England and Wales High Court (Commercial Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Rolls Building, Fetter Lane, London, EC4A 1NL
		6 February 2014

Mr Justice Hamblen :

Introduction

1. The First Defendant, Toba Trading FZC ("D1"), and the Third Defendant, Hossein Rahbarian ("D3"), apply for relief from sanctions under CPR 3.9 in respect of the order of Field J dated 15 November 2013 entering judgment against D1 and D3. D1 and D3 also seek to make a late amendment to their application to rely on CPR 3.1(7), which is opposed.
2. The effect of Field J's order was that:

(1) D1's defence and counterclaim in 2011 Folio 1213 ("Action 1213") was struck out and judgment entered against D1 for US$7,260,382;

(2) D1's defence and counterclaim in 2011 Folio 1214 ("Action 1214") was struck out and judgment entered against D1 for US$1,752,291;

(3) Judgment was entered against D3 in Action 1213 in the sum of US$7,260,382.

Factual Background

3. The Claimant, Newland Shipping and Forwarding Limited, supplied oil products to D1, which is an Iranian owned UAE company engaged in the business of trading oil and gasoline related products. D1 made certain advance payments but failed to pay the full amount due for the cargoes. The cargoes were sold elsewhere. A series of advance payments therefore built up which the parties agreed (by a contract dated 6 February 2011) would be deducted from sums due in respect of a series of five further cargoes, which in each case were to be delivered CFR Iranian Caspian Port.
4. The Second Defendant, Seyed Majed Taheri ("D2"), is said to be the commercial manager, shareholder and an (or the) alter ego of D1. D3 is said to be a board member, managing director and an (or the) alter ego of D1.
5. The Claimant's case is that, rather than waiting for reimbursement to be made in five stages as had been agreed, the Defendants resorted to stratagems to attempt to obtain the cargoes before payment. In the 1213 Action, D1 did obtain a cargo worth over $4 million formerly on board the vessel "TETI". The Defendants gave various reasons for delaying payment until the TETI finally put into port in Neka in Iran. Shortly afterwards, the cargo was arrested by the Iranian Courts in allegedly contrived proceedings between D1 and a company ("Chirreh"), which was (as is common ground) a company controlled by D3's sister.
6. In the 1214 Action, which relates to the delivery of cargo by rail, D1's alleged ruses to obtain the cargo without payment were unsuccessful, and the cargo was eventually sold elsewhere by C in a distressed sale. The claim in this action is only brought against D1.
7. The principal claim in the 1213 Action is for the purchase price of about US$4.5 million, and in the 1214 Action for the purchase price of about US$1 million, together in both actions with damages claims including (in the 1213 Action) a claim for conspiracy and conversion of the goods.
8. In both the 1213 and the 1214 Actions, D1 counterclaims for its advance payments of some US$3.6 million. There is an issue in respect of the counterclaims as to whether the 6 February 2011 contract was a compromise agreement which settled how D1 would recover the advance payments, and (if so) whether D1 (in concert with D2 and D3) acted in repudiatory breach of that agreement.

Procedural history

9. The Claim Forms in both Actions were issued on 12 October 2011.
10. The only claim initially advanced under the Claim Form in Action 1213 was a contractual claim for failure to pay the purchase price of US$4,534,120.48 and wrongful repudiation of the contract. The claim was only advanced against D1 as the counterparty under the Contract.
11. Following the order allowing service out of the jurisdiction, the Claimant served Particulars of Claim in Action 1213 dated 26 January 2012. These particulars alleged for the first time unlawful conspiracy and conversion.
12. On 14 May 2012, the Claimant sought to amend the Claim Form in Action 1213 to add D2 as a party to the contractual claim.
13. On 29 June 2012, the Claimant filed its application to amend.
14. On 18 July 2012, D1 and D2 applied to strike out the Claim Form and Particulars in Action 1213, alternatively for an order for summary judgment.
15. The Claimant's application dated 29 June 2012 and D1 and D2's application to strike out/summary judgment was due to be heard on 2 November 2012.
16. Shortly before the hearing on 23 October 2012, the Claimant wrote to D1/D2's solicitors, Stephenson Harwood LLP, requesting an adjournment of both applications as they wished to further amend their particulars and issue applications in relation to joinder and service. D1 and D2 agreed to the adjournment of both applications on that basis and a consent order was drawn up.
17. On 11 January 2013, a further application to re-amend the Particulars of Claim was served and add D3 together with various orders for alternative service.
18. On 8 February 2013, the Claimant's applications dated 29 June 2012, and 11 January 2013 to re-amend and the Defendants' application dated 18 July 2012 came before Cooke J on a CMC. Without prejudice to D1 and D2's application dated 18 July 2012, Cooke J gave permission to serve the amended claim form and amended Particulars of Claim in Action 1213 on D1, D2 and D3.
19. On 22 February 2013 a further short CMC took place before Cooke J. He ordered that the 1213 Action and the 1214 Action be heard together and at the same time. The two Actions were fixed for a 6 day trial commencing on 24 February 2014.
20. D1 and D2's application dated 18 July 2012 was listed for May 2013, but was adjourned by agreement because of ongoing settlement discussions. It was later re-listed for hearing in January 2014, but this was stood out following Field J's order.
21. D1/D2 (but not D3) had already applied for security for costs from the Claimant. The matter came before the Court on 26 July 2013. Popplewell J dismissed the application and gave directions down to trial. He gave the following directions "in respect of 2011 Folio 1213":

