On 4 July 2014, the Court of Appeal allowed the appeals against the decisions in three of the “Mitchell” cases, which were heard together before Dyson MR, Jackson LJ and Vos LJ. The Court somewhat passed the buck of the huge amount of satellite litigation arising from the application of the Mitchell decision to the failures by judges to apply that decision correctly, rather than accept that it was unclear and inadequately explained.
The Court provided that Mitchell had been “misunderstood and is being misapplied in some courts” but that the guidance given in Mitchell remains substantially sound. The Court went on to provide a 3 stage test to be used in all applications for relief from sanctions under CPR 3.9.
The 3 stages are:
1. Identify and assess the seriousness of the “failure to comply with any rule, practice direction or court order”, which triggers the application of CPR 3.9 and consider whether the breach is “serious” or “significant” (with reference only to the very breach in respect of which relief is sought and not include past unrelated failures);
2. Consider why the default occurred (with a reminder that the examples provided in Mitchell are only examples);
3. Evaluate all of the circumstances of the case, so as to enable the Court to deal justly with the application including factors (a) and (b) of CPR 3.9(1) namely: the need for litigation to be conducted efficiently and at a proportionate cost; and, to enforce compliance with rules, practice directions and orders, as well as all of the circumstances. This can then include consideration of previous defaults which go to the overall conduct of the party.
Previously, Mitchell had been apparently interpreted by the courts as making (a) and (b) “paramount considerations” when in fact they should be given no more weight than all other relevant factors according to LJ Jackson (although both Dyson MR and Vos LJ thought they should be given more weight). We pause here to point out that it seems a bit rich criticising other judges for not applying Mitchell principles correctly when the three judges in the Court of Appeal couldn’t agree.
The new test turns on its head the notion of identifying whether a breach is a “trivial” one and instead focuses on whether it is significant or serious, continues to look at the reasons for the default (which means some of the case law on this point might still be relevant although the Court hopes that it will be unnecessary to refer to earlier authorities) and provides the clarity that the Court needs to look at all of the circumstances as well. This seems to provide more discretion for the Court which we think is likely to open a can of worms, but the Court of Appeal hopes this will end the culture of parties’ taking unreasonable stances for minor indiscretions, and the Court’s reluctance to grant relief from sanctions for fear of criticism.
Both the Law Society and the Bar Council were invited to intervene in these hearings, and they proposed that the test of triviality seemingly imposed by Mitchell be replaced by the test of immateriality and that that test be defined as one which “neither imperils future hearing dates nor otherwise disrupts the conduct of the litigation”. The Court was concerned that this would exclude breaches which are incapable of affecting the efficient progress of litigation although still serious eg failure to pay court fees, and so provided the first stage should include an assessment of seriousness and significance, with a view to providing consistency in time.
Emphasis was placed on the fact that it is considered “wholly inappropriate for litigants or their lawyers to take advantage of mistakes made by opposing parties in the hope that relief from sanctions will be denied and that they will obtain a windfall strike out or other litigation advantage”. The Court encouraged agreement between parties to relief from sanctions without the need for satellite litigation in circumstances where it is clear that the Court will grant such relief, based on the above guidance. The message is that compliance should become the norm, and in all but the most serious cases, satellite litigation should be avoided.
The Court has warned that heavy costs sanctions should be imposed on parties who behave unreasonably in refusing to agree extensions of time or unreasonably oppose applications for relief from sanctions. This appears to turn on its head the risk from those who are failing to comply to those who are seeking compliance and undermines the whole purpose of the changes to CPR3.9 and the point of Mitchell in the first place, surely inviting parties to default and invent elaborate reasons which make any opposition to an application for a relief from sanctions one that most parties would dare not risk.
Jackson emphasised that the new CPR 3.9 was not intended to introduce a “harsh regime of zero tolerance”, but was to promote access to justice at proportionate cost. That’s the dream although we have a suspicion that the nightmare for practitioners and clients alike will continue with a return to a culture of non-compliance. Plus ça change, plus c’est la même old story.‹‹ Back to articles