England and Wales Court of Appeal (Civil Division) Decisions

COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIGH COURT OF JUSTICE QUEENS BENCH DIVISION
Sharp J
HQ09X03540, HQ09X03541

		A2/2011/0044 Royal Courts of Justice Strand, London, WC2A 2LL TBA
		07/07/2011

Lord Justice Toulson:

1. These are appeals by the claimants in two libel actions against orders made by Sharp J under CPR 3.4(2)(e) striking out the actions for failure to comply with court orders. The judge heard argument on 14 October 2010 and announced her decision at the end of the hearing, but she gave her reasons in writing on 1 December 2010. Her judgment is reported at [2010] EWHC 3144 (QB).
2. No criticism is made of the judge's admirably careful and reasoned judgment on the material which was before her. The appeal is based on fresh evidence which the appellants seek to introduce in order to show that the fault in the conduct of the litigation lay entirely with their former solicitor, who not only failed to inform them but positively misled them about the true state of affairs in the action.
3. The judge concluded at [81]:

"In this case, the only rational conclusion to be drawn from the claimants' conduct of this litigation in my judgment is that they have lost interest in the litigation, and have no genuine desire to pursue it or to vindicate their reputation, and in that respect the continuation of these actions is an abuse."

4. The appellants make no criticism of the judge for coming to that conclusion, but they say that it was in fact wrong. They were unable to put the true position before the judge because they were unaware of the application which she was hearing.
5. The judge also held that even if the actions were not an abuse, the delay and its consequences were such that they ought still to be struck out. The judge referred in her judgment to CPR3.9, which lists a number of factors relevant to the imposition of any sanction for failure to comply with a court order. Those factors include "(f) whether the failure to comply was caused by the party or his legal representative". The judge did not take that factor into account because she was unaware of the facts set out in the fresh evidence.
6. The fresh evidence is credible and it would be unjust not to admit it. Accordingly this court must now make a fresh decision on all the material before it.
7. The claimant company runs an engineering business. It has manufacturing works in Wentworth Street, Ilkeston, Derbyshire. It manufactures and welds pipes for the gas industry. It is a family business. Mr Richard Hayden is the managing director and holds 90% of the company's shares. The other shares are held by his son.
8. In September 2006 the company put up or arranged for the putting up of an eight foot steel fence around a triangle of land which it planned to use for storage. The land is adjacent to a row of terraced houses in Wentworth Street, one of which is the home of Mrs Charlton, the defendant in one of the libel actions. (Mrs Charlton is a part time worker in a care home.) She and other residents felt strongly about what the company was doing.
9. On 21 September 2006 the matter was the lead story on the front page of the local newspaper, the Ilkeston Advertiser, under the headline "Land Fury". It reported:

"Tension flared last week when Rayden Engineering Limited, of Wentworth Street, Ilkeston, put up an 8ft steel palisade fencing around a piece of unregistered land they planned to use for storage.

But residents whose homes back onto the triangular-shaped plot say it has left them feeling claustrophobic and angry after they spent the weekend marking the boundaries of the unregistered land they wanted to claim.

Diane Charlton, of Wentworth Street, said: "I actually feel like I'm in prison, we're absolutely closed in."

…

Residents overlooking it spent the weekend recreating the borders of their own properties and putting up bunting until a small fence could be erected.

They claim they had plans to create a pathway and plant trees – but contractors soon moved in to put up security fencing."

