Relief from Sanctions Applications – latest judgment

October 19, 2015

 Relief from Sanctions Applications – latest judgment

 

Whilst recoverable additional liabilities have become a thing of the past in the majority of matters since 1 April 2013 their legacy, and the problems of non-compliance with the Rules and the often draconian sanctions which followed still endure. The cautionary tales of Relief from Sanction Applications in matters such as Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537, [2014] 1 WLR 795 and the subsequent clarification of the approach to be adopted in Denton & Others v TH White Ltd & Another [2014] EWCA Civ 906 still loom large in the minds of practitioners.

 

It is heartening then to see that the processes to be adopted in such Applications are being further clarified and, whilst the importance of compliance with the Rules is still emphasised, an injection of common sense has once again been administered.

 

In the latest consideration by the Court of Appeal, an Appeal has been rejected against the decision to grant Relief from Sanctions.

 

The matter of Mishcon De Reya (a firm) & Mishcon De Reya LLP v Antonio Caliendo & Barnaby Holdings LLC [2015] EWCA Civ 1029, a professional negligence matter, was one in which the letter of claim was sent in December 2009, with a change of representation taking place in February 2013 when the Claimant moved instructions from Charles Fussell & Co to DLA Piper.

 

Following that move, a CFA was entered into with support from an ATE Premium, and at that stage the former Rules (s19.2(4) PD 44.15) provided that notice of any change of funding must have been given within 7 days of that change, however in this matter the notice was not given until June 2013. The consequence of not giving notice was set out at CPR 44.3B, namely that the additional liabilities would not be recoverable, unless Relief were applied for and granted.

 

It was argued by DLA Piper that the failure had been brought about through simple oversight, and with the potential losses being great, amounting to approximately £45,000.00 and £17,000.00 in terms of DLA Piper’s costs and Counsel’s fees respectively, with the potential for the ATE premium being as high as £1.43 million, so when the claim was issued a week later, rather unsurprisingly DLA Piper applied for Relief from Sanction.

 

With such high stakes for both parties, the Application was opposed.

 

At first instance, Relief was granted by Mr Justice Hildyard, applying the criteria in Denton to find that there were no adverse effects to the wider matter as a result of the default, however Mishcon De Reya and their clients were not satisfied with the judgement and sought to Appeal Hildyard J’s ruling on 7 bases.

 

Delivering the judgement of the Court of Appeal, Lady Justice Gloster drew comparisons with one of the conjoined cases in Denton which similarly involved the late filing and service of Notice of Funding, rejecting Mishcon’s attempts to distinguish the same and finding that the situation in the instant matter was “…analogous to the present case…” and that in that case, as in this one, it was important to focus on the effect of the breach which was minor in both and had not affected the proper and efficient conduct of the matter. The opposition to the Application, however, focused on the consequences of granting relief which was, it was found, not an attractive approach in this instance.

 

This judgment demonstrates the more flexible and considered approach adopted by the Courts more recently to applications for relief, rather than slavishly following a strict interpretation of the word of the Rules as it did in Mitchell. However, it is not to be taken as a softening towards breaches of the Rules or failures, innocent or otherwise, to comply and practitioners should be careful to avoid such, wherever possible.

 

What is evident from this judgment, though, is that the Courts are more and more willing to consider not only the full circumstances around any particular breach or failure, but also the overall effect of the same to both parties, the efficient conduct of the litigation and the administration of justice.

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