ANATOMY OF A POST-DENTON APPLICATION FOR RELIEF FROM SANCTIONS 3: THE "THIRD STAGE": EVERYTHING IS IN THE MIX

Having considered whether the breach is serious or significant and the reason for the breach a judge hearing a relief from sanctions application may have to go on to the “third stage”. Here the court considers all aspects of the case.

THE MISTAKEN APPROACH TO MITCHELL

The Court of Appeal was anxious to put right a misunderstanding that had arisen about the Mitchell decision. The view that if the breach was not trivial, and there was no good, reason, then relief from sanctions should not be granted.

“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.”

HOW SIGNIFICANT ARE THE TWO ASPECTS SPECIFICALLY STATED IN THE RULE?

One ongoing debate (which was the subject of a dissenting judgment by Jackson L.J. is how significant the two specific matters mentioned CPR 3.9 was in the consideration of “all the circumstances of the case.

“Relief from sanctions
(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 of the case,
so as to enable it to deal justly with the application, including
the need –
(a) for litigation to be conducted efficiently and at
proportionate cost; and
(b) to enforce compliance with rules, practice directions and
orders.”

THESE FACTORS ARE TO BE GIVEN PARTICULAR WEIGHT

The majority decision did not accept the idea that the two factors specified in the rule should not be given particular weight.

Factor (a) – the need for litigation to be conducted efficiently and at proportionate costs

• 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 costs, that will be a factor weighing in favour of refusing relief.

Factor (b) -to enforce compliance with rules, practice directions and orders

• This emphasises the importance of compliance.
• This aspect received insufficient attention in the past.
• The court must always bear in mind the need for compliance.
• “the old lax culture of non-compliance is no longer tolerated.”

THE COURT CONSIDERS ALL THE CIRCUMSTANCES OF THE CASE

The court has to “consider all the circumstances of the case so as to enable it to deal with the application justly”. In doing so it must give particular weight to these two important factors.

• It will take account of the serious and significance of the breach.
• It will take account of the explanation.
• The more serious and 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.

IT IS ALWAYS NECESSARY TO HAVE REGARDS TO ALL THE CIRCUMSTANCES OF THE CASE

The factors that are relevant will vary from case to case.

• The promptness of the application will be relevant factor to be weighed in the balance along with all the circumstances.
• Other past or current breaches of the rules, practice directions and court orders by the parties can (at this stage) be taken into account as a relevant circumstance.

SOME JUDGES WERE ADOPTING AN UNREASONABLE APPROACH TO RULE 3.9(1)

The Court stated, expressly, that “some judges are adopting an unreasonable approach to rule 3.9(1)”.  The Court emphasised the 18th Implementation Lecture

“[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”.

DECISIONS HAD BEEN MADE WHICH WERE “MANIFESTLY UNJUST AND DISPROPORTIONATE”

The Court was clear that:

• Some judges had approached applications for relief on the basis that, unless a default could be characterised as trivial or there was a good reason for it, they were bound to refuse relief.
• “This is leading to decision which are manifestly unjust and disproportionate”.
• It was not the correct approach and was not mandated by what the court said in Mitchell.
• A more nuanced approach is required.
• The two factors in the rule must always be given particular weight. Anything less will lead to a slipping back into the old culture of non-compliance which the Jackson reforms were designed to eliminate.

CONTESTED APPLICATIONS FOR RELIEF FROM SANCTIONS SHOULD BE EXCEPTIONAL CASES

“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”

PRESSURE PLACED ON THE PARTY NOT IN DEFAULT

This puts a degree of pressure on the party not in default.  This is something that will be considered in the next article in this series.