01/09/2015
In the 2014 case of City Basements v Nordic Construction, Mr Justice Ramsey made some obiter points regarding relief from sanctions in regards to adjudication. In doing so, he took a hard line, stating that had an application for relief from sanctions for failing to produce a witness statement in the time dictated by the court been pursued (the application was withdrawn at the hearing), then it would have been denied. His reasons included:
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Applications to enforce adjudicators' decisions are subject to very short timetables, and summary judgment ones are only about a month long. It is, therefore, vital for parties to comply with the directions given
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The delay of 11 days to deal with the relief from sanctions application could not be trivial when viewed in the context of the short timetable in place.
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The witness statement was to be 100 pages and inevitably issues raised would need to be addressed which would lead to further later evidence and difficulties
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The defendant had not provided any good reasons for the delay in providing the witness statement in line with the court directions. The reliance on a misinterpretation of the order was not accepted; it was standard form order for such applications. Note: it was claimed that the directions required further evidence and that the defendant took that to be the defence, not the witness evidence and the defence was served within that time frame.
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The failure to comply with the directions order about the provision of witness evidence raised issues that the costs would become disproportionate
This decision highlights how important it is for construction, manufacturing and engineering companies to comply with any court directives in both adjudication and litigation proceedings. Since the Jackson Reforms (which will be discussed below) the courts have taken a much tougher approach to companies and individuals who fail to comply with directives issued and additionally, have made it much tougher to obtain any relief from sanctions.
Why Have the Courts Toughened up on Relief from Sanctions?
UK Courts have a duty to provide justice in an efficient and fair way. Therefore, under the Civil Procedure Rules (CPR) 1998, the court has the power to:
a) Make case management directions (ie outline timetables for evidence and documents to be submitted); and
b) Apply sanctions to litigants who fail to comply with these sanctions.
In 2009, Sir Rupert Jackson was asked to carry out a review of civil litigation costs. His findings, which were presented the Lord Chancellor in January 2010, led to sweeping changes in civil procedure when they came into force on 1st April 2013. The aim of the Jackson Reforms is to reduce the cost of litigation across all the English Courts and to make better use of court time and facilities. It stands to reason therefore, that litigants negligently or deliberately holding up an adjudication or litigation process due to failing to comply with court issued instructions regarding the timetable of when certain things need to be done will not evoke much leniency.
Applying for Relief from Sanctions
Applicants may apply for relief from sanctions under CPR 1998 r.3.9. The Jackson Reforms introduced a new test the court needed to use when assessing whether relief should be granted. “On an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to deal justly with the application, including the need –
(a) For litigation to be conducted efficiently and at a proportionate cost; and
(b) To enforce compliance with rules, practice directions and orders.
How Have the Courts Applied this Test?
In the decision of Andrew Mitchell MP v News Group Newspapers Limited, the claimant for failed to file a cost budget seven days prior to the Case Management Conference. The Court applied sanctions which resulted in the claimant losing the right to recover any costs, apart from the court fee paid on issuing the claim form.
When considering the case the Court of Appeal stated relief from sanctions would only be granted if:
(a) the nature of non-compliance was trivial (ie the deadline was missed by a few minutes, or there is a failure of form rather than substance) and;
(b) there was a good reason for the breach (such as the applicant's lawyer suffering severe illness or accident) and;
(c) the application for relief was made promptly.
The Court of Appeal subsequently softened the Mitchell test in the case of Denton v White, in which three applications for relief from sanctions were granted on appeal from the High Court.
The Court stated that the first step a court should take when considering an application for relief from sanctions was to establish whether the breach was ‘serious or significant’. If the breach is not considered serious or significant, relief can usually be granted, without having to consider any other criteria. Secondly the court must consider why the breach occurred and whether or not there was a good reason. Thirdly, the court must evaluate all the surrounding circumstances of the case to ensure there is just reason for granting or denying relief.
The Future of Applying for Relief from Sanctions
Despite the decision in Denton appearing to make it easier for applicants to obtain relief from sanctions, this is far from the case. It is clear from the obiter statements in Nordic Construction that the courts will continue to take a tough line on lax or negligent litigants, in order to abide by the spirit of the Jackson Reforms in both litigation and adjudication cases.
If you wish to find out more about relief from sanctions or adjudication, please phone our London office on 0207 9936960.
Fisher Scoggins Waters is a leading construction, engineering and manufacturing litigation firm, specialising in disputes and disasters. For further information on this article or any of our litigation services, please contact us on +44 (0) 207 993 6960.