England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
MR JUSTICE ROTH

[2009] EWHC 3610 (Ch)

		Royal Courts of Justice Strand, London, WC2A 2LL
		18/05/2011

Lord Justice Lloyd:

1. This appeal is brought against an order of Mr Justice Roth made on 14 December 2009 by which he declined to relieve the Claimant of the sanction of the striking out of his claim which had been imposed by an order of Deputy Master Mark dated 18 September 2008 (as subsequently varied). It is said on behalf of the Claimant that the judge misdirected himself as to the principles applicable to the Claimant's application. Permission to appeal was given, on a limited basis, by Lord Justice Rimer.
2. The Claimant, as appellant, was represented before us by Mr John Wardell Q.C., instructed by Davenport Lyons, solicitors, whereas before the judge he was represented by other Leading Counsel on a direct access basis. The Defendants, respondents to the appeal, were represented before us, as they had been below, by Mr James Gibbons, instructed by Fuglers, solicitors. Mr Wardell, whose submissions (like those of Mr Gibbons) were well-directed and pertinent, assisted the court in a way in which, it has to be said, Roth J does not seem to have been helped by Counsel then appearing for the Claimant.
3. The issue as it stood before the judge arose from a long and somewhat complex procedural history. I have to describe it in order that the question on the appeal can be properly understood and assessed.
4. The Claimant issued the Claim Form on 12 August 2005 against the seven Defendants, claiming sums by way of commission said to have been due to him under an oral agreement with the Seventh Defendant, governing their business relationship which lasted from 1989 to 2003, in the course of which he claimed to have acted as sales manager. The Seventh Defendant is said to be the chairman and principal shareholder of the six companies which are the other Defendants. The Claimant claimed to be the key employee in the sales and marketing of the Defendants' projects with authority to initiate and close multi-million pound deals. He claimed to be entitled to be paid a commission of 10% of all net profits generated by the business activities of the Defendants. He said that he estimated the Defendants' relevant profits to have amounted to £40 million, and he sought an order for appropriate accounts and enquiries, and payment of the sums found to be due to him on those accounts and enquiries.
5. The Defendants' position was that the Claimant had worked for the Seventh Defendant from 1989 until 1992, and then for the Second Defendant, until he resigned in 2003. His job had been limited to administrative and personal assistant type tasks, and he had not had any function as sales manager or any sales-related role for any of the Defendants. His remuneration had been a salary of £26,000, paid to him by monthly instalments. He was not entitled to any commission, and had never been paid any. In addition a plea of limitation was relied on for any payments said to have fallen due more than 6 years before the issue of the Claim Form.
6. It was also said that the Seventh Defendant had made a number of loans to the Claimant to help him out from time to time, as well as a number of gifts. The Defendants made a Part 20 claim against the Claimant for repayment of the amount of those loans, and also for sums said to have been received by him for and on behalf of the Third Defendant and the Seventh Defendant and not accounted for or paid over by him.
7. The Claimant joined issue with all of this, and set up a far from compelling plea of concealment to defeat the limitation defence.
8. The case was at one stage listed for trial with a hearing date of 22 October 2007. Issues to be determined at that trial had been identified in the course of 2006 and standard disclosure had been given on both sides. The trial date went off, however, and a long history of procedural steps ensued, with resulting delays.
9. To explain this later history I must start by going back to 22 March 2007, when the Claimant issued an application notice seeking additional specific disclosure from the Defendants. That application came before Deputy Master Bartlett on 30 and 31 August 2007; he dismissed the application and ordered the Claimant to pay the costs of the application by 12 October 2007, which he assessed summarily at £16,807. I will call that the Bartlett order
10. On 20 September 2007 the Claimant appealed against that order. He also applied for a stay of the order to pay the costs pending his application for permission to appeal. Lindsay J refused that application on 9 October 2007, on the basis that the evidence before him did not justify the grant of the stay. On 11 October Lindsay J acceded to the Defendants' application to vacate the trial date because of the pending appeal, against the Claimant's opposition. The judge also ordered the Claimant to pay the Defendants' costs, with £9,500 payable on account of those costs. He extended to 19 October the date by which the Claimant must pay the costs under the Bartlett order, or apply for a further extension of the time to pay. By then, therefore, the Claimant was subject to two immediate quantified costs liabilities: £16,807 under the Bartlett order and £9,500 ordered by Lindsay J.
11. On 17 October 2007 the Claimant issued an application for a further extension of time for payment of the costs under the Bartlett order.
12. On 24 January 2008 Lindsay J refused the Claimant permission to appeal against his refusal in October 2007 to stay the Bartlett order as to costs. On the following day Master Bragge made an unless order as regards the £9,500, the Claimant to be debarred if he did not pay those costs by 22 February 2008. On 7 February 2008 the Claimant was also ordered to pay a further £9,000 by way of the costs of the application for that unless order. On 22 February he duly paid the two sums of £9,000 and £9,500.
13. On 12 March 2008 Henderson J granted the Claimant permission to appeal on a limited basis against the refusal of the order for specific disclosure.
14. On 22 April 2008 Master Bragge adjourned the Claimant's application for an extension of the time within which to pay the sum of £16,807 by way of costs, so that the Claimant could file further evidence in support of his application. He did file such evidence in May 2008, as well as evidence in reply in September 2008 to that filed for the Defendants. The application was at one stage due to be heard on 29 July 2008 but it was adjourned because the Claimant's Counsel was not available on that date.
