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Relief from sanctions and a legal headache?

In the recent combined Court of Appeal decision in Denton v TH White Ltd, Decadent Vapours Ltd v Bevan and Utilise TDS Ltd v Davies [2014] EWCA Civ 906, the court dealt with three conjoined appeals concerning both grants of relief from sanction and refusal of such grants. The case has sought to remedy the confusion caused by the inconsistent interpretation of the guidelines arising out of the case of Mitchell v News Group Newspapers [2013] EWCA Civ 1537. Under Mitchell, the court adopted an uncompromising approach to relief from sanction which left parties unsure as to how strictly the court would impose consequences for non-compliance with rules, directions and orders. As a result, parties were beginning to take advantage of any procedural mistakes (however minor) made by their opponents in an attempt to gain an advantage in the litigation. At DWF, we had particular interest in the outcome of this Appeal as the issue of sanctions relief has arisen in a number of our recent cases - including the Appeal itself where we successfully represented one of the parties (Decadent Vapours Ltd) by overturning what the Appeal Court agreed was an ‘unduly draconian’ refusal of relief imposed on Decadent Vapours Ltd’s previous legal advisors.

The recent Court of Appeal decision in Denton has sought to clarify the Mitchell guidelines and provide solicitors with further guidance as to how they should be interpreted. The court has specified a three stage test which must be followed when considering any relief from sanction applications made pursuant to CPR 3.9.

Stage one: The first stage requires the court to identify and assess the seriousness or significance of the failure to comply with the rule, practice direction or court order. The Master of the Rolls was concerned that debate surrounding the word ‘trivial’, as taken from Mitchell, was resulting in a series of disputes which were not conducive to efficient and proportionate litigation. The test of triviality is to be replaced with a test for whether the breach is “serious or significant” which is to be interpreted as something that "neither imperils future hearing dates nor otherwise disrupts the conduct of litigation". Past failures should not be considered at this point. If a breach is not significant or serious then relief from sanctions should be granted.

Stage two: The second stage requires the court to consider why the failure or default occurred. This does not deviate from the previous guidance as set out in Mitchell and is essentially the court considering whether there was a “good reason” for the breach. The court did not produce a definitive list of events which would be considered as good reasons however, it did state that the examples provided in the Mitchell case were to be considered as examples only and not an exhaustive list.

Stage three: The Court of Appeal went on to consider the third stage of the test: the majority in the Court of Appeal (including the Master of the Rolls) held that the factors set out at CPR 3.9(1)(a) and (b) ought to be given particular weight when considering all the circumstances of the case (including the promptness with which the application was made). In his dissenting judgement, Jackson LJ held that the weight to be attributed to those two factors was a matter for the court, such that those factors should be described as having “a seat at the table, not the top seats at the table”.

So, how should the decision in Denton be interpreted by the legal profession? It is considered to be a toning down of the harsh principles laid down in Mitchell - although it should not necessarily be seen as a retreat from the Jackson Reform’s overall aim to encourage compliance with rules, orders and practice directions.

Denton has emphasised that all the circumstances of the case should be taken into account and it restores judicial discretion to do what is right within the rules to meet the overriding objective. Perhaps most importantly, the Denton case has made it clear that it should be very much the exceptional case where a contested application for relief from sanctions is necessary. This is because the parties should work together to make sure that, in all but the most serious cases, satellite litigation is avoided even where a breach has occurred.

The approach in Denton is a welcome reminder from the Court of Appeal that a co-operative approach should be taken by litigants to assist the court in managing the case, and that the court’s limited resources should not be taken up with relief from sanctions applications concerning extensions of time/relief from sanction unless the default prejudices a hearing date or trial date.

Author: Claire Bogle

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

Paul Barge

Partner

I am a Partner in DWF’s Manchester office and Head of the Construction & Infrastructure team in the North West.