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 TECHNOLOGY AND
CONSTRUCTION COURT
(His Honour Judge Lloyd)

		Royal Courts of Justice Strand London WC2 Wednesday 21 March 2001

Wednesday 21 March 2001

1. LORD JUSTICE ALDOUS: Mr William Basten, the claimant, seeks permission to appeal against an order of His Honour Judge Humphrey Lloyd QC of 5 November 1999 which struck out his re-amended statement of claim and gave judgment for the defendant, Zucken-Redac (UK) Ltd, formerly called Racal-Redac (UK) Limited. He also seeks an extension of time to appeal against an order made by the judge on 25 June 1999 and permission to appeal if an extension of time is granted. Those applications were ordered to be heard on notice, with the appeal to follow if permission was granted.
2. Before coming to the issues that arise upon Mr Basten's applications, it is necessary to summarise some of the background facts.
3. In 1975 Mr Basten joined a business owned by a Mr Quick which traded under the name Circuit Systems. It was involved in design and manufacture of printed circuit board designs. In 1981 Mr Basten took over the running of the business. Shortly thereafter the business purchased a computer-aided design system marketed under the name "Cadet". It consisted of hardware and software produced by the defendant which produced designs for printed circuit boards more effectively and faster than could be done by hand.
4. On 27 October 1983 the first named claimant, Circuit Systems Ltd, was formed by Mr Basten. At that time Mr Basten owned 98 per cent of the shares, with his wife owning the remaining 2 per cent. That company took over the business that had been carried on under the name of Circuit Systems on 1 July 1984. Mr Basten was the managing director.
5. The business of Circuit Systems Ltd grew from 1982 to mid-1985 with the result that Circuit Systems Ltd decided to upgrade its computer design equipment. According to Mr Basten, he disclosed Circuit System Limited's requirements to the defendant in the summer of 1984. He was told not to acquire the system then being marketed by the defendant, but to wait for the new system which the defendant was due to launch in a few months' time. That advice was accepted by Mr Basten. He contacted the defendant again in May 1985 when the new system, called "Visula" had been launched.
6. In the summer of 1985, following discussions between Mr Basten and the defendant, Circuit Systems acquired an Apollo DN660 computer and a Visula system. It was said to have many advantages over the Cadet. Circuit Systems Ltd was one of the defendant's first customers to acquire the system. They experienced problems in operating the system which they communicated to the defendant. According to Mr Basten, the equipment and software supplied remained defective despite attempts by the defendant to remedy this. In 1986 the defendant offered to supply and did supply Circuit Systems Ltd with their updated Visula system, together with a further DN660 computer. According to Mr Basten, Circuit Systems Ltd's problems were not solved by the new equipment, even though the DN660 computer was replaced by a more modern model.
7. As Circuit Systems Ltd did not have the finance to purchase the Visula systems, it was arranged that Black Arrow Finance Ltd would make them available to Circuit Systems Ltd under lease agreements, with Circuit Systems Ltd entering into software licensing and maintenance agreements with the defendant.
8. Circuit Systems Ltd ceased trading during 1988 and went into creditors' voluntary liquidation, with estimated claims against the defendant of about £350,000. Mr Basten was one of the main creditors as he claimed that he had lost £40,000, being the balance due to him on his director's company loan account. He had guaranteed its overdraft and discharged the company's liability to a sum of, I think, exceeding £100,000. He had also guaranteed the company's liability in respect of one of the Visula systems that had been financed by Black Arrow Finance Plc.
9. On 22 March 1988 Circuit Systems Ltd issued a writ claiming damages for breach of contract and/or misrepresentation arising out of their purchase from the defendant of computer hardware and software known as the Visula System. A number of alleged defects in the system were relied upon. According to a schedule of loss, Circuit Systems Ltd's claim was in excess of £2,000,000 up to June 1994. A defence was served on 24 August 1988 denying the alleged defects and denying the breaches of contract and the misrepresentations. The defendant also counterclaimed for about £108,000 alleged to be due under the agreements. There followed an amended statement of claim in April 1990 and a re-amended statement of claim in November 1993.
10. From 23 March 1988 until 27 April 1990, Circuit Systems Ltd's action was funded by Mr Basten. By an order dated 29 September 1988 the action was stayed pending provision of security for the defendant's costs up to and including the sum of £10,000. On 15 February 1990 the defendant issued summonses to strike out the action, on the ground of alleged want of prosecution and because of the failure to furnish security for costs. On 19 March 1990, security for costs in the sum of £10,000 was provided. In consequence the application to strike out the action for failure to provide the security was withdrawn.
11. The creditors of Circuit Systems Ltd were unwilling to fund the action themselves and therefore negotiations were started with the liquidator to secure an assignment of Circuit Systems Ltd's causes of action to Mr Basten. On 12 April 1990 such an assignment was executed by the liquidator.
12. By amendment of the defence and counterclaim served on 22 October 1991 the defendant put in issue the validity of the assignment and alleged it was contrary to certain risk-assignment clauses and also that further prosecution of the action would amount to an abuse of the process. Those matters were ordered to be heard as preliminary issues, with judgment being given in favour of the defendant on 16 November 1994. Those issues proceeded to the Court of Appeal ([1997] 1 WLR 721) with the abuse of process issue being considered by the House of Lords ([1999] 2 AC 1). Judgment in the House of Lords was given on 27 November 1999. It dismissed the defendant's appeal with the result that Mr Basten was free to pursue some of the causes of action that had been originally pleaded.
13. These proceedings started with the writ in 1988 and thereafter the only steps towards trial up to November 1994 - six years – involved pleadings and disclosure. There followed about a three-year delay while a decision was reached on the issue as to whether continuation of the proceedings amounted to an abuse. Despite the lapse of time, the summons seeking to re-re-amend the statement of claim was not issued for another year.
14. By summons dated 10 November 1998 Mr Basten sought, amongst other things, leave to re-re-amend the statement of claim. That summons came before the judge on 22 January 1999, when the defendant put forward objections to leave being granted upon a number of grounds. The judge produced a detailed judgment in which he set out the submissions of the parties and what he described as the essential battle-ground between them. He then said this:

"The principles which apply are well known and well established. First, all proper amendments should be allowed which will enable the true issues in the case to emerge, as the issues in the case ought to be those which are to be found in, and derived from, the pleadings. Secondly, leave to amend should not be granted for any case that is bound to fail. It would also be wrong to allow an amendment (and it would be embarrassing to Racal) to introduce a case to which it will plead, if there will then inevitably be re-pleading by the plaintiffs and by Racal, all of which could be avoided if the plaintiffs first sorted out their case and so avoided such additional expense. Modern practice, certainly in this court, is not to be hidebound to a course which requires a party to be granted leave to amend, but then particulars have to be sought, and then further amendments have to be made, if the case ought properly to be managed by an active set of directions requiring a party to look hard at its own case, to anticipate what is clearly going to be the case of the other party, and to set out what may not prove to be its final and complete answer to that case, but which is its best answer at the time and which lays the foundations for the real issues."

15. The judge went on to record the submissions made by Mr Henderson QC, counsel who appeared on behalf of the defendant, and those made by Mr Alastair Wilson QC, counsel for Mr Basten. Those latter submissions he recorded as:

"Mr Wilson, for the plaintiffs, suggests that I should grant leave, possibly on terms, so that there should be some finality. He submits that the deficiencies to which Mr Henderson has referred can be overcome by compliance with any conditions as to leave."

16. The judge concluded:

"Of the options available I still prefer the second. Where the amendment is itself acceptable it would not be right to refuse to grant leave to amend simply because the pleadings are overall not in as good order as they ought to be. On the other hand, I cannot accept Mr Wilson's submission that leave to amend should be granted, even on conditional terms, because there is a real danger of the action repeating the course it has taken so far with a proliferation of pleadings, one superseding the other. There will be at least two rounds of further pleadings - the defendant will plead to the amendments made under that conditional leave, the plaintiffs will then reply, and will then start another round by amending the statement of claim, as I think is almost inevitable, and then Racal will have to re-plead to it. We will not be making any progress. Since there is nothing fundamentally wrong with the proposed amendment but there is a lot wanting in the statement of claim the right course in this instance is to require the plaintiffs to provide the necessary framework."

17. The judge then made an order which required that the claimants' application should be adjourned to 16 April to enable the claimants to reconsider and then to re-amend their statement of claim with any amendments considered necessary. It continued in this way:

". . . in particular,

(a) to state how the contract of supply between Black Arrow Finance Limited and the Defendant was made and, if more than one contract was made, the subject matter and the terms of each;

(b) to state whether or not any such contract incorporated the Defendant's standard terms and conditions;

(c) if so, whether and to what extent the terms set out in paragraphs 47A(a) and (b) are to be maintained;

(d) to join Black Arrow Finance Limited in these proceedings, whether as Plaintiff or Defendant, and otherwise also to give effect to the previous orders (and observations) of the Courts;

any such proposed amended pleading to be served by 5 March 1999."

18. The order went on to direct that the action be tried commencing 11 January 2000, with an estimate of six weeks.
19. It is clear from reading his judgment that the judge had in mind the Civil Procedure Rules and the need to set a framework and timetable leading to trial. It was, I believe, in that context that he anticipated that the proceedings would be ready for trial by 11 January 2000, the trial to last six weeks.
20. The claimants failed to serve their proposed re-re-amended statement of claim by 5 March 1999. Two different versions of proposed amendments were served on the defendant's solicitors on 23 March 1999. The two different versions varied depending on whether Black Arrow were going to be added as plaintiff or defendant. The hearing date of 16 April, to which the application of November 1998 had been adjourned, had to be vacated to allow the draft amendments to be considered, with the result that the adjourned hearing was relisted for 11 June 1999. It was not until mid-May 1999 that Mr Basten (because by then the action by Circuit Systems Ltd had been stayed because of its inability to provide security for costs) chose which version was to be relied upon. As I understand it, it had become clear at that stage that Black Arrow would have had to have been added as defendant.
21. By letter dated 4 June the defendant had informed the solicitors acting for Mr Basten about its complaints about the proposed re-re-amended statement of claim that had been served on it. In a long letter it listed the deficiencies that it perceived were present. The letter stated that unless a dramatically improved version was received, it would ask the judge on 11 June to strike out the statement of claim under CPR 3.4(2)(b) under the inherent jurisdiction of the court. On 7 June 1999 the defendant issued an application seeking that the re-re-amended statement of claim be struck out. By letter dated 8 June further amendments were proposed. Thus the judge had before him on 11 June an adjourned application to amend the re-amended statement of claim and an application by the defendant to strike out the re-amended statement of claim.
22. After hearing lengthy submissions on 11 June, the judge gave judgment on 25 June 1999. It was a detailed and careful judgment of 33 pages. I do not need to set out the judge's detailed criticism of the pleading, but I need to quote extensively from his judgment to show the approach that he took. At the outset he drew attention to the overriding objectives of the Civil Procedure Rules, set out in Rule 1. He recorded that the sums of money involved were large. He then decided certain issues of law and came to the defendant's application to strike out the existing pleading at paragraph 34. In the next five paragraphs he set out the submissions of the parties. His decision started at paragraph 39:

