A2/2013/3782 
Neutral Citation Number: [2016] EWCA Civ 381
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE 
QUEEN'S BENCH DIVISION
(HIS HONOUR JUDGE SEYMOUR QC) 
Royal Courts of Justice 
Strand
London, WC2A 2LL 

Thursday, 14 January 2016
 
B e f o r e: 

LADY JUSTICE ARDEN

LORD JUSTICE BEATSON 

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Between: 
JUDGE SYKES FRIXOU 
Respondent

v 

BHABRA & ANR 
Appellant 
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DAR Transcript of the Stenograph Notes of  
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Mr G Buttimore (instructed by Direct Access) appeared on behalf of the Appellant
Mr B Stimmler (instructed by Judge Sykes Frixou Solicitors) appeared on behalf of the Respondent

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J U D G M E N T
1.	LADY JUSTICE ARDEN:  The Appellant on this appeal is Mr Darjit Bhabra for whom Mr Buttimore appears.  He obtained permission to appeal.  The original notice of appeal was lodged on behalf of both Mr Darjit Bhabra and Mr Parminder Bhabra, but at some point Mr Parminder Bhabra entered bankruptcy from which he has since been discharged so he has, he has informed the court through Mr Buttimore, no further interest in this matter.  
2.	We have proceeded to hear this appeal by one Appellant alone without Mr Parminder Bhabra being present.  He would, of course, not have been an appellant, but a respondent.  The Respondent to the appeal, Judge Sykes Frixou, were content that we should do that and took the risk of any judgment not being enforceable against Mr Bhabra should it be set aside and there be a further retrial.  With that explanation, I now give my judgment on the appeal.  
3.	The Respondent, Judge Sykes Frixou, has brought proceedings to enforce guarantees given by the Appellant and his brother, Mr Parminder Bhabra, as the persons controlling certain companies for the payment of legal fees for advice given for the benefit of those companies, which as I say, were controlled by the Defendants.  The outstanding claim for fees is over £138,000.  
4.	The Appellant appeals against the refusal on 10 December 2013 of His Honour Judge Seymour to admit in evidence at the trial of this action a third witness statement of Mr Parminder Bhabra dated 16 July 2008 which was filed in support of an application to set aside a judgment entered against the Defendants in default of defence.  
5.	The trial before His Honour Judge Seymour was an adjourned trial.  The original trial date had had to be vacated by His Honour Judge Ralls QC on 21 November 2013 because Messrs Bhabra had filed evidence on the previous evening on which they sought to rely at the trial.  
6.	His Honour Judge Ralls ordered any further witness statements to be exchanged on 29 November 2008.  There had been previous orders made for disclosure and for exchange of witness statements.  No witness statements for use at trial had been produced by Messrs Bhabra.  So the last date for filing the evidence for use at trial was 29 November 2013.  
7.	Messrs Bhabra missed that date and sought to produce the fifth witness statement of Mr Parminder Bhabra on the day before the trial.  Counsel Mr Stimmler, who appears before us today for Judge Sykes Frixou, tells us that he did not see it until the very morning of the trial.  
8.	It will be recalled that CPR 32.10 provides: 
"If a witness statement or a witness summary for use at trial is not served in respect of an intended witness within the time specified by the court, then the witness may not be called to give oral evidence unless the court gives permission."
9.	At the opening of the trial Mr Buttimore made an application for the judge to admit the fifth witness statement of Mr Parminder Bhabra.  He also sought to rely on the third witness statement of Mr Parminder Bhabra of 16 July 2008.  In the result, the judge refused to extend time to permit the fifth witness statement to be served because of non‑compliance with the orders and because there would need to be an adjournment.  
10.	I will have to say a little bit more about the application that was made to the judge.  There is a transcript in volume 1 of the bundles before us.  The application begins at page 52 and the nature of the application is formulated both at pages 52 and 53.  It is sufficient for me to read what was stated to be the application at paragraph 53 of the transcript.  Mr Buttimore says:
"So in my submission, your Lordship should rule as follows.  First, that he is entitled [that is Mr Parminder Bhabra] to give evidence on matters he has already served witness statements on in relation to and secondly, that your Lordship should exercise discretion, either under the relief from sanction provision or just as a general discretion, which I submit is the appropriate course in this case, to allow the further evidence contained in his witness statement to be relied on in his evidence‑in‑chief."
11.	So it is clear that there were two applications before the judge.  One was an application that Mr Parminder Bhabra should be able to refer to witness statements already filed on the basis that he was entitled to give that evidence and secondly, that the judge should exercise discretion to admit the fifth witness statement either under relief from sanctions or as a matter of general discretion.  In relation to the fifth witness statement and the fifth witness statement only, Mr Buttimore invoked the discretion of the judge.  He said that there could be no prejudice to Judge Sykes Frixou and that it would be unfair to the Defendants to exclude it.  
12.	Mr Stimmler for Judge Sykes Frixou then made his submissions.  He said that the fifth witness statement would necessitate an adjournment.  He added at the end of the submissions that CPR 32.10 applied to both witness statements and then he added: 
"Even if it did not, my Lord, the alternative position is that the Defendant ought only to be able to rely on the statements that had already been served some time before and were included in the trial bundles as it is so that the trial can proceed, my having, as I say, to take more time to deal with these further matters and to consider the additional information included at the 11th hour without proper justification."
