Where witness evidence is filed and served out of time or is admitted outside the directions timetable, this should be treated like an application for relief from sanctions under Civil Procedure Rule (CPR) 3.9, according to the High Court in Wolf Rock (Cornwall) Ltd v Langhelle. If you require advice on submitting evidence in insolvency proceedings or your solicitors have missed a deadline, get in touch with us to obtain legal advice as soon as possible.
Ms Langhelle was the substituted petitioning creditor in winding up proceedings presented against Wolf Rock (Cornwall) Ltd (“the Company”) on the basis that the company is unable to pay its debts under section 122(1)(f) of the Insolvency Act 1986. Ms Langhelle took carriage of the winding up petition on the basis that the Company had not paid her salary or repaid loans that she had advanced, which claims the Company denied.
The District Judge in the insolvency proceedings handed down directions for service of evidence which included an extension of time for the Company to file and serve witness evidence on 16 August 2019. Three months later, in November 2019, the Company filed and served three additional witness statements and at the hearing of the petition, sought permission to rely on these statements.
The District Judge refused and concluded that in considering an application for relief from sanctions under CPR 3.9, relied on principles in established caselaw Mitchell/Denton, which were not satisfied here.
What is relief from sanctions?
If a party in proceedings fails to comply with a deadline, rule, practice direction or court order, they will need to apply to the Court for relief from any sanction imposed by that rule or court order.
The courts have previously implied sanctions into various rules and orders which contain no express sanction.
(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 of the case, so as to enable it to deal justly with the application, including the need –
(a) for litigation to be conducted efficiently and at proportionate cost; and
(b) to enforce compliance with rules, practice directions and orders.
(2) An application for relief must be supported by evidence.
Appeal against refusal to admit witness evidence
The Company appealed and argued that the District Judge was wrong in refusing to admit witness evidence which were served in accordance with rule 7.16 of the Insolvency (England and Wales) Rules 2016:
7.16.—(1) If the company intends to oppose the petition, it must not later than five business days before the date fixed for the hearing—
(a) file with the court a witness statement in opposition; and
(b) deliver a copy of the witness statement to the petitioner or the petitioner’s solicitor.
As the additional statements were not in breach of a court order, the Company submitted that there was no need for an application from relief from sanctions.
CPR 32.1 of the Civil Procedure Rules provides:
(1) The court may control the evidence by giving directions as to –
(a) the issues on which it requires evidence;
(b) the nature of the evidence which it requires to decide those issues; and
(c) the way in which the evidence is to be placed before the court.
(2) The court may use its power under this rule to exclude evidence that would otherwise be admissible.
(3) The court may limit cross-examination(GL).
In this case, the Court had exercised its case management powers in handing down directions for witness evidence pursuant to CPR 32.1.
Appeal dismissed: Relief from sanctions required
The High Court dismissed the appeal holding that an application for relief from the consequences of a breach of order or rule which contains no express sanction should be treated as an application for relief from sanctions if:
- the intention of the court is to impose a sanction which has not been expressed, and the court has construed the rule or order as impliedly containing one; or
- the court had no intention of imposing a sanction, but for policy reasons the case is treated as one of relief from sanctions.
The High Court held that the District Judge had given directions for a prescribed timetable for witness evidence to be filed by August 2019 and that the “obvious inference” was that the additional witness statements filed after that date should not be admitted without the court’s permission.
This case serves as a warning to those who fail to comply with a time limit as they may be penalised or even have their claim/ defence struck out and where the Court may impose a sanction for policy reasons.
How do I oppose a winding up petition?
Where the grounds to challenge the petition exist it would be sensible to oppose the winding up petition. A winding up petition may be challenged by a company on the following grounds:
- The debt alleged in the demand to be owing is genuinely disputed on substantial grounds by the company.
- The company has a genuine right of set-off against the creditor which exceeds the amount claimed in the demand.
- In certain other limited circumstances (for example such as Jurisdiction, Company likely to become insolvent, Technical or procedural error or Delay).
The procedure to oppose a winding up petition is to file a witness statement in opposition in court not less than five business days before the date of the hearing of the petition (rule 4.18(1), Insolvency Rules). A copy of the evidence must also be sent to the petitioning creditor as soon as reasonably practicable (rule 4.18(2), Insolvency Rules).
My solicitor missed my deadline for witness evidence
If your solicitor or barrister has not properly advised you on your claim and the relevant deadlines or has missed a deadline for an important step in proceedings such as filing and serving of witness evidence, you may have a complaint against that firm or claim for professional negligence.
If your claim has been struck out by the court after your solicitor or barrister breached an order of the Court (e.g. an unless order), then you may have a claim against the legal professional for poor performance of the litigation.
Our professional negligence team can be instructed to assist you.