Relief from sanctions: Mitchell update
Posted on 04 July 2014 by Carter-Ruck
The Court of Appeal has today handed down its judgment in three post-Mitchell relief appeals following an order by the Court of Appeal that the three appeals be heard together.
The relief sought in the three cases heard today related to breaches of varying degrees of seriousness, occurring at various different stages in the litigation process. The judges in the High Court made the following decisions at first instance:
- Utilise TDS Ltd v Davies and others  EWHC 834 – the Claimant filed its costs budget 41 minutes late and also failed to inform the court about the result of negotiations between the parties as directed by the Court. Here the judge aggregated two seemingly minor breaches and assessed their cumulative worth to be serious, relief from sanctions was refused.
- Denton and others v TH White Ltd and another (unreported) – the trial judge had to reconcile the conflict between admitting late, material evidence and the need to preserve a fixed trial date. Deciding it would not make sense to have a hearing without all of the evidence, he let the evidence in and vacated the trial date.
- Decadent Vapours Ltd v Bevan and others, Cardiff District Registry of the Chancery Division (18 February 2014) – where a claim was struck out due to late payment of a fee for a pre-trial review as specified in an unless order.
When considering these cases, the Master of the Rolls and Lord Justice Vos stated that the judgment in Mitchell has been “misunderstood and is being misapplied by some courts” and that it “needs to be clarified and amplified” as this misunderstanding “has led to the imposition of disproportionate penalties on parties for breaches which have little practical effect on the course of litigation.” In addition, the Master of the Rolls and Lord Justice Vos stated that as a consequence of the strict approach post-Mitchell had encouraged “(i) uncooperative behaviour by litigants; (ii) excessive and unreasonable satellite litigation; and (iii) inconsistent approaches by the courts.”
The Court of Appeal has held today that a judge should address an application for relief from sanctions in three stages:
- Stage One – 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). If the breach is neither serious nor significant, the court is unlikely to consider stages two and three.
- Stage Two – consider why the default has occurred.
- Stage Three – evaluate “all of the circumstances of the case, so as to enable [the court] to deal justly with the application, including the factors set out in CPR 3.9.1(a) & (b).
The Court of Appeal considered these three stages when reaching their decisions on the three cases at the centre of today’s judgment. In Denton the Court of Appeal granted the appeal and ordered that the judge’s order be set aside as the breach by the claimant in filing new witness statements so long after they had been ordered to do so was significant and unjustified. They described the original decision as “an unduly relaxed approach to compliance”.
The first instance decisions in Decadent and Utilise were described by the Court of Appeal as being “unduly draconian”. In both cases, the Court of Appeal applied the three stages above and again determined that relief from sanctions ought to have been granted and have set aside the original orders.
The original test for relief from sanctions as established in Mitchell (later reiterated in Durrant v Avon & Somerset Constabulary  EWCA Civ 1624) was that relief (as provided for in Rule 3.9 of the Civil Procedure Rules) would only be granted in limited circumstances: either where the breach is trivial and the application for relief is made promptly; or where there is good reason for the default (i.e. reasons outside of the defaulting party’s control).
A series of decisions since then have demonstrated the dilemma faced by judges when trying to ensure cases are on track but are also dealt with justly.
The most recent major decision before today was in the case of Chartwell Estate Agents Ltd v Fergies Properties SA and another  EWHC 438. In this case, although the judge found that neither of the two elements of the Mitchell test could be made out, he considered that relief had to be granted because: both the Claimant and Defendant were jointly in default; the trial date would not be affected by a decision to grant relief; and the proportionate cost of the whole action would not be affected by the relief from sanction. There would be no additional cost implications as the costs budgets would not be increased. This pragmatic decision, which was unanimously upheld on appeal, could be said to be unusual in circumstances where judges were otherwise adopting a robust approach and it emphasised that any decision to grant relief ought to ultimately depend on the circumstances of each case. It seems that the approach taken in Chartwell highlighted the need for clarification and was in some ways a precursor to today’s decision.
In their conclusion today, the Master of the Rolls and Mr Justice Vos stated that although recent case law has provided “useful amplification of the Mitchell guidance” they hope that “it will now be unnecessary to refer to earlier authorities in future and that the guidance [we] have now given will assist in reducing the need for satellite litigation and will be conducive to a reasonably consistent judicial approach to the application of rule 3.9”.
A copy of the judgment can be found here.