Haley v Siddiqui & Ors

Where the court imposes a sanction for the first time by an order made without a hearing or on its own initiative, an application to set aside or vary that order is not governed by the restrictive approach applicable to relief from sanctions. The court must instead review whether the order was appropriate, applying the overriding objective and considering proportionality, fairness, expense and the interests of justice. An immediate strike-out is a severe case-management measure and requires careful justification. The parties’ failure to comply with a joint notification obligation does not automatically justify striking out the claim.

The claimant appealed against a district judge’s refusal to set aside an order striking out proceedings concerning the estate of the deceased. The strike-out followed the parties’ failure to notify the court, after a mediation stay, of the outcome of negotiations and any directions required. The order had been made without a hearing and on the court’s own initiative.

The district judge treated the application principally as one for relief from sanctions under CPR 3.9 and applied the approach in Mitchell v News Group Newspapers Ltd. The central issue was whether that was the correct legal approach to an application to set aside an order imposing a sanction for the first time without a hearing.

1. Appeal allowed. Permission to appeal was granted because the district judge’s decision was wrong, or alternatively unjust because of a serious procedural irregularity.
2. The application notice sought both relief from sanctions and rescission or setting aside of the strike-out order. The strike-out was imposed by the court’s own initiative under CPR 3.4(2)(c), without a hearing. CPR 3.3(4)–(6) therefore entitled the parties to apply to set aside, vary or stay the order.
3. On such an application, the restrictions governing relief from sanctions under CPR 3.9, including those stated in Mitchell v News Group Newspapers Ltd, do not apply. The court must review whether it was appropriate to impose the order in the first place. It must consider the whole overriding objective, including fairness, proportionality, expense, expedition and the appropriate use of court resources.
4. The district judge erred by treating the application as one for relief from sanctions, by focusing on the absence of a good reason for non-compliance, and by considering only enforcement and court-resource factors. She failed to consider whether the immediate and drastic sanction of striking out the claim was reasonable and proportionate, particularly where the obligation was joint and no prior sanction had been imposed.
5. The observations in Marcan Shipping (London) Ltd v Kefalas concerning the need to justify a strike-out sanction applied with even greater force to an immediate strike-out imposed without a hearing. The order was set aside through the allowed appeal. There was no order as to costs. The matter was listed for settlement approval or further case management directions after 1 April 2014.

• High Court (Chancery Division): The appeal from District Judge Matharu’s refusal of relief from sanctions was allowed. The district judge’s decision was held to have proceeded on the wrong basis.