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

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 relief from sanctions, 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 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:

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.