BRITISH GAS HAS PRODUCED SOME HOT AIR: DENTON APPLIED NOT CONVERTED

I have already seen several headlines, and numerous commentaries, that mention the “hard line” taken by the Court of Appeal in British Gas Trading -v- Oak Cash & Carry Limited [2016] EWCA Civ 153.  The case is not as draconian as some commentators (or certainly some headlines) indicate.  It is wise to read certain parts of the case in more detail. The case, in fact, preserves the more “balanced” approach set out in Denton.  There is no heresy involved.

“If, therefore, the defendant had promptly applied for relief from the sanction, in my view this is a case where one of two things would have happened. The claimant may (and should) have consented to the application. Alternatively, the court would have acceded to the application when applying stage 3 of the Denton test”

READ THE FOLLOWING PASSAGE: A PROMPT APPLICATION FOR RELIEF FROM SANCTIONS AFTER BREACH OF THE PEREMPTORY ORDER WOULD PROBABLY HAVE BEEN GRANTED

The key issue in this case was not the failure to file the PTC, or even the initial breach of the peremptory order requiring filing.  The judgment states that if the application had been made promptly after the breach was remedied (that is the PTC filed) then relief from sanctions would probably have been granted.  Note that this would have been an application made after a peremptory order had been breached.

1. Let me now turn to the present case. It the defendant had made an immediate application for relief at the same time as filing its PTC, or very soon after, I would have been strongly inclined to grant relief from the sanction of striking out. To debar a party from defending a £200,000 claim because it was somewhat late in filing a PTC is not in my view required by rule 3.9, even as interpreted by the majority in Denton.

2. As at 21^st February the late filing of the listing questionnaire had not had any adverse impact on the smooth conduct of the action. The moderately late filing of a PTC is not like the late service of evidence or the late disclosure of documents. It does not disrupt the work schedule of any other party to the action. The PTC is needed for administrative reasons, except in those cases where the court dispenses with that procedural step. The late provision of the PTC in this case did not have any adverse effect on the administrative processes of the Oxford County Court.

3. If, therefore, the defendant had promptly applied for relief from the sanction, in my view this is a case where one of two things would have happened. The claimant may (and should) have consented to the application. Alternatively, the court would have acceded to the application when applying stage 3 of the Denton test

NOTE THE CLAIMANT “MAY (AND SHOULD)” HAVE CONSENTED TO RELIEF FROM SANCTIONS

Jackson L.J. stated that the claimant “may (and should)” have consented to relief from sanctions if the application for relief had been made at the same time as compliance “or shortly thereafter”.  The key point in this case was that the defendant delayed for more than a month before applying for relief from sanctions.  This had a major impact on the whole trial timetable.

“By then, unfortunately, the trial date had been lost. If the court had granted relief at that late stage, it would have needed to fix a new trial date some time after the original trial window. The serious consequences of losing a trial date are discussed inDenton at paragraph 89.”

SO THE PART RESPONDING TO AN APPLICATION FOR RELIEF FROM SANCTIONS STILL HAS TO EXERCISE JUDGMENT

There has been the possibility of a degree of injustice ever since Denton.  An innocent party who stands on it rights and refuses relief from sanctions is at danger of having to pay costs.  It pays, periodically, to re-read paragraphs 39 – 43 of Denton.  This section was designed to deal with the procedural game playing that the decision in Mitchell (that much “misunderstood” case) had given rise to.

DENTON: A REMINDER WHY OPPOSING AN APPLICATION FOR RELIEF FROM SANCTIONS IS A JUDGMENT CALL

“Satellite litigation and non-cooperation

1. Justifiable concern has been expressed by the legal profession about the satellite litigation and the non-cooperation between lawyers that Mitchell has generated. We believe that this has been caused by a failure to apply Mitchell correctly and in the manner now more fully explained above.

2. Litigation cannot be conducted efficiently and at proportionate cost without (a) fostering a culture of compliance with rules, practice directions and court orders, and (b) cooperation between the parties and their lawyers. This applies as much to litigation undertaken by litigants in person as it does to others. This was part of the foundation of the Jackson report. Nor should it be overlooked that CPR rule 1.3 provides that “the parties are required to help the court to further the overriding objective”. Parties who opportunistically and unreasonably oppose applications for relief from sanctions take up court time and act in breach of this obligation.

3. We think we should make it plain that it is wholly inappropriate for litigants or their lawyers to take advantage of mistakes made by opposing parties in the hope that relief from sanctions will be denied and that they will obtain a windfall strike out or other litigation advantage. 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 parties should in any event be ready to agree limited but reasonable extensions of time up to 28 days as envisaged by the new rule 3.8(4).

4. It should be very much the exceptional case where a contested application for relief from sanctions is necessary. This is for two reasons: first because compliance should become the norm, rather than the exception as it was in the past, and secondly, because the parties should work together to make sure that, in all but the most serious cases, satellite litigation is avoided even where a breach has occurred.

5. The court will be more ready in the future to penalise opportunism. The duty of care owed by a legal representative to his client takes account of the fact that litigants are required to help the court to further the overriding objective. Representatives should bear this important obligation to the court in mind when considering whether to advise their clients to adopt an uncooperative attitude in unreasonably refusing to agree extensions of time and in unreasonably opposing applications for relief from sanctions. 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. Heavy costs sanctions should, therefore, be imposed on parties who behave unreasonably in refusing to agree extensions of time or unreasonably oppose applications for relief from sanctions. An order to pay the costs of the application under rule 3.9 may not always be sufficient. The court can, in an appropriate case, also record in its order that the opposition to the relief application was unreasonable conduct to be taken into account under CPR rule 44.11 when costs are dealt with at the end of the case. If the offending party ultimately wins, the court may make a substantial reduction in its costs recovery on grounds of conduct under rule 44.11.  If the offending party ultimately loses, then its conduct may be a good reason to order it to pay indemnity costs. Such an order would free the winning party from the operation of CPR rule 3.18 in relation to its costs budget.

6. We should also make clear that the culture of compliance that the new rules are intended to promote requires that judges ensure that the directions that they give are realistic and achievable. It is no use imposing a tight timetable that can be seen at the outset to be unattainable. The court must have regard to the realities of litigation in making orders in the first place. Judges should also have in mind, when making directions, where the Rules provide for automatic sanctions in the case of default. Likewise, the parties should be aware of these consequences when they are agreeing directions. “Unless” orders should be reserved for situations in which they are truly required: these are usually so as to enable the litigation to proceed efficiently and at proportionate cost.”

RELATED POSTS

• Denton and delay in applying for relief from sanctions.
• The litigator’s dilemma: Denton relief from sanctions – life is now dangerous for respondents. 
• The “litigators dilemma”: do you take the “Mitchell point”?
• Why litigators are living with the Mitchell dilemma.