EXTENSIONS OF TIME: RESPONDENT'S NOTICES AND THE "MITCHELL" PRINCIPLES & THE "SERIOUSNESS AND SIGNIFICANCE OF THE BREACH"
The question of the general applicability, and the application, of “Mitchell” principles was considered today by the Court of Appeal in Altomart Ltd -v- Salford Estates (No 2) Limited  EWHC 1408. The court considered the principles to be applied in relation to late service of a respondent’s notice. The case also provides some guidance on the issues relating to the “seriousness and significance” of a breach.
An application for an extension of time to file a respondent’s notice had been listed in front of a full court so guidance could be given in relation to the application of the “Mitchell” principles in relation to late filing of a respondent’s notice. The notice had been served late because of a difference of view between junior counsel originally instructed and leading counsel.
The appellant resisted the application relying on (what the court still referred to) as the “Mitchell” principles.
The Mitchell principles
- In Mitchell itself the court was concerned with the claimant’s failure to file a costs budget seven days before the hearing at which it was due to be considered. The pilot scheme then in force in relation to defamation proceedings contained in Practice Direction 51D prescribed no sanction for a failure to comply with its requirements, but an amendment to the Rules which became effective on 1st April 2013 and extended costs management to claims of all kinds provided that, if a party fails to file a costs budget within the prescribed time, it would be treated as having filed a budget comprising only the applicable court fees: see rule 3.14. The Master considered that that was the appropriate sanction for the claimant’s default and made an order in those terms. At a subsequent hearing she dismissed his application for relief against the sanction she had by her earlier order imposed. An appeal against her orders was dismissed. In relation to the approach to applications for relief from sanctions the court emphasised that greater weight should be given to the two considerations specifically mentioned in rule 3.9, namely, the need for litigation to be conducted efficiently and at proportionate cost and the need to enforce compliance with the rules. A debilitating accident or illness might provide a good reason for the delay, but not excessive pressure of work, much less mere oversight.
- Nonetheless, in subsequent cases the courts recognised that enforcing compliance with the rules is not an end in itself and that it is not part of their function to impose sanctions merely for punitive purposes. Thus, in Chartwell Estate Agents Ltd v Fergies Properties S.A.  EWCA 506 this court upheld an order giving relief from sanctions for failing to serve witness statements in time, even thought the defaults were not trivial and there was no good reason for them, because it considered that the interests of justice must ultimately prevail.
- More recently the rigour of the decision in Mitchell has been tempered by the decision in Denton. In that case the court recognised that Mitchell had been the subject of criticism and, while holding that the guidance it provided remained substantially sound, sought to explain in rather more detail how it should be interpreted and applied. In doing so it identified three stages of enquiry: (i) identifying and assessing the seriousness and significance of the default which engages rule 3.9; (ii) identifying its cause; and (iii) evaluating all the circumstances of the case, including those specifically mentioned, so as to enable the court to deal with the application justly. The court clearly contemplated that if the default is not serious and significant, relief is likely to be granted. For these purposes a default which does not disrupt the progress of the litigation or the business of the courts more generally may well not be regarded as serious or significant. The court did not consider it appropriate to elaborate on the second stage, given the range of circumstances likely to arise. One of the most significant aspects of the decision, however, is to be found in paragraph 31, in which the Master of the Rolls makes it clear when dealing with the third stage that, even if there is a serious and significant default for which no good reason can be given, the application will not automatically fail. Although the factors mentioned in rule 3.9 are of particular importance, they are not of overriding significance.
- The approach that is now to be taken to an application under rule 3.9 is summarised in paragraphs 35-36 as follows:
“35. Thus, 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. 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.
36. But it is always necessary to have regard to all the circumstances of the case. The factors that are relevant will vary from case to case. As has been pointed out in some of the authorities that have followed Mitchell, the promptness of the application will be a relevant circumstance to be weighed in the balance along with all the circumstances. Likewise, other past or current breaches of the rules, practice directions and court orders by the parties may also be taken into account as a relevant circumstance.”
The application of the Mitchell principles to this case
- A number of points of some significance emerge from the history of the present proceedings. The first, and most obvious, is that the respondent’s notice was issued well out of time; it was 36 days late, a substantial delay, given that 14 days is allowed for that step. The second, however, is that when the application for an extension of time was made the appeal was unlikely to be heard for some months. There was no application for expedition and in the event it was listed for hearing over 6 months later. The third, which follows close on the heels of the second, is that there is no reason to think that Salford would then, or indeed will now, suffer any undue prejudice if the extension of time is granted, other than having to meet arguments on the merits that were not advanced before the judge. There is no reason to think that it will be any less able to respond to them than would have been the case if the respondent’s notice had been filed in time. The question for us, therefore, was whether Altomart should be granted an indulgence in order to enable it to take advantage of the advice of newly-instructed counsel, or whether the application should be refused in the interests of encouraging more rigorous compliance with the requirements of the rules and promoting a more disciplined approach to litigation generally.
- Applying the Mitchell principles as expounded in Denton, the first question for consideration was the seriousness and significance of the breach of the rules which had given rise to the need for the application. In terms of the lapse of time the delay was considerable, but it was clear that it was likely to have had little, if any, effect on the course of the proceedings. Neither party suggested, for example, that it would lead to an adjournment of the hearing and there was no reason to think that the need to allow additional time for argument would be likely to interfere with the court’s other business. In those circumstances I did not think that the delay could properly be regarded as serious or significant in the sense in which those expressions were used in Denton. That suggested that relief should probably be granted: see Denton, paragraph 28.
- As I have already said, it did not seem to me that the explanation given for the delay was very persuasive, but, since the delay itself had had no real effect on the proceedings and had caused no substantive prejudice to Salford, I did not consider that to be of great significance. Altomart accepted that it should bear the costs occasioned by its need to seek the court’s indulgence. There was nothing else in its conduct of the proceedings or in the circumstances more generally that militated against granting relief and it would not have been appropriate to refuse relief simply as a punitive measure. I was therefore satisfied that the appeal should be allowed.
The other judges agreed with this judgment.
This is one of the first post-Denton cases where the Court of Appeal has considered the question of “serious or significant” breaches. It shows that the court is concerned, amongst other things, with the effect of the breach on the conduct of the litigation and not just the length of any delay.