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	England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Summit Navigation Ltd & Anor v Generali Romania Asigurare Reasigurare SA Ardaf SA & Anor [2014] EWHC 398 (Comm) (21 February 2014) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2014/398.html Cite as: [2014] EWHC 398 (Comm), [2014] 2 Costs LR 367, [2014] 1 WLR 3472, [2014] WLR(D) 104, [2014] WLR 3472

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		21/02/2014

Mr Justice Leggatt :

Introduction

1. The decision of the Court of Appeal in Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537, [2013] 6 Costs LR 1008, on the effect of the new CPR 3.9, has rightly been described as a "game changer": see Michael Wilson & Partners Ltd v Sinclair [2013] EWCA Civ 1732, per Lewison LJ. It is important for litigants to understand, however, how the rules of the game have been changed and how they have not. The defendants in this case have sought to rely on Mitchell to turn to their tactical advantage a short delay by the claimants in providing security for costs which in itself had no material impact on the efficient conduct of the litigation. They have argued that the consequence of the claimants' default should be that the action remains permanently stayed.
2. Unlike the claimants' default itself, the defendants' response to it has had a very serious impact on the litigation. The whole timetable for the proceedings has been derailed, significant costs have been incurred and court time has been wasted to the detriment of other court users. In other words, the reliance placed on Mitchell in this case has had the very consequences which the new approach enunciated by the Court of Appeal in Mitchell is intended to avoid.
3. In the hope of discouraging other litigants from making similar arguments to those made by the defendants in this case, with similar disruptive consequences, I said at the end of the hearing that I would put in writing my reasons for the orders which I then made. This judgment gives those reasons.

Procedural history

4. The first claimant is a Maltese company which owned the vessel "Beril", and the second claimant is Turkish company which managed the vessel. They claim in this action under a policy of marine insurance issued by the defendants in respect of damage to the vessel's hull and machinery. The amount at stake is modest by the standards of commercial claims being some US$500,000.
5. The action was begun in March 2012. In March 2013 the claimants were ordered to and did provide security for the defendants' costs in a sum of £25,000 by procuring a bond from a company called Amtrust Europe Ltd which insured the claimants for their potential costs liability up to that amount.
6. After statements of case had been served, directions for the future conduct of the action were agreed and embodied in an order made by consent on 11 October 2013. That order set out a timetable for disclosure, service of witness statements, exchange of experts' reports and other steps leading to a trial which was fixed to start on 7 July 2014.
7. The defendants applied for further security for their costs, which the claimants agreed to provide by a further consent order dated 26 November 2013. It is here that the trouble began. The Commercial Court Guide in addressing security for costs in Appendix 16, paragraph 6, states:

"It is not usually convenient or appropriate to order an automatic stay of the proceedings pending the provision of the security. It leads to delay and may disrupt the preparation of the case for trial, or other hearing. Experience has shown that it is usually better to give the claimant (or other relevant party) a reasonable time within which to provide security and the other party liberty to apply to the court in the event of default. This enables the court to put the claimant to his election and then, if appropriate, to dismiss the case."

The wisdom of the experience referred to in the Guide is demonstrated by the history of the present case.

8. The relevant terms of the consent order dated 26 November 2013 were as follows:

"IT IS ORDERED that:

1. By 4pm on 5 December 2013, the Claimants provide further security for the Defendants' costs of the claim in the sum of £100,000 by one of the following methods:

1.1 Payment into Court or

1.2 Delivery to the Defendants' solicitors of a bond in the sum of £125,000 in terms identical save as to amount to that of Amtrust Europe Ltd dated 11 March 2013 ("the Existing Bond") whereupon the Existing Bond will cease to have effect and the Defendants' solicitors will return it to the Claimants' solicitors.

