What a relief! The Law and Procedure for Relief from Sanctions

The following article was prepared as part of the Business & Property juniors’ Litigation Toolkit series. Throughout October, a series of articles will be published providing junior practitioners with useful guidance and resources for their day-to-day practice.

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Introduction

1. In litigation, as in life, sometimes things go wrong. Junior litigators will be all too familiar with some of the problems that can arise. The most common example is that of a missed deadline. However, given a sanction can be imposed by any rule, practice direction, or court order, the list of examples is potentially endless. When a breach results in a sanction, the question is what can be done to remedy it. Usually, the answer is to apply for relief from sanctions under rule 3.9 of the Civil Procedure Rules (“CPR”). In this edition of the BPJ Back to Basics series, we will be looking at the law and procedure surrounding relief from sanctions applications, as well as thinking about some practical tips when applying for relief.

Has there been a breach resulting in a sanction?

2. The first question to consider when faced with a breach is whether it has actually given rise to a sanction. Ordinarily, the answer will be straightforward. For example, if a witness statement is not served in time pursuant to CPR r.32.10, that witness is unable to give oral evidence at trial except with the permission of the court. The restriction on the giving of evidence operates as a sanction within the meaning of r.3.9 for which relief will be required (see, Chartwell v Fergies [2014] EWCA Civ 506). However, there are examples which are not quite as obvious. The White Book gives the example of Yesss (A) Electrical Limited v Wearren [2014] EWCA Civ 14 which concerned a late application for expert evidence. In that case, the applicant had failed to comply with elements of two previous directions orders. Nevertheless, as the directions orders had not imposed a sanction, there was no requirement to apply for relief. The mere fact that permission was required to call expert evidence was not itself a sanction, it was simply a requirement of the rules governing experts under Part 35. The point is that, just because a party requires the court’s permission to take a particular step (such as to call an expert or amend a statement of case), that does not necessarily mean that permission is itself a sanction. 
3. The question, then, is how to identify whether or not a case falls within r.3.9. In essence, r.3.9 will only apply where there is both a breach of a rule, Practice Direction, or order, and a sanction imposed for that breach. In Yesss, Birss LJ provided the following guidance on working out whether or not a case falls within the remit of r.3.9 (at [33]):

1. Breach – First, identify whether or not a rule, Practice Direction, or order has been breached. If not, then the r.3.9 does not apply. Identifying whether or not there has actually been a breach can be particularly important. The case may be that there is simply an irregularity capable of remedy by way of the court’s general discretion under r.3.10, rather than a breach requiring relief. An example is that of a costs budget signed by a costs draftsperson rather than the party’s senior legal representative (see, Americhem Europe Ltd v Rakem Ltd [2014] EWHC 1881 (TCC)).
2. Express Sanction – If there has been a breach, identify any sanction for that breach which is expressly provided for in the rules, Practice Directions, or in any order. An example would be an explicit sanction imposed by a court order or the sanction imposed by r.32.10 in respect of witness statements.
3. Implied Sanction – If there is no express sanction, consider whether there is an implied sanction (i.e. where the rule does not state a sanction for non-compliance, but permission of the court is required to proceed). The most common example of this category is the failure to file a Notice of Appeal, or a Respondent’s Notice. 
4. Sanction imposed as a result of a further step taken – Consider whether a further step has been taken in consequence of the non-compliance. The most obvious examples are the entry of default judgment or the striking out of a claim for non-attendance at trial. Such cases will require an application for relief under r.3.9 (see, FXF v English Karate Federation Ltd [2023] EWCA Civ 891 at [59]-[60]).

4. In cases where there has been a breach, but there is no corresponding sanction, it will be for the aggrieved party to apply for a sanction to be imposed, either by way of strike out under r.3.4(2)(c), or for an unless order under the court’s general case management powers. In the author’s experience, except in the case of the most egregious persistent non-compliance by a represented party, the court will be reluctant to strike out for non-compliance. Therefore, an aggrieved party’s remedy will usually be in applying for an unless order to put the defaulting party in the procedural last chance saloon.

The Effect of Sanctions

5. Assuming there is a breach for which a sanction has been imposed, that sanction will have effect unless and until the defaulting party applies for and obtains relief (see, r.3.8(1)). This is perhaps unsurprising. However, notwithstanding the fact that the wording of r.3.8(1) assumes that a defaulting party will apply for relief, it remains open to the court to grant relief of its own motion (see, Marcan Shipping (London) Ltd v Kefalas [2007] EWCA Civ 463 at [33]). Naturally, the court will only rarely exercise this jurisdiction because it will usually require evidence from the parties to determine the matters set out in r.3.9. Therefore, except in exceptional cases, the defaulting party will be required to make an application with appropriate evidence. 
6. An interesting question is whether parties can agree to extend the time for compliance without the need for an application for relief. The answer provided by r.3.8 is “no with a but”: 

1. Rule 3.8(3) provides that, where a rule, practice direction or order (a) requires a party to do something within a specified time, and (b) specifies the consequence for failure to comply, the parties may not agree to extend the time for compliance except as provided in r.3.8(4). 
2. Rule 3.8(4) provides that, unless the court orders otherwise, the time for doing the act in question may be extended by prior written agreement of the parties for up to a maximum of 28 days, provided that such extension does not put at risk any hearing date.

