Right Support Management Limited v The London Borough of Hillingdon

This is an appeal from a decision of HHJ Saunders (the Judge) made at Central London County Court on 12.8.2024. The Judge dealt with various applications on the day and in relation to the relevant ones dismissed the Appellant’s applications for: (1) permission to amend its Particulars of Claim and (2) relief from the costs sanctions set out in CPR r.3.14.

By notice of appeal issued on 23.8.2024 the Appellant sought, in five grounds, to overturn those decisions. Permission to appeal was granted on the papers by Sir Stephen Stewart on grounds 1, 2 and 4 but refused on grounds 3 and 5. At the hearing the Appellant abandoned the renewed applications for permission on grounds 3 and 5 and focussed on grounds 1 and 2; 4 was rather left by the wayside.

The Court was provided with an appeal bundle, an authorities bundle by each party and skeleton arguments. At the start of the hearing counsel for the Respondent took objection to the Appellant’s note of oral submissions, but on further consideration accepted that he was not disadvantaged by it. It was a bullet point summary which I found helpful.

Was the Judge wrong to decide to dismiss the Appellant’s application to amend?

Was the Judge wrong to dismiss the application for relief from sanctions?

Under CPR r. 52.21 every appeal is a review of the decision of the lower Court, not a rehearing, unless the Court decides otherwise (or a Regulation or Act provides that it is a rehearing) and will only be granted if the decision below was wrong or unjust due to a serious procedural or other irregularity.

This appeal is restricted to the evidence before the lower Court unless this Court grants permission under CPR r. 52.21(2). The decision to grant permission is informed by the three grounds enunciated in Ladd v Marshall [1954] 1 W.L.R. 1489 (CA). New evidence may be allowed in when it was: (1) not obtainable with reasonable diligence before the lower Court, (2) would have an important influence on the result and (3) is apparently credible, though not incontrovertible.

I take into account the decisions in Henderson v Foxworth [2014] UKSC 41, per Lord Reed at para. 67 and Grizzly Business v Stena Drilling [2017] EWCA Civ. 94, per Longmore LJ at paras. 39-40 and Deutsche Bank AG v Sebastian Holdings [2023] EWCA Civ. 191, by Lord Justice Males at paras. 48 - 55, to the effect that any challenges to findings of fact in the Court below have to pass a high threshold test. The Appellant needs to show the Judge was wrong in the sense that there was no sufficient evidence upon which the decision could have been reached or that no reasonable Judge could have reached that decision, or that the Judge took into account an irrelevant matter or failed to take into account a material and relevant matter. Two deferential principles are generally applied. Firstly, where the trial judge heard and saw the evidence being given live over the course of the trial he/she was better placed to assess the evidence than the appellate court is, having only the transcript and documents. Secondly, there is a generous ambit for disagreement allowed on such findings. The threshold for appeals against findings of fact was summarised by Lord Justice Lewison in Volpi v Volpi [2022] EWCA Civ. 464, [2022] 4 WLR 48, at paras. 2-4 and 52:

Appeals from case management decisions have a high threshold test. In an appeal in respect of the discretionary exercise of a Judge’s case management powers, the approach of the appellate court is set out in the following authorities. In G & G (Minors’ Custody Appeal) [1985] 1 WLR 647, per Lord Fraser at 652:

“The appellate court should only interfere when they consider that the judge of first instance has not merely preferred an imperfect solution which is different from an alternative imperfect solution, which the Court of Appeal might, or would have adopted, but has exceeded the generous ambit within which a reasonable disagreement is possible.”

In Powell v Pallisers of Hereford Ltd [2002] EWCA Civ. 959 per Potter LJ at para. 11:

“This was, of course, a case management decision involving the exercise of the judge's discretion of a kind with which this court has repeatedly expressed reluctance to interfere; indeed it has been emphasised that it is wrong to do so unless it can be clearly demonstrated that the overriding objective will not be observed or maintained if the decision is permitted to stand.”

In Royal & Sun v T & N [2002] EWCA Civ. 1964, Chadwick LJ enunciated the deferential principle thus:

“37.

… these are appeals from case management decisions made in the exercise of his discretion by a judge who, because of his involvement in the case over time, had an accumulated knowledge of the background and the issues which this Court would be unable to match. The judge was in the best position to reach conclusions as to the future course of the proceedings. An appellate Court should respect the judge's decisions. It should not yield to the temptation to “second guess” the judge in a matter peculiarly within his province.

38.

I accept, without reservation, that this Court should not interfere with case management decisions made by a judge who has applied the correct principles, and who has taken into account the matters which should be taken into account and left out of account matters which are irrelevant, unless satisfied that the decision is so plainly wrong that it must be regarded as outside the generous ambit of the discretion entrusted to the judge.”

In Serco Ltd (trading as Serco Docklands) v National Union of Rail, Maritime and Transport Workers and others[2011] EWCA Ci.v 226 (in relation to the exercise of a discretion in the context of injunctions) per Elias LJ at para. 14:

“The function is one of review, and in the absence of further material evidence invalidating the exercise of discretion by the first instance judge, the Court of Appeal should only interfere where the judge had misdirected himself or reached a conclusion which is unsustainable on the evidence before him.”

In Mitchell v News Group Newspapers Ltd [2013] EWCA Civ. 1537, at para. 52 the Master of the Rolls said:

“We start by reiterating a point that has been made before, namely that this Court will not lightly interfere with a case management decision. In Mannion v Ginty [2012] EWCA Civ. 1667 at [18] Lewison LJ said: “it has been said more than once in this Court, it is vital for the Court of Appeal to uphold robust fair case management decisions made by first instance judges.”

In Global Torch v Apex [2014] 1 WLR 4495 (UKSC), Lord Neuberger summarised the power thus:

“13.

… The essential question is whether it was a direction which Vos J could properly have given. Given that it was a case management decision, it would be inappropriate for an appellate court to reverse or otherwise interfere with it, unless it was “plainly wrong in the sense of being outside the generous ambit where reasonable decision makers may disagree” …”

This dispute concerns whether the Defendant should pay for the costs of accommodating DB, a member of the public with serious mental health challenges. He was detained in 2008 under the Mental Health Act 1983 (the Act). He was released in 2009. There is no dispute between the parties that, under S.117 of the Act, the Defendant was under a duty to provide, in cooperation with relevant voluntary agencies, “aftercare services” for him until such time as the Defendant was satisfied that he no longer needed such services. The Defendant placed DB in the Claimant’s care home at Ringstead House, in Lewisham. A dispute arose between the Claimant and the Defendant which was settled in August 2015, at which time DB was moved to the Claimant’s supported living accommodation at Radnor House, Southwark. Correspondence was exchanged in August 2015 between the parties about the cost of the care element of the necessary aftercare services at Radnor House and that correspondence has become the subject of one part of the claim. Despite some obscure pleading in the Defence it appears beyond dispute that DB lived there until 2022.