2. In the event that such security is not provided by the said date the action be stayed."

9. On 28 November 2013 the claimants' solicitors sent to the defendants' solicitors the form of a proposed bond seeking their approval of the wording. The bond was drafted as a deed to secure the claimants' liability for costs in a sum of £100,000 in addition to the £25,000 secured under the existing bond. The defendants' solicitors refused to accept the proposed wording on the basis that the consent order provided for a single new bond in the sum of £125,000 and not an additional bond for a further £100,000.
10. On 3 December 2013 the claimants' solicitors sent an email to confirm that the underwriters would issue a new bond for the full amount subject to it being exchanged for the old one. On the same day the defendants' solicitors agreed a procedure for such an exchange.
11. On 4 December 2013 the claimants' solicitor, Mr Dorman, was told by the brokers that the new bond would be issued on the following day (5 December) and that arrangements would be made by the brokers direct with the defendants' solicitors to effect an exchange of the new deed for the old one on that day. However, this did not happen. The brokers have since informed Mr Dorman that they were unable to get the underwriter's signature on the new deed on 5 December or until the morning of 6 December 2013.
12. The claimants thus failed to comply with paragraph 1 of the order dated 26 November 2013, which required the new bond to be delivered by 4pm on 5 December 2013. At 9.28am on 6 December 2013 the defendants' solicitor, Mr Stockler, sent an email to record that fact and point out that the action was now stayed.
13. Mr Dorman sent an email back at 9.56am to say that he understood that the signature on the deed was still required but would be obtained that day. That email was followed five minutes later by a further email from Mr Dorman timed at 10.01am stating that he had just been advised that the signature to the deed had been obtained and it was ready for exchange. He said that the broker would attend Mr Stockler's offices to exchange the new deed for the old one and would be in contact directly to arrange a convenient time.
14. Mr Stockler's response (sent at 10.08am) said:

"The action is stayed. If you wish to have the stay lifted, you will no doubt take your own advice on how, if at all, this can be achieved. For our part, we can tell you now that, should your client make an application for relief from sanctions pursuant to CPR 3.9, that application will be resisted. No doubt you will be aware of the recent Court of Appeal decision in Mitchell v News Group Newspapers."

15. In a further email sent a few minutes later Mr Stockler made it clear that:

"We do not intend to exchange the bond unless and until the stay on proceedings has been lifted."

16. In subsequent email correspondence the claimants' solicitors asked the defendants' solicitors to reconsider their position and to agree to the lifting of the stay in return for the delivery of the new bond. Those requests were refused. In these circumstances the claimants issued an application dated 9 December 2013 for an order declaring that the action was no longer stayed by virtue of the claimants having made security available to the defendants or, alternatively, an order that the stay of the proceedings be lifted.
17. The defendants responded by issuing an application of their own on 13 December 2013 for an order that the action be stayed pursuant to CPR 58.14 on the ground that the claimants had failed to comply with part of the order for directions dated 11 October 2013 which provided for disclosure of ship's papers. That may be thought a surprising application to make in circumstances where the defendants were maintaining that the action was already stayed. It has, however, been relied on by the defendants as an alternative basis for not lifting the stay.

The defendants' arguments

18. In outline, the arguments advanced by Mr Evans-Tovey on behalf of the defendants were as follows:

i) The failure of the claimants to provide security in compliance with paragraph 1 of the order had the consequence that, pursuant to paragraph 2, the action became automatically stayed.

ii) To lift the stay would require an order of the court.

iii) The claimants' application for such an order is an application for relief from a sanction falling under CPR 3.9.

iv) Accordingly, the Mitchell principles must be applied.

v) Applying those principles, the claimants' default was not trivial and there was no good reason for it.

vi) In these circumstances, the claimants' application should be refused and the action should remain permanently stayed.

vii) Alternatively, if the court would otherwise be prepared to lift the stay, it should not do so and an order should be made staying the proceedings under CPR 58.14 on account of the claimants' alleged failure to comply with the order for disclosure of the ship's papers.

Is an application to lift the stay necessary?

