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Chartwell v Fergies: Important Court of Appeal decision on relief from sanctions & Mitchell

Michele De Gregorio acted for Chartwell, the successful applicant at first instance and respondent in the Court of Appeal. 

On 3 April 2014 the Court of Appeal (Laws, Davis, Sullivan LJJ) upheld the decision of Globe J, granting the parties relief from the sanction imposed by CPR r.32.10 for the late service of witness statements.

This will be an important decision on the exercise of judicial discretion under CPR r.3.9 following Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537.

In Mitchell the Court of Appeal endorsed a new, more robust approach to relief from sanctions.  At paragraph 58, the Court held that the expectation is that a sanction would “usually” apply unless (i) the breach is trivial or (ii) there is a good reason for it.

In Chartwell Estate Agents Ltd v Fergies Properties SA [2014] EWHC 438 (QB) Globe J held that the default of the applicant, Chartwell, was not trivial; it had failed to serve witness statements by the date ordered and did not make an application to extend time until many weeks after the deadline.   Further, Globe J was critical of the reason given by Chartwell for its default, namely the contention that it could not finalise its statements until Fergies had provided full disclosure.

Nonetheless, Globe J granted relief from the sanctions.  A striking factor in this case was that there had been default on both sides.  Not only had the respondent, Fergies, delayed in the provision of the particular documents requested by Chartwell, it had also failed to serve any witness statements by the deadline.  Indeed, it was conceded that it had not been in a position to serve its witness statements on the date ordered. 

Globe J observed that a refusal to grant relief on the basis of a robust application of the new r.3.9 and the guidance in Mitchell would effectively mean the end of the action.  That would be too severe a consequence and an unjust result when considered against the background history, which included: the fact that there was default on both sides; the fact that the parties were ready to exchange statements almost immediately and the trial date would not be affected; and the fact that there were no significant additional cost implications (as Globe J refused to increase costs budgets).

Fergies obtained permission to appeal against the decision of Globe J from Lewison LJ, arguing that Globe J ought to have refused to grant relief from sanctions upon a proper application of the guidance in Mitchell.

The Court of Appeal dismissed the appeal and upheld the decision of Globe J.  As the matter was urgent, with the trial window just a few weeks away, the Court of Appeal announced its decision following the appeal hearing on 3 April 2014.  Reasons are to follow.

A note on the first instance decision is available here. Both the first instance judgment and the Court of Appeal judgment are available below.

Chartwell v Fergies [2014] EWHC 438 (QB)
Chartwell v Fergies [2014] EWCA 506


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