Relief from sanctions revisited

In British Gas Trading Limited v Oak Cash & Carry Limited [2014] EWHC 4058 (QB), the High Court refused relief from sanctions where the failure to file a listing questionnaire was in breach of an Unless Order which in turn led to the loss of the allocated trial date.

The Claimant brought a claim for unpaid electricity bills in February 2013. Directions were given for both parties to file listing questionnaires by 3 February 2014. The Defendant did not comply and an Unless Order was made by the Court on 10 February 2014 that unless the Defendant filed a listing questionnaire by 19 February 2014, their Defence would be struck out.

The Defendant finally capitulated on 18 February 2014, but filed a directions questionnaire; not the listing questionnaire requested by the Court Order. A listing questionnaire was eventually filed at Court (by fax), but not until 21 February 2014. Accordingly, on 25 February 2014, the Claimant's solicitors requested judgment in default. In response, the Defendant's solicitors wrote to the Court on 27 February 2014, apologising for the mistake and asked the Court not to grant the sanction requested by the Claimant.

Judgment in default was however obtained by the Claimant for £211,388.61 on 18 March 2014. The Defendant thereafter applied to the Court on 21 March 2014, for relief from sanctions.

On15 April 2014, HHJ Charles Harris QC sitting at the County Court at Oxford granted the Defendant relief from sanctions. He subsequently ordered that the Default Judgment obtained by the Claimant be set aside and that the Defendant's Defence be reinstated. He further ordered that the Defendant have until 4pm on 21 February 2014 to file their listing questionnaire and the trial date listed for 30 April to 1 May 2014 be vacated.

The Claimant appealed the ruling of HHJ Harris on the basis that, amongst other things, HHJ Harris had misapplied CPR 3.9 which deals with the granting of relief from sanctions.

It should be noted that the initial decision of HHJ Harris came after the landmark decision in Mitchell but before Denton. However, on appeal Mrs Justice McGowan DBE set out how although "Denton restated and gave greater definition to the views of the Court expressed in Mitchell … Denton does not alter the statement of principle as set out in Mitchell".

In short, Denton set out a three-stage test which the Court should apply when considering an application for relief from sanctions, being;

1. The seriousness and significance of the breach in question;

2. Whether there was a good reason for the breach; and

3. An evaluation of all the circumstances of the case.

In applying the Denton test, McGowan J found that:

1. The Defendant's solicitors had failed to comply with the original Directions Order and the Unless Order, "it cannot be said that such a breach is not either serious or significant";

2. Whilst it was recognised that the Defendant's solicitor had suffered personal problems during the period in question, McGowan J considered that the Defendant firm of solicitors was significantly sized in order to deal with the relevant solicitor's unavailability and matters should not have been delegated to an inexperienced trainee who did not know which document to file; as was the case. She therefore concluded that the reason for the breach did not have significant weight and there was no good reason for the failure.

3. Finally, whilst acknowledging that a listing questionnaire may not be seen as "the most important document" in court proceedings, McGowan J's view was that that being said, "the persistent failure" to file such a document meant that a trial date of two days was lost and that this was a "matter of grave concern". Allowing relief from sanctions in these circumstances would, in McGowan J's opinion, not only affect this litigation but all those awaiting hearing dates, putting further strain on an already under pressure Court system.

McGowan J considered that HHJ Harris had applied an "overly generous interpretation of the Judgment in Mitchell" and accordingly overturned the previous decision refusing relief from sanctions was and entering Judgment for the Claimant.

This case is a reminder that despite the Denton approach to relief from sanctions, relief from sanctions is by no means something that will be granted automatically. This case is therefore a stark reminder that the Court sets deadlines for a reason and any failure to meet those deadlines will need to be justified. Trivial breaches may not be tolerated (as maybe first expected after Denton) and therefore clients and solicitors need to ensure that during litigation they work as a team and understand the actions required of them to avoid unnecessary and avoidable pitfalls.

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.