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IN THE SUPREME COURT OF JUDICATURE QBEN1 95/1516-7/B

(HIS HONOUR JUDGE HAVERY QC )

Royal Courts of Justice

Strand

London WC2

Wednesday 4 December 1996

B e f o r e:

THE MASTER OF THE ROLLS

(LORD WOOLF)

LORD JUSTICE AULD

LORD JUSTICE WARD

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HYTEC INFORMATION SYSTEMS LIMITED

Plaintiff/Respondent

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THE COUNCIL OF THE CITY OF COVENTRY

Defendant/Appellant

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(Computer Aided Transcript of the Palantype Notes of

Smith Bernal Reporting Limited, 180 Fleet Street,

London EC4A 2HD

Tel: 0171 831 3183

Official Shorthand Writers to the Court)

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MR A WILLIAMSON (Instructed by Sharpe Pritchard, London WC1V agents for Mr J Wood, Coventry) appeared on behalf of the Appellant.

MR A MACGREGOR QC and MR J HAGE (Instructed by Messrs Cole & Cole, Oxford EX2 0SZ) appeared on behalf of the Respondent.

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J U D G M E N T

(As approved by the Court)

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©Crown Copyright

JUDGMENT

THE MASTER OF THE ROLLS: Lord Justice Ward will give the first judgment.

LORD JUSTICE WARD: This is an appeal by the defendant Council against two orders made by His Honour Judge Havery QC. By his first order, dated 9 June 1995, he ordered that the Defence be struck out, the plaintiff be at liberty to enter judgment in the sum of £48,000 with interest and that the Counterclaim be dismissed. Judgment was duly entered on 14 June 1995.

By his second order, dated 28 July 1995, he refused to enlarge the time limited by the previous order of His Honour Judge Hicks, dated 13 January 1995, for the defendant to comply with an earlier order of 4 November 1994 that he give further and better particulars of his Defence and Counterclaim. The learned judge on that occasion also refused to set aside his order of 9 June and the judgment entered pursuant thereto.

I need not state the facts at great length. The plaintiff is a company carrying on business in providing computer software. By a writ issued in August 1993, it sued for sums falling due under an agreement made in September l990 to provide a software package to the Local Authority's Education Committee designed for the more efficient management of schools.

By an Amended Defence the City Council claimed that the plaintiff had failed to ensure that the software performed in accordance with the contract and the defendant accordingly sought to reject the goods and terminate the agreement. There was a Counterclaim for the recovery of £200,000, being a part payment of the price. There were also allegations of a failure to provide an acceptable level of maintenance and support, and a failure to supply an updated system. It was alleged the goods were unfit for the purpose for which they were supplied and further damages were counterclaimed. The plaintiffs sought further and better particulars of that Defence and Counterclaim on 16 November 1993.

On 13 March 1994 the first order was made directing that the defendants serve particulars by 1 April. On 26 April, that time was extended to 6 May which was marked as a final extension. On 6 May some particulars were given which, despite or perhaps because of, incorporating 700 pages of various memoranda and print-outs, were held to be inadequate.

There was, therefore, a summons to strike out for failure to comply with the order, but on 4 November 1994 His Honour Judge Newman made the third order that particulars be delivered by by 2 December 1994. No particulars were served and the plaintiff restored the application to strike out which was fixed for hearing on 13 January 1995. On 12 January certain particulars were served, but again they were inadequate with the result that on 13 January His Honour Judge Hicks made the fourth order directing that, unless proper particulars were filed by 20 January, the Defence and Counterclaim were to be struck out.

On 20 January some particulars were served, but once again they were inadequate. In the result the plaintiff renewed its application to strike out the Defence and Counterclaim. This was granted by His Honour Judge Havery QC on 9 June 1995 when he made the first order now under appeal. A curious and unsatisfactory feature of that hearing was that counsel, who had attempted so unsuccessfully to comply with the previous orders, inexplicably made herself unavailable though she had long known of the hearing. She sent in her place her six months' pupil who was so overwhelmed by the complexity of the case that she indicated that she could do no more than seek an adjournment. The learned judge, not surprisingly, rejected the application to adjourn. The pupil and her instructing solicitors, who were the in-house lawyers to the City Council represented by a legal Executive, remained in court but took no further part in that hearing. Counsel for the plaintiff accordingly addressed the judge who made the orders I have indicated.

