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SECURING RELIEF FROM SANCTIONS
Professor Dominic Regan – notes for delegates of the ACL 2019 London Annual Costs Conference
(1) Where a party has failed to comply with a rule, practice direction or court order, any sanction for failure to comply imposed by the rule, practice direction or court order has effect unless the party in default applies for and obtains relief from the sanction. (Rule 3.9 sets out the circumstances which the court will consider on an application to grant relief from a sanction) (2) Where the sanction is the payment of costs, the party in default may only obtain relief by appealing against the order for costs. (3) Where a rule, practice direction or court order – (a) requires a party to do something within a specified time, and (b) specifies the consequence of failure to comply, the time for doing the act in question may not be extended by agreement between the parties except as provided in paragraph (4). (4) In the circumstances referred to in paragraph (3) and unless the court orders otherwise, the time for doing the act in question may be extended by prior written agreement of the parties for up to a maximum of 28 days, provided always that any such extension does not put at risk any hearing date.
Relief from sanctions
(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 – (a) for litigation to be conducted efficiently and at proportionate cost; and (b) to enforce compliance with rules, practice directions and orders. (2) An application for relief must be supported by evidence.
The definitive authority is DENTON. Note that MITCHELL is still declared to be correct.See paragraphs 9 and 98 of DENTON (2014) 1 WLR 3926 where Jackson LJ in the latter paragraph said that the decision was “very tough ‘ but unappealable as it fell within the permissible range of case management direction. However , we now have revised guidance that should militate against more nightmares. Mitchell advocated a 2 step test .If the breach was trivial it
should be forgiven. Beyond that, it would fall to the guilty party to win relief by showing a good reason for the default. Pausing here, a point made in oral argument by Lord Dyson at the DENTON hearing is that the examples given were not exhaustive and nor , contrary to popular myth , were they absolute. For example, it was said that being too busy was UNLIKELY to be a good reason rather than NEVER good. Whilst DENTON asserts ( at para 24 ) that the guidance “remains substantially sound “ the court elected to restate it because some had ‘misinterpreted ‘it.
THE NEW 3 STEP TEST ( PARAS 24-38 DENTON ).
1. IDENTIFY AND ASSESS THE SERIOUSNESS AND
SIGNIFICANCE OF THE SPECIFIC BREACH ALONE. If it is neither serious nor significant then the 2 remaining steps warrant little or no consideration. “Trivial” is no longer to be referred to as a yardstick (para.26).
- WHY DID THE BREACH OCCUR? Here the MITCHELL examples, and they are no more than that , remain of assistance (para30).
- EVALUATE ALL OF THE CIRCUMSTANCES INCLUDING FACTORS (A) and (B). Where the breach then is serious/ significant it is less likely that it will be forgiven UNLESS good reason is advanced. It is at the final stage that the promptness of the application will be relevant (see DURRANT below ) and only here also that any previous history of breaches comes into the equation (para. 36). Whilst a more subtle, nuanced approach is needed both Lord Dyson and Vos LJ assert that the explicit factors must be given “PARTICULAR WEIGHT” (para. 38).
DENTON involved 3 appeals, all of which were allowed. Two decisions were draconian and one was soft. DENTON – A Judge vacated a trial date so as to allow more , late witness statements in. “What litigants need is finality , not procrastination “ per Jackson LJ at para 89. The Judge wrongly attached emphasis upon the need for the claimant to deploy their full case by letting in every (late) shred of evidence. Factors A and B , if considered , would have compelled the trial to proceed. The show must go on. DECADENT VAPOURS-This is a fine example of stage 3 riding to the rescue. C failed to pay a court fee on time. C sent it by dx so it would inevitably arrive a day late. This was not a major breach, there was no good stage 2 excuse as it was inevitable that it would be a late
The sanctions decision to beware of is GLADWIN V BOGESCU (2017) EWHC 1287 where Turner J struck out a liability admitted claim because solicitors had been very late with witness statements. CPR 3.4 (2) (c) does indeed empower the Court to strike out for breach of any order, rule or direction.