19. It is common ground that, when the claimants failed to provide the requisite further security by 4pm on 5 December 2013, paragraph 2 of the consent order was triggered and the action became stayed. However, on behalf of the claimants, Mr Watthey submitted that paragraph 2 of the order is to be interpreted as meaning that the action will be stayed until the security is provided, such that the stay was lifted automatically when the claimants tendered the necessary security on the following day (6 December 2013). This interpretation, he submitted, gives effect to what the parties must objectively have intended, which was to protect the defendants against having to incur costs without security for them.
20. I am unable to accept that this is the meaning of the order. One standard form of order for security of costs (set out in Practice Form 44) provides that "all further proceedings be stayed until security is given" (emphasis added). However, the consent order in this case is not in these terms and did not specify any event which would bring the stay to an end. If the parties had intended the stay provided for in paragraph 2 of the order to end automatically when security was given, I would expect them to have said so. Such an intention is not so obvious that it goes without saying. Although in this case the requisite security was offered the next day, the order was applicable to a delay of any length. It is far from obvious that if, by the time security was provided, deadlines set out in the order for directions dated 11 October 2013 had passed, the parties must objectively have intended that the claimants should automatically be entitled to continue the proceedings without any involvement from the court.
21. I therefore reject the claimants' argument that the stay provided for in paragraph 2 of the consent order should be construed as self-lifting upon the provision or tender of security at any time after that specified in the order.

Is the application one for relief from sanctions?

22. Mr Watthey next argued that, if an application to lift the stay is necessary – as I have held that it is – the court should lift the stay as a matter of course as it purpose has been fulfilled. He submitted that a stay of the present kind is not properly described as a "sanction" from which the claimants need to seek "relief". The term "sanction", he argued, connotes a punitive purpose. In Mr Watthey's submission, the purpose of the stay imposed in this case was not to penalise the claimants for failing to provide security by the time ordered, but was to act as a temporary brake on the proceedings while the necessary security was found and to protect the defendants in the meantime from having to incur costs without the benefit of security.
23. In support of the defendants' argument that the claimants' application for an order to lift the stay falls under CPR 3.9, Mr Evans-Tovey submitted that CPR 3.9, which deals with relief from sanctions, needs to be read together with CPR 3.8. CPR 3.8 states:

"Sanctions have effect unless defaulting party obtains relief.

3.8(1) Where a party has failed to comply with a rule, practice direction or court order, any sanction for failure to comply imposed by the rule, practice direction or court order has effect unless the party in default applies for and obtains relief from the sanction.

(Rule 3.9 sets out the circumstances which the court may consider on an application to grant relief from a sanction.)

…

(3) Where a rule, practice direction or court order –

(a) requires a party to do something within a specified time, and

(b) specifies the consequence of failure to comply,

the time for doing the act in question may not be extended by agreement between the parties."