"(a) Standard disclosure is to be made by 20 September 2013, with inspection 7 days after notice.

(b) Signed witness statements of fact and hearsay notices in 2011 Folio 1213 are to be exchanged by no later than 25 October 2013."

22. There was no need to give directions in Action 1214 as disclosure had already taken place, witness statements had been exchanged and the action was ready for trial.
23. On 30 September 2013, following an agreed extension of 10 days, the parties exchanged disclosure lists. Separate lists of documents and disclosure statements were not provided by D1 and D2. Instead an allegedly deficient disclosure list was provided by Stephenson Harwood LLP (purportedly on behalf of D1 and D2, but contrary to E3.2 of the Admiralty and Commercial Court Guide which requires separate lists from each party). Inspection was provided on 13 October 2013.
24. Exchange of witness statements had been ordered to take place on 25 October 2013. On 24 October 2013, the Claimant's solicitors, Holman Fenwick & Willan LLP ("HFW"), received a letter from Stephenson Harwood LLP indicating that they were no longer acting for the Defendants, and asking that further communications be addressed to "Iranian legal counsel" at two yahoo email addresses that the letter provided. The letter from Stephenson Harwood LLP indicated that their former clients had asked them to pass on a request for an extension of time "for exchange of witness statements and regarding disclosure" of one month. HFW responded indicating that they did not agree to any extension and explained that the Claimant would be sending copies of its statements to Stephenson Harwood LLP to be held in escrow.
25. On 29 October 2013, the Claimant's application seeking judgment against the Defendants for non-compliance with the court's orders was served on Stephenson Harwood LLP. A copy was also sent to the two yahoo email addresses that Stephenson Harwood LLP had provided. The email serving the application informed the parties that HFW's clerk would be attending the listing office of the Commercial Court on the next day to fix a hearing. In the event, no representative of any of the other parties attended. On 1 November 2013, HFW therefore informed all relevant parties of listing arrangements for the hearing.
26. On 30 October 2013 D1 and D2 wrote to the court in the following terms, without copying in the Claimant or HFW:

"We regret to inform that our solicitor Mr Rovine Pradeep Chandrasekera of Messrs STEPHENSON HARWOOD LLP has caused us some difficulties whilst we do not deny that we had some financial disagreement with each other;

1) He informed us on Wednesday (23^rd Oct. 2013) that he had resigned; as a result we didn't have enough time to prepare our witness statement in the two remaining days considering the fact that we could not have any access to new and vital documents in the claimant's disclosure list.

2) He unreasonably refused to submit to us the relevant documents sent by Holman Fenwick Willan LLP during the process of disclosure and to prepare the witness statement to be exchanged on 25^th October 2013. Considering the foregoing and the remaining time, it has been impossible for the witness statement/s to be exchanged on time, pursuant to Court Order on 26^th July 2013; therefore we need more time to prepare the relevant witness statement .

3) We wrote to the claimant's attorney (via email) on 25^th Oct. 2013 regarding this situation and asked him to delay the exchange of the witness statement which was not accepted by him.

4) We asked for several times from our solicitor to request a 30-day adjournment following disclosure documents exchange for witness statement but he did not do so.

Finally, we request for a one-month adjournment (extension of time) in order to be able to submit the witness statement."