10. Mr Hayden was reported as saying that the land was part of a 4½ acre site which the company had bought nine years earlier. Mrs Charlton and others disputed that the plot formed part of the land in the company's ownership. She also claimed that the land was flood plain and that, by laying down a hard surface, the company had altered the natural drainage route for surface water and had raised the level of the ground above that of neighbouring properties, so increasing the flood risk to neighbours.
11. In June 2007 fifteen properties on the side of Wentworth Street adjacent to the disputed land suffered flooding. There was an issue, about which I need say no more, as to whether the flooding was a consequence of what had been done to the land by the company. There was also a planning argument. (At some stage the company obtained retrospective planning permission in respect of its use of the land.)
12. In March 2008 Mrs Charlton launched a website www.councilanddeveloper.net on which she set out her complaints in vivid and unrestrained style. She also registered two other web domains named after the claimant company, with links to the first website. She was forced to close down the two websites with the names resembling the company by Nominet, the internet registry for UK domain names.
13. The defendant in the other libel action, Mr Carver, is retired and lives in London. He has no personal involvement in the dispute but he runs a website at www.name-n-shame.co.uk, whose purpose is to see that those who may have dealings with companies which he regards as disreputable should be made aware of their activities. In March 2008 he created a link between www.councilanddeveloper.net and his website so that material published by Mrs Charlton appeared on it.
14. The libel actions were begun on 6 August 2009. The limitation period for libel is twelve months. The particulars of claim in the two actions related to the publication or continued publication of material on Mrs Charlton's and Mr Carver's websites from September 2008.
15. The particulars of claim against Mrs Charlton included claims for an injunction and aggravated damages, as well as a claim for special damages incurred by the company in pursuing its Nominet application in 2008.
16. The following extract from the websites gives a flavour of the allegations made by Mrs Charlton:

"MR HAYDEN TOOK FLOOD LAND THAT DID NOT BELONG TO HIM

MR HAYDEN DEVELOPED THAT FLOOD LAND AGAINST OFFICIAL ADVICE

MR HAYDEN HAD PRIOR KNOWLEDGE THAT THE DEVELOPMENT WOULD INCREASE FLOOD RISK

MR HAYDEN WAS DIRECTLY RESPONSIBLE FOR THE FLOODING OF 15 NEIGHBOURING HOMES

MR HAYDEN HAS DONE NOTHING TO ALLEVIATE THIS INCREASED FLOOD RISK TO OUR HOMES

MR HAYDEN HAS SUBJECT(sic) HIS NEIGHBOURS TO A SUSTAINED CAMPAIGN OF HARASSMENT

MR HAYDEN CANNOT KEEP TAKING THINGS THAT DOES NOT BELONG TO HIM AND RESORTING TO BULLYING, HARASSMENT AND DECEPTION IN WHICH TO ACHIEVE THEM"

17. Mrs Charlton and Mr Carver have represented themselves throughout the litigation.
18. On 2 September 2009 the defendants served defences pleading justification. On 25 September 2009 they served their allocation questionnaires in which they indicated willingness to mediate. On 29 September 2009 Master Kay made an unless order in the Charlton action directing that the claimants' allocation questionnaire be filed in seven days or the action be dismissed. On the same day the claimants served their allocation questionnaire, rejecting the suggestion of mediation.
19. On 7 October 2009 Master Kay ordered the Charlton action to be stayed until 4 December 2009 to permit mediation, failing which he directed there should be standard disclosure by 18 December 2009, inspection by 16 January 2010 and a case management conference on 25 January 2010. On 28 October 2009 similar directions were given in the Carver action. On 14 December 2009 the claimants served lengthy requests for further information. On 17 December 2009 the defendants complied with the disclosure orders.
20. The hearing of the case management conference took place on 25 January 2010. At that stage the claimants were in breach of the previous orders in various ways, including failure to give disclosure. Master Leslie ordered the defendants to answer certain of the claimants' requests by 12 February 2010, which they did by serving amended defences on that day. The master also set a revised timetable. The claimants were ordered to serve replies by 5 March 2010 and to give disclosure by 26 March 2010. They did neither. On 10 March 2010 Master Leslie extended time for replies to 19 March 2010. He also made consequential variations to the timetable previously set. The claimants did none of the things which they should have done. They did not serve a copy of the order on the defendants, they did not provide replies and they did not give disclosure of documents.
21. On 26 May 2010 Mrs Charlton made an application for an unless order to compel compliance with the court's earlier directions. The application was heard by Judge Mackie QC on 10 June 2010. He set a new timetable. This included setting a trial window of November 2010 to January 2011 with an estimated hearing length of 10 days. He ordered the claimants to apply by 10 July 2010 for the case to be listed as a fixture within the trial window. The judge also made a modest costs order in favour of the defendants.
22. The claimants failed to comply with Judge Mackie's order. They did not give disclosure or inspection. They did not pay the costs ordered by the judge. In Sharp J's words "there was yet again complete radio silence". Mrs Charlton ultimately had to apply for enforcement by the bailiffs.
23. On 22 August 2010 Mrs Charlton issued an application for further unless orders. The application, together with an earlier application for a jury trial, came before Sharp J on 14 October 2010. Having reviewed the lamentable history, she decided that the just and proper course was to strike out both claims.
24. Mr Hayden in his witness statement says that he knew nothing of the hearing before Judge Mackie until in August the bailiffs arrived to enforce the costs order made by the judge. This caused him serious concern. He phoned his former solicitor but did not receive any satisfactory response. On 2 September 2010 Mr Hayden sent him an email complaining about his failure to answer his questions and saying:

