Marcan Shipping (London) Ltd v Kefalas and Candida Corporation
| Jurisdiction | England & Wales |
| Judge | Lord Justice Moore-Bick,Lord Justice Keene,Lord Justice Pill |
| Judgment Date | 17 May 2007 |
| Neutral Citation | [2007] EWCA Civ 463 |
| Docket Number | Case No: A3/2006/2201(A)&(B) |
| Court | Court of Appeal (Civil Division) |
| Date | 17 May 2007 |
[2007] EWCA Civ 463
Lord Justice Pill
Lord Justice Keene and
Lord Justice Moore-Bick
Case No: A3/2006/2201(A)&(B)
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION (COMMERCIAL COURT)
(Mr. Justice Morison)
2004 Folio 374
Mr. Neil Henderson (instructed by Jackson Parton) for the appellant
Mr. Graham Charkham (instructed by Thomas Cooper & Stibbard) for the respondents
Hearing dates : 28 th March 2007
Introduction
This is an appeal against the order of Morison J. made on 5 th September 2006 dismissing the claim and giving judgment in favour of the respondents for the costs of the action to be assessed on the indemnity basis following the appellant's failure to comply with the terms of a conditional order in traditional “unless” form that he himself had made on 21 st July 2006.
For many years the appellant, Marcan Shipping (London) Ltd (“Marcan”), carried on business as a shipbroker in the London market under the control of Mr. Dimitrios Yamvrias. The first respondent, Mr. George Kefalas, has for many years been concerned in the ownership and operation of vessels through various companies operated under his direction. One of those companies, Candida Corporation, which acts as his ship management company, is a defendant in the present proceedings and the second respondent to this appeal.
In May 2004 Marcan began proceedings against Mr. Kefalas and Candida seeking damages for the wrongful termination of a general agency agreement alleged to have been made orally between Mr. Yamvrias and Mr. Kefalas in 1982. Mr. Kefalas denies that there was any such general agency agreement; he says that Marcan was instructed to act as a broker from time to time to charter vessels belonging to companies he managed, for which it received commission in the ordinary way. He also says that if there was any general agency agreement of the kind alleged by Marcan, he was entitled to terminate it as a result of Mr. Yamvrias's dishonest behaviour. Marcan also alleges that Mr. Kefalas made a number of false representations between 1982 and 2003 as a result of which it suffered loss and damage in an amount which has yet to be quantified. The respondents deny that and say that any representations that may have been made were no more than statements of intention and belief and were honestly held.
It is clear from that brief description of the proceedings that the action should have been brought to trial as quickly as possible. Not only do the events with which it is concerned stretch back over the best part of twenty-five years, but Mr. Yamvrias and Mr. Kefalas are both elderly men whose recollection of the circumstances which lie at the heart of the dispute is likely to become less reliable as time passes. Regrettably, however, the proceedings have not been conducted with the degree of expedition their nature called for.
The matter came before the court for a case management conference on 31 st October 2005. On that occasion directions were given leading to a trial commencing on a date to be fixed not before 6 th June 2006. It was subsequently fixed to begin on 3 rd July 2006. However, on 12 th May 2006 the matter came before Langley J. on the respondents' application for permission to amend their defence and counterclaim. The judge gave permission to make the amendment, vacated the existing trial date and directed that issues relating to liability only should be determined at a trial to begin on 16 th October. At the same time he ordered the parties to give further disclosure of documents relating to matters put in issue as a result of the amendment, including specific documents or classes of documents referred to in the order. Among the documents that Marcan was ordered to disclose were certain documents and correspondence passing between it and the Baltic Exchange and the pleadings and witness statements in certain proceedings brought by Mr. Yamvrias in Greece to which he had referred in a statement made in March 2003. The judge directed that disclosure was to be made by list and by service of copies of all the listed documents in respect of which the claimant did not claim privilege, in each case by 16.00 on 23 rd June 2006. The judge also ordered Marcan to give additional security for the respondents' costs of the proceedings in the sum of £80,000.
