Nelson v Circle Thirty Three Housing Trust Ltd

A court may consider relief from a procedural sanction of its own motion, although a party in default should ordinarily apply for it and cannot require the court to act. Relief may properly be granted where fresh evidence shows very substantial compliance with disclosure obligations, proper efforts to comply with the outstanding requirement, and that the remaining default was caused by a third party rather than the litigant.

Where those exceptional circumstances are established and the missing material has since been disclosed, the court may exercise the discretion afresh and restore a struck-out defence.

A registered provider of social housing sought possession from its tenant, alleging that she had not occupied the property as her principal home and had made unauthorised alterations. Disclosure relevant to occupation was ordered. An unless order later provided that the tenant’s defence would be struck out unless she supplied outstanding credit-card statements.

Although much disclosure had been provided, the outstanding statements were not produced by the deadline. The judge treated the unless order as effective and made a possession order. On appeal, the tenant relied on fresh bank evidence showing repeated pre-hearing requests for the statements and that the bank had failed to provide them.

The central issue was whether the Court of Appeal should grant relief from the sanction and restore the defence.

Appeal allowed. The Court of Appeal granted relief from the sanction imposed by the unless order and restored the tenant’s defence.

1. The judge had been presented with a confused and materially inaccurate account of the tenant’s attempts to obtain the outstanding credit-card statements. The fresh evidence admitted on appeal showed that she had contacted the bank repeatedly before the hearing. The bank acknowledged that it had failed to provide the statements.

2. The court exercised the discretion afresh on the full material. It did not hold that the judge had erred on the information then available. The court could consider relief even though no formal application had been made below. As explained in Marcan Shipping v Kefalas [2007] 1 WLR 1864, a defaulting party should apply for relief, but the court may act of its own motion and is not obliged to do so.

3. Relief under rule 3.9 was justified by the special circumstances. There had been very substantial compliance with the disclosure order, including substantial credit-card disclosure. The tenant had made proper efforts to obtain the missing material. The residual failure was the bank’s fault, and the statements had by then been served on the claimant.

4. The court declined to determine the separate issue under section 7(4) of the Housing Act 1988: whether, after a defence has been struck out, the court must still consider reasonableness before making a possession order. That issue raised difficult questions and did not require decision once relief was granted.

• Court of Appeal (Civil Division): Allowed the appeal in [2014] EWCA Civ 106, granted relief from the unless-order sanction, and restored the defence.
• Central London Civil Justice Centre: His Honour Judge Collender QC made a possession order on 5 April 2013 after the tenant’s defence was struck out for non-compliance with an unless order.