There was evidence under the heading “New Evidence” in the appeal bundle which was not before the Judge. This included a 2021 FACE assessment by the Respondent. No application was made to admit it. No objection was taken to it being in the bundle or to me reading it. I do consider it to be relevant. It could have an important influence on the result and is clearly credible. I was not addressed on whether it was obtainable at the hearing below. I do not admit it in evidence due to the lack of explanation for the failure to put it before the Judge below. However, I have read the witness statement of Edith Eneanya-Bonito, dated January 2022 and the exhibits, which were before the Judge. Two documents are highly relevant. Firstly, DB’s discharge summary in 2009 set out his very serious mental health condition. Secondly, the written mental health FACE assessment by Hillingdon for DB dated 20.11.2020 (although is contains factual assertions from 2021) listed DB as living at Radnor House. His legal status was: “S.117. 27-Mar-2009 – current”. DB had a diagnosis of paranoid schizophrenia and a history of verbal abuse to carers, absconding, smoking cannabis, violence and refusing medication. He had chronic thought disorder making it difficult for him to communicate. He needed 24 hour supervision at Radnor House. His “finances are managed under an Appointeeship by the London Borough of Hillingdon Client Financial Affairs Team (CFA).” He was at risk of accessing prohibited drugs and he was at “significant risk” in his own accommodation without supervision. He had a history of harm to himself and others. The budget allocated was £25,190 pa. No mention is made payments for accommodation.

The Claimant issued a Claim Form in November 2020 in the County Court Business Centre for £44,253.71 for unpaid accommodation and living expenses. In the Claim Form the Claimant pleaded breach of the governing contract and of the duty of care owed by the Defendant to DB who placed DB in the Claimant’s living accommodation and who failed to remit money to the Claimant for DB’s rent, service charges, food and pocket money. I have put the words duty of care in italics for a reason which will become apparent below. Unjust enrichment was also claimed.

In the Particulars of Claim the Claimant relied on a letter dated 3rd August 2015 settling the parties’ previous dispute, offering for DB to be accommodated in Radnor House and calculating 36 hours of care and support at a cost to the Defendant of £1462.10 per week. In paragraph 6 of that letter the Claimant stated: “if DB continues to stay at Radnor House beyond 08 August 2015, our client will issue him with the tenancy agreement as he would become a supported accommodation tenant, and thereafter the ordinary residence rule will apply to DB as a tenanted client.” The parties are in dispute as to what that meant. The Claimant pleaded that it issued DB with a tenancy agreement at a rent of £150 per week payable through the housing benefits claim made on his behalf. In paragraphs 11 to 13 the Claimant pleaded subsequent difficulties with the DWP who revoked the previous appointment of the Claimant to manage DB’s finances and then transferred the management of his finances to the Defendant. The Claimant then pleaded that it was an express or implied term of the August 2015 contract that the Defendant would pay for or reimburse the Claimant for the accommodation rent, service charges and maintenance costs for DB in Radnor House. In addition, the Claimant asserted an implied term to the same effect based on “usage, custom, practice or dealings between the parties”. The Claimant also pleaded unjust enrichment of the Defendant who, the Claimant believed, was receiving DB’s State Benefits for his accommodation and maintenance and not passing them on. The Claimant pleaded that the transfer of the management of DB’s money occurred in July 2017 and that is when they no longer received payment for his rent and maintenance from the DWP. The Defendant did not pay for DB’s accommodation or maintenance so the Claimant calculated it and claimed it.

In Hillingdon's served Defence they relied on their e-mail of 11th August 2015 and pleaded “in DB’s case, his care and support is provided under section 117 Mental Health Act 1983. The test for determining the responsible authority under that act at the time DB was discharged from hospital was not ordinary residence but residence.” At paragraphs 10 and 11 the Defendant did not deny the tenancy agreement but put the Claimant to proof not only that the agreement was signed but also that DB had the capacity to sign it and that the Claimant owned Radnor House. That was a remarkable piece of pleading and may lead to costs consequences at trial. Objectively, it seems difficult to believe that Hillingdon were paying for carers and support workers to take care of DB at a property which they do not accept the Claimant owned or possessed and under a tenancy agreement that they do not accept DB signed. The Defendant did not plead with any clarity in relation to the DWP benefits which it took over from the Claimant. At paragraph 14 the Defendant pleaded it was unable to admit or deny the assertion that the DWP transferred to the Defendant control over DB’s state benefits. The Defendant required the Claimant to prove the transfer of control to them. That was also a remarkable pleading considering the following paragraphs of the Defence and its own FACE assessment. Whether the Defendant had control over DB’s money starting from 2017 or 2019 should have been a matter wholly within the knowledge of the Defendant. The FACE assessment says that they did. The Defendant denied liability for the monies claimed under what they assert was only a care agreement. In paragraph 20 the Defendant admitted it was DB’s appointee and had started receiving benefits on the 16th of July 2020 thereby contradicting its earlier non-admission. However, the Defendant pleaded that it had not been enriched and stated: “in any event the Defendant is bound to retain such benefits until satisfied that it should, on DB’s behalf, spend those sums.” Stopping there, it seems to me that if the Defendant has received housing benefit and personal independence payments for DB since 2020 but has not paid them over to the Claimant, despite the fact that DB was placed by the Defendant to live in Radnor House during the relevant period and has been fed and accommodated there, then a more specific pleading about why the Defendant has not paid over the benefits received for DB’s accommodation and maintenance was required. The Defendant put the Claimant to proof as to the details of the accounts held for DB, denied any liability to pay, denied contractual obligations to pay, denied that DB had breached any contractual obligations or that the Defendant had caused any such breach and put the Claimant to proof to establish the DB was liable to pay the rent and maintenance sums charged. The Defendant also pleaded that the Claimant had failed to make allowance for the fact that DB was moved out of Radnor House and back into Ringstead House for a period during which maintenance and repairs were affected at Radnor House. That is odd because Ringstead House, being a care home, was more expensive than Radnor House. Unjust enrichment was also denied.

In the Reply (dated 9.8.2021) the Claimant pleaded as to the meaning of the “ordinary residence rule” set out in their letter of the 3rd of August 2015 and as to DB’s capacity when he signed the tenancy agreement. At paragraph 7(c) the Claimant pleaded that by virtue of S.117 of the Act read together with Ss.18 and 75 of the Care Act 2014, the Defendant was under a duty to meet DP's needs for care support and for his placement accommodation rent, service charges and maintenance costs. Further, as an appointee for the receipt of DB’s benefits, the Defendant was liable and bound to pay over for his debts for his accommodation rent, service charges and maintenance costs. The Claimant pleaded that the Defence did not provide justification, by way of facts and matters, for the Defendant to withhold payment of DB’s benefits received from the DWP. The Claimant attached an updated schedule of the debt with the pleading. The rent debt claimed started from 2017.

