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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Primus Telecommunications Netherlands BV v Pan European Ltd & Ors [2005] EWCA Civ 273 (23 February 2005) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2005/273.html Cite as: [2005] EWCA Civ 273

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IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION
(MR JUSTICE BUCKLEY)

		Royal Courts of Justice Strand London, WC2
		23rd February 2005

1. LORD JUSTICE POTTER: This is the appeal of second, fourth and fifth defendants who, together with the first, third and sixth defendants, were the signatories of a document headed "Agreement Relating to Outstanding Balance Statement" dated 28th February 2002. That agreement was for payment to the claimants by instalments in the amounts and on the dates set out in the agreement over an eighteen-week period of the sum of €1,062,507.54. I shall call it the Compromise Agreement. The second to sixth defendants were at the time officers of the first defendant company and the agreement related to the debts of the first defendant company to the claimant company and its subsidiaries in respect of the supply of pre-paid telephone calling cards.
2. The claimant issued proceedings on 30th June 2002 as a short and straightforward claim in debt. The claim recited the existence of an agency agreement in writing, dated 1st June 2001, entitled "Pre-paid Calling Cards -- Sales Agent Agreement" (the "Agency Agreement") made between the claimant and the first defendant, pursuant to which the claimant had delivered and activated pre-paid calling cards. The claim stated that the first defendant had failed to pay for cards to the amount of the sum in euros which I have already read out. It exhibited the Compromise Agreement, recited its relevant terms, and the fact that certain sums had been received against the debt, and claimed the outstanding balance which, exclusive of interest, was €896,507.54. It claimed interest at the rate of 8 per cent per annum from the relevant default date, such rate being provided for in the Agreement.
3. On 9th August 2002 the defendants delivered a short "holding" defence, which stated inter alia that:

"The proposed Compromise Agreement was signed by the Defendants in escrow pending a final agreement as to the correct amounts allegedly outstanding and supported by Call Detail Record (CDR) to be provided by the Claimant and subject to the terms. The terms were not agreed therefore the proposed Compromise Agreement was not intended by the Defendants to become effective."