"39. In my judgment, Mr Basten's present and proposed pleadings provide textbook examples of the justification of the reform produced by the Civil Procedure Rules whereby the court can now take a grip of an action and require a party to it to present its case in a form which will satisfy the overriding objective and which will enable it to be understood clearly and to be managed properly, ie it will identify the claims clearly and precisely and, in so doing, it will lead to the definition of the issues in a way that will be just and fair to both parties. There is no reason to suppose that the underlying case against Racal is unmeritorious. Racal has fairly and properly admitted that there were some deficiencies but has equally fairly and clearly maintained that their cause were not matters for which it was as a matter of fact or law liable. It does not however wish to go to the expense of preparing for a trial of an action by a party who is legally aided unless and until it is clear that a tenable case in fact (eg on causation and quantum) and in law (ie a precise and thought through legal basis) is pleaded against it. It believes that if this is done then the Legal Aid authorities will be better placed to be advised as to the prospects of Mr Basten succeeding.

40. Whilst it is not for the court to assist a party for an ulterior purpose (such as enabling Racal more effectively to campaign for the withdrawal of legal aid) its duty to deal with a case justly now includes the need to ensure that it is presented justly and in a cost-effective and efficient manner. . . . The CPR introduce, by way of reforms, powers of management which enable a court to take greater control of the proceedings. Some are quite extensive, but even in relation to evidence and proof, they do not confer on the court the powers which are to be found in other jurisdictions - commonly called "inquisitorial" or "investigative" - by which the court itself decides the areas of enquiry and what facts it wishes to establish and, in some cases, by whom the facts are to be established. In my view, the CPR, in emphasising the need for clarity and precision in the parties' statement of case and elsewhere in the rules, do not signal a major departure from the general principle that it is primarily for each party to decide what its case is and how best it is to be presented to the other party or parties and to the court. The party most affected may seek clarification or further information, as may the court, acting on its own initiative. However, if a party does not heed the need to reconsider its case, then, in my judgment, the court has now not only the power but also the duty, under Rule 1, to intervene - not to take the case out of a party's hands and to require a party to put forward a case which is not its preferred case - but to direct a party as to how its case is to be presented to the court, in other words, in a form which will enable the case to be properly managed in the interests of all.

41. In my judgment, the defendant has satisfied me completely that the time has come when the court could and should intervene to direct Mr Basten, and those advising him, to start again so that both the defendant and the court know clearly what Mr Basten's case is. I gave a clear warning in January that I expected a revised statement of claim which would 'make it very clear indeed how that claim is maintainable in anticipation of the points which Mr Henderson has so clearly set out'. That has not been done. What has been done is the antithesis of what should have been done. If anything the pleading is less clear. The present statement of claim and the proposed statement of claim remain essentially back to front: the facts ie the chronology, are in the wrong place. Had not Mr Wilson said that the chronology culminated about paragraph 69 it was a matter of speculation where it came to an end. The pleading meanders towards its conclusion but peters out in a swampy delta with no certain foothold, eg in the form of specific prayers. The tables in the beginning of the new pleading are, in places, incomplete and, in any event, are not a proper way of presenting a case. They serve only to show the lack of organisation and clarity. I have set out only one of Mr Henderson's illustrations of how in following the references in the table one has to go backwards and forwards to try to see what is being alleged. Each of the cases on collateral contract and misrepresentation is, quite frankly, a shambles, as is much else of the pleading. ...

43. What ought to have been done, as Mr Henderson submitted, is to serve a substituted statement of claim. Permission to do so is readily granted in this court when it is clear that the existing pleading is no longer capable of being used intelligibly. Mr Henderson was also right in saying that the text of a substituted statement of claim in a case of this kind would naturally and logically not use titles such as claimant or plaintiff (and would in any event make all necessary changes consequent on the CPR) and instead use the names of those involved so that the pleading was more comprehensible.

44. In my judgment permission to make the re-re-amendments should therefore not be granted for the substantive reasons which I have already set out, and for the procedural reasons to which I have just referred. I also consider that the existing pleading can no longer be tolerated, and that unless a satisfactory substituted statement of claim can be produced, it must be struck out. Mr Basten has had since January to correct the deficiencies in the pleading and has failed to do so. He has had more than adequate opportunity to do so. In arriving at this decision I bear in mind the expense that has already been incurred in producing the original and revised versions of the re-amended statement of case and the fact that this order will require further expenditure. However against those factors I take account of the need that the case should be presented fairly to the defendant and the fact that all this expenditure could and should have been avoided had what I said in January been heeded. Ample time was then given but the opportunity has been wasted. . . .

