The dangers of missing court deadlines

Missing Court deadlines may be the result of a party’s indifference to Court timetables or a tactic to delay an eventual unfavourable order being made whilst also escalating the legal costs of your opponent. Whether a party is seeking to prevent an opponent from abusing the Court process or a party is tactically seeking to delay matters, both parties should be aware of the potential repercussions and the impact of an application for strike out.

Application for Strike Out

 An application for strike pursuant to CPR. 3.4 aims delete a party’s statement of case so that it cannot be relied on in the proceedings. CPR 3.4(2) provides that the Court may strike out the whole statement of case where:

  • ‘the statement of case discloses no reasonable grounds for bringing or defending the claim;
  • the statement of case is an abuse of the court’s process or is otherwise likely to obstruct the disposal of the proceedings; or
  • there has been a failure to comply with a rule, practice direction or court order’.

If a whole statement of case is struck out this can lead to the Court giving a final judgment for the applicant and potentially costs.

 Case Study – the facts

A landlord (“L”) rents prime central London office space to a law firm, with the two senior partners being the named tenants under the lease (‘T’).  T proves a less than ideal tenant and, after failing to pay the rents on time, L serves a S.25 notice terminating T’s tenancy. T does not provide vacant possession and L is forced to issue a claim for possession and damages including a claim for dilapidations and mesne profits. T vacates just prior to the possession hearing and then disputes the balance of the sums outstanding meaning that L is forced to continue with their claim. T serves an initial Defence but then disengages from the Court proceedings; consistently failing to respond to notifications, proposals for settlement, a Part 36 Offer, Court Directions including disclosure. T also fails to attend the Directions Hearing.

Whilst disengaging from the proceedings served T in the short term by delaying the inevitable court date, Hunters were instructed to issue an application to strike out T’s Defence pursuant to CPR 3.4(2)(c) for failure to comply with a court order, and specifically failing to comply with an order for disclosure. Unsurprisingly, T failed to attend the hearing of L’s application but filed and served a witness statement at the 11th hour attempting to comply with their disclosure obligations and seeking the Court’s indulgence. However, the Court was not prepared to grant T any further indulgence as this would mean vacating the fixed trail date which was contrary to the Court’s dual obligation to (i) ensure that claims are conducted efficiently and at proportionate cost (CPR 3.9(a)) and (ii) enforce compliance with court rules, practice directions and orders (CPR 3.9(b)). The Judge therefore struck out T’s entire Defence, and ordered T to pay not only the full amount claimed by L but at a late payment interest rate of 8%. Further, the Judge used the strike out application to penalise T for failure to comply with the court directions by ordering that they pay the costs of L’s strike out application as well as a significant proportion of L’s costs in the underlying claim, a proportion of which was to be paid on an indemnity basis.

Following the strike out application, Hunters have successfully obtained interim charging orders against T’s residential and business property portfolio to safeguard the amounts due to L, and to prevent T disposing of any assets in order to place funds out of L’s reach.

Cautionary Application

As demonstrated above, a party’s disregard of court deadlines can be used to underpin a strike out application which, if successful, can bring a litigation to a head and save further time and expense by short circuiting the preparation for an eventual trial. Despite there being several grounds on which to base the application, it is nevertheless an “order of the last resort” and thus used sparingly by the courts. Further, it should be noted that a failed application could lead to a wasted costs order being made against the applicant.  The application will normally require the preparation of witness evidence and separate costs schedules for both the claim generally and the application itself which will increase solicitors’ fees. Considered advice will therefore need to be obtained from your legal advisors as to whether an application for strike out is the appropriate mechanism to deal with a non-engaging party in order to achieve the best outcome for the client.

 Jamie Lester – Partner

 Hunters incorporating May, May & Merrimans

Jamie specialises in complex, high value matters in the areas of professional negligence, corporate/commercial, risk management, insolvency, insurance, intellectual property, group actions, trusts, wills, probate, property and employment law.


 

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