4. On 28th August 2002 Rossides Caine solicitors, of which Mr Adil Vittachi is the sole principal, appeared on the record as solicitor for all defendants. On 8th October 2002 at a case management conference the defendants were given permission to serve a substituted defence, and on 5th November 2002 a more elaborate defence on the part of all the defendants was served together with a counterclaim by the first defendant. On 28th February 2003, at a further case management conference, the first defendant was granted permission to counterclaim and directions were made.
5. There then followed a hiatus during which a winding-up petition was presented by the claimants against the first defendant and, after adjournments had been obtained, the first defendant was wound up on 17th February 2004. Its application thereafter to rescind the winding-up order was dismissed on 24th March 2004.
6. On 7th April 2004 the claimants' claim against the first defendant was stayed and directions given by the court for the exchange of witness statements by the second to sixth defendants by 30th April 2004. On 17th June 2004 Rossides Caine informed the court office that they were without instructions. However, they remained on the record.
7. Upon the date fixed for trial, Mr Jonathan Crystal (instructed by Messrs Campbell Hooper) appeared on behalf of the claimant. The first defendant (against whom proceedings had been stayed), the third defendant and the sixth defendant did not appear and were not represented. Mr Crystal informed the judge that Campbell Hooper had duly served the witness statements, skeleton argument and statement of costs upon the defendant solicitors, but that the latter were not present, though still on the record. The judge addressed the defendants and informed them of the position that the CPR provides for parties who wish to pursue or defend an action and to give evidence at trial to put in witness statements and that, if this was not done, those parties were not, without specific permission from the court, allowed to produce evidence at trial. He asked them their position and intentions.
8. As spokesman for the defendants, the fourth defendant informed the judge that they had only come to know of the trial the evening before at 3.30 pm through Mr Victor, the first defendant's former contract manager, who had in turn been so informed by Rossides Caine, but that the defendants had received no documents whatsoever, were in need of a solicitor and needed time to instruct him. Having referred to inter-solicitor correspondence placed before him by Mr Crystal and, in particular, letters of 14th and 26th April 2004 to Campbell Hooper from Rossides Caine referring to their lack of instructions, the judge asked the fourth defendant why that was so. The fourth defendant informed him that Rossides Caine were the solicitors for the first defendant company which he (the fourth defendant) had left two years before, and that, despite the fact that Rossides Caine had plainly received documents and witness statements from Campbell Hooper, they had not passed anything on to any of the defendants. The fifth defendant made clear to the judge that his and the first defendant's positions were the same, namely that Rossides Caine were the solicitors for the company and that they too knew nothing of the case until 3.30 pm the previous day.
9. The judge explained to the defendants the apparent regularity of the proceedings, the propriety of Messrs Campbell and Hooper having dealt with Rossides Caine as the solicitors on the record and ostensibly acting for the defendants at all material times.
10. Mr Crystal pointed out that the original defence dated 9th August 2002 bore the signature of each of the defendants and that a letter to Campbell Hooper from Rossides Caine made clear that the full and detailed defence filed shortly thereafter was the product of a conference between some or all of the individual defendants and counsel at that time. There followed a tour through the inter-solicitor correspondence and a general discussion between the judge and Mr Crystal in the presence of the defendants which made clear that Rossides Caine had been ostensibly acting and conducting the correspondence on behalf of all defendants. The judge pointed out that the solicitors referred in their correspondence to the defendants in the plural, had put in a defence on their behalf and had recently been in touch with the court indicating that there were going to apply to be removed from the record because they had not been receiving instructions from the defendants. The second defendant then asked for an adjournment so that the solicitors could conduct the case. The judge informed Mr Crystal that he thought that they had got as far as they were going to in unearthing the true position and asked him what course he proposed.
11. Mr Crystal opposed the defendants' applications for an adjournment on the grounds that the action was a straightforward action in debt upon an agreement which it was not disputed had been signed by the defendants and the detail of the defence appeared to be a series of attempts to avoid the apparently straightforward effects of its terms and the failure to make payment under it. He submitted that it would be unjust if the claimants were not permitted to proceed.
12. The judge then suggested that Mr Crystal could proceed to prove his case seeking judgment against the third defendant and the sixth defendant who had not attended, but that, so far as the second, fourth and fifth defendants were concerned, there were three alternatives. He could (a) if satisfied by the evidence enter judgment against them, leaving them to any appeal procedure; (b) enter judgment with liberty to apply to set aside the judgment on an application to do so accompanied by proper witness statements and a full explanation of the situation; or (c) adjourn the case against the defendants as he had been invited to do.
13. Mr Crystal submitted that the proper course was for the judge first to adjudicate on the application for an adjournment and that, if he declined to grant it, then he should proceed to trial permitting the claimants' witnesses to give evidence in accordance with their witness statements, and allowing them to cross-examine them. However, he submitted that the defendants should be debarred from giving evidence themselves because of their failure to put in witness statements. Mr Crystal acknowledged that such a procedure was far from satisfactory, but emphasised that his instructions were to proceed.
14. Mr Crystal then submitted that, if the judge was disinclined to proceed on that basis and decided to adjourn the matter, he should do so upon terms that the defendants pay the costs of the adjournment, such costs being summarily assessed (as to which the claimants produced a costs schedule) and that, in default of payment within 14 days, judgment be entered against the defendants.
15. The judge then turned to the fourth defendant "on behalf of all the defendants" saying that he understood that the defendants applied to adjourn on the basis that they had had no proper notice of the claim and had not seen the relevant documents. He asked whether, in support of that application, he wished to make further submissions or to go into the witness box to give evidence. The fourth defendant then gave a short explanation of the proposed defence. He complained that what the claimants were now trying to do was, because of a failure on the part of the solicitors, to obtain a judgment to which they were not entitled.
16. The judge then made clear that his concern in relation to the application for an adjournment was to establish the truth of the position as to the state of the defendants' knowledge and the authority of the solicitors, and asked if the defendants wished to give evidence in that connection. They indicated that they did and the judge then heard their evidence.
17. The fifth defendant gave evidence first. He said that the first he knew of the trial was, on being so informed the day before by Mr Victor, the former contract manager for the first defendant, who was present in court. Mr Victor had told him that he had himself so learned at 3.20 pm the previous afternoon from Mr Vittachi. Asked by the judge why he had been giving no instructions to Rossides Caine he said:

"... we were communicating with them until the last trial took place against [the first defendants] [ie in March 2004] and after that I haven't received any correspondence from Mr Vittachi now to our office or to my house address regarding this, but he did act for us on that case three or four months ago. March."