15. Eventually the application came on before Deputy Master Mark on 18 September 2008. He dismissed the application, and in addition he made an unless order, so that if the costs (and interest) were not paid by 16 October 2008, the Claimant's claim and his defence to the Part 20 claim would both be struck out and he would be debarred from defending the Part 20 claim. In addition the Deputy Master ordered the Claimant to pay the costs of the application by 2 October 2008, assessed at £9,500. The Claimant appealed against that order, which I will call the Mark order. He did not pay the costs or interest by the due date. On 3 November 2008 he also issued an application to be relieved from the sanction of striking out under the Mark order.
16. The papers include a note of the judgment given by Deputy Master Mark. He is recorded as referring to the evidence of the Claimant's means as disclosing substantial debts, some of them perhaps secured on his flat, said by the Defendants to be worth around £700,000. He said that there had been no explanation of why, given that the Claimant could pay the £18,500 that he did pay in February 2008, he could not pay the £16,807 ordered to be paid in October 2007. The source of the £18,500 had not been disclosed. The Deputy Master is recorded as having said: "I am not satisfied from the evidence that he has been unable to make this payment. It appears on the balance of probabilities that he could have made it earlier this year. It is remarkable that someone who could not make the payment could afford Leading and Junior Counsel. … I am not satisfied that the Claimant would be prevented from continuing the action if ordered to pay the costs."
17. On 5 and 8 December 2008 Mr David Donaldson Q.C., sitting as a Deputy High Court Judge, heard several appeals and applications, including the Claimant's appeals against the Bartlett order and the Mark order. He dismissed the appeal against the Bartlett order, for which permission had been granted by Henderson J. As regards the Mark order, he granted permission to appeal, and allowed the appeal but only to the extent of qualifying the debarring sanction imposed by the unless order so that it should not preclude the Appellant from pursuing a second appeal against the Bartlett order. He imposed a proviso that no judgment should be entered against the Claimant pursuant to the Mark order until the determination of the appeal against the Bartlett order. His order did not affect the substance of the Mark order. He did, on the other hand, impose an equivalent proviso on the effect of the order as so varied pending any application for permission to appeal, and any eventual appeal, against his own order. He did not deal with the separate application by the Claimant for relief against the debarring sanction, perhaps on the basis that by (in substance) dismissing the appeal, he had dealt with that aspect of the case.
18. Thus, by that stage the Claimant had been ordered to pay, and had paid, £18,500 of costs under the orders of Lindsay J and Master Bragge. But he had also been ordered to pay, and had not paid, £16,807 of costs by the Bartlett order made in August 2007 which, by the Mark order, had become an unless order requiring payment by 16 October 2008. Thus, the claim would have been struck out and he would have been debarred from defending the Part 20 claim, but for the suspensive effect, pending appeal, of Mr Donaldson's order. In addition, he had been ordered to pay £9,500 by way of costs under the Mark order itself, but without a debarring sanction. This remained outstanding.
19. On 19 December 2008 the Claimant issued an Appellant's Notice seeking permission to appeal against Mr Donaldson's order and on 23 December he issued a further application for relief against the striking out and debarring sanction under the Mark order, in case the appeal were unsuccessful. The latter application was adjourned on 15 January 2009, by consent, to await the outcome of the application for permission to appeal.
20. That application was decided against the Claimant by Etherton LJ at a hearing on 9 September 2009. The Claimant then paid the costs ordered by the Bartlett order, with interest, by two instalments on 17 September and 9 October 2009. At the time the Claimant said he had raised this from family members.
21. On 30 November 2009 the Claimant restored his application for relief against sanctions, by then his one remaining hope of keeping his claim, and the defence to the Part 20 claim, alive. That was the application that came before Roth J on 14 December 2009, who was then assisting with the applications list of that day.
22. It is fair to say, as Mr Wardell put it to us, that the tactics adopted by the Claimant on advice from the summer of 2007 onwards had had a disastrous outcome. He had lost his trial date on October 2007, and had failed to obtain the additional disclosure, the pursuit of which had been the reason for the loss of the trial date; he had had to pay £18,500 of costs in February 2008, under the compulsion of an unless order, and he had paid the £16,807 under the Bartlett order, with interest, by October 2009, again under such a sanction, but far too late to avoid incurring the consequences of the sanction, so that he was still at mercy, and had to invoke the court's discretion to relieve him from the effect of the sanction.
23. It is also necessary to refer to what had been said (and also what had not been said) in evidence on his behalf on relevant points in the course of this history. Rule 3.9(2) requires an application for relief under the rule to be supported by evidence. Accordingly the application must be determined by reference to the matters which are in the evidence, and not to things which are not in evidence, unless they are not in dispute.
24. On 21 April 2008, in support of his application, then to be heard by Master Bragge, for an extension of time for payment of the £16,807, the Claimant made a first witness statement. He said that he had commenced a restaurant business in February 2008, and he gave figures for his personal expenses and the expenses of running the business, amounting to £18,500 (for a period which was not specified) and income figures of £19,700 for February and March 2008 together. The personal expenses included a payment identified as "Mortgage (Halifax)" and the business expenses included "Loan instalments" said to be on a loan of £200,000 from HSBC. He said: "in these circumstances I am unable to pay the costs order at present". In his further witness statement made on 8 May 2008 he exhibited various documents, which were said to show "the complete accounts profile of the Claimant", and he referred to having raised money from friends and relatives, and to having remortgaged the matrimonial home in order to finance the business. I have referred at paragraph [16] above to the Deputy Master's comments on the effect of that evidence.
