Insights in Commercial Law
Thursday, October 2nd, 2014 at 9:00 am

The English Courts’ approach to dealing with applications for relief from sanctions under the revised CPR 3.9

Since the introduction of the April 2013 Jackson Reforms, the English Courts have been particularly keen to ensure effective and efficient case and costs management. The Courts seem to be doing this by adopting a robust attitude to case management and compliance including using their powers to:

–   impose sanctions on parties who fail to comply with relevant rules, practice directions and court orders, and

–   grant or refuse relief from sanctions applications under CPR 3.9

 

The revised CPR 3.9

The revised CPR 3.9, which came into effect on 1 April 2013 states:

On an application for relief from any sanction imposed for 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 a proportionate cost; and

(b)   to enforce compliance with rules, practice directions and orders.

(2)  An application for relief must be support by evidence.

 

The revised version of CPR 3.9 removed the nine factors previously listed under the old version and now directs the court specifically to focus on the need to conduct litigation efficiently and at proportionate cost, and enforce compliance with rules, practice directions and orders. It must also be noted that CPR 3.9 does require the court to consider ‘all the circumstances of the case so as to enable it to deal justly’. But greater emphasis will be given for litigation to be conducted efficiently and at proportionate cost and to enforce compliance than the other circumstances in the case. On the face of it this rule says very little that is not already stated in the rules and law generally. The requirements for efficiency and proportionality are clearly set out in greater detail under the overriding objective so why was there ever the need for the revision and what was the purpose behind the revision?

What was the purpose behind the revised CPR 3.9?

Much has been said about the Jackson reforms and the harmful consequences of the courts taking an over excessive ‘merits-based approach’ to justice. The merits-based approach in principle allowed defaults/non-compliance to be excused and further opportunities to comply by the defaulting party provided that this can be done without injustice or prejudice to the other parties and that any inconvenience to the non-defaulting parties could be compensated in costs. The well-known ‘Diplock’ test established by Lord Diplock in Birkett –v- James [1978][1] justified the merits-based approach to justice:

The power [to dismiss an action for want of prosecution] should be exercised only where the court is satisfied either (1) the default has been intentional and contumelious e.g. disobedience to a peremptory order of court or conduct amounting to an abuse of process of court; or (2) (a) that there has been inordinate and inexcusable delay on the part of the plaintiff or his lawyers and (b) that such delay will give rise to substantial risk that it is not possible to have a fair trial of the issues in the action or is such as is likely to cause serious prejudice to the defendants either as between themselves and the plaintiff or between each other or between them and a third party”.[2]

 

The merit-based approach allowed defaulting parties to delay performance of their process obligations at no great risk to their prospects in the litigation, leading to the consequences of unnecessary satellite litigation and delays, causing inefficiency, not just to the parties in the instant case but to the wider public, on other cases. Justice involves not just rendering judgments on the merits of an individual case are correct of the facts and law, but also doing so by proportionate use of court and litigant resources and within a reasonable time.[3] There is now to be a shift away from exclusively focusing on doing justice in the individual case alone.

 

Sir Rupert in the 18th Lecture stated:

The tougher, more robust approach to rule compliance and relief from sanctions is intended to ensure that justice can be done in the majority of cases. This requires an acknowledgement that the achievement of justice means something different now

 

The amendment to CPR 3.9 followed the recommendations made in Sir Rupert’s Final Report Ch 39. At paragraph 6.4 he said:

First, the court should set realistic timetables for case and not impossibly tough timetables in order to give an impression of firmness. Secondly, the courts at all level have become too tolerant of delays and non-compliance with orders. In doing so, they have lost sight of the damage which the culture of delay and non-compliance is inflicting upon the civil justice system. The balance therefore needs to be redressed. However, I do not advocate the extreme course [i.e. non-compliance would no longer be tolerated save in “exceptional circumstances”] which was canvassed as one possibility in [the Preliminary Report] paragraph 43.4.21 or any approach of that nature

 

However, Courts post-April 2013, although accepting the new, stricter regime appear to have differing opinions on the level of strictness to be applied. Some judges have allowed relief with disapproval of the applicant’s conduct resulting in cost orders or other sanctions[4], other judges have taken a more stern approach and punished with a refusal of relief where breaches of rule or order are anything but minor. The need to achieve justice by the courts by balancing the need for enforcing rules and orders, with the merits of the particular case for a fair hearing, seemed to once again create an atmosphere of uncertainly to rise and a clear guidance was necessary.

