POST MITCHELL PRE-DENTON RELIEF FROM SANCTIONS APPEAL: MITCHELL PRINCIPLES WERE NOT HERE TO STAY

The appeal in Michael Wilson & Partners Ltd -v- Sinclair [2015] EWCA Civ 774 involves the Court of Appeal considering the Mitchell/Denton divide.

KEY POINTS

• The Court overturned a decision, made post-Mitchell but prior to Denton, where a judge refused to lift a stay.
• A stay is different to an order striking out an action.
• In the exceptional circumstances of this case it was appropriate to set aside the order which had been made under the “Mitchell” principles.

THE FACTS

The claimant had been 16 weeks late in complying with an order for security for costs. Consequently an appeal was stayed. In July 2013 a judge refused an application to lift the stay. The judge found that it was an application for relief from sanctions and, applying the Mitchell criteria,  refused the application to lift the stay.

Shortly after the Denton decision the claimant filed an application for revocation of that order.

THE COURT OF APPEAL JUDGMENT

Lord Justice Richards.

1. In the ordinary course I would examine whether the circumstances justified revisiting the earlier order of the court before I examined, and in order to see whether it was appropriate to examine, the substance of the challenge to that order. In the present case, however, the substance of the challenge to Lewison LJ’s order forms an integral part of the argument that the court should revisit the order. What is said is that the order was based on an understanding of Mitchell which has been shown by Denton to represent a fundamentally mistaken view of rule 3.9, and that the consequence was a grossly disproportionate and wholly unjust outcome, against which there was no realistic avenue of appeal. It is submitted thatDenton effected a change of circumstances which, when taken with the need to avoid a serious injustice, takes this case out of the ordinary and provides a proper basis for the exceptional exercise of the court’s discretion under rule 3.1(7).

2. As is now well known, the court in Denton said that a judge should address an application for relief from sanctions in three stages. To summarise paragraphs 25 to 38 of the judgment of Lord Dyson MR and Vos LJ:

i) The first stage is to determine whether the breach is significant or serious. If it is not, relief from sanction will usually be granted.

ii) The second stage is to determine whether there is good reason for the breach.

iii) As to the third stage, the judgment stated that the important misunderstanding of Mitchell was that, if there is a non-trivial (now serious or significant) breach and there is no good reason for the breach, the application for relief will automatically fail. That is not so. 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”. That is the third stage. Further, the court in Mitchell described the two factors specifically mentioned in the rule, namely (a) the need for litigation to be conducted efficiently and at proportionate cost and (b) the need to enforce compliance with rules, practice directions and orders, as being of “paramount importance”. This had encouraged the idea that other factors were of little weight. The judgment in Denton sought to remove that confusion by re-asserting that the two factors are of “particular importance” and should be given “particular weight” but stressing that “it is always necessary to have regard to all the circumstances of the case”. The judgment expressed concern that a misunderstanding of Mitchell was leading to decisions which were manifestly unjust and disproportionate, whereas a more nuanced approach was required.

1. I turn to consider how the approach laid down by Denton applies to the facts of the present case and whether it produces a different result as compared with the approach adopted by Lewison LJ by reference to Mitchell.

2. First, I am satisfied that the breach was “significant or serious”. There was a lengthy period of default. The stay of the appeal triggered by the default did not result in the loss of an actual hearing date, since no hearing had yet been fixed (though the Civil Appeals Office had sent MWP’s solicitors a listing window notification letter dated 17 October 2012, which they claim not to have received at the time); but it disrupted the progress of the appeal and caused significant delay to the hearing of the appeal. That would have been the position even if the stay had been lifted on MWP’s application following payment of the monies in May 2013. I leave out of account the further time that has elapsed by reason of the respondents’ resistance to the lifting of the stay and their successful strike-out application in July 2013, which in my view should not be treated as increasing the significance or seriousness of MWP’s breach of Rix LJ’s order.

3. Secondly, I am satisfied that there was no good reason for the breach. Given the impression conveyed to Rix LJ that MWP was “full of money” and could make immediate payment, subsequent excuses for the delay in making payment ring hollow. I do not think it necessary to go into the detail of the various explanations given on behalf of MWP in correspondence and in the witness statements of Mr Michael Wilson himself, though it is right to record that Mr Shepherd took us through the history and was able to make great play of the inconsistencies between different accounts over time. At best, the position was as Lewison LJ regarded it, that MWP chose to meet other obligations in preference to compliance with Rix LJ’s order. In any event, it can properly be inferred from the evidence as a whole that the non-compliance was deliberate.

