From Relief from Sanction to Sanctioning Relief
It is now 1 year since the Jackson reforms amended rule 3.9 of the CPR so as to place particular focus in any application for relief from sanction on the need for litigation to be conducted efficiently and at proportionate cost and to enforce compliance with rules, practice directions and orders. It is also 1 year ago that this newsletter guessed that:
- more relief from sanctions applications would be expected under the new rule;
- Judges will only rarely give relief from sanction in respect of the more serious breaches and breaches that cause the most inconvenience; but that
- the vast majority of the more minor breaches that are not considered contumelious and cause little inconvenience could properly be marked by an appropriate adverse costs order
Well, two out of three ain’t bad. With only a couple of exceptions, the case law since April 2013 has put that third guess firmly in the ‘wrong’ category. This article gives a potted history of that case law, tries to draw together some common themes and foolishly attempts more predictions.
In Mitchell v. Newsgroup Newspapers Limited  EWCA Civ 1537 the Court of Appeal dismissed an appeal against a costs management decision by Master McCloud in which the Claimant’s costs budget was to be treated as being limited to court fees due to late filing (one day before the CMC rather than seven). It provided guidance that the considerations set out in the new CPR 3.9 were of “paramount importance” with “all the circumstances of the case” carrying less weight. In the future, defaulting parties must show that any non-compliance with any rule, practice direction or court order was trivial and that an application for relief was made promptly. If the non compliance is not trivial, they must persuade the court that there was a good reason for it. According to the Court of Appeal doing justice in an individual case is only achievable through the proper application of the CPR consistently with the overriding objective. It was accepted that might seem “harsh” but once it was understood that courts would adopt a “firm line”, it was felt litigation would be conducted “in a more disciplined way”.
In Durrant v. Chief Constable of Avon & Somerset  EWCA Civ 1624, the Court of Appeal reinforced the point that even if the non-compliance could be characterised as trivial, the application for relief must be made promptly. If there has been a delay in making the application, then providing a good reason for that delay will be important.; See also M A Lloyd & Sons Limited v. PPC International Limited  EWHC 41. In both these cases, the trial date was affected by the non compliance.
In a property dispute, where a defendant failed to comply with an unless order to file and serve a Defence by a certain date (having already attempted to serve previous versions of a Defence), the sanction was that the Defendant was debarred from defending a claim; Singh v. Singh  EWHC 4571 (Ch). This was ‘no harsher’ than restricting Mr. Mitchell’s costs budget and ‘the traditional approach of the courts to excuse non-compliance, if any prejudice caused to the other party can be remedied, is no longer one that the courts will endorse.’
It will rarely be open to a defaulting party to make an application under 3.1(7) (varying or revoking orders) so as to circumvent the new approach under rule 3.9; Thevarajah v. Riordan & Ors  EWCA Civ 14. If the defaulting party takes issue with an order imposing a sanction, appeal is the appropriate route or, exceptionally, rule 3.1(7) although the seemingly wide discretion contained therein is to be exercised narrowly in accordance with the principles set out in Tibbles v SIG Plc (t/a Asphaltic Roofing Supplies  EWCA Civ 518. Absent such successful challenge, the court will presume that the sanction as imposed was properly made.
HHJ Oliver-Jones QC was of the view that whether a failure to comply with an order is significant or insignificant depends on the consequences of the non-compliance; Adlington v. ELS International Lawyers  EWHC B29. As ever was, a significant consequence would be impacting on a trial date and that will often be a decisive factor as to whether relief will be given; Chartwell Estate Agents Ltd v. Fergies Properties SA & Lehrer  EWHC 438. Where a deadline to comply with an order for disclosure was missed by only 46 minutes, relief was granted; Lakatmia Shipping Co Ltd v. Nobu Su & Ors  EWHC 275. This non-compliance was characterised as trivial, its triviality not being affected by the fact there was a history of other defaults. Conversely, a delay of 20 days in serving Particulars of Claim was not trivial; AEI Limited v. Alstom UK  EWHC 430. 21 hours in the Durrant case might have been regarded as trivial but for other errors.
In Burt v. Christie (unreported, available on Lawtel) the Defendant filed its costs budget two days late, which gave rise to a relief from sanction application. This application was heard when the court had intended to conduct the costs and case management conference. That necessitated a further hearing and it was that extra expense and delay to other litigants that rendered the non-compliance significant (not trivial). As such, it was not just to grant relief from the sanction set out in CPR 3.14.
