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	England and Wales High Court (Queen's Bench Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Travel and Holidays v Hajj Charter [2013] EWHC 1212 (QB) (28 February 2013) URL: http://www.bailii.org/ew/cases/EWHC/QB/2013/1212.html Cite as: [2013] EWHC 1212 (QB)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		The Royal Courts of Justice Strand London EC4A 1NL
		28 February 2013

1. MR JUSTICE LEGGATT: This is an application by the claimant for relief against the sanction of having the claim struck out following the claimant's failure to comply with an order of the court. The relevant background to this matter starts with an order dated 14 January 2013 when the claimant unsuccessfully opposed an application to vary the freezing order which it had obtained against the defendants in this action.
2. In consequence, the claimant was ordered the pay the costs of the application to vary, which were summarily assessed in the sum of £48,000; such payment to be made by 4.00 pm on 28 January 2013. Payment was not made by that date and on 7 February 2013 the defendants made an application for security for costs and also to strike out the claim for failure to satisfy the earlier costs order. Those applications were heard by Haddon-Cave J, who declined to order security for costs on the basis that it had been sought at too late a stage in the action. He made an order for the costs of the applications before him in favour of the claimant, which was set off against the earlier costs order for £48,000 in their favour; and at paragraph 5 of his order the judge ordered the claimant to pay the balance of £21,000 to the defendant by 4.00 pm on 22 February 2013, failing which the claim would be struck out.
3. There was then another application made by the defendants to Haddon-Cave J a week later on 14 February 2013 seeking to vacate the trial date. The trial, I should say, had been and still is, unless I make an order varying it today, listed to start in a two day window on 4 or 5 March 2013. This further application by the defendants was also unsuccessful and resulted in a costs order against them. The costs were summarily assessed in the sum of £6,000. That sum was also ordered to be set off against the costs payable to the defendants reducing the balance due to them to £15,000, and Haddon-Cave J ordered that sum of £15,000 to be paid by the deadline already specified of 4.00 pm on 22 February 2013, failing which he ordered the claim to be struck out without further order of the court.
4. The claimant left it until 21 February, in other words the day before the deadline, to make any attempt to comply with the order for payment of costs. It appears that on that day, last Thursday, instructions were given to a bank in Azerbaijan to transfer the sum of £15,000 to the bank account of the defendant's solicitors; the details given for that account having been supplied by the defendant's solicitors at the time of their application for security for costs.
5. It is said in the witness statement of Sarah Cornwall, that has been provided in support of the present application, that the reason why that instruction was not complied with was that the IBAN number was not supplied by the claimant, but that that omission was not appreciated either by the claimant or by the bank until the following morning when a request was made to supply the IBAN number. The claimant's solicitors received that request on Friday morning, immediately contacted the defendant's solicitor, Richard Holmwood, who immediately provided the IBAN number. That happened at 10.36 or thereabouts on the Friday morning. It is said that, however, in consequence of the delay in providing the IBAN number no transfer was made on Friday 22 February and the money was not received in the defendant solicitor's bank account until the morning of the following Monday, 25 February 2013.
6. There is some mystery, to my mind, about the precise sequence of events because two documents have been produced by the claimant which bear no obvious relation to one another. The first is a receipt from AG Bank in Azerbaijan dated 21 February of an instruction from STI Azerbaijan Limited, being the name given of the customer, to make a transfer of £15,000 to the defendant's solicitor's bank account. The second document produced is a record of a payment instruction given on 22 February 2013 (in other words, the Friday) by a different company, Gran Electric AS, which I understand to be a company registered in the Seychelles, to a different bank, ABLV Bank in Latvia, to pay £15,000 to the defendant's solicitor's bank account. This second document appears to be a record of an on-line banking communication. No explanation has been given for the apparent discrepancy between those documents, but the inference that I draw is that the payment ultimately made, which resulted from the instruction given on Friday 22 February, was from a different bank and the account of a different company from the attempted payment that appears to have been made on the previous day. Why the claimant left it to the last minute and why payment was then made in the way that it was, to attempt to comply with the order has not been explained. The conclusion that I draw is that it was plainly through fault of the claimant and no one else that the payment was not made in time to be received before the deadline expired; but at the same time, that the default was not intentional in the sense that the claimant did not deliberately decline to comply with the order. It simply made efforts to do so, which were inadequate.