4. As regards the first two stages, therefore, there is no material difference in outcome as between the approach applied by Lewison LJ and the approach laid down in Denton. It is in relation to the third stage, to which I now turn, that important differences arise.

5. I should begin with the two factors specifically mentioned in rule 3.9(1). As to the need for litigation to be conducted efficiently and at proportionate cost, the breach was self-evidently prejudicial to the efficient conduct of the appeal itself and of the underlying proceedings; it may also have had adverse effects on related proceedings. As to the need to enforce compliance with rules, practice directions and orders, the breach involved a lengthy and, as I have said, deliberate failure to comply with Rix LJ’s order, following on from the previous failure to comply with Teare J’s order of 21 September 2012 as to payments on account of costs. It should of course be borne in mind that MWP had in fact complied with Rix LJ’s order by the time the question of relief from sanction came to be addressed. Nevertheless, the considerations to which I have referred underline the particular importance of the two factors specifically mentioned in rule 3.9(1) and the particular weight that should be given to them in determining whether to grant relief from sanction.

6. The problem about Lewison LJ’s approach, however, is that he went beyond attaching particular importance to those two factors. Basing himself understandably on the language of Mitchell, he treated them as paramount considerations which were effectively determinative against the grant of relief from sanction; and he did not do what Denton has since stressed must be done, namely have regard to all the circumstances of the case. This is a key point, since consideration of all the circumstances of the case casts a very different light on the matter.

7. It should be recalled that the sanction imposed by Rix LJ in the event of MWP failing to pay the money in time was a stay, not a strike-out, and that he expressly declined to make an unless order with a strike-out sanction. It seems to me that in providing in that way for a stay, Rix LJ plainly had in mind a stay that might be lifted once payment was made, rather than a permanent stay that was equivalent in its effect to a strike-out. That was evidently how counsel for the respondents also understood it, since the reason why he sought the sanction of strike-out was that a stay would enable the appeal to “become live again” on payment of the money even after many months’ delay (see paragraph 14 above). The subsequent warning, conveyed through Rix LJ’s clerk, that MWP was likely to find itself in “grave difficulties” if, by missing any of the deadlines, it suffered a stay of its appeal did not alter the character of the stay that Rix LJ had ordered.

8. Strike-out is, moreover, a sanction of last resort. In Global Torch Ltd v Apex Global Management Ltd and Others (No.2) [2014] UKSC 64, [2014] 1 WLR 4495, Lord Neuberger (with whom Lord Sumption, Lord Hughes and Lord Hodge agreed) quoted with evident approval the observation of Norris J at first instance that “the striking out of a statement of case is one of the most powerful weapons in the court’s case management armoury and should not be deployed unless its consequences can be justified”. The sanction had been imposed in that case pursuant to an unless order made only after the party in question had failed to comply with an earlier order requiring him to sign a statement personally. In relation to the alleged disproportionality of the order, Lord Neuberger’s judgment included this:

“23. … The importance of litigants obeying orders of court is self-evident. Once a court order is disobeyed, the imposition of a sanction is almost inevitable if court orders are to continue to enjoy the respect which they ought to have. And, if persistence in the disobedience would lead to an unfair trial, it seems, at least in the absence of special circumstances, hard to quarrel with a sanction which prevents the party in breach from presenting (in the case of a claimant) or resisting (in the case of a defendant) the claim. And, if the disobedience continues notwithstanding the imposition of a sanction, the enforcement of the sanction is almost inevitable, essentially for the same reasons ….

24. … Further, it is difficult to have much sympathy with a litigant who has failed to comply with an unless order, when the original order was in standard terms, the litigant has been given every opportunity to comply with it, he has failed to come up with a convincing explanation as to why he has not done so, and it was he, albeit through a company of which he is a major shareholder, who invoked the jurisdiction of the court in the first place.

25. … The Prince has had two very clear opportunities to comply with the simple obligation to give disclosure in an appropriate fashion, namely pursuant to the orders of Vos and of Norris JJ. Indeed, there would have been a very good chance that, if he had offered to sign the relevant statement after judgment had been entered against him, the court would have set aside the judgment and permitted him to defend provided that no unfair prejudice was thereby caused to the other parties, and he satisfied any appropriate terms that were imposed.”

