High Court judge overturns "overly generous interpretation" of relief from sanctions rules

Out-Law News | 15 Dec 2014 | 11:01 am | 3 min. read

Parties to civil litigation cases have been issued with an important reminder of the need to manage their cases effectively after the High Court overturned an "overly generous interpretation" of the rules governing when relief from sanctions can be granted.

In April, a county court judge had granted relief from sanctions to Oak Cash and Carry in a dispute over an unpaid electricity bill, despite the fact that the firm's solicitors had submitted a listing questionnaire 18 days late and then missed a second deadline in breach of an 'unless' order threatening the firm with default judgment. He also set aside the default judgment awarding the sum in dispute to electricity provider British Gas, even though neither of the parties had requested that he do so.

Mrs Justice McGowan said that Oak's default had been "serious and significant", as its solicitors had had "over three months in which to complete a not particularly difficult questionnaire". She went on to apply the tests set out in the 'Denton' case earlier this year, which clarified new rules on relief established in a case involving Conservative MP Andrew Mitchell in November 2013, and found that there was "no reason why" relief should be granted.

Litigation expert Sophie Gallop of Pinsent Masons, the law firm behind Out-Law.com, said that the decision was a good example of the English courts' approach to dealing with parties that had failed to comply with case directions, deadlines and orders.

"The importance of complying with all deadlines in proceedings cannot be overstated, as failure to do so can have serious repercussions," she said. "In this case, the failure to file the correct paperwork by the required deadline led the court to award British Gas an immediate judgment for a substantial sum."

"Deadlines and obligations can be extended or amended with relative ease at any time up to the appointed deadline, through negotiations between the parties or with a simple application to the court. Once a party has gone even one minute past a deadline, however, the window to agree extensions or amendments simply with the other side closes. The defaulting party at that stage may have no other recourse except to pursue an application for relief from sanction, the outcome of which is far from certain. The courts have made it clear, therefore, that 'asking for forgiveness rather than permission' is certainly not the most sensible course of action," she said.

In the November 2013 Mitchell judgment, the Court of Appeal set out guidance on the factors that judges should take into account when faced with an application for relief from sanctions imposed for failure to comply with any rule, practice direction or court order. In a case involving the Denton family in July, the Court of Appeal provided further guidance aimed at addressing what it considered the misapplication and misunderstanding of the Mitchell judgment. The Denton test requires judges to address applications for relief in three stages: firstly, by identifying whether the breach is "serious or significant"; if it is, secondly, by considering why the default occurred; and thirdly, by evaluating "all the circumstances of the case".

The hearing in this case took place in the time period between the handing down of the Mitchell and Denton judgments. However, Mrs Justice McGowan said that the Denton case did not alter the Mitchell "statement of principle". Rather, it simply "restated and gave greater definition to the views of the court expressed in Mitchell ... [with] adjustments to facilitate greater understanding and perhaps a greater explanation", she said.

Moving on to look at why the "serious and significant" default occurred, the judge noted that the solicitor in charge of Oak's case had had "personal difficulties" involving his wife's pregnancy while the case was going on. However, given that the firm had "over 40 qualified solicitors ... there must be provision for those who have the responsibility of conducting litigation who know that they may not be available because of an ongoing medical problem to delegate the work to others who have sufficient experience and skill to ensure that tasks are properly completed".

As part of the third stage, involving the consideration of all the circumstances of the case, the judge admitted that the document "might not be the most important document provided by either side in the conduct of litigation".

"That being said, the persistent failure to provide [the] questionnaire meant that in this particular case the trial date of two days was lost. That must be a matter of grave concern when one looks as the court did in Mitchell to the overall effect of such a breach, to the impact that it would have not only on the conduct of the piece of litigation but all those other cases awaiting dates for hearings and a waste of valuable court time, which is already massively under strain," she said.