The orders made in the case can be summarised as follows. On the 16th of December 2020 an administrative officer ordered that it was proposed that the claim be allocated to the multi-track and that Directions Questionnaires and cost budgets be provided on the 18th of January 2021. Neither party complied with the costs budget deadline. However, the Defendant applied to strike out the claim in early 2021. On the 4th of March 2021 HHJ Monty listed the Defendant’s striking out application for hearing later. On the 2nd of August 2021 DJ Greenidge gave directions relating to pleadings. On the 4th of February 2022 HHJ Saggerson dismissed the Defendant’s application to strike out the claim and ordered costs against the Defendant. On the 30th of May 2023 the Claimant filed its costs budget, two years and four months late. On the 31st of May 2023 HHJ Hellman joined DB by consent, on the Claimant’s application, as a Defendant and gave consequential directions. By an order dated the 7th of June 2023 HHJ Hellman ordered a capacity assessment for DB. On the 14th of June 2023 the Defendant applied for relief from sanctions because their cost budget had been delivered one day late (back in January 2021). That application itself was two years and five months late. It should have been dealt with by consent. Three months later, on the 27th of September 2023, the Claimant applied for relief from sanctions for filing their cost budgets late. That application was two years and eight months late. The breach having occurred back in January 2021. On the 27th of November 2023 DJ Greenidge ruled that DB lacked capacity and invited the official solicitor to be the litigation friend.

On the 18th of February 2024 the Claimant applied to strike out the Defence and sought the summary judgment based on the Defendant's late service of their directions questionnaire, amongst other matters.

On the 28th of February 2024 the Claimant applied to amend the particulars of claim. The proposed amendments included: (1) adding DB as second Defendant; (2) adding a factual assertion that DB was arrested in July 2022 and admitted to a mental health ward; and (3) pleading that on 13th October 2022 the Defendant gave notice to the Claimant ending DBS placement at Radnor House managed by the Claimant as of 1st November 2022. All of those amendments should have been allowed in but were not, as I shall explain below. It seems to me that the asserted fact in (3), if true, in itself rather showed up the obstructive nature of the Defendant’s initial pleading, which invited the Claimant to prove where DB was placed and whether the Claimant had control over Radnor House. In any event the amended pleading went on to assert: (4) at paragraph 14 that, by virtue of S.117 of the Act, supported living services including accommodation rent and maintenance were part of his “aftercare” and which the Defendant had the duty to fund. The Claimant also sought to rely on the Local Government and Social Services Care Ombudsman’s decisions on complaints against the Defendant, the detail of which was not pleaded out. At paragraph 21(a) the Claimant asserted that the Defendant was liable to pay DB’s aftercare costs, including the claimed debt under S.117 of the Act and as the responsible local authority and as the appointee for DB under a DWP letter dated second April 2019 in which the DWP asked the Claimant to liaise with the first Defendant for DB’s benefits.

Directions were given for the hearing of the applications by both parties for relief from sanctions, by the Claimant to strike out/summary judgment and for the permission to amend the Particulars of Claim. The hearing was then adjourned by HHJ Bloom in July 2024 and finally heard on the 12th of August 2024 by the Judge. On that day, in addition to the orders which are appealed, the Judge allowed the Defendant’s application for relief and rejected the Claimant’s application to strike out the Defence and for summary judgment.

I shall summarise only the relevant parts of the judgment. The Judge found that the Claimant’s cost budget, which was due on the 18th of January 2021, (para. 4(a) of the order dated 16.10.2020) was filed two years and four months late, on the 30th of May 2023. This was the day before the CCMC. He found that this was a serious and significant breach. Considering the witness statement of the Claimant’s solicitor and the explanation that he thought that he did not need to file it until 21 days before the CCMC (relying on para. 4(b) of the order dated 16.10.2020), and that he became distracted by the Defendant’s strike out application and the process of joining DB to the proceedings and determining DB’s capacity, the judge found these were not good reasons for the default. Therefore, limbs one and two of the test in Dentonv White [2014] EWCA Civ. 906, were satisfied. These findings are not appealed.

In paras. 10-14 the judge then turned to limb three of the Denton test for relief from sanctions and described the sanction in CPR r.3.14 as “harsh” because, if relief was not granted, the Claimant would not be able to recover any costs for the claim other than court fees, despite perhaps needing to take it to trial. The judge took into account the case had been running for four years and that the CCMC had not even been reached yet. He took into account the delay in issuing the application for relief which he found was between May and September 2023. He found there was a lack of promptness which was a “critical factor”. He considered the decision in British Gas v Oak [2016] EWCA Civ. 153 and stated that he was concerned that the case had become sidetracked into satellite litigation. He considered the case of Diriye v Bojaj [2020] EWCA Civ. 1400, and reluctantly refused relief from the sanction in CPR r.3.14.

In relation to the application to amend the Particulars of Claim to include a claim under S.117 of the Act, he considered that CPR rules 17.3 and 17.4 allowed the court the power to admit amendments. He noted that the applicability of the Act was admitted in the Defence. He considered that the words in the pleading relating to “residence” did not indicate a claim under S.117. He ruled that the Claimant was bringing a new claim. He considered the new claim was statute barred (para. 22) because the sums sought to be recovered under S.117 started accruing in 2015 and so the six year limitation period under S.9 of the Limitation Act 1980 would expire in 2021 for those sums. He considered Martlet Homesv Mulalley & Co. Ltd [2021] EWHC 296, para. 20, and the guidance therein to the effect that the matters raised in the defence in that case enfranchised the claimant to amend the particulars of claim. However, he ruled that the Claimant in this appeal was pleading a new claim. The Judge then considered whether the new claim arose from the same facts or substantially the same facts. He described that as the key question. He considered the S.117 claim and the issues within it about the scope of the statutory duty. He decided that resolving them would require the responsible bodies who determined the scope to be included in the action and that was a “tangent” to the contract claim. Factors that he found weighed against allowing amendment were: (1) that the NHS would have to be joined, and (2) further investigations would be required, and (3) that the application was made very late. Finally, (4) he considered that the prospects of success for the new claim were very poor passing his view about whether S.117 and the duty therein extended to paying for ordinary accommodation and relying on R, Afework v Camden Borough Council [2013] EWHC 1637 (Admin) in which Mostyn J held that “normal accommodation” was not within the S.117 duty relating to “aftercare services”. Therefore, the Judge refused the amendment application.

Ground 1 (G1). Amending the pleading. The Claimant pursued ground one by setting out six sub-grounds and asserting that the judge was wrong:

Ground 2 (G2). Relief from the CPR r.3.14 sanction. The Claimant pursued ground 2 on the following sub-grounds:

G1: Amendment. The Appellant submitted that the reasoning in paras. 18-23 of the judgment disclosed that the Judge fell into error. The S.117 amendment was the response to the admission made in the Defence by the Defendant that it was paying for DB’s care and support under its duty imposed by S.117. The Reply contained the Claimant’s response on how properly to interpret the scope of the S.117 duty. The Defendant is clearly going to make submissions on the scope of their responsibilities under S.117 and the Claimant will be making submissions at trial on the scope too. The issue will be: “for DB’s needs, does the S.117 duty cover accommodation and living expenses or not?” In R (Afework) v Camden [2013] EWHC 1637 (Admin), Mostyn J, at paras. 14 and 19 gave guidance on whether the S.117 duty required a Local Authority to pay for accommodation. The duty did cover some types of accommodation in which care and/or medical support is provided. It was arguable that the duty covered the supported living accommodation at Radnor House. The Appellant relied on para.19 of Mostyn J’s judgment in which he ruled as follows:

“19.

