To Mitchell or not to Mitchell…hold on, what is it ‘to Mitchell’?!
References to Mitchell are of course references to Mitchell v News Group Newspapers Limited  EWCA Civ 1537,  1 WLR 795. Paragraph references herein are references to the judgment paragraph number in Denton unless otherwise stated.
The Court of Appeal has formed the view that practitioners and judges alike have misunderstood and misapplied the judgement (and guidance) in Mitchell. Notwithstanding that assertion, the Court of Appeal maintains that the guidance it offered in Mitchell remains substantially sound. In the Denton judgment, it now seeks to amplify that guidance.
A quick reminder of CPR 3.9
CPR 3.9 provides:
- On an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, 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 the rules, practice directions and orders.
- An application for relief must be supported by evidence.
The Mitchell guidance
The guidance in Mitchell is substantially set out in paragraph 40 and 41 of the Mitchell judgment. The Court when faced with an application for relief from sanctions should start by considering the nature of the non-compliance with the relevant rule, practice direction or court order. If this can properly be regarded as trivial, the court will usually grant relief provided that an application is made promptly.
The Court will usually grant relief if there has been no more than an insignificant failure to comply with an order.
If the non-compliance cannot be characterised as trivial, then the burden is on the defaulting party to persuade the court to grant relief. The Court should enquire why the default occurred and if there is a good reason for it. If there is a good reason, the Court will be likely to decide that relief should be granted.
There has been much by way of example on both sides of the fence since the Mitchell judgment, keeping practitioners and Courts excited with the flurry of activity. In Denton, the Court of Appeal was taken to numerous examples of the application of Mitchell in practice and referred in its judgment to what it considered to be the most important of the cases that followed, but the upshot is that the Court of Appeal in Denton has recognised that there has been much criticism of Mitchell hence why it has now sought to amplify its guidance.
The recognised criticism was that the:
- ‘triviality’ test was becoming an ‘exceptionality’ test;
- Factors (a) and (b) in rule 3.9(1) were being give too much weight having been referred to as “paramount considerations”;
- Mitchell approach downplayed the obligation to ‘consider all the circumstances of the case’;
- Disproportionate penalties had little practical effect on the course of litigation, but one party received a windfall;
- Mitchell approach encouraged uncooperative behaviour, unreasonable satellite litigation and inconsistent approaches by the Courts.
In recognising the criticism, the Court of Appeal has reiterated that its guidance in Mitchell “…remains substantially sound…”. Nonetheless, in view of the way in which Mitchell has been interpreted (everyone else’s fault!) further guidance is now offered in Denton such that it should also “…avoid the need in future to resort to the earlier [post-Mitchell] authorities…” (paragraph 24). Famous last words, I wonder.
The Court of Appeal has amplified its guidance to state that a Court faced with an application for relief from sanctions should apply a 3-stage approach:
- Identify and assess the seriousness and significance of the failure to comply with any rule, practice direction or court order. If the breach is neither serious or significant, the court is unlikely to need to spend much time on the second and third stages;
- Consider why the default occurred;
- Evaluate all the circumstances of the case, so as to enable the Court to deal justly with the application including factors (a) and (b).
Denton – the first stage
We are told that the distinction between the words ‘trivial’ and ‘serious and significant’ is said to be one of semantics in this context, nonetheless, the new term of reference should have the desired effect. Note that ‘serious and significant’ is broader than the term ‘material’ [as suggested by the Bar Council and Law Society], as it appears to include serious breaches “…which are incapable of affecting the efficient progress of the litigation…” (paragraph 26). That strongly implies that there is a punitive element that remains to all this, and intentionally so. Indeed, we are reminded that “…the old lax culture of non-compliance is no longer tolerated…” (paragraph 34).
This will itself provide yet further satellite litigation seeking to establish ‘what is a serious breach that bites at the first stage even where the efficient progress of the litigation is not affected?’. Is it late disclosure which does not upset a trial date? Is it late evidence that does not upset a trial date? Plainly, the fact that a trial date can be maintained despite a ‘serious breach’ (once defined) cannot be enough on its own to suggest that an application for relief should be granted. If it was intended to be so, why else would the Court of Appeal in this further guidance suggest that the first stage can still bite even if the litigation can progress efficiently?
So if there remains a battle ground of some description, presumably we are to see business as usual as we have seen post-Mitchell? Indeed it seems that ‘battle’ is expected: “…We recognise that the concepts of seriousness and significance are not hard-edged and that there are degrees of seriousness and significance, but we hope that, assisted by the guidance given in this decision and its application in individual cases over time, courts will deal with these applications in a consistent manner…” (paragraph 26).
It is noteworthy that the more serious or significant the breach, the less likely it is that relief will be granted unless there is a good reason for it (paragraph 35).
Well, respondents beware! “…Parties who opportunistically and unreasonably oppose applications for relief from sanctions take up court time and act in breach of…” the obligation to further the overriding objective (paragraph 40). We are told that it is “…wholly inappropriate…to take advantage of mistakes made by opposing parties in the hope that relief from sanctions will be denied…” (paragraph 41).