27. On 1 November 2013, an email was received from a Ms Farivar at one of the yahoo email addresses, which requested details of the hearing that would be taking place on 15 November 2013. HFW responded the following day cross-referring to the Claimant's application dated 29 October 2013, and noting that HFW would continue to update Ms Farivar of the time and exact location of the hearing as soon as these details were available.
28. D2 (Mr Taheri) then contacted the Claimant and requested permission to attend the hearing by video link, which the Claimant helped to facilitate. Although D1/D3 were copied into all of the correspondence with D2 relating to his request to attend by video link, no similar request was made by or on behalf of D1 or D3.
29. Also on 8 November 2013, HFW received from Stephenson Harwood LLP an order signed by Males J dated 4 November 2013. This confirmed that Stephenson Harwood LLP had ceased to act for the Defendants, but provided no alternative address for service.
30. Very shortly before the hearing before Field J an email was received from Ms Farivar on behalf of D1/D3 requesting that the hearing be adjourned due to difficulties in obtaining a visa. A similar request was made to the Court on 12 November 2013, but not copied to the Claimant or HFW. It stated that:

1. "We write to raise this fact that since our former solicitor, Stephenson Harwood LLP, ceased to act for us and an Order made by Males J on 4^th November for the removal of Stephenson Harwood LLP from the court record, it is practically impossible for us to represent ourselves in the court hearing listed for 15 Nov. 2013 or to engage a new solicitor to attend the said hearing on behalf of us having regard to the brief time remained. Considering this fact, we seek an adjournment of the above mentioned hearing for a proper time based on the court discretion.

2. As a sign of good faith and in order to not delay the court proceeding, we applied for UK visa to attend 15^th Nov. listed hearing; however, we have been unable to obtain the visa yet as it is a time-consuming process and British embassy is not active in Iran so we had to apply for visa through neighbouring countries.

3. As we mentioned in our Application for Adjournment of exchanging Witness Statements dated 30^th Oct. 2013, our former solicitor, Stephenson Harwood LLP, unreasonably refused to submit to us the relevant documents sent by Holman Fenwick Willan LLP during the process of disclosure so we were unable to prepare our witness statement on time. We arranged to collect the said documents from our former solicitor in order to make our witness statement. Therefore, the requested adjournment for exchanging Witness Statement is again sought based on the foregoing facts

4. The Original hard version of this Application shall be promptly dispatched to the court office via a first class courier (like DHL)."

31. On 13 November 2013 a letter was received from Andrew Smith J directing that the 15 November 2013 hearing would not be adjourned. This was responding to an adjournment request that had previously been made by D2, although since the letter is sent to the info@tobatrade.com address as well as to D2, it may also have been responding to (and rejecting) D1/D3's request for an adjournment.
32. The hearing went ahead before Field J on 15 November 2013. The Claimant's skeleton argument for the hearing has been provided, but there is no transcript of the hearing or of the ruling made. D2 attended the hearing by video link. D1 and D3 did not attend or appear at the hearing.
33. Field J made the orders against D1 and D3 summarised in paragraph 2 above. He made no such order against D2, although D2 was ordered to provide specific disclosure and it was ordered that if he failed to comply with the timetable set down the Claimant would have leave to apply for judgment.
34. It is unclear whether D2 immediately informed D1/D3 of the outcome of the proceedings. In any event, D1/D3 were served with a copy of the order on 20 November 2013. There was then a delay of a further month until the present application was issued on 19 December 2013. This was probably because of ongoing discussion about fees between D1/D3 and their former solicitors. It appears Stephenson Harwood LLP were not reinstructed until 27 November 2013, and were then not paid until 10 December 2013.

The relevant principles

CPR 3.1(7)

35. CPR 3.1(7) provides that:

"A power of the court under these Rules to make an order includes a power to vary or revoke the order."

36. The relevant authorities were considered by the Court of Appeal in Tibbles v SIG plc [2012] EWCA Civ 518 and conclusions to be drawn from the jurisprudence summarised by Rix LJ at [39]. He stated that although the rule is broadly drawn "considerations of finality, the undesirability of allowing litigants to have two bites at the cherry, and the need to avoid undermining the concept of appeal, all push towards a principled curtailment of an otherwise apparently open discretion". He explained that "the primary circumstances in which the discretion may, as a matter of principle, be appropriately exercised, namely normally only (a) where there has been a material change of circumstances since the order was made, or (b) where the facts on which the original decision was made were (innocently or otherwise) misstated", but warned against treating these primary circumstances as a statute.
37. In Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537; [2013] 6 Costs LR 1008 the Court of Appeal summarised what it described as the "Tibbles criteria" as follows at [44]:

"…The discretion might be appropriately exercised normally only (i) where there had been a material change of circumstances since the order was made; (ii) where the facts on which the original decision was made had been misstated; or (iii) where there had been a manifest mistake on the part of the judge in formulating the order. Moreover, as the court emphasised, the application must be made promptly..."