18. In cross-examination by Mr Crystal the fifth defendant admitted that he had been with his solicitor to a conference with a barrister, Mr Rudd, together with Mr Victor early on. He said that he understood the case to be against the first defendant. However, he also admitted his personal signature upon the amended defence. He admitted that he knew that he was being sued for almost a million euros and that the solicitors were acting on his behalf as well as the company. However, he said they were depending on Mr Victor to tell them what was going on. Asked how it was that, if the solicitors were acting for him in this important matter, they could have got into a position where they were able to say that they had no instructions, he replied that following the hearing of the case against the first defendants (ie the winding-up proceedings) he had not received, and had no knowledge of, any correspondence in the matter.
19. The judge asked whether the second or fourth defendant wished to give evidence, or were content to adopt what had already been said. The fourth defendant stated that the only thing he wished to add was that he was "out of the scene of the company since January", so he had not been aware of what was going on.
20. Mr Crystal then submitted that it was a matter for the judge whether he accepted the explanation given as sufficient basis for an adjournment. He said that, if so, it should only be upon the basis previously advanced as to the costs of the adjournment. However, Mr Crystal suggested that, in view of the time made available for the trial, the judge should postpone his decision to the next day, so that Mr Vittachi could be requested to attend court to provide whatever explanation he wished and that, meanwhile, the defendants would have the rest of the day to study the bundle of documents and to prepare themselves to cross-examine the claimants' witnesses and make any speech which they wished to make. It then became apparent that Mr Vittachi could attend that afternoon. Before adjourning for that purpose the judge indicated that his present inclination was to proceed and to hear the evidence. However, he said:

"I would still like to hear from Mr Vittachi because, despite the very clear impression I got from his own correspondence, if that is in any way misleading or unfair to these defendants, or there is anything else I ought to know, then obviously that would [mean], notwithstanding having, if you like, part-heard some of your evidence so that your witness can get away, I could still adjourn the matter."

21. Before the evidence was called, Mr Vittachi arrived at court. He confirmed that he was still on the record and was aware of the progress of the action and the date which the court had fixed. He said that he had communicated the date of the hearing to his clients. He said that he had been communicating with them through Mr Victor and that, having received no instructions, he had on 20th May written to each of the defendants individually at their home addresses confirming the date of the trial and their lack of instructions. He said that he had checked at Companies House to ensure that he wrote to the right addresses.
22. He produced the following letters to the judge:
23. 19th January and 2nd February 2004: two recorded delivery letters addressed to the directors of the first defendant at the company address, 171 Welbeck Road, reminding them of the date listed for hearing of the winding-up petition of the first defendant on 17th February 2004 and asking for urgent instructions.
24. 27th February and 12th March 2004: letters addressed to Mr Victor at the company address referring to a telephone conversation and requesting funds to instruct counsel in relation to an application by the first defendant company for the winding up order to be set aside.
25. 14th April 2004: A letter to Mr Victor at the company address enclosing the order for directions in these proceedings, drawing attention to the timetable and the requirement for witness statements to be exchanged by 30th April, the trial being fixed to take place during the period 1st June to 31st July 2004. It requested Mr Victor to contact Mr Vittachi urgently in order to arrange a meeting with the directors to discuss how to proceed further.
26. 13th May 2004: A letter to Mr Victor enclosing a copy of the Notice of Trial requesting funds and instructions.
27. 20th May 2004: Letters addressed individually to each of the defendants in a similar form at their home addresses as recorded by Companies House informing of the date for a final hearing on 13th July 2004. It stated Mr Vittachi's intention to apply to the court seven days later to be removed from the record. The letter stated to each defendant:

"If you do wish me to act then I need to see you and be placed in funds to cover both my costs and those of Counsel."

28. Apart from a question from the fourth defendant, asking Mr Vittachi on what day he sent the letter to the fourth defendant, which day Mr Vittachi confirmed as 20th May, there was no challenge by the defendants to Mr Vittachi to suggest that he had not sent the letters of 20th May.
29. The judge then addressed the defendants as follows:

"Gentlemen, the position is that I have heard what you have had to say, I have heard from Mr Vittachi and, more importantly, I have seen certain letters that have been written over the months. The case now formally come before the court for trial. The claimants are here ready to prove their case. I make a note of the fact that you have asked me to adjourn. I am not prepared to adjourn it; I do not think that would be fair on the claimants, who have done everything that they should have done and are obliged to do.

