COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION (COMMERCIAL COURT)
(Mr. Justice Morison)
2004 Folio 374
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE KEENE
LORD JUSTICE MOORE-BICK
| MARCAN SHIPPING (LONDON) LIMITED
|- and -
|(1) GEORGE KEFALAS
(2) CANDIDA CORPORATION
WordWave International Ltd
A Merrill Communications Company
190 Fleet Street, London EC4A 2AG
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Mr. Graham Charkham (instructed by Thomas Cooper & Stibbard ) for the respondents
Hearing dates : 28th March 2007
Crown Copyright ©
Lord Justice Moore-Bick :
"the claimants' claim shall be dismissed and it is ordered and adjudged that the claimants pay the defendants' costs on an indemnity basis, such costs to be assessed if not agreed . . . "
Part 3 of the Civil Procedure Rules
"3.1 The court's general powers of management
(1) . . . . . .
(2) Except where these Rules provide otherwise, the court may –
(a) extend or shorten the time for compliance with any rule, practice direction or court order (even if an application for extension is made after the time for compliance has expired);
(3) . . . . . .
(b) specify the consequence of failure to comply with the order or a condition.
3.3 Court's power to make order of its own initiative
(1) Except where a rule or some other enactment provides otherwise, the court may exercise its powers on an application or of its own initiative.
. . . . . .
3.4 Power to strike out a statement of case
(1) . . . . . .
(2) The court may strike out a statement of case if it appears to the court
(a) . . . . . .(b) . . . . . .(c) that there has been a failure to comply with a rule, practice direction or court order.
3.5 Judgment without trial after striking out
(1) This rule applies where –
(a) the court makes an order which includes a term that the statement of case of a party shall be struck out if the party does not comply with the order; and(b) the party against whom the order was made does not comply with it.
(2) A party may obtain judgment with costs by filing a request for judgment if –
(a) the order referred to in paragraph (1)(a) relates to the whole of a statement of case; and(b) where the party wishing to obtain judgment is the claimant, the claim is for –(i) a specified amount of money;(ii) an amount of money to be decided by the court;(iii) delivery of goods where the claim form gives the defendant the alternative of paying their value; or(iv) any combination of these remedies.
(3) . . . . . .
(4) . . . . . .
(5) A party must make an application in accordance with Part 23 if he wishes to obtain judgment under this rule in a case to which paragraph (2) does not apply.
3.6 Setting aside judgment entered after striking out
(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.
. . . . . . . . . .
3.8 Sanctions have effect unless defaulting party obtains relief
(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 and obtains relief from the sanction.
. . . . . . . . .
3.9 Relief from sanctions
(1) On an application for relief from any sanction imposed for a failure to comply with any rules, 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 preaction protocol;(f) whether the failure to comply was caused by the party or his legal representative;(g) whether the trial date or the likely trial 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."
"I do not think that it would be right to drive a litigant from the judgment seat without a determination of the issues as a punishment for his conduct, however deplorable, unless there was a real risk that that conduct would render further conduct of the proceedings unsatisfactory. The court must always guard itself against the temptation of allowing its indignation to lead to a miscarriage of justice."
The effect of CPR Part 3
"where a rule, practice direction or order states 'shall be struck out or dismissed' or 'will be struck out or dismissed' this means that the striking out or dismissal will be automatic and that no further order of the court is required."
That is reflected in the following observations of Brooke L.J. in Sayers v Clarke Walker (Practice Note)  1 WLR 3095:
"The philosophy underpinning CPR Pt 3 is that rules, court orders and practice directions are there to be obeyed. If a sanction is imposed in the event of non-compliance, the defaulting party has to seek relief from the sanction on an application made under CPR 3.9, and in that event the court will consider all the matters listed in CPR 3.9, so far as relevant."
As a result a clear distinction is maintained in the CPR between the operation of the sanction and the exercise of the court's discretion to grant relief. That is reflected in the terms of rule 3.5(1) and (2) which allow a claimant to enter judgment without further order where the claim is for a sum of money or for the delivery of goods or payment of their value and the sanction is the striking out of the defence in its entirety.
The other case to which we were referred was Keen Phillips v Field  EWCA Civ 1524;  1 WLR 686. That case concerned a claim by a firm of accountants for outstanding fees in respect of which it sought summary judgment. The District Judge dismissed the application and on the claimant's application for permission to appeal the Circuit Judge directed that an approved transcript of the judgment be lodged with the court by 31st January 2006, failing which permission to appeal would be refused. Time for lodging the transcript was subsequently extended by a week, but in the event through no fault of the claimant it was lodged one day late (although still six days before the date fixed for the hearing). At the hearing of the appeal the judge further extended time for lodging the transcript, gave permission to appeal and allowed the appeal, giving judgment for the claimant. The defendant appealed on the grounds that the judge had no jurisdiction to extend time because the sanction had taken effect, there had been no application for relief, and the general power under rule 3.1(2)(a) to extend time was excluded by rule 3.8 which only allowed the court to grant relief if the party in default made an application for it. Jonathan Parker L.J., with whom I agreed, held that the court's power to extend time under rule 3.1(2)(a) and to act on its own initiative under rule 3.3(1) are not cut down by rule 3.8 so that the judge had jurisdiction to make the order extending time for lodging the transcript.
Application of the principles to the present case
Lord Justice Keene:
Lord Justice Pill:
a) the criminal conviction against the defendant, which formed the basis for the striking out claim and played an important part in events leading to the unless order, had been quashed, on a date between the judge's order and the hearing in this court.
b) The freezing order, which led to the order for disclosure of assets and the unless order, was made without notice and the judge refused to hear a properly made application to set it aside.
c) There was real doubt, the court held, as to what the defendant was required to do to comply with the disclosure obligations and there was no firm foundation for findings of continued contempt.
d) The defendant was not present, through no fault of his, at some of the hearings below.