I therefore hold that as a matter of law s117(2) is only engaged vis-à-vis accommodation if:

i)

The need for accommodation is a direct result of the reason that the ex-patient was detained in the first place (“the original condition”);

ii)

The requirement is for enhanced specialised accommodation to meet needs directly arising from the original condition; and

iii)

The ex-patient is being placed in the accommodation on an involuntary (in the sense of being incapacitated) basis arising as a result of the original condition.”

Further, the Appellant submitted that if the S.117 claim was a new claim or a new cause of action then most of the sums claimed were not statute barred. The hearing took place in August 2024, 6 years before that would be August 2018. A large part of the debt arose after the DWP payments were transferred to the Defendant in 2017-2019. None of those were statute barred.

The Appellant submitted that in any event the new claim arose on the same facts or substantially the same facts as the old claims. These were that all the claims: (1) concerned DB; (2) were based on the scope and level of DB’s medical and care needs supplied by the supported care whilst living at Radnor House at the Defendant’s express request; (3) were based on the Defendant fulfilling its duty under S.117 of the Act which was admitted in the Defence; (4) in all the claims, even without the amended pleading, the parties would be raising submissions on S.117 and in particular the scope of the duty thereunder in relation to the implied terms in the originally pleaded contract claim and in relation to the unjust enrichment claim. No trial Judge would refuse to hear submissions on the scope of relevant Statute. (5) The facts relating to the transfer of BD’s DWP benefits from the Claimant to the Defendant were common. (6) Interpretation of the correspondence between the parties in 2015 was a common issue.

The Appellant submitted that the NHS or Clinical Commissioning Boards were not going to be brought into the claim as a result of the amendment. The claim was against the Defendant who admitted they were acting under the duty. They would have copies of any relevant decision documents which they made.

G2: Relief from sanctions. The Appellant accepted that the Judge’s decision on limbs one and two of the test in Denton were unassailable. The breach was serious in itself and the explanations were not good reason to avoid sanctions altogether. The issue in the appeal related to limb 3, namely consideration of all the circumstances of the case and the overriding objective.

The main point which the Appellant made was that the breach had made no difference to the course of the action and the Judge was wrong to find that it had. Various applications by the Defendant, for instance to strike out the claim, and various orders relating to joining DB, then assessing his capacity and then deleting him from the action, had all delayed the course of the action. The secondary point which the Appellant made was that no CCMC hearing had taken place because of the other applications. That was still to come, so the late filing did not even delay the CCMC. The third point made was that- if the costs budget had been filed on 18.1.2021 it would have been updated at least once if not twice by the date of the relief hearing because of the multiple applications and due to joining DB and then deleting him as a party. The Appellant submitted that an important factor in the exercise of the Judge’s discretion at limb 3, was the impact of the breach on the litigation and there had been no impact, save that one part of the hearing on 12.8.2024 dealt with that application, amongst 3 other applications.

The Appellant submitted that the Judge misled himself over British Gas and Diriye. Neither case provided much assistance and both were decided on their own facts. The lack of promptness in the application for relief, which the Judge held was 4 months, did not disrupt the action at all.

G1: Amendment. The Respondent submitted that: (1) the Judge was right to rule that the S.117 claim was a new claim asserting that the Defendant had to pay the Claimant under S.117 or as the responsible Local Authority or as DB’s DWP benefits appointee. Such could not be raised in a Reply (relying on Martlet Homes v Mulalley [2021] EWHC 296 and [2022] EWCA Civ. 32). (2) The Judge was right to rule that the new claim did not arise from the same facts or substantially the same facts, albeit the Respondent accepted, through counsel, that the facts were “connected”. (3) The Judge was right to hold that the debts, at least from 2015, were statute barred and this was not well argued below. (4) The Judge was right to rule that the new claim had poor prospects because in R (Afework), although Mostyn J ruled that paying for care home accommodation was covered by S.117, paying for normal accommodation was not. The implication of this submissions was that Radnor House was “ordinary accommodation”. (5) The Judge was right to accept the Defendant’s counsel’s submission that the Defendant would have to join the relevant NHS body if the new claim were allowed. (6) The Respondent set out a long justification for why they were the responsible body under S.117, the relevance of which is unclear to me. Then, a further long explanation of the law and guidance (described as confusing) relating to the joint or several liability of Clinical Commissioning Groups in 3 boroughs for the S.117 duties was set out. The Respondent submitted that it would all be very complicated and the Judge rightly accepted that. (7) The Respondent submitted that the Judge had DB’s lack of capacity in mind when refusing relief.

G2: Relief from sanctions. The Respondent submitted that the Judge was correct to have regard to British Gas when he concluded that the application “must have delayed these proceedings” (para. 13) and that it was very serious. The Respondent analysed the Claimant’s witness statement in support dated 27.9.2023 and criticised the delay between May and September 2023 in making the application which was before DB’s capacity was assessed. The Appellant did not raise CPR r.21 or CPR r.3.10 before the Judge. The misunderstanding of the date for filing the costs budget was also criticised. Overall, the decision was within the scope of the discretion available to the Judge and should not be overturned.

Amendment inside limitation, CPR r.17.3. The power to grant permission to amend a served pleading to add a new cause of action within limitation is set out in CPR r.17.1(2) and r.17.3. It can be done with consent or with permission, but not without.

The procedure, practice and form for an amendment within limitation includes requirements that:

The substance of the decision on permission (within limitation) is multifactorial. When exercising the discretion to permit or refuse amendments the authorities set out that the Judge should consider, the procedural requirements summarised above and, inter alia, the following three matters:

Amendment outside limitation, CPR r.17.4. When making the decision on an amendment application for a new claim made outside limitation, the rules are different. CPR r.17.4 applies along with the Limitation Act 1980, S.35, which provides that:

“35 New claims in pending actions: rules of court.

(1)

For the purposes of this Act, any new claim made in the course of any action shall be deemed to be a separate action and to have been commenced—

(a)

…

(b)

in the case of any other new claim, on the same date as the original action.

…

(3)

Except as provided by section 33 of this Act or by rules of court, neither the High Court nor [the county] court shall allow a new claim within subsection (1)(b) above, other than an original set-off or counterclaim, to be made in the course of any action after the expiry of any time limit under this Act which would affect a new action to enforce that claim. …

(4)

Rules of court may provide for allowing a new claim to which subsection (3) above applies to be made as there mentioned, but only if the conditions specified in subsection (5) below are satisfied, and subject to any further restrictions the rules may impose.

(5)

The conditions referred to in subsection (4) above are the following—

(a)

in the case of a claim involving a new cause of action, if the new cause of action arises out of the same facts or substantially the same facts as are already in issue on any claim previously made in the original action; and

(b)

in the case of a claim involving a new party, if the addition or substitution of the new party is necessary for the determination of the original action.”

CPR r.17.4(2) provides that:

“(2)

The court may allow an amendment whose effect will be to add or substitute a new claim, but only if the new claim arises out of the same facts or substantially the same facts as are already in issue on as a claim in respect of which the party applying for permission has already claimed a remedy in the proceedings.”