24. Mr Evans-Tovey argued that the language of CPR 3.8(3) demonstrates that a "sanction" for the purposes of CPR 3.8 and 3.9 includes any "consequence" of failure to comply with a court order requiring something to be done within a specified time. He further submitted that the fact that the stay in this case was intended to be a sanction is supported by the fact that (i) the stay was not immediate and (ii) the order did not provide that the stay would be only temporary in nature until security was provided.
25. Mr Evans-Tovey also relied on two authorities. In Woodhouse v Consignia plc [2002] EWCA Civ 275, [2002] 1 WLR 2558, the Court of Appeal held, following earlier decisions to the same effect, that an automatic stay imposed by the transitional provisions in CPR 51 (when pre-existing proceedings were not brought before a judge within a year of the CPR coming into effect) was to be treated as a sanction for the purposes of CPR 3.9. Second, in Michael Wilson & Partners Ltd v Sinclair [2013] EWCA Civ 1732, a stay pending compliance with an order for the immediate payment into court of security for the costs of an appeal was likewise treated as a sanction for the purposes of CPR 3.9. Mr Evans-Tovey submitted that the stay in the present case is analogous.
26. To these arguments Mr Watthey responded that the choice of the different word "consequence" in CPR 3.8(3) reinforces his contention that not every consequence of a failure to comply with a court order is a "sanction". He sought to distinguish Woodhouse on the basis that the purpose of the stay at issue in that case was intended to be punitive unlike, he submits, the purpose of the stay imposed here. He further pointed out that in the Michael Wilson case it appears to have been assumed without argument that CPR 3.9 applied.
27. Although I see force in the distinction which the claimants seek to draw, I have concluded that the stay imposed by paragraph 2 of the consent order in this case is a "sanction" within the meaning of CPR 3.9. The term "sanction" seems to me apt to include any consequence adverse to the party to whom it applies. I also consider that it makes much better sense to construe CPR 3.8 and 3.9 as a coherent scheme rather than as drawing a distinction between a "consequence" of failure to comply and a "sanction" for failure to comply with a rule, practice direction or court order. I interpret r.3.8(3) and r.3.8(1) as dealing with the same situation, in the one case before, and in the other case after, the time specified for doing an act has expired. I can see no sensible reason for supposing that the provisions were not intended to be symmetrical. It follows that any application to disapply a consequence specified in a court order for failing to do something within a time specified in the order is an application for relief from a "sanction" within the meaning of these rules.
28. In any event, while I accept that one purpose of a stay of proceedings when security for costs has not been provided is to protect the other party from having to incur costs in the absence of security for them, it seems to me that such a stay does also operate as a penalty – or "sanction" in the ordinary sense of the word – on the party who fails to comply with the order by preventing that party from pursuing its claim.
29. The conclusion that the stay in this case is a "sanction" for the purposes of CPR 3.8 and 3.9 gives an additional reason for rejecting the claimants' argument that the stay lifts automatically once security is provided – since CPR 3.8(1) does not permit the parties to achieve that result by agreement. By reason of CPR 3.8(1), the stay has effect unless the claimants, as the party in default, apply for and obtain relief from the sanction in the form of an order lifting the stay.
30. CPR 3.9 (as amended) provides that on such an application:

"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."

Do the Mitchell principles apply?

31. It does not follow, however, from the fact that the stay of proceedings imposed in this case is a "sanction" that all sanctions are equal and are to be treated as equivalent to one another for the purposes of CPR 3.9. There is, in my view, a significant difference between an order which specifies the consequence that proceedings are to be stayed if security for costs is not provided by a specified date and an order that, unless security is provided by a specified date, the claim will be struck out. Such "unless" orders are of course commonly made when security of costs is not provided but not, at any rate in the Commercial Court, before the party ordered to provide the security has first failed to do so within a specified time.
32. In Radu v Houston [2006] EWCA Civ 1575 at [18], Waller LJ said:

"The obtaining of an order for security for costs is a rather special form of order. It is intended, if it is right to make an order at all, to give a claimant a choice as to whether he puts up security and continues with his action or withdraws his claim. That choice is meant to be a proper choice. I actually find it somewhat strange that, whereas with most forms of interlocutory order it would be unlikely that a court would make an unless order as its first order, it seems to be quite common to make an unless order in relation to security for costs. I note from the Annual Practice that there seems to be a difference between the practice in the Masters' corridor and in the Commercial Court as to the making of an unless order at all as a term of the first order for security [see CPR r.25.12]. The reason for that difference, I suspect, is the attitude in the Commercial Court that an order for very large sums should not be made subject to the "unless" sanction until a real opportunity has been given to the claimant to find the money. I would have thought that, even if an unless order is made as part of the first order, the period for complying should on any view be generous. The making of an order for security is not intended to be a weapon by which a defendant can obtain a speedy summary judgment without a trial."

33. The normal approach in the Commercial Court is illustrated by the recent case of SC GD Petrol SRL v Vitol Broking [2013] EWHC 3920 (Comm), which shows Eder J:

i) making an order on 7 June 2013 for security of costs to be provided within 28 days;

ii) then, when security had still not been provided by 4 September 2013, extending the time for providing the required security until 17 October 2013, with a stay of proceedings in the meantime; and

iii) ordering at the same time that, unless the security was provided or a further extension of time granted before 17 October 2013, the claim would be struck out on that date.

