The Mitchell ruling has been “misunderstood and is being misapplied by some courts”, the Master of the Rolls said today in issuing more detailed guidance on how it should be used – while also recognising that some of the language used in Mitchell may have contributed to the problems.
In the much-anticipated appeals against three Mitchell-related decisions, Lord Dyson said “it seems some judges are approaching applications for relief on the basis that, unless a default can be characterised as trivial or there is good reason for it, they are bound to refuse relief”.
This, he said, was leading to decisions that are “manifestly unjust and disproportionate”, and not what the appeal court intended in Mitchell.
Some judges have ignored the need to consider all the circumstances of the case, Lord Dyson said.
At the other end of the spectrum, decisions taking “what might be said to be the traditional approach of giving pre-eminence to the need to decide the claim on its merits” should have disappeared following the Woolf reforms, he said. “There is certainly no room for it in the post-Jackson era.”
Lord Dyson, giving the main ruling with Lord Justice Vos, said the guidance given in Mitchell remains “substantially sound” but needed restating in “a little more detail”.
He said judges should address an application for relief from sanctions in three stages. The first stage is to identify the “seriousness and significance” of the breach, rather than whether or not it is “trivial”.
He recognised that these are not “hard-edged” concepts and that there are degrees of seriousness and significance, but in a statement that appears to anticipate further satellite litigation, said: “We hope that, assisted by the guidance given in this decision and its application in individual cases over time, courts will deal with these applications in a consistent manner.”
If a judge concludes that a breach is not serious or significant, then relief will usually be granted and it will be unnecessary to spend too much time on the other two stages, Lord Dyson said.
The second stage is for the judge to consider why the default occurred, and the court declined to produce “an encyclopaedia of good and bad reasons”.
The third stage is for the court to consider “all the circumstances of the case, so as to enable it to deal justly with the application”.
This means that the two factors specifically mentioned in rule 3.9 – the need to conduct litigation efficiently and at proportionate cost, and to enforce compliance – should be of “particular importance”. This was consistent with the way the rule had been drafted, he said.
Lord Dyson recognised that describing these as being of “paramount importance” in Mitchell had encouraged the idea that all other factors are of little weight. “On the other hand, at para 37, the court merely said that the other circumstances should be given ‘less weight’… This may have given rise to some confusion which we now seek to remove.”
In was on this point that the third judge on the appeals, Lord Justice Jackson, dissented. He argued that rule 3.9 does not require these two factors to be given greater weight, only that they should be considered in every case.
But Lord Dyson said that not giving the two factors particular importance “will inevitably lead to the court slipping back to the old culture of non-compliance which the Jackson reforms were designed to eliminate”.
He went on to emphasise the importance of parties co-operating and not trying to take advantage of mistakes by the other side in the hope that relief will be denied, saying contested applications for relief should “very much” be exceptional.
He tasked judges with imposing “heavy costs sanctions” on parties who “behave unreasonably in refusing to agree extensions of time or unreasonably oppose applications for relief from sanctions” – this could apply not just to the specific application but impact the wider costs order made at the end of the case.
Lord Dyson also told judges to ensure that the directions they give are “realistic and achievable”, and should bear in mind where the rules provide for automatic sanctions in the case of default. “‘Unless’ orders should be reserved for situations in which they are truly required: these are usually so as to enable the litigation to proceed efficiently and at proportionate cost.”
In each of the three cases – two of which involved refusal of relief and one the grant of relief – the appeals were upheld.
The Master of the Rolls concluded by hoping that the ruling would mean lawyers need not refer to earlier authorities in future and “that the guidance we have given will assist in reducing the need for satellite litigation and will be conducive to a reasonably consistent judicial approach in the application of rule 3.9”.
See the full ruling here.