A new test, or more testing times ahead?
Lord Dyson (he of Mitchell fame) has issued new guidance for dealing with non-compliance with Court directions.
Recognising that clarity was required for lower Courts, three appeals were grouped together as he attempted to bring clarity to Courts across the country. There was no complete departure from the Mitchell ‘guidance’ and it is therefore noteworthy that one of the appeals (against relief from sanctions being granted to a party that served their witness evidence late) was allowed. (Denton & Ors v TH White).
However, the two other appeals concerned cases where relief from sanctions had not been granted at first instance.
Decadent Vapours Ltd v Bevan & Ors concerned a case which had been struck out for late payment of fees.
Utilise TDS Ltd v Davies concerned a case where the Court had to decide if two ‘trivial’ breaches could aggregate to become a ‘significant’ breach.
The commentary that followed carries significant weight given these appeals were heard by Lord Dyson sitting alongside Lord Justice Jackson. Some of Lord Dyson’s key comments included:
That the guidance in Mitchell has been “misunderstood and is being misapplied by some courts”, and that:
“It is clear that the guidance in Mitchell needs to be clarified and further explained”.
“It seems that some judges have ignored the fact that it is necessary in every case to consider all the circumstances of the case. This may be the reason for the decisions in Decadent and Utilise”
“But other judges have adopted what might be said to be the traditional approach of giving pre-eminence to the need to decide the claim on the merits”.
“That approach should have disappeared following the Woolf reforms. There is certainly no room for it in the post-Jackson era. It seems, however, that this approach must have been applied in Denton”.
Lord Dyson has sought to suggest that the guidance in Mitchell cannot in fact be applied in all relief from sanction applications. He sought to now distinguish Mitchell in noting the “substantial extra work and extra costs to be incurred by the defendant” as a result of the Claimant’s delay could not necessarily be applied in all case.
Instead a 3 stage test has now been laid down:
Stage 1 directs the Court to consider the “seriousness and significance” of the breach frim which relief from sanction is sought. If the breach is neither serious nor significant, then relief is likely to be granted (subject to Stages 2 and 3 below). In Decadent the Court Fee was sent to Court one day late. Unbeknown to instructed Solicitors it did not arrive at all. The required fee was subsequently paid 3 weeks late. In Utilise a costs budget was filed 45 minutes late. In neither case could the breach be said to be “serious” or “significant”. Note the departure from instead deciding if a breach is “trivial”.
Stage 2 directs the Court to consider why the breach occurred. This element harks back to the Mitchell decision and the assessment of whether there was a ‘good reason’ for the breach. The Court in fact found there was no ‘good reason’ for the breaches in Decadent and Utilise. However, it was more persuasive that the breach was not serious or significant. The implication being that even where a breach is found to be “serious” or “significant” in Stage 1, relief may still be granted if the Court is satisfied there was a ‘good reason’ for the breach. Unsurprisingly Lord Dyson did not seek to venture any examples of how such a scenario might arise.
Stage 3 – Finally the Court needs to consider ‘all the circumstances’. This includes the need for cases to be conducted efficiently, the need to manage cases effectively, any previous breaches by either party, the promptness of any application for relief, and of course proportionality.
Dyson then curiously added: ‘The important misunderstanding that has occurred is that, if (i) there is a non-trivial (now serious or significant) breach and (ii) there is no good reason for the breach, the application for relief from sanctions will automatically fail. That is not so and is not what the court said in Mitchell.’
This quote would seem to indicate that Lord Dyson still envisages scenarios where there has been a serious or significant breach, with no good reason, yet relief from sanctions could still be granted. We therefore struggle to see how this would lead to a reduction in satellite litigation (as Lord Dyson has expressed a hope for).
Any clarification of Judicial interpretation is always welcome. The overwhelming message must remain that if you do not comply with Rules, Orders and Directions then you remain at risk of sanctions. However, it does now appear that where the breach is neither significant or serious, an application for relief would seem to have enhanced prospects of success.