John Fiddler v Dreams Limited.

James Rozier, instructed by Mark Dyson, Partner, Plexus Law.

 

Many reading this will remember the tense atmosphere of “hyper-compliance” which existed in the interregnum between the Court of Appeal’s decisions in Mitchell v News Group Newspapers Limited(i) and Denton v TH White(ii) . Denton was viewed by many as being a judgment which restored a more reasonable expectation of compliance, and, resulted in it being likely that applications for relief in respect of tardiness in the order of merely a day or two would usually be granted. This may, as an overall assessment, hold some truth, however, there of course remain situations in which it can be successfully argued that relief in respect of such breaches should be refused. This case double underlines the importance of giving mature consideration to whether to oppose applications for relief, when, at first blush, they may seem to relate to very minor breaches.

Background

The Claimant claimed for damages relating to a workplace accident. Liability was admitted. The claim was initially issued with a pleaded value of ‘no more than £25,000’, however, in respect of quantum, the Claimant’s Particulars of Claim stated: ‘The Claimant’s claim for special damages is to be confirmed’, and no Schedule was served with the Particulars. Within its Defence the Defendant demanded a properly pleaded Schedule be served within 14 days along with the threat that an application seeking strike out (and an unless order in the alternative) would be made should a Schedule not be produced. The Claimant duly served a Schedule. However, of the eight heads of loss asserted, only one, future loss of earnings, had been calculated, and, this head of loss alone totalled £283,000.

The Defendant promptly made an application which: sought the court’s permission to resile from admission on the basis of the claim’s tenfold increase in value (relying upon authorities including Blake v Croasdale & Esure(iii) ; and, sought two unless orders compelling the Claimant to both produce a properly pleaded Schedule, and pay the requisite increased issue fee, with the sanction of strike out should he fail to comply. At a contested hearing on 24th May 2021, James Rozier represented the Defendant. Following extensive submissions, the court granted the Defendant’s application in full.

On 7th June 2021 the Claimant duly served a fully pleaded Schedule. It totalled £882,049.

A CCMC was listed on 5th November 2021. In preparation for the hearing the Defendant duly filed and served its Precedent H prior to twenty one clear days before the hearing. However, the Claimant filed and served his Precedent H only twenty clear days prior to the hearing. This, of course, put him in breach of CPR 3.13(1)(b) and subject to the notorious automatic sanction pursuant to CPR 3.14, i.e. he would ‘be treated as having filed a budget comprising only the applicable court fees’.

Pivotally, on the same day that the Claimant filed and served his Precedent H, the Defendant’s Solicitors responded highlighting his non-compliance and the need for him to make an application for relief from sanction. This was also communicated a second time within the Defendant’s Precedent R. Despite the Defendant twice highlighting this issue to the Claimant’s Solicitors, no application for relief was made in advance of the CCMC.

At the CCMC on 5th November 2021 the Claimant’s counsel attempted to make an oral application for relief from sanction. James appeared for the Defendant and argued that: the Claimant’s Solicitors had been on notice that a relief application was required for 20 days, and, they had essentially chosen not to make an application; contrary to CPR 3.9(2) there was no actual evidence before the Court to support an oral application for relief; the Claimant had already been subject to two unless orders; and, having made the previous unless orders, the Court could reasonably have expected full procedural compliance thereafter. The Court refused to hear the Claimant’s oral application for relief, proceeded to hand down directions to trial, noted that the Defendant’s costs had been agreed, and, in respect of the Claimant’s costs, imposed the sanction as per CPR 3.14.

On 11th November 2021 the Claimant finally filed and served an application seeking relief. Rather audaciously, the Claimant’s Solicitors asserted that all three of the Denton tests fell in his favour: they relied upon the breach not being “serious or significant”; with regards to the reason for the breach they relied upon their mere ‘misinterpretation of the Rules’ as constituting a good reason; and, they considered that the “all the circumstances” test fell in their favour as the Defendant had suffered “no prejudice” as a result of the breach.

The Claimant’s application for relief was heard on 14th February 2022. In opposing the Claimant’s application James relied upon submissions including that, whilst prima facie minor, the Claimant’s breach, with proper analysis, had to be “serious and significant” because it had necessitated both the Court’s, and the Defendant’s, time and resources being taken up by two unnecessary hearings: the instant relief application; and, an inevitable further CCMC in order for the Claimant’s costs to actually be assessed.

With regards to the reason for the breach James submitted that applying the law correctly, ‘a misinterpretation of the Rules’ simply could not constitute a “good reason” in accordance with the Court of Appeal’s guidance in Denton, which, specifically on this test, echoed and endorsed its previous comments in Mitchell (see discussion below).

Further, a correct application of the “all the circumstances” test had to result in relief being refused. Had a prompt application been made in the days after the breach it may not have been opposed, and, it could have simply been dealt with at the start of the CCMC. Further, in Denton the Court of Appeal emphasised the weight which was to be given to previous non-compliance and the Claimant had already been subject to two unless order for the reasons set out above.

In dismissing the application the Court echoed James’s submissions and commented that the seminal cases of Mitchell and Denton, alongside the specific sanction prescribed by CPR 3.14, provided more than adequate warning to Solicitors dealing with Multi Track work that the deadline for the service of costs budgets is to be overlooked at their peril, especially when they have previously failed to comply with Rules, Practice Directions and orders.

Discussion

So, what are the lessons to be taken from this case? They are straightforward. Firstly, always give careful consideration to what impact an opponent’s failure to comply with a Rule, Practice Direction or order will actually have, instead of simply looking at the breach itself. If you fail to do this you may overlook the breach’s true seriousness and significance. A 24 hour delay in filing and serving a Precedent H does not at-first-blush appear serious or significant, however, in such circumstances, if a relief application is not made before a CCMC, and, the Court refuses to hear an oral application at the CCMC, rectifying this position will likely necessitate two further unnecessary hearings to be listed: the relief application; and, a further CCMC for the assessment of the defaulting party’s costs.

Secondly, regrettably, it is sometimes necessary when considering the reason relied upon for a breach to remind practitioners (and occasionally even members of the judiciary) that the Court of Appeal’s guidance in Mitchell specifically on the “good reason” test (paras 40 and 41) remains good law. Unlike the “triviality” test, the Court’s guidance in Mitchell, in respect of the reason for a breach, was actually endorsed in Denton (para 12). Hence, reasons such as “a misinterpretation of the Rules” or “oversight due to excessive workload” remain incapable of being reasons which can satisfy the second of the Denton tests if the law is correctly applied.

Thirdly and finally, as with “seriousness and significance”, this case double underlines the importance of thoroughly considering “all the circumstances of the case”, which, of course, includes its procedural history and any previous non-compliance by the party seeking relief. When considering whether to oppose an application for relief from sanctions it is vital to stand back and put the material breach in the proper context of the litigation as whole.

Your initial reaction to a relief from sanction application relating to a party having filed a Precedent H only one day late may be that it could not possibly be successfully opposed. However, is it yet another breach in a string of breaches? Has the party seeking relief been subject to previous unless orders? Were they put on notice of their breach? Has the party’s conduct previously caused both your and the court’s time to be occupied with unnecessary hearings? Is this yet another example of a flippant disregard for adherence to the rules? Will a Judge agree with your conclusion that this is simply the last straw?

Remember: “what difference a day makes, twenty four little hours”.

[i] [2013] EWCA Civ 1537

[ii] [2014] EWCA Civ 906

[iii] [2017] EWHC 1336 (QB)