Pannone LLP v Aardvark Digital Ltd

Lady Justice Arden

This is a renewed application for permission to appeal by Aardvark Digital Limited, which is represented by Mr Weston who has made submissions on its behalf today. Patten LJ has granted permission to appeal on Grounds 1 to 7 and dismissed the application in respect of the remaining grounds, 8 to 41.

The background is that Pannones brought proceedings to recover their fees. The appellant filed a defence and counterclaim in which it was alleged that Pannones were negligent in the handling of various intellectual property matters and that the appellant had suffered loss and damage as a result.

On 16 November 2009 it was ordered by consent that the claimant had to file and to serve its reply and defence to counterclaim by no later than 1.00 pm on 26 October 2009. If the claimant did not comply with this, the defendant was entitled to strike out the defence to counterclaim and enter judgment for the full counterclaim. That order was not made until 16 November, but it had been agreed in advance and sent to the court.

On 26 October Pannone served its reply and defence to counterclaim and filed it. Although attempts were made to send the document out prior to 1.00 pm, the fax by which this was done was actually received by the court at a later stage, it is said, at about ten minutes past one o'clock on 26 October 2009, an earlier version having been sent with a single page missing which was received a little earlier but still after 1.00. Service was effected by email on the appellant. Initially this was done without a statement of truth, but a copy with the statement of truth was sent about 1.00 on that day. The time of this does not actually matter because it was not received by the appellant until two days later when it was recovered from a spam box. The position is that there had been no prior order or agreement as to service on the appellant by email.

The matter came before District Judge Obodai and she decided to cut through the problems of service and to extend time for filing. Her order was the subject of an appeal to His Honour Judge Hodge QC, who dismissed it by an order dated 19 August 2010. The judge approached the appeal on the footing that he was re-hearing the matter rather than conducting a review of the decision of the district judge, who had not given reasons. However, he was satisfied that the decision was entirely correct.

This application is an appeal from the order of His Honour Judge Hodge QC. The question, therefore, is whether the judge misdirected himself and the outstanding issues relate to service by e-mail and relief from sanctions pursuant to CPR 3.9.

As regards email, the judge held in paragraphs 40 and 41 that because of inter alia the distance between the parties the court had been prepared to sanction the use of email and as a matter of discretion held that service by email was in order.

In relation to sanction, the judge did not consider whether there was any unusual circumstance which prevented compliance, as that was already within the grounds for which permission had been given, and then proceeded to consider that relief from sanctions should be given.

On this application Mr Weston has made three points. Firstly, he has focused on a ground at the end of his grounds of appeal in which the appellant criticises the judge in these terms:

"The court erred in determining it has power to grant 'mercy' to one party in relation to contractually agreed obligations in a civil matter. By granting 'mercy' to Pannone The Court biased its judgment and therefore infringed Aardvark's right to a fair trial which was protected by Article 6 of the [European Convention on Human Rights]."

Insofar as this is a point about the court not being able to grant relief because there was a contractually agreed consent order, that matter is already within the grounds of appeal, but Mr Weston submitted that this ground enabled him to argue a wider point, one based on clean hands. The conduct, he submits, of the respondents had been unlawful because they had misled the court into exactly what happened about the filing and service of the documents. He submits the matters in statements to the court were perjury. This point, he submits, was raised below. He argued that that it was intentional. But it is clear when one goes to the judgment that the judge is clear that the court has been unwittingly misled and rejects the assertion that this had all been intentional. As to that, Mr Weston says the court erred on this finding of fact.

Mr Weston began his submissions by referring very properly to CPR 52.1(3), which makes it clear that a second appeal can only be on an important point of principle or practice or where there is some other compelling reason for the Court of Appeal to hear it. In these circumstances where the judge has considered the matter and been satisfied that the misinformation was unwitting, there is no prospect of success on appeal in arguing that there is an important point of principle or practice or some other compelling reason to bring this ground. Mr Weston submits there would be an action in deceit and that would only multiply the litigation of the parties. That is not an issue which changes my conclusion on this point.

I now move to service by e-mail. As to this, Mr Weston correctly points out that the judge gave three reasons. First, there had been an order for leaving the statement of claim (I think it must mean serving the statement of case on the claimant) and that there had not been a prior order for service by email. As to that issue, the judge said that the statement of case to which the claimant had to respond was itself initially served by email by the defendant on 1 September and filed at the court in the same way. Whether or not that was a proper service in accordance with the terms of order of District Judge Haigh, it does not raise a point of principle. It was a matter for the judge to weigh up in the exercise of his discretion as to whether to allow service by email and extend time if necessary.

The judge also, on Mr Weston's submission, was mistaken in his second reason. His second reason was that the consent order had been agreed by email. The parties have indeed corresponded by email, but what Mr Weston says is that there had been problems in communication by email due to the technical issues with the server or service provider, but this is not a matter which raises a point of principle within CPR 52.1(3). The judge's point remains that there had been communication by email between the parties.

The third reason given by the judge was that the claimant's offices, the offices I think of the solicitors for Pannones, were some 100 miles away. The judge gave as one of his reasons the fact that that justified using some means of electronic communication, and Mr Weston criticised that on the basis that no consideration was given to using a process server. But that again is not a point of principle. It is a point which the judge could have taken into account but he did not do so. He was satisfied that the distance alone justified the use of email.

I now move to the area on which Mr Weston made submissions and this was in the area of balancing of relief from sanctions, and in his grounds of appeal he has gone through each and every subparagraph of CPR 3.9 showing that the judge was wrong to grant relief from sanctions. He also raises a general point about giving relief from sanctions where there is a consent order, but that is within the grounds of appeal on which permission has already been given.

Mr Weston submits that the judge approached this matter as a re-hearing and that therefore it was for the claimant to prove that they were entitled to relief. I do not think that is what the judge meant. The judge meant that he was having to go into the matter more thoroughly because there were no reasons given by the district judge which could form the parameters of the appeal. He had to consider the matter more fully.

Mr Weston goes on to submit that the judge failed to take into account significant factors. His argument here is that there is a compelling reason to grant permission to appeal because there had been deceit by the solicitors or those advising Pannone, and that is the deceit which caused the court to be misled as to precisely what had happened. As to that, he submits that the court has to protect itself from abuse, and that deceit (I use my own words) affects all the grounds on which he seeks to establish that the judge should not have given relief against sanctions.

As I see it, the position is that this does not afford a real prospect of success on appeal. The judge rejected the argument that the misleading of the court was intentional and in the event the weighing of the factors for the purposes of CPR 3.9 was a classic situation of the judge exercising his discretion and does not raise any point in principle or practice for this court or, in the circumstances, a compelling reason.

In those circumstances, I refuse permission to argue the remaining grounds before this court.

Order: Application refused