"You have a choice. You can stay and listen or you can leave, it is up to you. If you stay and listen you can take, within reason, whatever part you want to; in other words, you can question the witnesses that Mr Crystal calls if you want to put questions to them, and at the end of that if you want to say anything to me you can."

30. He went on to say:

"I do not think it is a case that involves many documents at all, but, Mr Crystal, such documents as you will be referring to can you make available to these defendants?"

31. The claimant then proceeded to prove its claim through the witness statements and oral evidence of two witnesses: Mr Reid, the claimants' managing director, and Mr Henry, the financial controller. The judge permitted the fourth defendant to ask questions in cross-examination on behalf of the other defendants, who expressly agreed to such procedure being followed on the basis that, if they wished, they could stand up and interrupt at any stage where they considered that the fourth defendant was mistaken in any of his questions or submissions. Having heard the evidence the judge adjourned early on the first day of trial to enable the defendants to consider the position and prepare their submissions for the following day.
32. When making his submissions next day, the fourth defendant made clear that it was the case for the defendants that the Compromise Agreement was a conditional agreement, subject to the checking of the amounts owed, which checking never took place, whereas it was the case for the claimants that it was an unconditional agreement, which followed argument about the figures involved. A number of points were made about the date appearing upon both the agreement and an earlier draft, the dates and manner in which they were exchanged, and certain contemporary correspondence to some extent supporting the defendants' position. It was submitted that the explanation of Mr Reid upon those matters was a lie and that the state of the documents was consistent with the defendants' assertion.
33. When submissions were complete the judge gave judgment. He recited the sequence of events on the previous day. He stated that it clearly appeared from the documents that the defendants had had the opportunity to defend themselves and to mount a counterclaim on behalf of the first defendant with the assistance of their legal advisers, but that, following complaints from Mr Vittachi that he was without instructions, had simply gone to ground. He observed that he had not been told of any particular reason why the relationship with Mr Vittachi had broken down or why communications had ceased. Having recited the attendance of Mr Vittachi and the production of the letters to which I have already referred, the judge said:

"12. It is against that background -- from which in my judgment it is entirely clearly that the defendants had had every opportunity of defending this matter, had they so wished -- that I decided that I would proceed with the trial. A fair trial cuts both ways. If a defendant or defendants are allowed simply to bring proceedings to a halt by going to ground for no good reason, and if a court responds to that by simply adjourning the trial, thus depriving the other party of its right to a fair trial within a reasonable time, the whole litigation process becomes absurd.

"13... the defendants had not, because they had not given instructions to Mr Vittachi ... put in any witness statements in accordance with the timetable set by the Master, or at all. That being so, it seemed to me quite unfair on the claimants to permit the defendants at trial [to do so] without any notice so that the claimants could prepare to give evidence. Again, our procedure provides for the exchange of witness statements, the defendants had had every opportunity to produce such statements and serve them on the claimant; had they done so these statements would have constituted their evidence in chief, they could have added to them subject to the discretion of the court, and been cross-examined appropriately.

"14. I declined to allow them on the day of trial to give evidence, they not having taken the opportunity afforded to them at an earlier stage. I did, however, permit ... the fourth defendant, to cross-examine the two witnesses called on behalf of the claimant by Mr Crystal, and to address me as he has this morning by way of argument as to why the claimants had not proved their case."

