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When to Oppose or Consent to an Application for Relief From Sanctions: The “Litigator’s Dilemma”

Alexander Bradford
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Alexander Bradford

Alexander Bradford
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Practitioners may sometimes be in doubt whether to consent to or oppose an application for relief from sanctions. The Court of Appeal in Denton v TH White Ltd [2014] EWCA Civ 906 strongly discouraged satellite litigation arising out of litigants taking advantage of minor mistakes.

Heavy costs sanctions can be imposed on a party who unreasonably opposes an application for relief from sanctions. By contrast, if it is reasonable to oppose an application for, then the defaulting party is usually ordered to pay the costs of any application for relief, even if they are successful.

Alexander Bradford provides a short guide to making the right decision in this dilemma, with case study examples and practical tips.

When will opposing relief be unreasonable?

Opposing relief from sanctions applications will usually be unreasonable where a party has behaved opportunistically, or cynically tried to take advantage of a minor inadvertent error.

Guidance by the Court of Appeal in Denton (at 39-45) emphasises that:

  • Opportunistic or cynical behaviour, in the hope that a party obtains a “windfall” litigation advantage, is ‘wholly inappropriate’ and ‘unacceptable’.
  • Litigants and their legal representatives owe a duty to assist the court under CPR 1.3 and the overriding objective. This obligation should be borne in mind by practitioners and their clients.
  • It should even remain ‘very much the exceptional case’ where a contested application for relief from sanctions is necessary: firstly because compliance should be the norm, but secondly because where rules are breached, the parties are expected to work together to avoid satellite litigation ‘in all but the most serious cases’.

Overall, Denton has created a very real expectation that litigators are to behave pragmatically and realistically.

However, subsequent cases (cited below) have held that proving opportunistic or unreasonable behaviour is a relatively high bar. Parties are generally not expected to standby in cases of serious breaches that amount to more than ‘administrative mishaps’ or ‘slips’, and the application of the Denton test does not give a defaulting party carte blanche to blame the other party for delays caused by their own breach and expect the Court to entertain them in granting relief.

What are the consequences for unreasonably refusing to agree to relief?

Parties who unreasonably oppose relief from sanctions applications should be expected to face ‘heavy costs sanctions’, as per the Court of Appeal in Denton (at 43). The Court indicated such sanctions might not just be limited to paying the costs of the application, but even costs of the overall case.

In particular, the Court expressly warned (also at 43) that unreasonably refusing relief can lead to:

  • A finding of ‘misconduct’ under CPR 44.11, which can dramatically reduce the costs recovered by a party or increase the costs payable by another party;
  • Indemnity costs being payable by the offending party at the end of the case; and
  • Costs being paid outside of an agreed or approved costs budget, as an exception to the limits imposed by CPR 3.18.

Case studies: Applications that should not be opposed

Case law makes clear that in the case of minor, inadvertent breaches applications for relief from sanctions should not normally be opposed. This is particularly where the breaches cause no harm, do not otherwise disrupt the litigation, and refusing relief would have disproportionate consequences. Put simply, the parties are under a duty to not behave opportunistically in such cases.

Below are some examples of breaches or defaults which the other party should not have opposed the granting relief from, but did so. Litigators should ensure to be particularly mindful of whether they could be said to be behaving opportunistically in similar situations:

Case NameNature of breach or defaultOutcome
Utilise TDS Ltd v Davies (conjoined appeal to Denton v TH White Ltd) [2014] EWCA Civ 906Costs budget filed 45 minutes late.The 45-minute delay was found to be trivial. In any event, it was neither serious or significant as it did not disrupt the conduct of the litigation or imperil any hearing date.
 
The Court of Appeal held that the defendants ‘ought to have consented to the grant of relief’.
Decadent Vapours Ltd v Bevan (conjoined appeal to Denton v TH White Ltd) [2014] EWCA Civ 906Claimant’s solicitors were 1 day late in posting a cheque with the Court fee to the Court. The cheque then got lost in the post.Whilst the failure to pay the Court fee was serious, and there was no good reason for the same, a) it did not affect the litigation being conducted efficiently and at proportionate cost, and b) there was only a delay of one day. The claimant had also acted promptly once the error had been discovered.
 
The Court of Appeal again held the defendants ‘ought to have consented to relief … so the case could proceed without the need for satellite litigation and delay’.
Lakatamia Shipping Co Ltd v Su and Others [2014] 2 Costs LR 307Standard disclosure given 46 minutes late.The delay was fodun to be trivial, even though there was no good reason for it. The Court stated that trivial delays are likely to be measured in minutes not hours. The delay had no other effect on the litigation and did not prejudice the parties.
 
Note that this case was decided pre-Denton, yet the Court found that relief should have been agreed even under the harsher guidance in Mitchell v News Group Newspapers Limited [2013] EWCA Civ 1537that was in force at the time.
Viridor Waste Management Ltd v Veolia ES Ltd [2015] EWHC 2321 (Comm)Particulars of Claim served 1 day late, having been sent by second class, rather than first class post. The Particulars of Claim were then re-served by hand, by first class post and by email.Given that the breach was measured in ‘hours, not in days’, caused no harm to the parties and did not disrupt the litigation, it was found to be neither serious nor significant. It was therefore found to be unjust in all the circumstances to prevent a £27m claim from proceeding (whilst allowing a £32m mirror counterclaim to continue) due to an ‘administrative mishap’, even if there was no good reason for it.
 
