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Relief from sanction: claimant being forced to pursue his solicitors for negligence is not desirable

23 June 2020. Published by Aimee Talbot, Senior Associate and Will Sefton, Partner

A recent High Court decision demonstrates a common-sense, realistic approach to relief from sanctions. Solicitors might have become used to judges, when striking claims out, reassuring the claimant that they can always sue their solicitors for negligence. In a welcome judgment, Mr Justice Fancourt reversed a decision to refuse relief from sanction.

Facts

In Badejo v Cranston [2019] EWHC 3343 (Ch), the claimant was seeking to recover about £120,000 that he had paid to the defendant pursuant to an option agreement. The parties were ready for trial, which was listed for 2 days in the Central London County Court.  The notice of trial date required the claimant to pay a trial fee of £1,090 by a certain date or the claim would be automatically struck out.  His solicitors failed to do so and the claim was struck out.  Although no explanation as to why is given in the judgment, presumably they simply forgot or mis-diarised.  The claimant's solicitors applied for relief from sanction 2 days after they realised their mistake, which was 9 days after the deadline for making the payment had passed. 

The claimant's solicitors asked for the application to be dealt with at a telephone hearing that they estimated would last 30 minutes.  The court originally failed to vacate the trial or set down the application for a hearing until prompted by the parties, who were keen to know whether the trial was going ahead.  In response to their enquiry, the court vacated the trial and listed a hearing about a month after the trial had been due to commence. 

Decision

At first instance, the Judge refused the claimant's application for relief on the basis that the breach was serious and significant – although it was not the most serious breach, it was not the first breach by the claimant and – importantly – the trial date had been lost as a result of the claimant's conduct.  Refusing the application for relief would mean that the claimant would need to sue his solicitors to obtain compensation, but this was not a good reason (of itself or in conjunction with other factors) to grant the application. 

On appeal, the High Court reversed the Judge's decision.  Mr Justice Fancourt found that the Judge at first instance had misdirected himself, including by holding the claimant wholly responsible for the loss of the trial date.  The court could and should have listed the application for relief from sanction before the trial, which could then have proceeded had relief been granted. 

Mr Justice Fancourt therefore exercised his discretion afresh.  Although the breach was moderately serious and there was no proper justification for it, there were a number of reasons weighing in the claimant's favour:

  • The application for relief was prompt;
  • Limited prejudice had been caused to the defendant;
  • Although the claimant had previously defaulted, so had the defendant.

Crucially, the consequences for the claimant of refusing relief from sanction would be severe.  A valuable claim would be lost and, although the claimant could bring a new claim, he would have to pay the costs of the first claim which would be significant (approaching £72,000, in the context of a claim worth £120,000).  Further, the claimant could sue his solicitor, but "the claim that may be brought against the solicitors is of course a harder claim to bring and prove, and would be more expensive for the appellant, and the measure of damages recovered may well be less than the full amount of the claim against the respondent." The Judge noted that the court's resources would be stretched by the bringing of an additional claim.

Accordingly, Mr Justice Fancourt allowed the appeal and granted relief from sanctions to the claimant. 

Comment

The Judge was careful to avoid giving the impression that this decision heralded a return to a lax, pre-Jackson approach to compliance with deadlines ("I do not by granting relief in this case suggest that a prompt application will always be liable to result in relief being granted").  However, solicitors can take a small amount of comfort - which can be hard to find in relief from sanction cases - from this case.

The key reasoning behind the Judge's decision was that justice is better served by allowing the claim to continue rather than forcing the Claimant to sue his solicitor.  We suggest that this will often be the case.   Whilst a relatively strict approach to compliance with court orders and rules is necessary to encourage good behaviour, relying on a litigant's ability to sue his solicitor as a factor justifying a strike out seems to make sense in principle, but not in practice.  The reality is that the overriding objective would often be furthered by allowing claims to continue.  Court resources and substantial costs and time (often years) have already been invested in the instant claim and forcing a litigant to effectively begin again - by pursuing their solicitor - throws away that expenditure and results in the wrongdoer going unpunished.  This is a windfall for the opposing party, which is likely to be disproportionate to the prejudice they suffered by the breach, and a burden on the system. 

This commendable common-sense approach seems hard to square with the recent decision in Mahoney v Royal Mail, described in my colleagues' blog, where the court refused to set aside a settlement reached through the RTA Portal on grounds of mistake when one party accidentally offered to accept £550, instead of £5,500, due to a typographical error.  Obviously, the court in Mahoney was examining another area of law - mistake, rather than relief from sanction - against a slightly different public policy background (whether applying the doctrine of mistake to Portal claims would undermine the speed and low cost of the Portal and give rise to undesirable satellite litigation).  It is not clear whether Mahoney (which was not reported but described by one of the advocates on his chambers' website) is under appeal.  To someone admittedly unfamiliar with the Portal, this seems like an astonishing decision, which has not achieved the aim of curbing satellite litigation - it will no doubt result in a claim against the solicitor who made the typographical error; a much less culpable mistake, perhaps, than that of the defendant?  Mahoney was a first instance county court decision and seems confined to the point of principle that common law does not apply to the Portal which is a separate self-contained code (like CPR Part 36), so comfort should still be derived from the decision in Badejo.