"I find this whole scenario very unsatisfactory for more than one reason, i.e.:

1. during the course of our telecom on 29 July I asked you how the defamation case with Charlton was progressing and if you needed me to do anything imminently as I would be away for a weeks holiday from Saturday; and you said "everything is going OK, I thinks its simply the case that Mrs Charlton is adamant she's going to have her day in court,

2. this conversation took place at a time when you were aware of the fiasco leading up to the high court writ,

3. I have absolutely no idea where we are with the defamation case,

4. I don't know what to expect next,

5. I am concerned that you will suddenly heap another bundle of time bound questions/clarifications on me and demand an immediate response (as you have in the past) at a time when I am absolutely flat out managing Rayden Engineering Limited.

6. I have still not had a detailed account of the events which led up to the high court writ being served on both my company and myself on the 6^th August,

7. to date, Rayden Engineering Limited has expended near on £100,000 on this distasteful saga.

Can I please have your response to the above mentioned at your earliest opportunity."

25. Mr Hayden received no reply, despite reminders sent on 21 September, 2 October and 5 November 2010. By 5 November 2010 Sharp J had announced her decision to strike out the actions, but the claimants were still not informed of the hearing or the result. The first that they learned of the matter was when Mr Hayden was contacted by the press after the judge delivered her written judgment on 1 December 2010.
26. In the light of that correspondence I accept that the judge, through no fault of her own, was incorrect in thinking that the claimants had lost interest in the action.
27. The question for this court is whether the actions should now be allowed to continue, applying the overriding objectives set out in CPR 1.1 and taking into account the various factors specifically identified in CPR 3.9 as relevant when considering the appropriate sanction for failure to comply with court orders.
28. The fundamental objective of the rules is that cases should be dealt with justly. CPR 1.1(2) states that this includes:

"…so far as is practicable –

(a) ensuring that the parties are on an equal footing;

(b) saving expense;

(c) dealing with a case in ways which are proportionate –

(i) to the amount of money involved;

(ii) to the importance of the case;

(iii) to the complexity of the issues; and

(iv) to the financial position of each party;

(d) ensuring that it is dealt with expeditiously and fairly; and

(e) allotting to it an appropriate share of the court's resources, while taking into account the need to allot resources to other cases."

29. It is not practicable in this case to ensure that the parties are in all respects on an equal footing, because financially their circumstances are very different.
30. I am most surprised that the claimants should have been charged £100,000 for the work done in relation to the litigation. I assume that this must include a good deal other than the costs of the libel actions themselves. Nevertheless it is substantial litigation. A litigant who has to conduct such litigation without being able to afford legal assistance should not be exposed to the burden of the litigation for longer than is reasonable. There is also the general public interest in ensuring that litigation is conducted in a proper and timely fashion. Sharp J made an additional point in relation to the nature of the actions, ie libel, and the effect on freedom of speech:

"81. …the limitation period for libel actions is one year. Parties who start libel actions are expected to get on with them…

82. …whether a defendant is a journalist, or person such as Mrs Charlton, who wishes to speak her mind about an issue which arises almost literally on her doorstep, there are important article 10 considerations so it seems to me, which arise when actions for libel are brought and not progressed, in particular when the power and resources of the parties are so different, and where the fact of being sued at all is a serious interference with freedom of expression…"

