Relief from Sanctions – has the Court become more lenient?

For a number of years now the Court has adopted a hard stance in respect of granting relief from sanctions as can be seen from the well-trodden paths set down in the cases of Mitchell and Denton. However, a recent case in the Chancery Division of the High Court suggests the Court’s stance may be softening.

'I have thought long and hard as to whether it is appropriate to say that this behaviour is so far beyond the pale as to be unrelievable, but I have come to the conclusion that, putting my hand on my heart, I cannot say that it is that bad. It is rank incompetence'.

In Dhanji and another v Al-Najar and other [2017] EWHC 193 (Ch), Master Matthews considered an application for relief from sanctions and a retrospective time extension for filing and serving a defence.

The claim was issued for sums due under investment and loan agreements together with enquiries and accounts in respect of sums found to be held on trust and any breach of trust involved and compensation for such breach.

The claim form and particulars of claim were issued on 4 October 2016 and were served by first class post on the first and second defendants. The deemed date for service was therefore 7 October 2016 and as an acknowledgment of service was filed on 21 October 2016 the last date for filing and serving a defence would have been 3 November 2016.

Master Matthews noted in his judgment that solicitor for the defendants, Mr Munro, realised by 1 November 2016 that he required an extension of time for service of the defence and any counterclaim. However, despite same, he did not ask for an extension until 15 November 2016.

The request was refused by the claimants and in any event by that time the claimants had already issued an application for judgment in default.

A defence and counterclaim was received by the court on 21 November 2016, some 18 days late but was not served on the claimants and nor did Mr Munro inform solicitors for the claimants that same had been filed.

It was not until 16 January 2017, two and a half months after the date for service of the defence had expired, that an application for relief from sanctions and an application for a retrospective extension of time was issued on behalf of the defendants.

At the hearing of the applications, the representatives of the claimants argued that the Master should follow the cases of Mitchell and Denton and that it had not been a trivial breach but rather a significant and serious breach. Master Matthews stated that 'I have to say I rather agree with him. It is…..So I conclude that it is a serious or significant breach of the rules. It is not a trivial breach (in this context) of missing a deadline by one or two days, or something like that'.

Master Matthews also concluded that there was no good explanation for the failure to file the defence on time.

The Master then had to consider the whole of the circumstances of the case in order to say whether or not, in all those circumstances, it is appropriate to grant relief. The Master commented that it was not the 'worst possible case. There are, unfortunately, much worse cases that have come before the courts, and I must not lose all sense of proportion in dealing with it'.

This led the Master somewhat surprisingly to decide that 'I have thought long and hard as to whether it is appropriate to say that this behaviour is so far beyond the pale as to be unrelievable, but I have come to the conclusion that, putting my hand on my heart, I cannot say that it is that bad. It is rank incompetence. It is professionally unacceptable. But, at the end of the day, the inconvenience and the difficulties it has caused can be dealt with in other ways, particularly on the question of costs'.

Master Matthews dismissed the claimants' application for default judgment and granted the relief sought by the defendants.

The Master's approach to stage 3 of the Denton test appears to be somewhat strange and more relaxed. Does this decision demonstrate that the Court may now be willing to adopt a more lenient approach in granting relief from sanctions? Only time will tell, but it would be inadvisable to assume that the tide has changed and that the Court will be willing to adopt a similar approach in the future.

For further information please contact Tamrah Woolfe at [email protected]