CPR 3.9

38. CPR 3.9(1) provides that:

"On an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need –

(a) for litigation to be conducted efficiently and at proportionate cost; and

(b) to enforce compliance with rules, practice directions and orders."

39. The leading authority is the Mitchell case. This requires a "robust" approach to be taken. As explained at [41], "the need to comply with rules, practice directions and court orders is essential if litigation is to be conducted in an efficient manner. If departures are tolerated, then the relaxed approach to civil litigation which the Jackson reforms were intended to change will continue".
40. Under CPR 3.9 the "paramount" considerations are now "the need (i) for litigation to be conducted efficiently and at proportionate cost and (ii) to enforce compliance with rules, practice directions and court orders" [36].
41. Whilst "regard should be had to all the circumstances of the case…the other circumstances should be given less weight" than the two "paramount" considerations [37].
42. The "starting point" is that "the sanction has been properly imposed and complies with the overriding objective" [45]. "An application for relief from a sanction presupposes that the sanction has in principle been properly imposed. If a party wishes to contend that it was not appropriate to make the order, that should be by way of appeal or, exceptionally, by asking the court which imposed the order to vary or revoke it under CPR 3.1(7)" [44].
43. In considering whether relief should be granted, "it will usually be appropriate to start by considering the nature of the non-compliance with the relevant rule, practice direction or court order. If this can properly be regarded as trivial, the court will usually grant relief provided that an application is made promptly." [40].
44. "If the non-compliance cannot be characterised as trivial, then the burden is on the defaulting party to persuade the court to grant relief. The court will want to consider why the default occurred. If there is a good reason for it, the court will be likely to decide that relief should be granted." [41]. "Good reasons are likely to arise from circumstances outside the control of the party in default" [43].
45. In summary, the importance of the "paramount" considerations means that as a general rule relief will not be granted unless (i) the non-compliance was trivial or (ii) there was good reason for the default. Although all the circumstances of the case are relevant, they are of less weight than the "paramount" considerations. Compelling circumstances are therefore likely to be required if relief is to be granted for a non-trivial default for which there is no good reason.

The application under CPR 3.1(7)

46. I am prepared to grant D1 and D3's application to amend their application to include this additional ground for relief. The main ground upon which it was opposed was that it was doomed to fail. However, this is best addressed by dealing with the application on its merits and in any event the whole application is not bound to fail, as the Claimant effectively acknowledged. At the hearing objection was taken by the Claimant to the factual arguments raised in support of the application on the grounds of potential prejudice caused thereby, but, since the same factual matters arise in respect of the application under CPR 3.9(1), I do not consider that this is a sufficient reason for refusing the amendment application.
47. There is one ground upon which it is not seriously disputed that D1 and D3 are entitled to an order under CPR 3.1(7), namely that in the 1213 Action judgment has been entered for the wrong amount. The Amended Particulars of Claim amends the price claimed down from US$4,534,120.48 to US$3,904,060.16. However, the prayer to the pleading was not amended, as it should have been, to reflect this change and judgment was sought and obtained on the basis of the incorrect higher figure. The facts on which the original decision was made were therefore misstated. It was stated that the claim for the price was US$4,534,120.48 whereas it was in fact US$3,904,060.16. The court can and should exercise its discretion under CPR 3.1(7) to allow the judgment to be varied so as to reflect the correct figure claimed.
48. In all other respects the application under CPR 3.1(7) was vigorously resisted. I shall address the application by reference to the requirements which, as the Mitchell case makes clear, "normally" need to be satisfied for it to be appropriate for the court's discretion to be exercised, namely:

(1) whether there has been a material change of circumstances since the order was made;

(2) whether the facts on which the original decision was made had been misstated;

(3) whether there has been a manifest mistake on the part of the judge in formulating the order.