The discretion is apparent from the word “may”. The issue in the appeal before me concerned whether the new claim arose out of the same facts or substantially the same facts. At the hearing the Appellant abandoned the assertion that there was no new claim.

The case law gives guidance on what constitutes a “new claim” and a “new cause of action” and what the phrase “substantially the same facts” means. “New claim” was explained in Aldi v Holmes [2003] EWCA Civ. 1882, in which Dyson LJ ruled thus:

“The first issue

The meaning of a “new claim” within the definition of s.35(2) of the Act has been considered by this court on a number of occasions. Perhaps it is sufficient to refer only to what was said by Auld L.J. in Lloyds Bank plc v Rogers [1999] 38 E.G. 83. At p.85F he said:

“It is important to note that what makes a ‘new claim’ as defined in s.35(2) is not the newness of the claim according to the type or quantum of remedy sought, but the newness of the cause of action that it involves. The formula employed in s.35(2)(a) and (5) is ‘a claim involving . . . the addition or substitution of a new cause of action’. And Ord.20 r.5(5) refers not to a claim but to ‘[a]n amendment the effect of which is to add or substitute “a new cause of action”’. Diplock L.J.’s widely accepted definition of a cause of action in Letang v Cooper [1965] 1 Q.B. 232, CA, at pp.242–3, as ‘simply a factual situation the existence of which entitles one party to obtain from the court a remedy against another person’, as distinct from ‘a form of action . . . used as a convenient and succinct description of a particular category of factual situation’, is of importance. It makes plain that a claim and a cause of action are not the same thing. It follows, as Mr Croally argued, that an originally pleaded ‘factual situation’ may disclose more than one cause of action, although one of them may not be individually categorised as such or the subject of a claim for a separate remedy. However, as Mr Browne- Wilkinson submitted, it does not follow that a claim so categorising it and/or seeking a remedy for it made for the first time by amendment is the addition of a new cause of action so as to render it a new claim. That the draftsmen of s.35 and Ord.20 r.5 had the distinction in mind is underlined by their respective provision for new claims by reference to substituted new causes of action, as well as additional new causes of action. The remedy claimed—‘any claim’—may or may not be the same; what makes the claim ‘a new claim’ is the newness of the substituted cause of action. Thus, a claim for damages is a new claim, even if in the same amount as originally claimed, if the Claimant seeks, by amendment, to justify it on a different factual basis from that originally pleaded. But it is not, even if made for the first time, if it does not involve the addition or substitution of an allegation of new facts constituting such a new cause of action.””

In Mulalley v Martlet Homes [2022] EWCA Civ. 32, Coulson, Baker LLJ and Lady Justice Andrews ruled on the term “new cause of action” as follows at paras. 40-44:

“… A New Cause of Action

40.

A cause of action is, in the classic phrase, "…a factual situation the existence of which entitles one person to obtain from the Court a remedy against another person…": Letang v Cooper [1965] 1 QB 232 at 242. In order to ascertain whether the opposed amendments amount to a new cause of action, the court has to compare the essential allegations which are in issue on the original pleadings with those proposed by way of amendment.

41.

The best-known authority in the last decade about what constitutes a new cause of action for these purposes is Co-Operative Group Limited v Birse Developments Limited & Anr. [2013] EWCA Civ 474; [2013] BLR 383. In that case, the original claim made by the building owners concerned specific defects in the floor slabs of two warehouses. The complaints were about the thickness of the floor slabs in places, the absence of sawn joints and a deficient jointing system. The allegations were in respect of the need to carry out localised repair works, valued at around £381,000.

42.

The opposed amendments involved a complaint about the absence of steel fibre within the floor slabs which, it was said, would lead to damage in the future if the originally intended racking leg load was deployed. This was a systemic failure, said to give rise to the need for the complete replacement of both floor slabs at a cost of £2.5m.

43.

The judge at first instance found that the amendments did not involve a new cause of action although, rather unusually, he went on to find that, if they did amount to a new cause of action, they did not arise out of the same or substantially the same facts as the original claim. The Defendant, Birse, appealed the judge's conclusion that the claim in respect of the missing steel fibre was not a new cause of action.

44.

The law was summarised by Tomlinson LJ at [20] and [21] as follows:

"20.

In the quest for what constitutes a "new" cause of action, i.e. a cause of action different from that already asserted, it is the essential factual allegations upon which the original and the proposed new or different claims are reliant which must be compared. Thus "the pleading of unnecessary allegations or the addition of further instances or better particulars do not amount to a distinct cause of action" – see Paragon Finance v Thakerar [1999] 1 All ER 400 at 405 per Millett LJ. "So in identifying a new cause of action the bare minimum of essential facts abstracted from the original pleading is to be compared with the minimum as it would be constituted under the amended pleading " - see per Robert Walker LJ in Smith v Henniker-Major [2003] Ch 182 at 210.

21.

The court is therefore concerned with the comparison of "the essential factual elements in a cause of action already pleaded with the essential factual elements in the cause of action as proposed" – see per David Richards J in HMRC v Begum [2010] EWHC 1799 (Ch) at paragraph 32 . "A change in the essential features of the factual basis (rather than, say, giving further particulars of existing allegations) will introduce a new cause of action" – ibid, paragraph 30."”

Guidance on what “arising from the same or substantially the same facts” means was also given by Coulson LJ in the Court of Appeal in Mulalley at paras. 49-50 as follows:

“The Same or Substantially the Same Facts

49.

This topic was addressed more recently by the Court of Appeal in Ballinger v Mercer Limited & Anr [2014] EWCA Civ 996; [2014] 1 WLR 3597, in which Tomlinson LJ referred to a number of subsequent observations about the applicable test:

"34.

Helpful guidance as to the proper approach to the resolution of this question was given by Colman J in BP plc v Aon Ltd [2006] 1 Lloyd's Rep 549 where, at page 558, he said this:-

"52.

At first instance in Goode v. Martin [2001] 3 All ER 562 I considered the purpose of Section 35(5) in the following passage:

"Whether one factual basis is 'substantially the same' as another factual basis obviously involves a value judgment, but the relevant criteria must clearly have regard to the main purpose for which the qualification to the power to give permission to amend is introduced. That purpose is to avoid placing a Defendant in the position where if the amendment is allowed he will be obliged after expiration of the limitation period to investigate facts and obtain evidence of matters which are completely outside the ambit of, and unrelated to those facts which he could reasonably be assumed to have investigated for the purpose of defending the unamended claim."

53.

In Lloyd's Bank plc v. Rogers [1997] TLR 154 Hobhouse LJ. said of Section 35 :

"The policy of the section was that, if factual issues were in any event going to be litigated between the parties, the parties should be able to rely upon any cause of action which substantially arises from those facts."

54.

The substance of the purpose of the exception in subsection (5) is thus based on the assumption that the party against whom the proposed amendment is directed will not be prejudiced because that party will, for the purposes of the pre-existing matters [in] issue, already have had to investigate the same or substantially the same facts."

35.

In the Welsh Development Agency case Glidewell LJ said, in an often quoted passage at page 1418, that whether or not a new cause of action arises out of substantially the same facts as those already pleaded is substantially a matter of impression.

36.