34. The judge then went on to deal with the claim which he found proved, saying in respect of the attack on the credit of Mr Reid that he found him to be a straightforward individual, whose evidence he saw no reason to doubt.
35. He went on to say that he found "somewhat fanciful" the notion that five individual officers of the defendant company, of whom the three which he had seen in court were intelligent individuals engaged in significant business, would sign a document such as the Compromise Agreement without any reservation on the face of it if it was not intended to be effective. He also observed that a number of payments actually made following the agreement appeared to be referable to the schedule of payments therein set out. Upon that basis, coupled with the evidence of Mr Reid's confirmation that there was no agreement that the Compromise Agreement was in fact a draft to be held in escrow, and that supply of equipment would have ceased had payments not been received, the judge found the claim proved.
36. The defendants now appeal on the grounds that the judge erred in exercising his discretion as he did, namely in permitting the matter to proceed on the basis of the evidence of the claimants' witnesses, rather than adjourning the matter at the defendants' expense to enable them to be represented, to prepare for the hearing, to file and serve witness statements, and to give evidence in support of their defence, first that the agreement was signed only in escrow and second that, in any event, the sums claimed under the Compromise Agreement fell to be reduced by the amount of the credits due in respect of deactivated cards as provided for in clause 2 of the Compromise Agreement.
37. Alternatively it is said that, at least, having decided that the matter should proceed, the judge should have permitted the defendants to give oral evidence without the necessity of putting in prior witness statements, so that the matter could be fairly adjudicated.
38. It is said that, as a result, the appellants were denied their human right to a fair trial in accordance with Article 6 of the European Convention on Human Rights. In particular it is said that they were denied their right to legal representation at the hearing, the claimants being legally represented; they had no proper opportunity to prepare for the hearing; they were denied the opportunity to give evidence, whether by way of witness statements or oral testimony; and they were denied the opportunity to have a bona fide defence properly explored.
39. In relation to his refusal of an adjournment, it is submitted that the judge took no proper account of the defendants' submissions that they had no knowledge of the trial until the previous day, gave undue weight to the unsworn evidence of Mr Vittachi and came to his conclusion without giving the defendants opportunity to cross-examine Mr Vittachi on what he said and the contents of his file.
40. In support of their appeal and their assertion of a defence on the merits, the defendants seek to rely by way of further evidence upon witness statements now obtained from each of them. There has been no objection by Mr Crystal to our considering those statements on this appeal.
41. The statements fall into two categories. The first category is a statement from each of the defendants briefly confirming the matters which they advanced in evidence before the judge as to their state of knowledge of the proceedings. The second defendant asserts that he had last seen and communicated with Mr Vittachi on an occasion when, following the conference with his counsel, Mr Vittachi came to his office in December 2002. He states that all subsequent contacts were between Mr Vittachi and Mr Victor and that the first that the second defendant knew of the hearing was when informed of it by Mr Victor on 12th July 2002 (the day before the hearing) on his return from a two week trip abroad.
42. The fourth defendant essentially makes statements in similar form, and none of these statements adds significantly to what the judge was told at the time. None of these defendants, however, deals with the undoubted fact that Mr Vittachi was, at the time of serving the Amended Defence, instructed to act for them personally, as well as for the first defendant company, or what efforts or arrangements they made to keep themselves informed of the progress of the action, to give any necessary instructions, or to comply with their obligations of discovery.
43. In a statement from Mr Victor, he asserts that correspondence in relation to the first defendant company's affairs was always addressed by Mr Vittachi to the company at its trading address, marked for Mr Victor's attention. He asserts that, as far as the trial date was concerned, the first he learned of it was by way of a telephone call from Mr Vittachi on 12th July 2004, his last contact with him having been in March 2004 in relation to the liquidation of the first defendant.
44. Without in terms challenging the authority or dispatch of the individual letters in Mr Vittachi's file, and in particular those dated 14th April, 13th May and 20th May, he simply asserts:

"I have seen no correspondence nor have I had any communications from Mr Vittachi requesting the Defendants to give him instructions in order to prepare witness statements in preparation for trial ... If I had any knowledge of a trial date, then, I would have contacted Mr Vittachi and made arrangements for a meeting between the Defendants and Mr Vittachi so that the Defendant's witness statements would have been prepared and filed."

45. As far as concerns the letters from Mr Vittachi addressed to Mr Victor at the first defendant's trading address, he states:

"The company's administrative staff, Mr Siva was the only one to deal with the mail. He would inform me of any letters received in relation to any legal matters including any letters from Messrs Rossedes Caines [sic] and read it over the phone, or otherwise fax it to me at a given number without delay. I did not see any letter received from Messrs Rossedes Caines [sic] informing me that the hearing of the trial of the matter had been fixed for the 13th July 2004."