The arrogant attitude of counsel whose name appeared on the pleadings was that the particulars already supplied were good enough; that it was now for experts to report; that the application to strike out was frivolous; and even that the plaintiffs were to blame for delaying the proper progress of the litigation. That advice had been tendered to the Legal Excutive who accepted it without question. When, however, he found that his employer's Defence and Counterclaim had been struck out, he reported to his senior lawyer in the office. They took fresh advice from new counsel as a result of which they applied to the judge to reconsider his previous decision. It was that application which Judge Havery heard and disposed of on 28 July 1995 which is the subject of the second appeal.

I would summarise his judgment as follows. On 9 June he observed that the defendant was effectively unrepresented. He commented on the "voluminous document purporting to be Amended Further and Better particulars of the Defence and Counterclaim" and said:

"Had it not been drafted in a style reminiscent of what has been described as the greatest literature of the 20th century...."

(an allusion to James Joyce):

"I would have said it was illiterate gibberish in several places. it is very difficult, if not impossible to understand what the defendant is trying to say, if indeed the defendant is trying to say anything."

The learned judge was clearly not impressed with counsel's efforts. He pointed out that there was no application for him to extend the time and to give yet another chance to remedy the defect. He accordingly directed himself in accordance with the judgment of the Vice Chancellor, Sir Nicolas Browne-Wilkinson, in re Jokai Tea Holdings [1993] 1 All ER 630 to which I shall refer. He concluded that "the defendants did have the intention of ignoring or flouting the order" made by Judge Hicks; that they had "ample opportunity to sort out the position"; they had "shown no intention of doing anything to rectify the inadequacies in the particulars". Accordingly he was satisfied that the defendant had "behaved in a contumacious manner, apparently taking the view that it was not necessary to serve an intelligible pleading". He therefore made the orders I have recited striking out the Defence and Counterclaim.

In his judgment on 28 July 1995, the judge considered, first, whether he had the jurisdiction to entertain the application for an extension of time for compliance with an unless order even after the action had been dismissed. He concluded that he would have the jurisdiction, at any rate where the judgment in default had not been made after a hearing on the merits. Looking at that question he concluded that the hearing was a hearing on the merits and, therefore, there was no jurisdiction to rehear the matter. Had he held that there was such jurisdiction, he would have again dismissed the application because he was satisfied that the solicitor was seriously negligent over a long time, that counsel was not only seriously negligent but intended to flout the court's order and that the Council were responsible for the activity of their lawyers.

The judge concluded in strong terms that the defendants had been playing around for too long, "Enough is enough. I decline to exercise my jurisdiction, if I have any, to extend time" and accordingly the matter rested there.

It seems to me that on this appeal there are four issues to be resolved: (a) whether, and if so, in what circumstances, the court at first instance has "jurisdiction to set aside its own order and to rehear an application to strike out the proceedings"; (b) what is the proper test for striking out the proceedings for failure to comply with an "unless order"; (c) as a particular question, whether the contumacious conduct of a legal representative is to be held against the client who may be personally blameless for the inadequacies of the preparation of his case; (d) when discretion is properly exercised what is the right order in this case?

Looking to the first question and the court's jurisdiction, it seems to me that there may be some limited powers in a judge to revisit an interlocutory order not to change it, but only to vary the method of giving effect to it: see Lewis v Daily Telegraph Limited No 2 [1964] 2 QB 601. When, however, the order is final in its effect, then I apprehend that, unless provided for by the rules, there is no power in the judge to rehear his own decision. Lord Diplock said in de Lasala v de Lasala [1980] AC 546:

"The test whether a judgment or order finally disposes of the issues between the parties is not determined by inquiring whether for the purposes of the rules of court relating to time or leave to appeal it attracts the label ´final´ or ´ interlocutory´. The test is: has the court that made the order a continuing power to vary its terms, as distinct from making orders in aid of in forcing those terms under a liberty to apply?"

Within that test this was a final order. If one then looks to the rules, one finds a power provided by Order 32 rule 5(3) in these terms:

"Where the Court hearing a summons [in chambers] proceeded in the absence of a party, then, provided that any order made on the hearing has not been perfected, the Court, if satisfied that it is just to do so, may rehear the summons."

There would be two questions to answer. Firstly, were the proceedings on 9 June 1995 in the absence of the defendant? The answer to that has been given by this court recently in Ley v Augustus Ltd unreported on 16 May 1966. Peter Gibson LJ dealing with the County Court Rules said:

"But when a party deliberately chooses either to be in court but not to make representation at the hearing or to depart from the court so as to avoid being there when the order is made, I cannot see how that party can bring himself within the purpose of the rule."

