Thomson & Anor v O'Connor & Anor

A trial judge retains an overriding discretion to decide what is fair when asked on the trial date to adjourn a case. The exceptional-circumstances provision in the Practice Direction to Part 29 should inform that discretion, but does not dictate its outcome.

An appellate court will usually be slow to interfere with case-management discretion exercised to enforce compliance with directions. It may do so where the judge omits a material consideration. Where parties are equally culpable for delay, their agreement to give up a valuable set-off in return for an adjournment, leaving an enforceable judgment on the claim, is a material factor that may require the counterclaim to remain for trial.

The claimants, as reversioners of a flat, claimed unpaid service charges. The defendants counterclaimed for damages, alleging that the claimants had unreasonably withheld agreement to a route for a flue and thereby prevented installation of a gas boiler and profitable letting.

Following delays in obtaining a jointly instructed valuer, the parties agreed on the day before trial that judgment should be entered for the service-charge claim and that the counterclaim should be adjourned. Judge Faber refused the adjournment, dismissed the counterclaim because the defendants had brought no evidence, and ordered them to pay costs.

The defendants appealed. The central issue was whether that exercise of discretion properly took account of the parties’ agreement and its consequences.

1. Appeal allowed unanimously. Brooke LJ, with whom Dyson and Carnwath LJJ agreed, held that the judge was entitled to regard both parties as seriously culpable for failing to inform the court promptly of the difficulty in obtaining a single joint valuer. The court’s case-management authority, and the parties’ duty under Civil Procedure Rules, rule 1.3, justified a firm approach to non-compliance.
2. A request made on the trial date remained subject to the trial judge’s overriding discretion to decide what was fair. The Practice Direction to Part 29 was relevant but not determinative. Moy v Pettman Smith [2005] UKHL 7 confirmed that the discretion concerned fairness and whether an adjournment should be granted.
3. The Court of Appeal would ordinarily be slow to disturb a judge’s broad discretion in enforcing directions. However, Judge Faber had omitted a material matter. By agreeing to judgment on the service-charge claim, with interest and costs, the defendants had given up their right to use the counterclaim as a set-off delaying payment. The claimants could enforce that judgment immediately.
4. That concession was made on the basis that the counterclaim would be adjourned. Given the judge’s finding that both sides were equally culpable, it was unjust to dismiss the counterclaim and require the defendants to pay its costs. Dismissal would also have left them able to pursue fresh proceedings without a res judicata bar, but only after paying those costs.
5. The order was varied. The counterclaim was adjourned to a date to be fixed. The defendants were ordered to pay only the claimants’ costs of the claim, subject to detailed assessment if not agreed. The service-charge judgment was not stayed and remained immediately enforceable.

• Court of Appeal (Civil Division): allowed the defendants’ appeal in [2005] EWCA Civ 1533; varied the order so that the counterclaim was adjourned and only the costs of the claim were payable by the defendants.
• Central London County Court: on 16 March 2005, Judge Faber refused an agreed adjournment, dismissed the defendants’ counterclaim, and ordered them to pay the claimants’ costs.