Nearly two year ago we saw the introduction of the Jackson Reforms which provided the biggest overhaul of the Civil Procedure Rules since their introduction over a decade previously. They came into fruition after Lord Justice Jackson had undertaken a year-long review into the costs of litigation. The reforms sought to tighten up the way in which litigation was being conducted, thereby promoting access to justice and controlling costs. Many of us wondered how things would play out ‘post-Jackson’.
It wasn’t long before we saw the full force of the Jackson Reforms at work, when in November 2013, the Court of Appeal handed down the judgment in the case of Mitchell v News Group Newspapers. As a result of Mr Mitchell’s solicitor failing to file and serve the cost budget within the court deadline, he was prevented from recovering any of his costs in the case and he was treated as having filed a cost budget which comprised of the court fees only. The cost budget which was filed late by Mr Mitchell’s solicitor was in the region of £500,000, so the sanction imposed was a huge blow.
This outcome left no doubt in our minds as to how strictly the judiciary would interpret and implement the Jackson Reforms and a lot of lessons were taken on board – not least to diarise properly and adhere to all court deadlines.
Prompt application for relief
The requirement to meet deadlines in a timely manner is the most obvious conclusion to be drawn from the Mitchell case, but the outcome also highlighted the need for applications for relief from sanctions to be made promptly, if, for whatever reason, deadlines cannot be met.
Rule 3.9 of the Civil Procedure Rules sets out that on an application for relief from sanction "the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need:
- For litigation to be conducted efficiently and at proportionate cost; and
- To enforce compliance with rules, practice directions and orders."
Such an application should also be supported by evidence.
Last year, the Court of Appeal provided guidance in applying this Rule in the case of Denton, Decadent and Utilise.
It set out a three-stage approach when considering an application for relief from sanctions. The first stage is to consider the seriousness and significance of the breach, the second stage to consider why the failure or default occurred, and the final stage is to consider the circumstances of the case to enable the application to be dealt with justly. This includes taking into account (a) and (b) above.
The Denton case also urged parties to avoid "satellite litigation" on the issue of applications for relief from sanctions. Where appropriate, parties should not unreasonably oppose another’s application for relief from sanctions. If they do so, they could face serious cost sanctions for their unreasonable opposition. While the applications require determination by the court, whether opposed or not, an unopposed application can be dealt with more swiftly and cost-efficiently than one which is opposed simply for the purpose of point scoring.
It is therefore important to pick one’s battles when it comes to opposing an application for relief from sanctions.
Recently I have encountered a number of cases where applications for relief from sanctions have been made by defendants who had defaulted on court directions. Two of those applications appeared appropriate to oppose and following the guidance set out in Denton the judges considered that the applications fell short and so they failed.
One of those cases concerned defendants who had failed to comply with an Unless Order against them, which required them to file and serve their witness statement. Subsequently judgment was entered against them, which the defendants sought to have set aside by making an application for relief from sanctions.
The three limbs from Denton were addressed as follows:
- The breach was serious and significant. It meant that the claimant could not consider the appropriateness of settlement and/or mediation, it not being in possession of all the information and evidence that the defendants would seek to rely on.
- The defendants sought to rely on the fact that they were litigants in person and did not understand the court directions as the reason for their failure and default. However, the defendants attended the hearing at which the directions were set, they received the Directions Order and the direction regarding witness evidence was not complex or difficult for a non-lawyer to understand. To argue that they could not deal with the claim properly on the basis that they were unrepresented was not a good reason for the failure to occur.
- The defendants’ participation in the proceedings had been poor – they had also failed to comply with the disclosure directions and filed their Listing Questionnaires late. The claimant was therefore required to make numerous applications to the court to compel the defendants to comply with directions, including the Unless Order which ultimately led to the claimant obtaining judgment. These applications increased the claimant’s costs and prevented the litigation from being conducted efficiently. The claimant had gone to significant expense in proceeding with the opposed claim and if the defendants had not had the intention of giving the claim the attention it required they should have either instructed solicitors to deal with the case on their behalf or they should not have defended the proceedings against them.
The Jackson Reforms saw a move towards tightening up civil litigation procedure and the Mitchell case showed the full force of those changes in practice.
Some considered that Denton may have been a step back from the strict approach taken in the Mitchell case, but in reality the guidelines set out in it show that the courts are continuing to apply the principles of the Jackson Reforms so that litigation can be conducted efficiently and at a proportionate cost.
Undoubtedly, the proper course of action is to comply with court directions. If that is not possible then the inability to comply should be identified early and an application made to vary the directions well in advance of the deadline.
The court is unlikely to refuse such a request if the overall timetable is unaffected. If that fails, then an application for relief from sanctions should be made promptly and should properly address the guidance set out in Denton.
Katherine Clark is a solicitor at Ford & Warren