7. The defendant's solicitor, Mr Holmwood, had been told on the Friday that the instructions to make the payment had been given, but he did not know, at that stage, whether or not the money had been received into his firm's bank account before the automatic strike out took effect. On the following Saturday morning, he discovered that the money had not been received and over the weekend a decision was taken that, in those circumstances, it would not be right to deliver counsel's briefs (as had been intended) on the Monday morning because Mr Holmwood or Mr Richard Slade, the partner, took the view (in my view, quite properly) that their firm could be personally liable for the costs incurred if they had committed the client's money at a time when the action had been dismissed and if the action was never subsequently reinstated. They also (again, in my view, quite properly) took the decision to notify Haddon-Cave J and the Court of Appeal that the order had not been complied with in case either Haddon-Cave J had been intending to work on a transcript of his judgment or the Court of Appeal to consider an application that had been made for permission to appeal against one of the previous orders on the Monday morning. There were further communications on the Monday. I am told and I accept from Mr Jones QC, who represented the defendants today, that it was not until the afternoon of Monday that the defendants learnt that the money (short of the £7 bank charge) had been received by the defendant's solicitor's bank in the course of that day. It was confirmed, however, by the close of business on Monday, that the money had been received and accordingly, the position is that the payment was made one working day later than was necessary in order to comply with the court's order.
8. The consequence of an order of this kind, as is well established, is that the claim is automatically struck out without the need for any further application or order of the court, and indeed the order of 14 February 2013 provided for that consequence in express terms. An argument was made today by Mr Vineall QC, on behalf of the claimant, that there had in fact been compliance with the order because it was sufficient compliance that the claimant had given on the Friday an irrevocable instruction to its bank to make the payment; and that was sufficient to fall within the terms of the order. It was suggested that in order to avoid that consequence the order would need to have been worded in terms that provided that the money must be received on 22 February.
9. I regard that as a hopeless contention. An instruction given to your bank to make a payment cannot, on any view of the matter, be equated with the making of the payment. Mr Vineall's submission, if correct, would have the consequence that if the bank failed to act on the instruction, so that the defendant never received any money, there would nevertheless have been compliance with the court's order by the claimant. There might have been a question mark about the position if the money had been despatched by the claimant's bank on the Friday, but was not received by the defendant's solicitor's bank until the Monday, but there is no evidence to support any suggestion that the money had been dispatched. My understanding (in the absence of any evidence to the contrary) would be that a transfer of this nature is, in any event, instantaneous so that the funds cannot have been dispatched by the claimant bank until the Monday. I have been calling the bank the claimant's bank, although on the documents provided it was not. And a further difficulty which would attend the argument made by the claimant, if it otherwise had any merit, is that the instruction does not, on the face of the documents, appear to be one given by the claimant.
10. So to my mind it is as clear as can be that there was a failure to comply with the court's order, from which the consequence follows that the action was automatically struck out at 4.00 pm on Friday 22 February; and it is for the claimant then to apply to the court to seek relief against that sanction and to seek an order that the claim should be reinstated. Such an application has indeed been made and is before the court today.