13.	I should say that in his submissions Mr Stimmler has explained to us that what he was doing, in a very candid and proper way, was telling the judge that he had already taken instructions on the third witness statement, but I note that he was only accepting that he could deal with what was in the third witness statement.  He was not accepting, therefore, that if the third witness statement were in evidence and Mr Parminder Bhabra brought in the matters in the fifth witness statement that he would be able to deal with those matters on the basis of the instructions which he had already taken.  It seems to me that that would be going much further than counsel had accepted.  
14.	The judge gave a substantial judgment on this part of the application.  He ruled against admission of the fifth witness statement because it was far too late and because he accepted that it would necessitate an adjournment.  He also, as I recall, took the view that an extension of time was necessary and thus that this was a relief from sanctions case.  
15.	In addition, the judge rejected the argument that the third witness statement could be relied on.  He held that in effect a witness statement had to be filed for use at trial in order to come within the exception in CPR 32.10.  As Beatson LJ has pointed out, this is clear from paragraphs 18 and 19 of the judgment: 
"18.  It is not the case, contrary to the submission of Mr Buttimore, that, as it were, there is a witness statement in place, consequently the Defendants can rely upon it, consequently Mr Bhabra can be put into a position of giving oral evidence.  At the moment there is no witness statement on the Defendants' side in relation to the evidence which the Defendants apparently wish to adduce at trial.
19.  It is not the case, contrary to Mr Buttimore's submission, that this is in the nature of a supplementary witness statement for trial.  The substance of the application before me is to extend time for serving a witness statement for trial when there is not one." 
In light of those paragraphs, the judge went on to reject simply the application to adduce the fifth witness statement.  
16.	Then Mr Buttimore makes a further application.  He applied to adduce the third witness statement, which had been adduced, as I say, in support of the application to set aside the default judgment.  He said there would be no prejudice to Judge Sykes Frixou because they had had it for a long time and he had envisaged that Mr Bhabra would simply confirm the contents of this statement in chief and that he would not elaborate on it.  Then it would be a matter for cross‑examination.  The judge did not call on Mr Stimmler to reply to this application.  He said this:
"For the reasons which I have given in the judgment just given, I am not prepared to accede to that application.  Indeed, I had intended by the judgment which I had delivered to preclude the making of any application along those lines by explaining that my view was that there was no trial witness statement before the court and that the witness statements which were before the court had been produced for a different purpose and before a number of orders of the court requiring publication of witness statements and it is those that the Defendants have ignored and they must now take the consequences."
17.	That is the judge's very short judgment on this application.  It was obviously an ex tempore judgment.  It therefore has to be read with care and cannot be expected to make every single point or dot every single I and cross every T that would perhaps be expected in a reserved judgment.  
18.	So the judge relied on the reasons which had already been given and said, as I have made clear, that the witness statement was prepared for another purpose and therefore, he considered that he could not accede to the application.  He goes on to make reference to the non‑compliance with orders of the court and to the consequences which the Defendants had to take, one of which was that they could not rely on the third witness statement.  
19.	I should explain that I am not going to go into the third and fifth witness statements in detail because it is accepted that the fifth witness statement merely amplifies what is in the third witness statement.  The third witness statement purports to deal with the defences which had been raised to the holding of liability on the guarantees, namely two defences on the basis of professional negligence and one on the basis of economic duress in the taking of the guarantee in the first place.  
20.	I am going to go now to the submissions.  On this appeal the Appellant relies on the judgment of Davis LJ in Chartwell Estate Agents v Fergies Properties [2014] EWCA Civ 506.  That makes it clear that the court has to look at all the circumstances in considering whether to grant relief from sanctions.  
21.	At this point I will also set out CPR 3.9(1) which is the rule which deals with relief from sanctions.  It appears on page 113 of the 2015 White Book and provides as follows:
"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."
22.	The Appellant submits that the judge did not take into account that there could be no prejudice because the third witness statement had indeed already been served and served a long time ago.  The Respondents' position on that is, of course, that the witness statement had not been supplied for use at trial and that therefore it could not be used at trial without an order of the court.  That was a submission which the judge had accepted on the wording of CPR 32.10.  
23.	The Appellant submitted that the judge did not consider the serious consequences of his order from the point of view of the Bhabras.  The Respondents say that the judge would have been well aware of all the serious consequences for them if he refused to admit the statement.  
24.	They also say that CPR 1.1(2)(f) is designed to encourage a judge to take into account the importance of enforcing compliance with the rules, practice directions and orders.  It is to be noted that is one of the particular matters which CPR 3.9(1)(b) states is a material factor in deciding whether it is appropriate to grant relief from sanctions and to deal with the application justly.  