I adopt that for this case. Secondly, this order was perfected and for both those reasons the case does not fall within that rule.

The hearing below proceeded upon the basis that the principle to apply might be that stated in Rackham v Tabrum (1923) 129 Law Times 24 where the Lord Chief Justice, Lord Hewart said at page 25:

"The question is whether the learned judge had jurisdiction to entertain this summons after it had been dismissed on the 26th Jan. In my opinion he had. The principle is that where a summons or case has not been heard, but then struck out, the court may, if it thinks fit, hear or entertain the summons or case, but if there has been a hearing on the merits, though in the absence of one party, it cannot do so after the order is perfected."

It should be observed that on the facts of that particular case the plaintiff had set the matter down for hearing on 26 January but had thought, no doubt justifiably that it had been taken out of the list and refixed.

The defendant appeared on that day and persuaded the judge to dismiss the summons for want of appearance by the plaintiff. The factual situation is now covered in Order 32 rule 5(4) which reads:

"Where an application made by summons has been dismissed without a hearing by reason of the failure of the party who took out the hearing, the Court, if satisfied that it is just to do so, may allow the summons to be restored to the list."

That is not this case.

Although therefore the judge considered whether or not the case had been disposed of on the merits, and on that basis decided he had no jurisdiction, in my judgment an order of this kind must come to the Court of Appeal if it is to be challenged. I would hold that there was no jurisdiction to entertain the proceedings on 28 July 1995 and I would dismiss the appeal against that order.

I turn therefore to the second question, the test to be applied for striking out. The seeds from which the present practice has grown were sewn by Diplock LJ, as he then was, in Allen v Sir Alfred McAlpine & Son Ltd [1968] 2 QB 229. Dealing with dismissing claims for want of prosecution, he said at 259F:

"It is then a Draconian order and will not be lightly made. It should not in any event be exercised without giving the plaintiff an opportunity to remedy his default, unless the court is satisfied either that the default has been intentional and contumelious, or that the inexcusable delay for which the plaintiff or his lawyers have been responsible has been such as to give rise to a substantial risk that a fair trial of the issues in the litigation will not be possible at the earliest date at which, as a result of the delay, the action would come to trial if it were allowed to continue."

Developing that theme in Birkett v James [1978] AC 297, 318F Lord Diplock as he had then become, summarised the first ground he had established in McAlpine's case:

"The power should be exercised only where the court is satisfied either (1) that the default has been intentional and contumelious, e.g. disobedience to a peremptory order of the court or conduct amounting to an abuse of the process of the court."

Accordingly he stated at page 321C that:

"The court may and ought to exercise such powers as it possesses under the rules to make the plaintiff pursue his action with all proper diligence, particularly where at the trial the case will turn upon the recollection of witnesses to past events. For this purpose the court may make peremptory orders providing for the dismissal of the action for non-compliance with its order as to the time by which a particular step in the proceedings is to be taken. Disobedience to such an order would qualify as ´intentional and contumelious´ within the meaning of the first principle laid down in Allen v McAlpine ."

There was an early warning of the need for rigorous judicial control. Finally completing the trilogy of his contributions he said in Tolley v Morris [1979] 1 WLR 592, 603G that:

"Where the delay by the plaintiff in taking a necessary procedural step is excessive he may obtain a ´peremptory order´ which, unless it is obeyed, attracts the sanction that the plaintiff's action is dismissed. Disobedience to a peremptory order would generally amount to such ´contumelious´ conduct as is referred to in Birkett v James [1978] AC 297 and would justify striking out a fresh action for the same cause of action, as an abuse of the process of the court."

