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Expert welcomes Court of Appeal's "more nuanced approach" to granting relief from 'Mitchell' sanctions

Courts should be much more ready to grant relief from sanctions for failure to comply with court orders, practice directions and rules after the Court of Appeal found that the current approach had been "misunderstood and is being misapplied by some courts", an expert has said.08 Jul 2014

Legal costs expert Keith Levene of Pinsent Masons, the law firm behind Out-Law.com, was commenting on a recent judgment in which the court set out guidance on how judges should address an application for relief in future. Although the court restated the need for a "culture of compliance" in its judgment, it said that some judges had been "adopting an unreasonable attitude" to the new regime since its decision against Conservative MP Andrew Mitchell in November 2013.

"In some respects, this decision is a breath of fresh air in which the unintended outcome of the Mitchell judgment has been remedied with what the Court of Appeal describes as a 'more nuanced approach'," said Levene. "By creating a three-stage test, the court has returned realism and proportionality to the process of deciding whether to grant relief from sanctions."

"At the same time, the Court of Appeal made it very clear that litigants should not take advantage of their opponents when a mistake has been made that has no bearing on the conduct of the litigation," he said.

In its judgment on three cases involving the Denton family, Decadent Vapours Limited and Utilise TDS Limited, the Court of Appeal overturned the decisions of three different judges on the application of the so-called 'Mitchell test'; two of which involved refusal of relief from sanctions and one the grant of relief. In the Mitchell decision, the Court of Appeal gave guidance on how strictly new rules governing the conduct of civil litigation from April 2013 should be interpreted and what constituted a 'trivial' breach for which courts should grant relief from sanctions.

Rule 3.9(1) of the Civil Procedure Rules (CPRs), which govern court action in England and Wales, sets out what courts should consider when dealing with an application for relief from a sanction imposed for failure to comply with any rule, practice direction or court order. Courts must "consider all the circumstances of the case" so that they can deal with the application justly, while at the same time considering the overriding objectives for litigation to be conducted efficiently and at proportionate cost.

In the most recent judgment, Master of the Rolls Lord Dyson and Lord Justice Vos said that although the guidance given by the Court of Appeal in the Mitchell case remained "substantially sound", it was necessary to break that guidance down and provide more detail. They said that judges should address applications for relief from sanctions in three stages: firstly, by identifying and assessing the "seriousness and significance" of the failure; secondly, by considering why the default occurred; and thirdly, by evaluating "all the circumstances of the case".

"Triviality [as set out in Mitchell] is not part of the test described in the rule," the judges said. "It is a useful concept in the context of the first stage because it requires the judge to focus on the question whether a breach is serious or significant ... It seems that the word 'trivial' has given rise to some difficulty ...In these circumstances, we think it would be preferable if in future the focus of the enquiry at the first stage should not be on whether the breach has been trivial. Rather, it should be on whether the breach has been serious or significant."

"If a judge concludes that a breach is not serious or significant, then relief from sanctions will usually be granted and it will usually be unnecessary to spend much time on the second or third stages. If, however, the court decides that the breach is serious or significant, then the second and third stages assume greater importance," they said.

The judges said that it was the third stage of the process that had resulted in most of the misunderstandings that had resulted from the Mitchell decision. They said that it was "not so" that all applications for relief would fail if the breach was serious or significant, and where there was no good reason for the breach.

"The court must, in considering all the circumstances of the case so as to enable it to deal with the application justly, give particular weight to these two important factors," they said. "In doing so, it will take account of the seriousness and significance of the breach (which has been assessed at the first stage) and any explanation (which has been considered at the second stage)."

"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. Where there is a good reason for a serious or significant breach, relief is likely to be granted. Where the breach is not serious or significant, relief is also likely to be granted. But it is always necessary to have regard to all the circumstances of the case," they said.

The judges said that "justifiable concern" had emerged from the legal profession about satellite litigation and non-cooperation between lawyers as a result of the Mitchell decision. They said that this had been caused by "a failure to apply Mitchell correctly and in the manner now more fully explained above".

"Parties who opportunistically and unreasonably oppose applications for relief from sanctions take up court time and act in breach of [their obligation to help the court to further the overriding objective]," the judges said.

"We think we should make it plain that it is wholly inappropriate for litigants or their lawyers to take advantage of mistakes made by opposing parties in the hope that relief from sanctions will be denied and that they will obtain a windfall strike out or other litigation advantage ... The court will be more ready in the future to penalise opportunism," they said.