46. The second category of statements relate to the history of the trading relationship between the claimants and the first defendant, and in particular the circumstances in which the Compromise Agreement was signed. In these statements each of the three appellants deals at some length with the background to the business with the first defendant company and sets out the facts on which they would seek to rely by way of defence should the appeal be allowed.
47. The position spoken to is both complicated and confused. However, matters originally pleaded in the amended defence have been elaborated in these statements and in the submissions of Mr Panesar for the defendants. From these, it is clear that there are essentially three strands of defence which the defendants wish to advance at trial and will seek to advance if this appeal is allowed. First, it is said that the Agency Agreement dated 1st June 2001 was not in fact signed until April 2002, it being backdated to 1st June 2001 in order for the first defendant to have authority to use the claimants' trademark. That fact has not been challenged before us by Mr Crystal. Albeit that would mean that in law the terms of the Agency Agreement would take effect as from 1st June 2001, the significance of the actual date of signature is that it lends some credence to what is the second, and main, strand of the defence, namely that the Compromise Agreement signed at a time when trading relations were fluid with the claimants and before the Agency Agreement had been signed, was signed only as a draft and not intended to be binding unless and until the parties had been able to agree what sums were due in respect of actual usage of the cards then on the market, many of which were unused, or had been deactivated, or the subject of return half-used and the need to compensate the ultimate customer for defective operation.
48. The reason why the dates of the signing of the Agency Agreement are important is because it is said that, until then, the parties had not operated on the basis of upfront and/or immediate liability to the claimants, for cards received and distributed, which was provided for in the subsequently signed Agency Agreement, and that, until then, the claimants had themselves had a direct relationship with many of the agents to whom the first defendant supplied cards, receiving payment from them: the first defendants being remunerated by way of commission from the claimants.
49. In those circumstances the defendants as individuals might well not have wished to become personally liable for any alleged debts of the first defendant until satisfied of the true position as to sales and used time, which they could only ascertain from the claimants' records, to which they say they had insufficient access. If that is so and if, as the defendants assert, the necessary information was never supplied and the final agreement never reached, then they would not be liable under the Compromise Agreement.
50. The third strand of the defence being advanced is that for various reasons and in the circumstances set out these defendants are entitled to set off substantial sums against the debt under the Compromise Agreement. Suffice it to say that I am satisfied that in respect of those sums, if proved, they would in any event only be available to the first defendant (now in liquidation) by way of set off or counterclaim. As I have indicated, the matters to which I have referred were foreshadowed by the defence pleaded on behalf of the defendants and thus were apparent to the judge as the pleaded matters in support of which the defendants had failed to supply witness statements as ordered, but wished to give evidence. It was therefore apparent to the judge that they were potentially the matters which, if the matter before him were adjourned, would be the subject of witness statements and disputed evidence.
51. In these circumstances, Mr Crystal has submitted that the judge was right to investigate the question whether the defendants were, or should personally have been, aware of the need to file witness statements, and, having decided that they were and were simply keeping their heads down, was equally right to refuse an adjournment and to refuse to permit the defendants to give evidence in support of their case.
52. I have not found a decision in this appeal easy. I start by saying that I do not find it necessary to approach the matter as one where Article 6 of the ECHR is engaged. Article 6 of course provides:

"In the determination of his civil rights and obligations ... everyone is entitled to a fair ... hearing within a reasonable time by an independent and impartial tribunal ..."

53. Mr Panesar submits that, having decided not to adjourn the matter, the only way in which the judge could accord the defendants a fair hearing was to allow the defendants to give oral evidence, despite their failure previously to supply witness statements, and that to limit their participation to a right to cross-examine the claimants' witnesses was to require them to fight with one hand behind their back and to breach the concept of equality of arms in the dispute being canvassed before the judge. They were effectively debarred from defending, despite their presence and their wish to give evidence with three days available for trial.
54. While such a submission is compelling on the face of it, the submission that there was an impermissible inequality of arms is not, in my view, sustainable in this case. It is clear from statements in cases such as De Haes and Gijsels v Belgium [1997] EHRR 1 at paragraph 53, that in both criminal and civil cases every party must have:

"... a reasonable opportunity of presenting his case to the court under conditions which do not place him at a substantial disadvantage vis a vis his opponent."

