No relief from sanctions for late witness evidence and defence struck out (Karbhari v Ahmed)

No relief from sanctions for late witness evidence and defence struck out (Karbhari v Ahmed)
In an unsurprising result, the court has refused permission to serve a supplemental witness statement and to amend a defence requested on the first day of a seven day trial in Karbhari and another v Ahmed [2013] EWHC 4042 (QB). Not only were the requests made very late in the day but, unlike the indicator in Mitchell (para 41), the requests to amend and serve supplemental evidence did not result from a legitimate progress in development of the litigation since the original deadlines.Rather the defendant had a change of heart and decided to come clean about his involvement in receipt of various monies, instead of maintaining the denials set out in his defence and original witness statement. The rationale for his change of heart was that he had hoped his denials would avoid others being investigated for money laundering offences, but that once he realised the trial would go ahead, he decided it was better to tell the whole story.

Summary

In summary, the defendant was alleged to have received various monies from investors who had not received the promised return on their investments. When the claimants issued proceedings, the defendant initially denied ever having received any of the claimed investment monies. On the first day of a seven day trial of the matter, however, the defendant sought to amend his defence to admit receipt of the monies and to provide a supplemental witness statement dealing with this. His rationale for his late change of position (from denial to admission) was that he had previously been concerned that admitting the claims would result in others being investigated for money laundering offences. However, having realised that the trial would be proceeding, he had now decided to tell the full story.

The judge refused permission to amend the defence or to serve the supplemental witness evidence, with reference to CPR 32.10, CPR 3.9, Mitchell (and by analogy with expert evidence prior to 1 April 2013, Boyle and CPR 35.13).

He then struck out the defence, relying on the existence of the false statements of truth and CPR 32.14, CPR 3.4(2) and CPR 2.3(1))—how could the trial realistically be dealt with when there was such contradictory evidence, even where the supplemental evidence had not been admitted.

However, he stayed execution of the judgment pending investigation by HMRC into the money laundering aspects.

Particular points to note from the judgment, include that:

  1. CPR 32.10 provides the court with a discretion as to whether or not to permit service of witness evidence after expiry of a deadline for its service
  2. the judge considered that given the circumstances of this case, he would have exercised his discretion to refuse permission even if the matter had arisen prior to the April 2013 reforms when CPR 3.9 (relief from sanctions) was strengthened and even if the Mitchell decision had not been given wherein the Court of Appeal stamped its authority and seal of approval of the tough approach to be taken in relief from sanctions cases
  3. the judge did note that in Mitchell, para [41], relief may be appropriate where, 'later developments in the course of the litigation process are likely to be a good reason [for missing a deadline] if they show that the period for compliance originally imposed was unreasonable ....'. However, this was clearly not one of those cases.
This article was first published on Lexis®PSL Dispute Resolution on 19 December 2013. Click here for a free 24 trial of Lexis®PSL.

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