England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION (BIRMINGHAM DISTRICT REGISTRY)
(HER HONOUR JUDGE KIRKHAM)

		Royal Courts of Justice Strand London WC2 Friday 7 September 2001

1. LORD JUSTICE PETER GIBSON: The second defendants, Graham Thompson & Co Ltd ("Thompsons"), apply for permission to appeal from the case management order made by Her Honour Judge Kirkham on 8 August 2001 debarring them from relying on the evidence of their valuation expert, Mr Elliott. Because the trial is now imminent, instead of the application being determined on paper with the possibility of a subsequent oral hearing, the application has been directed to be heard in open court with notice to the claimants, Mr and Mrs Meredith, and to the first defendant, Colleys Valuation Services Ltd ("Colleys"), with the appeal to follow if permission is given.
2. The background to the application can be stated shortly. By proceedings issued on 22 December 2000, the claimants, who purchased for £270,000 a house in Droitwich with the help of a building society mortgage, seek damages for professional negligence from Colleys, who prepared a mortgage valuation for the building society, and from their own surveyors, Thompsons, who produced a building survey report for the claimants. Thompsons dispute liability, causation and quantum. The claimants claim that the true value of the property which they purchased was £70,000 less than the purchase price.
3. At a case management conference on 11 May 2001, the judge gave directions that:

(1) lay witness statements be exchanged by 6 July;

(2) each party should be permitted to produce evidence from a building surveyor expert and a valuation expert;

(3) the reports of those experts be exchanged by 20 July;

(4) the experts in case of disagreement should meet by 10 August and produce a joint statement of issues by 24 August; and

(5) the case should be listed for a 3-day trial commencing on 11 September 2001.

4. Thompsons had difficulties in two respects. They had difficulty tracing their only lay witness, Mr Harrow, who had prepared the report for the claimants but who no longer worked for Thompsons. They also had difficulties in obtaining instructions from their insurers, Independent Insurance Co Plc, which went into provisional liquidation in June.
5. Thompsons' solicitors made the claimants' solicitors aware of those difficulties and of the need to obtain an extension of time. On 6 July the claimants' solicitors told Thompsons' solicitors that the claimants were prepared to extend time for the exchange of lay witness statements to 27 July provided that the expert evidence was served by 10 July. On 10 July Thompsons' solicitors sent the claimants' solicitors the draft report of their surveyor expert, Mr Martin, which was complete, save only for the fact that it was not dated or signed. But the report of their valuer expert, Mr Elliott, was not sent. Thompsons were also not able to exchange the lay witness statements on 27 July. On 31 July the claimants' solicitors said that they would be applying to the court for a debarring order. That application was then made. On 3 August Thompsons' solicitors sent the claimants' solicitors the completed report of their building surveyor expert, Mr Martin, and said that they hoped to serve the report of Mr Elliott by 7 August. They said in that letter:

"As you are aware from numerous recent telephone conversations we have been experiencing difficulties in obtaining instructions in this matter due to the provisional liquidation of our clients' professional indemnity insurers, Independent. In the circumstances we have made an application to the court for an extension of time for service of the witness statements and the expert report from the valuation expert in this matter."

6. They named that expert and invited the claimants to set up an experts' meeting on or after 10 August.
7. Thompsons applied for an extension of time until 10 August for the service both of the lay witness statement and of the valuer's report. In their supporting evidence, Thompsons' solicitor explained in her witness statement the difficulties which they had been experiencing. On 7 August, the day before the hearing of the two applications, Mr Elliott's report was served at 6 pm.
8. The two applications came before the judge on 8 August. The judge made an unless order extending time for service by Thompsons of the lay witness statement as requested, but said that the question of valuation evidence was a very different matter. She pointed to the fact that reports should have been exchanged on 20 July, that the claimants' solicitors had agreed that time should be extended, but that Thompsons had been unable to comply with the extension that the claimants had offered. She drew attention to the fact that the valuer's report served the previous evening was dated 28 June, but only served the day before. The explanation which the judge says was given for that later service, with all respect to her, appears to have related to why Mr Harrow's evidence was not given in time. There was no proper explanation given to the judge about the valuation expert's report being produced so late. The judge noted that amendments to Mr Elliott's report were requested to take into account matters in the report of Mr Martin. She said:

"I am not satisfied that the Second Defendant has done all it could/should have done to serve the valuation expert report within the time limit the Claimants were willing to agree. I say that taking into account the practical difficulties which the Second Defendant had with respect to the insurance question.

Furthermore, and of the greatest significance with respect to the valuation evidence, is that because of holidays and given we are now only four weeks from trial, the Claimants will not be able to deal in time with the questions it will quite properly want to raise on the Second Defendant's valuation report. I accept that the Claimants will be prejudiced as a result of that position and in those circumstances, ie in view of the substantially unexplained and inexcusable delay of the Second Defendant to get its evidence in on time, and the prejudice the Claimants would suffer if the report served only last night is allowed in and bearing in mind the Court of Appeal case of Baron v Lovell, the Second Defendant is debarred from relying upon expert valuation evidence."

