Gallaher International Ltd. v Tlais Enterprises Ltd. Between :

Splitting a trial is justified only where it serves the interests of justice and produces genuine procedural or economic benefits. Issues should remain together where factual and expert evidence is closely interlinked.

Relief from an unless order under CPR Part 3.9(1) requires consideration of all the listed circumstances, followed by an overall assessment against the overriding objective. Although repeated procedural defaults and disruption to the trial timetable weigh heavily against relief, relief may be granted where refusal would prevent a reasonably arguable claim from being properly advanced and strict conditions can protect the opposing party.

Gallaher International Limited brought two related actions against Tlais Enterprises Limited and Ptolemeos Tlais concerning the termination of a cigarette distributorship agreement and associated counterclaims. At a pre-trial review, the court considered TEL’s application to separate forensic accountancy issues for a later hearing and its application for relief from an unless order debarring late forensic accountancy evidence.

The applications arose after repeated failures to comply with orders concerning expert evidence, witness statements and security for costs. The central issues were whether the accountancy issues could properly be separated from the main trial and whether relief should be granted under CPR Part 3.9(1).

1. The application to split the trial was dismissed. The forensic accountancy issues were closely connected with evidence about sales, margins, markets and the alleged loss of profits. Separating them would require witnesses and experts to be recalled, increase costs, delay the second hearing and risk generating further issues. It was therefore not in the interests of justice to order a separate trial.

2. Relief from the sanction imposed by the unless order was granted under CPR Part 3.9(1), but only on strict conditions. The court considered each of the matters listed in the rule and then stood back to assess the aggregate position against the overriding objective.

3. The failure was serious. TEL had repeatedly failed to comply with court orders, had no good explanation for the late accountancy evidence, and relief would disrupt preparation for the trial and probably prevent completion within the existing timetable. The court also emphasised the importance of compliance with unless orders. In R.C. Residuals v Linton Fuel Oils Limited [2002] 1 WLR 2782, the serious consequences of non-compliance were emphasised.

4. Nevertheless, refusal of relief would prevent TEL from adducing evidence central to a reasonably arguable counterclaim for loss of profits. The prompt application, the proposed expert’s availability, and confirmation that the required retainer would be paid justified granting relief. The court adopted the approach described in CIBC Mellon Trust Co v Stolzenberg [2004] EWCA (Civ) 827: after considering the listed factors, the court must form an overall judgment in accordance with the overriding objective.

5. Relief was conditional on service and lodging of the forensic accountancy report by 4 pm on 19 March 2007, payment of indemnity costs arising from the default and application, and adjustment of the pre-trial and trial timetables. Failure to comply with the new deadline would result in TEL being debarred from adducing forensic accountancy evidence.

First-instance interlocutory decision of the High Court (Commercial Court). No appeal or earlier appellate decision is stated in the judgment.