Denton - The only post-Mitchell authority you need
July 2014

Article 1 - Denton - The only post-Mitchell authority you need - Matthew Curtis

IntroductionDenton & ors v TH White Ltd & ors [2014] EWCA Civ 906 is the most important decision since Mitchell v News Group Newspapers, The Court of Appeal has delivered an amended test for relief from sanction applications which will remove the requirement to trawl through the 94 previous post-Mitchell decisions; becoming the only post-Mitchell authority you will need.

The New Test

The court stated that the guidance in Mitchell "remains substantially sound" but it has given a new 3-stage approach for relief from sanction applications: (paragraph 24)

How serious and significant is the failure to comply? (replacing the "trivial" test)Why did the default occur? (is it a "good" or "bad" reason?)Evaluate all the circumstances of the case, including the factors listed in r.3.9

1. Serious or significant breach? (paragraphs 25-28)

The previous Mitchell test of whether a breach is "trivial" has been replaced with the question of whether the breach is "serious or significant", as judges failed to cope with the "trivial" concept.

If the breach is not serious or significant then relief will usually be granted and it will not usually be necessary to spend long on stages 2 and 3, although they must still be undertaken. (para 28) How is this to be judged? A clue is in paragraph 26: the question of whether the breach is "material" will often have the same result as the question of whether it is serious or significant, an immaterial breach being one which "neither imperils future hearing dates nor otherwise disrupts the conduct of the litigation" (being litigation generally rather than the individual case) (para 26).

This stage of the test should not include consideration of whether there have been other breaches of court orders. (para 27)

2. Why did the default occur?

The examples of "good" and "bad" reasons given in Mitchellat paragraph 41 were endorsed without further explanation or elaboration (para 30).

The test remains that if there is a good reason then relief is likely to be granted, even if the breach is serious or significant.

3. All the circumstances of the case

Contrary to some previous interpretations of Mitchellthe third stage of considering "all the circumstances" must be undertaken in every case, even if there is a serious breach with no good reason (para 31)

The Court of Appeal have made a couple of key changes from the guidance in Mitchell:

The factors specifically listed in r3.9 are downgraded from their "paramount" status in Mitchell and instead have "particular importance", to be "given particular weight at the third stage". It is not entirely clear how much difference this semantic distinction makes, nor to what extent the specific factors can now "trump" the other considerations.When considering r3.9(1)(a) (the need for litigation to be conducted efficiently and at proportionate cost), the court will consider any other cases being dealt with by the party (para 34). As such, if witnesses have other court commitments that may be affected by relief being granted this could be a factor weighing against reliefMany interpreted paragraph 40 of Mitchellas requiring a prompt application for relief, otherwise the application would be doomed to failure. In Denton the Court of Appeal made it clear that promptness is only one of the factors to be considered, so a tardy application may still succeed: "The promptness of the application will be a relevant circumstance to be weighed in the balance along with all the circumstances. Likewise, other past or current breaches of the rules, practice directions and court orders by the parties may also be taken into account as a relevant circumstance" (para 36).

Agreement/Avoiding contested applications

A very important shot across the bows from the Court of Appeal: contested relief applications should be a thing of the past and unreasonably contesting an application may result in a severe costs sanction. The court expressed frustration with parties looking to capitalise on opponent's mistakes, stating: "The court will be more ready in the future to penalise opportunism... It is as unacceptable for a party to try to take advantage of a minor inadvertent error, as it is for rules, orders and practice directions to be breached in the first place. Heavy costs sanctions should, therefore, be imposed on parties who behave unreasonably in refusing to agree extensions of time or unreasonably oppose applications for relief from sanctions. An order to pay the costs of the application under rule 3.9 may not always be sufficient" (para 43) The judgment indicated that the court will consider recording in the order that the conduct should be taken into account under CPR r.44.11 when costs are dealt with at the end of the case, which could result in:

Depriving a winning party of its full costsChanging the assessment to the indemnity basisFreeing a party from its costs budget (if there is one)

Conclusion

Given the comments of the Court of Appeal, it will be important in future to attempt to agree relief from sanction applications where possible. Equally, requests to extend time under the recently amended r3.8 should not be unreasonably refused.

There may be difficulty in assessing whether the relief application is likely to succeed. In Mitchell the Court of Appeal were aware that the question of whether a breach was "insignificant" could itself lead to dispute and contested applications (para 40). The "serious or significant" test provided in Denton may have the same problems, but it is clear is that an adjournment of a trial date, a failure to pay court fees or the party in breach gaining a litigation advantage are likely to be considered significant or serious:

On a practical point, it will be interesting to see whether the additional consideration under r3.9(1)(a) to include the parties' "other litigation" extends to the parties' legal representatives and their ability to conduct other litigation efficiently and at proportionate cost.

The general rules in relief from sanction cases are now considered to be:

If the breach is not serious or significant then it is likely that relief will be granted and the court is unlikely to need to spend much time on the second and third stages (paras 24, 28 and 35)If there is a good reason for the breach then it is likely that relief will be granted. (para 35)The more serious or significant the breach the less likely it is that relief will be granted unless there is a good reason for it. (para 35)If the breach is serious/significant and there is no good reason for it then the application for relief will not automatically fail; it may still succeed at stage 3 ("all the circumstances") (para 31)All the circumstances includes the promptness of the application and any current or past breaches of rules, practice directions or court orders (para 36)The factors listed in 3.9 are of "particular importance" but not "paramount importance" (para 32)

The Court of Appeal has said that it hopes the Denton decision will "avoid the need in future to resort to the earlier [post-Mitchell] authorities." Given the importance of this decision, if there is one case that litigators read this year it should be this one.

Sign up to the newsletter

Sign up for our Newsletter (Legal Update). Keep up to date with all of the latest news and events from College Chambers

Upcoming event