The Court of Appeal has given judgment on three cases dealing with non-compliance and applications for relief of sanctions.
The Court heard the cases as a linked appeal in order to provide clarity following the decision in Mitchell. The three appeals were upheld (Denton v TH White; Decadent Vapours v Bevan; Utilise v Davies) and Master of the Rolls, Lord Dyson, issued new guidance.
The Court recognised that the decision in Mitchell has been flawed in its interpretation and has led to excessive satellite litigation. Lord Dyson outlined that decisions following Mitchell have both been too harsh or too lenient and so recognised the need for clear guidance. Whilst the Court noted the problems that Mitchell has created, those hoping for a complete departure from the decision will be disappointed as Lord Dyson said that is ‘substantially sound’ and the problems have been created in the way it has been interpreted. Lord Dyson, in allowing the three appeals, concluded that the issue lies in the Courts use of the ‘triviality’ test, which has led to unjustifiably narrow decisions.
The Court allowed the appeal against relief of sanctions in Denton v White, Lord Dyson referred to the significance and seriousness of the breach as the party filed six witness statements over a year late. In contrast, the Court applied a more lenient approach in the remaining linked cases. In Decadent Vapours Ltd v Bevan, the case was struck out due to late payment of court fees. Lord Dyson, sitting alongside Lord Justice Jackson, allowed the appeal having recognised that failure to pay court fees is a serious breach; this one was less serious and would not have a significant impact on the impending trial.
In giving these decisions, Lord Dyson outlined a new three stage approach, to replace the draconian test for ‘triviality’, with the aim that any previous authorities will no longer need to be referred to.
- Step One- requires that the Court should consider if there has been a ‘serious or significant breach’;
- Step Two- how and why the party has made such a breach, and is there a good reason?;
- Step Three- the Court should assess all of the circumstances in the case in order to deal with the application justly.
The Judge’s equally agreed to allow the appeals, but in giving the final stage of the new test, opinions were split. Lord Justice Jackson preferred to conclude that all factors including the need to do justice should be of equal importance whereas Lord Dyson referred to the need for efficient conduct of litigation and compliance being of the most importance.
Where a breach is found to be insignificant and that there is a good reason for it, the Court has suggested that there will not be a need to spend significant time exploring stage three of the test, as it will be clear that relief from sanctions should be granted
The new guidance has been widely welcomed by the Legal Profession and it will be unnecessary to refer to earlier authorities going forward. The Law Society Chief Executive, Desmond Hudson, said the ‘Judgments are welcomed news’. The Court of Appeal has certainly provided flexibility and clear guidance that Mitchell did not, however the need for litigants to comply with directions and orders still remains. The Court has allowed for common sense to be put back into the system, but in no way tolerates the old culture of non compliance.
By Louise Hebborn, Partner in the commercial law department