COURT OF APPEAL SANCTIONS HEARING: SUBMISSIONS IN UTILISE -V- DAVIES
The final tranche of the notes taking at the hearing of the sanctions cases yesterday. The case of Utilise -v- Davies. Discussion of the first instance decision can be found in this blog as can a link to the transcript. (The hearing of this application took place before the Bar Council and Law Society submissions which were posted on the blog yesterday). One of the issues in the case was whether a number of breaches can be aggregated together so that, although trivial in themselves, the breaches militated against relief from sanctions being granted. Again this is a case where the arguments and interjections from the Court of Appeal show the difficulties in balancing proper enforcement with sensibly, proportionally, conducted litigation.
The consequences and nature of the breach should be considered alone.
A further breach should not affect the characterization of the first breach.
What we need is a clear answer to whether two trivial breaches can amount one non-trivial breach.
It seems absolutely plain that when considering whether the breach is trivial you have to consider the breach before the court then apply the rule.
In Mitchell I attempted to provide guidance, perhaps not successfully to provide guidance. The considerations of trivial and good reasons is not the rule but guidance on the rule. A court must still stand back and consider the whole picture.
The problem is that the courts have applied the Mitchell guidance incorrectly. The courts have forgotten their power to consider all the circumstances in CPR 3.9 and have found that even trivial breaches can lead to cases being struck out.
(The court was then referred to para 48 of Durrant)
Durrant states that non compliance is more significant if it occurs against a backdrop of non compliance.
Although it does become more significant it is submitted that it does not become more significant than trivial just more significant but trivial.
In Mitchell (paragraph 40-41) it was said that the court must identify the breach that gives rise to the sanction.
Mitchell then gave examples, however the lower courts have forgotten that these were merely examples.
This is what has happened in the present case. The courts still have a discretion but have not taken this on board.
The respondent relies on Durrant, particularly paragraph 48 but Durrant was not an unusual case. The key question is whether paragraph 48 is authority that the character of the breach is not defined by circumstances of that breach but the circumstances of the case and other history.
The problem being highlighted seems to be that the guidance is being treated as a sub clause in the test and then authorities are being built on that.
The beauty of the present rule 3.9 is it tells you to look at all the circumstances of the case and the courts have to take more notice of limb (a) and (b).
The construction of the rule is not that difficult, but I have the point that it has thrown up problems.
Yes the problem is that the courts have interpreted it wrongly.
Well then it appears we will have to have another go. People have concentrated on facts of Mitchell, if you just look at the breach it looks harsh but the breach did have important and large consequences for the litigation.
Yes I understand that the court was just trying to give guidance but the lower courts have taken it too far and have treated it like a statute.
(Counsel then went through the facts of the case.)
But in the order it stated that the case was stayed. Surely if it is stayed the case is stayed?
Does it mean stayed apart from paragraph 4 (which required costs budgets to be filed). But you could have applied to have this order revoked or varied but absent an order, as outlined in Mitchell the court really cannot take that point.
No, I accept that the irrationality of the order is not going to be the main winning point.
(End of day 16/6/14)
If I can begin on the point raised by Voss LJ, I have looked into the authority and a stay does not render ineffective conditions to be carried out. So unfortunately I cannot rely on My Lord Voss’ astute observation.
In this case the appellant’s breach was sending their costs budget via fax 45 minutes late.
The file handler then changed and he was not aware that the fax had been sent late.
Even though the costs budgets were required at the beginning of the case the Costs Management Hearing was not listed until 24th February 2014.
On the 28th November 2013 the appellant’s solicitors sent an email to the respondents acknowledging that their budget was filed late and outlining their intention to make a relief from sanction application.
The respondent’s solicitor sat on this and did not respond for 2 ½ weeks. When they did they stated that they would be opposing any application.
This is a common occurrence after Mitchell, parties will not agree to extensions and that results in an application being needed.
But if there is a trivial breach it is a waste of court time if the parties refuse to agree applications.