Less well-known perhaps is the cautionary note added by Millett LJ in Paragon Finance , where at page 418 he said, after citing the passage from Glidewell LJ to which I have just referred:-

"In borderline cases this may be so. In others it must be a question of analysis."

37.

I would also point out, as did Briggs LJ in the course of the argument, that "the same or substantially the same" is not synonymous with "similar". The word 'similar' is often used in this context, but it should not be regarded as anything more than a convenient shorthand. It may serve to divert attention from the appropriate enquiry."

50.

I am not sure, with respect, how far these various observations really take us, although it is important to stress the point at [37] of Tomlinson LJ's judgment, namely that "substantially the same" is not synonymous with "similar". Brickfield v Newton does not appear to have been cited in Ballinger , which is a potentially important omission. Furthermore, in the most recent case which touches on this topic, Libyan Investment Authority v King [2020] EWCA Civ 1690; [2021] 1 WLR 2659 , Nugee LJ said at [49]-[50] that it was neither necessary nor helpful to seek to resolve the differences between some of these observations since they were not and could not be a substitute for applying the wording of s.35 of the Limitation Act 1980 or CPR 17.4(2).”

I extract from this guidance that “substantially the same facts” means that some new facts are expected in a new cause of action, but if the facts are substantially the same as those within the old causes of action, the power to give permission is triggered. If the new cause of action requires the gathering of facts which are completely different, then the power is not triggered. If most of the facts are the same but also some are different then a value judgment is needed. The prejudice to the other party in having to address the new facts after the end of the limitation period is relevant to whether the claim arose out of substantially the same facts.

Limitation. CPR r.17.3 The Judge decided at para. 22 that the new claim “is statute barred”. On the pleadings, whilst the earliest invoices were from August 2015, they ran through to 2022. The hearing below was in August 2024. 6 years before the hearing was August 2018. Patently, there were ongoing invoices for rent and maintenance from August 2018 to mid 2022. Taking into account the undisputed fact that DWP benefits were paid into the hands of the Claimant until 2017 or 2019 it is not unreasonable to infer that the Claimant was paying itself for accommodation and maintenance for DB until the account was transferred. Also, I note that between November 2020 when the claim was issued and June 2022 when DB was taken onto medical care again. a further approximately £25,000 of rent and maintenance is claimed to have accrued and was unpaid. Therefore, a large part of the sums claimed were not limitation barred. For those sums the Judge should have assessed that part of the application on the basis of the factors relevant to CPR r.17.3 not CPR r.17.4, but he did not do so. Had the Judge done so I consider that the only proper result would have been to allow the amendment so as to enfranchise the parties to address the real issue between them and to allow justice to be done. If the Defendant was under a duty to pay for DB’s accommodation under S.117, when they chose to place DB in the Claimant’s accommodation with 24 hour supervision and care, those facts could affect the implied terms in the contract, the unjust enrichment claim and the new claim. As to timing, the application and the hearing took place before the CCMC, before evidence had been served, before disclosure and long before trial. It is difficult to discern any meaningful prejudice to the Defendant, other than the need for more disclosure relating to the S.117 decisions which they made and to address them in witness statements, but that is hardly prejudice, it is answering the new case. The Judge did not state what prejudice he found other than the Defendant’s assertion that they would need to join an NHS body. I consider that the Judge was distracted by that red herring in the Defendant’s submissions on the need to sue one or more NHS CCG and how difficult that would be. The Defendant admitted that it owed the S.117 duty. Whether anyone else owed it contemporaneously was not the point. That might have allowed for a claim for contribution which would have assisted the Defendant in offsetting its liability, but I do not consider that there is any real prejudice arising from within that submission. In any event, the Defendant could have brought the NHS in by third party proceedings long ago to cover their share of the care being paid. They chose not to do so. There was no evidence put before the Court that it would be difficult to work out who to sue if that is what the Defendant decided to do, that was merely an assertion. In my judgment a decision under CPR r.17.3 was either not made at all or, if made and unexpressed, was wrong. Permission should have been granted for the new cause of action in relation to invoices from August 2018 onwards.

Limitation, CPR r.17.4. Dealing first with the decision that this was a new claim. Only the pleading relating to the alleged liability to pay for accommodation under S.117 was a potentially new claim. The rest of the amendments were factual or updating. Within the new claim, for those invoices issued after August 2018, and the amendment relating to S.117, the issue of whether it was a new cause of action was irrelevant because that is not a triggering requirement in CPR R.17.3. Dealing now only with the early invoices, issued before August 2018, and the decision on whether S.117 was a new cause of action, this was admitted at the hearing and was in any event a value judgment by the Judge. He weighed the factors and decided that the S.117 pleading raised a new cause of action and hence a new claim. The Respondent asserts that the Appellant approached the application on the basis that it was a new cause of action at the hearing below. I have not been shown the skeletons or a transcript but I consider that the Judge’s decision on “new cause of action” was not wrong in relation to the invoices between August 2015 and August 2018. The Appellant did not press this sub-ground of appeal.

The next issue which the Judge decided was that the new cause of action did not arise from the same or substantially the same facts (paras. 25-27). On this I consider that Mr Butler’s points are powerful. There were many common facts and matters which related to the old causes of action and the new one. None of these were mentioned in the judgment. These included: (1) DB’s substantial medical needs due to his mental health condition; (2) DB’s substantial, 24 hours per day, need for care which was provided at the Defendant’s expense by the Claimant at Radnor House; (3) DB’s supervised accommodation needs at Radnor House, provided at the Defendant’s request by the Claimant. (4) DB’s need to have his benefits put into the control of others, so his benefits payments were initially received by the Claimant and then transferred to the Defendant between 2017-2019. (5) The fact that the Defendant did not pay the Claimant for DB’s accommodation after August 2015. (6) The alleged unjust enrichment involved in the Defendant receiving DB’s housing benefit and maintenance benefits and keeping them, despite knowing that they were not entitled to do so if DB needed them and the Claimant had properly supplied them. (7) The agreed fact that the Defendant operated under a duty to provide “aftercare services” to DB from the admitted date of 2019 onwards. (8) The dispute between the parties as to the scope of the S.117 duty and whether it covered accommodation in the Defence and the Reply. The only difference in the facts and matters introduced by the new “cause of action” is the legal argument over the scope of the Defendant’s liability arising from the scope of the S.117 duty and that will be in play at trial in any event. This legal argument will be based on the facts relating to the scope of DB’s medical, nursing, therapy and care needs. Disclosure of DB’s medical records will be required for the old causes of action and will be needed for the new. The Defendant’s records of their internal decisions on DB’s needs (including the FACE assessments) were relevant to the new cause of action for the invoices which are not limitation barred and will be relevant for the limitation barred invoices. The Court will need to examine the Defendant’s internal documents on the decisions it made on DB’s needs and its own responsibilities. (9) Finally, I take into account that because much of the new cause of action should have been allowed in because it was not limitation barred, so most and probably all of the evidence and legal argument will be covered in any event at the trial for the invoices from August 2018 onwards. The limitation barred invoices do not add much to the work which the Defendant will have to do in any event. Therefore, in my judgment the Judge fell into error when he ruled that the new cause of action did not arise from the same or substantially the same facts.

