Despite Lord Justice Jackson's belief that his civil justice reforms would reduce satellite litigation, there have now been at least 100 court decisions on what the reforms mean. Many concern the now notorious Mitchell decision, in which the Court of Appeal held that courts should only grant relief from sanctions to parties who had breached a rule or order where the breach had been "trivial" or committed for a "good reason". The Court of Appeal has now given further guidance on the correct judicial approach to procedural defaults.
Many of the decisions have unfortunately been contradictory, with some judges adopting a "one strike and you are out" approach to breaches of the rules, with others being more lenient. At last the Court of Appeal has had a chance to give further guidance on the correct judicial approach to procedural defaults in its decision earlier this month in three linked appeals concerning the Mitchell judgment.
The three appeals concerned the following issues:
- Denton v TH White Ltd – should the judge have admitted late, material evidence, where it would result in a trial having to be re-listed?
- Decadent Vapours Ltd v Bevan – should the judge have struck out a claim at the pre-trial review stage for late payment of a fee?
- Utilise TDS Ltd v Davies – could two minor breaches add up to one non-trivial breach?
The Court of Appeal allowed all three appeals.
The Court stated that the guidance in Mitchell remained "substantially sound", but had been misunderstood and had been misapplied by some courts. The Court therefore proposed to restate the approach in the following new test.
A judge should address an application for relief from sanctions in three stages:
- Stage 1: identify and assess the seriousness and significance of the failure to comply with a rule or order. If the breach is neither serious nor significant, the court is unlikely to need to spend much time on the second and third stages;
- Stage 2: consider why the default occurred; and
- Stage 3: evaluate all the circumstances of the case, so as to enable the court to deal justly with the application, including the need for litigation to be conducted efficiently and at proportionate cost and to enforce compliance with court rules.
The Court added that the more serious or significant the breach, the less likely that relief would be granted unless there was a good reason for it. Where there was a good reason, or where the breach was not serious or significant, relief was likely to be granted.
The Court hoped that the new test and accompanying guidance would avoid the need to resort to earlier authorities. The Court also stated that, in future, courts should be more ready to penalise opportunism. In the Court's view it was wholly inappropriate for litigants to take advantage of mistakes made by opposing parties in the hope that relief from sanctions would be denied and that they would obtain an advantage. Other than in exceptional cases, parties should agree that relief from sanctions should be granted without the need for satellite litigation. The Court warned that taking an unreasonably uncooperative attitude could result in heavy costs sanctions.
The Court of Appeal's decision is a welcome and much-needed clarification of the approach to be taken by judges considering applications for relief from sanctions. From now on, courts will no longer have to consider whether a breach of a rule or order was "trivial", instead focusing on whether the breach was serious or significant.
The Court of Appeal has given a clear indication that the courts should not tolerate opportunistic "point-scoring" by litigants. A party considering opposing an application for relief from sanctions should bear in mind the risk that the court will come down hard on them at the costs stage, if it considers their opposition to have been unreasonably unco-operative.