11. I will deal, in due course, with the consequences of the failure to comply with the order and its impact on the trial date scheduled for next week. But I should say at the outset that I regard it as overwhelmingly clear that relief from the sanction of striking out should be granted in this case. It would be wholly disproportionate that the claimant should forfeit its entire claim and the right to have that claim determined on the merits because of a failure to make a payment of £15,000 (a very small sum in comparison with the size of the claim) and in circumstances where the payment was one working day late. Considering, more specifically, the factors set out in CPR Rule 3.9, as the court is required to do, it is in my view overwhelmingly in the interests of the administration of justice that this case should be decided on its merits rather than on the basis of the non-compliance with the court's order that I have described. Secondly, with regard to factor (b), the application for relief has been made promptly. It was intimated even if not made immediately on Monday 25 February. Thirdly, I am satisfied that the failure to comply was not intentional in that there was an attempt made to comply with the court order by giving instructions for payment to be made before the deadline. Fourth, I do not consider that there is a good explanation for the failure in the sense that there was no good reason and no explanation indeed has been provided to me for leaving the payment to the last minute and incurring the obvious risk that the order would not be complied with. However, that fault on the part of the claimant is not as severe as would be the case if there had been a deliberate or contumelious breach of the court's order and is very strongly outweighed, in my view, as a factor by the countervailing factors which militate in favour of granting relief from the sanction of striking out the claim. Factor (e) is the extent to which the party in default has complied with other Rules, Practice Directions or court orders. I have been told that there was a short delay in giving disclosure by the claimant in this action and that, more significantly, witness statements which were ordered to be exchanged on 24 January 2013 were not in fact exchanged until 18 February. I am told that the defendant was ready to exchange its statement on 24 January, though the claimants were not then ready to exchange; that the claimant tendered its statements on or about 15 or 16 February though, at that stage, the defendant had taken the opportunity of the further time available to amend its witness statement and so was then not ready for exchange. Witness statements were finally exchanged on 18 February 2013. It does not appear to me that that delay has caused material prejudice or is a matter which should weigh in the decision whether to grant relief from the sanction. More serious to my mind is the fact that the claimant's solicitors were ordered to prepare trial bundles by 15 February. I am told that there may have been further discussion about the date, but in all events bundles were not delivered to the defendant's solicitors until yesterday, 27 February. That failure by the claimant does not, in my view, affect in any material way the question of whether I should grant relief from the sanction of striking out, but it is a factor which I need to bear in mind when considering what impact these issues may have on when the trial should take place. Factor (f) is whether the failure to comply was caused by the party or his legal representative. Here there is no suggestion that the claimant's legal representatives bear any responsibility for the failure to comply with the court's order. Factor (g) is whether the trial date or the likely trial date can still be met if relief is granted.
12. I will consider in more detail shortly the impact on the trial date, but my overall conclusion is that the failure to comply with the court's order has some impact on when the trial should take place, but it is a factor which should be addressed by considering the appropriate date on which the trial should start and could not possibly justify a refusal to afford relief from the sanction of striking out. The remaining factors mentioned in the rule are the effect which the failure to comply had on each party and the effect which the granting of relief would have on each party. As to that, the effect of failure on the defendant has been that time was lost in preparing for the trial between Friday afternoon and Monday afternoon when the defendant learnt that the payment had been made and in dealing with this application thereafter, I do not think that any competent legal adviser would have advised their client that they should stop preparing for the trial on the assumption that relief from sanctions would not be granted. On the contrary, I consider that any competent adviser would have taken the view that in all probability the court would grant relief from sanctions and should have approached preparation accordingly.
13. As for the effect which granting relief would have: granting relief will enable the case to be determined on its merits, whereas if the court were to decline to grant relief it would be struck out on account of what, in comparison, is a wholly disproportionate default.
14. Considering the factors as a whole I have concluded, as I have said, that the interests of justice overwhelmingly require that I should grant the order sought to reinstate the claim. There remains, however, the question of the terms on which I should grant that order and when the trial should take place.
15. Mr Jones QC, submitted first that the court ought to make an order for costs in his client's favour in respect of the costs which have been thrown away as a result of the failure to comply with the Unless Order; and secondly, that the court should not allow the claim to be reinstated until those costs have been paid. He pointed out that his client has been deprived of the opportunity to obtain security for its costs because of lateness in making the application and therefore has no realistic prospect of recovering any costs if they are left to be recovered unless those costs are paid as a condition of the trial taking place. I see the force of the argument that any order for costs which I make ought to be attended with a similar sanction to the orders made by Haddon-Cave J on 7 and 14 February 2013, but I am not prepared to accept the proposal that this action should remain struck out until any payment has been made.
16. As to the trial date, the trial is currently due to begin on Monday of next week, 4 March, or alternatively Tuesday 5th. It has an estimate of four days. If I look to see what delay and time in preparation is reasonably attributable to the claimant's default in satisfying the court's orders and the further consequences of that, I consider that it is about two days. As I have already said, the defendant's representatives were left in limbo, in effect, and reasonably took the view that they should not continue preparing for the trial over the weekend of 23 and 24 February and until the afternoon of 25th. In terms of working time I would assess that at about two days. I am also told that Mr Vineall received his trial bundles on Monday 25 February, which I believe I was told is when it had been agreed, perhaps informally, between the solicitors that they would be made available. As I have already said, the defendants were not provided with those bundles until yesterday, 27 February and that too, in my view, accounts for two days, in effect, of time lost at least in terms of full ability to prepare for the trial.
