UNSUCCESSFUL APPEAL AGAINST GRANT OF RELIEF FROM SANCTIONS: HOME GROUP LIMITED -v- MATREJEK
There may be a few appeals pending where a party is arguing that relief from sanctions should be granted on the grounds of the Denton criteria which “modified” the Mitchell test. The unusual aspect of the decision in Home Group Limited -v- Matrejek  EWHC 441 (QB) was that the case was decided on the Mitchell principles and relief from sanctions granted to the claimant. It was then the defendant that appealed arguing that relief should not have been granted. The original hearing was heard on the “Mitchell” basis, the appeal was heard on the “Denton” criteria.
The claimant was a social landlord bringing a possession claim against the defendant.
The defendant failed to attend a directions hearing and the action was struck out.
The Circuit Judge subsequently reinstated the action and granted relief from sanctions.
The defendant appealed the decision to grant relief from sanctions.
THE DECISION ON APPEAL
At the time of the hearing before the District Judge the case of Mitchell was the leading authority. By the time of the appeal Mitchell had been “revised” by Denton. Both parties agreed that the Denton principle applied.
There are several important points here.
- The need for court orders to be clear in their intentions.
- The overwhelming wisdom of turning up to a hearing when the court has indicated that it wants the parties to be present.
- The advantages of making a prompt application for relief from sanctions.
- The difficulties of overturning an order in relation to relief from sanctions which is, in essence, a case management order.
- The question of whether it is necessary, or desirable, to cite authorities, other than Denton, in relief from sanctions hearings and appeals.
- This case provides a reminder of the advantage of the purpose of court orders (particularly those made in the absence of the parties) being made clear, of the need for parties to comply with court orders (however much they may have misgivings about them) whilst they still apply, and for all the known circumstances to be considered with care when imposing sanctions.
- The starting point is that the application for relief was made in good time.
- The hearing below on 9 June 2014 took place at a time when Mitchell was recognised to be the leading authority. It is clear from  &  of the judgment in Denton, Decadent & Utilise that Mitchell was misunderstood and misapplied by some courts, that some judges were approaching applications for relief upon the incorrect basis that, unless a default could be characterised as trivial or there was a good reason for it, they were bound to refuse relief and that was leading to decisions that were manifestly unjust and disproportionate. The purpose of the judgment in Denton, Decadent & Utilise was to provide clarification and amplification in certain respects, and thus a more nuanced approach to relief from sanctions.
- Whilst HHJ Lochrane did not have the benefit of the judgment in Denton, Decadent & Utilise, I accept that I must apply it when considering his decision.
- The judge clearly proceeded upon the requisite basis that the sanctions had been properly imposed and had complied with the overriding objective. It equally seems to me that he did, in effect, carry out the three stage approach required by Denton, Decadent & Utilise.
- As to the first stage, and albeit against the background that the Respondent believed that all that was left to do in the possession claim was to fix the trial date, the Respondent decided not to attend the Directions Hearing on 28 April when it was required to attend, failed to warn the Appellant or the court that it was not going to do so, and did not attend as required. As he made clear in his written reasons for refusing permission to appeal the judge found that the default was “not trivial”. The Respondent does not appeal against that finding. Whilst there was no prejudice to the Appellant, whose own case was in some disarray at that time (and who wanted an adjournment), I nevertheless proceed upon the basis that, in the terms ofDenton, Decadent & Utilise, this was a serious or significant default – albeit one which was plainly not, because of its particular circumstances, at the top end of the scale.
- As to the second stage, during the course of his judgment the judge carefully examined why the default had come about. He accepted that the Directions Order which provided for the linked directions hearings had not necessarily explained “terribly clearly” the court’s thinking (albeit that it should have been reasonably clear that there was at least some intention to link the two matters for some reason), and underlined that there had been no application made to vary that order (albeit, I would add, that that was against the background the parties had identified a possible way ahead without the need for such an application). He found that it was apparent that the Respondent did not understand the purpose of the linked directions process, and had attempted to alert the court and to obtain the Appellant’s agreement to vacate the hearing with a view to saving costs – which was laudable. He noted that the Appellant did not understand the purpose of the linked directions hearing either, and had some interest in the matter not going ahead on 28 April 2014. The direct cause of the default had been the Respondent’s decision, having written to and contacted the court without response, not to send representation “in the somewhat tenuous hope” that all would be well. It was therefore, he concluded, a failure to comply with an order of the court “somewhat deliberately”, with the mitigation being limited to the “perhaps explicable misunderstanding of the court’s purpose and the fact that the order was made without greater elaboration of the court’s purpose and in the absence of the parties themselves at the time”. Summarising the position in his written reasons for refusing permission to appeal the judge recorded that the Respondent’s default was “a misguided attempt to save costs upon an apparent misunderstanding of an earlier court order which was, on one reading, potentially partially valid” and that “…..there was just about a reasonable excuse…”.
