Comparing Recent Decisions on the Granting of Relief from Sanctions and Considering the Implications Thereof
The sensible place to start an article comparing recent decisions relating to relief from sanctions, is by considering the rules themselves.
CPR 3.9 provides:
“(1) On an Application for relief from sanctions imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstance 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 rules, practice directions and orders.
(2) An application for relief must be supported by evidence.”
So as per the rules, a Judge must consider all circumstance before granting or refusing an Application for relief from sanctions. This is so imprecise, that inevitably further guidance on the application of the rules would need to be established by caselaw.
Denton v TH White Ltd & Others  EWCA Civ 906
Denton is the cornerstone on which all other considerations regarding relief from sanctions are based. Within Denton, a three stage test is established in order to determine whether a judge should grant relief from sanctions.
“A judge should address an application for relief from sanctions in three stages. The first stage is to identify and assess the seriousness and significance of the “failure to comply with any rule, practice direction or court order” which engages rule 3.9(1). If the breach is neither serious nor significant, the court is unlikely to need to spend much time on the second and third stages. The second stage is to consider why the default occurred. The third stage is to evaluate “all the circumstances of the case, so as to enable [the court] to deal justly with the application including [factors (a) and (b)]”.
Subsequent caselaw has without exception considered Rule 3.9 in the context of this 3 stage test, below are a brief outline of some of the more recent cases in this area.
Mott & Ano v Long & Anor (2017) EWHC 2130 (TCC)
Here, the Defendant’s budget was filed 10 days late as a result of an IT error. This resulted in the parties having insufficient time to prepare a meaningful budget discussion report. Importantly, the court was in agreement with the Defendant that regardless of the breach, the budgets could not have been agreed at the Cost Management Conference. This was because as a result of converging directions, revised budgets would have been sought in any event. (Relief Granted)
Singh & Others v Charity Commission & Others  EWHC 2183 (Ch)
This recent case stemmed from the Claimant’s failure to make a £75,000.00 payment on account of costs in accordance with an Unless Order. This resulted in the Claimant’s claim being struck out and resulted in the Claimant being debarred from defending the counterclaim and having their Defence to the counterclaim struck out. The Claimants did make the payment 6 days late, however by this stage the claim had been struck out. The parties were in agreement that the breach was serious (Denton Stage 1) and the no good reason was provided for failing to comply with the Unless Order (Denton Stage 2). Nevertheless, relief from sanctions was granted for three main reasons. Firstly because the payment was made shortly after the deadline within the Unless Order. Secondly because the court timetable would not be significantly effected (the dates for the pre-trial review and the trial itself still being available). Thirdly because the sanctions would affect other parties apart from the Claimants immediately before the court. As such ‘standing back and looking at the overall justice of both side’s cases, this is an appropriate case for relief from sanctions.’ (Denton Stage 3) (Relief Granted)
Adva Optical Networking Limited v Optron Holding Limited  EWHC 1813 (TCC)
In this interesting case, the Defendant failed to file their Defence on time and as such made an Application to file their Defence out of time (judgment was not entered). Mr Justice Coulson confirmed that the Denton Test was still to be overcome for the Defendant to have permission to serve their Defence late. Failing to file the Defence on time was deemed serious and there was no good reason for the same. Nevertheless, the Defendant was permitted to serve their Defence for two reasons. Firstly, while the Defence was three months late, there was no real impact on the course of the proceedings. Secondly, the claim against the Defendant was contingent on a second set of ongoing pleadings. Any judgement in default (which disallowing the Defendant to file a Defence would amount to) would effectively be contingent on a separate claim. (Relief Granted)
Griffith v Gourgey  EWCA Civ 926
The Defendant were ordered to provide full responses to a Part 18 request or have their Defence struck out. Part 18 responses were provided but were deemed to be insufficient by the Claimant. As such, the Claimant applied for an Order that the Defence be struck out. The Defendant then filed an Application for relief from sanctions on the basis that the Part 18 requests were excessive. Relief was granted on the strict condition that full responses to the Part 18 questions be provided thereafter. Once again responses were served, however the Claimant took issue with the adequacy of the same. The Claimant therefore Applied to the Court that the Defence remain struck out. The Defendant’s Application for relief was this time unsuccessful, the responses still being inadequate and there having been no material change of circumstance since the Order. Relief Granted (First Application) and Refused (Second Application)
