Elo Trustees Limited v Bonhams 1793 Limited & Anor

Relief from sanctions requires the three-stage inquiry established in Denton: seriousness and significance, the reason for default, and all the circumstances. Promptness is circumstance-specific; no fixed period, such as 14 days, automatically qualifies. A party’s failure to keep opponents apprised may be relevant even without a specific duty to correspond. An error concerning the effect of personal service on deemed service will not justify appellate intervention where other sufficient reasons support the decision. Refusal of relief may be proportionate where breaches of peremptory orders are serious, unexplained and prejudicial.

ETL appealed against the dismissal of two applications by the High Court, Queen’s Bench Division, reported at [2022] EWHC 2465 (QB). The first application sought relief from sanctions imposed by an order requiring ETL to issue and serve a claim concerning ownership of several cars and to serve supporting evidence. The second sought to set aside a consequential order confirming the sanctions. It was common ground that the second application depended on the first. The central issue was whether ETL should receive relief from sanctions despite issuing and serving the claim form and serving evidence out of time.

Appeal dismissed. The Court of Appeal held that the application for relief from sanctions was governed by the three-stage approach in Denton v T.H. White Ltd [2014] EWCA Civ 9806, [2014] 1 WLR 795.

1. The breaches concerned peremptory orders with tight deadlines. They were serious and significant because they delayed the proceedings by days, derailed the intended timetable and undermined the urgent basis on which the injunction had been granted.
2. There was no good reason for the defaults. ETL should have anticipated possible problems with the claim form, chased the court when it was not issued, sought agreement to an extension, or applied for one. There was also no adequate explanation for the late service of the claim form or evidence. The fact that Mr Elo was in Florida did not constitute a good reason.
3. At the third stage, the judge was entitled to consider the need for compliance with a peremptory order, ETL’s relaxed and reckless approach, the parties’ previous expenditure of time and resources, the failure to notify the defendants of the relief application, delay, prejudice and additional storage costs. The refusal of relief was proportionate.
4. The judge had erred in treating personal service of the claim form as relevant to its deemed date of service. Under the Civil Procedure Rules 1998, rule 6.14, and Godwin v Swindon Borough Council [2001] EWCA Civ 1478, [2002] 1 WLR 997, and Anderton v Clywd County Council [2002] EWCA Civ 933, [2002] 1 WLR 3174, personal service would have made no difference. Rule 6.26 would have made a difference to service of the evidence. The error was immaterial because the judge gave other sufficient reasons.
5. Promptness under CPR rule 39.5 depends on the circumstances. The dictum of Simon Brown LJ in Regency Rolls Ltd v Carnall [2000] EWCA Civ 379 did not support a fixed 14-day period. The judge was entitled to find that ETL’s application was not prompt. Nor did he impose a duty to correspond with the court or defendants; he was entitled to treat ETL’s failure to keep them apprised as part of its unsatisfactory conduct.

Lord Justice Stuart-Smith and Lord Justice Moylan agreed with Lord Justice Arnold’s reasons and the dismissal of the appeal.

1. Court of Appeal (Civil Division): dismissed ETL’s appeal.
2. High Court of Justice, Queen’s Bench Division: dismissed ETL’s applications for relief from sanctions and to set aside the consequential order in [2022] EWHC 2465 (QB).