UK: Relief From Sanctions

Last Updated: 24 July 2014
Article by Alexander Kingston-Splatt

The Court of Appeal delivers an important decision in the turbulent area of relief from sanctions for non-compliance with Court rules or orders in the wake of the Jackson Reforms and the Mitchell decision.

Background: The Jackson Reforms and the Mitchell Decision

A great deal has been written in recent times about the "Jackson Reforms" to civil litigation and the subsequent decision of the Court of Appeal in what has become the notorious Mitchell case.

An important part of the Jackson Reforms, which were largely rolled out in April 2013, was the requirement for parties engaged in litigation to prepare and serve costs budgets. These are detailed estimates, compiled in the early stages of litigation, of the projected overall costs of a case, including what sums will be incurred in respect of particular aspects of the litigation. In very general terms, a successful party will be held to the limit of the approved budget unless there are good reasons for departing from it.

This represented a sea change in the way that litigation costs are dealt with. Rather than examining costs after the substantive case has been resolved (either following a trial or a settlement), budgeting has shifted the argument about costs to a preliminary stage.

Another tenet of the Jackson Reforms was a change in the approach of the Courts to procedural failings. This change was encapsulated in amendments to Part 3 of the Civil Procedure Rules ("CPR"). CPR 3.8 provides that where a party has failed to comply with a requirement of the CPR or a Court order, any sanction which the CPR or the Court order in question states will apply to such a failing will automatically take effect. This is the case unless and until the party at fault successfully applies to the Court for "relief" from the sanction.

In turn, CPR 3.9 was redrafted and provides that the Court will, when hearing an application for relief, consider all the circumstances of the case, including the need for litigation to be conducted efficiently and at proportionate cost, and to enforce compliance with the CPR and Court orders.

The Mitchell case quickly became the leading authority on what this means. The case involved the failure by Andrew Mitchell MP's solicitors to lodge his costs budget on time in his libel action against News Group Newspapers. In such circumstances, the sanction prescribed by the CPR is that the budget should be treated as including only the Court fees incurred by the party in default and not his legal fees.

In refusing to grant relief to Mr Mitchell, the Court of Appeal held that relief would only be granted under CPR 3.9 in respect of trivial breaches where the relief application was subsequently made promptly, and where there were good reasons for the default. An example given was where a party narrowly missed a deadline. A "good reason", the Court indicated, was likely to be something beyond the control of the defaulting party.

Essentially, therefore, the emphasis was placed by the Court on the need for litigants to comply with their obligations. In so doing, the Court acknowledged that the decision not to allow Mr Mitchell relief from sanctions might appear harsh in his case. However, the Court's stated intention was to send out a "clear message" and to effect a "change in culture" as regards compliance with rules and orders.

The Effect of the Mitchell Decision

Mitchell prompted numerous pieces of "satellite litigation" involving arguments between parties about instances of default and relief from sanctions applications. Many of the decisions of the lower Courts were inconsistent not only with the Court of Appeal's "trivial breach" test as set out in Mitchell, but also with the decisions of other first instance Judges.

In consequence, the Court of Appeal decided to hear three different appeals from such decisions of the lower Courts at the same time. In summary the joined cases were as follows:

  1. Denton v. White and Ors.: The Claimant had served witness statements six months late and just one month before the trial. The automatic sanction in the CPR meant that the Claimant could not rely on those statements at the trial. The Judge granted relief and as a result the trial was adjourned. The Defendants appealed.
  2. Decadent Vapours v. Bevan and Ors.: The Claimant had failed to comply with an "Unless Order" which required payment of certain Court fees, on pain of the sanction that failure to do so would lead to the striking out of the claim. The Claimant sent a cheque to Court by DX on the day of the deadline, which got lost in transit. The Judge at first instance refused relief and the Claimant appealed.
  3. Utilise TSD v. Davies and Ors.: The Claimant filed its budget 45 minutes late. The order which required the budget to be filed had also previously required that the Claimant notify the Court of the outcome of negotiations with the Defendant. The Claimant complied but was 13 days late in doing so. The Judge held the late filing of the budget to be a trivial breach, but refused relief from sanctions. This was on the basis that the second breach was sufficient to turn the first breach into something "more than trivial".

The Decision in Denton v. White and joined cases

The Court of Appeal clarified the Mitchell test. Now, a three stage test is to be adopted by Courts hearing relief from sanctions applications, namely:

  1. Is the breach "serious or significant"? This is determined by an assessment of the nature of the non-compliance.
  2. If the answer is yes, why did the breach occur?
  3. All of the circumstances of the case must be considered to ensure that the application is dealt with justly, including the need for litigation to be efficiently conducted at proportionate cost, and also the need for compliance with the CPR and Court orders.

Stage 1 of the modified test can be said to be less draconian than the original Mitchell formulation. Instead of asking first if the breach is simply trivial, the Judge must assess the problem from the opposite perspective, asking whether the breach is serious or significant. If the natural answer is "no", then relief should usually be granted.

By applying this test to the three appeals in question, the Court refused relief from sanctions in Denton but granted relief in Decadent Vapours and Utilise TDS.

Conclusions

The new guidelines set out by the Court of Appeal have been broadly welcomed. Many commentators saw the Mitchell decision as unduly inflexible and liable to create harsh and unjust results for parties. Many had also begun to see the development of a culture of non-co-operation between solicitors where one party defaults.

The Court has now clearly warned litigants and lawyers alike that they should be co-operative in agreeing requests for relief from sanctions when faced with a breach which is neither serious nor significant. The Court has also clearly stated that contested applications for relief should be exceptional and has voiced strong disapproval of attempts to take advantage of an opponent's mistake. Indeed, where a party wrongly refuses to consent to a relief application, they will likely be penalised by way of a harsh costs award against them.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.