 

Mitchell

Andrew Mitchell MP -v- News Group Newspapers Ltd[2013] EWCA Civ 1537 was the first Court of Appeal decision to apply the revised CPR 3.9. Under Mitchell, the position was, generally and put very simply, that where:

  • Whether the sanction has been properly imposed and complies with the overriding objective
  • the breach was trivial and appropriate action had been taken promptly, relief would usually be granted
  • the breach was not trivial, but there was a good reason for it and appropriate action had been taken promptly, relief would usually be granted
  • in all other cases, ie where the breach was not trivial and there was no good reason for it, relief would not generally be granted unless there was a compelling reason to do so.

Denton

Further clarification and guidance was given by the Court of Appeal in Denton v White & others; Decadent Vapours Limited v Bevan & others; Utilise TDS Limited v Cranstoun Davies & others [2014] EWCA Civ 906, [2014] All ER (D) 53 (Jul), paras 21, 37 as

(1) practitioners were confused as to the application and interpretation of CPR 3.9

(2) uncertainty about civil litigation generally and compliance specifically in the light of the courts failing to adopt a consistent approach to relief from sanction applications

(3) litigants need finality and SMEs in particular need swift and just resolution of their commercial disputes

(4) rafts of satellite litigation involving relief from sanctions, which were not only adding to the parties’ costs but were clogging up the courts.

(5) increasingly adversarial and uncooperative’ behaviour as between litigants (again, with resulting costs implications).

Under the Denton cases a three stage test was given at para 24, it held a judge determining a relief from sanctions application should address it in the following three stages:

o             (1) identify and assess the seriousness and significance of the ‘failure to comply with any rule, practice direction or court order’ which engages rule 3.9(1)’

o             (2) consider why the default occurred,

o             (3) evaluate ‘all the circumstances of the case’, so as to enable [the court] to deal justly with the application including factors CPR 3.9(1)(a) and (b)’

 

The first stage for a judge determining a relief application is to ‘identify and assess the seriousness and significance of the ‘failure to comply with any rule, practice direction or court order’ which engages rule 3.9(1)’. This stage is to replace the ‘triviality’ criteria, which had arisen following Mitchell and is considered in more detail at paras 25-28 of ‘Denton’. If the breach is determined as being neither serious nor significant, relief is likely to be granted and the court is unlikely to need to spend much time on the second and third stages. However, if the breach is determined as being serous or significant, the second and third tests below ‘assume greater importance’ (para 28, Denton). In considering this stage, the court could adopt the Law Society’s suggestion of a test of ‘immateriality’ and look at whether the breach imperils future hearing dates or otherwise disrupts the conduct of litigation. However, if this approach is to be adopted it must be noted that the disruption factor is not to be considered by reference to the instant proceedings alone but by reference to litigation and impact on the court generally. This is in line with the spirit of the April 2013 Jackson Reforms, which recognised the detrimental ‘knock-on’ effect of non-compliance to other court users, as well as the parties to the instant proceedings.

The second stage for a judge determining an application for relief is to consider why the failure or default occurred and, presumably by implication, whether these are good or bad reasons (ie presumably the same test as under the Mitchell guidance).

The third stage is for the judge to evaluate all the circumstances of the case so as to enable it to deal justly with the application. This stage includes considering the factors at CPR 3.9(1)(a) and (b).

 

 

 

 

[1] Birkett –v- James [1978] A.C 297 HL

[2] Birkett –v- James [1978] A.C 297 HL at 318

[3] Professor Adrian Zuckerman’s article explains the three dimensional concept of justice designed to promote efficiency of process : “The revised CPR 3.9: a coded message demanding articulation” (2013) 32 C.J.Q. Issue 2

[4] In Ian Wyche v Careforce Group Plc [2013 EWHC 3282 the defendant had failed to comply in all respects with an unless order. Walker J acceded to an application for relief under CPR 3.9 for two failure which he described as material in the sense that they were more than trivial”