Denton & Ors v White & Ors; Decadent Vapours Ltd v Bevan & Ors; Utilise TDS Ltd v Cranstoun Davies & Ors (2014)

In this landmark decision on three conjoined appeals, the Court of Appeal took the opportunity to clarify the guidance it gave at the end of 2013 in Mitchell regarding applications for relief from sanction. It highlighted that, even with serious or significant breaches committed for no good reason, relief is not automatically to be denied. Instead, courts must consider “all the circumstances of  the case” when deciding whether or not to grant relief. The more serious or significant the breach, the less likely it is that relief will be granted (unless there is a good reason for it). Whilst making their judgment, courts must give factors (a) and (b) in CPR 3.9(1) particular weight.

In each of the appeals, one or other party had sought relief from sanctions pursuant to CPR 3.9. The respective judges had purported to apply the Mitchell guidance, but in each case the parties had been treated inconsistently. Allowing all three appeals, the Court held that the guidance given  in Mitchell remained substantially sound, but needed to be clarified. It decided that, in future, judges should adopt a three-stage approach. Firstly, they must identify and assess the seriousness or significance of the relevant failure. If a breach is not serious or significant, relief should usually  be granted and there is no need to spend much time on the second and third stages. The second stage involves considering why the failure or default occurred. Thirdly, the court should consider all the circumstances of the case in order to deal justly with the application.

If the breach was not serious or significant i.e. it was trivial, then relief is likely to be granted. If however, the breach  was serious or significant, the burden falls on the breaching party to persuade the court to grant relief. If the reason for the serious breach is good e.g. the party or solicitor were in an accident, the court will be likely to grant relief. If there is no good reason for a serious or significant breach, it is not automatically prevented from attracting relief. Rather, the more serious or significant the breach the less likely it is that relief will be granted (unless there is a good reason for it). Factors (a) and (b) in CPR 3.9 must be given particular weight at this stage. Relevant factors vary per case and the Court commented that “the promptness of the application will be a relevant circumstance to be weighed in the balance along with all the circumstances. Likewise, other past or current breaches of the rules, practice directions and court orders by the parties may also be taken into account as a relevant circumstance.”

The Court of Appeal disapproved of uncooperative behaviour between litigants, explaining that litigants  should not waste money on satellite litigation where the failure is not serious or significant or where a good reason is demonstrated, or where it is otherwise obvious that relief from sanctions is appropriate. It stated: “It is as unacceptable for a party to try to take advantage of a minor inadvertent error, as it is for rules, orders and practice directions to be breached in the first place.”

The Court emphasised that obstructive behaviour could result in the offending party not only paying the costs of the application for relief from sanctions but also suffering a reduction in its costs recovery when the court considers this under CPR 44.11 at the end of the case (assuming it wins). If it ultimately loses, its conduct could mean that it could be ordered to pay indemnity costs.