Chairs in cafeteria

It can still be too late – Denton re-visited

18 March 2016. Published by Jonathan Wyles, Of Counsel

The Court of Appeal in British Gas Trading Ltd v Oak Cash & Carry Ltd [2016] EWCA Civ 153 has reminded all solicitors that Court Orders are there to be complied with, and dire consequences can still follow if they are breached, despite the more generous guidance given in Denton v TH White Ltd [2014] EWCA Civ 906.

British Gas sued Oak Cash & Carry for about £200,000 for non-payment of the cost of the supply of electricity.  Oak Cash & Carry resisted the claim.  On 1 November 2013 a district judge ordered the parties to file completed pre-trial checklists by 3 February 2014. Oak Cash & Carry failed to do so. On 10 February 2014 the judge directed in an unless order that the Defence be struck out if Oak Cash & Carry failed to file the checklist by 19 February 2014. Oak Cash & Carry's solicitors failed to comply with the unless order and the defence was indeed struck out. The checklist was finally filed on 21 February 2014. British Gas applied for judgment in default of the Defence, which was granted on 18 March 2014. On 24 March 2014 Oak Cash & Carry belatedly applied for relief from sanctions. By this time, the trial date had been lost.

In the application for relief from sanctions, the solicitor with conduct of the litigation said that he had entrusted the litigation to a trainee solicitor during February 2014, as he had been required to attend medical appointments with his wife, who was suffering from pregnancy complications. The trainee was not supervised by anyone else.  Originally the trainee prepared and filed a directions questionnaire which was filed before 19 February 2014. The Court rejected this and that is what prompted the filing of the pre-trial checklist on 21 February 2014.

Relief from sanctions was granted on 15 April 2014.  However, that was overturned on appeal on 7 October 2014 as being too generous.  Mrs Justice McGowan applied the test inDenton v TH White Ltd [2014] EWCA Civ 906.  She considered that the breach was serious and significant. Whilst expressing sympathy for the particular solicitor, she pointed out that the solicitors' firm was of significant size and it should have ensured that a competent solicitor was available to deal with the case and that the trainee was properly supervised. There was no good reason for the default.

The Court of Appeal unanimously rejected the appeal by Oak Cash & Carry.  In giving the leading judgment, Jackson LJ fully endorsed the approach of Mrs Justice McGowan.  It was necessary for a Court to look at the original order as well as the unless order when considering whether the breach was significant and serious.  Oak Cash & Carry had 3 months to comply with the original order, which it failed to do, and was another 18 days late in complying with the unless order.  The solicitor's wife's health problems had been known for many months, and the firm was of a significant size and could be expected to have provided appropriate cover for the solicitor whilst he was away.  The solicitor had in fact been in the office and approved the directions questionnaire which was filed in error.  There was no good reason for the default. 

The situation may still have been saved if the application for relief from sanctions had been issued before the expiry of the unless order or immediately afterwards, when filing the pre-trial checklist.  It was not done for another month and that further delay was fatal.

This decision will come as a salutary reminder to all solicitors against any complacency that has crept in as a result of the decision in Denton v TH White Ltd [2014] EWCA Civ 906.  Court orders are to be complied with.  If you are unable to do so for whatever reason, and you cannot obtain an extension of time from your opponent, apply to court as soon as possible and preferably before the deadline.  If not, you run the risk of having your client's claim struck out and then having very difficult conversations with that (soon to be former) client and your professional indemnity insurers.