England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE CCRTI 1999/0700/2

(HIS HONOUR JUDGE KENNEDY QC )

Royal Courts of Justice

Strand

London WC2A 2LL

Monday 26 July 1999

B e f o r e:

THE MASTER OF THE ROLLS

(LORD WOOLF)

LORD JUSTICE BROOKE

LORD JUSTICE ROBERT WALKER

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RICARDO BIGUZZI

Claimant/Respondent

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RANK LEISURE PLC

Defendant/Appellant

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(Computer Aided Transcript of the Palantype Notes of

Smith Bernal Reporting Limited, 180 Fleet Street,

London EC4A 2HD

Tel: 0171 421 4040

Official Shorthand Writers to the Court)

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MR S SHAW (Instructed by Messrs Bunkers, Hove, East Sussex, BN3 3JS) appeared on behalf of the Appellant

MR A CHAMBERS (Instructed by Messrs Andreas Serghis & Co, Hove, East Sussex, BN3 2TL) appeared on behalf of the Respondent

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J U D G M E N T

(As approved by the Court)

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©Crown Copyright

Monday 26 July 1999

JUDGMENT

LORD WOOLF, MR: This is an appeal by the defendant, Rank Leisure Plc, against the judgment of His Honour Judge Kennedy QC given on 17 May 1999. That judgment allowed the claimant's appeal against the order of Deputy District Judge Paul Radcliffe of 20 March 1999, the deputy district judge having struck out the claimant's statement of case. That decision was given before the new Civil Procedure Rules ("CPR") came into force on 26 April 1999. The Judge's decision was given after that date.

As Mr Shaw, who appeared on behalf of Rank Leisure, rightly submitted, this case involves questions of significance with regard to the CPR. In particular it deals with a case which straddles the period pre and post 26 April 1999 and so involves the transitional provisions to which I will refer. In addition, it raises the question as to the relevance of decisions of this court, and of the House of Lords given prior to the CPR coming into force on cases which are considered by the courts after the coming into force of the CPR.

As to the role of His Honour Judge Kennedy in relation to the decision of the deputy district judge, it is important to bear in mind that the position is still one where he has to rehear the issue determined by the deputy district judge. The matter is not dealt with in the same way as this court deals with the decision of the lower court. This court will only interfere if the issue involved is one of discretion if it can be shown that the judge has either misdirected himself in law or his decision is plainly wrong.

The proceedings go back to an injury which was caused to the claimant, Mr Biguzzi as long ago as the night of 20/21 November 1993. At that time he was employed by the defendants as a bar manager at a night club in Brighton. A fight broke out in the course of which Mr Biguzzi suffered some injuries, including what was described by Mr Hodge, the consultant oral and maxillofacial surgeon, as a severe injury to his mandible. There were other heads of damage put forward by the claimant in addition to his injuries and loss of earnings. Mr Biguzzi says that the defendants, in addition to failing to provide him with a safe place of work, caused him to cancel his insurance policy on the grounds that he would be satisfactorily covered by the defendant's own policy. Furthermore, the defendants were in breach of contract in not having a policy which provided him with the cover to which he was entitled under his contract.

The injury to Mr Biguzzi having occurred in November 1993, service of proceedings did not take place until almost two years later on 26 October 1995. The defendants responded promptly on 4 December 1995 when a defence and request for further and better particulars were delivered.

The automatic directions applied to the claim as from 19 December 1995. It was the claimant's case, and he had the prime responsibility of advancing his case, that there were breaches of the automatic directions on both sides. On 5 June 1996 the claimant's solicitors made a request for a date to be fixed for the hearing. At that time the defendants were not ready for the case to be heard. No doubt the claimant's solicitors notified the court that they were ready to proceed because if they had not done so, they could find themselves automatically struck out under the regime which then applied; obviously they did not want that to happen.

Shortly after the court was in receipt of that information, on 21 June 1996, the court gave notice to the parties that the case would be heard during August/September 1996 (nearly three years ago). On 7 July 1996 the court fixed the 12 - 13 August 1996. On 19 July 1996 the claimant's solicitors wrote a lengthy letter pointing out various reasons why the case could not be heard on the date fixed by the court.

That letter clearly discloses that the case was not ready at that stage and, inevitably, the defendant's solicitors had no alternative but to adopt the course of agreeing to the case being taken out of the list.

As a result, on 9 August 1996 the matter came before His Honour Judge Lloyd. He made an order that, (1) the application to adjourn the trial should be granted; (2) that the matter having been set down for trial by the claimant's solicitors, it should be relisted on both solicitors filing at court a certificate of readiness with dates to avoid and a time estimate, that date to be not later than 19 March 1997; and, (3) that costs should be in the cause.