THEVERAJAH V RIORDAN (2015) UKSC 78 was concerned with CPR 3.1 (7) , the measure which empowers the court to vary or revoke an Order. The scope of the measure is narrow. It does not enable the court to circumvent the relief obligations of CPR 3.9. The Supreme Court referred to DENTON V WHITE (2014) 1 WLR 3926 without criticism. The most important decision post DENTON is the judgment delivered by JACKSON LJ on behalf of a unanimous court in OAK CASH AND CARRY LTD V BRITISH GAS TRADING LTD (2016) EWCA Civ 153. A defendant who had failed to file a pre -trial checklist until 2 days after the deadline imposed within an unless order was refused relief. The defendant consequently secured the benefit of a 6 figure judgment. . I set out a chronology which does not appear in the transcript.
November 1st 2013 - Pre - trial checklist order made for filing by 3rd February 2014.No compliance. February 10th 2014 - Unless order made. Defence to be struck out on February 19th in event of default. February 13th - D received unless order. February 18th - a trainee filed an irrelevant directions questionnaire. February 21 - D filed PTC , 18 days late under original order and 2 days late under the unless order. March 18th - Judgment for £211, 388 issued. March 24 th - D sought relief for breach of the unless order but made no application to set aside the default judgment. HHJ Harris QC granted relief. The breach had arisen because the wife of the solicitor running the case had complications arising from her pregnancy. The loss of the trial date enabled other matters to be heard instead. D appealed successfully to Mrs Justice McGowan. She held that within a firm comprising over 40 solicitors someone competent should have supervised the trainee and maintained efficient conduct of the case. An aggrieved claimant went to the Court of Appeal. Sir Rupert Jackson applied the DENTON criteria to the facts. He memorably dissented in part from the majority in the 2014 decision. With a tongue lodged firmly in his cheek, he described his stance then as "heretical “before declaring "I must and I do loyally accept the decision of the majority"( paragraph 53). There are 2 noteworthy aspects to the way that DENTON was applied by the Court to the facts in OAK. First, when applying stage 1 of the test for relief, which requires an assessment of how serious the default was, it is proper to look at both the underlying breach as well as the subsequent failure to comply with the later unless order. Here
then, the claimant was in breach of two successive obligations to do the same thing. It was legitimate to take into account delay starting from the original, innocuous order. This rendered the breach "significant and serious"(paragraph 44). One must always regard an unless order as a last chance here reinforced by the draconian sanction of a strike out. Alarm bells should have been heard.
The next part of the DENTON test is to ask whether there was good reason for the breach. The illness of the fee- earner's wife was no excuse. She had been ill for months so one could not realistically assert that this was an unexpected twist. Ominously, the Court stated that the solicitor was no longer at the firm.
The need to apply for relief with alacrity was upheld in GENTRY V MILLER (2016) EWCA Civ 141 where a defendant with credible evidence that a claim was fraudulent was denied relief on account of more than 2 months delay.
HOW TO SURVIVE.
. 1. Issue only when you are ready. . 2. Give yourself plenty of time. 3. Diarise every date. . 4. Seek under the new CPR3.8 (4) to agree extensions in writing of up to 28 days.
- Do appreciate, as was reiterated in KANERIA V KANERIA (2014) EWHC 1165 (CH ) , that the hard approach does not apply to a prospective application for time ( a point made in Mitchell too). The definitive authority is now HALLAM ESTATES V BAKER(2014) EWCA Civ 661 here , at para. 26, Jackson LJ confirms that a prospective application is not caught by CPR 3. even if only heard after the deadline has expired. It is never negligent to agree to a reasonable request for an extension.
- If a breach occurs do not delay in making an immediate application for relief – DURRANT (2013) EWCA Civ.1624 and BRITISH GAS.
- Explain how and why default happened. Apologise. Refer to your previous exemplary conduct. Explain how the default is not disruptive - CHARTWELL. . 8. At the outset produce a clear and cogent explanation - BAHO V MEERZA (2014) EWCA Civ .669.
- Critically, the new 3 step means that a culpable party without a good reason could yet escape the sanction.
Only on November 22nd did D seek an extension of time to seek an oral renewal of their application. It will be appreciated that CPR 52. 3 ( 5) imposes a time limit for the request to be filed within 7 days after service of the notice that permission had been refused. Whilst no explicit sanction is spelt out for late service the Judge declared ( at paragraph 20 ) that he was satisfied the tougher and less forgiving approach should be applied here. He did so on 3 grounds. The wording of the Rule was blindingly clear , the short time limit emphasised the need to act with alacrity and there is a compelling priority for litigation to be at an end. The default was not trivial. Delay was significant. Incidentally, he underestimated it saying that it was about 3 times that permitted by the Rule. It was in fact 5 times longer. Finally , there was no good reason for the delay. The explanation, which should ring alarm bells for any large or convoluted entity , was that instructions had to be fed down the line , hence the delay. “They were thoroughly bad reasons " ( at paragraph 25 ) and so D was slung out. This decision was cited with approval by Treacy LJ in BAHO at paragraph 8.