34. To apply the same approach to an application to lift a stay which takes effect when security is not provided on time as to an application for relief from the sanction of striking out the claim for failure to comply with an "unless" order would collapse the important distinction between those two different kinds of order, with the different gradations of seriousness which they are generally understood to signify. Mr Evans-Tovey disputed this, arguing that there is still a material difference between a stay of proceedings and an order that the claim be struck out, since a stay does not entitle the defendants to recover their costs of the action. For that purpose, a further order would be needed. I cannot accept, however, that this is the sole intended distinction between the two forms of order. The essential difference is that a stay of the proceedings if security is not provided is intended to be non-permanent, whereas an order that the claim be struck out is intended to bring the action permanently to an end absent any further order which avoids that result.
35. In the present case the period between the date of the order for security (26 November 2012) and the date by which the security was ordered to be provided (5 December 2012) was only nine days. Neither the parties when they agreed the form of order, nor the court when making an order in the terms agreed, could reasonably have intended that the consequence of missing that deadline would be that the action would come permanently to an end. To the contrary, the only intention which can in my view reasonably be attributed to the parties and to the court is that a stay would be temporary only; and that if the requisite security was provided subsequently, the stay would be lifted on appropriate terms including as to costs. The reasonable expectation is that, to debar the claimants permanently from continuing with the action, a further order from the court would be needed thereby ensuring that the claimant has been given a proper choice between putting up the security and losing the right to pursue the claim for good.
36. The broad language of CPR 3.9 is quite capable of accommodating more than one approach to applications for relief from sanctions taking account of the nature of the sanction and the nature of the relief sought. In giving guidance as to how the amended CPR 3.9 should be applied, the Court of Appeal in Mitchell was not concerned with the "rather special form of order" that is an order for security of costs, nor with the granting of relief from a sanction which was not intended to be permanent. The sanction imposed in the Mitchell case was an order made after the claimant had failed to file a costs budget on time applying by analogy CPR 3.14. This states:

"Unless the court otherwise orders, any party which fails to file a budget despite being required to do so will be treated as having filed a budget comprising only the applicable court fees."

Absent a further order from the court, the specified consequence of failing to file a costs budget on time is clearly intended to be permanent. The same applies to other common forms of "unless" order: for example, an order debarring a party from relying on witness evidence unless it is served by a specified date or an order striking out a party's claim or defence and allowing the other party to enter judgment unless a step in the litigation is taken within a specified time.

37. In the present case where, by contrast, the application is for the lifting of a sanction not intended to be permanent, a different approach is called for. The terms of the new CPR 3.9 still require the court to consider the need (a) for litigation to be conducted efficiently and at proportionate cost, and (b) to enforce compliance with rules, practice directions and orders. But those considerations do not carry the same weight as reasons to refuse relief as they do in the kinds of case with which the Court of Appeal in Mitchell was concerned. Certainly, in the circumstances of the present case where the necessary security for costs was tendered on the day after the stay came into effect, neither of those factors provides a good reason for refusing to lift the stay.

Applying the Mitchell principles

38. If I am wrong in this analysis and the approach outlined in Mitchell is indeed applicable in this case, I would still come to the clear conclusion that the claimants' application for relief should be granted.
39. The principles established by the Court of Appeal in Mitchell can, I think, be fairly summarised as follows:

i) On an application for relief from a sanction under CPR 3.9, it is usually appropriate to start by considering the nature of the non-compliance. If the non-compliance can be regarded as trivial or insignificant, the court will usually grant relief provided that an application is made promptly [40].

ii) If the non-compliance cannot be so regarded, the court should consider why it occurred and will still be likely to grant relief if there is a good reason for it [41].

iii) Good reasons are likely to arise from circumstances outside the control of the party in default [43]; by contrast, inefficiency or incompetence of a party's solicitors – for example, where a deadline is simply overlooked – is unlikely to amount to a good reason [41].

iv) Where the non-compliance is not trivial and there is no good reason for it, the court is still required by CPR 3.9 to consider "all the circumstances of the case, so as to enable it to deal justly with the application" [37] + [49]. However, relief should not usually be granted in such cases because the circumstances which should generally be given greatest weight are the two factors specifically mentioned in the rules [49] + [58].

