Saturday, 5 July 2014

Legal News: Court of Appeal clarifies ‘misunderstood and misapplied’ Mitchell guidance



Lord Dyson, Master of the Rolls, yesterday attempted to bring clarity to courts in England & Wales following on from last year’s landmark case of Mitchell v News Group Newspapers Limited [2013] EWCA Civ 1526. This new guidance will undoubtedly be welcomed by the legal profession after the unforgiving stance taken by the courts since the Mitchell decision.
Lord Dyson, sitting alongside Lord Justice Jackson, upheld three appeals relating to granting relief from sanctions under the new CPR 3.9:-

·         Denton & Ors v TH White - an appeal against relief from sanctions being granted for a party that served six witness statements late.

·         Decadent Vapours Ltd v Bevan & Ors – an appeal in a case that had been struck out for late payment of fees.

·         Utilities TDS Ltd v Davies – an appeal in a case where the court had to decide if two trivial breaches aggregate so as to become one significant breach.

The judgments can be found here.

They were deliberately heard together in an attempt to provide clarity to any uncertainty arising from the new CPR and the Mitchell judgment.

Lord Dyson commented that the guidance in Mitchell remained ‘substantially sound’ but had been ‘misunderstood and is being misapplied by some courts’. Lord Dyson was critical of the approach taken by some courts and concluded that the guidance in Mitchell needed to be clarified.

Dyson reminded the judiciary that the guidance in Mitchell, where the claimant’s non-compliance caused ‘substantial extra work and extra costs to be incurred by the defendant’, could not necessarily be applied in all cases.

Dyson replaced the Mitchell guidance with a three stage test:

1.      At the first stage, the court assess the ‘seriousness and significance’ of the breach in respect of which relief from sanctions is sought.

2.      At the second stage, the court should consider why the failure occurred.

3.      At the third stage, the court should consider the circumstances of the case itself.

Dyson added that ‘The important misunderstanding that has occurred is that, if (i) there is a non-trivial (now serious or significant) breach and (ii) there is no good reason for the breach, the application for relief from sanctions will automatically fail. That is not so and is not what the court said in Mitchell.’

Dyson commented that yesterday’s judgments should help allow the courts to provide for a ‘reasonably consistent judicial approach’ to the application of CPR 3.9.

Interestingly, paragraph 21 of the judgment details criticisms of the guidance in Mitchell. It states that the outcome of Mitchell has been to encourage un-cooperative behaviour between litigants, along with excessive and unreasonable satellite litigation.

The judgment further advises at paragraph 43 that ‘The Court will be more ready in the future to penalise opportunism.... It is as unacceptable for a party to try to take advantage of a minor inadvertent error, as it is for rules, orders and practice directions to be breached in the first place.’ The courts will be more ready in the future to impose cost sanctions on parties who unreasonably refuse to agree extensions of time or who unreasonably oppose applications for relief from sanctions. Dyson specifies that the parties should be prepared to agree limited but reasonable extensions of time up to 28 days as envisaged by the new rule 3.8(4).

The legal profession is likely to welcome this new guidance and the return to a less adversarial and more co-operative way of working, hopefully minimising the need for satellite litigation over trivial matters going forward. This decision should herald the return to a more common-sense approach to applications for relief from sanctions and should allow for more just and sensible decisions from the courts.

Yesterday’s judgments, whilst softening the Mitchell guidance, does not allow for a return to the old culture of non-compliance. Strict compliance with the court timetables is still required from the Parties, however it does allow a more reasonable approach by the Court when hearing applications for relief from sanctions under CPR 3.9.

It would appear that, for the first time in a while, common sense has prevailed. Although, I wonder whether Defendant firms will be quite so happy with yesterday’s outcome...?

Ginger Cat x

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