Those observations lay stress on the sequence of orders that gave every opportunity for compliance before the ultimate sanction of strike-out was imposed. In similar vein, albeit dissenting as to the result, Lord Clarke referred at paragraph 47 of his judgment to his previously expressed view that “the draconian step of striking a claim out is always a last resort”. (I should add that nothing in Global Torch Ltd was intended to impinge onMitchell or Denton, as was made clear in the judgments at paragraphs 40 and 79.)

1. Bringing together the fact that Rix LJ imposed only a stay, not a strike-out, and what was said in Global Torch Ltd about the giving of every opportunity to comply with an order before resorting to a strike-out, I would not have expected to move straight from a stay to a strike-out in the present case unless there had been a continuing default and a further opportunity, by way of a specific unless order, for MWP to remedy that default. As it was, however, the default had been remedied by the time the formal application for a strike-out was filed and the matter came to be considered by Lewison LJ, so that there was no need for an unless order with the sanction of strike-out for non-compliance. To move straight to a strike-out in those circumstances was a very strong step indeed and, as it seems to me, a step outwith the contemplation of Rix LJ when he ordered a stay in the event of failure to pay the monies within the time specified.

2. That way of looking at the matter is supported by Leggatt J’s convincing analysis of a similar issue in Summit Navigation Ltd v Generali Romania Asigurare Reasigurare SA [2014] EWHC 398 (Comm), [2014] 1 WLR 3472. In that case a consent order had provided for the claimants to provide security for costs by a specified date, failing which the action would be automatically stayed. In the event, the security was not provided until the day after the date specified, with the result that the automatic stay took effect. The claimants applied for the stay to be lifted. The defendants resisted the application. The judge had no sympathy with their position, which he described as an attempt to rely on Mitchell to turn to tactical advantage a short delay in providing security which in itself had no material impact on the efficient conduct of the litigation. What matters, however, is the specific reasoning that led him to lift the stay. He accepted that the stay was a sanction and that relief from sanction was required pursuant to rule 3.9, but he continued:

“31. It does not follow, however, from the fact that the stay of proceedings imposed in this case is a ‘sanction’ that all sanctions are equal and are to be treated as equivalent to one another for the purposes of CPR r 3.9. There is, in my view, a significant difference between an order which specifies the consequence that proceedings are to be stayed if security for costs is not provided by a specified date and an order that, unless security is provided by a specified date, the claim will be struck out. Such ‘unless’ orders are of course commonly made when security for costs is not provided but not, at any rate in the Commercial Court, before the party ordered to provide the security has first failed to do so within a specified time.

…

34. To apply the same approach to an application to lift a stay which takes effect when security is not provided on time as to an application for relief from the sanction of striking out the claim for failure to comply with an ‘unless’ order would collapse the important distinction between those two different kinds of order, with the different gradations of seriousness which they are generally understood to signify. … The essential difference is that a stay of proceedings if security is not provided is intended to be non-permanent, whereas an order that the claim be struck out is intended to bring the action permanently to an end absent any further order which avoids that result.

35. In the present case the period between the date of the order for security … and the date by which the security was ordered to be provided … was only nine days. Neither the parties when they agreed the form of order, nor the court when making an order in the terms agreed, could reasonably have intended that the consequence of missing that deadline would be that the action would come permanently to an end. To the contrary, the only intention which can in my view reasonably be attributed to the parties and to the court is that a stay would be temporary only; and that if the requisite security was provided subsequently, the stay would be lifted on appropriate terms including as to costs. The reasonable expectation is that, to debar the claimants permanently from continuing with the action, a further order from the court would be needed thereby ensuring that the claimant has been given a proper choice between putting up the security and losing the right to pursue the claim for good.

36. The broad language of CPR r 3.9 is quite capable of accommodating more than one approach to applications for relief from sanctions taking account of the nature of the sanction and the nature of the relief sought. In giving guidance as to how the amended CPR r 3.9 should be applied, the Court of Appeal in the Mitchell case … was not concerned with the ‘rather special form of order’ that is an order for security for costs, nor with the granting of relief from a sanction which was not intended to be permanent ….”

1. In that way Leggatt J distinguished the decision in Mitchell. It seems to me that on the principles governing the application of rule 3.9 as restated inDenton, the various considerations to which he referred would fall naturally to be taken into account at the third stage, when looking at all the circumstances of the case.

