The Continued Iron Fist – Application of relief from sanction – the Denton Test

The recent decision in Pipe v Spicehaart Estate Agents Ltd [2016] EWHC 61 (QB) reveals the court’s strict application of the test enunciated in Denton v TH White Limited (The “Denton” test) in relation to application for relief from sanction.

General:

It is clear that even at the start of this new year, cases in relation to relief from sanction are still being reported regularly and the default position remains a problem and an issue within the civil courts. Further it is equally clear that the Denton principles do not represent a "soft touch" and applications for relief from sanctions are regularly being refused.

Facts:

The Claimant/Respondent sued a former client for unpaid professional estate agency fees. The trial took place at the small claims court whereby Judge Murfitt found that under the TPO Codes of Practice, the estate agent valuer was under a professional obligation to verbally point out to the Appellant that there was a liability to pay more than one agency fee when he knew that there was a joint agency contract already secured in place, and therefore significantly misled the Appellant into signing the agreement.

The Judge gave the now Appellant permission to appeal and found the following:

  1. This was a small claim:
    Paragraph 27. "Against the background that this is a small claims case, the conduct of the Respondent in relation to the Respondent's Notice (and also the provision of their skeleton argument at or around the last possible moment) has, in my view prevented the parties from conducting the litigation at proportionate cost. Equally, this is the second time in the case the the Respondent has been in breach – albeit that it eventually obtained relief in relation to the first breach."
  2. The late service of the respondent's notice and skeleton argument had prevented the parties from dealing with the claim at proportionate costs;
    Paragraph 26. "Of course, that does not mean that the application for relief of sanctions must automatically fail. Rather, I must consider all the circumstances of the case so as to enable me to deal justly with the application – including the need for litigation to be conducted efficiently and at proportionate cost and the need to enforce compliance with rules, practice directions, and orders."
  3. It was a second application for relief (the first application for relief from sanction had been granted);
  4. The Appellant repeatedly sought to engage with the Respondent, however the Respondent "repeatedly failed to do so until it was too late" See paragraph 28 of the judgment.
  5. If the Court granted relief, P would suffer prejudice
    Paragraph 30. "Accordingly I conclude that the way to deal justly with the application is to refuse it."

It is clear that the Court will always strictly apply the 3 stage test set out in Denton, which considers:-

  1. The seriousness or significance of the breach;
  2. Whether there was good reason for the breach; and
  3. All the circumstances of the case so as to enable the court to deal justly with the application

Ultimately, the recent case reveals that the Denton decision is not a "soft touch". The guidance is that more prudence should be given to Court deadlines, with speed and candour.

For more information please contact Kristen Lai at [email protected]