SANCTIONS JUDGMENTS 2: THE THIRD STAGE AND CRACKING DOWN ON "OPPORTUNISM"
The Court of Appeal went on to state that a major misunderstanding had occurred in relation to sanctions applications. There was a third stage which the Court explained at length.
THE THIRD STAGE
“31. The important misunderstanding that has occurred is that, if (i) there is a non-trivial
(now serious or significant) breach and (ii) there is no good reason for the breach, the
application for relief from sanctions will automatically fail. That is not so and is not
what the court said in Mitchell: see para 37. Rule 3.9(1) requires that, in every case,the court will consider “all the circumstances of the case, so as to enable it to deal justly with the application”. We regard this as the third stage
32. We can see that the use of the phrase “paramount importance” in para 36 of Mitchell
has encouraged the idea that the factors other than factors (a) and (b) are of little
weight. On the other hand, at para 37 the court merely said that the other
circumstances should be given “less weight” than the two considerations specifically
mentioned. This may have given rise to some confusion which we now seek to
remove. Although the two factors may not be of paramount importance, we reassert
that they are of particular importance and should be given particular weight at the
third stage when all the circumstances of the case are considered. That is why they
were singled out for mention in the rule. It is striking that factor (a) is in substance
included in the definition of the overriding objective in rule 1.1(2) of enabling the
court to deal with cases justly; and factor (b) is included in the definition of the
overriding objective in identical language at rule 1.1(2)(f). If it had been intended that
factors (a) and (b) were to be given no particular weight, they would not have been
mentioned in rule 3.9(1). In our view, the draftsman of rule 3.9(1) clearly intended to
emphasise the particular importance of these two factors.
33. Our view on this point is reinforced by the fact that Sir Rupert recommended at
paragraph 6.7 of Chapter 39 of his report that rule 3.9 should read as follows,
including a factor (b) referring specifically to the interests of justice in a particular
“(1) On an application for relief from any sanction imposed for
a failure to comply with any rule, practice direction or court
order, the court will consider all the circumstances including –
(a) the requirements that litigation should be conducted
efficiently and at proportionate cost; and
(b) the interests of justice in the particular case.”
This recommendation was rejected by the Civil Procedure Rule Committee in favour
of the current version. In our opinion, it is legitimate to have regard to this significant
fact in determining the proper construction of the rule. It follows that, unlike Jackson
LJ, we cannot accept the submission of the Bar Council that factors (a) and (b) in the
new rule should “have a seat at the table, not the top seats at the table”, if by that is
meant that the specified factors are not to be given particular weight.
34. Factor (a) makes it clear that the court must consider the effect of the breach in every
case. If the breach has prevented the court or the parties from conducting the
litigation (or other litigation) efficiently and at proportionate cost, that will be a factor
weighing in favour of refusing relief. Factor (b) emphasises the importance of
complying with rules, practice directions and orders. This aspect received insufficient
attention in the past. The court must always bear in mind the need for compliance
with rules, practice directions and orders, because the old lax culture of non compliance is no longer tolerated.
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.
SOME JUDGES HAVE BEEN TOO DRACONIAN
37. We are concerned that some judges are adopting an unreasonable approach to rule
3.9(1). As we shall explain, the decisions reached by the courts below in each of the
three cases under appeal to this court illustrate this well. Two of them evidence an
unduly draconian approach and the third evidences an unduly relaxed approach to
compliance which the Jackson reforms were intended to discourage. As regards the
former, we repeat the passage from the 18th Implementation Lecture on the Jackson
reforms to which the court referred at para 38 of its judgment in Mitchell: “[i]t has
changed not by transforming rules and rule compliance into trip wires. Nor has it
changed it by turning the rules and rule compliance into the mistress rather than the
handmaid of justice. If that were the case then we would have, quite impermissibly,
rendered compliance an end in itself and one superior to doing justice in any case”.