46. The orders which I propose to make also include directions leading to the trial, but these directions are dependent on compliance with the timetable. They are in my view otherwise feasible. I regret that it is necessary to set out objectives for the new pleading since they are elementary. Precisely how the objectives are attained is a matter for the judgment of Mr Basten and his advisers. The dates have been fixed on the basis that it is not expected that either Mr Basten or Racal will need to deal with any case or allegation that has not already been made in some form or another. The parties must conform to the requirements of the CPR. This means not only must the defendant observe rule 16.5 but Mr Basten must present his case in such a form that the defendant is able to comply with that duty. It will be apparent that in giving Mr Basten a further opportunity to serve a substituted statement of case, this must be regarded as his last chance or virtually his last chance for otherwise his claims are liable to be struck out. The orders do not deal with the Scott Schedule as I expect that its status will depend on the extent to which its items are utilised in Mr Basten's new case. A PTR will be held in early December 1999. In this way the trial date may be maintained. A rolling timetable has been provided to avoid Mr Basten having to make an application for a little more time for the new pleading. However, the trial date will be in peril if the new statement of case cannot be served by 30 July, in which [case] Mr Basten will need to apply for more time in order to avoid the consequences."

23. The order that the judge made on 25 June was in this form:

"1. The Second Claimant, Mr Basten, shall by 4.30 pm on 9 July 1999 serve a substituted statement of case. The sanction for failure to do so shall be that the statement of claim shall be struck out and the Defendant shall have permission to enter the judgment against him.

2. The substituted statement of case shall meet the following objectives: [there are then set out four objectives]."

24. The order went on in paragraph 10 to provide that if Mr Basten notified the Defendant and the Court by 10.30 am on 5 July 1999 that he was unable to serve a substituted statement of case by that time, then the time would be extended to 4.30 pm on 30 July 1999. Upon that basis the order dismissed the application to re-amend the statement of claim.
25. Mr Wilson did not criticise the approach of that judgment, nor the conclusion that the judge reached. He accepted that the judge had jurisdiction to take a grip of the action as the pleading was, in his words, "in a mess". In the light of the date of trial already having been fixed for 11 January, it was clearly important that the directions that the judge gave be complied with. As the judge said, the trial date would be in peril if the new statement of claim was not served by 30 July. Thus he pointed out that it was the last, or virtually the last, chance that Mr Basten would have to put his pleading in appropriate form.
26. On 14 July 1999 Mr Basten served a draft substituted statement of claim. On 21 July the defendant by letter notified the solicitors acting for Mr Basten that it was issuing an application seeking an order striking out the substituted statement of claim. The three-page letter pointed out the deficiencies that the defendant perceived existed in the proposed substituted statement of claim. Twenty-three points were listed.
27. The defendant's application to strike out the re-amended statement of claim and the claimants' application to amend came on for hearing before the judge on 24 and 25 August 1999, while the judge was sitting as vacation judge. According to Mr Wilson, it was only during the hearing that the full meaning of the defendant's objections to the proposed substituted statement of claim became apparent. He therefore sought leave in the middle of the hearing to deal with those objections in a further substituted statement of claim which he undertook to prepare and serve within seven days. The judge refused that application.
28. I shall have to come back to the principles applied by the judge in his judgment of 31 August 1999 as they are at the heart of the appeal. It is sufficient at this stage to mention that the judge analysed the pleading paragraph by paragraph, pointing out the deficiencies that he found. He concluded that it did not comply with the order of 25 June upon a number of grounds. His conclusion was expressed in these terms:

"32. The upshot is therefore that Mr Basten cannot advance any claim for the loss and damage sought to be recovered. I am conscious that I have not covered every criticism made by Racal (most of which were valid) some of which relate to parts of the statement of claim which technically still stand and those based on breaches of contract and the like where proof of damage is not required to perfect a cause of action could theoretically be maintained. However there would be no practical purpose in so doing so for this reason it would be pointless to perpetuate the claim. In addition although there was apparent compliance with the terms of the order the reality is that there was non-compliance in respects which were crucial so that in my judgment if one looks beyond the apparent form and at the true substance of the new pleading it is plain that it does not comply with the order so the sanction provided in it applies. Permission to serve the substituted statement of claim is refused; the defendant is entitled to the other orders for which it applied and it has permission to enter judgment with costs."

29. The judge recorded in a postscript that after he had completed his judgment on 31 August 1999 he had received a letter from Mr Basten's solicitors enclosing a 67-page modified form of the substituted statement of claim and additions to the Scott Schedule. He said he had not taken them into account as he had refused the claimant permission to submit such modifications. He said that if he had he would have had to hear the defendant on many of the changes, so that once again there would be delay to the resolution of the case. He concluded:

"At first sight however they do not all meet the criticisms which I have upheld, eg the codes inserted into the Scott Schedule do not state which term of the software licence agreement was broken."

