The Court of Appeal handed down judgment today in the conjoined cases of Denton, Decadent Vapours and Utilise.

Michael Mylonas QC and Cecily White summarise the ruling on behalf of Serjeants’ Inn Chambers as follows:

The Master of the Rolls observed in Court today that “the judgment in Mitchell has been misunderstood and misapplied; the three decisions on appeal illustrate the point well”. Noting that the guidance in Mitchell was substantially sound, Dyson MR commented that it was “clarified and amplified” by the judgment today.

Clarification of Mitchell

He outlined a three stage approach which is set out in detail in the written judgment at paragraphs 24 to 38. It provides that a Court dealing with an application for relief should:

1.  Assess the seriousness and significance of the default;
2. Consider why the default occurred; and
3. Evaluate all the circumstances of the case so that it can deal justly with the application, giving particular weight to the need to enforce compliance with rules and orders.

Non Co-operation & Costs

At paragraph 41 the Court expressed dissatisfaction with the spirit of non-co-operation that has resulted following Mitchell and emphasised that “in a case where (a) the failure can be seen to be neither serious nor significant, (b) where a good reason is demonstrated, or (c) where it is otherwise obvious that relief from sanctions is appropriate, parties should agree that relief from sanctions be granted without the need for further costs to be expended in satellite litigation”.

The Master of the Rolls added at paragraph 43 that “heavy costs sanctions should, therefore, be imposed on parties who behave unreasonably in refusing to agree extensions for time or unreasonably oppose applications for relief from sanctions”.

Practical Implications

Looking forwards, the new guidance allows the Court hearing an application to focus both on the individual justice in the case as well as the need to enforce compliance with the rules. That critical rebalancing in favour of the defaulting party was necessary after the overly rigid interpretation of the earlier guidance. It should ensure that trivial breaches having no impact on the conduct of the litigation (as in Utilise & Decadent) will merit relief and the courts will expect parties to agree applications. However, applications for relief following significant breaches which do disrupt the litigation (as in Denton where the trial was vacated) are unlikely to succeed.

A copy of the judgment is available at:

http://www.judiciary.gov.uk/wp-content/uploads/2014/07/denton-decadent-utilise.pdf

We look forward to the first decisions in the light of the new guidance.