25. On 2 November 2008 the Claimant made a further witness statement to support the application for relief against sanctions which came before Mr Donaldson. This referred specifically to the points enumerated in CPR rule 3.9. When he issued his new application for relief in December 2008 he made a further witness statement dated 23 December 2008. In turn he made a yet further witness statement dated 13 December 2009 on the eve of the hearing before Roth J. The latter two were those principally referred to at the hearing before the judge, of which we have a transcript. I therefore concentrate on those.
26. In the witness statement dated 23 December 2008, the Claimant referred in terms to the factors set out in CPR rule 3.9, and organised his statement by reference to those factors. It is fair to say that the statement has a good deal of argument and submission in it, in addition to some factual statements. The more relevant statements were as follows.
27. Under the heading whether the failure to comply was intentional, he said it was not intentional - it was simply beyond his means to pay. He said "I appreciate that the Deputy Master made a finding against me in this regard and I have tried to follow his holding but have been unable to obtain funds to pay the Costs Order." He exhibited various bank statements and said, among other things, that he could only afford to engage Counsel because they had been very patient with him as regards payment of their fees. He said that he was prepared to offer to pay the costs by instalments from his takings every month so as to comply with the order, even though he could not really afford this. He had borrowed money to pay the costs which he did pay in 2008, but had not been able to borrow more to pay the other costs liability.
28. He asserted that his failure to pay had had no prejudicial effect on the Seventh Defendant, other than his not receiving that money, because he is wealthy. He would not be prejudiced in the conduct of the case if relief against the sanction were given. Not granting relief, however, would have a devastating effect on the Claimant himself, because he would be unable to pursue his claim for commission.
29. A witness statement was put in for the Defendants in opposition to the application. It took a number of points as to whether the Claimant really was as short of funds as he claimed to be. It did not assert any prejudice to the Defendants if the relief were granted.
30. The Claimant's last witness statement gave further evidence as to his inability to pay. Speaking of the period in 2008 when the unless order was made he said that he did not have money to pay "and as is well known borrowing became impossible in the autumn of 2008". He went on: "In the end I had to beg and borrow in order to pay the Defendants which I have now done."
31. A bundle of papers was put before the judge, including those which had been before Mr Donaldson. In practice he was not able to consider the supporting material except insofar as it was referred to during the hearing before him. The case had been listed before the applications judge, Mr Justice Sales, but was transferred to Mr Justice Roth to be heard in the latter part of the afternoon. It was opened by Counsel then appearing for the Claimant. He made a number of statements to the judge which went beyond what was in the evidence, for example that the Claimant had paid the sum due under the Bartlett order, in the end, by drawing on money that he puts away every month to pay rent. The judge made the point that the first witness statement stated the position as it was at the end of 2008, but the second witness statement did not say anything about what had been happening since then, and there was nothing in the evidence about any efforts to pay between January and September 2009. He returned to that point later, and Counsel accepted that there was no evidence as to why what was paid in September could not have been paid earlier in the year.
32. The application, originally made in December 2008, had been adjourned pending the appeal, which finally failed on 9 September 2009, and was restored on 30 November 2009, as I have mentioned. The judge asked why this had not happened sooner. Counsel said that he took the view that the payments had to be made in full first, but that was done by 9 October. It remained unclear why the case had not been restored earlier than on 30 November 2009. As to that Counsel accepted that there was some delay, but submitted that there was no prejudice to the Defendants who had been prepared to wait. From there he went on to submit that there was no prejudice to the Defendants generally if the relief were granted.
33. Mr Gibbons, in the course of his submissions for the Defendants, did not seek to persuade the judge that his clients had suffered any particular prejudice. The judge commented, during those submissions, that although the Claimant's conduct had been deeply unattractive, tending to do everything at the last minute, nevertheless "one has to balance that when one is considering what is, here, effectively an entry of judgment against him". Mr Gibbons referred the judge to Stolzenberg v CIBC Mellon Trust Co Ltd [2004] EWCA Civ 827 and took him, in particular, to paragraph 153, which includes a citation from an earlier case Woodhouse v Consignia which I set out at paragraph [47] below, to paragraph 155 (see paragraph [49] below), to paragraph 161 (dealing with article 6) and lastly to paragraph 167 (see paragraph [50] below).
34. In reply, the Claimant's Counsel sought to deal with the judge's concern at the absence of explanation as to why the costs were not paid earlier by reiterating that the Claimant is not wealthy and does not have access to money easily. He referred to the Claimant's house having been remortgaged for loans to his business. That prompted the judge again to ask where the evidence was of the mortgage. In fact there was reference to this in the bundle for the court, in one of the early witness statements to which I have referred at paragraph [24] above, but the judge had not been taken to these, nor was Counsel able to show it to the judge. Near to the very end of his submissions Counsel put the case for the Claimant quite neatly in these terms:

"In my submission, if one stands back, as one is supposed to, and looks at this case and says: "Well, actually my client will have to pay £300,000 [said to be the estimated amount of the Defendants' costs of the proceedings as a whole] without having the merits decided", the other side have pointed to no prejudice really except the costs, some of which they have recovered. At the end of the day, my Lord, my submission is that the balance is in favour of my client. If this is a balancing exercise the behaviour of my client has not been perfect in any sense. He has not complied on occasions – we say not intentionally. At the end of the day the balance is in his favour."

35. The judge gave a short unreserved judgment. He referred to Stolzenberg. In a comment shortly after having completed giving judgment, during the argument about the terms of the order, he said this:

"I should have said that in the light of the lateness of the hour I am not delivering a fuller judgment analysing each of the points set out in Stolzenberg. I referred to it compendiously, but I shall add the comment in case this matter should go further."

36. In his judgment itself he reviewed the history of the case up to the point of the application for relief which was before him. At paragraph 8 he referred in general terms to CPR rule 3.9, to the obligation on the court to consider all the circumstances and the nine particular factors listed in the rule, and to the obligation to support such an application with evidence.
37. At paragraph 9 he referred to some of the particular factors. He said that the application had not been made promptly because, though made earlier, it had not been restored until the end of November 2009, after the sanction had bitten in mid-October. But he said that he did not regard that as of particular significance.
38. Much more significant was whether there was a good explanation for the failure to comply with the order for payment and whether that failure was intentional, as explained in the evidence. As to that he said the evidence was woefully inadequate, all the more surprisingly in the light of Deputy Master Mark's comments as to the inadequacy of the evidence before him. The judge said that the first witness statement in support of the application, made in December 2008, referred to various financial obligations and, apparently in relation to the Claimant's property, a loan arrangement with HSBC. Counsel had told him that there was a mortgage but this was not referred to in either of the witness statements. (That is correct, though there had been a reference to it, as I have mentioned, in one of the Claimant's early witness statements, which, despite its having been in the bundle before the judge, the judge had not been shown.)
39. Then the judge referred to there being a letter on the court file which mentioned that the Claimant was travelling abroad in January 2009 to try to raise funds to pay the costs orders, but he said there was no evidence in the later witness statement as to what efforts were made, what happened and why the money was not raised. He commented on how quickly the money was paid when it had to be in the end, after the failure of the appeal. No doubt that was due to Counsel's advice. But the judge said that that did not begin to explain why no part of that sum had been paid at any earlier date.
40. At paragraph 12 the judge came to the central part of the judgment. He said this:

"However, in looking at the general interests of the administration of justice there must be concern that the repeated leaving of matters to the last minute, as evident in the preparation by the claimant of the application before me, and that this longstanding claim, based on an oral agreement of 1989, would now have a very late trial. Nonetheless, there is always a difficulty for the court where the costs that are outstanding, despite delays and breaches of its orders, have in the end been paid and the consequence of the sanction is that the claimant would be shut out from having a trial on the merits. Unsurprisingly, that is a matter that [Counsel] emphasises. I, of course, bear that in mind and appreciate the effect that this will have if the sanction remains on Mr Khatib's claim. However, he is the claimant. In my judgment, where an "unless" order is made it places a particular imperative upon a party to obey. If they do not obey and cannot properly explain their non-compliance, they bring the result upon themselves, as Lord Justice Ward observed in Hi-Tec Ltd v Coventry City Council [1997] 1 WLR 1666 at 1667:

"If a party intentionally or deliberately flouts the order he can expect no mercy"."

41. After a reference to Stolzenberg, the judge went on at paragraph 13:

"In my judgment, it cannot simply be said that because the claimant is prevented from having a trial of his claim on the merits and the costs have, very belatedly, been paid, any non-compliance with an "unless" order must therefore be outweighed by his own interests."

42. He then said that he had had regard to the "very helpful discussion of the legal principles relevant to CPR rule 3.9" beginning at paragraph 153 of the judgment in Stolzenberg. He said that he had not found the case entirely easy to resolve. In the end he decided that the circumstances did not justify relieving the claimant of the sanction of striking out his claim, but that it would be right to allow him to defend the Part 20 claim, despite his breaches of the court's previous orders.
43. In his grounds of appeal as permitted by Rimer LJ, Mr Wardell took the following points: (1) The judge was wrong to hold that the Claimant had deliberately flouted a court order and could expect no mercy. (2) The judge was wrong to treat the factors set out in rule 3.9 as matters to which he could have regard instead of matters which he was required to consider. (3) The judge failed to consider each of the factors set out in rule 3.9, identifying five points in particular. (4) If the judge had had regard to each of the rule 3.9 factors and had stood back to form a judgment as to whether the grant of relief was consistent with the overriding objective, he would have concluded that relief should be granted.
44. The suggestion that the judge treated the Claimant as having deliberately flouted a court order arises from what he said at the end of paragraph 12 and his quotation from Ward LJ. It seems to me, however that the correct view of how the judge approached the Claimant's application is to be seen from the previous passage in his own words: "If they do not obey and cannot properly explain their non-compliance, they bring the result upon themselves". That is not quite the same as holding that the conduct was a deliberate flouting of the order, though the distinction may be rather fine. It is a comment more on the inadequacy of the Claimant's evidence than on the culpability of the Claimant's conduct. I will refer to this point further below, putting the relevant citation from Stolzenberg in its proper context.
45. I would also reject Mr Wardell's second complaint. The rule says that on an application of this kind "the court will consider all the circumstances including" the nine listed matters. I see no difference in substance between a judge "considering" the circumstances and "having regard" to them. They are, in substance, virtually interchangeable words in this context.
46. The main focus of Mr Wardell's argument turned, first, on the judge's failure to deal with each of the rule 3.9 factors expressly, secondly on what were said to be errors in his treatment of some of those that he did mention, and thirdly on his failure to mention points which would have counted in favour of the Claimant's position.
47. In support of the first of those points, he relied on a passage in the judgment of Arden LJ in Stolzenberg at paragraph 153 where she cited from an earlier judgment of the court, given by Brooke LJ, in Woodhouse v Consignia [2002] EWCA Civ 275, [2002[ 1 WLR 2558, at paragraph 33:

"The circumstances in which a court may be asked to make a decision of this kind are infinitely varied. This is why the rule instructs the court to consider all the circumstances of the particular case, including the nine listed items. On the other hand, the rule would lose much of its praiseworthy purpose of encouraging structured decision-making if courts did not consciously go through the exercise of considering all the items on the list when determining how, on balance, it should exercise its discretion. Provided it does so, and in this way ensures that the risk of omitting any material consideration is minimised, it is most unlikely that an appeal court will interfere with its decision. If it fails to do so, an appeal court may not be able to detect that it has taken all material matters into account, and it may be obliged to exercise its discretion afresh for this reason."

48. She also cited this passage in a judgment of Mance LJ in Hansom and others v Makin and Wright [2003] EWCA Civ 1801 at paragraph 20:

"at the end of the day, the right approach is to stand back and assess the significance and weight of all relevant circumstances overall, rather than to engage in some form of 'head-counting' of circumstances."

49. She summarised the position in her paragraph 155 as follows:

"The dictum of Mance LJ makes it clear that although the court must go through each of the matters in the list in CPR 3.9 as a separate and distinct exercise the result is not ascertained by adding up the "score" of either side on each point. If that were the right method, there would be a danger of double-counting. The object of CPR 3.9 is to ensure that all the right questions are asked. That produces "structured decision-making". In addition to going through the subparagraphs of CPR 3.9, the court must ask itself if there are any other circumstances that need to be taken into account. However, having done all this, the court is then also required to stand back and form a judgment to the aggregate of the relevant circumstances that have been identified in going through the list to see whether it is in accordance with the overriding objective in the CPR to lift the sanction. This overall "look see" is simply the overriding objective in action."

50. I would also quote a passage from her paragraph 167, which includes the passage quoted by the judge at his paragraph 12, but sets the context out more fully:

"Moreover, compliance with orders of the court is not a question of judicial amour propre. It goes to the essence of the rule of law that parties subject to the court's jurisdiction … should comply with the court's orders. The gravity of the matter of non-compliance is plainly increased where the non-compliance results from a conscious decision, as in this case. It follows, as Ward LJ said in Hytec Ltd v Coventry City Council [1997] 1 WLR 1666 at 1674 to 1675, that "if a party intentionally or deliberately … flouts the order, he can expect no mercy." He has to persuade the court that in all the circumstances the injustice to him outweighs the interests of the administration of justice and the injury to the other party."