2. There is a further point to be made about the approach taken in this case by Lewison LJ. In the ordinary course there is a clear distinction between the initial imposition of a sanction and the exercise to be conducted under rule 3.9 in considering whether to grant relief from sanction. I made that point, in relation to the sanction of strike-out, in my judgment in Walsham Chalet Park (t/s The Dream Lodge Group) v Tallington Lakes Ltd [2014] EWCA Civ 1607, [2014] 1 Costs LO 157, at paragraph 44:

“It must be stressed, however, that the ultimate question for the court in deciding whether to impose the sanction of strike-out is materially different from that in deciding whether to grant relief from a sanction that has already been imposed. In a strike-out application under rule 3.4 the proportionality of the sanction itself is in issue, whereas an application under rule 3.9 for relief from sanction has to proceed on the basis that the sanction was properly imposed (see Mitchell, paras 44-45). The importance of that distinction is particularly obvious where the sanction being sought is as fundamental as a strike-out ….”

On Lewison LJ’s reasoning, however, the points became merged: the refusal of relief from the sanction of a stay was going to lead automatically to the appeal being struck out. Yet no separate consideration was given to whether a strike-out was itself a proportionate sanction. It had not been considered by Rix LJ, since he had not imposed that sanction. If it was going to be imposed as the consequence of the refusal of relief from the sanction of a stay, it was essential to factor it in to the exercise under rule 3.9. There is, however, no indication that Lewison LJ looked at the matter in those terms. When it is looked at through the lens of Denton, this consideration can readily be seen to come into the analysis at the third stage, when having regard to all the circumstances of the case.

1. In relation to the sanction of a strike-out, I should also mention the terms of CPR rule 52.9 since they relate specifically to the striking out of anappeal notice:

“52.9(1) The appeal court may –

(a) strike out the whole of part of an appeal notice ….

(2) The court will only exercise its powers under paragraph (1) where there is a compelling reason for doing so.”

The need for a compelling reason may not add much to the overall analysis but needs to be borne in mind at the third stage of the exercise under rule 3.9 if the refusal of relief from sanction is going to lead automatically to a strike-out of the appeal.

1. Other factors relevant at the third stage include the fact that MWP failed to avail itself of the liberty to apply granted by Rix LJ and, far from applying promptly for relief from sanction, made the application only after the payments had eventually been made. On the other hand, Mr Sinclair and Sokol do not appear to have pressed for payment at any time prior to their letter of 20 May 2013 requesting that the appeal be struck out. I have dealt already with the effect of the delay on the progress of the appeal. It cannot be said, however, that the delay caused the respondents serious prejudice, even in the context of litigation that had already been protracted, or that it adversely affected other litigants. I do not think it appropriate to embark on detailed consideration of the wider conduct of the parties or of the extent of their compliance or non-compliance with orders in other cases. Both sides made points about such matters but in my view they are not capable of having a significant effect on the overall balance here. The fact that the appeal involves an issue of general importance is of some relevance but the merits of the appeal were rightly not addressed in submissions and should play no part in the overall assessment.

2. When all the circumstances of the case are taken into account as required by Denton, in my view they point overwhelmingly towards the grant of relief from sanction, that is to say to the lifting of the stay, rather than in the direction of a strike-out of the appeal for the default that occurred.

3. In conclusion on this issue, I see why Lewison LJ took the draconian approach he did on the basis of his understanding of the principles laid down in Mitchell. Leggatt J’s decision in the Summit Navigation Ltd case shows that a very different approach was possible in a similar context even in the light of Mitchell. It was not until Denton, however, that it became clear that Lewison LJ’s approach was mistaken. Applying the restatement inDenton – recognising that this was a significant or serious breach and that there was no good reason for it, giving particular weight to the two factors specifically mentioned in rule 3.9(1) but having regard at the same time to all the other circumstances to which I have referred – I am left in no doubt that Lewison LJ’s decision was wrong.

4. There remains, however, the important question whether the circumstances justify the revocation of his order pursuant to rule 3.1(7) and the making of a substitute order in the exercise of a fresh discretion.

The application of CPR rule 3.1(7)

1. Rule 3.1(7) provides that the power of the court under the CPR to make an order “includes a power to vary or revoke the order”. The case-law relating to the exercise of that power was considered at length in the judgment of Rix LJ (with whom the other members of the court agreed) inTibbles. He summarised the relevant principles as follows:

“39. In my judgment, this jurisprudence permits the following conclusions to be drawn:

(i) Despite occasional references to a possible distinction between jurisdiction and discretion in the operation of CPR r 3.1(7), there is in all probability no line to be drawn between the two. The rule is apparently broad and unfettered, but considerations of finality, the undesirability of allowing litigants to have two bites at the cherry, and the need to avoid undermining the concept of appeal, all push towards a principled curtailment of an otherwise apparently open discretion. Whether that curtailment goes even further in the case of a final order does not arise in this appeal.