Nature of the non-compliance

40. In my view, the present case falls squarely within the category of case where the non-compliance with a court order can properly be regarded as "trivial". With the greatest respect to the Court of Appeal, I should prefer to use a different adjective, since the whole thrust of the new approach is to inculcate a culture of compliance with rules and orders and to dispel an attitude which trivialises even "minor" breaches. I would therefore prefer to say that the default in this case was not material. But whatever label is used, this case fits exactly one of the examples given by the Court of Appeal in Mitchell at [40] – namely, "where the party has narrowly missed the deadline imposed by the order, but has otherwise fully complied with its terms".
41. The deadline imposed by the order for security for costs in this case expired at 4pm on 5 December 2013. The bond which the claimants had agreed to put up as security had been signed and was ready for exchange with the existing bond (being the form of delivery agreed between the solicitors) at 10.01am on 6 December 2013, the next day. It is not suggested that this delay had any impact on any other aspect of the conduct of the litigation. The default cannot on any reasonable view be regarded as material.
42. The defendants have nevertheless sought to argue that the non-compliance was not "trivial" on three grounds. First, Mr Evans-Tovey submitted that this is not a case where the evidence shows that the claimants' solicitors were attending to and seeking to comply with the deadline at the time when it expired. That argument, however, is one which goes to the reason why the default occurred. Under the guidance given in Mitchell, consideration of why the default occurred only becomes relevant if the non-compliance cannot be characterised as "trivial". It therefore cannot be relied on at the prior stage of considering whether the non-compliance can be regarded as trivial or not.
43. Second, Mr Evans-Tovey submitted that the claimants did not deliver or even send a copy of the new bond to the defendants' solicitors on 6 December 2013, or until after close of business on Tuesday, 10 December 2013, when a copy of the bond was included in the evidence served in support of the claimants' application to lift the stay. However, the only reason why the bond was not delivered on 6 December 2013 was because the defendants' solicitors refused to accept delivery of the bond on that day and made it clear that they would not do so unless and until the stay of proceedings had been lifted. The defendants cannot take advantage of their own refusal to permit compliance with the court order on or after 6 December 2013 as a basis for asserting that there was a continuing default after that date.
44. Third, the defendants took two points on the form of the bond. The first was to dispute that the bond was signed by the underwriter so as to be validly executed as a deed in circumstances where the underwriter appended his scratch rather than writing his name as a signature. That point, raised by Mr Stockler in his seventh witness statement dated 6 February 2014, was sensibly not mentioned by Mr Evans-Tovey in his oral argument. However, he did press a second point, also raised in Mr Stockler's seventh witness statement, that the signature was not validly attested. That was said to be so because the witness in whose presence the bond was signed had written his name opposite the words "in the presence of" in capital letters. Mr Evans-Tovey submitted that this did not amount to a signature of the witness – as is required to constitute a valid attestation (see Wickham v Marquis of Bath (1855) 1 Eq 17, 24).
45. These points were made all the more unattractive by the fact that they were not even raised until 6 February 2014, nearly two months after the application to lift the stay was issued and a copy of the bond provided, but were nevertheless relied on as reasons for contending that the bond tendered on 6 December 2013 did not comply with the court order.
46. Neither point on the form of the instrument, in my opinion, has even the advantage of being correct in law. Section 1(4) of the Law of Property (Miscellaneous Provisions) Act 1989 provides that the word "sign" in this context "includes making one's mark on the instrument and 'signature' is to be construed accordingly". An underwriter's scratch is clearly a mark made on the instrument and therefore a "signature" for this purpose. Nor do I see any reason why a handwritten inscription by the witness of his name in capital letters opposite the words "in the presence of" should not constitute a sufficient signature for the purpose of attestation. But in any event, even if either of these technical points was valid and meant that the bond as tendered did not comply with the order, this would have been a failure of form rather than substance – which is another example given in Mitchell at [40] of a case where the non-compliance can be regarded as "trivial" so that the court will usually grant relief.

