Exercising the Discretion Under the Mitchell/Denton Principles
Following consideration having been given and the determination made that the Mitchell/Denton principles apply in a given situation the mind must turn to the manner in which those principles are likely to be applied in the relevant circumstances. Given the nature of the discretion afforded to the court in an application for relief from sanctions and the numerous different types of breach and accompanying factors surrounding the purported breach, further examples of the Court’s discretion being exercised can always be of assistance.
Case Law
In the recent case of BMCE Bank International plc v Phoenix Commodities Pvt Ltd and another [2018] EWHC 3380 (Comm) Bryan J considered whether relief should be granted for the late filing of a costs budget. The sanction for such late filing, in the absence of any subsequent relief, is that under rule 3.14 of the Civil Procedure Rules 1998 the defaulting party is deemed to have filed a budget including only the applicable court fees.
Pursuant to CPR 3.13(1)(b) the parties were required to file their respective costs budgets no later than 21 days before the CMC, thus in the instant case the relevant date was 27th September 2018. The claimant complied by filing and serving its budget in time, however the Defendant failed to do so, serving its budget on the 11th October 2018.
In applying the three-stage test the Bryan J deemed that it was a serious, and indeed significant, breach (the Defendant having conceded the point in any event), as the budget was two weeks late, thus severely limiting what should have been a 21 day period for budget discussions to take place.
When considering the second stage of the test, the Defendant’s written evidence in support of the application for relief gave the reason for the breach as effectively an error on the part of the solicitor with conduct of the case. He stated he had engaged the firm’s internal costs lawyers at some stage in the week commencing 10th September before travelling to South America for work purposes from the 14th to the 28th September, returning to the office on the 1st October. The solicitor accepted it was effectively an oversight on his part, apologising and stating that it was a genuine mistake. At the hearing it was accepted on behalf of the Defendant that there was no good reason for the breach, albeit the Court acknowledged that it was not a deliberate breach, thus not aggravated accordingly. The Judge stated “It is quite clear that what happened was that the solicitor involved in the case… took his eye of the ball. That regrettably does happen in life, but it does not amount to a good reason.”
Moving to the third stage of the test, the court considered CPR 3.9(1)(a) and (b) as well as all the circumstances of the case, including the late filing of the application (on the day of the CMC), lack of notice to the court of the anticipated application, the effect on court resources of the delayed CMC as well as the undertaking provided by the Defendant’s solicitors to pay the Claimant’s costs on an indemnity basis. The Judge ultimately refused to grant relief from sanctions, stating “This is an archetypal case where it would not be appropriate to grant relief from sanctions. There was a serious breach without good reason, followed by a very late application to seek relief, and a consideration of all the circumstances demonstrates that it is not an appropriate case for relief.
Guidance
The Mitchell/Denton era has ensured that compliance with rules, practice directions and orders is now crucial. Practices and procedures must be put in place to ensure that deadlines are not missed or overlooked.
Nevertheless, even if every preventative measure is taken there will always be a case where something falls through the cracks. If that is the case then immediate action must be taken, either as soon as it becomes apparent that a breach has occurred, or preferably, prior to the breach even having taken place if it becomes apparent beforehand that a rule or direction is unlikely to be complied with. It is often far better to incur the time and expense of preparing and issuing an application that is ultimately not required, than to risk not doing so and risk being subject to the relevant sanction.
Bryan J emphasised the point with respect of the High Court as follows: “It is important in all divisions of the High Court, not least the Business and Property Courts, that the parties comply with rules, practice directions and orders so that litigation can be conducted efficiently and at proportionate cost. It is also important that parties in commercial litigation before this court cooperate with each other in furtherance of the overriding objective. This means that whilst there may be cases where relief would obviously be granted, and no point is rightly taken, the rules, directions and orders of the court are there to be observed and for good reason. If there is a failure to comply, then an application for relief from sanctions should be made promptly, supported with evidence, after which it will be considered in accordance with CPR 3.9 and the established principles I have identified.