As Lord Justice Brooke pointed out in the course of argument, that type of order, which was regularly made in 1996 and thereafter, had the vice of removing any control which the court then had over the parties from the court and delivered it to the parties'. This is because it left the parties to come back to the court when they saw fit. Although there was a provision contained in the order that they should file at the court a certificate of readiness not later than 19 March 1997, in practice, because the court was not in a position to monitor the proceedings, it was not open to the court to bring the parties back if they did not comply with that part of the order.

In this case they did not comply with that part of the order. This resulted in there being no control over these proceedings until the court indicated that it would be heard by the court during February to May 1999. That was followed by the defendant's application to strike out, which resulted in the matter going before the deputy district judge.

The deputy district judge gave a careful and detailed judgment in which he examined the plaintiff's conduct. He considered the numerous judgments given by the courts on the question of delay subsequent to the decision of the House of Lords in Birkett v James [1978] AC 297. When he was considering the case, the district judge was focusing on the claimant's failure to prosecute the case in the way that he should rather than considering the conduct of both parties. However, having taken that approach, the deputy district judge came to the conclusion that this was not a case where the proceedings should be struck out for want of prosecution, although he could certainly have found that there was inordinate delay in these proceedings.

The district judge came to that conclusion because he could not find any reason for saying that there was any substantial risk of a fair trial not being able to be achieved and that there was no serious prejudice caused to the defendant by the delay which had occurred. However, the deputy district judge, basing himself on the authorities which were decided prior to the CPR coming into force, came to the conclusion that it was right to strike out the claimant's case on the basis that there was an abuse of process in that there had been a wholesale disregard of the rules. He pointed out that the claimant had not given discovery on time; that no trial bundles had been prepared; the case had not been set down for trial in accordance with the order of His Honour Judge Lloyd in March 1997; that the calculation of special damages had not been prepared; and, in his judgment, the cumulative effect of these matters was properly regarded as a wholesale abuse.

His Honour Judge Kennedy took a different view. He had clearly examined the events which had occurred in this case, from the point of view of the extent of the default on both sides. He came to the conclusion that both parties had been "ambling" forward towards trial and that there was a lack of a proper degree of expedition on the part of both parties. He indicated that, in relation to many of the matters, there was default on both sides. In doing so, it does not seem to me that he had lost sight of the fact that it is always for a claimant to prosecute his claim. The judge was, however, particularly concerned that part of the problem was due to the fact that the claimant was seeking to rely on psychiatric medical evidence. He took the view that the defendant was not being realistic in seeking to obtain discovery of medical notes relating to the claimant's psychiatric evidence (which the judge thought were probably now no longer obtainable).

The judge went on to indicate that he thought that the case could still be tried fairly. The case was one in which it was important that, so much delay having occurred, it should now be heard promptly. He thought that the best course for him to take was not to strike out the plaintiff's claim but to achieve the objective of having the case heard at the first convenient date.

It is with regard to the judge's approach to the previous authorities that Mr Shaw makes particular complaint in his helpful submissions to this court. He submits that, certainly in relation to a transitional case, the judge's approach was wrong. What the judge said in his judgment on this matter to which Mr Shaw takes objection, was:

"It is my firm belief that authorities decided under the old procedure should not be taken as binding or probably even persuasive upon this court, any more than looking back to the old rules to interpret the new should be so. This is a new regime."

He added:

"I very much doubt whether any of the authorities can assist, although it is perfectly true, as counsel both pointed out to me, that in some of the later striking out cases, and I do not propose going through them for the reason I have just expressed, there were foreshadowings and expressions of view as to how things might be under the new order.

I have to say that this court's view, after extensive training and a good deal of discussion and thought, is that the new order will look after itself and develop its own ethos and that references to old decisions and old rules are a distraction."

He continued:

"We now have to decide what is going to happen and we shall. We will not, I repeat, look over our shoulders. If the Court of Appeal try and tell us judges at first instance that we must look over our shoulders in any way at all, we will just have to find ways of adjusting our wing mirrors."

He went on to consider the central issue which he identified as being:

"Is there anything unfair in letting this case go to trial? That is really the issue I have got to look at."

The judge then sought to apply the CPR.

