Relief From Sanction – Mitchell and Later Developments
Mitchell v News Group
Most litigators and Costs Lawyers will now be all too familiar with this decision. By way of recap, on 1 August 2013 Master McCloud heard the original application for relief from sanctions ( EWHC 2355 (QB)). The underlying claim is a libel action brought by the former Government Chief Whip, Andrew Mitchell, against News Group Newspapers. Mr Mitchell’s solicitors failed to lodge a costs budget in due time and had as a result, pursuant to a previous judgment by the Master, been limited to a budget consisting of court fees only. An application under CPR 3.9 followed.
Adopting a tougher approach compared with previous (pre April 2013) practice, the Master refused to grant relief from sanctions. Importantly, she referred to “the right of other litigants to have a ‘fair crack of the whip’ where judicial and court resources are very limited, and the right not to be delayed while the courts dispose of matters which ought not to arise in the first place if rules are complied with”. The judgment made it clear that the stricter approach following the Jackson Reforms was central to the outcome.
Mitchell in the Court of Appeal
The subsequent appeal was leapfrogged to the Court of Appeal such was its importance. It was heard by a panel including the Master of the Rolls Lord Dyson, responsible for the administration of civil justice in England and Wales (see  EWCA Civ 1526).
The Court of Appeal robustly dismissed the appeal, sending out a clear message that non-compliance will no longer be tolerated. The key points were that:
- Although, as per Lord Justice Jackson’s Reports, the new approach is not an extreme one where relief will only be granted in exceptional circumstances, nonetheless it should be granted “more sparingly than previously”;
- Whilst all the circumstances of the case must be considered, the need for litigation to be conducted efficiently and at proportionate cost (CPR 3.9(1)(a)) and the need to enforce compliance with rules, practice directions and orders (CPR 3.9(1)(b)) will be of “paramount importance”;
- The requirement to act proportionately is one directed at the wider interests of achieving public justice and not exclusively at achieving justice in an individual case.
- Sanctions should be regarded as having been properly imposed; if the applicant wishes to attack the sanction, setting aside (or appeal) is the correct approach.
- The guidance given by Dyson LJ has created in effect a two prong test:-
- Relief from sanction should typically only be given where the breach is trivial or “de minimis”, where there has otherwise been full compliance and where the application is made promptly (in which case relief will usually be granted). Examples of such a trivial breach are a failure of form rather than substance, or “narrowly” missing a deadline.
- If the breach is not trivial there must be very good reason for the breach (which would normally require something outside of the control of the party or its lawyer). “Well intentioned incompetence”, administrative errors or pressure of work will not suffice.
The Court explicitly stated that its decision aims to support the change in culture that Lord Justice Jackson aspired to, and to force legal representatives to become more efficient.
Forstater v Python (Monty) Pictures Ltd  EWHC 3759
The hearing in this matter preceded Mitchell in the CA, but was handed down after it. The reasoning on relief from sanction does not feature Mitchell, except for a postscript from Norris J confirming that his decision was consistent with it.
The party seeking relief (MFPL) had failed to serve a notice of funding in respect of its CFA using form N251 as required. However some way into proceedings it averted to the existence of the CFA in without prejudice correspondence. Accordingly from that date onward the opposing party would have been aware of the information which it would have been, had an N251 been served then or earlier.
Norris J granted relief to the extent that MFPL was to be treated as having served the N251 on the date when it averted to the CFA in correspondence, but not earlier, and was thus entitled to its additional liability from that date.
While not spelled out by Norris J, the decision is consistent with Mitchell as it arguably falls into the ‘failure of form rather than substance’ example of triviality. Consistently with that, Norris J granted relief without too detailed an analysis of other circumstances, and the explanation for the breach.
SC DG Petrol Sri v Vitol Broking Ltd  EWHC 3920 (Comm)
The particular facts on which relief was refused in this case are uninteresting; it was an easy case on failure to pay security for costs. Robin Knowles QC sitting as Deputy High Court Judge did however make two practical observations for future Mitchell style applications. Firstly, while the Court was required to look at the wider interests of those seeking justice, this was unlikely to be a factor that the parties could assist the Court with, and (in short) they should not waste Court time and resources seeking to do so, or seeking to teach the Court how to enforce compliance with the rules . Secondly, the examples given in Mitchell in relation to what would be a good reason under the second limb (in a non-trivial case) are examples only, and it will unlikely be useful to refer to other decisions on other facts.
The decision shortly thereafter in Michael Wilson v Sinclair  EWCA Civ 1732 is also uninteresting on the facts – and is referred to here only for the sound bite of Lewison LJ describing the decision in Mitchell as a “game-changer”.
Adlington v Els International Lawyers LLP (12 Dec. 2013, unrep.)
The claim was a group action of 134 claimants arising out of off plan investment property sales. The claimants had been given many months of extensions of time to serve their particulars, and were subject to an unless order for service by 19 June 2013. Ten claimants failed to do so by 1 July and a further eleventh claimant by 15 July because they were out of the country and unable to sign their POCs in time. In the case of seven, the application for relief was resisted.
