England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM WANDSWORTH COUNTY COURT
(HER HONOUR JUDGE HALLON)

		Royal Courts of Justice Strand, London, WC2A 2LL
		12th November 2008

Lord Justice Lawrence Collins:

1. The defendant is the lessee of a flat, 64 Fairacres, Roehampton Lane, London, SW15, and of the garage there. The claimant is a company owned by the leaseholders of the block. The flat is a substantial one; this court was told that it is on the market for about £900,000. The claim by the claimant company is for arrears of service charge. The defendant has not paid the service charge since mid-2006, and the arrears currently stand at about £30,000. The defendant says that he has a setoff from damage allegedly caused by contractors working at the plant.
2. This case has a tangled procedural history and the defendant has caused his co-owners to incur very substantial costs in pursuing his contribution to the service charge. On 8 February 2007 the claimant commenced proceedings in the Wandsworth County Court for the recovery of the service charge arrears, which were then about £9,000. The defendant counterclaimed for damages, alleging that the claimant's contractors had negligently carried out works to the premises. On 4 May 2007 directions were given by District Judge Tilbury. He ordered that the matter be allocated to the multitrack, with the defendant to fully particularise his defence and counterclaim by 17 May. The parties were to give standard disclosure by exchange of lists of documents by 14 June, with inspection to take place within seven days thereafter, and each party was to serve on the other witness statements of evidence, with simultaneous exchange by no later than 12 July. The matter was to be listed for the first open date after 2 August. The trial date was then fixed for 8 August and notice of the trial date was sent also on 4 May.
3. The counterclaim was filed on 16 May. On 6 July the claimant filed and served the disclosure of documents form N265. On 9 July 2007 the defendant sent his form N265 to the claimant but he did not include Appendix A to the form, which would have been the actual list of documents. His covering letter said that all documents referred to in his list had been exhibited to his witness statement which was to be served a few days later on 12 July. On 11 July 2007 the claimant's solicitors acknowledged receipt of the form N265, but said on page 79 of the bundle:

"However, you have not enclosed Appendix A (your schedule of documents). Please forward the same …"