38. It seems that some judges are approaching applications for relief on the basis that,
unless a default can be characterised as trivial or there is a good reason for it, they are
bound to refuse relief. This is leading to decisions which are manifestly unjust and
disproportionate. It is not the correct approach and is not mandated by what the court
said in Mitchell: see in particular para 37. A more nuanced approach is required as
we have explained. But the two factors stated in the rule must always be given
particular weight. Anything less will inevitably lead to the court slipping back to the
old culture of non-compliance which the Jackson reforms were designed to eliminate.
DISCOURAGING SATELLITE LITIGATION AND PEDANTIC POINT SCORING
Satellite litigation and non-cooperation
39. Justifiable concern has been expressed by the legal profession about the satellite
litigation and the non-cooperation between lawyers that Mitchell has generated. We
believe that this has been caused by a failure to apply Mitchell correctly and in the
manner now more fully explained above.
40. Litigation cannot be conducted efficiently and at proportionate cost without (a)
fostering a culture of compliance with rules, practice directions and court orders, and
(b) cooperation between the parties and their lawyers. This applies as much to
litigation undertaken by litigants in person as it does to others. This was part of the
foundation of the Jackson report. Nor should it be overlooked that CPR rule 1.3
provides that “the parties are required to help the court to further the overriding
objective”. Parties who opportunistically and unreasonably oppose applications for
relief from sanctions take up court time and act in breach of this obligation.
41. We think we should make it plain that it is wholly inappropriate for litigants or their
lawyers to take advantage of mistakes made by opposing parties in the hope that relief
from sanctions will be denied and that they will obtain a windfall strike out or other
litigation advantage. In a case where (a) the failure can be seen to be neither serious
nor significant, (b) where a good reason is demonstrated, or (c) where it is otherwise
obvious that relief from sanctions is appropriate, parties should agree that relief from
sanctions be granted without the need for further costs to be expended in satellite
litigation. The parties should in any event be ready to agree limited but reasonable
extensions of time up to 28 days as envisaged by the new rule 3.8(4).
42. It should be very much the exceptional case where a contested application for relief
from sanctions is necessary. This is for two reasons: first because compliance should
become the norm, rather than the exception as it was in the past, and secondly,
because the parties should work together to make sure that, in all but the most serious
cases, satellite litigation is avoided even where a breach has occurred.
PENALISING PEDANTIC POINT TAKING WITH ORDERS AS TO COSTS (WHICH IMPACT UPON THE ENTIRE ACTION)
43. The court will be more ready in the future to penalise opportunism. The duty of care
owed by a legal representative to his client takes account of the fact that litigants are
required to help the court to further the overriding objective. Representatives should
bear this important obligation to the court in mind when considering whether to
advise their clients to adopt an uncooperative attitude in unreasonably refusing to
agree extensions of time and in unreasonably opposing applications for relief from
sanctions. It is as unacceptable for a party to try to take advantage of a minor
inadvertent error, as it is for rules, orders and practice directions to be breached in the
first place. Heavy costs sanctions should, therefore, be imposed on parties who
behave unreasonably in refusing to agree extensions of time or unreasonably oppose
applications for relief from sanctions. An order to pay the costs of the application
under rule 3.9 may not always be sufficient. The court can, in an appropriate case,
also record in its order that the opposition to the relief application was unreasonable
conduct to be taken into account under CPR rule 44.11 when costs are dealt with at
the end of the case. If the offending party ultimately wins, the court may make a
substantial reduction in its costs recovery on grounds of conduct under rule 44.11. If
the offending party ultimately loses, then its conduct may be a good reason to order it
to pay indemnity costs. Such an order would free the winning party from the
operation of CPR rule 3.18 in relation to its costs budget.
THE COURTS MUST MAKE REALISTIC ORDERS AND SET REALISTIC TIMETABLES
44. We should also make clear that the culture of compliance that the new rules are
intended to promote requires that judges ensure that the directions that they give are
realistic and achievable. It is no use imposing a tight timetable that can be seen at the
outset to be unattainable. The court must have regard to the realities of litigation in
making orders in the first place. Judges should also have in mind, when making
directions, where the Rules provide for automatic sanctions in the case of default.
Likewise, the parties should be aware of these consequences when they are agreeing
directions. “Unless” orders should be reserved for situations in which they are truly
required: these are usually so as to enable the litigation to proceed efficiently and at