55. However, it is also clear that a decision as to whether or not a litigant has been denied his right to a fair hearing, including his so-called right to equality of arms, involves an assessment of the whole course of the proceedings in order to assess whether such reasonable opportunity has been afforded. The question is whether the proceedings in their entirety, including the way in which evidence is permitted or excluded, are fair within the meaning of Article 6(1). Whereas requirement of equality of arms in the sense of a fair balance between the parties applies in principle to civil as well as criminal cases, states have a greater latitude when laying down the rules for civil cases as opposed to criminal cases; see Dombo Beheer NV v The Netherlands [1994] 18 EHRR 213.
56. This plainly includes the provisions which are made for the conduct of litigation in this country under the CPR, the object of which is to hold the balance of procedural fairness between the parties. Within the overriding objective of enabling the court to deal with cases justly (CPR 1.1) the court is required as far as practicable to deal with cases expeditiously and fairly as between the parties. Prior to the coming into effect of the CPR, it was stated by Lord Woolf in Walker v Daniels CA 3rd May 2000, that in relation to the court's approach to the proper applications of the CPR, they should be wary of Article 6 arguments adding anything of substance to the provisions of the CPR themselves, bearing in mind the terms of the overriding objective as set out in CPR 1.1 and the requirement for judges to treat individual procedural provisions, such as those in part 35.1 governing the restriction of expert evidence, within the terms of the overriding objective.
57. That remains the position in my view. It would, in general, be sufficient to consider a decision or ruling by a judge in the context of the relevant provisions of the CPR, applied as they must be in the spirit of the overriding objective. The relevant provisions in this case are, first, those of Part 32.10, which deals with the consequences of failing to serve witness statements, and parts 3.8 and 3.9, which deal with relief from sanctions.
58. Paragraph 32.10 reads:

"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."

59. The wording of section 32.10 amounts to a sanction in the terms of Part 3.8(1), which provides:

"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."

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

"(1) 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 including --

"(a) the interests of the administration of justice;

"(b) whether the application for relief has been made promptly;

"(c) whether the failure to comply was intentional;

"(d) whether there is a good explanation for the failure;

"(e) the extent to which the party in default has complied with other rules, practice directions and court orders and any relevant pre-action protocol;

"(f) whether the failure to comply was caused by the party or his legal representative;

"(g) whether the trial date or the likely date can still be met if relief is granted;

"(h) the effect which the failure to comply had on each party; and

"(i) the effect which the granting of relief would have on each party."

