The Court of Appeal has today allowed appeals against a trio of judgments which it said did not correctly apply the well-known Mitchell guidance on relief from sanctions: Denton v TH White Ltd, Decadent Vapours Ltd v Bevan, Utilise TDS Ltd v Davies  EWCA Civ 906.
In doing so it has taken the opportunity to clarify and amplify the Mitchell guidance (outlined here), which the court said remained “substantially sound” but had been misunderstood and was being misapplied by some courts. In particular, some judges were approaching applications for relief on the basis that, unless a default could be characterised as trivial or there was good reason for it, they were bound to refuse relief. That, the court said, was not the correct approach and was not what was said in Mitchell.
The court replaced the Mitchell guidance with a three-stage test, expressing the hope that this new guidance would avoid the need in future to resort to the earlier authorities (which have been numerous). In summary: (i) the court must identify and assess the “seriousness and significance” of the breach; (ii) the court must consider why the breach occurred; and (iii) the court must always have regard to all the circumstances of the case, a point that was being overlooked in some cases following Mitchell.
Interestingly, however, Lord Justice Jackson disagreed with Lord Dyson MR and Lord Justice Vos on the detail of this third aspect of the test. The latter considered that the two factors set out in CPR 3.9(1) (namely (a) the need for litigation to be conducted efficiently and at proportionate cost; and (b) the need to enforce compliance with rules, practice directions and orders) were to be given particular weight, whereas Lord Justice Jackson thought they were amongst the matters to be considered, no more no less.
The present judgment represents a clear softening of the approach adopted in many decisions following Mitchell, in which judges had taken an unduly draconian approach. The extent to which the court’s approach has been relaxed should not however be overstated. The decision emphasises that there is to be no return to the “traditional approach of giving pre-eminence to the need to decide the claim on the merits”. That approach should have disappeared, the court said, following the Woolf reforms and there was certainly no room for it in the post-Jackson era. Compliance, it seems, is still king.
However, at the same time as emphasising the need for strict compliance, the decision makes it clear that the courts are ready to penalise those who try to hold their opponents to what the court sees as an overly strict approach. Heavy costs sanctions will be imposed on those who unreasonably refuse to agree extensions of time or who unreasonably oppose applications for relief from sanctions. In this way the court hopes to put an end to the satellite litigation and non-cooperative approach that Mitchell has generated.
As a practical matter, in light of this decision litigating parties should continue to make every effort to comply with rules and court orders, as it is clear that the court will not allow a return to the old culture of non-compliance and therefore relief from sanctions may not be easy to come by. But parties should also think carefully before trying to make mileage out of an opponent’s breach; such an attempt could backfire in the form of heavy costs sanctions. Continue reading