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Is Denton the Future?

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Author: Jade Reeve, Litigation Paralegal 

In the judgment passed down this week The Honourable Mrs Justice McGowan's decision in British Gas Trading Limited and Oak Cash and Carry Limited [2014] EWHC 4058 (QB) was upheld. 

Lord Justice Jackson, Lindblom, and Lady Justice King decided that following the guidance given by the Court of Appeal in Denton v TH White Ltd [2014] EWCA Civ 906; [2014] 1 WLR 3926, the defendant's application for relief pursuant to CPR 3.9 must be refused and that McGowan J was correct. 

Background

The claimant sought to recover unpaid gas charges from the defendant in the sum of circa £200,000.00. 

Proceedings to recover the sums were issued on the 7th December 2013. The case was later transferred to the Oxford County Court where District Judge Matthews gave various directions including, under Section 4.3; that each party file his completed Pre-Trial Checklists by 3 February 2014 with up to date costs estimates.

The claimant returned the pre trial checklist in accordance with the order but the defendant failed to do so within the timeframe initially set out. District Judge Gatter allowed the defendant additional time in an unless order dated the 10th February 2014 which stated that; unless the defendant files the listing questionnaire by 19th February 2014 their defence will be struck out without further order of the Court. 

The defendant again failed to file the correct document with the court in time and a default judgement was obtained by the claimant and was issued on the 18th March 2014 in the sum of £211,388.61. 

Three days later the defendant applied for relief from sanction which was granted on 15 April 2014 by HHJ Charles Harris QC when he ordered that the Judgement be set aside and the upcoming trial dates be vacated after applying the tests set out in Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537; [2014] 1 WLR 795. 

The claimant successfully appealed the decision of Judge Harris and the default Judgement was reinstated by McGowan J after hearing the appeal on 7th October 2014. 

The judgement published this week is as a result of Oak Cash & Carry Limited appealing to the Court of Appeal.

Lord Justice Jackson states in the Judgment that if the defendant had made an immediate application for relief at the same time as filing its pre trial checklist, or very soon after, he would have been strongly inclined to grant relief from the sanction of striking out. Unfortunately this was not the case and forms part of the reason for the decision in this case.

CPR 3.9 - Relief From Sanctions

(1) 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 enable it to deal justly with the application, including the need –
(a) for litigation to be conducted efficiently and at proportionate cost; and
(b) to enforce compliance with rules, practice directions and orders.
(2) An application for relief must be supported by evidence.

What does this mean for the future?

It appears that the test as set out in Mitchell is now a test of the past. Whilst the test itself is not entirely wrong and has much a similar basis as in Denton, it allows for Judges to use discretion and was frequently interpreted incorrectly.  
The new test applied in Denton is much more specific setting out a three stage process in place of the idea that the considerations in CPR 3.9 should be ‘of paramount importance’. This process established was in the hope that there would be one precedent to follow moving forward and no need to refer to earlier authorities.
The test established in Denton and the test to be used moving forward is as follows:
1)    Identify and assess the seriousness of the non-compliance. Is the breach ‘serious or significant’?
2)    If it is, why did the default occur?
3)    Consider all the circumstances of the case in order to deal with the application ‘justly’, including (a) the need for litigation to be conducted efficiently and at proportionate cost and (b) the need to enforce compliance with rules, directions and court orders.

If you would like advice, please contact our team.

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