Denton v White: back from the brink

To say that the Court of Appeal decision in Mitchell v News Group Newspapers [2013] EWCA Civ 1537 had caused a bit of a stir among those who practise in the civil courts of England and Wales would perhaps amount to the legal understatement of this century. That decision was handed down on 27 November 2013.

Between that date and the arguments before the Court of Appeal in the case of Denton v TH White [2014] EWCA Civ 906 (‘Denton’) on 16 and 17 June 2014, the Mitchell case had featured in at least five separate Court of Appeal decisions and generated a huge raft of satellite litigation in both the County Court and the High Court.

The way in which the Mitchell decision had been interpreted by lower courts had frequently led to outcomes which, on any rational basis, were unjust and unwarranted. Parties were made to suffer severe sanctions as a result of comparatively minor procedural defaults.

Just as worryingly, parties to litigation had ceased to co-operate and, entirely rationally, adopted a policy of ‘spot the breach’ in the hope that they might obtain windfall benefits as a result of a stringent application of the Mitchell guidelines.

Recognising this (and that the guidance in Mitchell had been “the subject of criticism”), the Court of Appeal (which included the Master of the Rolls as well as Lord Justice Jackson) heard three conjoined appeals and handed down their judgments in Denton on 4 July 2014. Despite the majority holding that the Mitchell guidance remained ‘substantially sound’, in fact, the court’s ‘restatement’ of the applicable principles amounts to a (welcome) re-injection of flexibility and (hopefully) the return of at least a degree of sanity.

Less tolerant

In paragraph 6.5 of chapter 39 of his final report of January 2010, Lord Justice Jackson said: “Courts at all levels have become too tolerant of delays and non-compliance with orders. In so doing they have lost sight of the damage which the culture of delay and non-compliance is inflicting upon the civil justice system.”

He thus recommended that: “The courts should be less tolerant than hitherto of unjustified delays and breaches of orders.” He also set out a draft of a revised version of CPR part 3.9.

The Civil Procedure Rule Committee took Jackson at his word. However, the new form of CPR part 3.9 which they propounded was different from the Jackson proposal. It was (and is) more stringent. As we all know, the new CPR part 3.9 (which came into effect in April 2013) removed the previous list of nine separate factors which were to be taken into account.

It provides as follows: “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.”

The Court of Appeal in Denton referred to the two specified criteria as factor (a) and factor (b).

I will not go into too much detail here about the Mitchell decision. It is sufficient to say that the court there emphasised that, following the Jackson Report and the amendment to CPR 3.9, a much more stringent regime was in place and that relief from sanction would be granted far less readily than before.

As the Court of Appeal acknowledged in Denton, many lower courts had, in interpreting the Mitchell guidelines, adopted “an unduly draconian approach”: if the breach could not be described as ‘trivial’ (and few were) or if there was not ‘good reason’ for it (and there were few ‘good reasons’), then relief was bound to be refused.

Serious or significant

In Denton, the Court of Appeal said that, in deciding whether to grant relief from sanctions under CPR 3.9, courts should henceforth adopt a three-stage approach.

The first stage is to identify and assess the seriousness or significance of the failure to comply or breach of a rule. Instead of asking whether the breach is ‘trivial’, the court should ask itself whether the breach is ‘serious or significant’.

In doing so, it may be useful to ask whether the breach is one which imperils future hearing dates or otherwise disrupts the conduct of the litigation. At this stage, the assessment of whether or not the breach or failure to comply is serious or significant should not involve a consideration of other unrelated failures or breaches.

Thus for stage one, two insignificant breaches do not add up to one significant breach. If the breach is neither serious nor significant, then relief from sanction should normally be granted.

The second stage is to consider why the default occurred. This stage is the same as, or at least similar to, the ‘good reason’ test in Mitchell. However, the court emphasised that the examples of good reasons given in Mitchell were just that: examples. There was no ‘encyclopaedia of good or bad reasons’.

The third stage is for the court to consider ‘all the circumstances of the case’ so as to enable it to deal justly with the application. Here, the Court of Appeal emphasised that it had not intended in Mitchell to say that the court should ignore ‘all the circumstances of the case’, which phrase is, after all, expressly set out in CPR 3.9.

It accepted that the description of factor (a) and factor (b) in Mitchell as having ‘paramount importance’ had “given rise to some confusion”.
It had encouraged the view that factors other than factor (a) and factor (b) were of little weight.

This was not so. Whereas factor (a) and factor (b) are of “particular importance and should be given particular weight”, nevertheless, it is always necessary to have regard to all the circumstances of the case. These will, of course, vary from case to case, but might include: the promptness of the application for relief and other past or current breaches.

Jackson LJ gave a dissenting judgment on this third stage. He agreed with the overall result in all three appeals. He agreed with the three-stage test propounded by the majority (the Master of the Rolls and Lord Justice Vos). However, he disagreed that factor (a) and factor (b) should be given particular weight. In his view, they should be given no greater weight than any other relevant factor. The overriding consideration was “to deal justly with the application”.

The court did, however, unanimously emphasise that opportunistic behaviour by litigants seeking to take advantage of minor failures to comply by others was wrong. It emphasised that all parties to litigation had an obligation to co-operate to ensure that it is conducted efficiently and at proportionate cost. It mentioned the new provision in CPR 3.8(4) (which allows an agreement to extend time by
up to 28 days). Contested applications for relief from sanction should from now on, it said, be
the exception rather than the rule. Courts, it said, will be much more ready to penalise opportunism.

Flexible approach

The court’s decision in Denton is to be welcomed. At least implicitly, the court realised that it had got it wrong in Mitchell.

Whether the test in Denton is a restatement
or merely ‘clarification’, it is clear that, from
now on, courts are free to apply a more flexible approach to the grant of relief from sanctions, one that permits an outcome which better reflects both the gravity of the breach and the justice of the individual case.

Those of us who are sufficiently long in the tooth will, no doubt, remember a previous procedural logjam that which arose as a result of order 17
rule 11 of the former County Court Rules. This led to a raft of satellite litigation which eventually culminated with the Court of Appeal case in Bannister v SGB [1998] 1 WLR 1123 and the abolition of the rule.

In the Bannister case Saville LJ complained: “Although the introduction of the rule will unquestionably have had a salutary effect on the working habits of dilatory litigators, the spawning of all this satellite litigation is in total conflict with the original purposes of the rule… This lamentable history surely provides an object lesson of the reasons why draconian new rules should not be introduced into litigation practice without being first submitted to a widespread and appropriately critical consultation process.”

Plus ça change! SJ

David Holland QC is a barrister practising at Landmark ?Chambers. He was counsel instructed by the Law Society and the Bar Council as intervening parties in the Denton case

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