Late service of evidence requires relief from sanctions

Facts
Appeal
Decision
Comment

An application to admit witness evidence outside the directions timetable should be treated like an application for relief from sanctions under Civil Procedure Rule (CPR) 3.9, according to the High Court in Wolf Rock (Cornwall) Ltd v Langhelle.

Facts

Ms Langhelle was the substituted petitioning creditor for the winding up of the appellant company, Wolf Rock, under Section 122(1)(f) of the Insolvency Act 1986 (which applies when a company is unable to pay its debts). Langhelle claimed that Wolf Rock had failed to:

• pay her salary and other expenses that she had incurred on its behalf; and
• repay loans that she had advanced.

Wolf Rock denied these claims.

The district judge gave directions as to the service of evidence, which included an extension of time for Wolf Rock to file and serve a witness statement to 16 August 2019.

On 22 November 2019 Wolf Rock filed and served three further witness statements (the November witness statements).

At the substantive hearing of the petition, Wolf Rock sought permission to rely on the November witness statements. The district judge refused, drawing a parallel with an application for relief from sanctions under CPR 3.9 and finding that the appropriate Mitchell/Denton principles were not satisfied.

Appeal

On appeal, Wolf Rock argued that the district judge had wrongly refused to admit the November witness statements as they were served in accordance with Rule 7.16 of the Insolvency (England and Wales) Rules 2016. Therefore, the November witness statements were not in breach of any relevant court order. As such, there was no need for an application for relief from sanctions.

Decision

The High Court judge dismissed the appeal. He stated that no specific sanction is prescribed for a breach of the orders but that, in recent years, case law has built up the concept of an implied sanction, to which the Mitchell/Denton principles are equally applicable.

In practice, this means that an application for relief from the consequences of a breach of a rule or order which contains no express sanction should be treated analogously to an application for relief from sanctions if:

• the intention of the rulemaker or judge is to impose a sanction which has not been expressed, and the court has construed the rule or order as impliedly containing one; or
• the rulemaker or judge had no intention of imposing a sanction, but for policy reasons the case is treated as one of relief from sanctions.

On the facts, the High Court judge held that the district judge was exercising his case management powers under CPR 32.1 in giving directions as to evidence and requiring that in order for the evidence to be admissible, it had to be filed and served in accordance with a prescribed timetable. Accordingly, the "obvious inference" was that that November witness statements would not be admitted without the court's permission. No specific sanction was laid down, except in the sense that if permission was not obtained, the evidence could not be admitted. This was directly comparable to the cases of:

• Sayers,(1) where an appellant could not appeal without permission to file its appellant's notice late; and
• Altomart,(2) where a respondent could not rely on additional grounds for the decision under appeal without permission to file a respondent's notice late.

As such, for the same policy reasons set out in earlier case law, the test for giving permission for evidence not filed and served in accordance with the court timetable was to be the same test for relief from sanctions under CPR 3.9.

The court also dismissed Wolf Rock's submission that the district judge had failed to properly apply the Mitchell/Denton principles – his decision could not possibly be characterised as 'perverse', irrespective of whether the present court would have come to a different decision on the facts. Accordingly, the district judge's application of the principles could not be challenged.

Comment

The decision suggests that the court may imply a sanction for policy reasons, even where there was no intention on the part of the rulemaker or judge to impose a sanction for a breach. Therefore, there is a real risk that parties which fail to comply with a time limit may be heavily penalised or even have their claim or defence struck out. To avoid an application for relief from sanctions for non-compliance with time limits, parties should take practical steps, including:

• setting a realistic timetable at the outset;
• agreeing a buffer order if they think that there may be difficulties in complying with a deadline;
• applying for an extension of time early; and
• obtaining the court's approval for consent orders where parties have agreed an extension of time.

This decision also reaffirms the reluctance of appellate courts to interfere with case management decisions.

For further information on this topic please contact Daniel Hemming or Christina Gleeson at RPC by telephone (+44 20 3060 6000) or email (daniel.hemming@rpc.co.uk or christina.gleeson@rpc.co.uk). The RPC website can be accessed at www.rpc.co.uk.

Endnotes

(1) Sayers v Clarke Walker [2002] 1 WLR 3095.

(2) Altomart Ltd v Salford Estates (No 2) Ltd [2015] 1 WLR 1825.