Fouda v London Borough of Southwark & Anor

Relief from sanctions under CPR 3.9 and CPR 32.10 requires a structured assessment of the seriousness and significance of the breach, the reason for it, and all the circumstances of the case. The court must give particular weight to efficient and proportionate litigation and compliance with rules and orders. Previous and current procedural defaults may be relevant at the third stage. A breach which is not serious may nevertheless justify refusal of relief where the explanation is inadequate and forms part of a wider pattern of default. Judgment on a counterclaim should not be entered merely from incomplete pleadings where the amount claimed is not properly particularised or supported by evidence.

The appellant challenged a county court decision arising from the seizure and detention of his vehicle for unpaid council tax. He alleged that the vehicle was exempt from seizure because it was used as a taxi. The trial judge refused relief from sanctions for late witness statements, excluded the witness evidence, struck out the claim, and entered judgment for Southwark on its counterclaim for seizure and storage charges.

Permission to appeal was granted on the relief-from-sanctions issue and the treatment of the counterclaim. The appeal concerned whether the trial judge had properly assessed the relevant factors and whether the counterclaim could be determined on the pleadings alone.

1. Relief from sanctions. The applicable approach was the three-stage test in Denton v T H White Ltd [2014] EWCA Civ 906; [2014] 1 WLR 3926: assess the seriousness or significance of the breach; identify the reason for it; and evaluate all the circumstances, giving particular weight to efficient and proportionate litigation and compliance with rules, practice directions and orders.
2. The breach of CPR 32.10 was not serious or significant in itself. The explanation, however, was inadequate. At the third stage the judge was entitled to consider the solicitors’ wider pattern of default, including unsatisfactory disclosure, defective preparation of the trial bundle, loss of the first hearing day, and inadequate pleading. The judge would therefore have been entitled to refuse relief had he expressly worked through the Denton stages. The appeal on this issue was dismissed.
3. Counterclaim. The trial judge erred in entering judgment for Southwark on the counterclaim. The pleadings did not explain how the seizure and storage figures had been calculated, and the absence of an effective admission did not supply the evidential basis for judgment. The appellant succeeded on this issue and the appeal was allowed in relation to the counterclaim.
4. The appeal was accordingly dismissed as to relief from sanctions and allowed as to Southwark’s counterclaim.

• Central London County Court: refused relief from sanctions, excluded the appellant’s late witness evidence, struck out the claim, and entered judgment for Southwark on its counterclaim.
• High Court (Queen’s Bench Division): dismissed the appeal on relief from sanctions but allowed it in relation to the counterclaim.
• The separate application concerning the wasted costs order was refused on renewal and was not allowed to affect the outcome of this appeal.