The High Court has ordered a party that missed the deadline to fix the date of a case management conference (CMC) by more than four years to pay security for costs as a sanction.
His Honour Judge Rawlings, sitting as a High Court judge, said the failure, though “inordinate and inexcusable”, did not justify striking out the case.
In Alba Exotic Fruit v MSC Mediteranean Shipping Company, a dispute over bananas damaged during their transport in 2013 from Ecuador and Honduras to Albania, the claimant Albanian company sought $122,000 for the damaged cargo and loss of profit of $25,000. MSC counterclaimed for $41,000.
Alba issued proceedings in April 2014. MSC served its defence and counterclaim that September, and in accordance with the CPR at the time, Alba should have applied to the court for a case management conference (CMC) within 14 days (paragraph 7.2 of Practice Direction 59).
But it did not and still has not, although it served a reply and defence to counterclaim in October 2014.
In June 2018, Alba served a notice of change of legal representative and an application to amend its particulars of claim. MSC sought to strike out the claim and also security for costs.
HHJ Rawlings declined to strike out the claim as an abuse of process on any of the three grounds under CPR 3.4(2)(b).
Whilst Alba’s delay in applying for a CMC was “both inordinate and inexcusable”, he was not satisfied it had resulted in serious prejudice to the defendant or that a fair trial was no longer possible, because documentation was likely to be key to resolving the case.
As to whether there had been an “intentional and contumelious delay involving a complete and total disregard for the rules of the court with full awareness of the consequences”, the judge found it had been intentional in the sense that Alba had been advised by its then solicitors that it needed to apply to fix a CMC and “there is no evidence that it has ever instructed any solicitor to take that step”.
However, he continued: “I am not satisfied that disregard of the court rules as opposed to the claimant’s financial constraints, language difficulties, preoccupation with other matters and dissatisfaction, for whatever reason with the solicitors providing legal advice to Alba and consequent changes of legal advisers, were not the predominant factors in causing the delay, rather than Alba’s disregard of the rules of the court.”
As to whether there was “an intentional decision not to progress the claim”, HHJ Rawlings rejected the defendant’s argument that the claimant had “warehoused” the claim.
This was not a case where the claimant deliberately chose to delay proceedings but keep them alive so it could continue them at some point in the future if it wanted, he said. Rather, it was one of “mere” delay.
The judge went on to consider the “appropriate and proportionate sanction” for Alba’s failure to comply with the CPR in not applying for the CMC.
He concluded, narrowly, that this was to order that Alba provide security for MSC’s costs, rather than to strike out the claim under CPR 3.4(2)(c), which provides that a court may strike out a statement of claim if there has been a failure to comply with a practice direction
On top of his earlier findings, he noted that it had been open to MSC to apply to fix the CMC itself.
“Depriving Alba of the ability to have the court determine what on its face appears to be a legitimate claim in circumstances where I have found that a fair trial is still possible and that there has been no substantial prejudice to MSC’s ability to defend the claim (as a result of Alba’s default) appears to me to be too draconian a step to take.
“I have, by a small margin decided that the risk of MSC being unable to enforce a costs award against Alba is not sufficiently serious to justify an order being made that Alba provide security for MSC’s costs under CPR 25.12.
“The question of security for costs, when considered afresh as a sanction for Alba’s default is different. Alba’s default is a serious one, it has delayed the litigation significantly and increased the costs of the litigation.
“If MSC is ultimately successful in defending the claim and receives a costs order in its favour then it would, in my judgment be grossly unfair if MSC were unable to enforce that costs order.
“In order to avoid that potential consequence and having regard to the need to impose some sanction upon Alba for its default, it appears to me that the most appropriate course of action is to order Alba to provide security for MSC’s costs under CPR 3.1(5).”
HHJ Rawlings ordered Alba to pay security of £100,000, 79% of MSC’s estimated costs to trial.
Though this was a “relatively high” percentage, it was “a proportionate sanction for Alba’s default for over four years and seven months in failing to fix a CMC and helps to ensure that MSC does not suffer a material shortfall in its recovery of costs at the end of the proceedings if it is ultimately successful in its defence of Alba’s claim”.