The modern exposition of the rules is given by Sir Nicolas Browne-Wilkinson VC in Re Jokai Tea Holdings [1992] 1 WLR 1196, 1202, where his Lordship said:

"In Samuels v Linzi Dresses Limited [1981] QB 115 the court did not give any direct guidance as to the approach to the exercise of the court's discretion in cases where a claim or defence has been struck out by reason of a failure to comply with an ´unless´ order beyond saying that such a discretion should be exercised ´cautiously´. However, Roskill LJ referred to the analogous case where the question is whether a plaintiff's claim should be struck out for want of prosecution to which the principles laid down in Birkett v James [1978] AC 297 apply. The first class of case to be considered in Birkett v James is where the plaintiff has been guilty of ´intentional and contumelious conduct´. Disobedience to a peremptory order is ´generally´ to be treated as contumelious conduct: Tolley v Morris [1979] 1 WLR 592, 603 per Lord Diplock. Where there has been such contumelious disobedience not only the plaintiff's original action but also any subsequent action brought by him based on the same cause of action will be struck out: Janov v Morris [1981] 1 WLR 1389. The basis of the principle is that orders of the court must be obeyed and that a litigant who deliberately and without proper excuse disobeys such an order is not allowed to proceed. The rationale of such penalty being that it is contumelious to flout the order of court, if a party can explain convincingly that outside circumstances account for the failure to obey the peremptory order and that there was no deliberate flouting of the court's order, his conduct is not contumelious and therefore the consequences of contumely do not flow.

In Janov v Morris a plaintiff whose first action had been struck out for failure to comply with an ´unless´ order brought a second action based on the same cause of action. The basis of the decision was that the failure to comply with the peremptory order was contumacious: see [1981] 1 WLR 1389, 1395H per Watkins LJ. It is clear that the court, in reaching the conclusion that the conduct was contumacious, placed much reliance on the fact that no explanation or excuse had been given by the plaintiff for his disobedience to the order.

In my judgment, in cases in which the court has to decide what are the consequences of a failure to comply with an ´unless´ order, the relevant question is whether such failure is intentional and contumelious. The court should not be astute to find excuses for such failure since disobedience to orders of the court is the foundation on which its authority is founded. But if a party can clearly demonstrate that there was no intention to ignore or flout the order and that the failure to obey was due to such extraneous circumstances, such failure to obey is not to be treated as contumelious and therefore does not disentitle the litigant to rights which he would otherwise have enjoyed."

In that case Sir John Megaw drew a distinction between the noun "contumely", which he understood to mean "insolent reproach or abuse", and contumacy which meant "perverse and obstinate resistance of authority". He much preferred the latter formulation. He posed the question:

"Was the defendants' failure to comply with the peremptory order properly to be described as showing perverse and obstinate resistance of authority?"

That case has been regularly followed. I refer particularly to the judgment of this court in Caribbean General Insurance Limited v Frizzell Insurance Brokers Limited [1994] 2 Lloyds Law Reports 32. The leading judgement was given by Leggatt LJ who said at page 37, having recited the passage from Jokai as I have done, that:

"It is to be noted that the Vice Chancellor was specifically expecting that a defaulter would only escape the consequences of judgment given against him if he could demonstrate both that there was no intention to ignore or flout the order and that the failure to obey was due to extraneous circumstances."

He also said at page 39 to 40:

"It is only in recent years that pretexts have been devised for avoiding the efficacy of ´unless´ orders. But it is important that breach of such orders should not be incautiously condoned or overlooked. Otherwise the notion that the Court will readily allow further time, will encourage those who have not troubled to comply with its peremptory orders to apply to set aside judgments entered in default. Peremptory orders are made to be obeyed. In Samuels v Linzi the Court opened the door to defaulters no more than a chink: it did not open it wide."

He also made an observation which I would emphasise. He drew attention to the fact that in Costellow v Somerset County Council [1993] 1 WLR 256, the Master of the Rolls had observed as an alternative formulation the repeated or persistent failure to obey peremptory orders. I draw attention to that difference of approach in order to emphasise that alternative formulations are appropriate for the facts of the particular case. They do not pretend to be immutable statements of immutable principle. This was the point made by Beldam LJ in RG Carter (West Norfolk) Limited v Ham Gray Associates Limited, CA unreported in this court on 21 June 1996, where at page 11 of the transcript he said:

"As I previously indicated, the only criticism which I would have of the judge's approach is of the meaning which he attributed to the phrase ´extraneous circumstances´ as used by this court in the cases of Jokai and Frizzell. In my view, it is intended to convey something which happens beyond the control of the party to prevent him from complying with the order."

These are the important words:

"But, in any event, it seems to me that in the exercise of discretion it is wrong to regard guidelines which have been put forward to aid a judge in the exercise of his discretion as if in every case they had to be regarded as conditions precedent to the exercise by the court of its power. It is the essence of a discretion that it should be exercised flexibly and should not be limited or circumscribed by conditions. No doubt in the ordinary case the considerations put forward in guidelines suggested by this court will be given great weight, but they are not to be regarded as conditions."

