England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand. London. WC2A 2LL
		4th July 2008

Mr Justice Coulson :

Introduction

1. This is an unhappy story in a number of respects. The Claimant is a self-employed plumber. His claim is based on a workplace accident, which happened as long ago as 19th October 2002, when he fell from a ladder and broke his right ankle. He commenced these proceedings in October 2005, right at the end of the limitation period. The claim then moved at glacial speed, until eventually it was listed for trial on 29th January 2008.
2. On that day, His Honour Judge Simpson drew Counsel's attention to the terms of an unless order, dated 9th March 2006, pursuant to which the Claimant had been ordered to provide a medical report by 25th March 2006, failing which the claim would be struck out, and also requiring the Claimant to provide a schedule of past and future expenses or losses, also by 25th March 2006, failing which the special damages claim would be struck out. After a certain amount of research by the judge, it became apparent that a medical report had indeed been served in accordance with the unless order. However, in the letter of 24th March 2006 which served that report, the Claimant's solicitors had informed the Court that the Claimant "does not seek to pursue a special damages claim". This position was apparently confirmed by a subsequent statement from the Claimant.
3. Judge Simpson therefore concluded that the claim for special damages had been struck out. As a result of the unless order, the Claimant's non-compliance and the absence of any application for relief from sanctions under CPR 3.9, he concluded that all the subsequent orders of the Court referring to the claim for special damages must be, as he put it, "nugatory". The judge therefore vacated the trial date and declared that the claim for special damages, which was of course the lion's share of the damages claim pursued by the Claimant, was struck out. However, he exercised his discretion in favour of the Claimant, in that he allowed the Claimant to apply for relief from sanctions within 28 days. He ordered that the Claimant pay the Second Defendant's costs of that hearing.
4. The Claimant sought permission to appeal that order. No application for relief from sanctions was made within the 28 day period. Amongst the submissions, of distinctly variable strength, advanced by Mr Valentine on behalf of the Claimant in support of the appeal, he returned repeatedly to one particular matter, namely the Defendants' apparent acquiescence in the months before trial in the bringing of a special damages claim. He maintained that the Defendants could not now jump on the bandwagon started by Judge Simpson, and argue that the special damages claim had already been struck out. Mr Valentine pointed to the hearings at which the Second Defendant had been represented on 6th March, 1st August and 26th November 2007, when, amongst other things, orders were made in relation to a schedule of special damages; that that schedule had to be served no later than 1st August 2007; and that the schedule be answered by the Second Defendant by way of a counter-schedule. Mr Valentine said that no point as to the unless order was taken during those hearings by the Second Defendant or indeed at any time prior to the trial on 29th January 2008.
5. Although the single Judge refused the Claimant's application for permission to appeal on paper, concluding that the decision of Judge Simpson being within his discretion, following an oral hearing in front of McCombe J on 24th April 2008, permission to appeal was granted. It appears that McCombe J considered that, in consequence of the point outlined in paragraph 4 above, it was arguable that the claim for special damages had somehow been reinstated or was otherwise properly before the Court on 29th January 2008.

Applicable Principles

6. The relevant principles applicable to this appeal seem to me to be the following.
7. 1 Discretion

Judge Simpson exercised his discretionary case management powers in deciding that the claim had been struck out and/or had not been reinstated. I should only interfere with the exercise of that discretion if I consider that "the judge has either erred in principle in his approach, or has left out of account, or has taken into account, some feature that he should, or should not, have considered, or that his decision is wholly wrong because the Court is forced to the conclusion that he has not balanced the various factors fairly in the scale": see Lord Woolf MR in AEI Rediffusion Music v Phonographic Performance Ltd [1999] 1 WLR 1507 at 1523.

8. 2 Unless orders

(a) A party who wishes to seek to avoid the consequences of an unless order faces something of an uphill struggle. The position was set out by the Court of Appeal in Marcan Shipping (London) Ltd v Kefalas & Anr [2007] EWCA Civ 463.

