Petrou v Lambrou (t/a KCJ Builders)

On an application for relief from sanctions, the court must identify the order allegedly breached and apply the Denton three-stage test to that breach. Where an unless order permits a party to serve evidence within the specified period without first obtaining relief from sanctions for an earlier breach, the application should focus on compliance with the unless order. The earlier breach remains relevant when assessing seriousness, significance and the circumstances of the case. A litigant in person is generally held to the same compliance standard as a represented party, although that status may have limited relevance at the margins. The opportunity lost through lack of knowledge of an unless order may be a weighty factor at the third stage.

The claimant appealed against an order of HH Judge Bailey in the Central London County Court granting the defendant relief from sanctions and extending time for service of witness statements. The defendant had failed to comply with an earlier directions order and subsequently with an unless order, following which his defence and counterclaim were struck out and judgment was entered for the claimant.

The principal issue was whether the relief application should be analysed by reference to the earlier directions order or the unless order, and whether the judge’s exercise of discretion should stand.

1. Appeal dismissed. The order granting relief from sanctions and extending time for service of witness statements was upheld, although the appeal court reached the same result primarily for different reasons.
2. The relevant application was to extend time for compliance with the unless order. It was not an application for relief from sanctions arising from the earlier directions order. The Denton analysis therefore had to begin with the unless order, while taking the earlier breach into account.
3. The failure to comply with the unless order was serious and significant. In assessing that issue, the court had to consider the underlying failure to comply with the earlier order, consistently with British Gas Trading Ltd v Oak Cash and Carry Ltd [2016] EWCA Civ 153; [2016] 1 WLR 4530.
4. The defendant’s lack of knowledge of the unless order was an explanation, but not a good reason under the second stage of Denton. He should have made arrangements to monitor post and email while abroad, and should have investigated the papers reported by his daughter.
5. At the third stage, the default was unintentional and involved low culpability. The defendant’s status as a litigant in person did not establish a good reason, since a litigant in person generally receives no different compliance standard, as stated in Barton v Wright Hassall LLP [2018] UKSC 12. That status could, however, be considered to a limited extent in the overall circumstances, consistently with Nata Lee Ltd v Abid [2014] EWCA Civ 1652; [2015] 2 P & CR 3.
6. The most significant factor was that, had the defendant known of the unless order during its currency, he could have served the witness statements and preserved his defence and counterclaim without first applying for relief from sanctions. Relief was therefore granted, time was extended and the default judgment was set aside.
7. Alternatively, if the application were analysed by reference to the directions order, the first-instance judge had exercised the discretion on principled grounds and reached a conclusion reasonably open to him. The court also observed that the form of an unless order may materially affect whether a further application for relief from sanctions is required.

• High Court (Commercial Court): Appeal from the order of HH Judge Bailey dated 16 March 2018 dismissed. Relief from sanctions and the extension of time were upheld.
• Permission to appeal: Permission was refused on paper by Mrs Justice Cheema-Grubb and later granted by Mrs Justice Yip.