Jagdish Lakhani (and another) v Ibrahim Sheikh Abdullah Mahmud  EWHC 1713 (Ch)
In this matter a cost budget was field one day late. This breach was considered serious primarily because of the impact it had on the parties’ ability to agree cost budgets, and the fact that a 45 minute Cost Management Conference far exceeded the listed time as the late service of the budget had to be dealt with. The reason provided for the breach was a misinterpretation of the rules (regarding the timescale for service of the budget). The court did not consider this an understandable mistake on which to grant Relief. (Relief not Granted)
R (On the Application of Kaur) v The Secretary of State Home Department  EWCA Civ 821
This case illustrates the importance of making Applications as soon as it becomes apparent there will be a breach, even if the breach is outside of the Parties control. The Appellant was required to file their Appeal and documents in support of the same. The Appeal itself was lodged correctly but the transcript which was required to be considered was not lodged in accordance with the rules. It emerged that this was because they had been unable to obtain the transcript. As a result of the failure to file the transcript, the Appeal was dismissed. The Appellant sought a review which was ultimately treated as an Application for relief from sanctions. It was established that the breach was serious (Denton Stage 1), but also that there was good reason for the failure to serve the transcript (Denton Stage 2). Ultimately the Appellant should have applied in advance of the breach, knowing it would occur. Their failure to do so meant considering the matter generally there should be no relief. (Relief not Granted)
Schenk v Cook  EWHC 144 (QB)
In this matter, a Defendant breached an Unless Order regarding disclosure and as such had their Defence struck out. The failings were determined to be serious in that they represented the culmination of a series of defaults on the part of the Defendant. This is interesting as the Defendant’s conduct prior to the breach was taken into account when considering the seriousness of the breach itself. The Defendant was found to have no good reason for the breach and based on these factors the judge did not grant Relief. (Relief Not Granted)
Michael & Ors v Phillips & Ors  EWHC 142 (QB)
The Defendant failed to provide proper disclosure as required by directions, as such the Claimant applied for an Unless Order that they do so. The Defendant agreed to the making of the Unless Order. The Defendant proceeded to disclose documents electronically, just an hour before the deadline indicated within the Unless Order. Hard copies were sent thereafter. On review the disclosures were deemed inadequate by the Claimant and as such the Claimant applied to have the Defence and Counterclaim stuck out in line with the Unless Order. While the Defendant provided extensive reasons as to why the disclosure did not take place in accordance with the Unless Order, most notably a cyber-attack on their computer systems, on investigation the judge was not persuaded by these reasons. With the insufficient disclosure unfairly prejudicing the Claimant’s ability to prepare for trial and with the Defendant having agreed to the terms of the Consent Order, no relief was awarded. (Relief Not Granted)
It should be clear from the above cases that although there are increasing examples of the application of Denton, the outcomes can still be incredibly unpredictable. The entire context of a claim will be considered and taken into account. This means on one day, before one judge, a one day breach may be considered serious enough to warrant that there be no relief. On another occasion before a different judge, a three month breach can be considered serious, but relief still be granted. Ultimately the discretion of the judge when applying the Denton test is extremely wide and the particular features a judge may consider important can vary considerably. This makes predicting the outcome of any Application for relief a difficult undertaking.
There is one common theme which should certainly be taken on board. Conduct of the parties, both before and after the actual breach are likely to play a considerable role in whether relief will be granted. Most important of all if a breach is anticipated, steps should be taken to notify the Court and resolve the issue prior to the breach occurring. Similarly as soon as it becomes apparent there has been a breach, steps should immediately be taken via an appropriate Application to obtain relief. Any efforts to ‘get around’ the breach are likely to be held firmly against the defaulting party when it comes to applying the Denton Test.
One of the most common breaches in caselaw is parties failing to comply with Orders in relation to Cost Management. Breaches of this nature also have a terrible impact on the solicitors, who in default, are seriously punished in costs. Instructing an experienced firm of Cost specialists such as MRN Solicitors removes the risk of this occurring and ensures cost management proceeds smoothly and successfully.