(b) In that case Lord Justice Moore-Bick said:

'34. In my view it should now be clearly recognised that the sanction embodied in an "unless" order in traditional form takes effect without the need for any further order if the party to whom it is addressed fails to comply with it in any material respect. This has a number of consequences, to three of which I think it is worth drawing particular attention. The first is that it is unnecessary, and indeed inappropriate, for a party who seeks to rely on non-compliance with an order of that kind to make an application to the court for the sanction to be imposed or, as the judge put it, "activated". The sanction prescribed by the order takes effect automatically as a result of the failure to comply with its terms. If an application to enter judgment is made under rule 3.5(5), the court's function is limited to deciding what order should properly be made to reflect the sanction which has already taken effect. Unless the party in default has applied for relief, or the court itself decides for some exceptional reason that it should act of its own initiative, the question whether the sanction ought to apply does not arise. It must be assumed that at the time of making the order the court considered all the relevant factors and reached the decision that the sanction should take effect in the event of default. If it is thought that the court should not have made an

order in those terms in the first place, the right course is to challenge it on appeal, but it may often be better to make all reasonable efforts to comply and to seek relief in the event of default.

35. The second consequence, which follows from the first, is that the party in default must apply for relief from the sanction under rule 3.8 if he wishes to escape its consequences. Although the court can act of its own motion, it is under no duty to do so and the party in default cannot complain if he fails to take appropriate steps to protect his own interests. Any application of this kind must deal with the matters which the court is required by rule 3.9 to consider.'

9. 3 Acquiescence

(a) The failure of a party to enforce or rely upon an unless order in its favour, in other words acquiescence by that party, may sometimes be relevant to a subsequent dispute about whether or not the order should be made effective. In Langtree Group v Richardson [2004] EWCA Civ 1447, a defendant who lost at trial subsequently took the point that an unless order had not been complied with by the claimant, so there should have been no trial at all. The breach was a technical breach, namely the service of a list of documents which had not been signed originally and was not signed until a few days after the expiry of the unless order. There was no prejudice to the party relying on the breach.

(b) In that case, Lord Justice Waller said:

"19. What one has to remember is that by the time that the trial came on, first of all Mr Richardson had never gone back to the court in order to prevent the processes continuing. He had insisted that he had an entitlement to have the documents. He allowed Langtree on that basis to incur the costs of preparing for trial and coming to the trial and, so far as any breach to which Mr Richardson could point, there could be no prejudice to him at all in that a list had been served on 1st October. He was entitled to get copies of the documents if he was prepared to pay the photocopying charges, and the fact that the disclosure statement only arrived on 6th October did him no harm at all. Indeed, as I have already emphasised, it was not a matter about which he complained.

"20. So whichever is the proper construction of CPR 3.5, and whatever the circumstances which could be identified as being matters about which Mr Richardson might have complained to the judge when he was exercising his discretion, the truth is that there was no way in which the judge could have exercised his discretion on the morning of 12th November other than in the way he did. It is clear that any judge, faced with the actual circumstances that existed, would not have entered judgment for Mr Richardson and would not have suggested that Langtree should not be allowed to pursue their claim. He would have allowed the trial to go on as it did, and in those circumstances this appeal must be dismissed."

The Issues

10. On this appeal there are, I think, five issues between the parties. First, was the claim for special damages originally made by the Claimant in the Particulars of Claim and subsequently struck out by operation of the unless order? Secondly, if the claim for special damages was withdrawn rather than struck out does that make any substantive difference to the appeal? Thirdly, what would have happened to any application in 2007 by the Claimant either for relief from sanctions or to reinstate a claim for special damages? Fourthly, what difference, if any, does the Defendants' alleged acquiescence make to the outcome of the appeal? Fifthly, looked at in the round, should the claim for special damages be reinstated or is it in any event hopeless?

