Mitchell Appeal Trio: Mitchell Judgment is misunderstood rather than flawed

The judgment in the Mitchell trio of conjoined cases  was handed down on 4 July 2014 – providing a new three-stage test to replace the Mitchell guidance (Denton v TH White Ltd, Decadent Vapours Ltd, Bevan, Utilise TDS Ltd, Davies [2014] EWCA Civ 906]). 

The Test in Mitchell and the Jackson Reforms

Riding on the back of the Jackson reforms the case of Andrew Mitchell MP v News Group Newspapers Ltd [2013] otherwise known as the Mitchell case promised to usher in a new era of compliance with the Civil Procedure Rules.

The Judgment in Mitchell provided a two stage test for the Court to apply to the facts when considering whether to grant an application for relief from sanctions under CPR 3.9:

1)      Was the breach trivial?

If the answer was yes then relief from sanctions would be granted.  If not the next stage of the test would be considered.

2)      Was there a good reason for the breach?

 If the answer to this stage was no then no relief would be granted.

Supporters of the Jackson reforms and of the Mitchell Judgement including Lord Jackson himself believed that the reforms and the judgment would create an efficient and fair environment in which to litigate.  Law firms would no longer flaunt Court Orders and expect the Court to be lenient.  Parties would comply with time limits as to do otherwise would require an application for relief from sanctions and the Court would be inclined to refuse such an application.

Unfortunately, instead of an era of efficiency, the Courts became clogged up with applications for relief from sanctions and subsequent satellite litigation became typical.  Parties to a claim hoping to land a great result for their clients would refuse to extend deadlines or show leniency to their opponents so that the Court would strike out their opponent’s case.

Another obvious pitfall in the new rules was the likely increase of professional negligence claims against solicitors.  Due to the reforms and the Mitchell case, it was more likely that a Court would apply sanctions if a deadline was missed.  This would leave a client who had had their case struck out seeking to recover damages from the law firm – increasing the overall number of claims issued in the Court, contrary to the intentions of the Jackson reforms.

Furthermore, there was a series of Court cases which handed down inconsistent decisions on what was a trivial breach and what was not a trivial breach – providing no realistic guidance to the legal profession – you can see our article on various post-Mitchell Judgments here.

The Court of Appeal orders consistency

To increase the efficiency of the Court and to provide consistency between future cases involving applications for relief from sanctions, the Court of Appeal ordered that three appeal cases referring to Mitchell were conjoined with the aim that the appeal judgment would clarify the legal test in Mitchell.

Common to all three appeals was that the time frame specified in a CPR provision, practice direction or Order had been exceeded and that failure to do so meant that a specified sanction would be applied:

  • The case of Denton v TH White Ltd and another concerned an application for relief after the Claimant served additional witness statements six months late and one month before trial.  The Judge allowed the Claimant’s application and the Defendant appealed.

 

  • In the case of Decadent Vapours Ltd v Bevan, the Claimant failed to comply with an unless order requiring it to pay certain court fees or the claim would be struck out.   The Claimant’s solicitor sent a cheque to the court by DX on the due date, which was lost.  The claim was struck out and the Claimant appealed.

 

  • In the case of Utilise TDS Ltd v Davies and others the claimant filed a costs budget 45 minutes late. The court considered this to be a trivial breach, but refused relief from sanctions.  It held that it was entitled to consider a second breach of the same Order (the Claimant being 13 days late in notifying the Court of the outcome of negotiations between the parties).  This second breach turned the first breach into a non-trivial one and sanctions were applied.  The Claimant appealed the decision.

The Denton test

The judgment in Denton was handed down on 4 July 2014 and it confirmed that the proper approach the Court should take when considering applications for relief from sanctions was to apply a three stage test:

1)      Consider and examine whether the breach was serious or significant taken in isolation.  If the breach was not serious or significant relief should usually be granted and consideration of steps 2 and 3 is not required.

2)      Consider why the breach occurred and whether there was a good reason for it.  In Denton it was stated that there was no encyclopaedia of good and bad reasons and that the examples given in Mitchell, i.e. the solicitor suffered a debilitating illness or was injured in an accident, were no more than examples.

3)      If neither of the first two steps is satisfied then all the circumstances in the case should be taken into consideration including CPR 3.9 – the need for litigation to be conducted efficiently and at a proportionate cost and the need to enforce compliance with the CPR, practice directions and Court Orders.

Denton Aftermath

The new three stage test was applied to each of the appeals in turn and all three appeals were allowed.  Therefore, in Denton v TH White Ltd and another relief from sanctions was refused and in the cases of Decadent Vapours Ltd v Bevan and Utilise TDS Ltd v Davies and others relief was granted.

The new test in Denton indicates a softening of the Court’s approach when dealing with relief from sanctions.  In Denton it was considered that the judgment in Mitchell was misapplied in later Court cases since in Mitchell it was also stated that the circumstances should be taken into account when considering whether relief from sanctions should be granted.  However, in Mitchell it was also stated that the first two factors, i.e. whether the breach was serious and was there a good reason for the breach, were of paramount importance.  This only confused the Courts and discouraged them to consider all the circumstances of the case.

Despite the judgment in Denton it would be wise for parties in litigation to pay close attention to deadlines and if they believe that they may miss the deadline they should consider whether they are able to use the buffer rule under CPR 3.8 (4) to agree an extension.   Parties who refuse to agree to an extension of time should be aware that after Denton opposition solely to create problems for the other side may be lead to cost penalties.  If an extension is not possible under CPR 3.8 (4) then an application to Court should be made as soon as possible.  Furthermore, if the deadline has already been missed then an application for relief from sanctions should be made promptly particularly as we do not yet know how the new “flexible” test will be interpreted in subsequent Court cases.  The only clear conclusion to be drawn from the Denton judgment is that supporters of Jackson may have to wait a while longer before the Jackson reforms fulfils its promise to reduce the cost of litigation and improve efficiency.