Over the past two days the Court of Appeal has heard three appeals against judgments seeking to apply the Mitchell guidance on the new test for relief from sanctions introduced as part of the Jackson reforms (see post). The appeals are particularly significant given that they were heard by Lord Dyson MR, who gave the judgment of the court in Mitchell, and Lord Justice Jackson, the author of the reforms, as well as Lord Justice Vos. Submissions were invited from the Law Society and Bar Council, who expressed grave concerns over the impact of Mitchell as applied by the courts in subsequent cases.

Based on comments made in the course of the hearing, it seems very likely that the court will take the opportunity to clarify and perhaps expand on the Mitchell guidance, though obviously that cannot be certain until judgment is handed down. It does seem clear from discussion at the hearing that the court agrees with the approach taken in Chartwell Estate Agents Limited v Fergies Properties SA [2014] EWCA Civ 506 (see post), namely that the Mitchell guidance does not mean relief will always be refused in cases where a breach is non-trivial and there was no good reason for it; CPR 3.9 still requires that all the circumstances must be taken into account so as to deal with the application justly. The court appeared to accept that Mitchell has not always been applied in that way by the lower courts, which may have taken an overly mechanistic approach in some cases. It also recognised the difficulties caused by a decrease in cooperation between litigating parties, who may stand to gain a huge prize from holding their opponents to account for failures in compliance.

The court is, however, clearly concerned at how to promote greater flexibility and discourage parties taking opportunistic points, without a return to the problem the rule change was meant to address in the first place: a culture of non-compliance where parties felt they could breach rules and court orders with impunity. Issues debated at the hearing include:

  • whether “triviality” is the appropriate threshold for the first stage of the Mitchell guidance, i.e. to characterise the sort of breach where relief will normally be granted without having to consider reasons for the breach, or whether it would be more appropriate to look at whether a breach is “material” or some other test;
  • whether the characterisation of the breach (as trivial or material or whatever term is used) should be affected by other failures to comply, or whether other failures should only come into play at the later stage of considering all the circumstances of the case;
  • whether the court’s approach should be affected by whether a breach is deliberate and/or an unless order is breached;
  • the significance of a lack of promptness in applying for relief from sanctions;
  • whether a finding that there is “good reason” for a breach should be restricted to where it arises from matters outside a party’s control;
  • how best to discourage parties taking opportunistic points, and whether costs sanctions are sufficient for that purpose.

In each of the appeals, it is argued that the court below failed properly to apply the Mitchell guidance. In two cases, the complaint is that relief was refused when it should have been granted: (i) in Decadent Vapours Ltd v Bevan (unreported, 18 February 2014) the claim was struck out for failure to pay a £45 court fee by the date set out in an unless order, in circumstances where the solicitor posted the cheque to the court on the final day and it was then lost either, it seems, in the post or by the court; (ii) in Utilise TDS Ltd v Davies [2014] EWHC 834 (Ch) the claimant was treated as having filed a costs budget limited to court fees due to having filed its budget 41 minutes late, combined with a separate breach of the court’s order. In the third, Denton v TH White Ltd (unreported, 23 December 2013), it is complained that the judge was unduly lenient in granting relief where six witness statements were served shortly before trial and the trial had to be vacated as a result. The Court of Appeal’s judgment is awaited.