Palmali Shipping SA v Litasco SA

Relief from sanctions requires application of the three-stage test in Denton v TH White: assess the seriousness and significance of the breach, identify why it occurred, and evaluate all the circumstances so as to deal justly with the application.

The solicitor’s responsibility for a default may be a significant factor at the third stage, although it is not decisive. The court must balance the need to enforce compliance and conduct litigation efficiently against the practical prejudice caused by refusing relief. The fact that a trial can still proceed is relevant but does not determine the application.

The claimant sought relief from sanctions after failing to serve two expert reports by deadlines imposed in an order made by Foxton J on 7 July 2023. It had also failed to provide further disclosure. The failures followed a change of solicitors and prolonged delay in obtaining competent advice.

The defendant accepted that the trial could proceed in January 2025 under an adjusted timetable, although with some pressure on its preparation. The central issue was whether relief should be granted under CPR 3.9 in light of the serious and significant breach, the reasons for it, and all the circumstances of the case.

1. Relief granted. The claimant’s failure to serve the expert evidence involved a serious and significant delay. The first stage of the Denton test therefore favoured the defendant.
2. The reason for the default also favoured the defendant. The claimant’s solicitors had given seriously deficient advice and failed to advise that an extension or relief application was required. Under Mitchell v News Group Newspapers Ltd, the client and solicitor are effectively equated when considering responsibility for default. That principle did not prevent the court from considering the solicitor’s conduct as part of all the circumstances.
3. The third stage favoured relief. The unusual adjournment of the original trial had resulted from sanctions concerns affecting the defendant and was not the claimant’s fault. The claimant had consequently lost approximately 27 months. The defendant’s prejudice from an adjusted timetable was comparatively modest, and the parties had demonstrated that a fair trial could still take place.
4. The outstanding expert evidence overlapped with evidence already served, particularly on shipping market rates and practice and accounting. Refusing relief would produce an unsatisfactory trial in which the defendant could call related expert evidence while the claimant could not.
5. The claimant’s solicitor was primarily responsible for the delay. That was a significant, but not decisive, factor. Refusal would also leave the claimant with a potentially complex professional negligence claim concerning the effect of missing expert evidence on quantum.
6. Taking all the circumstances into account, and having regard to the objectives in CPR 3.9, the court granted relief against sanctions. Consequential orders and costs were to be addressed separately.

Not stated in the judgment.