This recent Court of Appeal decision reaffirms the hard-line approach that will be adopted when considering an application for relief from sanctions, in light of the decisions of Mitchell v News Group Newspapers Limited [2013] and Bianca Durrant v Chief Constable of Avon & Somerset Constabulary [2013].

The Facts

The Claimant obtained an ex parte freezing injunction against the Defendant, which required the Defendant to provide disclosure of assets and liabilities. The Claimant was dissatisfied with the disclosure provided and made an application for an Unless Order. At the hearing, the Judge found that the disclosure provided was inadequate and made an Order that unless the Defendant provided the disclosure required by a specific date and time, it would be debarred from defending the claim and any defence filed would be struck out. Further disclosure was made, yet the Claimant was still dissatisfied and subsequently applied for a Debarring Order. The Judge concluded that there was serious failure to comply with the Unless Order and accordingly granted the Debarring Order and refused relief from sanctions. The Defendant did not appeal.

Despite this, two months after the original refusal and just two days before the trial, the Defendant filed a second application for relief from sanctions. The Deputy Judge considered the fact that further disclosure had been made and concluded that the Defendant had now complied with the Unless Order. Accordingly, in the interests of justice, he granted relief. The Deputy Judge considered that the appropriate rule to consider was CPR 3.9 and to the extent that the Unless Order required variation or revocation under CPR 3.1(7), then this was justified. In reaching his decision, the Deputy Judge held that the matters set out in the check list under the old CPR 3.9 remained relevant. He held that the change in CPR 3.9 did not mean that relief should be refused where it would be disproportionate and would give the opposing party an unjustified windfall. The Deputy Judge held that the Court should make an allowance for human error and that the rules should not be permitted to encourage parties to exploit minor errors for tactical gain.

The Deputy Judge considered the case of Woodhouse v Consigna Plc [2002] EWCA Civ 275 (“Woodhouse”), which he said was clear authority that a second application for relief was permissible. He sought to distinguish the case of Tarn Insurance Services Limited v Kirby, a case where the applicant seeking relief remained in breach of the Unless Order at the time of the second application, on the basis that the Defendant in this case, albeit belatedly, had now met their disclosure obligations and this was a material change of circumstances.

The Court of Appeal’s Decision

The Court of Appeal held that the Claimant’s case turned on the application of two procedural rules: CPR 3.1(7) and CPR 3.9. Although the Court of Appeal noted that the Mitchell decision post-dated the Deputy Judge’s judgment, it nevertheless upheld the Claimant’s appeal.

The Deputy Judge held that a second application for relief from sanctions could be made under CPR 3.9, without needing to rely on CPR 3.1(7), which had no more than a secondary role in relation to any necessary variation or revocation of an earlier order. However, the Court of Appeal held that this was incorrect. The Debarring Order meant that the Defendant was debarred from defending the claim, unless and until the relevant provisions of that Order were set aside by means of variation or revocation. Consequently, it was not open to the Deputy Judge to make an order granting relief under CPR 3.9.

The Court of Appeal considered the conditions for varying or revoking an order under CPR 3.1(7) and referred to the case of Collier v Williams and Tibbles v SIG PLC (“Tibbles”). Tibbles held that, for the Court to be able to revisit an earlier order under CPR 3.17, the applicant must show either some material change of circumstance, or that the Judge who made the earlier Order was misled in some way, whether innocently or otherwise, as to the correct factual position.

Referring to the Mitchell decision, the Court of Appeal emphasised the distinction between an application for relief from sanction under CPR 3.9 and an application to vary or revoke under CPR 3.1(7). It was held that an application for relief presupposes that the sanction has in principle been properly imposed. If a party wished to contend that it was not appropriate to make the order, then that should be by way of appeal, or exceptionally, by asking the Court to vary or revoke the order under CPR 3.1(7).

The starting point for relief from sanctions should be that the sanction has been properly imposed and complies with the overriding objective. If the application for relief is combined with an application to vary or revoke under CPR 3.1(7), then that should be considered first under the Tibbles criteria. The Court of Appeal acknowledged that Woodhouse allowed for the possibility of a second application under CPR 3.9 without making any reference to CPR 3.1(7), but went on to distinguish it by explaining that in the Woodhouse action the claim had been stayed automatically by virtue of a practice direction, being the equivalent of a sanction.

The Court of Appeal held that the Deputy Judge’s approach lacked the robustness called for by the guidance given in the Mitchell judgment. The Deputy Judge gave insufficient consideration to the need for litigation to be conducted efficiently, at proportionate cost and the need to enforce compliance with rules, practice directions and orders. In particular, the Deputy Judge:

failed to take as a starting point that the sanction imposed, which had not itself been the subject of appeal or an application under CPR 3.1(7), was properly imposed and complied with the overriding objective;
referred to the first instance judgment of Mitchell and to the observations of the Master of the Rolls in the 18th Jackson Implementation Lecture, but did not appear to have been guided by them; and
failed to pay sufficient attention to the fact that the second application had not been made promptly but came almost 2 months after the original order refusing relief. He was wrong to consider that the delay was of no importance.

Conclusions

This is yet another reminder of the Court of Appeal’s determination to make the Jackson Reforms work and uphold the tough stance introduced by Mitchell. Accordingly, litigants should be in no doubt that they should comply with Orders and deadlines fully and promptly, as relief from sanctions will not be lightly granted.

For further information, please contact Georgina Squire or the Partner with whom you usually deal.