He made another valuable comment, which I would respectfully adopt:

"Judgment signed after failure to comply with an order after repeated extensions of time and with an order which provides that the opposite party may sign judgment in default of compliance should be upheld unless substantial reasons are advanced which show no fault on the part of the party seeking to set aside the judgment pursuant to that order. The time of the courts and judges has become a most important resource and a scarce one in the administration of justice today and, as the defendant pointed out in this case, delay is the enemy of justice. After a history of delays and a binding agreement to abide by an unless order of the court against their client, which allowed ample time for compliance, this experienced solicitor without any substantial excuse failed to comply with the court's order."

In the light of my observations that each case really should be cited upon its own facts, it may be otiose to try and encapsulate what I understand to be the philosophy underlying this approach.

It seems to me it is:

1. An unless order is an order of last resort. It is not made unless there is a history of failure to comply with other orders. It is the party's last chance to put his case in order;

2. Because that was his last chance, a failure to comply will ordinarily result in the sanction being imposed;

3. This sanction is a necessary forensic weapon which the broader interests of the administration of justice require to be deployed unless the most compelling reason is advanced to exempt his failure;

4. It seems axiomatic that if a party intentionally or deliberately (if the synonym is preferred), flouts the order then he can expect no mercy;

5. A sufficient exoneration will almost inevitably require that he satisfies the court that something beyond his control has caused his failure to comply with the order;

6. The judge exercises his judicial discretion in deciding whether or not to excuse. A discretion judicially exercised on the facts and circumstances of each case on its own merits depends on the circumstances of that case; at the core is service to justice;

7. The interests of justice require that justice be shown to the injured party for the procedural inefficiencies caused the twin scourges of delay and wasted costs. The public interest in the administration of justice to contain those two blights upon it also weigh very heavily. Any injustice to the defaulting party, though never to be ignored, comes a long way behind the other two;

I turn to the third particular issue, whether or not this defendant is exonerated because the fault was not his personally but that of his legal representatives? In support of that submission, Mr Williamson, for whose arguments and skeleton arguments I am indebted as I am to Mr MacGregor QC, submits that the true rule is encapsulated in that sentence of the Vice Chancellor that:

"in my judgment in cases in which the court has to decide what are the consequences of a failure to comply with an unless order the relevant question is whether such failure is intentional and contumelious."

He submits, secondly, that there is no additional requirement of extraneous circumstances. I cannot accept those submissions. The judgment of the Vice Chancellor must be read as a whole. It is quite plain that there are difficulties in giving a narrow meaning to intentional linked as it is with contumelious. The submission wholly fails to have regard to the broader terms in which he expresses the basis of the rule and the limited circumstances in which a failure can be exonerated.

Mr Williamson's second submission is rejected by the judgment of this court in the Frizzell case and the passage from the judgment of Leggatt LJ to which I have already referred. He relies upon the decision at first instance in Pereira v Beanlands [1996] 3 All ER 528 and the judgment of Robert Walker J. I would not wish to express any disagreement with either the statement of the principle or the application of it in the particular facts of that particular case. He held that there was no binding principle which fettered the broad discretion he had to exercise that a default, whether an act or omission of the litigant's solicitor, should always be visited on the litigant himself. This is a perfect example of the exigencies of justice coming to do justice in a particular case.

Ordinarily this court should distinguish between the litigant himself and his advisers. There are good reasons why the court should not: firstly, if anyone is to suffer for the failure of the solicitor it is better that it be the client than another party to the litigation; secondly, the disgruntled client may in appropriate cases have his remedies in damages or in respect of the wasted costs; thirdly, it seems to me that it would become a charter for the incompetent (as Mr MacGregor eloquently put it) were this court to allow almost impossible investigations in apportioning blame between solicitor and counsel on the one hand, or between themselves and their client on the other. The basis of the rule is that orders of the court must be observed and the court is entitled to expect that its officers and counsel who appear before it are more observant of that duty even than the litigant himself.

In my judgment, on the facts of this case, the City of Coventry cannot escape the quite manifest failings of counsel who was instructed on its behalf. She displayed, as I have said, an arrogant disdain to the court's authority. Her sending her pupil was in my judgment contumaciously disrespectful. She had manifestly failed to fulfil her duty to her client and her duty to the court, to settle particulars which were intelligible and her client must pay the penalty for that failure.

