The Court of Appeal has handed down its much anticipated decision in three cases on relief from sanctions heard on 16 and 17 June 2014 and considered jointly.
The judgment starts with the news that the court considers that ‘Mitchell has been misunderstood and is being misapplied by some courts. It is clear that it needs to be clarified and amplified in certain respects’. Satellite litigation and non-cooperation has been caused by failure to apply Mitchell correctly.
We will be providing a more detailed discussion shortly. In the meantime, the major points coming out of the judgment are:
- Guidance in paragraphs 40 and 41 of Mitchell on CPR 3.9(1) is substantially sound but it is useful to state in more detail how it should be applied.
- In assessing an application for relief, judges should apply a three stage test:
- assess significance and seriousness of failure which engages CPR3.9
- consider why the default occurred
- evaluate all the circumstances to enable the application to be dealt with justly
- Triviality – the Court of Appeal points out that this is not part of the rule, but is a useful concept to decide whether a breach is significant or serious.
- However, the term trivial has led to semantic difficulties in interpretation and the focus should now be on considering whether a breach is significant or serious.
- At stage one, the significance and seriousness of the breach itself should be considered. The surrounding circumstances are best left to stage three.
- Stage two is what the Court of Appeal discussed at paragraph 41 of Mitchell. It is inappropriate to produce an encyclopaedia of good and bad reasons for the failure to comply – the examples given in the Mitchell case are only examples.
- The Court of Appeal says that there has been an important misunderstanding of Mitchell in relation to stage three. It has been assumed that if there has been a non-trivial breach and there is no good reason for it any application will automatically fail. This is not the case and is not what the Court of Appeal said in Mitchell. CPR 3.9 clearly requires consideration of all the circumstances of the case.
- There is concern that some judges, having misinterpreted this area of the judgment, have been adopting an ‘unreasonable approach’ to CPR 3.9. By considering that, if there has been a non-trivial breach and no good reason the application must fail, judges have made decisions which are manifestly unjust and disproportionate.
- A more nuanced approach is required. The two factors in rule 3.9 itself must always be given particular weight: ‘Anything less will inevitably lead to the court slipping back to the old culture of non-compliance which the Jackson reforms were designed to eliminate.’
Having set out the correct way to apply rule 3.9, the judgment then goes on to set out the court’s views on the level of satellite litigation and non-cooperation that Mitchell has generated. It is inappropriate for litigants or their lawyers to take tactical advantage of mistakes in the hope of obtaining a windfall.
The judgment emphasises that parties should be ready to agree limited, but reasonable, extensions of time in line with the new buffer direction in CPR 3.8. Contested applications for relief should be exceptional occurrences – parties should comply and work together to avoid them. In future courts should be ready to penalise opportunism and heavy costs penalties should be applied on parties who behave unreasonably in refusing to agree extensions or agree applications for relief.
Guidance is also provided to courts emphasising that judges should ensure that directions given are realistic and achievable. Courts should be open to the realities of litigation when orders are made and unless orders should be made only where they are truly required.
The joint lead judgment is given by the Master of the Rolls and Lord Justice Vos. Lord Justice Jackson provides a short final judgment with a dissenting view in one area. We will discuss this, and the effect of the above reasoning on the individual cases before the court, in our more detailed review of the decision. Watch this space!
The full decision can be considered here http://www.bailii.org/ew/cases/EWCA/Civ/2014/906.html