After scouring the blog articles from the past few months it came to my attention that the decision in the conjoined appeals of Denton v TH White, Decadent Vapours Limited v Bevan and Utilise TDS Limited v Davies  EWCA Civ 906 (“Denton”) is yet to be covered.
Denton followed the controversial decision made in Mitchell v Newsgroup  EWCA Civ 1537 (“Mitchell”). Importantly, the Court of Appeal has now clarified the approach that the courts must take when they are considering whether or not to grant relief from sanctions.
CPR 3.9 sets out the test for relief from sanctions.
(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.
The general gist of the Mitchell judgment is that where a party fails to comply with a rule, practice direction or court order, relief from sanctions will only be granted in situations where either the breach was “trivial” or, if the breach was not trivial, there was a “good reason” for it. This is a very high threshold and a large number of unfair decisions followed Mitchell. In Mitchell itself the fact that Mr. Mitchell’s solicitors were overworked resulting in them filing a cost budget 6 days late was found neither to be a trivial breach nor a good reason to justify granting relief from sanctions. As such, the Court found that Mr. Mitchell would only be entitled to recover court fees if he was successful at trial. These fees were a drop in the ocean compared to Mr. Mitchell’s £500,000 costs.
Bearing in mind that the new CPR 3.8 (4), which allows parties to agree to extend time for compliance with an order by up to 28 days), had yet to come into force, there were some worrying months for both the legal profession and its clients.
Denton has done much to alleviate the problems created by Mitchell, introducing a 3 stage process that the Court is to follow when considering whether or not to grant relief.
Stage 1: Is the breach serious or significant?
Both the effect to the litigation in question and to litigation generally are to be considered when deciding whether a breach is serious or significant. Equally, even “breaches which are incapable of affecting the efficient progress of the litigation, although they are serious [such as] failure to pay court fees” [Denton, para 26] are deemed serious for the purposes of Stage 1.
Stage 2: Is there a good reason for the breach?
Mitchell sets out what may qualify as a “good reason”. This is likely to be an issue outside of your control, such as a party or their solicitor suffering from a debilitating illness or being involved in an accident [para 41]. Denton found that “the guidance given in paragraphs 40 and 41 of Mitchell remains substantially sound” [para 24].
As found in Mitchell, pressures of work and/or taking on too much work is not a good reason nor is “merely overlooking a deadline” [para 41]. Evidently, this is a high threshold.
If the court agrees that there is no good reason for a serious or significant breach, all the circumstances of the case must be considered in assessing whether to grant relief.
There is a focus on the need to conduct litigation efficiently and at proportionate cost as well as to enforce compliance with rules, practice directions and court orders. The majority in the Denton case stated that “particular weight” [para 32] is “always” [para 38] to be given to these factors.
Factors to be considered at this stage include whether an application for relief has been made promptly [para 36] and a party’s previous conduct in litigation [para 26].
The Court’s assessment at Stage 3 includes a requirement to assess whether an opposing party has been unreasonable in refusing to agree to any extension in time requested. Denton was clear is advocating a co-operative approach to litigation and the Court criticised the unhelpful tactics used by many after Mitchell, which led to much satellite litigation.
Applying the 3 stage test: the three appeals in Denton:
In the first appeal 6 witness statements were served 6 months late. This was found to be serious and significant, there was no good reason for it and, after considering all the circumstances, the Court concluded that the application for relief must fail.
In the second, in breach of an unless order, a court fee was sent to the Court one day late and subsequently got lost in the post. Relief was granted.
In the third, a cost budget was filed 45 minutes late. This was neither serious nor significant and relief was granted.
Denton is clearly a welcoming development but it is still important to note that relief from sanctions will not be granted by the Court light-heartedly and compliance must be the norm.
If there are complications and it appears as though a deadline is going to be missed, an application for relief from sanctions should be made before that deadline has passed. The profession must make all efforts it can to meet deadlines but be realistic when it is clear that these cannot be met.
Co-operation is vital in the pursuance of CPR 3.9 and CPR 3.8 (4) should be used by parties where practicable. A contested application for relief should be rare and reserved for the most serious breaches. If a party is unreasonable in refusing to agree to an extension and/or opposing an application for relief they may face costs consequences, both at that stage and when the case concludes, if the application succeeds. This requires careful consideration.
Nathaniel Garner – Hanne & Co