The Court of Appeal, in Denton v TH White Ltd [2014] EWCA Civ 906 has now clarified the test required for relief from sanctions after the controversial case of Mitchell v News Group Newspapers[2013] EWCA Civ 1537 in which the Court of Appeal appeared to adopt a much stricter approach to relief from sanctions.

Mitchell involved a solicitor who had failed to file his costs budget on time and set out a two stage test for granting relief from sanctions. First, is the breach trivial and, if so, was the application for relief made promptly? Second, if the breach is not trivial was there a good reason for it? This test made it considerably more difficult to obtain relief from sanctions and meant that a party could suffer drastic consequences for missing deadlines quite out of proportion to the seriousness of the procedural error. The application of the test was leading to inconsistent results.

Denton has therefore given some comfort and clarified Mitchell by setting out a three stage test that should be applied by a court when considering whether to grant relief from sanctions:

  1. identify and asses the seriousness or significance of the failure;
  2. consider why the default occurred; and
  3. evaluate all the circumstances of the case.

Crucially, the first limb of the test does not involve an assessment of whether the failure is trivial as this would, in effect, be very narrow. Instead, the Court of Appeal reasoned that 'triviality is not part of the test… it should be on whether the breach has been serious or significant'. It was explained that the assessment should not (at least initially) take into account the previous unrelated failures of the defaulting party. That consideration is better taken into account at the third limb of the test. The Court of Appeal also explained that where the conclusion is that a breach is not serious or significant, then relief should normally be granted and it is unlikely that much time will need to be spent on the other two limbs.  

The second limb 'cannot be derived from the express wording of rule 3.9(1) [of the CPR Rules]' but is nevertheless important. Their Lordships referred to the list of examples provided in Mitchell. For example, if the reason why a document was not filed with the court was that the party or his solicitor suffered from a debilitating illness or was involved in an accident, that may constitute a good reason. However, the court was keen to stress that the list in Mitchell was not exhaustive and were just examples.    

The final limb involves taking into account all of the circumstances of the case but it was expressly stated that factors (a) and (b) of CPR 3.9(1) 'are of particular importance and should be given particular weight at the third stage when all the circumstances of the case are considered'. The more serious or significant the breach, the less likely it will be that relief will be granted. The relevant factors will vary from case to case but examples might include the promptness of the application, other past or ongoing breaches and compliance with practice directions and / or court orders.

The Denton decision seems to have been successful in bringing greater clarity and will likely product less harsh results than Mitchell.  There have been three decisions applying the test and in each case relief was granted:

  • Yeo MP v Times Newspapers Ltd [2014] EWHC 2853 involved a failure to serve a notice of a conditional fee arrangement. The judge was persuaded, inter alia, that the breach was not serious and that the impact on the efficient conduct of litigation was negligible.
  • Ultimate Products Ltd v Woolley [2014] EWHC 2706 held that failure to serve a notice of new conditional fee arrangements was not serious because the other side was already aware of such an arrangement and therefore it made no substantial difference to proceedings.  
  • NNN v D1 [2014] EWHC B14 involved a failure by the defendant to comply with an ‘unless order’ requiring disclosure. The judge was persuaded that the defendant had done his best to comply with the order and the failure did not seriously prejudice the claimant.  

The decision in Mitchell gave rise to a considerable amount of litigation and appeared to mark a narrow approach in dealing with those seeking relief from sanctions. Although their Lordships asserted that Denton was a clarification, in reality it is a step back from the (overly) harsh approach that followed in the wake of Mitchell.