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This article was first published for The Commercial Litigation Journal, September/October 2017.
Much has been written about the court’s discretion to grant relief from sanctions pursuant to CPR 3.9 over recent years, due to the reformulation of the rule in April 2013 and the landmark Court of Appeal decision in Mitchell MP v News Group Newspapers Ltd . The strictness of the approach in Mitchell led to an outcry from academics and practitioners, but that has now been allayed by the Court of Appeal in Denton v TH White Ltd .
Mott v Long  is the Technology and Construction Court (TCC’s) most recent approach to a relief from sanctions application.
Relief from sanctions CPR 3.9 provides that, on an application for relief, the court must consider all the circumstances of the case, so as to enable it to deal justly with the application, including:
In Denton, the Court of Appeal stipulated a three-stage approach to such an application:
This guidance has been useful to practitioners in clarifying the approach to be taken to applications for relief. However, as Denton itself recognised:
… the concepts of seriousness and significance are not hard-edged and… there are degrees of seriousness and significance.
Moreover, there can obviously be a number of different reasons for a breach occurring and the material factors in each case will vary. The Court of Appeal hoped that:
… assisted by the guidance given in [Denton] and its application in individual cases over time, courts will deal with these applications in a consistent manner.
Therefore, while every case is fact specific, an analysis of those cases should assist practitioners in knowing how a court is likely to treat any application they are forced to make or respond to. With that in mind, it is useful to see the TCC’s most recent approach to a relief from sanctions application, decided by HHJ Grant in the Birmingham TCC.
In Mott, the defendants filed their costs budget ten days late and applied for relief from sanctions. The defendants’ solicitor believed that the budget had been served in time but, in fact, that was not the case and she accepted that it was likely that the documents were not saved correctly and/or not printed due to IT difficulties.
As to the first stage of the Denton test, the defendants submitted that the delay in service was minor because, although served ten days late, the budget was filed and served nine days ahead of the case management conference (CMC) hearing. The defendants submitted that for a breach properly to be considered serious and significant, it must have some impact on the smooth running of the litigation in question or litigation generally. They relied on the decisions of Murray v Bae Systems plc  and Azure East Midlands Ltd v Manchester Airport Group Property Developments Ltd  to contend that the minor delay in providing the budget had had no material effect on the proceedings, nor prejudiced the claimants in any material way.
By contrast, the claimants contended that:
It was also submitted that the failure to serve a costs budget can have a material effect on the litigation if such failure sufficiently distracts from the cooperative process of entering into discussions about costs budgets. In support of that submission, the claimants relied on the decision in Lakhani v Mahmud , which found that the first instance judge was correct to refuse an application for relief from sanctions when a costs budget had been served one day late, as:
… it is legitimate for a court to take account of the effective amount of time available and how much of that was lost as a result. Moreover, the amount of time lost can be more significant where a task involves a degree of co-operation, such as attempting to agree a matter…
Having weighed up these submissions, the court concluded that:
… process of co-operation in the costs budgeting process
Having weighed up these submissions, the court concluded that:
which the rules are designed to achieve…
… answers the description of being serious or significant, perhaps with particular emphasis on the latter word.
As to the second stage of the Denton test, the court was not satisfied that the defendants had established a good reason for the default. That was not to say there may not have been such a reason, but the evidence was lacking in particularity as to the precise nature of the experienced ‘IT difficulties’. For example, it was unclear whether the failure was human or system error, and there was no evidence from anyone with the appropriate IT expertise.
In relation to the third stage of the Denton test, the court set out the circumstances it considered material, including that:
However, the far more influential matter was the nature of the parties’ budgets and the significant disparity between them due to the different approaches to the case, in particular as to the nature of expert evidence required and its impact on the trial length.
The court acknowledged that while the ‘10 days could have been put to good use’, and the parties may have been able to agree some of the substantive matters in issue, they might not. In those circumstances, these issues would become the subject of oral submissions at the CMC and the court would rule on them. A party that filed a costs budget reflecting its own views was:
… likely to be ordered to file and serve a revised cost budget which reflects the orders which the court has in fact made at the CMC, with a view to the parties discussing such revised budget, and in default of agreement a cost management hearing would be listed…
Taking everything into account, the court came to the conclusion that, in light of the:
… substantive order for directions relating to expert opinion evidence and the estimated length of the forthcoming trial…
that it had made at the CMC, and the need for the defendants to file and serve a revised cost budget reflecting that order, relief from sanctions should be granted:
The fact that the parties are now in precisely the same procedural position in which they would have been so far as the process of cost budgeting is concerned, had the defendants served their cost budget in time, is a highly significant circumstance in the case, and one to which the court should have proper regard.
There are a number of lessons to be learned from this case:
Azure East Midlands Ltd v Manchester Airport Group Property Developments Ltd (Rev 1)
 EWHC 1644 (TCC) Denton & ors v TH White Ltd & ors
 EWCA Civ 906 Lakhani & anor v Mahmud & ors
 EWHC 1713 (Ch) Mitchell MP v News Group Newspapers Ltd
 EWCA Civ 1537 Mott & anor v Long & anor
 EWHC 2130 (TCC) Murray v BAE Systems plc
(2016) unreported, Liverpool County Court, 17 February
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