The New 3 Stage Test

The Court of Appeal rewrites Mitchell in “the Denton test”.

Last Friday afternoon the Court of Appeal handed down judgment in three appeals (Denton v T H White; Decadent Vapours v Bevan; Utilise v Davies [2014] EWCA Civ 906). The judges, including Lord Justice Jackson and the Master of the Rolls Lord Dyson, placed the court’s earlier judgment in Andrew Mitchell MP v News Group Newspapers Ltd [2013] EWHC 2355 (QB) firmly under the microscope yet again. They entirely rewrote the guidance in Mitchell in the hope that in the future reference to previous decisions, including Mitchell, could be avoided. The aim: to prevent judges taking an unreasonable approach to compliance issues by misapplying and misunderstanding the Mitchell guidance.

The Court of Appeal held that applications for relief from sanctions should now be dealt with in three stages.

Stage 1: How serious and significant is the failure to comply?

If the breach is considered to be neither, relief is likely to be granted. If the breach is found to be serious and/or significant, then stages 2 and 3 will be more important.

So, for example, in Decadent, the court fee was sent to the court to arrive just 1 day late; however, it did not arrive at court and was in fact paid 3 weeks late in breach of an Unless Order. In Utilise, a costs budget was filed 45 minutes late. Neither of these breaches was identified as serious or significant.

Stage 2: Why did the breach occur?

Was there a good reason why the breach occurred? In both Decadent and Utilise the Court of Appeal found there to be no good reason why the court orders weren’t complied with. However, the lack of good reason made no difference to the outcome.

Stage 3: Consideration of all the circumstances of the case

In order to deal with the application justly, courts must consider all the circumstances of the case including the need for litigation to be conducted efficiently and proportionately and the need to enforce compliance with rules and orders (as set out in the post April rules). The parties’ history in proceedings i.e. any previous breaches, would also be relevant under this limb; as would how promptly the application had been made.

The appeal court’s approach in Decadent and Utilise seems to have been that where at stage 1 the breach was found to be neither serious nor significant, there was no reason to spend much time considering stage 3.

What does this mean for us?

In summary, the Court of Appeal said that relief is likely to be given where the breach is neither serious nor significant, or where there is good reason for it. Stage 1 of the test effectively puts an end to the test of ‘triviality’ seen in Mitchell. It is hoped that establishing that a breach is neither serious nor significant will be an easier test to satisfy than whether a breach was trivial.

Of course the court made no criticism of the judgment laid down by them in Mitchell, the justification they gave for redefining the Mitchell test seems to be that the judgment has widely been misunderstood and not applied as intended.

Of course the need for compliance with rules and orders remains in place; however parties firstly have the facility to agree extensions of time under the so-called ‘buffer direction’, and secondly going forward under this new test defaulting parties now have a greater chance of being granted relief from sanctions. Furthermore, the Court of Appeal warned that there would be heavy costs penalties for parties failing to cooperate in agreeing extension or who ‘opportunistically and unreasonable oppose applications for relief from sanctions’.

We at Ontime see ‘the Denton test’ as a clear victory for a common sense approach to relief from sanctions.

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