On timing, the application to amend was made after the pleadings closed but before the CCMC. Evidence had not been exchanged, disclosure had not been started and the trial had not been listed. It cannot fairly have been characterised as a late application, so the stricter approach described by Carr J in Quah Su-Ling is not engaged.

Furthermore, the new cause of action was added in response to the admission by the Defendant that the duty in S.117 rested on them and applied to DB and his placement with the Claimant at Radnor House. Whilst the new cause of action should have been pleaded when the Claim Form was issued, there is no requirement to plead law, there is only a requirement to plead facts and matters. The words “duty of care owed to DB” were used in the Claim Form so, in my judgment, S.117 was potentially presaged but not made explicit.

What is the relevance of the Defence when considering an amendment application for a new cause of action which is (in part) out of limitation? Guidance was given on this is in Goode v Martin [2001]EWCA Civ. 1899; 3 All ER 562. In a personal injury case arising from an accident on a yacht the Claimant had no recollection due to a head injury. The defendant pleaded facts relating to how the accident occurred in the defence and the claimant sought to amend to plead: “well on those facts you were negligent anyway”. Brooke LJ ruled at para. 36 and 46-47 that:

“36.

It is commonplace that the claimant must not be impeded in her right of access to a court for the determination of her civil rights unless any hindrance to such access can be justified in a way recognised by the relevant Strasbourg jurisprudence (for the general principles, see Cachia v Faluyi [2001] EWCA Civ 998 at [17] [20], [2001] 1 WLR 1996). All she wants to do is to say that even if the accident happened in the way Mr Martin says it happened, he was nevertheless negligent for failing to take appropriate steps, as an experienced yachts master, to protect her safety as a novice sailor. She does not want to rely on any facts which will not flow naturally from the way Mr Martin sets up the evidential basis of his defence at the trial.”

…

“46.

Mr Ralls contended that we should interpret CPR 17.4(2) as if it contained the additional words "are already in issue on". It would therefore read, so far as is material:

The court may allow an amendment whose effect will be to add a new claim, but only if the new claim arises out of the same facts or substantially the same facts as are already in issue on a claim in respect of which the party applying for permission has already claimed a remedy in the proceedings." (Emphasis added).

This would bring the sense of the rule in line with the language of the 1980 Act, which is the source of the authority to make the rules contained in CPR 17.4. 47. In my judgment it is possible, using the techniques identified by Lord Steyn in R v A, to interpret the rule in the manner for which Mr Ralls contends. In this way there would be no question of a violation of the claimant's Article 6(1) rights, and the court would be able to deal with the case justly, as we are adjured to do by the Civil Procedure Rules. I would therefore permit the amendment and allow the appeal. A case management conference should be heard at an early date with a view to setting a timetable for an early trial after all the delays that have recently occurred.”

As Coulson LJ commented in Mulalley at paras. 59-60, no new facts were pleaded by the claimant in Goode. There is a parallel with the current appeal here. The Claimant pleaded no new facts in this part of the rejected application to amend relating to S.117 for invoices from before August 2018. Instead, the Claimant pleaded that on the facts, in law, the Defendant’s duty was wider than they accept and encompassed a duty to pay for accommodation and maintenance. The Judge considered this issue in paras. 22-23 of the judgment but ruled that it did not assist the Claimant and relied on the first instance judgment of Pepperall J on Martlett v Mulalley [2021] EWHC 296, at para 20. However, that paragraph does not deal with this issue. It deals with the legal requirement to plead new claims in the Particulars of Claim, not the Reply. The judgment in the Court of Appeal did deal with the effect of the application to amend arising from the defence at paras. 55-61 and cited Goode. I must take into account the requirement of the European Convention on Human Rights, Art 6 (the right to a fair trial) as directed by Brooke LJ in Goode, and will do so when deciding whether the Judge was wrong to exclude the new claim.

At para. 29 of the Judgment, the Judge determined that the prospects of success for all of the S.117 cause of action amendment were poor. He based this on Afework. There was no analysis of the level of medical, nursing or care required by DB for his paranoid schizophrenia when he did so. He did not mention the FACE assessment. He relied on Mostyn J’s ruling that ordinary accommodation was not covered by the S.117 duty but made no reference to para. 19 of the judgment in which guidance was given on accommodation which would be included in the duty. It will be a matter for the trial judge to decide whether Radnor House and the services provided to DB there constituted “ordinary” accommodation or not. Mostyn J held that S.117(2) is engaged vis-à-vis accommodation if the Claimant proves that: (1) the need for accommodation was a direct result of the reason that DB was detained in the first place (“the original condition”); and (2) the requirement was for enhanced specialised accommodation to meet needs directly arising from the original condition; and (3) DB was placed in the accommodation on an involuntary (in the sense of being incapacitated) basis arising as a result of the original condition. The fact that the Court has found that DB lacks capacity to litigate is relevant here. If those 3 steps are satisfied then the Claimant will come within Mostyn J’s criteria. That will depend on the medical notes and perhaps expert medical evidence. I consider that the Judge was wrong to hold that the prospects of success were poor on the evidence, including the FACE assessment before him.

When considering the factors in CPR 1.1 and the overriding objective, within the scope of CPR 17.4, I take into account that the Judge did not list or mention the common factual issues, did not interpret the guidance in Goode correctly, did not take into account that a substantial amount of the claim was not limitation barred and did not put enough weight on the early stage of the action at which the application was made. Nor did the Judge give weight to the ECHR and the need for the parties to get to the root of one of the main issues at trial. He was distracted by the submission, made without evidence, that the Defendant would need to bring Third Party proceedings, and by his view that the new claim had poor prospects. For these reasons I consider the decision was wrong and I grant the appeal on ground 1.

G2: the decision to refuse relief from sanctions. The Judge refused relief giving the reasons in paras. 10-14 of the judgment. The sanction imposed by CPR r.3.14, for failing to file a costs budge on time, is that the budget is restricted to fees only and no costs can be recovered under the budget. The Judge recognised that is harsh and refused relief reluctantly. Relief may be applied for under CPR r.3.9(1).

“Relief from sanctions

3.9

(1) On an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need –

(a)

for litigation to be conducted efficiently and at proportionate cost; and

(b)

to enforce compliance with rules, practice directions and orders.

(2)

An application for relief must be supported by evidence.

General power of the court to rectify matters where there has been an error of procedure

3.10

Where there has been an error of procedure such as a failure to comply with a rule or practice direction –

(a)

the error does not invalidate any step taken in the proceedings unless the court so orders; and

(b)

the court may make an order to remedy the error.”

Rule 3.9 was considered in Denton. I am only concerned with limb 3 of the three stage test set out in Denton. Guidance was given in paras. 36-38, and 41-43 of the judgment of LJ Vos MR as follows:

“36.

But it is always necessary to have regard to all the circumstances of the case. The factors that are relevant will vary from case to case. As has been pointed out in some of the authorities that have followed Mitchell, the promptness of the application will be a relevant circumstance to be weighed in the balance along with all the circumstances. Likewise, other past or current breaches of the rules, practice directions and court orders by the parties may also be taken into account as a relevant circumstance.

