Court of Appeal outlines 'new Mitchell test' for relief from sanctions

Practical Law UK Legal Update Case Report 9-573-4718 (Approx. 4 pages)

Court of Appeal outlines 'new Mitchell test' for relief from sanctions

by Practical Law Dispute Resolution

In Denton v TH White Ltd and another, Decadent Vapours Ltd v Bevan and others and Utilise TDS Ltd v Davies and another [2014] EWCA CA Civ 906, the Court of Appeal considered three appeals relating to the guidance in Mitchell on the test for relief from sanctions introduced on 1 April 2013.

In a greatly anticipated decision, the Court of Appeal has allowed appeals in three consolidated cases concerning the application of the Mitchell guidance regarding relief from sanctions, holding that a misunderstanding of Mitchell has led to unjust and disproportionate decisions. Utilise and Decadent evidencing, for example, an unduly draconian approach to compliance and Denton demonstrating an unduly relaxed approach.

In a joint judgment, the Master of the Rolls, Lord Dyson and Vos LJ restated the law in more detail in the hope that it will avoid the need in the future to resort to earlier authorities and reduce satellite litigation. The key message is that although a culture of non-compliance will not be tolerated, relief should not be automatically denied where there has been a serious breach without good reason; all the circumstances of the case should be considered. They held that the following three stage approach to relief from sanction is required:

Assess whether the failure to comply with a rule, practice direction or order is serious or significant. The focus of the enquiry should not be on whether the breach was trivial. If the judge concludes that the breach is not serious or significant relief should usually be granted and the second and third stages will assume less importance.
Assess the reasons for the default. Examples of good and bad reasons given in Mitchell are no more than examples. The more serious or significant the breach the less likely that relief will be granted unless there is good reason for it.
Consider all the circumstances of the case, including the promptness of the application, so as to enable the court to deal justly with the application. Although particular (as opposed to paramount) weight must be given to the need to conduct litigation efficiently and at proportionate cost (CPR 3.9(1)(a)) and to enforce compliance with rules and orders (CPR 3.9(1)(b)), it is always necessary to have regard to all the circumstances of the case. Accordingly, judges have been wrong in thinking that where there has been a non-trivial (now serious or significant) breach and there is no good reason for it, the application for relief will automatically fail. It is also at this stage where any previous or current breaches may be considered (and not when assessing the seriousness of a breach).

The Court of Appeal commented that contested applications for relief from sanctions should be exceptional because compliance should be the norm and parties should, generally, work together to avoid satellite litigation even where a breach has occurred. It warned that the court will be more willing to penalise opportunism and heavy costs sanctions should be imposed on parties who behave unreasonably in refusing to agree extensions or oppose applications. It also emphasised that judges are required to give realistic and achievable directions and bear in mind where the CPR provide for automatic sanctions in the event of default.

It is noteworthy that Jackson LJ disagreed with the majority's enunciation of the third stage of the test. In his view, CPR 3.9 does not require the need to conduct litigation efficiently and at proportionate cost and to enforce compliance with rules and orders to be given greater weight than other considerations. All that is required is that those two factors be specifically considered in every case.

A full update will be published shortly and as well as an analysis by professor Dominic Regan.

Case: Denton v TH White Ltd and another, Decadent Vapours Ltd v Bevan and others and Utilise TDS Ltd v Davies and others [2014] EWCA Civ 906 (4 July 2014).

End of Document

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Resource ID 9-573-4718

Published on 04-Jul-2014

Resource Type Legal update: case report

Jurisdictions

England
Wales