25.	The Respondents to this appeal, Judge Sykes Frixou, also submit that the circumstances do not justify relief from sanctions.  There had been previous defaults in the bundles and in giving inspection and in giving disclosure, for which there had been an unless order on 21 January, and that to allow relief would undermine the policy going behind the position of sanctions.  
26.	There were also before us a number of submissions on law and the merits of the defences raised.  The Respondents say that the defences had no real prospect of success.  For instance, they say that there was no unlawful pressure to grant the guarantees and therefore, there could be no duress as pleaded in the defence.  In relation to the breaches of duty, they assert that there is no evidence in the witness statements of any loss or causation sufficient to constitute a sufficient prospect of success.  
27.	Those matters are, of course, disputed by Mr Buttimore.  He submits that all he has to show is that there was a prospect of success.  I would accept that, but I do not think that it is going to be determinative for me to go into those matters.  But if I may summarise again what Mr Buttimore is saying, he says that the judge's refusal of the application was punitive, inflexible and unjust and that there was no real attempt by the judge to exercise discretion.  He also says that the judge failed to consider the impact of his refusal on the proceedings and that he was plainly wrong and should have allowed the case to proceed on the basis of the third witness statement.  
28.	These matters are intricate because we are having to put ourselves into the position of the trial judge, but it is well‑known that on an appeal an appellate court will respect the fact that the judge was in a better position than they to judge matters of case management.  It allows a fairly substantial margin for the judge's exercise of discretion because he had before him a much fuller picture of the circumstances of the case before him.  
29.	In addition, it is inevitable that some decisions as a matter of case management will bear in a hard way on one party or another.  Many questions that arise as a matter of case management will have serious consequences for one party or another.  But on the other hand, when the court makes orders for the exchange of witness statements, they are not made idly.  They are intended to be adhered to unless there is some very good reason.  
30.	Mr Buttimore fairly accepts that there had been serious breaches of the court's orders and there was no explanation which was acceptable.  I do understand that there had been illness in the family and so on, but they are not reasons for not complying with a series of orders which gave the Appellant a series of opportunities to put in evidence which would give a proper opportunity to Judge Sykes Frixou to present a case in support of their argument.  
31.	In all the circumstances, I have concluded that this appeal should be dismissed.  The applications to admit both the third and the fifth witness statement were made extremely late and it is no answer, for the reasons which the judge gave, to say that the third witness statement had previously been served.  The fact was that it was served for a different application and that the Respondents had no formal notice that it was to be relied on at trial.  
32.	As a thorough counsel, counsel had in fact taken instructions on it and he candidly and frankly and properly told the court that in effect he had done so, but that was not this end of the point.  The original application to the judge was made on the basis that the Bhabras were entitled to rely on the third witness statement because it was already filed.  They did not change their position on that until Mr Buttimore got up after the judge had given his judgment for permission to use the third witness statement alone.  
33.	His case was essentially that Judge Sykes Frixou could not be prejudiced, but that is not what Mr Stimmler had accepted in his submissions for the reasons that I have already given.  He had accepted that he could proceed simply on the basis of the third witness statement already in the trial bundles without having to take further instructions.  But, of course, as Mr Buttimore very properly accepted at a very early point in his address to us, as soon as he, Mr Stimmler, started to cross‑examine Mr Parminder Bhabra, Mr Parminder Bhabra could include in his replies material from the fifth witness statement.  No solution to this dilemma was offered to the judge.  They would be matters on which Mr Stimmler would not have had the chance to take instructions.  
34.	The third witness statement, therefore, had to be rejected for the same reason as the fifth witness statement, namely that it would lead to the need for an adjournment.  One of the matters in CPR 3.9 is that the court must see to the efficient handling of a trial and that must mean keeping adjournments to the minimum.  There had already been one adjournment of the trial.  
35.	The matter had already come on for trial before His Honour Judge Ralls.  The judge would clearly have been aware from his experience of the possible prejudice to the Defendants of his order fixing a date for the exchange of witness statements, but he had considered that, because he said at the end of his judgment that the Defendants would have to take the consequences.  That could only have been a relevant comment if he had considered the prejudice but thought that it was inevitable.  
36.	At the end of the day, this decision, though a very tough one, was a matter of discretion for the trial judge.  He was within his discretion, in my judgment, to take this decision in the light of the procedural history, in the light of the Rules and the authorities and in the light of the circumstances of the case.  
37.	As I see it, the merits of the defence do not come into this and there is no question of the re‑exercising of the discretion.  I would, therefore, dismiss this appeal. 
38.	LORD JUSTICE BEATSON:  I agree.