- The judge was in the best possible position to assess the nature and effect of the Order that he had made of his own motion on 12 February 2014. He was also entitled to conclude that the Respondent did not understand the purpose of the linked directions (albeit that it plainly understood that it was required to attend). Equally, see (2) above, I see no necessary inconsistency between the judge’s comments in argument and in his ruling, and his ultimate conclusion that the Respondent had “just about a reasonable excuse”. It seems to me that that was a conclusion that he was entitled to reach.
- Against the background of the judge’s finding, in effect, that the failure was serious and significant (albeit plainly not, in my view, at the top end of the scale), and that there was just about a reasonable excuse, the third stage required an evaluation of “all the circumstances of the case so as to enable [the court] to deal justly with the application”. It is clear from  of his judgment that he did give particular weight to factors (a) and (b) in CPR 3.9. However he was also entitled to take into account all the other circumstances – including the overall position in relation to the Appellant’s case, the lack of prejudice to the Appellant, the rights of the alleged victims, and the limited extent to which court time had been lost.
- I reject Miss Blackmore’s arguments that the judge erred in various respects in his approach to factors (a) and (b), that he gave too much or too little weight to other circumstances, and that he took into account irrelevant considerations.
- Whilst it is clear that, unlike factors (a) and (b) none of the other circumstances carried particular weight, it seems to me that, against the background of my findings in relation to stages 1 & 2, and albeit that the judge was aware of a number of the other circumstances when he imposed the sanction in the first place, on the particular facts of this case the combination of all the circumstances was capable of carrying sufficient weight to justify the judge’s conclusion, in the exercise of his discretion, that the just outcome of the application was to grant relief on the terms that he did. It must, of course, be remembered that this was the exercise of discretion in the context of a case management decision and that such decisions are not lightly to be interfered with – see e.g. Mannion v Ginty  EWCA Civ 1667 (quoted at  in Mitchell).
- In the result, and although the balance was a fine one, it seems to me that the judge was entitled, in the exercise of his discretion, to come to the conclusion that he did.
- For the reasons set out above, this appeal is dismissed. I will deal with any consequential applications administratively.
OTHER POINTS TO NOTE ABOUT THIS APPEAL
One feature of the case is the extent to which the court was taken to other pre and post-Denton cases by way of example. The judge observed:
- During the course of the hearing I was also referred to a number of other authorities in which the approach to relief from sanctions after the implementation of the Jackson reforms (including the amendment of CPR 3.9) was considered. They included, in chronological order: Murray & Stokes v Neil Dowlman Architecture Ltd  3 Costs LR 460 (“Murray“); Durrant v Chief Constable of Avon & Somerset Constabulary [2013 EWCA Civ 1624 (“Durrant“); R (Royal Free London NHS Foundation Trust) v Secretary of State for the Home Department  EWHC 4101 (Admin) (“Royal Free“); Associated Electrical Industries Ltd v Alstom UK  3 Costs LR 415 (“Associated Electrical“); Chartwell Estate Agents Ltd v Fergies Properties SA  3 Costs LR 588 (“Chartwell“); and Yeo v Times Newspapers Ltd  EWHC 2853 (QB) (“Yeo“).
- Whilst I have considered all the authorities, I bear in mind that at  of the judgment in Denton, Decadent & Utilise, the Court of Appeal expressed the hope that the guidance that it went on to give as to the three stages by which a judge should address an application for relief from sanctions would avoid the need in future to resort to earlier authorities.
It will be interesting to see how strictly the guidance at  of Denton is observed. In theory the only guidance that need be referred to is the relevant paragraphs in Denton.
- I have recently updated the section Developments since Denton: All the Posts and Cases in one Place.
- An example (the other way) when the court overturned a post Mitchell pre-Denton order granting relief from sanctions can be found in Post Mitchell Pre-Denton decision to grant relief from sanctions overturned on appeal.