Khatib v Ramco International & Ors

Relief from an unless order under CPR rule 3.9 requires the court to consider all relevant circumstances, including the listed factors, and then to make an overall assessment in accordance with the overriding objective. The exercise is structured but is not a mechanical count of factors.

An extempore judgment need not expressly address every factor or recite a checklist. It is sufficient if it is reasonably apparent that the judge identified the applicable principles, considered the relevant matters raised by the evidence, and conducted the necessary balancing exercise. Continuing delay in curing a default and an inadequate evidential explanation may justify refusal of relief, despite eventual payment and no additional prejudice to the respondent.

The claimant sought substantial commission under an alleged oral agreement governing a business relationship with the seventh defendant. The defendants denied that any commission agreement existed and advanced a Part 20 claim for loans and other sums.

Following unsuccessful disclosure applications, the claimant was ordered to pay costs. He did not pay a costs order of £16,807 by the time required by an unless order. His claim and defence to the Part 20 claim were therefore struck out and debarred, subject to later procedural qualifications. He eventually paid the costs with interest after his appeal against the underlying costs order failed.

Roth J, in the Chancery Division, refused relief from the sanction as to the claim but allowed the claimant to defend the Part 20 claim: [2009] EWHC 3610 (Ch). The central issue was whether that discretionary refusal misapplied CPR rule 3.9.

Appeal dismissed. Lord Justice Lloyd gave the judgment of the court, with whom Lord Justice Wilson and Lord Justice Carnwath agreed.

1. CPR rule 3.9 required the judge to consider all relevant circumstances, including the listed factors, and to conduct an overall balancing exercise. The approach described in Stolzenberg and Woodhouse promotes structured decision-making, but the outcome is not reached by counting factors for and against relief.

2. The judge had not held that the claimant deliberately flouted the order. His reasoning was directed to the claimant’s failure to give an adequate evidential explanation for non-payment. A failure which is not consciously deliberate may nevertheless be culpable where the evidence does not show that the defaulting party did all that could reasonably have been expected to comply.

3. The claimant’s original application for relief had been prompt. However, the later delay in curing the non-payment remained relevant to the circumstances overall. The prolonged delay and the inadequate evidence explaining why payment could not have been made earlier were material considerations.

4. An extempore judgment in an applications list need not expressly work through every item in rule 3.9 or state each stage of the balancing exercise. It was enough that the judge’s awareness of the rule, the governing principles, and the relevant factual matters was reasonably apparent. The judge had properly considered the severe effect of striking out the claim, the eventual payment with interest, and the absence of further prejudice asserted by the defendants. He was entitled nonetheless to refuse relief in the interests of the administration of justice.

5. The preservation of the claimant’s defence to the Part 20 claim did not undermine refusal of relief for his claim. The claim and counterclaim arose from different facts and any trial of the counterclaim would be materially narrower.

The refusal of relief from the striking-out sanction as to the claim therefore stood. The parties were invited to agree the consequential treatment of the Part 20 claim.

• Court of Appeal (Civil Division): The claimant’s appeal was dismissed: [2011] EWCA Civ 605.
• High Court of Justice, Chancery Division (Roth J): Relief from the striking-out sanction was refused in respect of the claimant’s claim, but granted to permit a defence to the Part 20 claim: [2009] EWHC 3610 (Ch).