It was Turner J again in MA LLOYD & SONS LTD V PPC INTERNATIONAL LTD ( 2014 ) EWHC 41 ( QB ) who waded in with a case management vengeance. The claimant was 3 months late in serving witness statements .One can hear the note of exasperation in his voice as he commenced judgment by describing the matter as one where yet again compliance with court orders was regarded as an " optional indulgence". The innocent defendant was described as unduly timid in not going for the jugular, having meekly sought more time for both to deal with disclosure. Not enough. Using the power in CPR 3 the Judge made a swingeing order on his own initiative and so debarred the claimant from raising any argument at trial about the existence of the defendant company nor about the entitlement it might have to be involved in litigation within this jurisdiction. This is a timely reminder that procedural defaults can now have catastrophic consequences upon evidence and issues. Jackson LJ clearly accepted this was correct in HALLAM ( at para. 29). The DENTON message at paragraph 43 , requiring litigators to act responsibly, was restated in GOTCH V ENELCO LTD (2015) EWHC ( TCC) 1802 where it was said that a culture of cooperative conduct is now essential, being a requirement of CPR1.. It will be remembered that DENTON itself was overturned as relief meant the loss of a trial date .However, relief was forthcoming in MARCHMENT V WISE (2015) EWHC ( QB) 1770 despite the consequential vacating of the hearing. The claimant solicitors had failed to diarise 2 deadlines which meant that material was served 2 and 4 weeks late respectively. The Judge made the point that the client was not culpable. Furthermore, he had checked with the listing office and had ascertained that a new date would be available shortly.
Striking out is so draconian a penalty that it should only be invoked where truly necessary. See GLOBAL TORCH LTD V APEX GLOBAL MANAGEMENT (2014 ) 1 WLR 4495.
In VIRIDOR WASTE MANAGEMENT V VEOLIA (2015 ) C served particulars of claim one day late.D took the point.Popplewell J held that this was the sort of opportunistic activity which the Court should discourage and granted relief. Leggatt J in SUMMIT NAVIGATION LTD V GENERALI ROMANIA (2014) EWHC 398 ( Comm ) mused that “ was not material “ was a neater epithet than “trivial “. The failure to provide security at 4 pm , which was delivered at 10.01 am the next day , was insignificant and D was ordered to pay costs for having had the temerity to take the point.
The tough approach to default is exemplified by AVANESOV V TOO SHYMKENTPIVO (2015) EWHC 394 (Comm ).Despite having put forward a realistic defence to a claim for $11m. the Court refused to set aside judgment .D was found to have deliberately ignored legal process and only made application for relief when faced with imminent enforcement. Delay was inexcusable as was the cavalier attitude of D.
Sticking out for abuse of process was the penalty applied by Master Bowles in SOLLAND INTERNATIONAL V CLIFFORD HARRIS & Co (2015) EWHC 2018 (Ch) .The claimant had failed to file a listing questionnaire due 31 months earlier. D applied for a strike out.C then served the questionnaire and sought relief from sanctions. Held - no automatic sanction for this breach existed.The court had the ability to make whatever order it felt appropriate.The chronic failure to progress the matter was evidence of a dilatory attitude which was unacceptable. The large professional negligence claim was dismissed. An appeal was dismissed ; ( 2015 ) EWHC 3295 ( Ch).
Do not think that if you are a claimant discontinuance and another stab at the litigation will be permitted. The classical approach at the heart of JANOV V MORRIS (1981) 1 WLR 1389 was alluded to in SC DG PETROL V VITOL BROKING decision , (2013) EWHC 3920 (Comm) .To try to play the system would undoubtedly amount to an abuse of process , an argument bolstered by the new overriding objective.
For BMCE Bank International Plc v Phoenix Commodities PVT Ltd & Anor [2018] please see https://www.bailii.org/ew/cases/EWHC/Comm/2018/3380.html