37.

We are concerned that some judges are adopting an unreasonable approach to rule 3.9(1). As we shall explain, the decisions reached by the courts below in each of the three cases under appeal to this court illustrate this well. Two of them evidence an unduly draconian approach and the third evidences an unduly relaxed approach to compliance which the Jackson reforms were intended to discourage. As regards the former, we repeat the passage from the 18th Implementation Lecture on the Jackson reforms to which the court referred at para 38 of its judgment in Mitchell: “[i]t has changed not by transforming rules and rule compliance into trip wires. Nor has it changed it by turning the rules and rule compliance into the mistress rather than the handmaid of justice. If that were the case then we would have, quite impermissibly, rendered compliance an end in itself and one superior to doing justice in any case”.

38.

It seems that some judges are approaching applications for relief on the basis that, unless a default can be characterised as trivial or there is a good reason for it, they are bound to refuse relief. This is leading to decisions which are manifestly unjust and disproportionate. It is not the correct approach and is not mandated by what the court said in Mitchell: see in particular para 37. A more nuanced approach is required as we have explained. But the two factors stated in the rule must always be given particular weight. Anything less will inevitably lead to the court slipping back to the old culture of non-compliance which the Jackson reforms were designed to eliminate.”

…

“41.

We think we should make it plain that it is wholly inappropriate for litigants or their lawyers to take advantage of mistakes made by opposing parties in the hope that relief from sanctions will be denied and that they will obtain a windfall strike out or other litigation advantage. In a case where (a) the failure can be seen to be neither serious nor significant, (b) where a good reason is demonstrated, or (c) where it is otherwise obvious that relief from sanctions is appropriate, parties should agree that relief from

sanctions be granted without the need for further costs to be expended in satellite litigation. The parties should in any event be ready to agree limited but reasonable extensions of time up to 28 days as envisaged by the new rule 3.8(4).

42.

It should be very much the exceptional case where a contested application for relief from sanctions is necessary. This is for two reasons: first because compliance should become the norm, rather than the exception as it was in the past, and secondly, because the parties should work together to make sure that, in all but the most serious cases, satellite litigation is avoided even where a breach has occurred.

43.

The court will be more ready in the future to penalise opportunism. The duty of care owed by a legal representative to his client takes account of the fact that litigants are required to help the court to further the overriding objective. Representatives should bear this important obligation to the court in mind when considering whether to advise their clients to adopt an uncooperative attitude in unreasonably refusing to agree extensions of time and in unreasonably opposing applications for relief from sanctions. It is as unacceptable for a party to try to take advantage of a minor inadvertent error, as it is for rules, orders and practice directions to be breached in the first place. Heavy costs sanctions should, therefore, be imposed on parties who behave unreasonably in refusing to agree extensions of time or unreasonably oppose applications for relief from sanctions. An order to pay the costs of the application under rule 3.9 may not always be sufficient. The court can, in an appropriate case, also record in its order that the opposition to the relief application was unreasonable conduct to be taken into account under CPR rule 44.11 when costs are dealt with at the end of the case. If the offending party ultimately wins, the court may make a substantial reduction in its costs recovery on grounds of conduct under rule 44.11. If the offending party ultimately loses, then its conduct may be a good reason to order it to pay indemnity costs. Such an order would free the winning party from the operation of CPR rule 3.18 in relation to its costs budget.”

I take from the above that at stage 3 the Judge should consider all the circumstances including:

In paras. 11-13 the Judge ruled that the lack of promptness of the application was critical. He expressly relied on British Gas v Oak and Diriye. In British Gas the Defence was struck out because the Defendant failed to file its pre-trial checklist as ordered and so an unless order was made and the Defendant failed to comply with that as well. The trial was listed to start in a window opening 8 weeks later. In the Court of Appeal’s Judgment nothing was added, in relation to stage 3, to the guidance in Denton. I do not gain any new assistance from the ruling. The facts speak for themselves. The breach was serious, the case was close to trial and the Defendant breached an unless order.

In Diriye the civil procedure rules required a specific and crucial pleading (impecuniosity in a credit hire claim) which the Claimant did not provide. The case was under Fast Track directions and a trial date was fixed. An unless order was made requiring service of the amended pleading and disclosure of relevant documents by a specific date. The Claimant posted the amended pleading out after the 4pm deadline that day and it was sent by post requiring a signature. It was signed for 5 days later. The case was struck out under the unless order and relief was refused at first instance and on appeal. Coulson LJ explained in para. 58 that the effect on the ligation is relevant to the seriousness of the breach at stage 2 and at stage 3. A breach can be serious and have little effect or be serious and have a serious effect on the action (imperilling timetables for instance) and other litigation. At para. 65 Coulson LJ ruled that, at stage 3, the delay in making the application, despite the fact that the solicitors knew and acknowledged that they were in breach, was also a breach of the requirement for the need to act promptly in CPR PD23A para 2.7, especially in a case where a trial date had been fixed. The factual matrix of Diriye was different from the matrix before the Judge in this appeal. Firstly, it was an unless order. Secondly, the trial date was fixed and the timetable was set. Thirdly, the Claimant delayed applying for 2 months in the context of that set timetable. None of those facts applied in the appeal before the Judge. Whilst the guidance given was clearly binding on the Judge, the decision on the facts of Diriye did not set out a 2 month rule for applications for relief. The Judge appears to have taken the 2 months delay from Diriye as akin to a guideline, in para. 13 of the judgment.

No other factors for refusing relief were set out by the Judge. In my judgment the following factors were relevant and material factors which, where indicated below, should have been taken into account but were not.

Because relevant and material factors were not taken into account at stage 3, I consider that ground 2 is made out and the Judge’s order on the relief application should be set aside.

I consider that the Judge was wrong not to have granted relief from the sanction in imposed by CPR r.3.14. However, that does not mean that no sanction should have been imposed on the Claimant. It is appropriate to consider what sanction should have been imposed under CPR r.52.20, r.3.10 and CPR r.44. I consider that the Claimant should pay the costs of the application for relief from sanctions, despite succeeding on the application. I do not consider that the Defendant’s opposition was unreasonable, save as to the sums claimed which were not limitation barred. However, in my judgment the costs of the application are not a sufficient sanction to match the seriousness of the default and the lack of promptness in applying for relief. Costs sanctions are generally the sanction for failure to file a costs budget on time and I consider that a deduction from the Claimant’s overall recoverable costs of 20% would be the appropriate sanction.

For the reasons set out above, grounds 1 and 2 of the appeal are upheld. I set aside the Judge’s orders on the Claimant’s applications for permission to amend the Particulars of Claim and for relief from sanctions. I substitute, as the appropriate sanction, that the Claimant shall pay the Defendant’s costs of both applications on the standard basis and that in relation to the costs of the action (excluding costs already covered by a costs order) the Claimant shall be debarred from recovering 20% of its costs as assessed or agreed.

Following providing draft of this judgment for corrections I received a further submission from the Appellant on costs. The costs of the appeal will be subject to a consequentials hearing to be listed before the end of term.