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After Denton

Denton v TH White Ltd [2014] EWCA Civ 906

Whilst reimagining the “Mitchell” test, the Court of Appeal in Denton & Ors v TH White Ltd & Ors [2014] EWCA Civ 906 was keen to stress the importance of cooperation between the parties, and the potential penalties of failure to assist the opposing party with the efficient and proportionate conduct of the litigation.

The Court of Appeal emphasised that it is entirely inappropriate for a party to take advantage of mistakes made by the opposing party in the hope that relief from sanction will be denied and a windfall or advantage in the litigation secured. The Court commented that in light of its guidance, it should be very much an exceptional case where a contested application for relief from sanction is necessary. This is because, on the one hand, compliance with rules, practice directions and Court orders should become the norm; and on the other because parties should work together to make sure that satellite litigation is avoided where a breach has occurred.

There are two aspects to this latter point; the first is presumably that in light of its guidance, a defaulting party will be better able to assess whether relief is likely to be granted, and take what the Court of Appeal may term a ‘sensible’ approach in those cases where the breach is obviously significant, for which there is no good reason, and where all the circumstances of the case are unlikely to tell in favour of granting any application. The second is the co-operation expected of the opposing party in such circumstances so that consent is not unreasonably withheld. The Court equated unreasonably opposing an application for relief with the breach itself.

In future the Court will be more ready to penalise what it termed “opportunism”, confirming that heavy costs sanctions should be imposed upon parties who behave unreasonably in refusing to agree extensions of time or unreasonably oppose applications for relief from sanctions.

The very significant point however, is that that the Court went further, confirming that an order to pay the costs of the application may not always be sufficient. In addition, in appropriate cases, the Court can record in its order that the opposition to the application under consideration was unreasonable conduct to be taken into account when the costs fall to be dealt with at the end of the case. Where a party wins a case, this previous unreasonable conduct may well be taken into account as a matter of principle to reduce its overall costs, or on the other hand as reason to order that party to pay indemnity costs where its case failed. This has significant ramifications, potentially creating greater uncertainty as to how costs may be dealt with at the end of a case. It certainly gives greater room for argument and potentially opens up a new front of satellite litigation, or at least more focused skirmishes.

It is also likely to result in parties, quite properly, aggressively pursuing the co-operation of their opponents. In practical terms, practitioners will need to keep a close eye on the level of cooperation of the opposing party in order to assist the Court if it wishes to consider this issue.