51. In that case it had been held by the judge at first instance that the decision not to comply with unless orders made against the appellant companies had been conscious and deliberate, as part of a tactical approach to a dispute about jurisdiction. No such element is present in this case. Here the issue is whether the Claimant had done all that he could reasonably be expected to have done in order to try to comply with the order for payment of the costs, and whether the evidence showed that he had done so. If he had not, or at any rate if it did not appear from the evidence that he had, then while the court might not assume that his failure was deliberate, in the same way as the failure had been in Stolzenberg, it might take the view that he had not tried hard enough, so that his conduct was, if not deliberate, at least culpable to some relevant degree.
52. Mr Wardell argued that, though the judge did not regard it as of much significance, he was wrong to regard the Claimant as not having issued his application promptly. He pointed to the fact that the first application for relief was issued shortly after the unless order had been made, which was prompt on any basis, and that when that application had not been dealt with by Mr Donaldson, a further application had been issued within a short time on 23 December 2008. He argued that delay after October 2009 was not relevant to CPR rule 3.9(1)(b) which refers to whether the application for relief has been made promptly. That submission is correct but unhelpful. Delay at the later stage, in late 2009, is plainly relevant as part of the circumstances generally. However, the judge did not attach weight to this point, so I will not spend more time on it.
53. Mr Wardell also argued that for the purpose of the factors relevant to non-compliance with the order, attention should be devoted only to the period in September and October 2008, when the unless order was made and not complied with. The further delay before the non-compliance was eventually made good was, he submitted, not to the point for the purposes of rule 3.9(1)(c) or (d). That is arguably (though not clearly) correct, but again the submission is beside the point. In relation to a non-compliance such as failure to pay by a given date, the continuance of the failure is plainly relevant as part of the circumstances overall, as is, of course, the fact that ultimately the failure was made good.
54. I cannot therefore accept those points of criticism of the judge's reasoning. However, Mr Wardell also contended that the judge had erred more substantially in not referring to the fact that the Defendants had not suffered any prejudice, other than delayed payment which was compensated for by interest, so that although the judge did recognise the major disadvantage that the Claimant would suffer if he did not obtain relief from the sanction, he did not show, at any rate, that he also recognised that there was nothing to put in the scales against that factor as regards prejudice to the Defendants, under rule 3.9(1)(i).
55. More generally, he pointed to the fact that the judge had not gone systematically through the terms of rule 3.9 (though he obviously had them in mind, from his reference at paragraph 8 and the references to Stolzenberg) and he did not stand back and take an overall view of the merits of the case. In both those respects, as well as in specific failures, Mr Wardell argued that the judge had failed in his duty to apply properly the terms of rule 3.9.
56. As the court recognised in Woodhouse v Consignia, quoted at paragraph [47] above, the circumstances in which a court has to apply rule 3.9 vary very greatly. It is one thing to consider such an application in a reserved judgment on appeal, as I am doing on this occasion and as Arden LJ did in Stolzenberg and the court in Woodhouse. It is quite another under the pressure of a hearing in the applications list in the Chancery Division or the Queen's Bench Division, or the equivalent in the county court, with other cases competing for the court's time, and often (as here) not quite enough time available for the hearing because of an unrealistic time estimate or inadequate preparation or both. It would be wrong for the Court of Appeal to lay down rules that are not reasonably practical in their application. Moreover, there is a risk of reproducing a situation described in paragraph 32 of the judgment in Woodhouse: "One of the great demerits of the former procedural regimes was that simple rules got barnacled with case-law."
57. Mr Justice Roth had seen the passage from Woodhouse v Consignia in the course of argument only shortly before he gave his judgment. He had also seen the comments by Mance LJ and Arden LJ about standing back at the end of the day to conduct the necessary balancing exercise. Counsel for the Claimant had referred, implicitly, to that task near the end of his submissions, in the passage quoted above at paragraph [34]. I cannot accept the proposition that, giving an extempore judgment immediately after the end of those submissions, the judge overlooked the need to have regard to all the circumstances of the case, and to such of the specific matters referred to in rule 3.9(1) as were relevant on the facts, or the need to conduct a balancing exercise looking at the matter as a whole in the light of the relevant circumstances. Mr Wardell invited us to hold that the judgment was flawed because the judge, giving judgment as and when he did, did not expressly go through a checklist of the successive elements in the rule and, as it were, tick off those that were relevant on the facts, assigning them to one side of the balance or the other as the case may be, nor did he expressly direct himself that, having done so in one way or another, he must stand back and review the case as a whole, nor set out the result of his assessment by way of express reasoning in his judgment.
58. What is clear enough from the judgment in the circumstances in which it was given is that the judge had had his attention drawn to the relevant rule, the principal relevant decided authority on the point, and all of those factual matters to which either party contended that he should have regard. I have commented on most of Mr Wardell's specific criticisms of what the judge said about the various relevant factors, and I do not need to repeat those comments. It is clear from what the judge said that he took into account those matters, which clearly were relevant, and did so, as I think, in an appropriate manner.