Reason for the non-compliance

47. Even if (contrary to my view) the non-compliance in this case cannot properly be characterised as "trivial" or not material, so that it is relevant to consider why the default occurred, I consider that there was a sufficiently good reason for the default. The explanation given by Mr Dorman in his witness statement on the basis of information supplied to him by the insurance brokers is that the brokers were unable to obtain the underwriter's signature on the bond on 5 December 2013. Although the defendants sought to question the truthfulness of that evidence, I see no reason to doubt it. It may be said that Mr Dorman could have done more to seek to ensure that the order was complied with – by drawing up the bond sooner and/or checking with the brokers on 5 December 2013 to find out what was happening. However, this is not a case where the claimant's solicitor simply overlooked the deadline or let it pass without attempting to comply with the order. The principal reason why the deadline was not met was not the inefficiency of the claimants or their solicitors, but the absence of the underwriter or, possibly, the inefficiency of the brokers – who for these purposes should be regarded as third parties as, unlike the solicitors, they are not responsible for the conduct the litigation.

The just result

48. Even if I had not concluded that the default can properly be characterised as "trivial" or due to a sufficiently good reason, I would still have considered it just to grant the relief sought in this case. The fact that the claimants missed the deadline for putting up security for costs by a day did not in itself have any impact on the efficient conduct of these proceedings, nor on the wider public interest of ensuring that litigants can obtain justice efficiently and proportionately. On the facts of this case, therefore, I am unable to conclude that the first consideration specifically mentioned in CPR 3.9 – that is, the need for litigation to be conducted efficiently and at proportionate cost –weighs against the grant of relief.
49. There remains, of course, the further consideration of the need to enforce compliance with rules, practice directions and court orders which, even on its own, must clearly be given substantial weight. But, as the Master of the Rolls emphasised in his lecture on the Jackson reforms in words approved by the Court of Appeal in Mitchell at [38], it is not the aim of the reforms to turn rules and rule compliance into "trip wires", nor into "the mistress rather than the handmaid of justice", nor to render compliance "an end in itself". It seems to me that this would be precisely the result of refusing relief in a situation where, as here, there has been non-compliance with a rule or order but the objective which the insistence on compliance seeks to serve of ensuring that litigation is conducted efficiently and at proportionate cost has not been impaired.
50. It is notable that in the Mitchell case the claimant's failure to file a costs budget caused an adjournment and an abortive hearing. To accommodate the adjourned hearing, a hearing in another case had to be vacated, to the detriment of other litigants. In making this point, the Court of Appeal emphasised the importance of the court having regard, when managing an individual case, to the needs and interests not only of the parties to that case but of all court users: see [39] and also [51].
51. The default in the present case had no consequence of that kind.
52. On behalf of the defendants, Mr Evans-Tovey submitted otherwise. He contended that the claimants' non-compliance necessitated the hearing of their application for relief, to the detriment of other litigants, and also required the action to be re-timetabled.
53. I do not accept that contention. What has resulted in an otherwise unnecessary hearing and required the action to be re-timetabled is not the claimants' failure to provide security for costs on time. It is the defendants' response to that default. If the defendants had accepted the new bond when it was tendered on 6 December 2013 and consented to the claimants' application to lift the stay, the action could have continued without disruption. However, instead of adopting such a constructive approach, the defendants cited Mitchell and cried foul. They required the claimants to come to court for an order which was vigorously opposed. In consequence, several witness statements have been prepared, three large bundles of documents lodged, skeleton arguments totalling some 45 pages produced and a hearing of half a day required – all at considerable cost to the parties and to the detriment of other litigants with applications waiting to be heard. By the time of the hearing, the dates by which the court had ordered disclosure to be made (15 December 2013) and witness statements to be exchanged (24 January 2014) had come and gone, while the action remained stayed. The effect on the timetable and orderly management of the case has therefore been substantial.
54. In my view, the defendants' conduct in refusing to agree to lift the stay was unreasonable. The grounds relied on for arguing that the claimants' default was material were without merit. The defendants' stance disregarded the duty of the parties and their representatives to cooperate with each other in the conduct of proceedings and the need for litigation to be conducted efficiently and at proportionate cost. It stood Mitchell on its head.