Given that it must be the position that in at least some cases where a party who opposes an application for relief from sanction is in fact acting in accordance with its duty under CPR 1.3 to further the overriding objective, and given that Mitchell (at paragraph 41 of the Mitchell judgment), now reinforced by Denton, makes it plain that “…merely overlooking a deadline, whether on account of overwork or otherwise, is unlikely to be a good reason…” for relief to be granted, how is a respondent meant to reconcile to two positions?
It gets worse still for respondents, because forget about breaches of court orders being ‘punished’. “…The Court will be more ready in the future to penalise opportunism…”! (paragraph 43). Courts are now advised to record in any order, if appropriate, that opposition to the relief application was unreasonable conduct to be taken into account under CPR rule 44.11 when costs are dealt with at the end of the case. The offending party may suffer a substantial reduction if it is the recipient of a costs order, or costs on the indemnity basis if it is the paying party. Respondents are further reminded to adopt more reasonable stances in extending time for minor inadvertent errors, consistent with the new CPR rule 3.8(4) [allowing parties to be ready to agree limited extensions of time up to 28 days], so who dares to oppose an application for relief now? And just how is this culture going to be slung Singapore-style?
Could the answer be for respondents to adopt an entirely neutral position and leave the matter entirely in the hands of the Court? Perhaps not yet. It seems to me that the Court of Appeal expects there to still be a period of turbulence and satellite litigation until a culture shift is achieved and one should hope and expect the Courts to not be quick to penalise ‘opportunists’ during the period of turbulence. I formulate this thought also having regard to paragraph 42 where despite the widespread recognition of a lax culture, the Court of Appeal states “…It should be very much the exceptional case where a contested application for relief from sanctions is necessary…” which sounds alarms bells, until one continues to read “…This is for two reasons: first because compliance should become the norm…” [my emphasis]. With that in mind, it is in my view the longer term future that holds the expectation for contested applications to be few and far between.
In any event, once in Court, practitioners should stick rigidly to the 3-stage approach. The Mitchell example of merely overlooking a deadline is in my view perhaps not supposed to slip through the first stage now, even though the Court of Appeal has not said so, although illustrated better by the facts of the Decadent and Utilise cases linked to Denton itself.
Denton – second stage
The Court of Appeal specifically reinforces the examples given in Mitchell (at paragraph 41 of the Mitchell judgment) – so am I wrong to suggest above that the example of overlooking a deadline is perhaps not supposed to slip through the first stage now?! Oh dear, more litigation…!
It is of note that if there is a good reason for a serious or significant breach, relief is likely to be granted (paragraph 35).
Denton – third stage
Always get to third stage. Even if a breach is serious or significant (first stage), and there is no good reason for the breach (second stage) [and presumably must even include scenarios where there is no explanation at all – for example where an applicant simply fails to address the point in the evidence supporting the application], that does not mean that the application will automatically fail. The Court must go on to the third stage and consider all of the circumstances of the case (paragraphs 32, 36).
To make matters yet more difficult, at the third stage the Court of Appeal had a difference of opinion amongst their own number, 2:1, with Jackson LJ dissenting.
The majority formed the view that factors (a) and (b) in CPR 3.9(1) might not be of ‘paramount importance’ but were of “…particular importance and should be given particular weight at the third stage when all the circumstances of the case are considered…” (paragraph 32). The majority did not accept that factors (a) and (b) “…should “have a seat at the table, not the top seats at the table” if by that is meant that the specified factors are not to be given particular weight…” (paragraph 33). They accepted that matters such as the promptness of the application would be a relevant circumstance to be weighed in the balance along with all the circumstances (paragraph 36).
Jackson LJ formed the view that factors (a) and (b) were not to be given greater weight than other considerations (paragraph 85). Just a seat at the table then, not a top seat.
The facts of Denton itself also remind us that the vacation of a trial date remains a most serious matter likely to result in relief not being granted.
Is this a brave new world? Jackson LJ emphasises that the Review of Civil Litigation Costs Final Report went on (at chapter 39) to reject the “extreme course” of refusing relief save in exceptional circumstances (paragraph 88) and that the new rule 3.9 is not intended to introduce a harsh regime of almost zero tolerance (paragraph 96). He seems to also lend support to the view that Master McCloud in Mitchell itself “…made a very tough order…” suggesting that it was at an extreme of the range of case management discretion, which is, in these early days of changing culture, perhaps surprising to hear.
What’s the message then? It seems to me that the guidance tells us this:
- A lax culture is still unacceptable;
- Any period of satellite litigation will be limited even though some is expected;
- Don’t be opportunistic;
- If you find yourself in Court dealing with an application for relief, there are 3 stages that must be followed.
Shaman Kapoor, Temple Garden Chambers
Costs Lawyers, Costs Draftsmen and Legal Costs Specialists