ADVA Optical Networking Ltd &Anr v Optron Holding Ltd

[2017] EWHC 1813 (TCC)

During 2016 ADVA settled a claim brought by BT concerning allegedly defective in-line socket electrical cables. In order to pass the claim down the supply chain, ADVA commenced proceedings against Optron who in turn joined in their own supplier Rotronic Instruments (UK) Ltd. The proceedings between ADVA, Optron and Rotronic were initially stayed pursuant to a standstill agreement but a trial date was fixed for April 2018.  Mr Justice Coulson noted that there had been a reasonable amount of cooperation between these parties.

However, Rotronic was unable to obtain the consent of its own supplier, A One Distribution (UK) Ltd, to enter into the standstill agreement or to become a party to ADVA’s proceedings.  Rotronic therefore commenced separate proceedings against A One and served its particulars of claim on 10 March 2017.  A One did not file an acknowledgement of service or serve a defence. Rotronic’s solicitors wrote to A One more than once advising A One to obtain legal advice “as a matter of urgency”. There was no response.

A Case Management Conference (“CMC”) in both Rotronic’s proceedings against A One and in ADVA’s proceedings against Optron/Rotronic was fixed to take place on 16 June 2017.

On that day, Rotronic’s solicitors were contacted by solicitors appointed by A One who indicated that they had only just been instructed and were unable to consider directions.  At the CMC the Judge ordered A One to issue an application for relief from sanctions pursuant to CPR Rule 3.9 on or before 23 June 2017.  A One did this and also issued a draft defence together with an application for an extension of time for service and/or relief from sanctions.       

The Court of Appeal in Denton and Others v TTH White Ltd [2014] EWCA Civ 906 had outlined a new three-stage test for considering breaches. In respect of stage one, Mr Justice Coulson considered that in circumstances where A One had refused to sign the standstill agreement (which had the result of forcing Rotronic to issue separate proceedings), and where A One had then gone on to  ignore those proceedings, including failing to serve a Defence, this was a serious default.

Similarly, the Judge did not consider that there was any good reason for A One’s serious breach of the court rules. The submission that A One had not understood the meaning and effect of the documents served by Rotronic was a “thoroughly bad point”. There was nothing complicated about these documents. The decision by A One to ignore the proceedings was “entirely consistent” with their conduct to date. 

That said, although A One’s conduct had been  “very poor” in failing to comply with the relevant rules which in turn “prevented the efficient and proportionate conduct of the claim against them”, A One were saved by consideration of the third stage. First, if A One was granted relief it would not cause any delay to the litigation overall, given that ADVA’s proceedings against Optron and Rotronic were at an early stage. Disclosure had not yet commenced and the trial was not listed until April 2018.    

Second, Mr Justice Coulson agreed that if judgment in default were granted against A One, this would be contingent and therefore unsatisfactory, given that Rotronic’s primary position as against Optron was to deny liability.  Thus any contingent judgment against A One would only become relevant if Rotronic’s defence against Optron was rejected. There was also a risk that with a contingent judgment to rely upon, Rotronic might decide not to engage further in the detail of the claim in the main action, knowing that, even if their primary case failed because of the default judgment, it would be A One who would be picking up the bill.

Therefore the Judge decided to grant A One’s application for relief, accepting that:

“this is one of those (relatively rare) cases of serious default in which it is appropriate to grant relief from sanctions”.

Parties should note, with care, the comment “relatively rare”. 

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