In the four and a half months since the Court of Appeal’s decision in Mitchell, there has been a continued flood of judgments in which the courts have sought to apply the decision and, in some cases, to explore its limits. A number of the decisions have been considered in earlier posts on this blog (now tagged as “Post-Mitchell decisions” for ease of reference). Below we outline some of the lessons that come out of these and other decisions.
1. You can’t always agree an extension
Before the decision in Mitchell, most practitioners would have assumed they could agree an extension to case management deadlines where this would not affect the dates set for any case management hearing or the trial. The question of precisely how deadlines can be extended has however been thrown into the spotlight since Mitchell, given the potentially dire consequences of missing a deadline.
In M A Lloyd v PPC  EWHC 41 (QB) the court referred to CPR 3.8(3) which provides that time cannot be extended by agreement where a rule, practice direction or court order “specifies the consequences of failure to comply” with a set deadline. The obvious effect of this rule is to prevent deadlines in “unless” orders being extended by agreement. However, the court held that it also means agreed extensions for witness statements are not effective unless formally endorsed by the court by way of a consent order. That is because CPR 32.10 specifies the consequences of failure to serve a witness statement in time (ie the witness may not be called to give oral evidence at trial unless the court gives permission). The same would appear to be true of expert reports, but that is untested.
We understand that the Civil Procedure Rules Committee is planning to address this problem by introducing a “buffer rule” that will allow parties to agree extensions of up to 28 days without needing to apply to the court. The timing of the new rule is currently uncertain.
2. Seek more time before the deadline expires
In Mitchell, the Court of Appeal stated that the courts will look more favourably on applications for an extension of time made before time has expired than applications for relief from sanction made after the event. An application to extend the time set by a rule or court order should be made by way of an application notice issued and served under CPR Part 23. Sometimes, however, there may not be time to get an application issued, served and heard before the deadline expires.
The decision in Summit Asset Management Ltd v Andrew Clive Coates  EWHC B36 (QB) suggests that it is better to contact the court, even if informally, before the deadline expires than to wait and seek relief from sanction. In that case, the court noted, the claimant had e-mailed the court with a letter asking for more time prior to expiry of the deadline. Although this was not the correct procedure, the Master said that “contacting the court informally is far better than not contacting the court at all to try to resolve a problem”. She waived the irregularity of the absence of a Part 23 application, treated the defendant’s letter as such an application and extended time. The extension was in effect granted retrospectively, since the deadline had expired before the hearing.
There is of course no guarantee that this approach will be taken in other cases. Where you cannot comply, the best course will always be to issue a Part 23 application and to do so in good time to have it heard before the deadline expires.
3. Unreasonably opposing an application for relief may be penalised in costs
One often noted effect of Mitchell has been a reduction in the level of cooperation between litigating parties. Unsurprisingly, parties may be less inclined to agree an opponent’s request to extend time, and more inclined to oppose an application for relief, where they are likely to gain some major tactical advantage if the opponent misses the deadline and is refused relief.
The courts have been trying to grip this problem, making it clear that efforts to rely on Mitchell to gain tactical advantage from a minor breach will not only be frowned upon but may result in costs sanctions. For example in Summit Navigation Ltd v Generali Romania Asigurare Reasigurare SA  EWHC 298 (Comm) (see post) the Commercial Court penalised the defendants in costs for seeking to take advantage of a very short delay in providing security for costs. Similarly, in Rattan v UBS  EWHC 665 (Comm) the Commercial Court awarded indemnity costs against the claimant for a “misguided piece of opportunism” in seeking to argue the defendant was a day late in serving its costs budget where, the court said, there had been a clear agreement that budgets filed on that date would be in time.
The claimant was also penalised in costs in Lakatamia Shipping Co Ltd v Nobu Su  EWHC 796 (Comm), where it had unreasonably opposed an application for relief in respect of (essentially) a 15 minute delay in giving disclosure. Hamblen J stated:
“I also consider that it is important that the message goes out that when a party applies for relief from sanctions, the other party should not assume that it is going to get a free costs ride in opposing that application. If the court considers that it was unreasonable to do so, then there will be cost consequences, and I consider that that is what should occur in this case. The Mitchell guidance was provided in order to help to avoid endless satellite litigation. If parties consider that they can always come to court to oppose any application for relief, then there will be no end to that satellite litigation.”
4. Even a trivial breach may not be excused in light of other circumstances
According to the Court of Appeal’s guidance in Mitchell, where non-compliance is “trivial” and an application for relief from sanctions is made promptly, the court will usually grant relief. This has led to a great deal of debate in the case law as to when a breach might be considered “trivial.
In McTear v Engelhard  EWHC 722 (Ch) the defendant sought relief from sanctions in respect of various breaches including the service of witness statements 50 minutes after the deadline. The defendant submitted that all the court could take into account when deciding whether or not to grant relief from sanction was that delay of 50 minutes. The court rejected that submission. In light of other failures by the defendant, including the fact that the witness statements exhibited documents that had not previously been disclosed (in breach of a disclosure deadline) and included expert evidence for which permission had not been granted, the court refused to grant relief.