61. The judge was faced with a difficult decision in this case. Plainly he did not consider that there was a good explanation for the failure to comply with the requirement to supply witness statements, it being the fault of the defendants and not their legal advisers. He was also of the view that the trial date would not be met if an adjournment were granted. However, while correctly asserting the principle that a fair trial cuts both ways and that the litigation process becomes absurd if defendants are permitted to bring proceedings to a halt for no good reason, he failed, it seems to me, to consider and give weight to the effect which the granting of relief would have on each party. In that respect Mr Crystal has very fairly observed on this appeal in answer to a question from the court that, had an adjournment been granted to the defendants as requested by them in order to file witness statements and obtain representation, subject to stringent terms as to the payment of the costs, no tangible prejudice would have been suffered by the claimants.
62. On the other hand, by permitting the claimants' witnesses to prove their case uncontradicted as a simple matter of debt under an unconditional agreement, he was, in effect, debarring the relevant defendants from defending a claim for some £800,000 including interest. In my view, while encouraged by Mr Crystal first to decide the question of the adjournment, and then to apply the sanction in respect of witness statements, the judge's task was to treat the two matters together, acknowledging that if the trial was to proceed with such sanction being applied, he was in effect depriving the defendants of the defence which they wished to advance and which was well flagged up in the pleaded defence. It was not, in fact, a case where the proceedings had been unduly protracted over any substantial period by any failure on the part of the defendants to progress the action. There had been no previous failure to comply with any order of the court and the claimants had taken no steps prior to trial to obtain an order for delivery of witness statements, or to attach any sanction to it. Until March 2004, which was only some three and a half months prior to the trial, the claimants had held up matters themselves pursuing the winding up remedy, and if the judge shut out, as he did, the filing of any witness statements, he was in no position to judge the strength of the defendants' case upon the central point. On the other hand, there was time available for other evidence to be given at the trial in support of a defence fully set out in the pleadings.
63. Having surveyed the transcript, it is apparent that there were several points in the evidence of Mr Reid which, if subject to contradiction in witness statements from the defendants, might well have given some substance to their case.
64. Upon this appeal, Mr Crystal has not sought vigorously to suggest that that is not so. He stands by the view of the judge that the defendants' conduct in failing to instruct their solicitor meant that they had no-one to blame but themselves. That is, of course, true. However, the court has to be concerned with the overriding objective at all times and the various methods by which it can be achieved. It is also clear that, before reaching a decision in relation to sanctions, when considering an application for relief, which application it seems to me the defendants were making on the day of trial, it is essential for courts to consider each matter listed in rule 3.9(1) systematically, in the same way that courts go systematically through the matters listed in section 33 of the Limitation Act 1980 when an application is made under that section; see the authorities cited at note 3.9.1 on page 97 of the White Book 2004.
65. It does not seem to me that the judge did so in this case. While his decision was a discretionary one, and indeed one of case management, he was faced with a position in which, in relation to real prejudice as between the parties, his decision to shut out the evidence of the defendants would deprive them of the defence which they wished to advance to what was a very substantial claim, whereas to grant an adjournment on stringent terms and a tight timetable for re-hearing would not prejudice the claimants to any significant extent.
66. It seems to me that, in failing to approach the matter systematically, as mentioned in the White Book note to which I have referred, and in failing, as it seems to me, specifically to consider the balance of justice between the parties in the sense of the effect which the granting or denial of relief would have on each party (see paragraphs (h) and (i) of CPR 3.9(1)), the judge's exercise of discretion was faulty, and that it is appropriate for this court to reconsider the matter.
67. In my view it is quite plain that, on the findings of the judge, the defendants were indeed to blame for the situation which had arisen. However, as I have indicated, there were a number of other considerations to be taken into account. One cannot avoid a feeling of concern, and one which I think Mr Crystal acknowledged both below and in this court, that the matter came before the judge in a situation where the defendants were precluded from putting forward their version of events, other than in cross-examination by one of them in relation to a matter which was being presented as a simple, straightforward debt collection on the part of the claimants, but was the subject of a clearly pleaded defence, the merits of which the judge did not consider.
68. Having considered the matter anxiously, I would allow this appeal. That said, however, one cannot ignore the conduct of the claimants as found by the judge and the suspicions to which it gives rise. The matters advanced by way of defence do not, in my view, justify any great grounds for optimism on the part of the defendants. There is still a strong suspicion that their last-minute awakening may be due to postponement of the day when they face judgment in respect of sums properly due.
69. In those circumstances, it seems to me that, had the judge exercised his discretion as I think he should have exercised it, he would have dealt with the matter on stringent terms as far as any adjournment was concerned, given the situation as it existed before him. That situation justified then, and in my view certainly now justifies, not merely a payment as to costs, but a substantial payment into court in earnest of good faith.
70. In my view, the appropriate order for this court to make is that, upon payment by the second, fourth and fifth defendants to the claimants within 21 days of the sum of £6,000 on account of costs thrown away below, and payment into court within 21 days of the sum of £300,000 to abide the retrial of the action, the judgment should be set aside. Failing compliance with such conditions, the judgment should stand.
71. LORD JUSTICE THORPE: I agree.
72. THE PRESIDENT: I agree with the judgment of Potter LJ. The appellants may be a trifle lucky in the outcome of this appeal, but I retain a certain unease over the shutting out of their case, and agree that, on the facts of this particular case, an adjournment on stringent terms would better have met the justice of the case. Therefore we allow the appeal, set aside the judgment, and remit for a re-hearing on the conditions (1) that £6,000 be paid to the solicitors for the respondent on account of costs thrown away below, that sum to the paid within 21 days of today, and (2) that £300,000 be paid into court by the second, fourth and fifth defendants within 21 days of today. If either of those payments is not met, then the judgment below will stand.
73. In relation to the costs of the appeal, if both payments are made, then the costs of this appeal will be reserved to the trial judge. If, however, either of the payments is not made, then there will be no order as to costs in relation to the costs of this appeal. I think it would be helpful if counsel Mr Panesar and Mr Crystal would please do a minute of this order and hand it in.

Order: Appeal allowed, subject to condition of payments being made into court within 21 days.