7. The key phrase is that an extension may be by the “prior” written agreement of the parties. On its face, the rule requires that any agreement be made prior to a breach. Therefore, in most cases, if it appears likely that a breach will occur (for example, if a looming deadline will be missed because your client is hospitalised), there are two options. The first is to work with the other parties to agree an extension prior to breach. The second option is to make an “in-time” application prior to the expiry of the deadline. Given the expectation that parties will co-operate in furthering the Overriding Objective, it is to be hoped that any non-defaulting party will approach any request for an agreed extension pragmatically. If they do not, a failure to co-operate may be a point which can sound in costs. If agreement cannot be reached, an in-time application is always preferable as it would engage the court’s jurisdiction to extend time, rather than requiring relief from sanctions (see, paragraph 3.9.11 of the White Book). 
8. That being said, it may well be open to the court to expand the scope of r.3.8(4) to include retrospective agreements by the terms of any directions order given. Paragraph 3.8.2 of the White Book quotes the standard direction given by clinical negligence masters in the Kings Bench Division, which provides (emphasis added): 

“The Parties may, by prior agreement in writing, extend time for a Direction in this Order by up to 28 days and without the need to apply to Court. Beyond that 28-day period, any agreed extensions of time must be submitted to the Court by email including a brief explanation of the reasons, confirmation that it will not prejudice any hearing date and with the draft Consent Order in Word format. The Court will then consider whether a formal application and hearing is necessary. Any retrospective agreement to extend time is to be submitted to the Court in like manner.”

Therefore, when preparing a draft directions order, it may be prudent to include provision for retrospective agreements to provide additional protection in the event of breach.

The Court’s Jurisdiction to grant relief

9. Where an application for relief from sanctions is required, the court’s general discretion is contained within r.3.9, which provides (emphasis added):

“(1) On an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need—

(a) for litigation to be conducted efficiently and at proportionate cost; and

(b) to enforce compliance with rules, practice directions and orders.

(2) An application for relief must be supported by evidence.”

10. This broad discretion is glossed by the now-familiar guidance of the Court of Appeal in Denton v TH White Ltd [2014] EWCA Civ 906, which provided that an application for relief should be approached in three stages:

1. Stage 1 – The Judge should identify and assess the seriousness and significance of the defaulting party’s failure to comply which engages r.3.9(1). If the breach is neither serious nor significant, the court is unlikely to need to spend much time on the second or third stages.
2. Stage 2 – Consider why the default occurred. Where there is a good reason for the default occurring (i.e. one which is outside of the defaulting party’s control), the court is likely to grant relief.
3. Stage 3 – Evaluate all the circumstances of the case, so as to enable the court to deal justly with the application. All the circumstances specifically include the factors listed in r.3.9(1)(a) and (b). That is to say, the need for litigation to be conducted efficiently and at proportionate cost, and the need to enforce compliance.

Denton stage 1: Assess the seriousness and significance of the breach

11. The first question is whether a breach is serious and / or significant. The focus of the assessment at this stage is upon the breach itself, rather than any surrounding circumstances (such as the defaulting party’s previous record of compliance) which are to be left to stage 3. The rule of thumb provided in Denton when assessing this limb is whether or not the breach imperilled a future hearing date or otherwise disrupted the conduct of litigation generally. If not, the breach is likely to be on the lower end of the spectrum of seriousness and significance. Nevertheless, it is possible to imagine breaches which are serious notwithstanding the fact that they do not affect the progress of litigation (such as the payment of court fees). With that in mind, the assessment at stage 1 will depend upon the nature of the specific breach in question and (in most cases) its impact upon the broader course of litigation. As stated above, if the breach is neither serious nor significant, the court is unlikely to need to spend much time on the second or third stages. That being said, in the author’s experience, the court will often conduct a cursory assessment of stages 2 and 3 for the sake of completeness, even where it considers the breach to be of lesser seriousness and significance.

Denton stage 2: Reason for the breach

12. Where a breach is serious or significant, it is particularly important to consider why it occurred. If there is a good reason for why the breach occurred, the court will usually grant relief even in the case of a serious breach. The question, therefore, is what qualifies as a good or a bad reason. The court in Denton refused to give any concrete guidance, but the court has suggested that good reasons are likely to be those arising from circumstances outside the control of the defaulting party (see, Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537 at [43]). The following are examples (and examples only) of possible good reasons:

1. Debilitating Illness or accident – Mitchell at [41] provided the example of the defaulting party or their solicitor suffering from a debilitating illness or being involved in an accident. Similarly, good reason has been found where a party’s key witness had been preoccupied with caring for and visiting his wife who was suffering from a debilitating illness (see, Cranford Community College v Cranford College Ltd [2014] EWHC 349 (IPEC)). One point to consider if relying upon the illness of a solicitor as a reason for default is that the court may ask why another member of the firm could not have taken over conduct in their colleague’s absence. For example, where a family member of the solicitor with conduct of the matter is suffering from a long-term illness and the firm or team in question is large enough to allow for appropriate cover, that is unlikely to be a good reason (see, British Gas Trading Ltd v Oak Cash & Carry Ltd [2016] EWCA Civ 153 at [45]-[51]). Of course, this will be a matter of fact and degree which depends upon when the illness occurs and the surrounding circumstances. 
2. Later developments in the course of litigation which show the original period for compliance was unreasonable – Again, this is likely to be a matter of fact and degree. If it has been apparent for some time that compliance would not be possible, a party will be expected to have applied to have either sought or applied for an extension. Failing that, the court will likely expect a good reason as to why that was not possible.
3. Delay caused by the court – Where an order requires a party to take some step through court (for example, the issuing of a claim or an application notice) and the court delays the issuing until after the prescribed deadline, that can qualify as a good reason (see, Service Insurance Co Ltd v Beacon [2014] EWHC 2435 (QB)). Service Insurance concerned a failure to comply with the terms of a consent order to issue a new claim by given date, where the claimant had delivered the claim form in time, but a court delay led to it being issued 4 days after the deadline.

13. Conversely, cases where there is no good reason for the breach will likely include those attributable to the defaulting party or their legal representatives. For example, overlooking a deadline will rarely be a good reason for default. Further, well-intentioned incompetence for which there is no good reason ought not attract relief unless the default is trivial (see, Mitchell at [41] & [48]). Where there is no good reason, or the reason provided is insufficient to justify relief on its own, the court will move to consider all the circumstances of the case.

Denton stage 3: All the circumstances of the case

14. Stage 3 of the Denton test will necessarily depend upon the facts of each case. That being said, the following are likely to be relevant in many applications for relief:

1. The need (a) for litigation to be conducted efficiently and at proportionate cost and (b) to enforce compliance with rules, practice directions and court orders – The court is specifically required to bear these factors in mind by r.3.9(1). Although there are other factors which may be of greater importance in a given case, the r.3.9(1) factors are likely to be significant. For example, if the defaulting party’s history of non-compliance has led to significant delay which risks the cost of pursuing the claim becoming disproportionate, that may well be a compelling reason to refuse relief.
2. Promptness of applying for relief – Promptness is likely always to be a factor in whether or not relief is granted. However, promptness is not itself a prerequisite for relief. Again, where a breach is of lesser seriousness or significance, the promptness of the application is unlikely to be a significant factor within reason. 
3. The defaulting parties’ record of compliance – Where a party has a good record of compliance, relief is more likely to be granted. 

15. One point to bear in mind is that the merits of a parties’ claim or defence is generally irrelevant when it comes to case management decisions, such as the granting of relief. The rationale for this approach is straightforward; requiring the court to consider the merits of a party’s underlying claim as part of an application for relief would necessarily increase the costs of such applications. Further, in the most extreme cases, parties who improperly seek to rely upon the strength of their underlying claim as a basis for relief may well find themselves punished in costs (see, paragraph 3.9.14 of the White Book). 

Opposing an application for relief from sanctions

16. For a non-defaulting party, the imposition of a sanction may appear to be something of a silver bullet. However, the question of whether or not to oppose an application for relief is one which ought to be given proper consideration. Where a party opportunistically and unreasonably opposes an application for relief, they will be acting in breach of the obligation to co-operate imposed by r.1.3 and may find themselves penalised in costs as a result. The decision whether or not to oppose an application will be determined by a frank assessment of the merits of the application for relief. For example, if it appears that the breach was trivial or for a good reason such that relief is likely to be granted, opposing relief will likely be opportunistic. By contrast, if the breach appears serious or significant, or there is no good reason, or it is not obvious that relief is appropriate, it will be entirely proper to oppose the application. As with many areas of practice, this will be a judgment call for legal professionals about which they may need to provide robust advice to lay clients who may wish to oppose any grant of relief. 

Practical tips

17. In summary, when faced with an application for relief from sanctions, it is useful to bear the following points in mind:

1. Is an application required? That is to say, it can be worthwhile to consider whether a breach occasioning a sanction has occurred. Often it will be obvious whether or not this is the case, but it may be that there is a better course of action.
2. If it appears a breach is likely to occur, can the parties agree to extend the relevant deadline? If you are at the case management stage, consider including directions which provide for retrospective agreement to extend deadlines to provide greater protection. If agreement cannot be reached before the deadline, seek to avoid the need for relief by way of an in-time application to extend. 
3. If an application is required, the more promptly it is made, the better. The evidence should clearly explain each of the Denton stages; if it can be shown that the breach was neither serious nor significant, or that there was a good reason for default, relief is likely to be granted. 
4. When faced with an opponent’s application for relief from sanctions, consider whether it is appropriate to oppose relief and be prepared to give robust advice as to potential adverse costs consequences, if necessary. 

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Whilst every effort has been taken to ensure that the law in this article is correct, it is intended to give a general overview of the law for educational and/or informational purposes. It is not intended to be a substitute for specific legal advice and should not be relied upon for this purpose. 

This article represents the opinion of the author and does not necessarily reflect the view of any other member of St Philips Chambers.