(ii) The cases all warn against an attempt at exhaustive definition of the circumstances in which a principled exercise of the discretion may arise. Subject to that, however, the jurisprudence has laid down firm guidance as to the primary circumstances in which the discretion may, as a matter of principle, be appropriately exercised, namely normally only (a) where there has been a material change of circumstances since the order was made, or (b) where the facts on which the original decision was made were (innocently or otherwise) misstated.

(iii) It would be dangerous to treat the statement of these primary circumstances, originating with Patten J and approved in this court, as though it were a statute. That is not how jurisprudence operates, especially where there is a warning against the attempt at exhaustive definition.

…

(vii) The cases considered above suggest that the successful invocation of the rule is rare. Exceptional is a dangerous and sometimes misleading word: however, such is the interest of justice in the finality of a court’s orders that it ought normally to take something out of the ordinary to lead to variation or revocation of an order, especially in the absence of a change of circumstances in an interlocutory situation.”

1. At paragraphs 40-42, Rix LJ observed that the cases he had cited may not reveal “the true core of circumstances” for which rule 3.1(7) was introduced. He pointed out that revisiting of orders is commonplace where the judge includes a “liberty to apply” in his order and that there may well be room within rule 3.1(7) for a prompt recourse back to a court to deal with a matter which ought to have been dealt with in an order but which in genuine error was overlooked and which the purposes behind the overriding objective would favour giving proper consideration to on the materials already before the court. This would not be a second consideration of something which had already been considered (as would typically arise in a change of circumstances situation), but would be giving consideration to something for the first time: on that basis, the power within the rule would not be invoked in order to give a party a second bite of the cherry or to avoid the need for an appeal, but to deal with something which, once the question is raised, is more or less obvious, on the materials before the court. It was in that context that he emphasised the word “prompt”, stating that the court would be unlikely to be prepared to assist an applicant once much time had gone by. I mention that passage of the judgment for completeness, but it was addressing a different situation from that which arises in the present case. The points in paragraph 39(i) of the judgment, however, are all directly applicable: considerations of finality, the undesirability of allowing litigants to have two bites at the cherry, and the need to avoid undermining the concept of an appeal.

2. Rix LJ pointed out that the court in Tibbles was not concerned with a final order. I doubt whether the order sought to be revoked in this case is a final order of the kind that Rix LJ had in mind. The rules relating to routes of appeal give the striking out of a claim or statement of case as an example of a decision that is not final (see CPR Practice Direction 52A, paragraphs 3.6 to 3.8, in particular at paragraph 3.8(2)); and whilst that does not cover in terms the striking out of an appellant’s notice, it is a helpful pointer. Moreover, since the effect of the order was to prevent the appeal from proceeding, it did not amount to the “final determination” of an appeal, the re-opening of which would be subject to particular constraints under the principles established in Taylor v Lawrence [2002] EWCA Civ 90, [2008] QB 528 and now reflected in CPR rule 52.17. The order could in theory have been appealed to the Supreme Court (section 40(2) of the Constitutional Reform Act 2005 provides that an appeal lies to the Supreme Court from any order or judgment of the Court of Appeal in civil proceedings), but it is unrealistic to suppose that such an appeal would have been entertained in practice. Overall, I take the view that the principles summarised by Rix LJ in Tibbles provide appropriate guidance but that the situation is one where the power under rule 3.1(7) should be exercised with particular caution. The particular importance of finality in this context is obvious. Changes in the law or in the understanding of the law will not generally provide a good reason for allowing earlier appellate decisions to be reopened.

3. The circumstances of this case do, however, strike me as truly exceptional. Mitchell, as the first decision of the Court of Appeal on the new wording of rule 3.9, gave important guidance on the approach of the courts towards application for relief from sanction. But as the court made clear in Denton, that guidance, or the way the guidance was widely understood, led to decisions that were manifestly unjust and disproportionate, to the extent that within a few months the court found it necessary in Denton to provide further guidance, restating the relevant principles. I have explained at length above that when this case is viewed through the lens of Denton rather than Mitchell, Lewison LJ can be seen to have approached the matter too narrowly and to have reached a decision that was plainly wrong. It seems to me that the restatement in Denton, and the very different light it casts upon this case, amounted to a sufficient change of circumstances, or to something sufficiently out of the ordinary, to justify exercising the discretion under rule 3.1(7) to revisit Lewison LJ’s order.

