Denton v TH White

03 Jul 2014

Newsflash: Denton v TH White
 

Summary:

The Court of Appeal has today handed down its judgment in the BLM case of Denton v T H White Ltd and conjoined appeals providing further guidance in relation to applications for relief from sanctions pursuant to CPR 3.9 following the Court of Appeal’s earlier judgment in Mitchell v News Group Newspapers Ltd [2014] 2 All ER 430.  In allowing all three appeals, the Court of Appeal has “restated” the correct test to be applied by courts in determining such applications by introducing a 3 stage test designed to promote:

  • A less draconian approach towards minor breaches of rules, practice directions and orders;
  • the efficient and proportionate running of litigation and a culture of compliance whereby significant breaches will properly penalised – trial dates, for example, should not be placed in jeopardy;
  • a decline in satellite litigation concerning relief from sanctions; and
  • A more pragmatic and consensual approach by parties to litigation.

 

Relief from Sanctions – CPR 3.9:

CPR 3.9 provides:-

  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:-
    1. For litigation to be conducted efficiently and at proportionate costs; and
    2. To enforce compliance with the rules, practise directions and orders.
  2. An application for relief must be supported by evidence”.

 

Mitchell v Newsgroup Newspapers Ltd:

In Mitchell, the Court of Appeal gave the following guidance in relation to CPR 3.9 and applications for relief:

  1. The court should begin by considering the nature of the non-compliance.  If the default could be regarded as trivial or insignificant, relief from sanctions should be granted.
  2. If the  non-compliance could not be regarded as trivial, the court should consider why it occurred and be likely to grant relief if there was good reason for it.
  3. Where the non-compliance was not trivial and there was no good reason for it, the court was still required by CPR 3.9 to consider “all the circumstances of the case so as to enable it to deal justly with the application”.

 

The Appeals:

The appeal in Denton sought to challenge a Deputy High Court Judge’s decision to allow the claimants’ application to adduce additional lay witness evidence significantly out of time a matter of only weeks before a two week trial, resulting in the loss of the trial fixture.

In the second appeal, Decadent Vapours Ltd v Bevan and Others, the Appellants sought to overturn a Circuit Judge’s decision refusing relief from sanctions following the breach of an Unless Order in respect of the payment of a court listing fee.

The last appeal, Utilise TDS Ltd v Davies and Others again concerned the refusal of a Circuit Judge to grant relief after the late service and lodgement (by 45 minutes) of a Precedent “H” costs budget.

In addition to the parties’ representatives, the court also heard submissions on behalf of the Bar Council and Law Society who had intervened in the appeals on the invitation of the Master of the Rolls.

 

Findings:

Although the Court of Appeal stated that the guidance in Mitchell was substantially sound, it  had in some quarters been misunderstood and misapplied – unless a default could be characterised as trivial or there was a good reason for it, relief had often been refused by lower courts leading to decisions which were “manifestly unjust and disproportionate”.

The Court of Appeal has therefore used the conjoined appeals to give further guidance to practitioners and the lower courts and to “restate” the approach to be taken under CPR 3.9 which, according to the lead judgment of the Master of the Rolls, Lord Dyson and Lord Justice Vos, involves three stages.   The court should:-

  1. Identify and assess the seriousness and significance of the failure to comply with the rule, practice direction or court order.   If the breach is neither serious nor significant, the court is unlikely to spend much time on the second or third stages. 
  2. Consider why the default occurred.
  3. Evaluate all the circumstances of the case so as to enable it to deal justly with the application including factors (a) and (b) in CPR 3.9 (1).

In relation to (1), the Court of Appeal acknowledged that use of the word “trivial” in Mitchell had given rise to difficulty in circumstances where some courts have decided certain breaches to be non-trivial notwithstanding that there had been no adverse effect upon the efficient running of the litigation.  In future cases, courts should focus upon whether the breach was serious or significant.  In assessing the seriousness of the breach, the court should not, initially, take into consideration whether unrelated breaches may have previously occurred.   Where the court concludes that a breach is not serious or significant it should be unnecessary for it to spend much time on the second or third stages and should grant relief.

In dealing with the second stage, the court of Appeal referred to relevant passages in Mitchell in which examples of “good and bad reasons” for a failure to comply were given – the debilitating illness of a party or his solicitor or later developments in the course of the litigation were cited as examples of “bad reasons”.

Under stage 3, where the breach was significant and there was no good reason for it, the court will be required to consider all the circumstances of the case so as to enable to deal justly with the application.

In the lead judgment, the Master of the Rolls and Lord Justice Vos indicated that it was appropriate to consider factors (a) and (b) under CPR 3.9 (1) at the third stage.

With regard to factor (a), if the breach has prevented the efficient conduct of the litigation then this will be a factor weighing in favour of refusing relief.   With regard to factor (b), the court should always bear in mind the need for compliance with rules, practice directions and orders and it is therefore important that any non-compliance should also be weighed in the balance. Consideration of all the circumstances should also encompass past or current breaches and the promptness of the application for relief.

Lord Justice Jackson delivered a separate judgment in which, whilst agreeing with stages 1 and 2 of the test formulated in the lead judgment, dissented upon the construction of the third stage.   In his judgment, CPR 3.9 (1) required the court to consider all the circumstances of the case as well as factors (a) and (b).  In other words, in his view, the two factors should be specifically and separately considered in each case and their respective importance was a matter to be determined by the court.

The Court of Appeal has also made it clear that parties to litigation are expected to assist the court in achieving the overriding objective by co-operating with one another.  Parties who opportunistically and unreasonably oppose applications for relief by seeking to take advantage of minor or inadvertent errors can expect to be heavily penalised by the court.

All three appeals were allowed.  Denton illustrated an “unduly relaxed approach to compliance which the Jackson Reforms were intended to discourage” whilst in Decadent and Utilise, the Court of Appeal considered that the lower courts had erred in assessing the relevant breaches as significant.  Both cases involved minor breaches which did not prevent the litigation from being conducted efficiently at proportionate cost and the Court of Appeal concluded that in each matter the opposing party ought to have consented to the grant of relief from sanctions.

 

Comment:

By providing further guidance the Court of Appeal has aimed to promote a consistent judicial approach towards the application of CPR 3.9 and eliminate the large volume of satellite litigation that ensued in the aftermath of Mitchell.

Courts should no longer treat all breaches as significant and even where the breach is significant and there is no good reason for it, the stage 3 approach involving consideration of all the circumstances of the case may result in the granting of relief particularly where the breach does not impact the efficient conduct of the litigation.

It is equally clear that heavy costs sanctions will be visited on parties to litigation who unreasonably oppose applications for relief.

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Disclaimer: This document does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to highlight issues that may be of interest to clients of BLM. Specialist legal advice should always be sought in any particular case.

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Matthew Harrington

Matthew Harrington

Senior partner,
Nationwide


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