The application to extend time for permission to appeal

30. In the notice seeking permission to appeal, an extension of time is sought for permission to appeal against the order of 25 June. As no application was made for permission to appeal until 1 December 1999, the application was about 6 months out of time.
31. Order 59 rule 14 required that an application for an extension of time for appealing should set out the reasons why the application for permission to appeal was not made in time. If facts are relied on, then the application must be supported by an affidavit. In the present case, the application contained no reasons and there was no affidavit. The reason became clear from the submissions of Mr Wilson made in response to questions from the court. Mr Wilson did not seek to challenge any part of the judge's order of 25 June. He also accepted that the order made was a practical one and that there was no reason for seeking to have it altered or overturned. The pleading before the judge was in a mess and it needed to be sorted out. In fact, Mr Basten accepted the order and sought to comply with it.
32. There is in my view no reason for extending the time for appealing the order made on 25 June as an extension would serve no useful purpose. Any appeal would fail. The order made was correct, the pleading was in a mess and did not satisfy the rules of pleading. The judge was correct to order a substituted statement of claim and to put Mr Basten on terms as to time and result. I therefore would refuse the application to extend the time for appealing the order of 25 June.

The application for permission to appeal

33. Mr Wilson accepted that under CPR rule 3.4 the court had power to strike out a claim for failure to comply with a rule or court order. The crucial question before this court was, he submitted, whether the judge had exercised his discretion correctly when he struck out the claim as he did and in particular when he refused to grant the adjournment to put in a modified statement of claim.
34. Mr Wilson drew attention to the part of the judgment where the judge accepted that it could not be said that Mr Basten had no ground of claim nor that the claim did not have merit. He submitted that in such circumstances the overriding objective required the court to deal with the case justly. That, he submitted, required, first, the case to be dealt with and, secondly, that it should be dealt with justly. No dispute could possibly arise as to the second of those propositions. To support the first proposition he referred us to Osman v United Kingdom Case 87/1997/871/1083 and Tolstoy Miloslavski [1995] 20 ECHRR 442. In Osman the European Court on Human Rights held that the United Kingdom was in breach of Article 6 of the Convention by failing to provide a right for the claimant to present a claim against the police. That case has no relevance to the facts of this case, where the judge accepted for the purposes of his judgment that Mr Basten had a meritorious claim. He struck the claim out because Mr Basten had failed to plead his case as required by the order of 25 June and by the rules of the court. The order of 25 June was an order which had set out what the judge had held was necessary to comply with the relevant rules of procedure and to enable the case to be dealt with expeditiously and fairly.
35. In the present case there remained no dispute about Mr Basten's right of access to the court. His case was dismissed because he had more than once failed to plead his case in the way required and finally had not complied with the order of 25 June. That order provided within it the sanction for failure, namely that the statement of claim would be struck out and the defendant could have permission to enter into judgment against him.
36. Mr Wilson submitted that the judge had approached the exercise of his discretion upon a wrong basis. He drew to our attention the judgment of Evans-Lombe J in Arrow Nominees Inc v Blackledge, (unreported 2 November 1999). That judgment was concerned with an application to strike out a petition in a section 459 Companies Act case. In my view it does not throw light upon the principles to be applied in this case. However, the judge said this at page 24 of the report:

"In the light of this authority I conclude that it is not a proper exercise of the court's power under the rules or its inherent power to strike out a claimant's case where the claimant has been found to have been in contumacious breach of the rules or an order of the court or even is guilty of conduct amounting to a fraud on the court and so a gross contempt, if it can be shown that notwithstanding the claimant's conduct there is no substantial risk that a fair trial of his claim cannot follow. In my judgment the applicable rule is to be found in the judgment of Millett J in the Logicrose case. It does not seem to me that the decision of the Court of Appeal in the Jokai Tea case and the Landauer case bind me to a contrary view."

37. Founding himself upon that statement of law, Mr Wilson submitted that, as it had not been established that a trial could not be conducted fairly, the judge was wrong to strike out the statement of claim.
38. In my view that submission cannot be supported. That can be demonstrated by a question posed by Lord Justice Kay in argument. Suppose a case was not time sensitive because it would be decided on the documents, could the claimant continue year after year to fail to provide a suitable pleading? The answer is clearly no. Such a course would offend the overriding objects of the CPR and, potentially, the right of the defendant under Article 6 of the European Convention. The correct principles are those set out in the CPR. In that context it is important to bear in mind the judgment of Lord Woolf MR in Biguzzi v Rank Leisure Plc [1999] 1 WLR 1926 at page 1932D. The Master of the Rolls said:

"The courts have learned, 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 [1978] AC 297. 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 rule 1.1 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. . .

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 rule 3.4."

39. The Master of the Rolls went on to quote that rule and continued:

"Under rule 3.4(2)(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 have 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 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 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 on 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 . . ."

40. The judge's order of August 1999 was made after the introduction of the Civil Procedure Rules. Rule 3.4 enables the court to strike out a claim if there has been a failure to comply with a rule, a practice direction or a court order. Rule 3.5 enables a party to obtain judgment pursuant to an order which includes a term that the action be struck out if the order is not complied with. Under rule 3.6 a party whose claim has been struck out can apply to have it set aside. It states:

"3.6(1) A party against whom the court has entered judgment under rule 3.5 may apply to the court to set the judgment aside.

(2) An application under paragraph (1) must be made not more than 14 days after the judgment has been served on the party making the application.

(3) If the right to enter judgment had not arisen at the time when judgment was entered, the court must set aside the judgment.

(4) If the application to set aside is made for any other reason, rule 3.9 (relief from sanctions) shall apply."

41. Rule 3.9 states:

"3.9(1) On an application for relief from any sanction imposed for a failure to comply with any 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 the 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.