Turning to the exercise of discretion, whilst not bound by the views expressed by His Honour Judge Havery on 28 July when he looked at the merits, I would certainly pay regard to them. In fact I agree with them. I agree that counsel was contumacious; I agree that solicitors and counsel were negligent in their conduct of the litigation on their own client's behalf; I agree that the defendant had been given ample opportunity to remedy the defects. There had been four orders made, none of which had been properly complied with. As the judge robustly said, "The defendants had been playing around for too long. Enough is enough". There is no adequate excuse proffered. In those circumstances, I agree with the approach of the judge that the court's authority has now to be stamped upon this litigation with the result of the orders that he made must be upheld.

I would not wish it to be thought that charm is incapable of diffusing this atomic weapon in judicial armoury. Had counsel appeared before the learned judge with sufficient humility, making respectful submissions that it was considered that the order had been complied with, throwing himself or herself on the mercy of the court, and offering to comply with its order if that view was wrong, then I imagine that the quality of mercy would not have been utterly dead in a judge's bosom. In this case that was not the course followed by these defendants. It is too late for them to come to this court with blandishments of that kind.

I would dismiss the appeal.

LORD JUSTICE AULD: I agree and wish only to add a few words about the test to be applied by a court in deciding whether to strike out a claim or defence because of failure to comply with an unless order.

Such an order is, by its nature, intended to mark the end of the line for a party who has failed to comply with it and any previous orders of the court. In Jokai Tea Holdings Limited , in the passage read by My Lord, Lord Justice Ward, at page 1203 in the report, Sir Nicolas Browne-Wilkinson, VC, as he then was, took as a useful test of the limit of the court's patience the question whether such failure has been intentional and contumelious.

That was the formulation of Lord Diplock in the context of the dismissal of an action for want of prosecution, sitting as Diplock LJ in Allen v Sir Alfred McAlpine & Son Ltd , and as Lord Diplock in Birkett v James . In the passage cited by My Lord from the speech of Lord Diplock in the latter case, his Lordship stated that it was one of two alternative circumstances, coupled with prejudice, in which a court could dismiss an action for want of prosecution even where no previous peremptory order had been made. The other was inordinate and inexcusable delay.

Sir Nicolas Browne-Wilkinson, in borrowing the words of one of Lord Diplock's alternative tests in that context, clearly did not intend to make it the only trigger for exercising the equally or more rigorous jurisdiction to strike out a pleading for failure to comply with a peremptory order. He also clearly had in mind failure to comply where it could not be shown to be due to "extraneous circumstances".

There is inevitably some scope for overlap between the two separate notions for an applicant seeking to avoid a strike out. In showing that his failure was due to extraneous circumstances, he would in ordinary circumstances demonstrate that it was not intentional. Lord Justice Megaw at 1207A-B, again a passage cited by my Lord, put the test in a different way, namely, whether it could be shown that there is a perverse and obstinate resistance to authority.

As Beldam LJ observed in R G Carter (West Norfolk) Limited v Ham Gray Associates Ltd , it is wrong to regard guidelines such as this as a statutory formula. He and Leggatt LJ demonstrated that approach two years before, in Caribbean General Insurance Limited v Frizzell , cited by My Lord.

There, Leggatt LJ, in a passage at page 40, immediately following the references to Jokai Tea Holdings and Costellow v Somerset County Council read by My Lord, continued with these words:

"Those approaches indicate the need for a defaulter, if he is to escape the consequences of failure to comply with a peremptory order, to show that in the circumstances the relevant breach was excusable if not unavoidable."

Beldam LJ on the same page, in a passage similar to that cited by My Lord from his judgment in the case of Carter, said:

"Final, peremptory or ´unless´ orders are only made by a Court when the party in default has already failed to comply with a requirement of the rules or an order, and the Court is satisfied that the time already allowed has been sufficient in the circumstances of the case, and the failure of the party to comply with the order is inexcusable."

Neill LJ agreed with both judgments in that case. I respectfully agree with him, Leggatt and Beldam LJJ that the essential notion in play is whether a party's failure to comply with an order is without fault or is inexcusable, the latter in the sense of being without a reasonable excuse.

