The Court of Appeal, with the Master of the Rolls presiding, this week in Clearway Drainage Systems Ltd v Miles Smith Ltd refused to allow an appeal for relief from sanctions where the Appellant’s solicitors had failed to serve witness statements until two months after the date specified in a court order. This resulted in the need for three pre-trial reviews to be held instead of the single one planned. The effect of this ruling is that the Appellant would be unable to call any witnesses at trial.
This case, the latest in a proliferation of appeals post Mitchell v News Group Newspapers Ltd and Denton v TH White Ltd, serves as a reminder to solicitors of the importance of compliance with case management directions and the Civil Procedure Rules.
CPR 3.9(1) specifies that on an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case so as to enable it to deal justly with the application, including the need (a) for litigation to be conducted efficiently and at proportionate cost; and (b) to enforce compliance with rules, practice directions and orders.
The Appellant in the present case had argued that the first instance judge had given overriding priority to the factors listed in CPR 3.9(1) and that she should have given more weight both to the fact that the trial could have gone ahead on the original date despite the late submission of witness evidence and to the reality that refusal of relief would in effect mean the end of the case, which, according to the Appellant would be an unjust outcome where the Claimant itself was blameless.
The court in Denton laid down a three-stage test for deciding whether relief from sanctions should be granted where a rule, direction or court order has been breached. The first stage is to determine whether the breach was serious and significant. The second is to consider why the default occurred. The third is to consider all the circumstances of the case. This appeal rested in part on an assessment of the relative importance of different factors to be taken into account by the court in reaching its decision whether to grant relief.
The Court of Appeal here confirmed that Denton remains good law in stating that whereas the two factors listed at CPR 3.9(1) (a) and (b) ‘may not be of paramount importance… they are of particular importance and should be given particular weight at the third stage when all the circumstances of the case are considered’.
The Court of Appeal concluded that the judge at first instance had undertaken a ‘conscientious and impeccable’ analysis of the three stages of the Denton test and that she had been fully entitled to give importance to the Appellant’s solicitors’ lack of promptness in applying for relief from sanctions.
The Court of Appeal confirmed both that there would be no return to the practice of some years ago where costs orders were generally considered sufficient penalty for lax compliance with court directions. The need for efficient conduct of litigation meant that a more rigorous approach was required, as laid down in Denton. The Court of Appeal emphasised that consistency in that rigorous approach was imperative.
The Court of Appeal also confirmed that it would not lightly interfere with case management decisions which were within the reasonable discretion of the first instance judge. Such a decision would have to be wholly wrong before it would be overturned.
Each case is fact-specific. The position in Clearway was unusual in that solicitors had unaccountably not applied for relief much earlier when informed by the other side of the missed deadline and they did not react promptly after the judge’s advice to do so at the first pre-trial review.
This case is important because it re-confirms that a judge is fully entitled to apply the Denton test rigorously in the interests of efficient case management. This discretion extends to the option to refuse relief for breach of directions even where the consequences for a blameless party will be severe and will potentially create “satellite litigation”.
Practitioners should take note that it was not the initial failure by the solicitors to serve its client's witness statements in time that was the critical failing but rather the solicitors’ failure to take action promptly as soon as they became aware of the position. The Court of Appeal made very clear that a solicitor’s existing heavy workload would not excuse a lack of promptness. Practitioners need to be mindful that missed deadlines remain a fertile ground for negligence claims.
CMS Cameron McKenna acted for the successful Respondent.