The defendants' application for a stay

55. The order for directions dated 11 October 2013 required the claimants to give disclosure by list of ship's documents (as defined in the order) by 4pm on 8 November 2013. The claimants were also ordered to "use their best endeavours to obtain and disclose documents which are not or have not been in their control" and to verify by witness statement what efforts had been made to obtain and disclose the documents ordered to be disclosed.
56. These orders were made under CPR 58.14, which provides:

"Disclosure – ship's papers

58.14–(1) If, in proceedings relating to a marine insurance policy, the underwriters apply for specific disclosure under rule 31.12, the court may –

(a) order a party to produce all the ship's papers; and

(b) require that party to use his best endeavours to obtain the disclosed documents which are not or have not been in his control.

(2) An order under this rule may be made at any stage of the proceedings and on such terms, if any, as to staying the proceedings or otherwise, as the court think fit."

57. An order for the disclosure of ship's papers under CPR 58.14 is something of a historical anomaly, since there is no good reason in modern times why marine underwriters should have the benefit of a procedure not available to other litigants. Nor is it clear to me why a separate order for such disclosure was made in this case after the defendants had served their defence, evidently without the need for such an order, and shortly before the parties were ordered to give standard disclosure of their documents. Nevertheless, that is what the parties agreed.
58. In purported compliance with the orders for the disclosure of ship's documents, the claimants served a witness statement from Mr Dorman. The statement was served late, on 18 November 2013, but described the efforts made to obtain and disclose documents within the scope of the order. The upshot was said to be that no such documents are now within the claimants' control. It was said that, however, before the vessel was sold and broken up in about March 2011, copies of relevant documents were made by marine surveyors instructed by the defendants and are in the defendants' possession.
59. The defendants did not on receipt of this witness statement issue any application alleging non-compliance with the orders for disclosure of ship's papers or seek any further relief. They made such an application, however, on 13 December 2013 after the action had become stayed because of the default in providing security for costs. The defendants' application seeks an order that the action be stayed pursuant to CPR 58.14(2). The supporting witness statement of Mr Stockler alleges that the claimants have failed to show that they have used best endeavours to obtain and disclose relevant documents not now under their control.
60. Since, if there was merit in the defendants' criticisms, the claimants could do nothing to address them when the application was issued as the action was already stayed, the defendants' application might be thought opportunistic. It is also misconceived. The ordinary purpose at least of a stay under CPR 58.14(2) must be to protect marine underwriters in circumstances where, without sight of the ship's papers, they cannot properly prepare their case. However, it was not suggested when the order for directions was made (by consent) that the defendants are in any such difficulty or that a stay was needed for that purpose in this case – no doubt because they already have copies of many of the relevant documents, as stated by Mr Dorman. In these circumstances I cannot see how any alleged inadequacies in the claimants' efforts to locate documents or in the witness statement verifying those efforts can justify staying the proceedings, causing yet further delay and disruption to the timetable. It seems to me that the correct approach is for the defendants, once the present stay has been lifted, to apply to the court, if so advised, for orders to require the claimants to carry out further searches or to give further information, to the extent that it is said to be lacking, of the searches which have been carried out.
61. It would, in my view, be highly undesirable if, at a time when the action needs to be brought rapidly back on track in order not to jeopardise the trial date, the court were to entertain any suggestion of a further stay.

Conclusion

62. For the reasons indicated briefly at the hearing and set out at more length in this judgment, I have granted the claimants' application for an order to lift the stay of the proceedings and dismissed the defendants' application for an order continuing the stay.

Costs

63. Save for the costs incurred by the claimants in issuing their application, which were necessitated by their default, I also ordered the defendants to pay the claimants' costs of both applications. The defendants seem to have viewed their opposition to the stay being lifted as a potentially free ride whereby, if successful, they would obtain a fortuitous dismissal of the claim without a trial and, if unsuccessful, would still have their costs paid by the claimants as the defaulting party. It is important to discourage that approach. Quite apart from the fact that the claimants are the successful party, I think it right that the order for costs should reflect the defendants' unreasonable conduct in refusing to agree to the stay being lifted and the waste of time and money which that entailed.