In my judgment, there is no need to confine the test to that of an intentional disregard of a court's peremptory order, whether or not it is characterised as flouting, contumelious, contumacious, perverse, obstinate or otherwise. Such an intent may be the most usual circumstance giving rise to the exercise of this jurisdiction. But failure to comply with one or a number of orders through negligence, incompetence or sheer indolence could equally qualify for its exercise. It all depends on the individual circumstances and the existence and degree of fault found by the court after hearing representations to the contrary by the party whose pleading it is sought to strike out.

THE MASTER OF THE ROLLS: I agree with both judgments. I add a footnote to those judgments in order to attempt to indicate the proper context of the decision which this court has given.

The Supreme Court's Rules Committee has wide powers of rule making. This enables the Rules Committee, not only to make the rules themselves, but from time to time to amend those rules when, in the light of experience, modification of those rules prove necessary so as to make the civil justice system work effectively.

There are, however, situations where this court makes remarks in the course of a particular judgment which were intended to be, or are taken to be, the source of general guidance as to how a particular discretion given to the courts by the rules in wide terms should normally be exercised.

Such guidance is extremely helpful since it allows courts up and down the country to achieve greater consistency which is an important feature of justice. However these remarks are usually either obiter or no more than an indication of the reasons for a decision in a particular case. The comments which are made in such a case are frequently picked up and repeated in judgments by other divisions of this court and that gives them greater authority.

This is all to the good subject to two qualifications. The first is the guidance may become treated with excessive respect so that they are regarded as exhaustive and enunciating principles of law. If this happens, there can be unfortunate consequences because situations which were not contemplated when the guidance was given might arise. If the courts follow the guidance blindly, it can result in decisions which are not in accordance with the requirements of justice where a decision which is in accordance with that requirement could otherwise be given if the general discretion which the rules confer were to be exercised.

This is a situation which may have gone wrong as a result of the remarks of Sir Nicolas Browne-Wilkinson, VC, as he then was, which have been referred to by my Lords. If that happens, it is the responsibility of this court to make the true effect of the remarks clear. That is what this court has sought to do today and what, as I understand it, Beldam LJ was doing in the case of Carter in the passages to which my Lord, Lord Justice Ward, has referred, passages which I would personally endorse.

The second qualification is that the rule in relation to which guidance is given, notwithstanding that the guidance no longer achieves its purpose satisfactorily, may remain an unsatisfactory rule. Where this happens, the Rule Committee cannot assist. Furthermore, the House of Lords is unlikely to assist because cases involving procedural issues of the sort that have been considered by this court today are rarely considered by their Lordships. In addition, with respect to their Lordships, often they are not in the ideal position to give practical guidance as to the day to day conduct of litigation, they being necessarily divorced to some extent from what is happening day in and day out in the courts up and down the land.

It is because of this that it is important that where a situation occurs where the guidance which has been given is shown by cases coming before this court not to be working well, fresh guidance should be given. I therefore draw judges' and practitioners' attention to the principles set out in the judgment of Lord Justice Ward which for the future should be regarded as stating the general guidance which should normally be applied in this area, but subject to the qualifications which he made clear.

The only other matters to which I would refer is the case of Pereira v Beanlands [1996] 3 All ER 528 which was decided by Robert Walker J earlier this year. Like my Lord, Lord Justice Ward, I would in general endorse the judgment of the judge. However, I would emphasise that judgment has to be considered in the context of its facts which included a defendant who was acting in a fiduciary capacity and therefore likely to be treated sympathetically by the courts.

So far as the merits of this case are concerned, I appreciate that the consequence of our decision is that the Council is deprived of a substantial Counterclaim. In the course of his very able submissions, Mr Williamson referred to the jurisprudence which is now developing, which indicates that if a second action is brought where a first action has been struck out, there is a danger of a second case being treated as an abuse of the court.

In circumstances such as existed in this case, I am sure that Mr Williamson was right to draw attention to that danger. It is always difficult to anticipate all circumstances which can arise. However, speaking for myself, I would doubt that there could be circumstances where in this situation the Council would be able to proceed in a fresh action with that Counterclaim.

The decision is therefore hard on the Council. In that regard, I draw attention to the fact that if they had the very substantial Counterclaim which they indicate they do have, then they were remarkably cavalier in trusting the conduct of that Counterclaim, first of all to an in-house lawyer of very limited experience and, secondly, to counsel who obviously were not of sufficient experience to conduct the litigation of that scale. To that extent they were the authors of their own misfortune.

In those circumstances, it follows that this appeal must be dismissed.

Order: Appeal dismissed with costs.