4. On 12 July the defendant served his witness statement and in a separate letter maintained his position that all documents were exhibited to his witness statement and that that was to be treated as his Appendix A. On 2 August 2007 the defendant applied to strike out the Particulars of Claim and to vacate the trial date on the basis that the claimant had not complied with the directions of District Judge Tilbury, but there was no suggestion that the service charges were not due, except as a result of the setoff claimed of about (at that time) £15,000.
5. On 8 August the defendant's application to strike out the Particulars of Claim was dismissed by HHJ Edwards of Brentford County Court, but he adjourned the trial date which had been set for that date due to late service of trial bundles by the claimant. He ordered the defendant to file and serve a list of documents in the form N265 by 15 August. A few days later, notice of a new trial date at Wandsworth County Court was given, and that was to be on 26 October. Upon a further failure by the defendant to serve a proper list, on 17 August the claimant's solicitors made a further request for the list, and said that, in default of receipt, they would apply for an order that the claim be struck out.
6. About three weeks later, on 6 September 2007, the claimant applied for an order that unless the defendant filed and served a proper appendix by 13 September he would be debarred from defending the claim and his current claim would be struck out. On 11 September District Judge Gittens made an order on paper that unless the defendant filed a list by 24 September 2007 he would be debarred from defending and the counterclaim would be struck out. Under the order the defendant had liberty to apply to set it aside.
7. On 21 September 2007 the defendant applied for the Unless Order to be set aside and the trial date vacated, pending his appeal to the High Court against HHJ Edwards' order of 8 August. That order, as I have said, was a dismissal of the defendant's application to strike out the Particulars of Claim. The ground for the application was that he had served his disclosure list on the claimant on 9 or 12 July 2007, and that meant that he had mentioned the documents in his witness statement. But he also attached a document entitled Appendix A to his application notice, which was in a form which I infer would have been satisfactory had it been served in time.
8. On 11 October the claimant's solicitors received notification from the court that the hearing of the application was to be on 15 October, and they wrote to the defendant to say that if his application was not withdrawn it would be opposed on the basis that his request for a stay for an adjournment had been refused, and the High Court had clearly indicated that the trial should proceed and that he had failed to serve the list of documents. They warned him that if he did not withdraw his application -- and it was necessary for them to attend court and his application was dismissed -- they would ask the court to order that he pay the legal costs.
9. On 15 October, the date of the hearing, Deputy District Judge Smart struck out the defendant's application of 21 September on the defendant not attending the hearing. On 17 October, according to an attendance note which was not before the judge but which was available to this court (and I add it is not necessary to decide whether it should be formally admitted), the defendant -- according to the claimant -- telephoned the claimant's solicitors and said that he had not received notification of the hearing because he had been away for a month. The trial date, as I have said, had already been set for October 26. The position as of that date was that, because of the debarring order, since September 24 the defence and counterclaim were to be treated as struck out and the claimant merely had to prove its case.
10. On the day before the hearing the defendant applied to set aside Deputy District Judge Smart's order of 15 October, which had struck out his application to set aside the Unless Order, and he applied to vacate the trial date, in each case on the basis that he had not received notice of the 15 October hearing date. He gave more than one ground for his contention that he had not received notice; he said that there had been a postal strike at the time and also that he had been away from the flat for two weeks. On 26 October HHJ Hallon dismissed the defendant's application and gave judgment for the claimant in the sum of about £9,500, and also awarded costs, which I understand to be by then in the region of about £25,000.
11. I turn to HHJ Hallon's judgment. What was before her was an application to set aside the order of 15 October and to accede to the application of 21 September, with the result that the defendant would not be debarred from defending or counterclaiming and there would be a yet further adjournment of the trial. She refused to set aside the order made on 15 October on the ground that proper notice of the hearing had been given to the defendant, and she decided that the order of 11 September -- the debarring order -- therefore stood. She said:

"8. Today, before me, the defendant says (through Mr Tawfik) that that reason why he did not attend the hearing on 15^th October was because he did not receive notice of that hearing and therefore he could not have attended. But what is plain is that notice of the hearing was sent out by the court. It was clearly received by the claimants, they knew of it and attended the hearing. In addition to that, the claimants sent a fax to a number, which had previously been supplied by the defendant, that fax being directed to the defendant. The letter which was sent was a covering letter with a statement of costs for the hearing on 15^th October and, indeed, referred specifically to the date and time of that hearing. In addition, the claimants sent an email, to the same effect, to Mr Tawfik. The reason why the claimants took the precaution of sending those two communications was because of a postal strike. In other words, the claimants, although it was not their obligation, since their notice is sent out by the court, did everything that they possibly could to ensure that the defendant knew about that date.

10. Essentially, what is being said by the defendant is that throughout that time, apparently throughout October, the defendant has not attended at the place where the fax machine is, the number of that fax machine being the number to which the claimants sent their letter giving notice of the 15^th October hearing, and that Mr Tawfick, to whom an email was sent, was out of the country. But the problem with that is that the defendant, and/or Mr Tawfick, had each put themselves in a position where communicating with them in a way in which would get to them, if they were at the relevant places, they have put themselves in the position of not being there, so that although the claimants have done everything they could, and the court did everything that it was supposed to do, to notify them, by their own actions they have apparently, from what they say, failed to obtain that notice. But service does not require, in this instance, personal service. That applies only to certain very specific kinds of orders and/or applications. Here, the court, perfectly properly, sent out the notice. The notice definitely got to the claimants, as I have already mentioned. As a sort of belt and braces exercise, the claimants, being aware of possible postal difficulties, did everything in their power, and if in fact the defendant had attended at the place where the fax number was, and if Mr Tawfick had not absented himself from the country, either or both of them would have been aware, through the claimants' own efforts, of the hearing date, but it was they who put themselves in a position where they could not receive those notifications. Therefore, to rely on that as being a reason to set aside the order of 15^th October is not, in my judgment, a valid basis upon which to proceed with such an application.