The transitional arrangements for dealing with the introduction of the CPR which applied to this case are contained not in the CPR itself, but in a practice direction. This was the process anticipated by Part 51 of the CPR. Paragraph 15 of the practice direction sets out what should be the normal approach in those circumstances in these terms:

"(1) When proceedings come before a judge (whether at a hearing or on paper) for the first time on or after 26 April 1999, he may direct how the CPR are to apply to the proceedings and may disapply certain provisions of the CPR. He may also give case management directions (which may include allocating the proceedings to a case management track)."

That paragraph is of importance because it gives to the judge a discretion to control how the CPR are to apply to proceedings after 26 April 1999 when they were commenced before that date. Subparagraph (2) reads:

"The general presumption will be that the CPR will apply to the proceedings from then on unless the judge directs, or this practice direction provides otherwise."

There is then a cross-reference which I need not mention.

"(3) If an application has been issued before 26 April 1999 and the hearing of the application has been set for a date on or after 26 April 1999, the general presumption is that the application will be decided having regard to the CPR. (For example an application for summary judgment issued before 26 April 1999, with a hearing date set for 1 May 1999, will be decided having regard to the test in the CPR part 24 (summary judgment).

(4) When the first occasion on which existing proceedings are before a judge on or after 26 April 1999 is a trial or hearing of a substantive issue, the general presumption is that the trial or hearing will be conducted having regard to the CPR."

I do not understand Judge Kennedy in this case to have made any specific direction as to the how the CPR are to apply to the present case. I understand the judge to be operating on the basis that if the general presumption applies to the proceedings, then the CPR applies to the decision which he had before him.

As many of the steps which have been taken in this relatively straightforward case were taken before the 26 April 1999, the parties' conduct prior to that date has to be assessed in accordance with the rules which were then applicable. To that extent Mr Shaw was perfectly entitled, as he did in his submissions, to criticise the claimant's conduct in so far as those acting for the claimant had not complied with the rules which applied prior to that date.

However I do not accept the criticisms of the judge with regard do his approach to the previous authorities. Indeed far from criticising the judge, I would commend his approach. The amount of time which the deputy district judge had to spend in his judgment examining the old authorities indicates the disadvantage of having to look back, as the judge said, "over your shoulder" at those authorities.

There is no fear in this case that this court is going to suggest that the judge should "adjust his wing mirrors". He had to make a decision applying the principles under the CPR, not under the previous regime in deciding whether this claim should be allowed to proceed. He could not, and should not, ignore the fact that the parties previously had been acting under a different regime. The fact that they were acting under a different regime does not mean that the judge is constrained to make the same sort of decision as would be made under the previous regime.

The courts have learnt, in consequence of the periods of excessive delay which took place before April 1999, that the ability of the courts to control delay was unduly restricted by such decisions as Birkett v James . In more recent decisions the courts sought to introduce a degree of flexibility into the situation because otherwise the approach which was being adopted by litigants generally of disregarding time limits for taking certain actions under the rules would continue.

Under the CPR, the position is fundamentally different. As Part 1 rule 1 one makes clear the CPR are:

"....a new procedural code with the overriding objective of enabling the court to deal with cases justly."

The problem with the position prior to the introduction of the CPR, was that often the courts had to take draconian steps, such as striking out the proceedings, in order to stop a general culture of failing to prosecute proceedings expeditiously. The prime example of that was contained in CCR Order 17 rule 11(9) which involved the automatic striking out of cases where the appropriate step of seeking a hearing date was not taken by the strike out date. That led to litigation which was fought furiously on both sides: on behalf of claimants to preserve their claim, and on behalf of defendants to bring the litigation to an end irrespective of the justice of the case because of a failure to comply with the rules of the court.

Under the CPR the keeping of time limits laid down by the CPR, or by the court itself, is in fact more important than it was. Perhaps the clearest reflection of that is to be found in the overriding objectives contained in Part 1 of the CPR. It is also to be found in the power that the court now has to strike out a statement of case under Part 3.4. That provides that:

"(2) The court may strike out a statement of case if it appears to the court-

(a) that a statement of case discloses no reasonable grounds for bringing or defending the claim;

(b) that the statement of case is an abuse of the court's process...."

and, most importantly:

(c) that there has been a failure to comply with a rule, practice direction or court order."

Under Part 3.4(c) a judge has an unqualified discretion to strike out a case such as this where there has been a failure to comply with a rule. The fact that a judge has that power does not mean that in applying the overriding objectives the initial approach will be to strike out the statement of case. The advantage of the CPR over the previous rules is that the court's powers are much broader than they were. In many cases there will be alternatives which enable a case to be dealt with justly without taking the draconian step of striking the case out.

