CPR: relief from sanctions

In Mitchell v News Group Newspapers Limited [2013] EWCA Civ 1537, Lord Dyson MR explained the rationale for causing a necessary judicial shift in attitude towards non-compliance of process requirements when he stated: ‘…the need to comply with rules, practice directions and court orders is essential if litigation is to be conducted in an efficient manner. If departures are tolerated, then the relaxed approach to civil litigation which the Jackson reforms were intended to change will continue’ (at paragraph 41).

There followed a line of authorities that reinforced the new strict approach to compliance with process requirements (see, for example, Durrant v Chief Constable of Avon and Somerset Constabulary [2013] EWCA Civ 1624 and Thevarajah v Riordan [2014] EWCA Civ 15). However, the Court of Appeal in the recent case of Chartwell Estate Agents Limited v Fergies Properties SA & Hyam Lehrer [2014] EWCA Civ 506 adopted a more balanced approach when applying the Mitchell guidelines.

The claimant estate agency commenced proceedings against the defendants for lost commission. During the course of the proceedings, the claimant’s solicitors requested that the defendants disclose certain key documentary information in order to complete and exchange witness statements.

However, the defendants’ solicitors disputed that there were any other documents for disclosure. As a result, the deadline for exchange of witness statements was missed and neither side sought an extension of time from the court. The defendants’ solicitors eventually gave some disclosure, but the claimant’s solicitors maintained the need for full disclosure of the documents which it sought.

Eventually, the claimant’s solicitors issued an application for an extension of time for exchange of witness statements and for relief from sanctions pursuant to Civil Procedure Rule 3.9.

Hearing the application, Globe J decided to grant relief from sanction. He found that both parties were to blame for the delays which had caused the deadline for exchange of witness statements to be missed. The claimant’s solicitors were not satisfied with disclosure and had failed to apply to the court in good time for an extension. The defendants’ solicitors had been unhelpful and this also contributed to the delays.

Applying Mitchell, Globe J found that the claimant’s non-compliance could not be regarded as trivial. But the defendants were also not in a position to exchange witness statements with the claimant. Despite missing the deadline, the judge concluded that the trial date remained and refusing relief would be too severe a consequence and be an unjust result in the light of the background history. The judge granted relief from sanctions and extended time to exchange witness statements.

The defendants appealed.

Davis LJ, giving the leading judgment of the court, dismissed the appeal and upheld Globe J’s decision. His lordship made reference to the new culture of strict rule compliance which the Jackson reforms and the Mitchell decision had introduced, and the obligation of the courts to continue to foster a tougher and more robust approach.

But Globe J was, Davis LJ noted, required to consider ‘all the circumstances of the case’ as provided under rule 3.9. This was so in order to enable the court to deal with the application justly. Those circumstances included, for example, the important fact that the trial date would not be lost if relief was granted and a fair trial could still be had.

Globe J did not, according to Davis LJ, misdirect himself on the issue of sanctions and relief. That decision had not been made solely because refusing the application would be a disproportionate consequence in the claimant’s ability to pursue its claim. On the contrary, Globe J had reached his conclusion that it would be too severe a consequence when set against all the background history.

Davis LJ placed importance on the reference in rule 3.9 to the need to consider ‘all the circumstances of the case’ when dealing with an application for relief. This allowed Globe J to depart from the expectation which otherwise would arise.

Of giving greater weight to proportionality of cost and rule compliance (rule 3.9 (a) and (b) respectively), Davis LJ said this regarding the Mitchell guidelines: ‘It must not be overlooked that the Court of Appeal in Mitchell did not say that the two factors specified in CPR 3.9 will always prevail, as a matter of weight, over any other circumstances in a case where the default is not trivial and where there is no good justification. It is true that it later stated that the expectation is that the two factors mentioned in CPR 3.9 will “usually” trump other circumstances.

‘But it did not say that they always will. That, with respect, must be right. It must be right just because CPR 3.9 has required that all the circumstances are to be taken into account and has required that the application be dealt with justly’ (at paragraph 57).

The factors or ‘circumstances’ identified by Globe J justified his decision to allow an extension of time and relief from sanctions. Those circumstances outweighed proportionality of cost and rule compliance, and therefore Davis LJ concluded there was no proper basis for interfering with Globe J’s evaluation of the position and his exercise of discretion.

Chartwell illustrates a departure from the ‘status quo’ of strict judicial attitudes towards default of process requirements following Mitchell. The case serves as an important authority in which the Court of Appeal considered the application of rule 3.9 against all the circumstances of the case rather than adopting a rigid and disciplinarian approach.

For some, this approach will be welcomed as it appears to balance the need for the courts to deal with rule compliance with the need for the courts to dispense substantive justice (or justice on the merits). For others, the approach adopted by the Court of Appeal may be seen as undermining the new philosophy which underpins rule 3.9, and one which creates unnecessary complexity and inconsistency within the jurisprudence, and thereby risks fuelling costly satellite litigation.

Masood Ahmed, University of Leicester