Issue 1: The Claim for Special Damages

11. On behalf of the Claimant, Mr Valentine sought to argue that no claim for special damages had ever been made by the Claimant's Particulars of Claim so that there was no head of claim on which the unless order could bite.
12. I reject that contention. The Particulars of Claim at paragraph 7 contain an express claim for special damages arising from the injury to the Claimant's ankle. The pleading makes plain that particulars of those special damages would be provided by way of a separate schedule. It says that that schedule is "to follow". Accordingly, I find that the original claim plainly included a claim for special damages.
13. Pursuant to the terms of the unless order, the Claimant knew that, if the promised schedule was not served by 25th March 2006, the claim for special damages would be struck out. For what it is worth, it seems to me that the making of the order in those circumstances was entirely proportionate, given that the original accident had happened some three and a half years previously.
14. No schedule of special damages was served. Therefore, in accordance with the principles set out in Marcan (paragraph 6.2 above), the claim for special damages was struck out without further order of the Court. It was unnecessary for the Defendants to do anything further about the special damages claim.

Issue 2: Withdrawal

15. Mr Valentine's next submission was that, because the claim for special damages was withdrawn by the letter of 24th March 2006, the unless order again had nothing to bite on. He said that in those circumstances it was open to the Claimant to seek to reactivate the claim for special damages at a later date and that the terms of the unless order were effectively irrelevant to any such reactivation.
16. I cannot accept that submission. If it were right, it would mean that a party who realised at the very last minute that it could not comply with an unless order affecting a part of his claim could withdraw that part of the claim and then seek to reinstate it at

a later date, once the claim had been properly prepared. It would be an obvious way in which a defaulting party could flout the effects of an unless order.

17. Further and in any event, I consider that by the letter of 24th March 2006, the Claimant's solicitors were signalling their agreement to the coming into effect of the terms of the unless order. They were acknowledging that they were not going to seek to comply with it. In such circumstances, the striking out of the special damages claim can be regarded as an order made by consent.
18. I should add that, although there is no direct evidence before me on the point, I am told that this was not a mistake; this was not some sort of error by the Claimant's solicitors that they now deeply regret. Instead, I am told and I accept that this letter reflected precisely the Claimant's instructions at the time, that he did not wish to pursue a claim for special damages.
19. For all these reasons, therefore, I reject the contention that the withdrawal of the claim somehow negated or avoided the effects of the unless order. On the contrary, I believe that the letter of 24th March 2006 merely confirmed the operation of the unless order and the striking out of the special damages claim.
20. However, if I am wrong about that and the claim for special damages was withdrawn voluntarily rather than struck out, I am confident that it makes no substantive difference to the Claimant's position now. If the claim had been struck out and the Claimant subsequently changed his mind and wished to pursue a claim for special damages after all, he would have needed to have applied for relief from sanctions under CPR 3.9. If, contrary to my primary view, the claim was withdrawn and not struck out, the Claimant would still have had to have sought permission from the Court to add back into his claim this principal head of loss which had previously been abandoned. Such an application would have given rise to all kinds of issues - delay, prejudice, res judicata and arguments by analogy to the withdrawal of an admission -which would all be very similar to, if not precisely the same as, the sorts of matters that the Court would have been obliged to consider under CPR 3.9.
21. For these reasons, therefore, whilst I reiterate my primary view that the claim for special damages was struck out and not simply withdrawn, it seems to me that ultimately this would have made no difference to the Claimant. If he had wanted to reactivate the claim for special damages, he would have needed the Court's permission and he would have had to have addressed all of the factors identified in CPR 3.9.