9. Baron v Lovell [2000] PIQR 20 was a personal injury case in which the defendant had received a medical expert's report but for some months had not disclosed that report. In that case the judge had refused to allow that report to be used. This court upheld his decision. The decision in that case seems to me to turn on the particular facts of the case, which are very different so that the case provides little assistance.
10. It is noticeable that in the judge's judgment no reference is made to CPR 3.9. It may well be that it was not thought by counsel to have any relevance to the present case because the judge's order of 11 May was not an unless order with any express sanction if it was not obeyed.
11. In Bansal v Cheema (unreported 2 March 2000) this court was faced with an appeal from a judge's order refusing to extend time for service of witness statements which the court had earlier ordered should be served by a particular date. The earlier order was not an unless order. This court made reference to CPR 32.10, as providing a sanction that when a witness statement is not served within the time specified by the court, the witness may not be called to give oral evidence unless the court gives permission. This court proceeded on the footing that CPR 3.8 and 3.9 applied. So far as relevant, they provide:

"3.8(1) Where a party has failed to comply with a rule, practice direction or court order, any sanction for failure to comply imposed by the rule, practice direction or court order has effect unless the party in default applies for an obtains relief from the sanction.

3.9(1) On an application for relief from any sanction imposed for a failure to comply with any practice rule, practice direction or court order the court will consider all the circumstances including -

(a) the interests of the administration of justice;

(b) whether the application for relief has been made promptly;

(c) whether the failure to comply was intentional;

(d) whether there is a good explanation for the failure;

(e) the extent to which the party in default has complied with other rules, practice directions, court orders and any relevant pre-action protocol;

(f) whether the failure to comply was caused by the party or his legal representative;

(g) whether the trial date or likely date can still be met if relief is granted;

(h) the effect which the failure to comply had on each party; and

(i) the effect which the granting of relief would have on each party."

12. It was held by this court in Bansal that it was "essential" for courts exercising their discretion to consider each matter listed under CPR 3.9(1). That necessity was repeated by this court in Keith v CPM Field Marketing Limited (unreported, 11 July 200).
13. In the present case the appeal relates not to the failure to comply with a court order requiring a witness statement to be served by a particular date, but to an expert's report. By CPR 35.13:

"A party who fails to disclose an expert's report may not use the report at the trial or call the expert to give evidence orally unless the court gives permission."

