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28 February 2020
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Why are so many firms stumbling their way to failure when it comes to applications for relief?

Stephen Averill provides some answers. 

If you haven’t recently had the misfortune to require a successful application for relief from sanctions, the chances are you know someone who has. Although we are several years into the Jackson reforms, and were reliably warned about a new culture of compliance with rules and deadlines, it seems strange to me that the courts are seeing as many applications for relief from sanctions as they ever have.

There are some straightforward explanations. This culture of compliance creates opportunity for parties who are perhaps now keener to exploit any failure by an opponent who breaches a rule, practice direction or court order where they may have previously turned a blind eye. In civil litigation at least, much of the reason is simply that the requirement to file a budget on time in multi-track cases simply did not exist prior to the Jackson reforms and these defaults are perhaps the most frequent of all.

However, what continues to baffle me is the sheer number of failed applications which, arguably, could have been successful had the application been better prepared. Although the reasons for each failed application are specific to each case, there are some general failings and, some general solutions which are routinely not implemented.

The three-stage test in Denton v T H White Ltd [2014] 1 WLR 3926 established the correct way to deal with an application for relief. This landmark decision developed and refined previous guidance on applications for relief from sanctions, seeking to avoid decisions which the Court of Appeal believed to be “manifestly unjust and disproportionate” whilst ensuring that there remained a culture of compliance with rules and deadlines.

Stage one: Identify and assess the seriousness or significance of the failure to comply with any rule, practice direction or court order

This is the most important stage and if passed, stages 2 and 3 are unlikely to be looked at in great detail and your chances of succeeding are high. It is clearly tempting for an applicant to argue that the breach is neither serious nor significant given, if accepted by the court, this will almost certainly lead to a relief being granted at the first opportunity of the three-stage test. Where there is a breach of form, as opposed to substance (for example, where a party is required to provide certain information and does so, but not quite in the stipulated format) it is possible to pass this stage of the test. However, the vast majority of breaches do not fall into this category. Too many conflate the seriousness of the breach itself with the seriousness of the consequences. 

Where this happens, the court dismisses this part of the application and moves onto the next stage, but the problem is that you may have undermined your cause altogether. Does the court’s view at your ‘shot to nothing’ undermine submissions for the other stages of the test? Has it got your application off on the wrong foot? Quite possibly.

In many cases, it is more beneficial to accept that a breach is ether serious or significant, albeit you can argue it is at the lower end of any scale.  

Stage two: Why did the breach happen?

In practice there is rarely a good reason for a default. The vast majority of breaches are honest mistakes and oversights. There is a tendency for some to suggest that these constitute a good reason. Some are even tempted to avoid explaining why the default happened, which is not a good idea at all.

In accordance with stage one of the Denton test, honesty is the best policy. Whilst oversights and mistakes will not constitute a ‘good reason’, they at least explain what happened.  Do not try to engineer a good reason if one does not exist.

Stage three: An evaluation of all the circumstances of the case

More often than not, this is the stage which determines success or failure and will, typically, be very fact specific.

In the back of many people’s minds there is a voice suggesting all they have to do is show that there is no prejudice to anybody, argue that the sanction is disproportionate to the breach and they will be back on track. They believe such arguments will trump all other factors. Not only is that view wrong, it plays a significant part in the frequent, and frankly unnecessary, mistakes which are made in these applications.

Typical mistakes

  • There is a delay in making the application for relief.
  • The breach is not remedied or the remedy is too slow.
  • A lack of evidence supporting the application.
  • A failure to highlight when there is a lack of delay and prejudice (to other court users as well as any opponent).
  • Using the application as an opportunity to sling mud at an opponent.
  • Failing to make the court aware they are entitled to be lenient (see Paragraph 96 of Denton).
  • Failing to pressurise an opponent into consenting to an application (see Paragraph 80 of Denton).
  • Further mistakes – e.g. failing to lodge the bundle in time.

The above mistakes are easily avoided, yet they are so common. Unfortunately, too many applications are not given their best chance of succeeding because of these mistakes. Applications for relief, more than any other type of application, require the sympathy of the court. And the best way of getting that is via an honest approach where those who are in default hold their hands up and can demonstrate a clear effort to put things right.

This article first appeared in the New Law Journal on 28 February 2020

Stephen Averill is a Council member of the Association of Costs Lawyers and Managing Director of Phoenix Legal Services

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