(2) An application for relief must be supported by evidence."

42. Even though it is arguable that rule 3.9 did not apply in this case, the relevant considerations are, I believe, those set out in this rule. In essence, Mr Basten was seeking to obtain an extension of time when he made his application for adjournment to put his pleading in order. Thereby he was seeking to avoid the sanction imposed by the order of 25 June.
43. Mr Wilson submitted that the substituted statement of claim that had been served in July was a genuine attempt to comply with the June order in circumstances where the pleading had stood for many years without a suggestion that it should be struck out. Although there were defects, they were not, he submitted, as bad as had been suggested by Mr Henderson. He submitted that in those circumstances it was unreasonable for the judge to refuse a seven-day extension of time for a further pleading to be served, particularly as Mr Basten's claim had merit and the strike out would have a disastrous effect upon him. He also submitted that the judge had failed to realise that the claim was relatively simple and that the gravamen of the case was that the Visula system never provided an adequate service. He had also failed to consider the matters set out in rule 3.9. The judge, he submitted, had confined his judgment to considering whether the substituted statement of claim complied with the June order.
44. Mr Henderson submitted that the judge had in his mind that he was exercising a discretion under the CPR. He drew to our attention passages in the judgment which, he submitted, showed that that submission was correct. The judge had before him a case which had been started in 1988, and a statement of claim produced in July 1999 that did not plead the claim in a manner which enabled the issues to be defined so that the case could move to trial with a defence pleading to it. The trial had been fixed for 11 January, to last six weeks, on the basis that the statement of claim would properly plead Mr Basten's case. No doubt the adjournment sought was only seven days, but it was a request made during the vacation when the judge was sitting as vacation judge. Any fresh substituted statement of claim would have to be considered by the defendant and the matter then relisted for hearing. That being so, he submitted, the six-week trial could not come on for hearing until 11 January with resulting prejudice to the defendant and misuse of the court's resources.
45. Before continuing with Mr Henderson's submissions, I break off to deal with the question as to whether the trial date fixed for 11 January would have to have been vacated. Mr Wilson submitted that that was not necessarily so. He said that in this particular case the adjournment was only for seven days and probably the modified statement of claim would meet all the defendant's objections. In those circumstances the defendant could proceed relatively quickly thereafter with the case coming on for hearing on 11 January.
46. I cannot accept that submission. It is unreal. Although we have not looked in any great detail at the modified statement of claim, it is quite clear from the parts we have looked at that there would be formidable objections to it. Whether or not those objections would succeed I do not know. I anticipate that the adjourned hearing would not have come back before the court before October, and in those circumstances it would have been inevitable that the 11 January date would have had to have been vacated to make proper use of the court's resources.
47. Mr Henderson took us through each of the circumstances listed in rule 3.9. He submitted that the judge had had in mind in June the administration of justice when he took control of the action and required the substituted statement of claim. The request for adjournment would have resulted in delay, which he submitted was the enemy of justice. He drew to our attention omissions in the pleadings to support a submission that the failure to comply with the June order was deliberate. He submitted that the omissions were clear. Despite the detail of Mr Henderson's submission I am minded to accept the submission of Mr Wilson in that respect, namely that they were due to an oversight.
48. Mr Henderson went on to submit that there was no good explanation for not complying with the order in June. Even if the pleading had seriously attempted to comply with the order that, he submitted, was not an explanation. He also explained the consequences of the failure upon his clients, namely adjournment of the trial, irrevocable extra costs and, if the modified substituted statement of claim was anything to go by, difficulty in dealing with a new case involving seeking evidence as to what happened in 1986 or 1987 from parties which there had been no need to contact.
49. Mr Henderson took us to the pleading and drew our attention to the way the allegations of misrepresentation and intimidation had changed from the first edition to the modified form supplied in August 1999. He also spent time putting forward formidable submissions as to the deficiencies of the modified form of statement of claim.
50. I do not believe it right that we should get involved in the modified form of the statement of claim which was sent to the judge on 31 August 1999. At the moment the judge has not dealt with it, and it would not be right for us to form any concluded view about it. However, Mr Wilson submitted that the proper administration of justice would not be dealt a blow if his client was enabled to put forward a further pleading. Even if the case would have to stand out for about a year, that, when weighed against the prejudice to his client balanced against that to the defendant, the scales came down heavily in favour of the adjournment.
51. Against that background of the submissions I come to the judgment. It is important in this case to consider the way that the judge approached the exercise of his discretion. If he was clearly wrong in result, or was wrong in the approach he adopted, this court could interfere; otherwise, not so.
52. In paragraph 2 of his judgment of 31 August, the judge recalled the order of 25 June. He said:

"The orders were made with a view to the case being ready for trial in January 2000 and accordingly for that purpose even though in certain respects it had to point out the obvious, the order was intended to see whether the claimants could now present their case in a form which would readily lead to the defendant not only pleading to it but also in a way that it would result in the issues being clearly defined by having regard to the precision with which the claimants were to plead their case, and thus lead to the preparation of witness statements of fact and the completion of experts' reports within a reasonable time. It was contemplated that since the original Scott Schedule needed to be revised the defendant would also have to submit revisions on its part so that the witness statements and in turn the expert's reports would deal with the issues so defined. I took the view that, although time was tight, it was perfectly feasible to maintain the trial date provided that the claimant complied with the terms of the order."

