Shawton Engineering Ltd v DGP International Ltd & Anor

LORD JUSTICE PETER GIBSON: Latham LJ will give the first judgment.

LORD JUSTICE LATHAM: This appeal arises as a result of litigation the conduct of which was described by the judge below as deplorable. The claim is for damages, said to be in excess of £1.5 million, for repudiatory breach of contract and negligence, the details of which are not relevant for the purposes of this appeal.

Underlying the appeal is the fact that the claimants have been responsible for gross delay and consequential expense which has been reflected in orders for costs one of which was the subject matter of another appeal due to be heard today which has now been compromised. We are told that that trial, if and when it takes place, is estimated to last nine weeks.

The relevant procedural history is as follows. The proceedings were commenced and a claim form was served on 8th May 2001. After three case management conferences a trial dated 4th March 2002 was fixed. On 22nd February 2002 the trial date was vacated because the claimants were not ready. At a further case management conference on 19th April 2002 the case was fixed for 18th November 2002. The trial duly commenced before His Honour Judge Mackay but was adjourned part heard on 3rd December 2002 because of the claimants' failure to disclose in excess of 21 files. In effect thereafter the trial was abandoned. The judge then made an order that the claimants pay the defendants all their costs of the trial on an indemnity basis. A further case management conference took place on 12th December 2002 when a fresh trial date was fixed for 23rd June 2003.

Shortly after Easter 2003 the claimants intimated that they would no longer rely on the expert evidence on quantum of Mr Anderton but would instead rely upon a report prepared by Mr Wills. This would necessitate an application to amend the particulars of claim. That application was duly made and heard on 16th May 2003, when the judge gave the claimants permission to amend and to rely on the new expert and vacated the trial date of 23rd June 2003. However, he reserved the costs and other directions to a hearing on 23rd June 2003. On that date he made four orders for costs and fixed a new hearing date for the trial of 15th March 2004. It would appear that it became apparent to the judge later that he would be unable to hear the case on that date because of his other commitments. However, that is not spelt out in any of the material before us and is only a matter of inference. Enquiries were made by the court at his instigation which indicated that it might be possible for the case to be heard in London on or about 15th March 2004. Accordingly, on 17th November 2003, the case was transferred administratively, without notice to the parties and without giving either an opportunity to be heard, from Liverpool to the Technology and Construction Court in London.

The defendants objected on the grounds that the consequence would be inconvenience and increased expense, which was put by Mr Jones, the defendants' solicitor, at approximately £40,000. He also made the point that all the witnesses, save the claimants' quantum expert, came from the north-west, as did the solicitors and as did the parties. Mr Jones further made the point that the court had been informed on a number of occasions of the difficulties that the defendants were having in financing the litigation and that this extra expense was therefore significant. He said the delay of a further few months would not work injustice and the problem was essentially the result of the claimants' failures in the past.

The judge refused the defendants' application for a review of his order transferring the trial after a conference call at which both parties were able to put their submissions. He considered that the case needed a trial at the earliest possible time. In a short oral judgment he set out the procedural history. He noted, without giving any detailed consideration to it, the prejudice asserted by Mr Jones, but he considered that the overriding consideration was the need to keep the trial date. That is the decision which is the subject matter of this appeal.

It is unusual for a case management decision of this sort to be one with which this court would interfere; but there are aspects of this order which cause me considerable concern. Firstly, the judge in transferring this case administratively seems to me to have acted entirely inappropriately, bearing in mind the history of the litigation. This quintessentially required a decision which took account of any possible prejudice there may be to either party -- for a nine-week trial is a trial which is inevitably going to be affected significantly by the transfer to a venue any substantial distance from where the parties have their main place of either work or home. The consequence was that there had to be a hearing at which the defendants had the unenviable task of seeking to persuade the judge that he was wrong. They put before the judge, it seems to me, a cogent argument directed to the prejudice that would be occasioned, not merely convenience (but that would of itself be a substantial factor), but also cost. Indeed, as has been explained by Mr Braslavsky QC appearing on behalf of the defendants, the cost does not merely include the calculable cost which Mr Jones has set out in his witness statement but also the incalculable cost which is the inevitable consequence of the disruption to a business by reason of the necessity for one or more of the senior members of the company to be at least in regular contact with the litigation if not present at the litigation. On the other hand, no specific prejudice was identified by the claimants in support of their contention that the judge's order should be maintained and no prejudice has been identified to us, save for what is described as the inevitable prejudice occasioned by delay; but that comes ill from the mouths of those who have been responsible so far for two adjournments and an aborted trial.

In those circumstances, it seems to me that in applying the principles set out in the overriding objective and the matters set out in Order 33(2) the overwhelming consideration to which the judge should have directed his attention must be the consideration of convenience and expense. The judgment that we have does not suggest that he did so direct his attention, even after the hearing of the review application; he certainly did not when he made the original order.

It seems to me, in those circumstances, that this court is entitled to look at the matter afresh, and, for the reasons which I think have been adequately expressed by me earlier in this judgment, it seems to me that the balance comes down firmly in favour of allowing this appeal so that this matter can be tried, as we now hear it can be, in the North West, namely at the Salford Court, where, it appears, a hearing date in the week commencing 14th October will be available and a judge, His Honour Judge Gillibrand, will be able to take the case at that time.

I would accordingly allow this appeal.

SIR MARTIN NOURSE: I agree.

LORD JUSTICE PETER GIBSON: I also agree. I add a few words of my own in relation to the first order made by the judge on 7th November as it seems to me that that is where things started to go wrong.

There is no doubt that the judge had power to transfer the case to the Technology and Construction Court in London, but by CPR 30.3 he was required to have regard to particular matters. I emphasise that they are matters to which the court must have regard -- see rule 30.3(2) -- and they include in paragraph (b) whether it would be more convenient or fair for hearings, including the trial, to be held in some other court. There is also no doubt that the judge had power to make an order of his own initiative and to do so without hearing the parties or giving them an opportunity to make representations. That is in CPR rule 3.3 and in particular rule 3.3(4).

However, if the court is to do that when making an order for transfer, the matters to which the judge must have regard under rule 30.3(2) must be such that he needs no help from the parties on them. In this case it is hard to see how he could properly have made the order, given the likely effect on both sides of such an order. A nine-week trial, which was to be heard in the north, was being transferred to London. We now have the evidence as to the financial cost to the appellants if the order were to stand and, in addition, there is the disruption which inevitably would be caused to the appellant company, senior members of which would have to be in attendance for large parts of the trial.

Before the court makes an order of its own initiative without hearing the parties or giving them an opportunity to make representations, the court must be very certain that it has all the material which it needs in order to make such an order fairly in compliance with the overriding objective. To my mind it is plain that the judge was quite wrong to have made the order which he did on 7th November. Indeed, the order itself failed to comply with the requirement of rule 3.3(5)(b). That provides that where the court has made an order under paragraph (4), that is to say an order of its own initiative without hearing the parties or giving them an opportunity to make representations, the order must contain a statement of the right of a party affected by the order to make an application to have the order set aside, varied or stayed, and that failure may have been responsible for the application that was made by the appellant being slightly out of time. The judge, having made that order in my view erroneously, was then faced with the invidious task of hearing the application to set it aside.

For the reasons which Latham LJ has given, I entirely agree that the judge was plainly wrong in refusing to set aside his order. I agree with the relief that my Lord has suggested we should grant.