The Judge (Oliver Jones QC) accepted that the claimants’ solicitors were disorganised throughout the long history of the case (even at that early procedural stage) and they lacked a clear command of the CPR.
However the Court held that this was a failure of form rather than substance, in the context of the many other claimants, for which POC were served in time, and where there was a later deadline for another category of claimants (the ‘Schedule 3’ claimants) which had not yet expired, and where service was “very shortly after” the deadline, and the application for relief was made promptly. The breach was properly therefore seen as trivial .
Further, triviality depended on the consequence of the breach; where there were no adverse consequences for the other party that indicated the breach was more likely to be trivial .
If that was incorrect, the Court held that the ‘good explanation’ test would have been made out as the claimants’ solicitor “did not realise that a few of his clients would simply be unavailable to sign their Particulars of Claim” .
In the writer’s opinion it is questionable whether late service of POC in the face of an unless order by 10 days or more could properly be described as a failure of form over substance. This cannot have been what Dyson LJ had in mind; the information in the POC was not provided in some other form – it was not provided at all by the deadline. The category of triviality engaged was only where a deadline was “narrowly missed”. It may be that the case turns on the unusual feature that it would have been open to the claimants’ solicitor to move the defaulting claimants into ‘Schedule 3’, but due to some misunderstanding he did not do so. Nevertheless it is conceivable that defaulting parties will seek to rely on it in future.
The defendants have sought permission to appeal this decision so watch this space.
Durrant v Chief Constable of Avon and Somerset  EWCA Civ 1624
The Court of Appeal’s first real post-Mitchell decision is, unsurprisingly, as robust as Mitchell itself. Durrant is a clear indication that if lower courts fail to apply the exacting standards imposed by the new rules, the Court of Appeal will not hesitate to interfere.
Having obtained earlier extensions of time the defendant posted two witness statements on the day the deadline fell (12 March 2013), which were therefore deemed served after the deadline. The order had explicitly debarred the parties from relying on late statements. However the defendant waited to 15 May 2013 before making an application for relief, at the same time as serving a further four witness statements. A further rule 3.9 application was made shortly before trial on 5 June seeking to adduce two further statements. The trial judge heard the applications on the first day of trial, granted relief across the board, and adjourned the trial.
The Court of Appeal reiterated that “decisions which fail to follow the robust approach laid down in [Mitchell] should not be allowed to stand” . Applying the approach mandated by Mitchell:-
- The breach in respect of the first two statements might, taken alone be regarded as trivial (presumably having narrowly missed the deadline). However taken together with previous delays and the express sanction imposed in the order, it was more significant. Moreover Mitchell states that relief will usually be granted in trivial cases provided that the application was made promptly. Here there was a delay of two months in applying for relief and relief should have been refused.
- The remaining statements were served well out of time (two months and more), which was not trivial, and there was no good explanation for the breach, which was simply due to incompetence.
The Court also observed that considerations such as the need for particular police officers to be able to clear their reputations and protect their careers at trial should carry little weight in an application for relief from sanction .
Theverajah v Riordan  EWCA Civ 15
The third Court of Appeal decision on relief from sanction maintains the robust approach. The defendant had made a somewhat ambitious ‘second bite at the cherry’ relief from sanction application two months after being refused by the vacation judge the first time round. The defendant had earlier been debarred from defending the claim following its failure to provide disclosure pursuant to a freezing order.
The Deputy Judge hearing the trial spent 4 of the 5 days of the listing hearing the application, acceded to it and adjourned the trial. Even though that decision was pre Mitchell, it was difficult to square with the new rule 3.9, and it seemed inevitable it would be overturned.
Sure enough, the Court of Appeal corrected the lax approach to the enforcement of court orders. The defendant had no right to a second application for relief without the requirements of Tibbles v SIG  EWCA Civ 518 being made out, which they manifestly were not. Even taking the second application on its merits however, it should never have been granted. It lacked the robustness called for, and gave inadequate weight to efficiency, proportionality and compliance. The Court was also critical of the amount of court time which the Deputy Judge allowed the application to waste; even if it had been refused, the trial would have had to be adjourned.
There is no doubt that Mitchell and subsequent decisions are ‘game changers’, marking a wholly different approach to these applications than would have been taken before. By the same token, as a matter of practical experience the new approach is causing parties to take points on timing and procedure and refuse extensions of time where they would simply have cooperated before. The Court of Appeal’s view appears to be that this is simply part of the process – the end result will be better compliance. The message for litigators and Costs Lawyers remains; beware, do not take cooperation from the other side for granted, do not wait until the last minute before complying, and if all else fails, apply for relief from sanction not merely as soon as reasonably practicable – but as soon as humanly possible.
Shail Patel, 4 New Square
Costs Lawyers, Costs Draftsmen and Legal Costs Specialists