Relief from sanctions – need for promptness
The Court of Appeal advises that the guidance given in Mitchell “remains substantially sound”.
In Mitchell the Court stated:
“If [the breach] can properly be regarded as trivial, the court will usually grant relief provided [emphasis added] that an application is made promptly”
It was therefore implicit that even where the breach was trivial, relief would probably not be granted where a prompt application was not made.
Elsewhere in the judgment it was stated:
“Moreover, as the court emphasised, the application must [emphasis added] be made promptly. This reasoning has equal validity in the context of an application under CPR 3.9.”
Again, absolutely clear an application needs to be prompt.
The Court of Appeal has now “clarified and amplified” its earlier guidance in Denton.
“Trivial” has been redefined:
“we think it would be preferable if in future the focus of the enquiry at the first stage should not be on whether the breach has been trivial. Rather, it should be on whether the breach has been serious or significant.”
The first stage of the new is now:
“If a judge concludes that a breach is not serious or significant, then relief from sanctions will usually be granted and it will usually be unnecessary to spend much time on the second or third stages. If, however, the court decides that the breach is serious or significant, then the second and third stages assume greater importance.”
The guidance was silent at this stage as to whether there is need to make an application promptly if the breach is not serious or significant, unlike in Mitchell.
Promptness is given brief consideration in the Denton judgment when considering “all the circumstances”:
“As has been pointed out in some of the authorities that have followed Mitchell, the promptness of the application will be a relevant circumstance to be weighed in the balance along with all the circumstances.”
The new guidance fails to explain whether the issue of promptness is to be given little weight if the breach was not “serious or significant”.
This is unfortunate.
The Court gives a strong warning to parties:
“We think we should make it plain that it is wholly inappropriate for litigants or their lawyers to take advantage of mistakes made by opposing parties in the hope that relief from sanctions will be denied and that they will obtain a windfall strike out or other litigation advantage. In a case where (a) the failure can be seen to be neither serious nor significant, (b) where a good reason is demonstrated, or (c) where it is otherwise obvious that relief from sanctions is appropriate, parties should agree that relief from sanctions be granted without the need for further costs to be expended in satellite litigation. … Heavy costs sanctions should, therefore, be imposed on parties who behave unreasonably in refusing to agree extensions of time or unreasonably oppose applications for relief from sanctions. An order to pay the costs of the application under rule 3.9 may not always be sufficient. The court can, in an appropriate case, also record in its order that the opposition to the relief application was unreasonable conduct to be taken into account under CPR rule 44.11 when costs are dealt with at the end of the case. If the offending party ultimately wins, the court may make a substantial reduction in its costs recovery on grounds of conduct under rule 44.11. If the offending party ultimately loses, then its conduct may be a good reason to order it to pay indemnity costs. Such an order would free the winning party from the operation of CPR rule 3.18 in relation to its costs budget.”
How is the non-defaulting party meant to deal with a breach that is not “serious or significant” if there has not been a prompt application? Gordon Exall’s Civil Litigation Brief recently explored the problems the non-defaulting party now faces where there is a breach. This is an acute problem in this situation. At what stage should the innocent (ie non-defaulting) party concede relief should be granted? If the promptness of the application is still important, the innocent party can presumably sit back and wait for the formal application to be made. The later it is, the less likely relief will be granted.
It is not uncommon for parties at fault to advise they will make an application for relief and ask the innocent party whether they consent to the same. Can the innocent party sit back and await a formal application and consent to the same if the application is made promptly, in the expectation the defaulting party will have to pay the costs? Will a failure to consent to relief being granted pre-application be treated as unreasonable behaviour even in the absence of a formal application, meaning the innocent party has to pay the costs of the application if, and when, it is made?
Given the Court of Appeal advised that the guidance given in Mitchell “remains substantially sound” surely this means the need for a prompt application still remains. Even if we pretend (as the Court of Appeal did) that they have the power to overturn their own decisions on a whim, surely they would have needed to expressly state the need for a prompt application for breaches which are not “serious or significant” is no longer good law.
The Denton judgment has been widely welcomed by many in the legal profession. I suspect this is largely a result of relief from lawyers that they no longer face the same risk of professional negligence claims and spiralling professional indemnity insurance. In terms of judicial thinking the judgment is a dog’s dinner.