Issue 3: The Application for Relief from Sanctions or to Reinstate the Claim for Special Damages

22. The third issue is of course what would have happened to any application by the Claimant to reinstate the claim for special damages. Mr Valentine's first submission is that I should assume that the Defendants would have agreed to any such application because they did not raise any issue on the unless order in 2007 or in the run up to the trial.
23. Again, I am bound to reject that submission. The fact that the special damages claim had been struck out was the unarguable effect of the Court order. The fact that neither the Claimant nor the Defendants realised that in 2007 does not affect the validity or effect of the order: see Marcan. Moreover, I am confident that if a proper application had been made by the Claimant either for relief from sanctions or to reinstate the withdrawn claim, the Defendants would have objected to it.
24. I infer that for two separate reasons. The first is that, when the point was drawn to their attention by Judge Simpson for the first time, they objected to the special damages claim. The second is that, as we shall see, the Defendants always objected lock, stock and barrel to the special damages claim that was formulated in the schedule and on which the Claimant was prepared to go to trial. Indeed, it is right to note that, at the trial on 29th January, the Defendants were going to seek an order from the Court that the special damages claim be struck out in its entirety. I shall look below under issue 5 at the reasons for that robust stance, but for present purposes the fact that this was the Defendants' position means that I am confident that, if they had realised that they had another ground for objecting to the special damages claim, then the Defendants would have taken it.
25. More importantly, I am in no doubt that if, in mid-2007, the Claimant had applied for relief from sanctions or sought to reinstate the claim for special damages that had been withdrawn in the face of the unless order, that application would have failed. First, there was the delay. By then, the accident was almost five years old. There was no explanation for how and why such a long time had been allowed to pass before the claim was first made and no explanation for why the action had progressed so slowly.
26. Secondly, there would have been a lack of any proper explanation for the radical change of mind on the part of the Claimant. Indeed, as I pointed out this morning, there is no evidence before me even now as to how and why that change of mind occurred.
27. Thirdly, I am confident that a Court considering any such application would have concluded, as I have done, that the special damages claim would fail in any event. My reasons for that view are set out in detail under issue 5 below. In such circumstances, permission to make such a hopeless claim would not have been granted.
28. For all these reasons, therefore, I find that, if an application had been made either for relief from sanctions or to reinstate the special damages claim that had been abandoned, such an application would have failed. Accordingly, the Court should guard now against putting the Claimant in a better position than he would have been in if he made such an application at the appropriate time.

Issue 4: Waiver Acquiescence

29. I accept, just as McCombe J accepted, that the Defendants' conduct is not beyond reproach because the unless order point was never taken until trial. Whilst I also accept that they did not turn their minds to the point, their failure must mean that, for example, the Defendants are entitled to potentially less advantageous costs orders than they would otherwise have obtained. However, I have explained why, because of the effect of the unless order, the claim for special damages was not properly before the Court, which is one reason why I do not consider that the concept of waiver or acquiescence can be directly relevant on these facts. Moreover, for the reasons set out above, I do not believe that the Defendants' conduct can allow the Claimant to bring a claim which, if he had complied with the CPR, he would not be entitled now to make.
30. If I am wrong about that, I would go on to examine whether or not it can be said that in truth the Defendants really did acquiesce in the bringing of the special damages claim. In my judgment, on the material before me, they did not. True, they did not take the unless order point, but they objected to every aspect of the special damages claim when it was eventually prepared, and their complaints were not simply on the detail, but were based on fundamental objections to the whole basis of the claim itself. As I have said, that is dealt with under issue 5 below, and I find that those fundamental objections were well founded.
31. Accordingly, by the time of the trial, the Defendants had made plain that they objected to the special damages claim as a matter of principle and they intended to seek to strike out that claim on the day of trial. They would have made that application, but for the judge's research into the unless order point, which rendered their own strike-out application academic. It is difficult to say in those circumstances, therefore, that the Second Defendant ever acquiesced in the bringing of the claim to which they objected to so fundamentally.
32. Moreover, on the facts, it seems to me that this case is a very long way from Langtree v Richardson. Here the breach was not technical but fundamental because there was a complete failure to comply with an unless order. In addition, in this case there is clear and obvious prejudice because there is an attempted reinstatement of a claim that has not only been struck out but which is, for the reasons explained below, hopeless.

