Late service of evidence requires relief from sanctions

An application to admit witness evidence outside the directions timetable should be treated like an application for relief from sanctions under 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 (company unable to pay its debts).  She claimed that Wolf Rock had failed to pay her salary and other expenses she incurred had on its behalf, and to repay loans 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).

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 rule 3.9 and finding that the appropriate Denton/Mitchell principles were not satisfied. 

Appeal 

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

Decision

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

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

• the intention of the rule-maker 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 rule-maker 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 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 were not obtained, the evidence could not be admitted. This was directly comparable to the case of Sayers(i), where an appellant could not appeal without permission to file its appellant's notice late and the case of Altomart(ii) 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 down 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 failed to properly apply the Denton/Mitchell 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 rule-maker or judge to impose a sanction for breach. Therefore, there is a real risk that parties who 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 you think 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.

(i)  Sayers v Clarke Walker [2002] 1 WLR 3095
(ii) Altomart Ltd v Salford Estates (No 2) Ltd [2015] 1 WLR 1825