49. D1/D3 submitted that there had been a material change in circumstances since the order was made because, in contrast to the position at the time of the order, there was now evidence from D1/D3, representation for D1/D3 and submissions by D1/D3. In my judgment these matters cannot amount to a change in circumstances. There could have been representation for and evidence and submissions from D1 and D3 at the time of hearing before Field J. If they had paid their solicitors there would have been. Even without solicitors they could have appeared at the hearing, as D2 did. Circumstances such as these, which were known to and within the control of the party at the material time, cannot found a material change in circumstances.
50. D1/D3 further submitted that there had been a manifest mistake by the Judge in formulating the order in that he had failed to consider alternative and more appropriate forms of sanction and the appropriateness of the sums claimed for which judgment was being given. However, these are matters which go to whether the order should have been made, rather than to its formulation. They are matters for appeal, not revocation or variation under CPR 3.7(1).
51. The main argument of D1/D3 was that the facts on which the decision was made were misstated. It was submitted that Field J's decision must have been founded on his acceptance of the Claimant's case that "D1 had turned its back on the litigation entirely" and that D1 and D3 had "a strategy of not investing further in the litigation but pursuing nonetheless a campaign of prevarication and delay". It was submitted that this was factually incorrect.
52. However, the Claimant's case to this effect was a matter of assertion. It was not a statement of fact. Nor, if relevant, could D1/D3 show that misstatements of fact were made in support of that asserted case. D1/D3's counsel went through a long list of matters which it was submitted were not brought to the attention of Field J, but these did not involve any misstatement of fact.
53. The principal matters about which complaint was made were as follows:

(1) That there had been no prior default by the Defendants.

(2) D1 and D2's application to strike out/summary judgment had originally been adjourned because of the Claimant's conduct.

(3) The fact that the Defendants had made an application to extend time for witness statements.

(4) The fact that the 1213 and 1214 actions had been ordered to be heard together and not consolidated. Further, defaults in action 1213 would not impact on action 1214, as the Claimant asserted.

(5) The costs history was presented in a one sided way.

(6) No mention was made of the fact that costs orders had been made against the Claimants, including "unless" orders.

(7) It was wrong to assert that D1 and D3 had turned their back on or were manipulating the proceedings, as the full factual history would have made clear.

(8) The Defendants' arguments in relation to the non-availability of any claim for the price was wrongly described as being technical.

(9) The difficulties for Iranian parties to obtain clearance to fund new representation was not explained.

(10) It was not pointed out that the reason that there was no Amended Defence was because there had not yet been any requirement to do so.

(11) It was not pointed out that the figures claimed gave no proper credit for the counterclaim.

(12) It was not pointed out that there is no prospect of enforcement in Iran and that D2 had no assets in the UAE to enforce against.

(13) It was wrongly suggested that there was no substance to the Defendants' forum conveniens arguments.

(14) There was no mention made of the Defendants' application to adjourn.

54. In my judgment, wide ranging arguments of this kind are properly the subject matter of an appeal rather than the exercise of the court's discretion under CPR 3.1(7) which is only available "exceptionally" (per Lord Dyson MR in Mitchell at [44]) or rarely (per Rix LJ in Tibbles at [39(vii)]). The use of the court's power under the rule in the case of misstatement is only likely to be appropriate in cases involving a clear misstatement which is central to the decision made, as exemplified by the misstated claim for the price in this case. It is not likely to be appropriate in cases such as this involving complex, detailed arguments as to why and how the Judge may have ended up with a wrong impression of the case. If he did, that is a matter for appeal.
55. The Claimant was able to answer each of the points made by D1/D3. It is not necessary to go through each answer so given. It is sufficient to say that I am satisfied that none of the points made demonstrate a misstatement of fact or a failure to state known and obviously material facts.
56. I am not therefore satisfied that any of the three main grounds for exercising the court's power under CPR 3.1(7) have been made out. Nor do I consider that there are any other grounds or circumstances which justify the court exercising that power in this case.
57. Save in relation to the judgment amount in Action 1213 I accordingly reject the application under CPR 3.1(7).

The application under CPR 3.9

58. It is clear that the judgment entered against D3 is a judgment in default. It was not a judgment entered on the basis of non-compliance with court orders. D3 has never acknowledged service and has therefore never got to the stage of being required to take or of taking steps in the proceedings.
59. Although the application form refers to CPR 3.5 the Claimant's skeleton argument (at para. 27) expressly sought default judgment against D3 and attached a copy of the Claimant's request for judgment in the relevant practice form. The supporting witness statement of Mr Parish similarly sought judgment in default (at para. 32). That was the appropriate application to be making in the circumstances.
60. As a judgment in default, the appropriate procedure for challenging it is CPR 13, not CPR 3.9. No such application has yet been issued. The proper party to the CPR 3.9 application is therefore D1, not D3.
61. In accordance with the guidance provided in the Mitchell case the most important considerations are (1) the nature of the non-compliance and whether it can be characterised as trivial and (2) whether there is a good reason why the default occurred.

