UK: Court Of Appeal Gives Revised Guidance On Court’s Attitude To Non-Compliance With Civil Procedure Rules

Last Updated: 16 July 2014
Article by Bob Deering and David Richards

Denton & Others v. White & Others [2014] EWCA CIV 906

We reported in the Spring 2014 E-Brief on the civil litigation reforms that came into force in England and Wales in April 2013 (the "Jackson Reforms") and their impact on commercial litigation in the English courts. One of the key aims of the Jackson Reforms was to promote a new culture of avoiding delay in English court cases, thus saving legal costs.

In November 2013, in the now famous Mitchell v. Newsgroup Newspapers, the Court of Appeal sent shock waves through the legal community with its tough approach to cases of non-compliance with the Court's rules.

In Mitchell, the Court of Appeal advocated a two stage approach for deciding whether a party should be granted relief from sanctions for non-compliance with the Court's rules, practice directions or orders, as follows:

  1. Can the non-compliance properly be regarded as trivial? If so, relief from sanctions would be appropriate.
  2. If the non-compliance is not trivial, then the burden is on the defaulting party to persuade the Court that there are good reasons to grant relief.

Post Mitchell

Following the decision in Mitchell, there were a number of cases at first instance in which judges sought to apply the guidance in Mitchell to applications for relief from sanctions. The contradictory approaches taken by the different judges in those cases – some of which were seen as unduly harsh whilst others were more lenient – led to confusion amongst court users as to the approach that the Court would take in future cases. The potential for the Court to impose tough sanctions for relatively minor procedural breaches, including the striking out of claims or defences, led to a lack of cooperation between litigants in the hope of securing an advantage where one party fell into breach. This led to an increase in litigation and thereby costs, precisely the opposite of what the Jackson Reforms were intended to achieve.

Denton

The fall-out from Mitchell needed to be resolved and, on 4 July 2014, the Court of Appeal took the opportunity to hear three appeals concurrently, all relating to cases in which one of the parties was seeking relief from sanctions. The head of the Court of Appeal, Lord Dyson, gave the leading judgment.

Lord Dyson stated that the guidance in Mitchell remained substantially sound but had been misinterpreted and so the Court would reinstate the approach that should be applied in future cases. Applications for relief from sanctions should now be approached in three stages as follows:

  1. Identify and assess the seriousness and significance of the failure to comply with the relevant rule, practice direction or court order. If the breach is neither serious nor significant, then relief should be granted.
  2. If the breach is serious or significant, consider why the default occurred.
  3. Evaluate all the circumstances of the case to ensure that the Court deals with the matter justly, but with particular weight to be given to the requirements under Civil Procedure Rule ("CPR") 3.9 that (a) litigation must be conducted efficiently and at proportionate cost and (b) the Court must enforce compliance with rules, practice directions and orders.

The main change to the hard line in Mitchell – and applied in many subsequent decisions – relates to the guidance given by Lord Dyson as to how judges should now approach the first stage. Instead of considering whether the breach is "trivial", the Court should now consider whether the breach is serious or significant. A useful test of whether a breach has been serious or significant is whether it has imperilled future hearing dates or otherwise disrupted the conduct of the litigation or other litigation generally. Lord Dyson also made it clear that an assessment of the seriousness or significance of a breach should not involve, at the first stage, an assessment of the general conduct of the parties.

The majority of the Court of Appeal (Lord Dyson and Lord Vos) were of the view that the two factors described in CPR 3.9 should be given particular importance and particular weight at the third stage when the Court considers all the circumstances of the case. The other judge, Lord Jackson himself, disagreed with the majority on this point, stating that although CPR 3.9 required the Court to consider those two factors in every case, it did not require that any special weight be attached to them.

Lord Dyson also dealt with a concern raised by the legal profession that the Jackson Reforms and the Mitchell decision had encouraged non-cooperation between litigators. Lord Dyson made it clear that it would be inappropriate for litigants or their lawyers to take advantage of mistakes made by opposing parties in the hope that relief from sanctions would be denied and that they would obtain some litigation advantage. He stated that it would be "very much the exceptional case where a contested application for relief from sanctions is necessary" and that the courts will be more ready in the future to penalise opportunism. In particular, Lord Dyson suggested that heavy costs sanctions could be imposed by the courts on parties who behave unreasonably in refusing to agree extensions of time or unreasonably oppose applications for relief from sanctions. Lord Dyson also stated that that, if a culture of compliance was to be encouraged, then judges must ensure that the directions given at the outset of the case are realistic and achievable.

The Court of Appeal accordingly reached the following conclusions on the three cases before it:-

  • In Denton,the parties had served all their witness statements but, 18 months later, the Defendant sought to serve a further six statements. At first instance, the Court granted relief from sanctions for late service of evidence and, as a consequence, the trial was adjourned.

The Court of Appeal reversed the Judge's decision because the breach was significant in that it caused the trial date to be vacated and there was no good reason for the breach.

  • In Decadent Vapours Ltd v. Bevan and others, the Claimant failed to pay court fees on time because the cheque was delayed in the post. At first instance, the Court refused to grant relief from sanctions and the Claimant's case was struck out.

The Court of Appeal allowed the appeal because the breach was "near the bottom of the range of seriousness" and the breach did not cause problems to the efficient conduct of the litigation at proportionate cost.

In Utilise TDS Limited v. Davies and others,the Claimant filed a costs budget 45 minutes late in breach of a court order and was 13 days late in notifying the Court of the outcome of certain settlement negotiations. At first instance, the court struck out the claim.

The Court of Appeal allowed the appeal as the delay in filing the budget was neither serious nor significant and did not imperil any future hearing date or the conduct of the litigation or any other litigation.

Comment

The decision in Mitchell and the harsh approach taken by some judges to even minor breaches in reliance on the Mitchell case has caused great concern.

Two things in particular stand out from the Denton decision. First, that the Court of Appeal wants to start again in terms of its guidance on the correct approach to applications for relief from sanctions. Lord Dyson stated expressly as follows: "We hope that what follows will avoid the need in future to resort to the earlier authorities." Second, the warning that only in an "exceptional case" should a litigant oppose an application for relief. Whilst this might indicate a softening of approach, any party to English litigation must keep in mind that the courts remain determined to stamp out delay and non-compliance with procedural requirements.

The clarification from the Court of Appeal in Denton as to the proper approach to be taken in future cases is very welcome. It now remains to be seen how the new guidance will be applied in practice.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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