RELIEF FROM SANCTIONS GRANTED: RESPONDENT'S "OPPORTUNISTIC" BEHAVIOUR CONDEMNED
In Long -v- Value Properties  EWHC 2981 (Ch) Mr Justice Barling roundly condemned the defendants for taking opportunistic points in litigation. The judge overturned a decision by the Master refusing relief from sanctions.
This was an application for relief from sanctions arising out of a failure to serve copies of the CFAS or relevant details of the success fees. The judgmen at first instance t observes.
“Following settlement, detailed assessment proceedings were commenced in October 2013 but no statement of reasons or other
information was served contrary to Section 32.5 of the Costs Practice Direction which applies to this case by virtue of CPR Rule 48.1.
2. Consequently, the Claimant has applied for relief from sanctions in the following terms.
“That the Claimant/receiving party be relieved from any sanction imposed by
CPR 44.38 and/or any Sections of the Costs Practice Direction, for failing to
serve the paying parties’ solicitors with copies of the CFAs and/or a statement
setting out the relevant details of the success fees in accordance with CPR
(The first instance judgment was considered here)
WAS THERE A BREACH AND WHAT WAS THE SANCTION?
There were arguments before the Judge that were not argued before the Master.
1. The claimant argued that the failure to serve the documentation was not a breach. The judge held that it was.
2. However the sanction of disallowing success fees and insurance premiums only applied if the documents had not been sent at all during the assessment proceedings.
- As against these problems, the claimant’s interpretation has the obvious merit not just of consistency with the extremely wide and non-specific wording of (c) but also of resolving the particular anomalies and lack of proportionality which troubled the Judge; it removes the glaring inconsistency between, for example, the treatment of a failure to serve N251 in time or the late commencement of detailed assessment proceedings, (proportionate and/or comparatively light sanctions) and the disproportionate sanction for the breach in this case if (d) were to apply (total disallowance of success fees).
- It seems to me that whichever interpretation is adopted there will remain anomalies and uncertainties. The provisions as they currently stand are obscure, unnecessarily complex, and in need of rationalisation. Nevertheless, after some hesitation, I have concluded that the claimant is right on this point, and that the applicable sanction for a breach of this kind is to be found in r.44.3B(1)(c), and that r.44.3B(1)(d) is not yet engaged, there having been no failure to fulfil an obligation “to disclose [the relevant details] in any assessment proceedings …”. I consider that this interpretation is likely to result in fewer anomalies and to give effect better to the overriding objective, to which the court is bound to have regard when interpreting these rules.
SHOULD RELIEF FROM SANCTIONS HAVE BEEN GRANTED?
The Judge went on to consider the issue of whether relief from sanctions should have been granted. Here the judgment is clear and robust.
- In my judgment the breach here must be looked at in the context of the surrounding circumstances, which I have set out above at paragraphs 2-8 above and which, in essence, reflect the Judge’s findings. From this it is clear that the claimant had commenced detailed assessment proceedings well within the 3 month limit imposed by the CPR. Once the breach was brought to the attention of the claimant it was remedied swiftly, and in the absence of any agreement by the defendants to resolve the matter without recourse to the court, the application for relief was also brought very quickly. Further, the defendants themselves, by seeking the claimant’s agreement to an extension of the 21 days allowed for service of points of dispute, added significantly to the length of the default. It is not clear whether the defendants knew of the breach when the second defendant sought the extension of time on 5 November 2013. This seems likely, for they were certainly aware of it by 14 November when they served their points of dispute. The defendants were, of course already aware as a result of the much earlier service of N251 that the claimant was funded by a CFA with success fees. Had the defendants wished to shorten the length of default and save the cost and delay of an amendment to the points of dispute, it was open to them to inform the claimant of its oversight before preparing and serving those documents, and to seek an extension of time to take stock of the Further Information when supplied. It is clear that the claimant would have agreed to such a request. I therefore do not understand why Mr Holland states that amendments were inevitable.
- In the event the defendants preferred to take advantage of the claimant’s oversight by choosing not to inform the claimant earlier, and going ahead with service of points of dispute (after obtaining an extension of time for that purpose) which they knew would require amendment once the Further Information was received. Thereafter they declined to cooperate with the claimant, and were unwilling to amend the points of dispute and avoid the need for an application for relief.
- It is clear, as the Judge found, that there was no significant prejudice to the defendants, or to the efficient conduct of the assessment proceedings at proportionate cost, or to the court or to other litigants as a result of the breach itself. It is evident that in so far as there has been unnecessary cost, delay and use of the court’s finite resources in hearing the application for relief from sanctions and this appeal, this is the result of what in my view was the unreasonable, opportunistic and non-cooperative approach of the defendants to the claimant’s unfortunate oversight.
- In my view when looked at in its context as discussed above, the breach here is properly regarded as “insignificant” and therefore “trivial” as those expressions are understood in the light of the guidance in Mitchell (see in particular paragraph 40 of the judgment of the Court of Appeal in that case). For the same reasons I consider the breach to be neither serious nor significant in the terms of the Dentonguidance. It is clear that in view of the concession the Judge did not receive the assistance he should have done in regard to the meaning of “triviality”. His instinct was to hold that the breach was trivial but he appears to have fallen into the error by attaching insufficient weight to the circumstances surrounding the breach as well as to the absence of any significant prejudice of any kind to anyone.
- The Judge also appears to have fallen into the error identified by the Majority in Denton, in that having concluded the breach was not trivial, and that there was no good reason for it, he regarded the application for relief from sanctions as bound to fail (see paragraphs 38-9 of his judgment). He did not go on to consider whether that was the appropriate outcome in “all the circumstances of the case, so as to enable [the court] to deal justly with the application”, as required by r.3.9. Had he done so he would almost certainly have granted the application, notwithstanding his finding that the breach was not trivial.
- In view of the Judge’s errors of approach it is open to me to exercise my own discretion in relation to the grant of relief. For the reasons I have given I consider the claimant’s breach of the practice direction to be neither serious nor significant. Although overlooking the requirements of the practice direction is not a good reason for the breach, when all the relevant circumstances are considered – including the nature and effect (or rather lack of effect) of the breach, the defendants’ conduct to which I have referred, the speed with which the claimant remedied the default and applied for relief, and the need to enforce compliance with rules, practice directions and orders – the just disposal of the application requires complete relief from the sanction in question to be granted.
- For the avoidance of doubt, I record that this would have been my conclusion even in the absence of the helpful guidance in Denton.
- It follows that this appeal must be allowed, either on the basis that an incorrect sanction has been applied to the breach in question, or, if I am wrong about that, on the basis that relief from that sanction in its entirety should be granted by the court pursuant to CPR r.3.9.
- I would also add that the defendants’ behaviour here has been precisely the kind of opportunistic, and non-cooperative conduct in litigation condemned by the Court of Appeal in Denton. Had the defendants taken a different course the matter could probably have been completely resolved within the overall period of the extension of time which they applied for and were granted by the claimant, or very soon thereafter. This would have saved the parties and the court the time and expense of a lengthy hearing before the Judge and an even longer appeal hearing before me. That in turn has disrupted the assessment proceedings and significantly delayed their final resolution.”