14. Note 35.13.1 in Civil Procedure 2001 states that rule 35.13 assumes that a party has been directed to disclose an expert's report and has failed to do so, and says that the rule imposes a sanction that that party may not use the report at trial or call the expert to give evidence orally unless the court gives permission. It thus seems to me that the reasoning in the Bansal case equally applies to the present case, the sanction being that which is described in CPR 35.13.
15. The claimants' counsel, Mr Nicol, has submitted that the judge had before her at the case management conference all the material to which reference is made in CPR 3.9(1), that she properly took that material into account and that this court should not interfere with the exercise by the judge of her discretion in a case management matter. I fully accept that this court should be exceedingly slow to interfere with such an exercise of discretion. If the judge has taken into account all relevant considerations, then this court cannot properly interfere unless the judge's conclusion was plainly wrong.
16. I appreciate from the note of the judgment that the judge was concerned about the prejudice that would be caused to the claimants if an extension of time was granted. That is an entirely proper consideration which she was bound to have in mind. She does not, however, seem to have given any consideration to the prejudice to Thompsons if such an extension was not granted. If the judge had directed herself correctly, and I repeat that it may not be entirely her fault that she did not have CPR 3.9(1) in mind, she would have had to consider all the circumstances, including the matters listed in the nine lettered subparagraphs.
17. On subparagraph (a), the failure to observe the time limit imposed by the court is indeed regrettable as it led to the applications which came before the court. But in all CPR 3.9 cases there will have been a failure to comply with a rule, practice direction or order, and the interests of the administration of justice are not otherwise in this case affected.
18. On subparagraph (b), the time limit imposed by the judge's order was extended by agreement and the application for relief was made reasonably promptly once the claimants had indicated that they were seeking a debarring order following the failure to comply with that extended time limit.
19. On subparagraph (c), Mr Nicol submits that the failure to comply was intentional in the sense that Thompsons must have known that they were not complying with the order made by the judge in May and with the extended time limit allowed by the claimants' solicitors. This paragraph also allows the court to consider whether the party in default was acting in deliberate disobedience to the court order. In the present case the evidence from Thompsons' solicitor was that the failure was not deliberate. As Miss Birkenshaw says in her witness statement, "the court order has not been deliberately breached".
20. On subparagraph (d) the judge's view that a good explanation for the failure has not been provided is one with which I do not quarrel. Mr Grace has accepted that the reason why there was a failure to supply Mr Elliott's report earlier was as a result of a muddle on the part of those advising Thompsons. It was thought that Mr Elliott would have obtained the report of Mr Martin independently. He did not do so until some time after Mr Martin's report was available. As Mr Grace accepts, there was a breakdown in communication.
21. As for subparagraph (e), Thompsons were also in default in relation to the lay witness statements, but the judge was plainly satisfied with the explanation for that delay because she extended time.
22. On subparagraph (f), it appears that the failure to comply was not caused by Thompsons themselves but by their legal representatives.
23. On subparagraph (g), the judge appears to have thought that the claimants could not in the time before trial adequately prepare themselves to deal with Mr Elliott's report. She referred to that time as four weeks. In fact it was nearer five weeks. That report has been provided to us. It is a brief report running to only 7½ large-type pages. I can see nothing in that report which is likely to take the claimants' expert by surprise.
24. I find it hard to understand how the judge could properly have formed the view that the time between the hearing before her and the trial was not sufficient to enable the claimants to deal with questions on Mr Elliott's reports which they might properly want to raise. It was suggested by Mr Nicol that the report was too simple and that it left open many questions which might have to be asked. No doubt that might have to be tested in cross-examination, but I cannot see that the period between 8 August and 11 September was not more than ample to deal with any questions, even allowing for the fact, as we have been told today, that the claimants' expert would be away for two weeks during the course of that period. In my judgment the trial date would have been kept if relief had been granted.
25. On subparagraphs (h) and (i), the failure to meet the judge's timetable set in May would have left the claimants with a shorter period within which to deal with Mr Elliott's report, but, for the reasons already given, that period was adequate for their preparation for trial. To grant the relief would have meant that Thompsons would be on an equal footing with the claimants in that Thompsons, like the claimants, would have a valuation expert giving his views for them. It would not, as I see it, result in the 3-day estimate for the trial being exceeded. That estimate had no doubt been made on the basis that there would be such expert evidence.
26. I add to these matters the following considerations, which do not appear to have been noted by or weighed with the judge. First, this is a case which has proceeded with commendable expedition with no real delay on any side until Thompsons encountered the difficulties I have noted. Second, I emphasise that the order which was not complied with was not an unless order. Third, the delay in meeting the extended time limit was not great: it was eleven days. Having regard to the extension of time which the claimants were prepared to allow, the report was served late on Tuesday 7 August when the trial was still five weeks away. Fourth, there is a considerable difference between the views of the claimants as to their loss and that of Mr Elliott. Mr Elliott says that the diminution in value, if there be negligence, is only £7,500 or £10,000. In contrast, the claimants claim £70,000. Finally, the choice before the judge was not simply one between debarring Thompsons from relying on its expert valuation evidence or extending time. The judge could have imposed costs sanctions on Thompsons in consequence of their failure.
27. When balancing all these matters, which in my judgment should have been, but do not appear to have been, fully taken into account by the judge, it seems plain to me that it was inconsistent with the overriding objective and disproportionate to debar Thompsons from relying on their expert valuation evidence. With all respect to her, the judge was plainly wrong in making that order. It was simply not just to impose so draconian a sanction, given that the expert evidence was already in the hands of the claimants at the time she made that order.
28. For these reasons, I would allow the appeal, set aside the judge's order and, in view of my decision, I would exercise the discretion afresh. I would extend time for service of Mr Elliott's report so as to validate the service which in fact occurred.
29. LADY JUSTICE HALE: I agree, but I would say to the second defendants that they are fortunate indeed that this appeal has come on, as it has, so speedily. The order under appeal was made on 8 August 2001. The trial is to take place next week. Yet the application was only set down on 22 August 2001. The Civil Appeals office were not warned immediately that the matter was so urgent. This, the solicitors should always do. We are not dealing here with a small, inexperienced firm of solicitors who are lacking in resources in relation to the conduct of litigation. The Court of Appeal is always reluctant to interfere with case management decisions and yet more so if this might put the trial date at risk. Applicants must therefore always tailor the conduct of their applications to ensure that that does not take place. It cannot be allowed to jeopardise the timetable which has been set by the judge in the interests of all parties and administration of justice.
30. In this particular case the only just way to deal with this application in those interests was to put it on at extremely short notice, no doubt at great inconvenience to the claimants' advisers. That should not happen. If the result of this appeal means that additional time and costs are spent at the trial which could have been saved by a more expeditious prosecution of the application, the trial judge will no doubt take that into account in the costs order which she makes.
Order: Appeal allowed. Paragraph 1 of order dated 8 August 2001 of HHJ Kirkham should be set aside. Time extended time to rely on valuation evidence of Mr Elliott. No order as to costs of the appeal.