There is a serious problem and concerns, especially if the rule committee has provided that parties can agree an extension.
Lots of innocent parties are refusing to agree extensions to grab the prize of a strike out; some solicitors say that they have a duty to their clients to do this.
The question is what can court do to discourage opportunist conduct.
Yes I think this is something that the Bar Council and Law Society are to address
In this case the district judge did not decide on the status of the breach. She held that even if it was trivial a good reason still needed to be given, but non was given in the present case.
She made the order in October thinking she was giving the parties a second change, and not just remedying the defective Form 149C. She believed there had been two breaches on the part of the appellant not one.
In the transcript there is a reference to the appellant’s solicitor’s statement, but in the judgment she goes on to say that she had not seen the statement.
I am a bit concerned about looking at this. We really need to look at the reasons in the judgment, not the transcript.
(Counsel then referred the bench to paragraph 51-52 and 55 of Judge Hodge QC’s judgment.
The structure of Mitchell as applied is that if there are trivial breaches relief should be given but if non-trivial then a good reason would be required.
But even if there are two trivial breaches and no good reason the court must still look at all the circumstances and apply the test.
The judge was obliged to look at decision and the test after finding the error in the district judge’s decision. But he found that the application had not been made promptly but the solicitors had no actual knowledge of the default and there was no evidence that they did. They drafted the application on the same day that they were made aware of the breach.
There is also the fact that the file handler left afterwards and the file was taken over.
Yes, and although promptness is a factor it is not a sufficient factor in itself to refuse relief.
Leaving the issue of promptness to one side and the issue of whether the judge could interfere with the district judge’s decision, can we look at the case and its combination of two trivial breaches and no reason?
Yes, it was never disputed that the breaches were trivial.
Promptness is not and should not be a determinative factor.
I can think of cases where promptness can be made an important factor but I can also think of vases with trivial breaches that are not noticed until the last minute and the case can continue but I cannot see why that lateness cannot justify a lack of relief in certain cases.
But it should not be a determinative factor. It is not a statute requirement. One has to look at the effect of the lack of promptness.
So if you have to look at the effect, promptness may or may not be fatal.
Yes in this case, although it was not excusable, it was understandable that the fee earner was not aware of the problem.
There was no effect on the hearing of the claim, or costs or the ability of other court users to access the court. The delay was not deliberate and there has been no evidence of prejudice to the respondent.
The final point is that even though there is no application to vary or revoke the order. But if there had been it would have been Tibbles compliant.
But that is a dud point, Mitchell says if there is no application you cannot rely on it.
I except it is a tenuous point, but not just simply bad. There was no appeal but the judge did deal with the district judge’s order and the respondent did not dispute that the order was incorrect.
GENERAL SUBMISSIONS ON MITCHELL
1. When looking at the definition of trivial the court must look at the consequences of the breach. This is the consequence on access to the courts to others and costs and the conduct of the action.
2. It needs to be made clear that the examples given in Mitchell are just examples. They are not exhaustive.
3. Replacing trivial with non-material more accurately ascertains the mischief of the breach. It has to be material as to costs etc. The phrase trivial is too narrow for example, a one-week delay may not be trivial but may be immaterial.
4. A good reason should not be restricted to matters outside the parties control.
5. A party that oppose applications should face costs consequences. They should not have a free ride.
(Counsel then referred to articles by Sime and Zander on the Mitchell decision)
The strong decision in Mitchell was necessary but there is a lack of clarity in Mitchell. The courts have treated the Mitchell guidance as a pre condition before going on to consider the test. A balance needs to be drawn.
A better approach would be to follow the approach in the Fred Perry case where litigants who substantially disregard court orders should face sanctions. The trouble with clarity is that it removes discretion.
I find it difficult to see how anyone can say Mitchell removes the courts discretion.
But that is how it has been interpreted.
But it was clear that there needed to be changes in the way courts approach the issue of breaches and the way to do that is to effect a rule change and then a strong judgment.
In this case the appellant cannot show they made a prompt application and the appellant’s conduct firmly points against relief from sanctions.
