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Relief from Sanctions - a Retreat from the Mitchell Guidelines

The court invited the Bar Council and the Law Society to intervene in three appeals ("Denton", "Decadent" and "Utilise"), due to the increasing questions surrounding non-compliance with court orders and time limits. These appeals were instances in which one or the other party has sought relief from sanctions pursuant to CPR rule 3.9.

Background

Denton
The parties had served all their witness statements for use at trial by July 2012, yet the claimant served six further statements in December 2013 - one month before the date fixed for trial. The judge granted relief from the automatic sanction that if a witness statement for use at trial was not served within the time specified by the court then the witness may not be called to give oral evidence unless the court gives permission.

Decadent
The claimant failed to comply with an order which provided that, unless it paid specified court fees by 4pm on 19 December 2013, its claim would be struck out. The judge refused to grant relief from sanctions.

Utilise
Firstly, the claimant filed a costs budget 45 minutes late in breach of an order that specifically made reference to automatic sanctions in CPR rule 3.14, which meant that if a party fails to file a budget despite being required to do so, it will be treated as having filed a budget which is only comprised of court fees. Secondly, the claimant was 13 days late in complying with an order that required them to notify the court of the outcome of negotiations. The District Judge declined to grant relief from sanctions on the basis that the second breach rendered the first breach, which would otherwise have been a trivial one, a non-trivial one.

Judgment
In a combined judgment, the Court of Appeal decided that all three cases had been examples of how the reformed CPR should not be implemented. In response to the criticisms of the Mitchell guidelines and in an attempt to address the difficulties in applying the Mitchell tests, a new, three-stage test was introduced to be used by the Court when assessing all applications for relief from sanctions:

1. Consider whether the breach is "serious or significant." If not, relief should usually be granted.

2. If the breach is serious or significant, consider why did the default occur and whether there was a good reason for the breach.

3. Consider all the circumstances of the case in order to deal with the application "justly", including (a) the need for litigation to be conducted efficiently and at proportionate cost, and (b) the need for enforced compliance with rules, directions and court orders (factors (a) and (b)).

Supporting the decision, Lord Justice Jackson declared that CPR 3.9 requires the court to:

"[…]consider all the circumstances of the case as well as factor (a) and (b). The rule does not require that factor (a) or factor (b) be given greater weight than other considerations. What the rule requires is that the two factors be specifically considered in every case. The weight attached to those two factors is a matter for the court having regard to all the circumstances."

This decision appears to introduce more flexibility and discretion into the test for relief from sanctions, and therefore comes as a relief to legal practitioners and clients facing the prospect of litigation.

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