59. There is one criticism with which I have not yet dealt: the judge's failure to refer specifically to the absence of any prejudice to the Defendants. That argument needs to be seen in the context of the application, which was by the Claimant to be relieved from the sanction which had been imposed on him. The first of the relevant factors, for this purpose, was the effect on the Claimant of the sanction, if it stood, namely that his claim, which if valid was or might be for a large sum of money, would be dismissed, without a trial on the merits, and he would be liable for the Defendants' proper costs of the proceedings, which were said to be large, and for that matter he would also have to submit to judgment on the counterclaim without having the opportunity to defend that on its merits. It could not be suggested that the judge was not well aware of that, or of the corresponding advantage to the Defendants of having the claim dismissed without any further litigation process being required. Not only did he refer to the effect on the Claimant in terms, but he drew a material distinction, by his order, between dismissing the claim on the one hand, and preserving the Claimant's ability to resist the counterclaim, on the other. Nor did he overlook the fact that this was the price to be paid, so to speak, for the Claimant not having paid £16,807 of costs within a limited period, admittedly after it had been due for quite a long time, but in circumstances in which he had eventually paid the costs, together with interest on them, so that the point of the actual costs order had been achieved, albeit very belatedly. That default had subsisted for a long time but it had been brought to an end. That was to be put in the scales in favour of the Claimant, because it was clearly a severe sanction.
60. The judge also had to consider any other material circumstances that might count against the Claimant, to be weighed up against the harsh result for the Claimant of the imposition and maintenance of the sanction. These were to be assessed from the material shown to the judge. It does not assist the appellant to show that other points might have been made in his favour by reference to documents which were in the papers before the judge, but were not shown to him, for whatever reason.
61. The primary point on this side of the balance was the very protracted and inadequately explained delay in making the payment. If the Defendants had sought to say that they had suffered any additional prejudice, then clearly the judge would have needed to have mentioned that and taken it into account. In fact they did not. Therefore there was nothing to include in the list of material factors in this respect. I do not accept Mr Wardell's submission that it was obligatory for the judge to refer expressly to the fact that nothing was relied on by way of additional prejudice.
62. Mr Wardell also submitted that, because the judge preserved the Claimant's ability to resist the counterclaim, there would in any event be a trial, and that this subverted the judge's conclusion that the claim itself should not go to trial. As to that, the claim and the counterclaim did not arise out of the same facts. If they had done this might have been a cogent point. The scope of the trial on the counterclaim, if it were ever to take place, would be very much more limited than that on the claim itself. I therefore cannot accept that this is a valid reason for criticising the judge's order refusing relief against the sanction as regards the claim, though granting it in relation to the counterclaim.
63. Coming back to the more general submission of Mr Wardell which I described at paragraph [57] above, it seems to me that to hold that the judge's judgment was legally flawed in these circumstances, so that his exercise of the discretion under rule 3.9 should be set aside, would be to impose an unrealistic, inappropriate and unduly formalistic burden on those who have to determine applications under rule 3.9 at first instance, whether Judges, in the High Court or the County Court, or Masters or District Judges.
64. I accept, of course, that the judge has to be aware, and it has to be reasonably apparent that he is, of rule 3.9 and of the particular factors said on either side to be relevant, according to the evidence and the circumstances of the particular case. He must conduct an appropriate review and balancing exercise. In this case it is clear that the judge was aware of the relevant rule and the applicable principles. He referred to those factual matters which were said on either side to be relevant. It seems to me that there can be no real doubt that he applied his mind to those matters in accordance with the relevant principles, which were fresh in his mind. In those circumstances it seems to me that it would be wrong to insist on a more fully formulated judgment as the minimum required in order to demonstrate that the judge's task under rule 3.9 had been properly discharged.
65. Among other things an approach as exigent as that would tend to lead to one or other of at least two undesirable consequences, because more time would be required for a "proper" judgment to be delivered. One is that judgment would be reserved more frequently. Quite apart from adding unnecessarily and unreasonably to the burden of a first instance judge, that would lead to delay and additional cost for the parties. Alternatively, judges might be more demanding as regards the time allowed for a hearing. In the present case the judge made a number of eminently reasonable comments in the course of argument about the preparation of the case, in terms of what he had been supplied for pre-reading, and as to the time estimate for the hearing, and consequently on the appropriateness of listing the application for an ordinary place in the applications list. There was a degree of urgency to the application, but for a reason which could have been sorted out. The judge would have been justified in refusing to hear the case on that day and requiring it to be listed for a longer hearing time. That too would have led to undesirable delay and additional cost for the parties. Either way, too rigorous an approach to the manner in which a judge must express his reasoning in relation to an application under rule 3.9 seems to me to be undesirable in principle and unnecessary in practice.
66. As I have indicated, it seems to me that the judge did have in mind both the relevant legal principles and all the factual matters relied on by each party as being relevant to the exercise which he had to carry out. In my judgment it is apparent that he applied his mind correctly, according to the relevant principles, to the factual matters which he ought to have taken into account (or considered, or had regard to), and he came to a conclusion which cannot be shown to have been the result of a misdirection.
67. For those reasons, I would reject Mr Wardell's submissions on behalf of the Claimant and would dismiss the appeal.
68. We were told that the Defendants had, no doubt realistically, taken the view that it would not be sensible to pursue the Part 20 claim and that they would be willing to discontinue it, so long as there would be no order for the costs of the Part 20 claim. That seems on the face of it to be a good idea. If it can be agreed all well and good; if not, it may be that it can be dealt with as one of the matters consequential on the determination of the appeal.

Lord Justice Wilson

69. I agree.

Lord Justice Carnwath

70. I also agree.