Issue 5: The Special Damages Claim

33. Now let us assume that I am wrong in my analysis set out above and that the special damages claim was properly before the Court on 29th January 2008. I should only allow the appeal, even in those circumstances, if I am persuaded that the special damages claim had a real prospect of success. As Mr Valentine very fairly conceded, it was never going to be improved upon. It seems to me that, if I concluded that the special damages claim was hopeless, then I should not allow this appeal in any event.
34. In my judgment, the special damages claim would have failed completely. The claim was based in the schedule on the twin assumptions that (a) the injury to the Claimant's ankle resulted in him working at six-sevenths of his normal capacity, which I shall call the "medical" element; and (b) the lost work can be valued at £278.80 per month, which I shall call the "financial" element of the special damages claim.
35. As Ms Van Der Leij pointed out, disclosure in this case took place when there was no claim for special damages at all. Therefore, it was unsurprising that, for example, the Claimant's medical records were not disclosed. If there had been a claim for special damages, these records would have been important because the Claimant had suffered a chronic back injury prior to this accident which caused him to take two years off work. The records would, therefore, have been necessary to see if any subsequent time off work was due to the Claimant's back condition and not his ankle. In addition, no accounts or tax returns or any financial information were provided to justify the figures in the Claimant's schedule.
36. As to the medical element of the special damages claim, there was no evidence from the Claimant that he worked at six-sevenths of his normal capacity or that he had one day off every few days because of his ankle or foot. The only evidence in his statement that was conceivably relevant was a suggestion that the pain in his foot meant that he was "having to limit the time I spent working". No further particulars of what that time was or might have been are provided and no documents supporting such a vague assertion were ever provided.
37. In addition, there is no medical evidence which supports the suggestion that the Claimant was having any time off at all because of his ankle and foot rather than the problems with his back. In the summer of 2007, the Claimant's solicitors tried to get the medical expert to support this part of the claim. However, he pointed out that, in order to deal with the issue, he would need to see the Claimant's previous medical records dealing with the back injury. Those were apparently not provided and they have never been provided to the Defendants.
38. As to the financial element of the special damages claim, the Claimant does not deal in his statement with his earnings at all. No documents have been disclosed which evidence either the £278.80 that is claimed per month or any of the figures from which that figure is calculated. The Claimant did not propose to call an accountant and there is not even a statement from the Claimant's own accountant seeking to justify any of the figures which make up the calculation of the £278.80.
39. All that has been provided is a letter from the Claimant's accountant, dated 22nd January 2007, which contains a one page statement entitled "Income and Expenditure Account February 05-April 06". The one page statement is unsigned. The totals are not explained and no documents supporting any of the figures have been provided. I conclude that those documents are of no probative value whatsoever.
40. Mr Valentine candidly admitted that there was a problem with the Claimant's records and that he had not filed accounts or tax returns. That might lead to the Claimant being in difficulties with Her Majesty's Customs & Revenue. Whilst I accept that, as Mr Valentine carefully put it, this was the product of muddle not mischief, I consider that this muddle is endemic of the entirety of the Claimant's claim for special damages.
41. For all these reasons, therefore, I am confident that if Judge Simpson had not struck out the special damages claim because of the non-compliance with the unless order, the Defendants would have immediately made a successful application to strike out the special damages claim on the ground that it was doomed to fail. Even if I consider Judge Simpson to have been wrong in the order that he made (and I do not, for the reasons I have given), it would be contrary to the overriding objective to allow this appeal, when the special damages claim is doomed to fail in any event.

Summary

42. For all those reasons, I consider that there are no grounds for interfering with the exercise of Judge Simpson's discretion or with the order that he made. I consider, for all the reasons that I have given, that he was right to make the order that he did. And if he was wrong, then it seems to me that the special damages claim would have been struck out in any event because it was going to fail. Accordingly, the appeal is dismissed.