31. Those are proper considerations.
32. As to the importance of the case, Sullivan LJ observed in argument that local disputes between residents and businesses about land use and environmental matters often excite high feelings and the use of intemperate language. On the other hand, the defendants have made express allegations not only about matters of land ownership, planning and the environment, but have included allegations of lying, bullying and harassment.
33. I have no reason to doubt the genuineness of the claimants' belief that the perpetuation of the allegations against them has been damaging to their reputation, although common sense would suggest that the likelihood of continuing damage from what is essentially a local neighbour dispute is in the nature of things a diminishing risk as the story becomes staler.
34. Although the defendants do not accept that the claimants have demonstrated that their failure to comply with the court's orders was due to the fault of their former solicitor rather than their personal fault, I see no reason to disbelieve Mr Hayden's account, which is corroborated by the correspondence, including a letter from the firm of solicitors who have taken over the practice of which the claimant's solicitor was formerly a partner. He has no continuing association with the firm, but the letter admits that he failed properly to communicate with the claimants and indeed misled them. The fact that the non-compliance with the court's orders was not due to the personal fault of the claimants is, as already mentioned, a factor to be taken into account: CPR 3.9(1)(f). Other circumstances identified in CPR 3.9(1) include "(i) the effect which the granting of relief would have on each party". To that must obviously be added the converse – i.e. the effect which not granting relief would have on each party.
35. Whether the actions are reinstated or not, it is inescapable that one or other party is bound to suffer some prejudice. Justice requires the court to weigh the prejudice on each side.
36. The main prejudice to the claimants if the actions are not restored is that, through no personal fault, they will have been deprived of the opportunity of obtaining a judgment establishing that the allegations made against them are false. Whether or not any monetary claim would be worthwhile, they would have the prospect of obtaining an injunction, which Ms Rogers QC submitted would be of real value. First, she submitted, the court should not assume that the defendants would break it. Secondly, she submitted that in any event the grant of an injunction would of itself be valuable in rebutting the potential ill-effects of the publicity on the claimants' business reputation. Ms Rogers further submitted that the delay has not been such as to prejudice the possibility of a fair trial. (I should make it clear that Ms Rogers and the claimants' present solicitors were not instructed until after the claimants learned in December 2010 that the actions had been struck out.)
37. These points are valid and have considerable force.
38. Ms Rogers also submitted that there is every likelihood that the defendants will continue to make the same allegations against the claimants. I will come back to that matter.
39. What will be the extent of the prejudice to the defendants if the actions are restored? Here it is necessary to consider the effect which the litigation has already had on them. It is clear from Sharp J's judgment that this factor weighed heavily with her. She said:

"69. In her oral submissions Mrs Charlton said the strain of the litigation and of the claimants conduct of the litigation, on both her and Mr Carver, as litigants in person, had been terrible. Her house was knee-deep in files. She said for years now she had had no family life and had not been able to spend any quality time with her husband, who was recovering from a severe illness. She said she needed to see an end to this and some light at the end of the tunnel…

75. In my view, the following factors are of particular importance in this case… Sixth, the significant prejudicial and oppressive effect that the claimants' conduct of the litigation has had on the defendants, who as litigants in person have been placed in the position where it is they who have had to struggle to progress the actions brought against them.

76. As to the last point, I refer to Mrs Charlton's submissions which I have set out at paragraph 69 above and which I accept. The burden and strain that had been placed on both defendants by the claimants' conduct was apparent to me at the hearing. Mrs Charlton in particular was extremely distressed by the behaviour of the claimants…"