17. I would have wished, in all the circumstances, to put the trial date back by a week to start on 11 March. That would have given a longer additional time than, in my view, is justified by the default in compliance with the order itself, but would have been desirable, given the rush with which preparations are having to take place. However, the position, as Mr Jones has explained it to me, is this: First, he would not be available for the trial if it were to start on Monday 11 March because he has commitments in the form of a one or probably two day hearing that is due to start on either the Monday or the Tuesday and also a mediation on the Wednesday of that week. He further tells me that he has other commitments which make it impossible, fairly, for the trial to take place on any later day before Easter. If I then look at the period after Easter, Mr Vineall, for his part, tells me that he has commitments in the month of April, which would mean a delay, effectively, until May.
18. Ordinarily, the convenience of counsel would have to take second place, in these circumstances, to the importance of hearing a trial which the court considered should be expedited. However, there is a further difficulty which has been explained to me as this: the only funds which I am told are available either to pay for the defendant's costs in defending the action or to satisfy any judgment which the claimant may obtain are a sum of money which is subject to a freezing injunction in this country. I have not seen the freezing order, but I am told that it contains the usual provisions which allow the party subject to the order (in this case, the defendant) to pay reasonable living expenses and allow for payment of reasonable legal costs. I am told by Mr Jones that the position has now been reached that the funds left are such that they will all be consumed in paying the defendant's legal costs. Indeed, so low has the amount become that even if all of it is applied now to meet the defendant's legal expenses that will mean that the defendant's legal advisers will have to do their work on the basis of reduced fees. Mr Jones tells me that he, his junior, Mr Lewis, and his instructing solicitors have taken the view that they have a professional obligation to carry on with the case, even though they will not receive payment at the ordinary level of their costs. However, the consequence is, he says, that if, at this stage, the case were fixed for a date on which he was unavailable it may well be that other counsel could not be found to take on the case or at least not of counsel of the standing that would achieve to equality of arms. He therefore invites me to take the view that I should have regard to his availability and adjourn the trial until after Easter. However, if I am to do that, I consider that, in fairness, I should also consider Mr Vineall's availability and that would mean, as I say, a further adjournment until May.
19. It is clear that there is no satisfactory solution to this problem and that whatever solution is adopted will be less than ideal. It also appears that assuming the information which Mr Jones has given to the court is correct, which I have no reason to doubt, even if the claimant succeeds at trial there will be no money left against which to execute any judgment unless the claimant is able to identify other funds not yet known about.
20. Balancing everything as best I can in this unsatisfactory situation, I consider that it is better that the trial should take place next week than that it should have to wait until May. The result of an adjournment until May would, in my view, be unfair to the claimant. It would not be a consequence which would be reasonably attributable to the default of one working day in complying with the court's order. It would also necessarily cause additional costs to be incurred on both sides, and that again would, in my view, be particularly unjust to the claimant if the position is that there are in fact no funds against which any judgment can, in any event, be executed. I do consider that I should take account of Mr Jones' availability and the importance of that to the defendant, but a compromise has to be reached and, in my judgment, the best or the least bad compromise is that the start of the trial should be delayed by two days until Wednesday 6 March to give some further time for its preparation and to enable Mr Jones to at least conduct the defendant's case for the majority of the trial, whether or not he can be available on the following Monday if it goes into the fourth and last day.
21. After hearing further argument, the Statement of Costs that has been presented by the defendant seems to me to be calculated at reasonable rates for the time spent. Looking at the matter overall, the way I see it is that it is the claimant who created this problem by failing to make the payment on time, despite ample warning of the date and therefore, to a large extent, must be responsible for the costs which that has set in motion. On the other hand, I do think it was unreasonable and unrealistic for the defendant to adopt the position that the consequence should be a striking out from which no relief would be granted, and insofar as I have rejected that argument, the defendant has been unsuccessful on this application. I am therefore not going to award the full amount or nearly the full amount of the costs which are being claimed. The sum that I am going to order to be paid by the claimant is another £15,000.