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Caselaw Update

28 August 2014

Denton v T H White Ltd [2014] EWCA Civ 906 – Relief granted from Mitchell

In the recent case of Denton the Court of Appeal has sought to temper the effects of the landmark decision in Andrew Mitchell MP v News Group Newspapers [2013] EWCA Civ 1537 (“Mitchell”).

Mitchell

In Mitchell, the Court provided guidance as to how applications for relief from sanctions under rule 3.9 of the Civil Procedure Rules (the “CPR”) should be treated. Perceived by many as draconian, the guidance called for the strict adherence to the CPR in particular to prescribed time limits and orders of the Court. The consequence of Mitchell was that a failure to comply would often see parties required to make applications to the Court to seek relief from the sanctions associated with such non-compliance. Those making such applications would, under Mitchell, face an uphill battle to convince the Court that relief should indeed be granted particularly if the breach of the CPR was anything less than “trivial”.

Subsequent decisions following Mitchell demonstrated the Court's intent that parties should comply with rules and orders notwithstanding the unreasonableness of such adherence in certain circumstances, particularly where the conduct of the case was marginally affected by the breach. The new regime was also open to abuse. Where previously parties would consent to extensions of time limits or would agree to applications for relief, the position following Mitchell was radically different, with parties seeking to score a “litigation advantage” in circumstances where previously one did not exist.

The implications for clients were significant.In some cases, claims were dismissed or in the case of Mitchell itself the recoverable costs limited to the Court fee only (costs were estimated to be in excess of £500,000).

Denton

In Denton, the Court has confirmed that whilst the purpose of Mitchell remains true, namely to encourage parties to comply with rules, practice directions and orders, its subsequent interpretation has led to an imbalance “leading to decisions which are manifestly unjust and disproportionate.”

As set out by the Master of the Rolls and Lord Justice Vos in their joint lead judgment in Denton, the approach to be adopted now by the Court in applications for relief from sanctions is to be “more nuanced”. Under the three staged test introduced under Denton, the Court will now consider:

  • What the default is and assess the “seriousness or significance” of the same. This departs from the test of whether the breach was “trivial” and aims to provide certainty.Whilst what will be considered serious of significant is yet to be determined, if a breach is considered as neither by the Court then relief will be granted without recourse to the further stages (see below);

  • Whether or not there was a good reason for the breach/default; and

  • What are “all the circumstances of the case” with a view to the Court dealing justly with the application for relief?

In conjunction with this more relaxed approach, the Court has emphasised the need for parties to co-operate and made it clear in Denton that any “opportunistic” parties seeking to obtain some form of advantage in circumstances where relief is required, will face severe costs penalties if they act unreasonably.

It is anticipated that opposed applications for relief will decline following Denton; however, the case serves as a reminder that the Court still expects the parties to conduct litigation in an efficient and proportionate manner. There remains the potential for applications for relief from sanctions not to be granted, and lenders should ensure that their panel firms have the appropriate measures and resources in place to comply with the applicable rules, directions and orders. When applications for relief fail, lenders may need to seek redress elsewhere and should consider whether it is appropriate to instruct other solicitors to investigate any potential claims for professional negligence.

The lender services team are experienced professional negligence litigators who can to respond to any queries and deal with any potential claims you may have.