The applicant was awarded their costs on an indemnity basis.
Freeborn and another v Marcal (trading as Dan Marcal Architects) [2017] EWHC 3046 (TCC)Costs budget were filed 14 days “late” after a Court officer wrote to the parties requiring costs budgets to be filed 7 days before a CMC, in contrast to the usual 21-day deadline in CPR 3.13. The defendant filed their costs budget 8 days before the CCMC. The claimant took issue with this, and the defendant applied for relief from sanctions.It was held that CPR 3.13 is only the default position unless the Court otherwise orders. The letter from the Court officer amounted to the Court otherwise ordering. The claimant’s argument to the contrary was considered to be ‘pedantic’ and an abuse of the defendant’s inadvertent error.
 
The claimant was ordered to pay the defendant’s costs of the application.
Khandanpour v Chambers [2019] EWCA Civ 570Appellant paid off the balance of a Default Costs Certificate 17 hours late. The respondent’s solicitors refused to agree to relief as they mistakenly thought that the payment was intended to pay off a different judgment debt.The Court considered that the respondent’s solicitors took ‘advantage of what they regarded as a slip’. It was obvious, given the timing, that the appellant’s payment was intended to pay off the Default Costs Certificate. As such, the 17-hour delay had made ‘no practical difference’. The appellant also had not been in breach of any previous costs orders. It was considered that it would be unjust for those reasons to prevent the appeal from proceeding: ‘a sense of perspective is necessary’.

Case studies: Applications that should be opposed

Conversely, relief applications should normally be opposed where a breach is serious or significant, there is no good reason for it, and it is not otherwise obvious that relief should be granted.

Whilst there are numerous case examples of relief being refused for serious breaches and where the opposing party reasonably refused to agree to relief, in the cases below, the Court shed further light on when it might be reasonable to oppose relief:

Case nameNature of breach or defaultOutcome
R. (Idira) v The Secretary of State for the Home Department [2015] EWCA Civ 1187Respondent’s notice in judicial review proceedings was filed over 5 months late.It was held that emphasis should be placed on the words ‘minor’ and ‘inadvertent’ in deciding whether to oppose an application for relief. The delay here was considered to be substantial and unjustified.
 
Relief was ultimately granted because the respondent’s notice raised important points of law and it was in the public interest for those to be decided in the appeal, but the respondent was ordered to pay the appellant’s indemnity costs.
Diriye v Bojaj [2020] EWCA Civ 1400A Reply to Defence was deemed served two days late. However, the contents of the Reply did not comply with the relevant directions of an Unless Order in any event. The claimant only applied for relief from the sanction of the unless order two months later.The delay in service was serious, but the failure to include the information required by the Unless Order was considered to be even more fundamental. The Court noted that it is a ‘relatively high bar’ for relief to be consented to. The costs consequences warned in Denton are not designed to give a party carte blanche to blame the other party for delays caused by their own breach.
 
Equally, the effect of a breach on the litigation is only one factor to be measured. Nor should there be a sliding scale which allows defaults of, say, 2-3 days but not of a month. The Court was keen to stress that each case turns on its own facts.
 
Relief was refused.
Kahlon v Barking and Dagenham LBC [2017] EWHC 2113 (QB)Applicant had failed to comply with an Unless Order regarding disclosure until the very last moment (at the hearing in which they applied to set aside judgment in default).This case was considered to be a ‘country mile’ from the opportunistic behaviour discouraged in Denton. The applicant had ‘strung along’ the respondent and had tried to prevent key documents from coming to light at every turn. She did not give any explanation for failing to comply with the Unless Order until she got to the hearing.
 
The applicant was ultimately granted relief by the ‘very thinnest of margins’, based on the explanation she eventually provided, but was ordered to pay the respondent’s costs in the case.

Practical Tips

It follows that when deciding whether to consent to or oppose an application for relief from sanctions, practitioners should bear the following points in mind:

  1. Practitioners should remind their clients of their important duty to assist the Court under CPR 1.3, and the heavy costs sanctions that might be imposed on them if they unreasonably oppose applications for relief from sanctions.
  2. Carefully consider whether to oppose a breach that is measured in minutes or hours, rather than days. This is particularly significant where the breach causes little or no prejudice to the other party, and does not disrupt the conduct of the litigation (including any future hearing dates). Breaches that are inadvertent, or made in good faith, are also likely to weigh in favour of refusing relief.
  3. Equally, opportunistic or unreasonable behaviour is a high threshold. If a breach is serious or significant, and there is no good reason for it, it is likely that opposing an application for relief will be reasonable, unless the wider circumstances point towards an obvious granting of relief.
  4. If you have suffered any harm as a result of the defaulting party’s breach, set out that harm in a supporting witness statement, with exhibited evidence if necessary.
  5. Ultimately, each case turns on its own facts, and it may be difficult to predict which approach a Judge may be minded to take. If you remain unsure whether an application for relief should be opposed or consented to, consider negotiation strategies. For example, consider if there is any scope to agree to relief but insist on a different costs order (such as a contribution to your party’s costs, or no order as to costs) as a compromise to reflect the litigation risk.

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.

Written by Alexander Bradford

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