Contract Facilities Ltd. v Estate of Rees & Ors

Relief from sanction under CPR 3.9 depends on all the circumstances, including the party’s history of compliance with court orders. Repeated defaults, attempts to delay enforcement of costs, and an unsatisfactory explanation may outweigh the fact that an appeal has been prepared and that payment is later promised. Delivery of an uncleared or defective cheque does not necessarily constitute compliance with an unless order. Where the court cannot be satisfied that the default was inadvertent, and the history shows disregard of court orders, relief may properly be refused and the appeal dismissed.

Contract Facilities Ltd appealed from a decision of the High Court of Justice, Chancery Division, dismissing its claim for damages for alleged breach of a written share-sale agreement. The judge found that the company had not been ready, willing and able to complete, had committed a fundamental breach, and that the agreement had been lawfully terminated before the company was restored to the register.

The appeal became subject to successive orders requiring security and payment of costs. The final unless order required £37,000 to be paid into court and more than £11,000 to be paid to the respondents by 4.00 pm on 18 July 2003. Cheques were supplied late; one was returned unpaid for want of a second signature and the other remained uncleared when the appeal was called. The central issue was whether relief from sanction should be granted under CPR 3.9.

The Court of Appeal unanimously refused relief from sanction and dismissed the appeal with costs.

1. Applicable approach. CPR 3.9 requires the court to consider all the circumstances of the case, including the listed factors capable of bearing on the particular application. The discretion must be applied to the procedural history as a whole. The fact that the appeal had been prepared and that the default had not affected the hearing date was not decisive.
2. Compliance history. The extent to which the defaulting party has complied with other rules, practice directions and court orders is a particularly significant consideration under CPR 3.9(1)(e). Buxton LJ described that factor as the signal feature of the application. The earlier late payment of security, the attempts to postpone assessment and payment of costs, and the failure to comply with later orders demonstrated a continuing disregard for the court process.
3. Explanation for the default. The court was entitled to test the explanation against the whole history and the surrounding circumstances. The cheques were produced only shortly before the deadline, one lacked the required second signature, the source of the funds was unexplained, and Mr Shuck neither attended nor supplied his own witness statement. The court was not prepared to find that the failure was unintentional. A later personal undertaking that the cheques would clear could not cure the non-compliance.
4. Unless order and disposal. The final order was understood to require actual compliance by the specified time. The cheque for £37,000 had not cleared and the other cheque had been returned. In the circumstances, the interests of justice did not support giving an impecunious company a further opportunity to continue an appeal after repeated defaults and conduct directed towards avoiding payment of costs. The application was refused, the appeal was dismissed, sums held in court were ordered to be paid to the respondents’ solicitors, and the relevant costs were subject to detailed assessment if not agreed.

• High Court of Justice, Chancery Division: His Honour Judge Weeks QC dismissed the claim, holding that the claimant was not ready, willing and able to complete, had committed a fundamental breach, and that termination was effective before restoration to the register.
• Court of Appeal (Civil Division): The appeal was struck out for failure to comply with the final unless order. Relief from sanction was refused and the appeal was dismissed with costs: [2003] EWCA Civ 1191.