Factual and Procedural Background
The Defendant was employed by the Respondents from May 2000 until his immediate resignation in February 2014 as one of two National Account Managers. The Respondents, a major independent communications service provider in the United Kingdom, initiated proceedings in May 2014 alleging that the Defendant breached his employment contract and database rights by downloading confidential customer information onto memory sticks and using electronically stored information to solicit customers during and after his employment, in breach of post-termination restrictive covenants. The Defendant denied wrongdoing, asserting constructive dismissal and denying liability and loss.
Following various procedural steps including undertakings given by the Defendant, enforcement applications, and admissions of contempt of court by the Defendant, the trial was fixed to start on 24 February 2015. The Defendant applied for an adjournment on health grounds, extension of legal aid, and permission to rely on additional witness statements, all of which were refused without detailed reasons. The Defendant submitted further medical evidence and sought adjournment again on the first day of trial, which was refused by the trial judge, who proceeded with the trial in the Defendant's absence.
The trial judge struck out the Defendant’s defence and counterclaim for non-attendance and awarded damages to the Respondents in the sum of £290,009 for breach of contract and fiduciary duties, along with costs. The Defendant applied to set aside the judgment and for a new trial, supported by additional witness statements from clients denying the alleged loss of business. This application was refused without reasons. Subsequently, sanctions for the Defendant’s admitted contempt were imposed, including a fine and an order for costs assessed summarily at £83,583.73.
The Defendant appealed against the refusal to adjourn the trial, the refusal to set aside judgment, and the summary assessment of costs. The Respondents supported the original decisions.
Legal Issues Presented
- Whether the trial judge erred in refusing the Defendant's application to adjourn the trial on health grounds, thereby breaching the Defendant's right to a fair trial under Article 6 ECHR.
- Whether the trial judge erred in refusing to set aside the judgment under CPR rule 39.3(5) despite the Defendant's non-attendance being for good reason and the existence of a reasonable prospect of success at trial.
- Whether the summary assessment of costs in the committal proceedings was disproportionate and should be set aside in favour of a detailed assessment.
Arguments of the Parties
Appellant's Arguments
- The refusal to adjourn the trial on health grounds was unfair and violated the Defendant's Article 6 rights by preventing a fair trial, denying the opportunity to call witnesses, and not allowing adequate preparation time.
- The refusal to set aside the judgment was incorrect as the Defendant had a good reason for non-attendance due to severe depression supported by medical evidence, acted promptly, and had a reasonable prospect of success based on witness statements challenging the Respondents’ claims of loss and causation.
- The summary assessment of costs for the committal proceedings was excessive, disproportionate, and contrary to the principle that costs for contempt applications should be reasonable and proportionate; it should be remitted for detailed assessment.
Respondents' Arguments
- The trial judge's refusal to adjourn was justified as the Defendant’s medical evidence was insufficient and the judge was entitled to rely on his observation of the Defendant’s conduct and emails to conclude the Defendant was fit to proceed.
- The refusal to set aside judgment was appropriate given the Defendant's wilful failure to attend and the lack of substantive defence; the trial judge was best placed to manage the procedural course.
- The costs order was appropriate given the conduct of the Defendant throughout the proceedings, including contested matters and the need to deal with the Defendant in person.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Terluk v Berezovsky [2010] EWCA Civ 1345 |
Standard for appellate review of adjournment decisions; fairness under Article 6 ECHR. |
Used to establish that the appellate court must be satisfied the refusal to adjourn was not unfair. |
| Teinaz v London Borough of Wandsworth [2002] IRLR 721 |
Guidance on adjournments, including the need to grant adjournments to avoid denial of justice and the requirement for genuine evidence of unfitness to attend. |
Applied to assess whether refusal to adjourn amounted to denial of justice. |
| Andreou v The Lord Chancellor's Department [2002] IRLR 728 |
Additional guidance on adjournments in the context of medical evidence. |
Supported the approach to medical evidence in adjournment applications. |
| Bank of Scotland plc v Pereira [2011] 1 WLR 2391 |
Conditions for setting aside judgment under CPR 39.3(5): promptness, good reason for non-attendance, and reasonable prospect of success. |
Guided the court on strict application of these conditions and the need to consider Article 6 rights. |
| Mohun-Smith v TBO Investments Ltd [2016] EWCA Civ 403 |
Distinction between adjournment applications and applications to set aside judgment under CPR 39.3; approach to medical evidence and fairness. |
Instructed the court to adopt a less rigorous approach to good reason for non-attendance when there is a reasonable prospect of success. |
| AA (Uganda) v Secretary of State for the Home Department [2008] EWCA Civ 579 |
Referenced in Terluk for fairness in procedural decisions affecting Article 6 rights. |
Supported the principle that procedural fairness is a question of law for appellate review. |
| Regency Rolls Ltd v Carnall [2000] EWCA Civ 379 |
Clarification that CPR 39.3 limits court discretion to set aside default judgments. |
Emphasized strict compliance with CPR 39.3 criteria for setting aside judgments. |
Court's Reasoning and Analysis
The court acknowledged that the trial judge exercised discretion in refusing the adjournment but emphasized that the appellate court must ensure that such discretion was exercised fairly, particularly where Article 6 ECHR rights are engaged. The medical evidence provided by the Defendant's GP was comprehensive and indicated severe depression with suicidal ideation, which the trial judge failed to properly consider or explain why it was rejected. The judge’s reliance on personal observations of the Defendant was insufficient to override professional medical evidence.
The court found that the refusal to admit the additional witness statements was a technical decision that ignored their potential critical importance to assessing liability and quantum. The failure to allow the Defendant to present evidence or cross-examine witnesses resulted in a denial of justice and irreparable prejudice, breaching the Defendant's right to a fair trial.
Regarding the application to set aside the judgment under CPR 39.3(5), the court found that the Defendant acted promptly, had a good reason for non-attendance based on medical evidence, and had a reasonable prospect of success at trial given the additional witness evidence challenging the Respondents' claims. The trial judge’s refusal without reasons was erroneous in principle and contrary to established legal principles.
On the costs appeal, the court held that the summary assessment of costs was disproportionate considering the limited nature of the admitted contempt and the Defendant’s financial circumstances. The judge failed to adequately consider proportionality and reasonableness, and the court remitted the matter for detailed assessment by a costs judge, to consider the necessity and utility of the costs incurred.
Holding and Implications
The court ALLOWED the Defendant's appeals on all grounds.
The judgment dated 27 February 2015 was set aside, and a new trial was ordered in the Circuit Commercial Court, with liberty for the Defendant to rely on the additional witness statements previously excluded. The summary assessment of costs relating to the committal proceedings was also set aside and remitted for detailed assessment at the Birmingham Registry after the retrial.
The decision directly affects the parties by reopening the substantive dispute for full adjudication with the Defendant afforded a fair opportunity to present evidence and participate. No new precedent was established beyond the application and reinforcement of existing principles regarding adjournments on health grounds, setting aside default judgments under CPR 39.3, and proportionality in costs assessment.