Under the court's duty to manage cases, delays such as has occurred in this case, should, it is hoped, no longer happen. The court's management powers should ensure that this does not occur. But if the court exercises its those powers with circumspection, it is also essential that parties do not disregard timetables laid down. If they do so, then the court must make sure that the default does not go unmarked. If the court were to ignore delays which occur, then undoubtedly there will be a return to the previous culture of regarding time limits as being unimportant.

There are alternative powers which the courts have which they can exercise to make it clear that the courts will not tolerate delays other than striking out cases. In a great many situations those other powers will be the appropriate ones to adopt because they produce a more just result. In considering whether a result is just, the courts are not confined to considering the relative positions of the parties. They have to take into account the effect of what has happened the administration of justice generally. That involves taking into account the effect of the court's ability to hear other cases if such defaults are allowed to occur. It will also involve taking into account the need for the courts to show by their conduct that they will not tolerate the parties not complying with dates for the reasons I have indicated.

Some of the alternatives which are open to the courts to deal with these situations are to be found conveniently summarised in the practice direction as to protocols. Paragraph 2 of that practice direction deals with compliance with protocols. It says:

"2.3 If, in the opinion of the court, non-compliance has led to the commencement of proceedings which might otherwise not have needed to be commenced, or has led to costs being incurred in the proceedings that might otherwise not have been incurred, the orders that the court may make include:

(1) an order of the party at fault pay the costs of the proceedings, or part of those costs, of the other party or parties;

(2) an order that the party at fault pays those costs on an indemnity basis;

(3) if the party at fault is a claimant in whose favour an order for the payment of damages or some specified some sum is subsequently made, an order depriving that party of interest on such sum and in respect of such period as maybe specified, and/or awarding interest at a lower rate than that at which interest would otherwise have been awarded;

(4) if the party at fault is a defendant and an order for the payment of damages or some specified sum is subsequently made in favour of the claimant, an order awarding interest on such sum and in respect of such period as may be specified at a higher rate, not exceeding 10% above base rate (cf CPR rule 36.21(2)), than the rate at which interest would otherwise have been awarded." ( Emphasis added )

To that table can be added (in relation to a default such as that which has occurred in this case) the new power of the court to order money to be paid in to court. The ability of the court to make an indemnity order for costs is an important power. Under the old rules there was little or no difference between an indemnity order and a standard order for costs. Under the new rules there is a significant difference. For a court to order certain parts of the costs to be paid on an indemnity basis and to be paid forthwith is a valuable sanction since a solicitor has to explain to his client why he has to be put into funds to pay costs on that basis forthwith. This is particularly valuable in bringing home to the solicitor and the party the consequences of default. It is more effective if the costs are assessed summarily than by a detailed assessment.

The other powers to which I have referred are also valuable. A great advantage of making one or other of those orders as the proper method of dealing with a default of the party is that they are much less likely to result in appeals such as this which in themselves generate huge disproportionate expense.

Having referred to the powers which exist under the CPR and the ability of the court to make such orders as I have indicated, I turn to the course which was adopted by the judge in this case. Having come to the conclusion that this was a case where both parties had undoubtedly failed to comply with the rules which were applicable at the relevant time, having come to the conclusion that the case was one which should be brought on as soon as was practical, in my judgment the judge was absolutely right in taking the course which he did. In doing so, I do not understand him to be countenancing the sort of behaviour that had occurred in this case. He was recognising the realities of what was happening under the old regime, and drawing a line then seeking to apply the new approach which the CPR require.

Under that approach judges have to be trusted to exercise the wide discretions which they have fairly and justly in all the circumstances, while recognising their responsibility to litigants in general not to allow the same defaults to occur in the future as have occurred in the past. When judges seek to do that, it is important that this court should not interfere unless judges can be shown to have exercised their powers in some way which contravenes the relevant principles.

In relation to the decision of the judge which is under appeal, I can see no failure on his part to recognise the relevant principles. He took the right course as to the previous authorities. The whole purpose of making the CPR a self-contained code was to send the message which now generally applies. Earlier authorities are no longer generally of ny relevance once the CPR applies.

I would dismiss this appeal.

LORD JUSTICE BROOKE: I agree. This case illustrates vividly some of the difficulties that used to arise under the rules of procedure that were in force until 26 April 1999 and some of the inherent weaknesses in the old regime. In this case any intelligent lay people who read the papers and the court file that relate to the period between January 1997 and January 1999 would have been horrified by what they read. The progress of the case cried out for firm external control by the court which it did not receive.

