The introduction of the Jackson Reforms in April 2013 caused the courts to be particularly mindful of effective and efficient case and cost management. Hence, a robust approach has since been imposed to case management and compliance. The courts can and will use their power to:
- impose sanctions on parties who fail to comply with relevant rules, practice directions and court orders, and;
- grant or refuse relief from sanctions applications that are made under the Civil Procedure Rule (CPR) 3.9
Rule 3.9 reads as follows:
“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.”
Why is compliance with the relevant rules, practice directions and court orders so important? Because failing to comply with civil procedural rules, practice directions and/or court orders can increase the amount of time it takes for a dispute to be resolved and/or the costs of doing so. These delays and costs affect not only those party to the instant proceedings but other court users as well.
Equally, effective, efficient case and cost management can minimise the time and costs of resolving a dispute and people to access the courts’ limited resources.
By applying sanctions to encourage the latter and minimise the former, it is hoped that the court system will become more user-friendly and cost-effective for everyone, thereby improving access to justice.
Mitchell v News Group Newspapers Ltd[1]
The first case to consider CPR 3.9 as revised under the 2013 Jackson reforms was Mitchell v News Group Newspapers Ltd.
The Court of Appeal provided a very simple test for assessing whether relief from sanctions should be granted under CPR 3.9:
- if the breach was small and the party had taken swift, appropriate action to remedy it, relief from sanctions would normally be granted
- if the breach was more serious, but there was good reason for it, and remedial action had been quickly taken, relief would usually be granted
- in all other cases, i.e. where the breach was not trivial, and there was no good reason for it, relief would not generally be granted unless there was a compelling reason to do so
The decision in Mitchell has been severely criticised by subsequent judges for being both ‘unduly draconian’ and at the same time, leading to decisions that were too lax.
In 2014, the Court of Appeal revisited CPR 3.9 in Denton & Ors v TH White Ltd & Anr[2] and developed a three-stage test to be adopted when a court was asked to rule on whether relief from sanctions should be granted.
The Master of the Rolls (at the time), Lord Dyson and Lord Justice Vos stated “the judgment in Mitchell has been misunderstood and is being misapplied by some courts. It is clear that it needs to be clarified and amplified in certain respects.”
The three-stage test was laid out as thus:
1. the court should identify and assess the seriousness and significance of the ‘failure to comply with any rule, practice direction or court order’ which engages rule 3.9(1)’
2. consider the reasons for the breach
3. consider “all the circumstances of the case, so as to enable it to deal justly with the application”. At this stage, the court should pay particular regard to CPR 3.9(1)(a) and (b)
The Court of Appeal in Denton stated:
“the more serious or significant the breach, the less likely it is that relief will be granted unless there is a good reason for it. Where there is a good reason for a serious or significant breach, relief is likely to be granted. Where the breach is not serious or significant, relief is also likely to be granted. But it is always necessary to have regard to all the circumstances of the case.
But it is always necessary to have regard to all the circumstances of the case. The factors that are relevant will vary from case to case.”
How have the courts applied Denton?
Despite the overarching ethos of Denton that the courts should take a more flexible approach to granting relief from sanctions, post-Denton case law indicates that a strict approach to compliance is still being taken.
Examples include:
Fouda v the Mayor and Burgesses of the London Borough of Southwark & Newlyn plc[3]
The appeal against the relief from sanctions decision for the late filing of witness statements was decision was dismissed. The appellant’s solicitors were also heavily criticised for the way in which they had managed this case and were ordered to pay some costs under a Wasted Costs Order.
Gentry v Miller and another[4]
The defendant failed to file an Acknowledgment of Service. The claimant had been awarded a default judgment and damages against the insurer. The defendant applied to have the default judgment set aside on grounds there was evidence to suggest the claim had been brought fraudulently.
The Court of Appeal dismissed the application for relief from sanctions citing that the insurer had no excuse for not filing the Acknowledgment of Service on time. Lord Justice Vos made it clear in his judgment that professional litigants such as insurers would receive no comfort from the courts if they failed to take care of their own commercial interests.
However, relief from sanctions was granted in Murray v BAE Systems Plc[5]. The claimant was seven days late in filing its costs budget. This meant it could only recover costs related to applicable court fees.
On appeal, the judge recognised that the late filing was a one-off mistake by the solicitor made due to a genuine breakdown in communication. There had been no other breaches in the proceedings, the relief application had been quickly made, and the litigation could be conducted efficiently, and at no extra cost, despite the breach being made.
Relief was also provided in the recent case of Mott v Long. The defendants were ten days late in filing a costs budget.
The court, applying the three-stage Denton test, concluded the default was serious and significant and there was no good reason for the late filing. Relief was nevertheless granted at the third stage of the Denton test. The court considered it particularly relevant that the parties’ approach to the litigation (and, thus, the costs budgeted for) was so different that a disputed Costs Case Management Conference (CCMC) was likely to occur and the parties would need to file an amended budget anyway. The court concluded that the parties were in precisely the same procedural position they would have been in had the defendants served their cost budget in time.
Concluding comments
An experienced civil litigation solicitor will have an in-depth understanding of the CPR and relief from sanctions. More importantly, they will do everything possible to avoid sanctions being applied in the first place. However, if they are, relief will be promptly sought as delays seem to be the main reason for applications being refused.
Saracens Solicitors is a multi-service law firm based in London’s West End. We have dedicated and highly experienced civil litigation solicitors who have an in-depth understanding of the CPR. For more information, please call our office on 020 3588 3500.
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[1] [2013] All ER (D) 314 (Nov), [2013] EWCA Civ 1537
[2] [2014] EWCA Civ 906
[3] [2015] EWHC 1128 (QB)
[4] [2016] EWCA Civ 141
[5] Unreported (Liverpool County Court, 1st April 2016)
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