4. In relation to the discretion under rule 3.1(7), it is also important that MWP’s application was made promptly after the judgment in Denton was handed down: I have explained the particular context in which Rix LJ in Tibbles emphasised the importance of promptness, but I would attach equal importance to it in the present context. I have also taken into account the various points made in the course of Mr Shepherd’s submissions, including his plea that Mr Sinclair and Sokol should not be exposed to a continuation of what has already been protracted litigation at the suit of MWP. Relevant to that point is that Mr Sinclair and Sokol have indicated that if MWP’s appeal remains struck out they will not pursue their extant counterclaim. I have acknowledged the importance of finality and have explained why I do not regard it as determinative of the outcome in this case, but I would add that the present proceedings are in any event only one part of a wider litigation picture and that even if MWP’s appeal were to remain struck out it would not produce finality overall.

5. In conclusion on this issue, I would exercise the court’s discretion under rule 3.1(7) to revoke Lewison LJ’s order of 9 December 2013 and to take a fresh decision on the matters that were before him on that occasion.

Fresh decision on application for reconsideration of Lewison LJ’s orders of July 2013

1. What that means is that a fresh decision is needed on MWP’s application for reconsideration of Lewison LJ’s orders of July 2013 refusing to lift the stay and ordering the strike-out of the appeal.

2. For the reasons I have given above and need not repeat, I would allow that application and would make an order under rule 3.9 granting relief from the sanction imposed by Rix LJ’s order of January 2013: I would lift the stay, thus allowing the appeal to proceed. I would do so, however, only on terms as to costs, an issue addressed in separate written submissions by counsel following receipt of a draft of this judgment.

Lord Christopher Clarke :

1. I agree. This case raises an unusual combination of significant features.

2. First, Lewison LJ’s refusal of relief was made in the light of Mitchell and before the restatement of applicable principles in Denton. Mitchell was the first decision of the Court of Appeal on the new wording of rule 3.9. It gave rise to considerable disquiet in the light of the manner in which it had been understood and the relevant principles were soon revisited and restated in Denton.

3. Second, Lewison LJ treated Mitchell as a “game-changer” on the footing that it decided that the need to conduct litigation efficiently and at reasonable expense and the need to enforce compliance with rules and orders were “paramount considerations“. In fact, as Denton establishes, whilst those considerations are of “particular importance/weight“, they are required to be considered with all other relevant factors in determining what is just.

4. Third, insofar as Lewison LJ carried out such an exercise he did so on the footing that the two considerations were paramount. As a result he ascribed much less weight to other considerations than he might otherwise have done.

5. Fourth, the sanction imposed by the order of Rix LJ was not that, if security was not provided, the appeal would be struck out (as the Respondent had wished). The sanction ordered was a stay. As Leggatt J pointed out in Summit Navigation the two sanctions are different. When security for costs is ordered a stay is often ordered until security is given. If an application is made for more time to provide the security, the court is quite likely to make an order that unless it is provided by a certain time the action will be struck out. If the security is provided after the stay and an application is made to lift it the applicant will have to persuade the court that the justice of the case requires that that should be done. The longer the delay the less likely it is that the court will be so persuaded; and intervening circumstances or the behaviour of the applicant may make lifting of the stay appropriate. But any application to lift the stay will be made in the context that the court has not previously made any order for the case to be struck out. The applicant has not already been given what is expressed to be a last chance. As my Lord has pointed out Lewison LJ’s approach did not take into account the fact that no one had previously decided to impose the sanction of strike out and that Rix LJ had refused to do so.

6. Fifth, I agree that, whatever Draco might have thought, the circumstances of the case pointed overwhelmingly towards the grant of relief from the sanction of stay. Such an order is the way to deal justly with the application.

7. Sixth, I am satisfied that the combination of circumstances (and the change therein) to which I have referred are both out of the ordinary and provide a compelling reason why we should revisit the discretion exercised by Lewison LJ, revoke his order of 9 December 2013 and make an order as proposed by my Lord.

COMMENT

It is important to note that not every post-Denton appeal was successful. In British Gas Trading -v- Oak Cash & Carry [2014] EWHC 4058 Mrs Justice McGowan DBE overturned an order granting relief from sanctions made under the Mitchell criteria.The Denton principles were in play at the time that appeal was heard, but these did not assist the defaulting party.  Similarly in Blemain Finance Ltd -v- Mukhar & Osman the appeal judge applied the Denton principles on appeal and upheld the decision to refuse relief from sanctions.

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