Marcan failed to comply with the order of Langley J. and so the matter came back before Morison J. on 21 st July 2006. On that occasion the judge made an order that unless the claimant gave disclosure and provided security for costs in accordance with the order of Langley J. by 16.30 on 26 th July 2006
“the claimants' claim shall be dismissed and it is ordered and adjudged that the claimants pay the defendants' costs on an indemnity basis, such costs to be assessed if not agreed …”
On 26 th July 2006 the claimant served a list of documents which it is now accepted was materially defective inasmuch as it did not include certain documents passing between Marcan and the Baltic Exchange or any of the documents in the Greek proceedings. Accordingly, on 28 th July the respondents made an application to the court pursuant to CPR rule 3.5 for an order that the claim be dismissed and that the appellant be adjudged liable to pay the respondents' costs on an indemnity basis. That application was supported by a witness statement made by their solicitor in which he identified the classes of documents which it was said Marcan had failed to disclose and grounds upon which it was said that there had been a failure to comply with the order of 21 st July.
The application came before Morison J. on 5 th September 2006. By that time Mr. Yamvrias had obtained the papers relating to the Greek proceedings and had provided copies to the respondents, but there was no evidence before the judge to explain why Marcan had failed to comply with the order made on 21 st July, or what steps had been taken to enable it to do so; nor was any application made to the court under rule 3.8 for relief from the sanction imposed by that order. At the hearing counsel for Marcan, acting on instructions, sought to persuade the judge that his client had not failed to comply with the order at all, or that, if it had, that the breach was not sufficiently serious to justify striking out the claim. The judge was not impressed. He referred to the fact that Marcan had had to be “pushed and bullied” into complying with its obligations under the rules and that different judges had made a large number of “unless” orders in order to force it to do so. He found that there had been a very clear breach of the order in relation to the Baltic Exchange documents and the documents in the Greek proceedings, and he commented on the absence of any evidence from Mr. Yamvrias describing the efforts he had made to comply with it. He also referred to criticisms made of Mr. Yamvrias's conduct made by another judge in earlier unrelated proceedings. The judge considered that in all the circumstances it was just and proportionate for the claim to be struck out and for the order, as he put it, to be “activated”. He therefore made an order in the terms sought by the respondents striking out the claim and giving judgment for the respondents for damages to be assessed on the indemnity basis.
Marcan's primary ground of appeal is that the striking out of a claim for failure to comply with an order of the court cannot be justified unless the breach is so serious as to prevent there being a fair trial, a requirement which the judge had failed to consider and which was not satisfied in this case. In support of that argument it relied on the decision of Millett J. in Logicrose Ltd v Southend Football Club Ltd [1988] 1 W.L.R. 1256, a case decided when the Rules of the Supreme Court were in force and to which it will be necessary to refer in some detail at a later stage. It also said that the judge was wrong to take into account the behaviour of Mr. Yamvrias in the conduct of earlier litigation. When giving permission to appeal Sir Henry Brooke questioned whether the approach adopted under the Rules of the Supreme Court to questions of this kind should be applied to cases conducted under the Civil Procedure Rules (“CPR”) and noted that there had been no application for relief under rule 3.8.
In order to ensure that its process is not subverted so as to become an instrument of injustice every procedural system must place at the disposal of the court the power to manage proceedings before it, if necessary by imposing sanctions on litigants who fail to comply with its rules and orders. The ultimate sanction, of course, is to dismiss the claim or strike out the defaulting party's statement of case. A well-recognised way of imposing a degree of discipline on a dilatory litigant is to make what is known as an “unless” order by which a conditional sanction is attached to an order requiring performance of a specified act by a particular date or within a particular period. Although the CPR have given the court greater powers to control proceedings and a greater responsibility for ensuring that they are conducted fairly and efficiently, for reasons which will become clear in due course I do not think that there is a significant difference between the approach to this problem adopted under the former Rules of the Supreme Court and that which is now embodied in the CPR.
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