Action 1214

62. In relation to Action 1214 D1 contends that there has been no default and that this is therefore an a fortiori case for relief.
63. Action 1214 has been ready for trial for some considerable time. Disclosure is complete and witness statements have been exchanged. D1 has complied with all procedural rules in Action 1214. The alleged non-compliance in relation to disclosure and witness statements occurred in Action 1213, not Action 1214.
64. In the Claimant's supporting witness statement of Mr Parish the case in relation to Action 1214 was put as follows:

"33. This action relates to the claim by Newland against Toba in relation to ULSD cargo. Cooke J's Order dated 22 February 2013 [I refer to pages 34 to 35 of MTP9] provides for that the cases are to be "listed and heard together and at the same time". There are no outstanding obligations regarding the action in Claim Number 2011-1214.

34. However, given the Order for joining the actions and effectively consolidating both actions and the fact that Toba have apparently abandoned the litigation in Claim Number 2011 -1213 it seems unlikely that they will be willing to engage in further litigation with Newland in Claim Number 2011-1214. The Order of Males J referred to both Claim Number 2011-1213 and 1214. [I refer to page 10 of MTP9]. The covering letter attaching Males J's order. [I refer to page 9 of MTP9] referenced both actions as too did Stephenson Harwood's initial letter informing HFW that they had ceased to act [I refer to page 1 of MTP9]. Toba therefore lacks representation in both actions.

35. Claim Number 2011-1213 and Claim Number 2011-1214 are now a joined action. Given this consolidation, the breaches of the orders in Claim Number 2011-1213 also affect the claim in Claim Number 2011-1214, as they are now the same action. An inability to meet the trial timetable in Claim Number 2011-1213 will continue to impact on Claim Number 2011-1214, which although ready for trial cannot be heard until the timetable for Claim Number 2011-1213 has been complied with. Given the above apparent abandonment of the claim by Toba, it appears unlikely that Toba will engage any further in this litigation. Therefore a default under the trial timetable obligations in Claim Number 2011-1213, which is now, intertwined with the fate of Claim Number 201-1214 means that Toba is effectively in default in both actions. For this reason, Newland request that judgment be entered against Toba as per its application dated 29 October 2013 pursuant to CPR Part 3."

65. The argument therefore was that because the actions are to be tried together they are "effectively" consolidated and that breaches of the orders in Action 1213 are "effectively" defaults in both actions. However, the actions remain separate actions. They have not been consolidated. A breach of order in Action 1213 is not a breach of any order in Action 1214, even if it has some effect thereon. I agree with D1 that there has been no default in Action 1214.
66. If that is wrong and a breach of an order in another action is a relevant and sufficient default because of its effect in a related action then it would be necessary to consider whether that effect means that the breach is more than trivial. The failure to provide disclosure and witness statements in Action 1213 has no direct effect in Action 1214 since the disclosure and witness statements in that action have already been provided. If the consequence of the non-compliance was adjournment of the trial then that might amount to an indirect effect. However, that stage had not been reached in November 2013, nor was it being suggested that it had. Further, if, as the Claimant was requesting and the Judge ordered, there was judgment for the Claimant in Action 1213 the defaults in that action could have no impact in Action 1214. If, therefore, it be relevant to consider effect, given the non-existent or very limited effect on Action 1214 of any default in Action 1213, that non-compliance was trivial as far as Action 1214 was concerned.
67. Although the point was not taken by the Claimant, it might be suggested that whether or not there has been a default is a matter for appeal rather than the court considering relief. In most cases that is likely to be so. However, the court considering relief is required to consider the nature of the non-compliance. If in doing so it reaches the clear conclusion that there has not been any non-compliance then it should be entitled to act thereon. Alternatively it should be entitled to treat the case as at least as strong a case for relief as one involving a trivial breach.
68. In oral argument, the Claimant sought to avoid the obvious difficulties arising out of the fact that there was no default in Action 1214 by contending that there had in fact been such a default since when Stephenson Harwood LLP came off the record no address for service in the jurisdiction had been provided in breach of CPR 6.23/Part 42.
69. However, that was not the basis of the application made. Although the fact of such a breach was referred to in the summary of the position given in the Claimant's skeleton argument, it was not a breach referred to or relied upon in the application form or the supporting evidence. The application was plainly based on the arguments set out in Mr Parish's statement. Judgment was given, as requested, on the basis of non-compliance in Action 1213 rather than non-compliance in Action 1214. The default now alleged is accordingly not a relevant default.
70. Even if that be wrong and the Claimant is entitled to rely on the failure to give an address for service as a relevant default, in the circumstances of this case I would regard the mere fact of that non-compliance as being trivial. If it was allowed to continue for any length of time the position might well be different, but here it had only just occurred. Further, there were good reasons for the Defendants being unable to provide such an address immediately. The evidence is that the effect of sanctions means that it takes time to obtain the necessary clearances and permissions to be in a position to pay and therefore to instruct new legal representatives. Even if that be wrong, in circumstances where the application has been made and granted on a different basis I would regard that as a sufficiently compelling circumstance, on the facts of this case, to grant relief.
71. For all these reasons I consider that this is an appropriate case for the grant of relief from sanctions under CPR3.9 in respect of Action 1214.