Most recently, in Summit Navigation and others v Generali Romania Asigurare Reasigurare SA and others  EWHC 398 (Comm), in granting relief from sanction when the claimant was not ready to provide security for costs until the day after the agreed date, Leggatt J considered the breach trivial. He relied on the fact deadline was only narrowly missed and there had otherwise been full compliance with the order. There was a good reason for the default (not the inefficiency of the party or its solicitors) and the missed deadline did not in itself have any impact on the efficient conduct of the proceedings or on the wider public interest of ensuring that litigants could obtain justice efficiently and proportionately. In resisting, the defendant had acted unreasonably without regard to the need to co-operate, conduct litigation efficiently and at a proportionate cost.
THEMES AND PRINCIPLES
Parties must assess whether the non-compliance is ‘trivial’ or ‘insignificant’. Whilst no definition of trivial is provided by the Court of Appeal, it does say that an error of form rather than substance will militate in favour of a finding of triviality. Where the non-compliance is one of delay (i.e., failing to serve witness statement in time), the length of the delay is relevant. However, even if the length of delay is short (say, 24 or 48 hours) if that delay has a significant consequence, the non-compliance is less likely to be found to be trivial.
It is likely to be rare for the court to give relief from sanction on the basis of a ‘good reason for the non-compliance’. In Chartwell Estate Agents Ltd v. Fergies Properties SA & Lehrer  EWHC 438, although the court found the breach was not trivial, it did not explicitly find there was a good reason– rather it decided that the wider circumstances of the case rendered refusing the application too severe an outcome. Summit Navigation was a rare case when the default was due to a third party and there was a good reason for it. It is clear that pressure of work on the part of those conducting litigation is not going to be considered a good reason.
Even if the breach is trivial, the defaulting party must make its application for relief promptly.
The court will be less inclined to allow parties to rely on rule 3.1(7) to vary or revoke an order that imposed a sanction. The defaulting party must establish that the court imposing the sanction had in some way erred or been misled or that there was some material change in circumstances (per Tibbles). Otherwise, it will be presumed the sanction as imposed was correct and the defaulting party must look to rule 3.9.
Parties must still have had a sanction imposed upon them (whether by court order or automatically upon application of the rules) for an ‘application for relief from sanction’ to be necessary. Applications to set aside judgment have their own rules and, whilst courts might properly have regard to the general thrust of the Jackson changes and new overriding objective, those rules should dominate such applications. These points, and others like them, should not be missed in the fog of war that non-compliance with a court order, practice direction or rule can create.
If 3.9 is engaged, the robustness with which courts will consider relief from sanction applications is clear for all to see. Decisions from the lower courts which do not tow the party line are likely to be appealable. The strictness with which the new approach is being applied is perhaps most starkly seen in the context of non-compliance due to delay. It seems that whilst a delay of hours may be trivial, days (6 days in Mitchell, 20 days in AEI Limited) is not. Much will depend on the effect of the breach.
With such a significant sea-change there is also likely to be, in the authors’ opinions, over-corrections. Some litigants will get caught out by the changing tide. The ‘achievement of justice’, according to Jackson LJ, ‘means something different now’. In particular, it means that fairness and justice as between parties is no longer the overriding issue. The interests of other litigants have to be taken into account. Therefore, windfall outcomes for one party and claim-shattering outcomes for the other are not to be unexpected. To many that feels unjust, although no doubt the Court of Appeal would say that idea of justice is now outdated.
Clearly, the changes are still bedding in and will do so for some time. Nevertheless, with the first year of case law now in, the Mitchell ‘clear message’ is getting across. It remains to be seen how long the satellite litigation surrounding the changes takes to die down. Don’t bank on it being any time soon.
Review of Civil Litigation Costs: Final Report, Lord Justice Jackson, December 2009
Achieving a culture change in case management: 18th Lecture in the implementation programme, The Judicial Institute, Lord Justice Jackson, 22 March 2013
Mitchell v. Newsgroup Newspapers Limited  EWCA Civ 1537
Durrant v. Chief Constable of Avon & Somerset  EWCA Civ 1624
M A Lloyd & Sons Limited v. PPC International Limited  EWHC 41
Singh v. Singh  EWHC 4571 (Ch)
Thevarajah v. Riordan & Ors  EWCA Civ 14
Tibbles v SIG Plc (t/a Asphaltic Roofing Supplies  EWCA Civ 518,  1 W.L.R. 2591
Adlington v. ELS International Lawyers  EWHC B29
Chartwell Estate Agents Ltd v. Fergies Properties SA & Lehrer  EWHC 438
Lakatmia Shipping Co Ltd v. Nobu Su & Ors  EWHC 275
AEI Limited v. Alstom UK  EWHC 430
Burt v. Christie (unreported, available on Lawtel)
Summit Navigation and others v Generali Romania Asigurare Reasigurare SA and others  EWHC 398 (Comm)