As Lord Woolf has said, one of the difficulties arose from the form of order made by Judge Lloyd in August 1996. The problem which confronted the claimant's solicitor in July 1996 related to a large extent to his client's medical condition. He told the defendant's solicitors of two matters. The first was that one of the matters which had come to light related to the need for a psychological report on Mr Biguzzi's current state of mind. The incident had affected him in the sense that he had changed his way of life and suffered a loss of amenities. It was necessary, therefore, to ascertain the exact position in this respect.

The second was that Mr Biguzzi was still receiving treatment for his injuries. His treatment would not be concluded for some time, and it was therefore possible that further reconstructive surgery might be needed. It was considered essential that a proper view of the extent of his injuries was obtained before the matter being set down for hearing once again.

After Judge Lloyd made his order, the claimant saw Mr Herold, the consultant oral maxillofacial surgeon, who had previously reported in the case. Mr Herold reported on 13 November 1996 that there was unlikely to be any significant change in the clinical situation relating to the discomfort in the jaw, but he thought that Mr Biguzzi's poor appetite and lack of control of temper could well be explained by the psychological effect of the injury which he sustained. He commented that it has been well reported that facial injuries do lead to significant problems with anxiety and psychological upset.

The claimant's solicitor had to obtain a change in the provision of his legal aid certificate to enable him to consult a psychiatrist but he did so early the following year and Dr Latif, a consultant psychiatrist, reported in June 1997 in a report which was immediately sent to the defendant's solicitor. He said that Biguzzi had gone through a catastrophic experience due to the grievous bodily harm inflicted on him by an unknown perpetrator.

"Consequently he suffers from post traumatic stress disorder. He continues to suffer from this disorder due to lack of proper compensation which could have helped him to come to terms with his loss of pride and dignity to some extent and he could once again take some initiative to rebuild his future."

That was in late June 1997. Unhappily it took a further full year for the defendants to obtain a report from a consultant psychiatrist, Dr Resek. For the whole of that year the trial of this action, which cried out for coming on in the light of Dr Latif's report, was delayed. It is certainly the case that to some extent the delay was caused by the claimant's solicitor not dealing promptly with requests he received from his opposite number and from forms of authority not being completed. But on any showing it appears to me to be lamentable that a further delay of a year occurred in the progress of the claim of a man in this condition.

Dr Resek did not agree with the diagnosis of a post traumatic stress disorder. He concluded in his report that:

"The key to understanding his complaints is his strong sense of grievance against his employers by whom he has felt neglected, slighted, and unappreciated. As a result he holds a very serious grudge which I think fuels his distress and complaints beyond what may be expected from his injuries which I do not wish to underestimate.

This, and the lingering litigation, have been responsible for the chronicity of his complaints."

Again, one would have hoped that the matter could have been moved by agreement between the parties rapidly to trial. Unhappily the defendant's solicitors, who had not seen any medical reports for the period up to 1984, nine years before the date of the claimant's accident, then continued to withhold their willingness to give a certificate of readiness while they pursued a hopeless task of trying to trace down these old medical records which related to the period of the claimant's youth.

As the claimant's solicitor said of them in his affidavit:

"It is also apparent that although they had the appropriate authority since the 18th March 1998 they did not get the GP notes until the 10th June 1998. Then they complained that they were incomplete .... They seemed to think that Mr Biguzzi was deliberately hiding something. The fact was that Mr Biguzzi had no more idea where his medical records were than they did. They were not in his possession, and never had been. As he did not know where they were. he could not ask anyone to show them to the Defendant."

The claimant's solicitor obtained a letter from the Kent Health Authority's Support Agency in September 1998 which reported that the staff from the health authority had made extensive enquiries to try and locate any other clinical notes of the claimant but, unfortunately, without success. Notwithstanding this, the defendant's solicitors continued to withhold their certificate that the case was ready, saying, in terms, that it was "of the greatest concern" to them that there seemed to be "a huge amount of missing medical notes" and materials concerning the claimant. They wrote:

"We also note that you believe it is appropriate for this matter to be set down for trial. For the moment we do not believe that this would be appropriate and have written to our client for instructions."

That was an attitude which they continued to hold on 11 January 1999.

If ever there was a case which called for the matter to be brought on for trial with direct hands-on control of the court, it was this came from January 1997 onwards. I cannot fault the way that the very experienced judge handled the issues before him in the exercise of his discretion and I, too, would dismiss this appeal.

LORD JUSTICE ROBERT WALKER: I agree that this appeal should be dismissed for the reasons stated in both of my Lords' judgments.

Order: Appeal dismissed with costs. Legal Aid Assessment.