Action 1213

(1) the nature of the non-compliance and whether it can be characterised as "trivial"

72. The alleged defaults were:

(1) An allegedly inadequate disclosure list from D1;

(2) A failure to file separate disclosure lists on behalf of D1 and D3;

(3) A failure to serve witness statements by 25 October 2013.

73. If the sole default had been a temporary failure to file a separate disclosure list then there might have been a de minimis argument. However, the other defaults are matters of substance and importance, particularly bearing in mind that there was a February trial date.
74. Although it was not accepted that inadequate disclosure had been given, I am satisfied, as was Field J, that it had been. Field J ordered D2 to provide further disclosure, and further disclosure has been provided. Further, D1's evidence acknowledges that there are further documents to be disclosed, albeit not all those sought. The provision of timely witness statements was a matter of obvious importance given the tight trial timetable. Further, it was not a matter of missing the deadline by a short period. It was made clear that considerable further time would be needed and indeed that the statements had hardly been begun. Even now statements have still not been provided.
75. The nature of the non-compliance was therefore serious. It was not trivial or close to being so.

(2) whether there is a good reason why the default occurred

76. There is no good reason in this case. The main ground relied upon was the loss of legal representation. However, D1 was still represented by Stephenson Harwood LLP at the time that inadequate disclosure was given by a single rather than separate lists. It was also still represented by them until a few days before the witness statement deadline.
77. The evidence was that work from 20 September 2013 onwards was hampered by the dispute which had arisen about fees. However, that simply demonstrates that there was a lengthy build up to Stephenson Harwood LLP's withdrawal. D1 would no doubt have been warned of the consequences of such withdrawal long before it occurred and had every opportunity to avoid such drastic steps being taken, or to plan around it.
78. Any difficulties that arose as a result of loss of representation were therefore foreseeable consequences of D1 not being prepared to pay fees which it was able to pay, but chose not to. That is not a good reason for default.
79. The only reason advanced in relation for the default in relation to disclosure was the contention that there was no such default. I have already rejected that contention.
80. D1 contended that there was good reason for the default in serving witness statements because (1) disclosure had been delayed by agreement; (2) D1 and D3 were litigants in person and did not have English legal representation; (3) D1 had made two applications for relief albeit not in the proper form promptly; and (4) the delay at the time of C's application was two working days ( Friday 25 October and Monday 28 October).
81. As to (1), disclosure was agreed to be delayed on the basis that the deadline for witness statements would remain. In any event, this would at most justify an extension of 10 days and it is clear that the Defendants were not in a position to provide witness statements in anything like that timeframe. As to (2), representation was only lost shortly before the witness statement deadline and it had been looming since at least 20 September 2013. The suggestion made in the application for an extension of time that it was "as a result" of D1 and D3 being so informed on 23 October 2013 that "we didn't have enough time to prepare our witness statement" was plainly incorrect. As to (3), the applications were not made before time had expired. Further, no application was made in relation to disclosure. As to (4), this does not address the reason for the breach and the application did not lead to the breach being cured.
82. For all these reasons I conclude that there was no good reason for the defaults.

Other circumstances

83. D1 submitted that there were other compelling reasons why relief should be granted. In particular:

(1) D1 and D3 were unrepresented;

(2) D1 and D3 had applied to Court for an adjournment

(3) The Court does not seem to have been aware of D1 and D3's applications.