53. The judge went on in paragraph 3 to set out the submissions of the defendant as to the principles of pleading. He set out this quotation from the judgment of Lord Woolf MR in Arbuthnot Latham Bank v Trafalgar Holdings Ltd [1998] 1 WLR 1426 at 1436E:

"Litigants and their legal advisers must therefore recognise that any delay which occurs from now on will be assessed not only from the point of view of the prejudice caused to the particular litigants whose case it is, but also in relation to the effect it can have on other litigants who are wishing to have their cases heard and the prejudice which is caused to the due administration of justice."

54. The judge went on in this way:

"These last references are relevant to cases in this court although in a slightly different way. Our listing system enables trial dates not only to be allocated at the outset of a case but also for the date which is the earliest practicable for the parties (a feature which is not as widely known as it ought to be). Delay which leads to a trial date being vacated may therefore mean the case has to be relisted as if it were a new case, although if it is a short case the delay may not be very great, and thus it will occupy a space which would have been allocated to another case which in turn will not be heard as early as it might have been, although the delay will be small. In addition another party or other parties who are or were ready for trial will thereby be prejudiced. Satellite litigation of the kind mentioned by Lord Woolf MR in Arbuthnot Latham can also affect other litigants in this court if the application is long enough that it has to be heard on a Friday. Thus this application would have tied up the court's resources for a day in the midst of the Michaelmass term had I not directed that it should be heard in the week when I was on call as a vacation judge. Racal emphasised that it did not wish the trial in January to be vacated; it was time that this long outstanding case was brought to a conclusion. That is a factor which requires to be taken into account."

55. The judge recorded in paragraph 4 that Mr Wilson and Mr Shipley, who appeared before him for Mr Basten, had not challenged the defendant's submissions on principle. He continued in paragraph 5 with the history of the matter and recalled the defendant's letter of 21 July which had set out 23 objections to the pleading then sought. In paragraph 6 he said:

"6. In approaching the defendant's application, it is uppermost in my mind that if it were to succeed it would have the effect of preventing the case from proceeding. The claimants suffered their primary losses in the mid 1980s until the first claimant went into liquidation. It cannot be said that there are no grounds for a claim or that it has no merit - paragraph 4 of the statement of claim summarises the main complaints. . . . With considerable reluctance in some instances and subject to exceptions in respect of the claim for intimidation I have thus assumed (but I have thus not decided) in the claimant's favour that the pleading discloses a cause of action recognised in English law."

56. The judge made it clear in paragraph 7 that his main task, as he saw it, was relatively limited; namely to decide whether the substituted statement of claim complied with the terms and purpose of the order that he had made on 25 June. He said this:

"In approaching the question of compliance with the order and the procedural rules, I bear firmly in mind that pleadings are not a game but a means to certain ends which here include whether the case will be ready for trial, given that discovery has taken place, that the claimant was told that he had one last chance to get his case in order, that he was given the time sought to do so and that he was given full advance warning over a month ago by the defendant of the respects in which the new statement of claim was deficient, and it was decided not to provide any further draft or pleading. This is therefore not an ordinary application to strike out as it results from an order previously made and an application that was adjourned to give the claimant a last opportunity. Whilst there is still discretion not to refuse permission for or not to strike out the new statement of claim or parts of it the room for its exercise is now limited."

