Oak Cash & Carry Ltd v British Gas Trading Ltd

When relief is sought following breach of an unless order, seriousness and significance cannot be assessed by isolating the final period of default. The court must consider the underlying obligation, the original breach and the failure to use the additional time allowed. Breach of an unless order points towards seriousness, but is not invariably serious or significant.

The court must then consider whether there was a good reason for the default. At the final stage it must consider all the circumstances, giving particular weight to efficient and proportionate litigation and the enforcement of compliance. Promptness is important. Delay in seeking relief may become decisive where it causes loss of a trial date and substantially disrupts the proceedings.

The claimant sought approximately £200,000 for electricity supplied to the defendant. The defendant failed to file its pre-trial checklist by the original deadline and then failed to comply with an unless order. Its defence was automatically struck out and default judgment was entered.

A circuit judge granted relief from sanctions and set aside the default judgment. On the claimant’s appeal, McGowan J reversed that decision and restored the judgment. The defendant appealed.

The central questions were whether the seriousness of breach of an unless order should be assessed by reference to the underlying breach, and what effect should be given to delay in applying for relief under rule 3.9 of the Civil Procedure Rules 1998.

1. The appeal was dismissed unanimously. McGowan J had correctly concluded that relief from the sanction of striking out the defence must be refused. Judge Harris QC’s contrary decision fell outside the permissible ambit of his discretion.

2. The three-stage approach in Denton v TH White Ltd [2014] EWCA Civ 906 applied. The court must assess the seriousness or significance of the breach, determine whether there was a good reason for it and then consider all the circumstances of the case.

3. An unless order does not stand independently of the obligation which preceded it. At the first stage, the court must examine what the party originally failed to do and its subsequent failure to use the additional time allowed by the unless order. The relevant breach is the failure to perform the obligation imposed by the original rule or order and extended by the unless order. Non-compliance with an unless order points towards seriousness because there have been two successive failures and the court has specified an automatic sanction. It does not follow that every such breach is serious or significant.

4. The present breach was serious and significant. The defendant had three months to comply with the original order, filed the checklist 18 days late under that order and remained two days late under the unless order. Its solicitors had received the unless order six days before the extended deadline.

5. There was no good reason for the breach. The responsible solicitor’s family difficulties had been known for months. A firm of significant size should have arranged competent cover and proper supervision of the trainee. The solicitor had also approved an obviously irrelevant document when he attended the office.

6. At the third stage, all circumstances had to be considered. Particular weight was required for efficient and proportionate litigation and the enforcement of compliance with rules and orders. Promptness was a relevant and important circumstance. A prompt application made when the checklist was filed would probably have succeeded because the modest delay had not affected the opposing party or the court’s administration. Instead, the defendant delayed until after default judgment and the loss of the trial date. That disruption, together with the other circumstances, made refusal of relief the only proper outcome.

1. Court of Appeal (Civil Division): The defendant’s appeal was dismissed. The order of McGowan J and the restored default judgment remained effective: [2016] EWCA Civ 153.

2. High Court, Queen’s Bench Division: McGowan J allowed the claimant’s appeal from Judge Harris QC, refused relief from sanctions and restored the default judgment.

3. Oxford County Court: Judge Harris QC granted the defendant relief from sanctions and set aside the default judgment.