(4) The full picture was not properly presented to the Court.

(5) The majority of the defaults were trivial;

(6) The application was made when D1 and D3 were 2 working days late.

(7) The Claimant has obtained double recovery (damages and claim for price) and failed to inform the Court that US$3.6 million was admitted to be owed to D1.

84. I have addressed (1), (2) and (6) when considering whether there was good reason for the defaults. Point (5) is incorrect for reasons already given. Point (4) has been addressed when dealing with the CPR 3.1(7) application. Point (7) is contentious and goes to whether the sanction was appropriate, which is a matter for appeal rather than relief from sanctions.
85. As to (3), the Court is likely to have been aware of the applications since they had been made directly to it. The fact that an application for an extension of time for the witness statements had been made to the court was referred to by Mr Parish in his witness statement, even though it had not been sent to or seen by the Claimant or HFW. An application for an adjournment was refused by Andrew Smith J although it is not entirely clear whether that related only to D2. The fact that the Defendants were requesting an adjournment was referred to in the Claimant's skeleton argument.
86. D1 also relied on the circumstances set out in the previous version of CPR 3.9(1) and submitted that they all pointed in favour of relief. This provided that:

"On an application for relief from any sanction imposed for failure to comply with any rule, practice direction or court order the court will consider all the circumstances including—

(a) the interests of the administration of justice;

(b) whether the application for relief has been made promptly;

(c) whether the failure to comply was intentional;

(d) whether there is a good explanation for the failure;

(e) the extent to which the party in default has complied with other rules, practice directions, court orders and any relevant preaction protocol;

(f) whether the failure to comply was caused by the party or his legal representatives;

(g) whether the trial date or the likely trial date can still be met if relief is granted;

(h) the effect which the failure to comply had on each party; and

(i) the effect which the granting of relief would have on each party."

87. Given the change in the wording of the Rule I doubt that it is generally appropriate to go through the exercise of considering the previous list of potentially relevant circumstances. No doubt if there is a particular identified circumstance that tells in favour of or against relief then it may be relied upon, but the most relevant circumstances are likely to be the two identified in Mitchell, namely the nature of the non-compliance and the reason for it.
88. In so far as it is appropriate to consider the previous list of circumstances, my findings under each sub-paragraph of the previous rule are as follows:

(a)The interests of the administration of justice are served by insisting on compliance with court orders, as Mitchell makes clear. This is particularly so in the context of a case with a shortly pending trial date.

(b) The application was not made promptly.

(c)The fact that a failure to serve witness statements by the deadline would breach the court order was well appreciated. It was the inevitable result of a deliberate course of action.

(d) There is no good explanation for the defaults.

(e) There was no prior non-compliance.

(f) The defaults were to a significant extent caused by D1 itself.

(g) The trial date is unlikely to be met if relief is not granted.

(h) The failure to comply prejudiced proper and timely preparation for the pending

trial.

(i) The granting of relief would cause serious prejudice to the Claimant if, as is

likely, the consequence is that the trial date cannot be met.

89. It follows that nearly all the listed circumstances tell against the grant of relief. The only one which favours D1 is (e) - that there was no previous history of non compliance.
90. D1 stressed that if relief is not given then it will have a judgment entered against it despite the fact that it has good defences to the claims and on quantum and despite the fact that it has admittedly overpaid the Claimant on previous transactions. Moreover, such judgment was entered despite the fact that there had been no previous non-compliance and against an unrepresented party. Further, Field J was wrongly persuaded that D1 had disengaged from the litigation, and the significance of that is shown by the different treatment afforded to D2. In my judgment, these arguments go to the appropriateness of the sanction and therefore to an appeal. For the purposes of CPR 3.9 it is to be assumed that the sanction has been properly imposed and complies with the overriding objective, as Mitchell makes clear.
91. In summary, I do not consider that there are other circumstances, still less compelling circumstances, which justify the grant of relief notwithstanding that the non-compliance cannot be characterised as trivial and there was no good reason for the defaults.
92. It follows that in accordance with the robust approach required under the new form of CPR 3.9, as set out in Mitchell, this is not an appropriate case for relief. If D1 is to have any recourse in Action 1213, it would need to be by way of appeal.

Conclusion

93. For the reasons outlined above the judgment sum in Action 1213 should be amended pursuant to CPR 3.1(7) and I grant relief against sanctions in Action 1214 pursuant to CPR 3.9. Otherwise the applications made are refused.