Delay kills defence in British Gas v Oak Cash & Carry

clockThe Court of Appeal has upheld the Queen’s Bench Division’s decision to allow an appeal and reinstate default judgment following the defendant’s failure to file its listing questionnaire (or pre-trial checklist (PTC)) in accordance with an unless order. In doing so, the Court of Appeal has considered the extent to which the breach of the unless order should be looked at in isolation and the fatal effect the defendant’s failure to act promptly on receiving the default judgment had on its ability to defend the claim. The decision applied the three-stage Denton test under CPR 3.9 and is perhaps the strongest indication yet of the importance of appropriate action being taken immediately in situations of default.

The three key practical implications arising from this judgment are:

1. Delay

Do not underestimate the importance of taking appropriate action immediately. As a defaulting party, take prompt and formal steps in relation to every aspect and implication of the breach. Here, the court observed:

  • the defendant ought to have made an application to set aside the default judgment as well as an application for relief from sanctions
  • consider always whether an application for relief should be made. Here, Jackson LJ considered an application for relief ought to have been made on filing the PTC. Had such an application been made, the court would have been likely to have granted relief (although the suggestion was that the matter would never have come before the court as the claimant/respondent would most likely have agreed the application.
  • it is not enough to write to the court begging its forgiveness for any breach, a formal application is required. Further, and in any event, any such letter ought to have been copied to the other side (para [58])
  • although there have been suggestions that satellite litigation in the form of relief from sanctions applications ought to be discouraged, this judgment seems to suggest it may be 'better to be safe than sorry' ie it may be better to incur costs associated with making an application for relief (including potentially adverse costs orders) rather than risk potentially draconian consequences, as here
  • particularly as the defaulting party, be extremely wary of losing a trial date and wherever possible seek to resist this. Here, the fact the trial date had been lost exacerbated the position for the defendant

2. Unless orders

  • be aware of the distinction between unless orders and 'ordinary' orders and, consequently, the courts' attitude to parties' non-compliance, particularly with the former
  • breaches of unless orders are unlikely to be considered in 'isolation'. This is in contrast to the general position that the court will not consider the defaulting party's other breaches and conduct at Denton stage one (doing so, instead, at stage three) such that an otherwise trivial breach cannot become serious and significant for the purposes of stage one purely because there is a history of non-compliance

3. Internal procedures

  • ensure matters are dealt with by an appropriate level of fee earner and/or under an appropriate level of supervision
  • monitor matters and seek to put in place pro-active systems and procedures such that senior fee earners are alerted to any personal and/or professional pressures on their colleagues and so that appropriate steps can be taken to ensure all cases are dealt with and progressed properly
  • put in place systems and processes such that important communications are delivered to relevant fee-earner(s) in a timely manner. This could include training those receiving post, secretaries, trainees and/or others who may have first sight of the post to be able to recognise time-sensitive and/or other important communications (including unless orders) such that they are brought to the relevant fee earner's attention and/or dealt with appropriately as a matter of urgency
  • be aware that, the larger the size of your firm, the greater the likelihood the court will not be sympathetic to reasons given to seek to excuse the breach under Denton stage two

Further Guidance

Lexis®PSL Dispute Resolution subscribers can read the full analysis of the case and the application of the Denton test here.

Click here for a free trial to access if you are not a PSL subscriber.

Filed Under: CPR

Relevant Articles
Area of Interest