40. The underlying dispute has been running now for nearly five years, since the claimants enclosed the triangle of land. The nucleolus of Mrs Charlton's complaints was contained in publication made long ago. The claimants did not issue proceedings until August 2009, in respect of the publication in September 2008 for matters which have been said earlier. That litigation took the course decided above. The judge's orders provided the defendants with "light at the end of the tunnel" for which they were asking.
41. It is also relevant to bear in mind that we are concerned with litigation for which Parliament has deliberately set a short limitation period. I have already referred to Sharp J's observations in paragraphs 81 and 82 of her judgment. Rightly or wrongly, Mrs Charlton feels passionately about what the claimants have done. The claimants say correctly that her right to freedom of speech does not entitle her to defame them. Nevertheless for a defendant whose right to speak her mind about matters of direct and close personal interest to her is under challenge, the unnecessary and unreasonable protraction of the proceedings and resulting extended uncertainty is itself a significant form of prejudice.
42. This leads me to another consideration. If the appeals are dismissed, the claimants will have the opportunity of some redress against their former solicitor. I recognise that a negligence claim against his firm is a far from perfect remedy, because it is not the equivalent of a judgment declaring that the defendants' allegations are false, but it at least some remedy. If the actions are restored, the defendants will have no remedy against the prejudice which they have already suffered in the two respects which I have identified, namely, the burden and strain of conducting the litigation and the prolongation of the uncertainty of the litigation in a matter affecting their freedom of speech. They have no right to claim compensation for these matters from the claimants' former solicitor, nor can they be adequately compensated by an award of costs.
43. The impact of the uncompensatable prejudice to the defendants should not be under estimated. In this case there is a striking inequality of arms between the parties. That does not entitle the defendants to libel the claimants, but it is relevant when considering the prejudice caused by the protracted nature of the litigation, which at the outset the impecunious defendants had signalled a willingness to try to avoid by mediation. For what may have been perfectly understandable reasons, the financially stronger claimants were not willing at that stage to consider mediation. The resulting burden on Mrs Charlton, in particular, has been substantial. She cannot afford to hire a solicitor, let alone a QC.
44. I return to the subject of the future. Ms Rogers submitted that it is clear that the defendants intend to continue to defame the claimants. For that reason there will be prejudice to the claimants if they are not allowed to continue with this action in order to prevent future wrong doing.
45. Ms Rogers also submitted that if the defendants maintain what is on their websites, there will be a fresh act of publication whenever there is a website hit, with the consequence that the claimants will inevitably bring fresh proceedings, as it is said that they will be entitled to do on the basis of fresh publication of the same material under the multiple publication rule.
46. Logically, the two submissions are alternatives. If the second limb is right, it undermines the prejudice advanced under the first limb. I suspect that the claimants are far from sure what would be the legal position if the defendants were not to put any more defamatory material on their websites but merely left the websites in their present state. There was some discussion but no detailed argument (quite properly) about whether in that situation any fresh action by the claimants would be liable to be struck out as an abuse of process.
47. Ms Rogers did, however, rightly accept that to advance the argument that the claimants were likely to have a future cause of action, from continued publication, as a ground for not striking out the claims based on the claimants' alleged past causes of action, would run counter to the approach of Sharp J in paragraphs 81-82 of her judgment (referred to in paragraph 30 above), and she submitted that in that respect the judge's approach was wrong. I do not agree. As I have indicated, in my view the judge's approach in paragraphs 81-82 was proper.
48. In any event, I am not persuaded of the factual premise to Ms Rogers's argument. If the appeals are dismissed, it is not at all clear whether the defendants will be likely to maintain their websites in their current form (or, for that matter, how many hits there are likely to be if they do). Ms Rogers drew the court's attention to a letter from the claimants' new solicitors dated 21 December 2010, in which they proposed dropping the present litigation in return for the defendants agreeing to remove the relevant material from their websites and agreeing not to publish such allegations in future. Mrs Charlton replied rejecting the proposal, which she interpreted as requiring her to "give a legally binding undertaking not to impart any further information in connection with your clients in the future". In her oral submissions Mrs Charlton said a number of things. She said that she had no desire to maintain her website; that if she won the appeal and was paid her costs, she would take the statements off the website, but she did not want to be bullied into doing so; that she had made her point; and that she was fed up with having to come to court. However, she also made statements about her future intention being conditional on the complainants not "harassing me".
49. For the purposes of deciding the present appeals, I do not think that it is right, necessary or indeed possible to second guess what will happen in the future or to investigate questions of law which might arise in the future. Not only have we heard no detailed legal argument on such hypothetical legal questions, but they may well be fact dependant.
50. Taking into account the entire history of the claims and the factors which I have mentioned, I consider that overall the less unfair result will be for this litigation to remain dismissed. I would therefore dismiss the appeals.
51. As a postscript, it is plain that the parties have a deep distrust of one another. However, Mrs Charlton made an obviously true statement when she said, about the future, that she and the claimants are never going to like each other, but it should be possible for them to get along together. This litigation has been a wretched experience for all parties. The claimants have incurred a lot of expense for no benefit. The fact they seem to have a good chance of recovering their financial losses is a palliative but nothing more. For the defendants it has been a most unpleasant and stressful time. The last thing that either party can want is more litigation. As Mrs Charlton said, she has had enough of going to court. It ought to be possible at this stage to negotiate a truce. I suspect that it is not going to be sensible for either party to demand undertakings from the other, given their mutual distrust, but it is equally clear that both parties have a wish to put the past behind them and a mutual interest in doing so. I would urge them to seek mediation, and the court can provide them with assistance in that direction if they would wish it.