57. The judge then considered the causes of action and the adequacy of the pleading and, in particular, whether they met the objectives set out in the 25 June order. He concluded that they did not.
58. I am of the view that the judgments of June and August must be considered together when deciding whether the judge's exercise of discretion was wrong or was exercised on wrong principles. They formed part of a case management decision taken in June with a view to a trial in January, starting on 11 January 2001.
59. In June 1999 the judge had before him a case started by writ in 1998 which was not ready for trial. The statement of claim did not properly plead Mr Basten's case. In the words of his counsel, it was a mess. The judge rightly decided to take a grip on the action. He accepted in paragraph 34, which I have read, that the underlying case had merit or should be assumed to have merit. However, he concluded that the statement of claim needed to plead with clarity and precision the relevant facts and matters. He therefore ordered that the claim which had been pleaded in the statement of claim, which he described as a shambles, to be substituted by a new document - see paragraph 41 of his judgment. In the interests of the administration of justice he gave directions to enable the case to be kept on course for 11 January 2000. To ensure that was done, he set 30 July as the last date for service of the substituted statement of claim which had to comply with the objectives that he had laid down. He concluded in paragraph 44 of his judgment that the existing pleading could not be tolerated and that was the reason for the order of 25 June.
60. In my view the order of 25 June cannot be faulted. Here was a very old case; the pleading was not in a form fit to be carried through to a trial, the trial date had been fixed for 11 January and it was quite contrary to the overall objectives of the administration of justice for that date to be vacated. In those circumstances the sanction that he imposed in the order of 25 June was appropriate, and the principles that he applied were correct and consistent with the Civil Procedure Rules.
61. When the matter returned in August, the judge came to the conclusion that his order had not been complied with. I believe that Mr Wilson accepted that in some respects it had not been complied with, although there had been a serious attempt, he submitted, to do so. His submission was that the deficiencies contained within it were due to an oversight. It was against that background that the judge had to decide whether to give Mr Basten another seven days to try to put his pleading in order.
62. The judge in his August judgment recalled that Mr Basten had been put upon notice that it was the last, or virtually the last, opportunity he would have to put his pleading in order. He also noted the purpose of making that order: firstly, that it was perfectly feasible for the pleading to be put in order; secondly, that it was only upon that basis that the trial date could be maintained and thus the overall objectives of the CPR achieved. The judge also had in mind the letter of 21 July which had set out 23 objections to the pleading and he clearly had in mind – and he used the word "uppermost" – that the effect of striking out the pleading and refusing the adjournment would be that Mr Basten would be prevented from proceeding with his case. He also had in mind, as he stated in paragraph 6 of that judgment, that he should assume that the cause of action had merit.
63. In my view, the decision by the judge to refuse the adjournment cannot be said to be clearly wrong or made upon wrong principles. He turned his mind in both his judgments to all the circumstances of the case. In particular, he took account of the overriding objectives of the CPR, how the failure arose, the explanation - or the lack of explanation - that Mr Wilson had given, and the prejudice to Mr Basten. As Lord Woolf MR pointed out in the Biguzzi case, the keeping of timing became under the CPR more important than before. Here Mr Basten had ample time and opportunity put his pleading in order, but he failed to do so, and he knew by the middle of the summer that there was a trial date on 11 January and that he was going to have a final, or virtually final, chance to put it right.
64. In my view this is a case where the discretion of the judge was exercised upon the right principles. In those circumstances I believe it would be wrong to interfere with that exercise of the discretion, and I therefore would refuse permission to appeal.
65. LORD JUSTICE MUMMERY: I agree. The order made by the judge, pursuant to the judgment given by him on 31 August 1999, is of the most drastic kind in the interlocutory armoury. It terminates the proceedings and deprives the claimant of the right to trial of a case in which a very substantial sum is claimed. Further, it is a case that has already survived one trip through this court to the House of Lords and back to the Technology and Construction Court. That excursion concerned the right of the personal claimant to sue in the capacity of assignee of causes of action from the corporate claimant.
66. It is, however, clear from the Civil Procedure Rules to which my Lord has referred that the judge had the power to make such a drastic order under CPR 3.4(2)(c). At one stage I thought that there might be something in the proposed appeal. The judge had, by the order following the judgment of 25 June, provided in paragraph 12 the sanction of striking out for failure to serve a substituted statement of case. The statement of case had to be served by 4.30 pm on 9 July 1999, and it had to be a document which met the specified objectives set out in paragraph 2 of the order. Paragraph 1 provided that the sanction for failure to comply with the order should be that the statement of case be struck out and that the defendant should have permission to enter the judgment against him.
67. In paragraph 32 of the judgment of 31 August, it was said by the judge that there had been non-compliance in crucial respects with the order "so the sanction provided in it applies."It might be argued, looking at that part of that paragraph alone, that the judge had misdirected himself to the extent of being unaware that he had a discretion in the matter. The passage, read on its own, could be interpreted as an indication that he had no option but to give effect to the sanction set out in paragraph 1 of the order of 25 June.
68. I am, however, satisfied by the very full argument of Mr Henderson QC on behalf of the respondent that that is not a correct reading of the judge's reasoning. If the two judgments of 25 June and 31 August are read together as one case management judgment, it is clear that the judge fully appreciated that he had a discretion not to strike out the statement of case for non-compliance with his order of 25 June, and that he had a discretion to grant an adjournment. He appreciated that he was not obliged automatically to give effect to the sanction specified in the 25 June order. Further, it is clear from reading the two judgments together that the judge correctly appreciated that the discretion which he had was to be exercised by having regard to all the relevant circumstances. CPR 3.9 gives some guidance (though it does not pretend to be exhaustive) as to the relevant circumstances to be borne in mind in a striking out situation. I am satisfied that the judge took into account all the relevant circumstances. It cannot be said that he failed to take into account relevant matters, and it certainly cannot be said that the result at which he arrived is plainly wrong.
69. My only other comment is on a point pressed at some length by Mr Wilson QC on behalf of the claimant, on article 6 of the Convention. In my view, his reliance on that provision was misconceived. Mr Wilson's argument was that the judge had not found as fact that a fair trial of this action was impossible, and that he should not therefore have struck out the pleading with the effect that there will be no trial at all, even though a fair one is possible. As pointed out by Lord Justice Kay more than once in argument, the right in article 6 is not simply to have a fair hearing; it is to have a fair hearing within a reasonable time. The defendant, as well as the claimant, has rights under the article. The defendant in this case certainly had a right to have this matter, which had started by action in 1988, brought to a trial within a reasonable time. That was the purpose behind the orders which the judge made, giving the claimants a last chance to get their case in order. They failed to take that chance. The judge was in those circumstances fully entitled to take the drastic action that he did.
70. For those reasons, and also for the fuller reasons given by my Lord, I would refuse permission to appeal.
71. LORD JUSTICE KAY: I agree with each of the judgments given by my Lords.
ORDER: Application for extension of time to appeal the order of 25 June refused. Application for permission to appeal order of 31 August refused. It is certified that it is just and equitable that the Legal Services Commission should pay the costs of these applications under section 11 of the Legal Aid Act 1998, with the liability of the appellant determined as nil. Detailed assessment of costs. (Order not part of approved judgment)