I accept that promptness is not determinative in itself but it is highly material especially in relation to the facts.
The starting point is 3.9. That is the test. The Mitchell guidance is just that. It is not the test. The court has to consider all the circumstances of the case and (a) and (b).
Mitchell does not oust the requirement to consider all the circumstances. The Mitchell guidance is aimed at the usual case. Even where the breach is trivial and there is a prompt application it is still incumbent on the applicant to show that their case falls into the usual case. An applicant is not entitled as of right to relief.
Cost budgeting is an obvious area for fair but robust attitude from courts. The October order was not challenged before the relief application. In effect the district judge was giving the parties a final chance.
A first and final chance?
Yes, had the relevant form have been given it would have had the same effect as the order. The defaulting party was obliged to make the application and put the true factual position before the court. At this time the parties didn’t actually have the power to consent to an extension.
The proper stages to relief in the usual case is:
1. The court looks at the characterization of the breach giving rise to the sanction.
2. If it is not trivial the courts will look for a good reason.
3. The court will then look at all the circumstances including promptness and take a step back and look at the justice between the parties.
The question is whether the judge hearing the application must at the first stage put on blinkers and only look at the breach in front of him. We submit that the judge hearing the application is not required to view the breach in isolation. They can take into account the quality and magnitude of the breach in its context.
The judge can take this approach at stages one and three. Durrant supports this and in that case they underwent the exercise just described.
It is unfortunate that we are being invited to construe paragraphs in Durrant that discusses the interpretation of the Mitchell guidance and not the actual rule.
This goes to the point of whether it is jurisprudence on jurisprudence. The Mitchell examples can only ever be limited. Durrant is just a further example.
The highest you can put this point is that if there are say six breached orders and then half an hour delay it may put amplification on that delay.
But there is nothing in the rule or guidance that means it cannot come in. The judge was entitled to do as he did and there is nothing in the rule or authorities to prevent it. If I am wrong the history of non-compliance still comes in at the third stage of the test.
But the appellant accepts that the history can come in at the third stage of the test.
We should also take into account what was said in Chartwell. When both parties don’t comply the court is less likely to not grant relief, as it is unjust. As one gets a sanction but the other party escapes.
In the present case if you go to stage two- there is no good reason in the present case.
At stage 3 and all the circumstances, promptness is an important factor. It is not determinative but it is material. Its magnitude can mean delay becomes the weightiest factor, especially when there is no good reason.
Suppose though that in your case no one noticed it was 45 minutes late. The action proceeded and it goes to trial, the claimant wins and gets costs. At the final assessment counsel suddenly notices that the budget was 45 minutes late and the other side says well it was trivial and no harm was done, can I have relief?
1. Is that delay fatal?
2. How is it to be dealt with?
In response to question one the party needs to give an explanation as to why it has been no long. Incompetence is not a good reason. If it is not a good reason for the failure it also cannot be an excuse for the delay. It would mean oversight would become a complete excuse.
As to question two the costs judge could deal with the relief application as long as material was before him as to the breach.
But you are making the CPR into an instrument of delay.
I do find the situation odd and that the timing of the delay which had no effect and the fact that the application was made late can be fatal and or terminative. It is just not real; one does have to apply common sense. You are relying heavily on delay.
Yes, it cannot be an answer to say well we did issue the application even though in this case it was two months late. The appellant also says the fee earner didn’t know. But the firm knew on the 11th October that the order had been breached. So promptness is an important factor in this case.
In this case the judge went through the proper process and the appeal should be dismissed.
So you are saying he made a decision within his ambit and discretion and we cannot interfere.
Yes, taking into account the lack of promptness and the lack of explanation he was entitled to make the decision.
GENERAL OBSERVATIONS ON MITCHELL
1. The introduction of materiality may not add clarity. This goes to prejudice as opposed to magnitude of breach.
2. It is helpful to focus on need to consider the circumstances generally and Rule 3.9 and clarify that Mitchell has not ousted the circumstances.