England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
SALFORD DISTRICT REGISTRY
TECHNOLOGY AND CONSTRUCTION COURT
(HIS HONOUR JUDGE GILLILAND QC)

		Royal Courts of Justice The Strand London
		1 July 1999

LORD JUSTICE OTTON: This is a renewed application on notice for leave to appeal against the order of His Honour Judge Gilliland given in the Technology and Construction Court. The matter arises by virtue of a summons dated 6 November 1998 whereby QPS Consultants (the plaintiff and respondent to this application) sought an order debarring Kruger Tissue (the defendant and applicant) from further defending the claim and from pursuing its counterclaim on the ground that it had failed to comply with an unless order of His Honour Judge Howarth made on 21 September when he ordered that it serve by 9 October further and better particulars of its defence and counterclaim and further and better particulars of Schedule 2, failing which it would be debarred from defending the claim and bringing its counterclaim. Suffice it to say that a response was made to that unless order. However, the response was considered by the judge to be so inadequate as to justify activating the penal sanction in the unless order. As a result, and having heard argument, he struck out fundamental parts of the defence and counterclaim, cutting (as Mr Reese QC put it) a swathe through, in particular, the counterclaim.

The primary question which arises is whether the judge was entitled to do so. When the matter came before me by way of the usual paper application, I considered that it was arguable that: (1) the judge erred in requiring more particulars of the future loss of profit, which are more appropriately a matter for expert evidence (ground 2 of the notice of appeal); and (2) that he adopted too strict an approach on the requirement to produce documents not already in the applicant's possession and which did not yet exist (ground 4). I also indicated that if other grounds were to be pursued, the application should be pursued at an oral hearing on notice, which has now taken place.

Mr Colin Reese QC on behalf of the applicant raises a fundamental issue as to whether the judge was correct in his approach in this situation. The question, he suggests, is whether, having found that an attempt had been made to comply with the order, and in many instances satisfactory replies had been given, the judge erred in law and/or failed properly to exercise his discretion in striking out individual parts of the defence and counterclaim and the schedules (the first ground of appeal).

I have been referred in the course of argument to three previous decisions which raise this interesting point. The first is Reiss v Woolf [1952] 2 QB 557, a decision of the full Court of Appeal; Grand Metropolitan Nominee (No 2) Co Ltd v Evans [1992] 1 WLR 1191, a decision of a two judge Court of Appeal; and Realkredit Danmark v York Montague Ltd (unreported, Ref No FC2 98/7480/1), a decision of Morritt and Tuckey LJJ. Suffice it to say that reliance is placed upon a particular passage of Devlin J (as he then was) when he said at page 559 in Reiss v Woolf:

"The order does fix a time very precisely, and I think it can and should be fairly be construed as a time order. So construed, 'default' refers to default in the delivery of a document within the specified time. I do not, of course, mean that any document with writing on it will do. It must be a document made in good faith and which can fairly be entitled 'particulars'. .... that is the word used by Mr Bankes in argument in Davey v Bentinck [1893] 1 QB 185, 186. That is the test, in my judgment, and not, as the plaintiff contends, whether each demand for particulars has been substantially met. Applying that test, I think there has been no default."

That principle has been applied in the two subsequent decisions to which reference has been made.

Consequently, I consider that it is arguable that it was not within the judge's power or discretion in this case to make the order that he did. There is sufficient merit in the argument I have heard, notwithstanding the admirable way that Mr Manzoni at short notice has sought to persuade me otherwise, to make it worthy of review by the full court.

(following further argument by counsel)

LORD JUSTICE OTTON: I do not propose to give a judgment in respect of each of these items. I shall just indicate whether or not I consider whether or not there is an arguable point, and I am satisfied that there is just an arguable point on ground 3, but I would not hold out any hope or expectation that it will necessarily find favour with the full court.

(following further argument by counsel)

LORD JUSTICE OTTON: The second application concerns schedule 3 of the amended defence and counterclaim. The applicant sought permission to amend the schedule, which revised the figures for the period previously claimed, and which sought to update the claim for the losses actually incurred from February 1996 to June 1997 amd extended to the period February 1996 to February 1999. The schedules were displayed before the judge and require no reference on this application.

In the event the judge refused permission to make this amendment on the grounds that the amendment sought to reinstate the claim for losses incurred after 1997, which the judge had previously struck out by an order dated 12 March 1999. When the matter came before me on the permission to appeal, I gave permission on ground 2 of the grounds of appeal, saying that it was arguable that the judge erred in requiring more particulars of the future loss of profit which were more appropriately a matter for expert advice. Consequently, the applicant renews the application for permission in respect of grounds 1 and 3, which also cover the loss of profits claim and this particular aspect in relation to schedule 3.

It seems to me that it would be illogical not to allow this application in the light of what has gone before, not only when the matter was before me on paper but in the light of the rulings I have made this morning.

(following further argument by counsel)

LORD JUSTICE OTTON: The next application concerns ground 4 on the inability of the claimant to deal with the amendments in time for trial. It is said that the judge was in error in holding that the proposed amendments to items 47 to 78, 82 and 83 of Schedule 2 (which raised allegations of defects in the effluent plant) imposed a considerable burden on the claimant, and that there was a real risk that the claimant would not be able to deal with these matters in time for trial.

Mr Reese has submitted that there were no grounds for the judge to come to that conclusion. The trial is set down to commence on 4 October and the order was dated 7 May. He acknowledges that there was no evidence from the experts and, in particular, there was no evidence from the effluent treatment plant experts. They would not be able properly to address the new defects.

He also points out that the experts have met on previous occasions on a without prejudice basis, with a view no doubt to identifying the issues where there is no dispute, and those where the parties cannot be reconciled.

What is unfortunate in this case is that there has been no disclosure at all of any of the expert evidence in support of the defendant's counterclaim in this regard. One might have expected that there would have been a unilateral disclosure of such evidence, particularly when it was known that the pleading was so vulnerable to being struck out. That was not to be.

I am satisfied that the judge dealt with the situation as it then presented itself to him in a perfectly proper manner. He was at great pains to set out the arguments on both sides, and overwhelmingly they point to a decision in the exercise of discretion in the claimant's favour. I do not propose to read out the passages; they are pages 10-12, 15E-17, 21A-23E, 29F-30F and 31G-32G. In my view his reasoning cannot be criticised. The exercise of discretion was properly considered. He took into account the situation as it presented itself to him at that time and I see no reason at all to suspect that the exercise of discretion was in any way assailable.

In those circumstances I would disallow this particular application.

However, it may be -- and I give no indication, hope or expectation to either party -- that when the hearing of the appeal in its full form is considered by the full court, Mr Reese may be able to persuade their Lordships that the other parts of the appeal are well founded. This may (and I emphasise may), in the light of the decision of the Court of Appeal, if it sees fit to reverse the learned judge on other matters, give the court an opportunity to revisit this particular aspect of the claim. They might then be invited to set aside the exercise of discretion and to substitute their own discretion in the light of the case as it then is. This will require, in my view, a considerable amount of work on behalf of the defendants to get their block and tackle in order, which it is so lamentably not at this moment in time. It seems to me that this is a situation which is entirely of the defendants' making in the preparation of their counterclaim. It is disquieting that a counterclaim which I am told is worth in the region of £3m to £4m should have been in such a state of disarray with less than six months to go to the trial date which had been fixed at a substantial time earlier in the history of the action. For those reasons I would disallow this part of the application.

ORDER: (Not part of judgment)

Agreed minute of order to be lodged with the Civil Appeal Office; claimant's costs in the appeal.

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