11. In those circumstances, the order of 11^th September stands, the application to set it aside was dismissed on 15^th October, the result of that is that the defendant is debarred from defending the claim and his counterclaim stands struck out. In the overall history of this, I should also deal with the fact that the application for permission to appeal the 8^th August order has also been disposed of by a High Court Judge, because on 5^th October, Eady J refused permission to appeal and said that it was appropriate now to concentrate on the trial and not waste time on unmeritorious applications to appeal."

The judge also rejected an argument that the trial date should be vacated because the defendant was also pursuing in the High Court an application to appeal from the order of 8 August, refusing to vacate that trial date because of the claimant's failure to comply with directions.

12. On 19 June I refused permission to the defendant to appeal, but it was granted by Stanley Burnton LJ on 8 August this year on the oral renewal. The appeal has been elaborately argued. It is not suggested by Mr Janusz on behalf of the defendant that he was not in default, and he no longer pursues the argument previously advanced that he had complied with the Unless Order by attaching the list of documents to his application on September 21. The main points made on his behalf are these. First, there had been no prejudice to the claimant. The coming into effect of the debarring order was based on an alleged default in relation to disclosure, which had been remedied in practice more than a month earlier, where copies of the documents required to be disclosed had all been sent to the claimant and where there was no suggestion that the default in question had caused any risk of prejudice, and where a fair trial of the defence and counterclaim was still possible. Second, the consequence was that the defendant was denied his right to a fair trial on the grounds of a fairly recent procedural default, which had been remedied, and which could not prevent a fair trial taking place, and in relation to which the defendant had acted promptly as far as seeking relief was concerned. Third, the defendant did not attend the hearing on 15 October because he was unaware of the hearing, and it is inconceivable that had he known of the hearing date he would not have attended. Fourth, basic considerations of fairness and justice dictate that if he had not been aware of that hearing, he should have been granted by the judge the opportunity to argue the merits of his application that the debarring order of 11 September should be set aside.
13. I come to my conclusions. This is a straightforward claim for service charges which has got out of hand. It is true that the failure to serve a proper list was somewhat technical in nature, but the whole conduct of the litigation and of at least two applications for adjournment of the trial date, and the defendant's unsuccessful attempts to strike out the claim, suggest that the defendant has been using the system to avoid payment of what is due. He failed to comply with three orders relating to service of a list of documents: the orders of District Judge Tilbury of 4 May 2007; of HH Judge Edwards on 8 August 2007; and District Judge Gittens on 11 September 2007. Mr Janusz accepts that his client was stubborn, but says that he was not contumacious. There can be no doubt that he failed to comply with the Unless Order of 11 September, simply because the list was not served by the date named in the order, namely 24 September; and attaching the list to the application of 21 September was plainly not compliance because it was not received by the claimant until well after.
14. I have come to the conclusion that there is no doubt that the exercise of discretion by the judge is not open to challenge on the conventional grounds. She found that proper notice had been given of the 15 October hearing and, given the history of the matter, she was justified in refusing to accede to the application. She did not expressly decide that there was actual notice, but I consider that it is implicit in her reasons that she considered that the defendant or his representative actually knew of the hearing. Common sense suggests that he did know, and it is reasonable to infer that he has been trying to string out the proceedings for as along as possible. Nor is there any basis, in my judgment, for the suggestion that the trial judge was wrong not to set aside the order of 11 September or to grant relief from the sanction imposed by the order under CPR 3.9. Not only was she not asked to exercise her discretion under CPR 3.9, but it seems to me that, even if she were wrong in not considering the checklist in CPR 3.9, the proper exercise of the discretion would have been to refuse relief in the circumstances of this case when the trial had already been adjourned once and she was met with yet another application for the trial date to be vacated by a litigant who had been in serial breach of orders of the court. I would therefore dismiss the appeal.

Lord Justice Goldring:

15. I agree.

Order: Appeal dismissed.