New guidance was issued by the Master of the Rolls Lord Dyson, as the Court of AppealÂ (‘CoA’) attempted to clarify the ruling in Mitchell. The purpose of Mitchell was to reduce litigation costs and send a message that in light of the Jackson reforms litigators needed to comply with rules, orders and practice directions. The decision sent a shiver down every litigators spine, but it seems the CoA have sought to ease the fear and return to a more cooperative approach.
The CoA gave judgment regarding three conjoined cases which as a result of the judgment in Mitchell related to the granting of relief from sanctions under the CPR rule 3.9. The CoA allowed all three appeals against relief from sanctions being granted:
- Denton & Ors v TH White Â party served six witness statements late.
- Decadent Vapours Ltd v Bevan & Ors Â late payment of fees.
- Utilities TDS Ltd v Davies Â one significant breach made up of two minor breaches.Â
The CoA stated Âwe think that the judgment in Mitchell has been misunderstood and is being misapplied by some courts. It is clear that it needs to be clarified and amplified in certain respects.ÂÂ The CoA also highlighted several criticisms of the Mitchell guidance:
- Âthe ÂtrivialityÂ test amounts to an ÂexceptionalityÂ test which was rejected by Sir Rupert Jackson in his report and is not reflected in the ruleÂ Â the CoA felt this approach was to narrow.
- Âthe description of factors (a) and (b) in rule 3.9(1) as Âparamount considerationsÂ gives too much weight to these factors and is inconsistent with rule 3.9 when read in accordance with rule 1.1Â Â all the relevant factors should be given the same weight.
- Âimposition of disproportionate penalties on parties for breaches which have little practical effect on the course of litigationÂ Â resulting in one party getting a windfall.
- Âthe consequences of this unduly strict approach have been to encourage (i) uncooperative behaviour by litigants (ii) excessive and unreasonable satellite litigation and (iii) inconsistent approaches by the courtsÂ.
The CoA therefore introduced a three stage approach when addressing an application for relief of sanctions.
- Âidentify and assess the seriousness and significance of the Âfailure to comply with any rule, practice direction or court orderÂ which engages rule 3.9(1).Â Â if the breach is neither serious or significant then there is no need for the court to spend more time on stage two or three
- Âconsider why the default occurredÂ and
- Âevaluate Âall the circumstances of the case, so as to enable [the court] to deal justly with the application including [factors (a) and (b)]ÂÂ.
The CoA also considered the resulting satellite litigation and non-cooperation between lawyers following the decision in Mitchell. The CoA affirmed that for litigation to be conducted efficiently and at a proportionate cost there need to be a culture of compliance with rules, practice directions and orders and cooperation between the parties and their lawyers. The CoA referred to CPR rule 1.3 which states that the parties have an obligation to assist the court to further the overriding objective. Parties should therefore agree reasonable extensions of time up to 28 days and in accordance with CPR rule 3.8(4). The court will penalise parties looking to take advantage of minor breaches with satellite litigation and failing to comply with this approach.
While the guidance is welcomed it is by no way a return to the previous position, but it is hoped that common sense, justice and a pragmatic approach will now prevail.
You can read the judgments by clicking here.