A similar approach was taken by the Court of Appeal in Durrant v Chief Constable of Avon & Somerset Constabulary  EWCA Civ 1624 (see post). Although the late service of two of the witness statements, taken by itself, might have been characterised as trivial since the deadline was narrowly missed, it was more significant when seen against the background of the failure to comply with an earlier order and the fact that a sanction for non-compliance had been specified, and in any event the application for relief had not been made promptly. Relief was therefore refused.
5. A lack of prejudice is unlikely in itself to excuse a breach
The Mitchell guidance provides that where non-compliance is not “trivial” the defaulting party must persuade the court that there was good reason for the default.
There is considerable room for debate as to what amounts to “good reason” in given circumstances, though it seems clear that relief is more likely to be granted where a failure results from circumstances outside a party’s control. The courts have held for example that a party’s failure to give disclosure of certain credit card statements could be excused where the party’s bank had failed to provide them on request (Nelson v Circle Thirty Three Housing Trust Ltd  EWCA Civ 106).
It also seems clear from a number of decisions that a lack of prejudice to the opponent will not in itself amount to good reason. For example in Singh v Singh  EWHC 4571 (Ch) the court refused an application for relief from sanctions imposed by an unless order for service of an amended defence (in circumstances where the defence had been served in time but was deficient and therefore did not comply with the order). The court said:
“It may seem harsh for the appellant to lose the chance of defending the house which was transferred to him by his mother; but it is, in reality, no harsher than the decision which has resulted in Mr Mitchell being unable to rely upon a costs budget in a sum in excess of half a million pounds. 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. The court now takes a tougher, and less forgiving, approach…”
Similarly in R (Royal Free London NHS Foundation Trust) v SoS for the Home Department and Brent BC  EWHC 4101, in refusing to grant relief for a six week delay in objecting to a costs order, the court stated that under the new terms of CPR 3.9, the question of prejudice is no longer a reason for allowing or disallowing relief from sanctions (referring also to Murray and Stokes v Neil Dowlman Architecture Ltd  EWHC 872, in the context of costs budgets – see post).
6. Make sure you have complied if you want to take advantage of an opponent’s breach
In Chartwell Estate Agents Ltd v Fergies Properties SA  EWHC 438 (QB) the court granted the claimant relief from sanctions for late service of witness statements, despite concluding that the breach was not trivial and there was no good reason for it.
An important factor was that there was default on both sides: the defendant was not ready to serve its witness statements on the day of the deadline either, though it said that was because the claimant had indicated it would not be in a position to exchange. (Other factors included the defendant’s unhelpful attitude in correspondence and the fact that the trial date could be maintained despite the delay.)
The court noted that the defendant had made no effort to safeguard its position, such as filing witness statements in a sealed envelope at court. In light of this decision that would clearly be a sensible step to take where a party wishes to seek to capitalise on its opponent’s delay in exchanging witness statements.
We understand the Court of Appeal has dismissed the appeal in this case, with reasons to follow – see this post on Civil Litigation Brief.
7. It is not always clear whether you need relief from sanctions
There is a surprising lack of clarity as to when relief from sanctions is needed. In the Chartwell decision referred to above, for instance, the court referred to a White Book note which questions whether CPR 3.9 applies where before trial a party seeks an extension of time to serve witness statements, because at that stage the sanction imposed by CPR 32.10 (i.e. that the witness may not be called to give oral evidence at trial unless the court gives permission) has not yet taken effect. In any event, the judge said that if he was wrong that relief was needed under CPR 3.9, he would have extended time for the same reasons as he had granted relief.
In Integral Petroleum SA v SCU-Finanz AG  EWHC 702 (Comm) (see post) the Commercial Court effectively bypassed Mitchell by treating service of particulars of claim as valid under CPR 3.10, which provides that an error of procedure does not invalidate any step in the proceedings unless the court so orders. This was despite various procedural errors including that service was five days late. An application for permission to appeal this decision has been lodged and is expected to be heard in late May or June 2014.
8. Courts may be more cautious in making “unless” orders
In Porter Capital Corporation v Zulfikar Masters (Unreported, 19 March 2014) the court ordered the defendant to make an interim payment but refused to grant an “unless” order enabling the claimant to enter judgment, or debarring the defendant from defending the proceedings, if the payment was not made.
The judge stated that, given the more stringent regime for obtaining relief from sanctions in light of Mitchell, the court should adopt a cautious approach to making orders with sanctions attached (unless the sanction was built into the rule) and should consider in advance whether the sanction would be proportionate in all foreseeable circumstances. That applied particularly where the order required payment of money, as opposed to compliance with a procedural direction, as a breach might be due to lack of funds rather than being deliberate or in any sense blameworthy.