Lord Justice Sullivan:

52. I agree that the appeal should be dismissed for the reasons given by Toulson LJ.

Lord Justice Pill:

53. I agree. This is a dispute between two determined people, Mr Richard Hayden and Mrs Dianne Charlton, who clash as neighbours because the claimants' intention to use land for industrial purposes clashes with the enjoyment of Mrs Charlton's land for residential purposes. This is not an unusual situation but has in this case led to litigation which both parties say they do not want. Mr Carver, the other defendant, perseveres, as I see it, only with the intention of assisting Mrs Charlton.
54. Efforts were made by the court at the hearing to bring things to an end. Toulson LJ has described events. Provided the appeal is dismissed with costs persistence in the existing publications will end, Mrs Charlton says, provided the harassment of her ends but she sought to remain the judge of what amounts to harassment. The court was, of course, unable to make a detailed enquiry into what is and what is not in the circumstances harassment and still less to make directions regulating the activities of either party.
55. I have mentioned the future first to make clear to the parties that they should make every effort, as Toulson LJ has said, to settle their differences and not to trouble themselves or the courts with them. Neither party is likely to persuade the other to be a good neighbour, or to cease to be a neighbour, but it is much to be hoped that they can manage to live as neighbours with a minimum of friction.
56. As to the claimants' appeal, I agree with the conclusion of Toulson LJ, and for the reasons he gives. Assuming, for present purposes, that the repeated breaches of court orders were the responsibility not of the claimants but of their then solicitor, it would not be appropriate for the defendants, litigants in person who have conducted the court proceedings in an exemplary manner throughout, to face a re-opened claim. Moreover, the claimants did not make a claim for a considerable time after the alleged cause of action arose. Mr Hayden accepted that he himself was responsible for a delay of almost a month (19 March-13 April 2010) in supplying the solicitor with documents. The claimants did pursue development, at least in one respect, without planning permission. The conduct of the claimants on particular occasions, alleged by Mrs Charlton to have occurred, is now well in the past.
57. Of course, I understand the claimants' continuing wish to vindicate their reputations against the allegations made, and particularly the more general allegations. The publications continue. However, as Sullivan LJ explained in the course of the hearing, strong feelings and strongly expressed views are a not uncommon feature of planning disputes and disputes of this kind.
58. In the circumstances, I would expect the claimants to be cautious about bringing a fresh claim. Issues as to curtailing the scope of the claims and as to abuse of process may arise as they did, for example, in Kaschke v Osler [2010] EWHC 1075 and Kaschke v Gray [2010] EWHC 1907. Article 6 considerations have been raised at Strasbourg in relation to libel proceedings (Peniazek v Poland [2004] ECHR 62179/00) (criminal libel) and other cases. These cases were not cited during the hearing of the appeal, and rightly so.
59. Equally, if her wish to be free of litigation is genuine, I would expect Mrs Charlton to be cautious about publishing fresh allegations, and even further publishing existing material, which may encourage further litigation. Mrs Charlton and Mr Carver should also be conscious of the costs they would probably incur if unsuccessful in defending a claim.
60. I agree that the appeal should be dismissed.