Relief from Sanctions

The case of Antonio Caliendo & Barnaby Holdings LLC and Mishcon De Reya (A Firm) & Mishcon De Reya LLP [2014] EWHC 3414 (Ch) relates to the Court’s interpretation and detailed consideration of the three principles laid out in the Denton case upon an Application for relief from sanctions.


The Claimant sought relief from sanctions resulting from their failure to file and serve the required notice of the existence of a Conditional Fee Agreement and an ATE policy.

CPR rule 44.15(2) states that:

“A party who seeks to recover an additional liability must provide information about the funding arrangement to the Court and to other parties as required by a rule, practice direction or court order”.

Paragraph 9.3 of the Practice Direction (Pre-Action Conduct) provides that this must be “as soon as possible and in any event within 7 days of entering into the funding arrangement concerned or, where a claimant enters into a funding arrangement before sending a letter before claim, in the letter before claim.”

The Application

As the Claimant had failed to notify the Defendant and the Court within the 7-day period (and actually some 3 ½ months late) the automatic sanctions were imposed and the requirement for an Application for Relief from Sanctions was required.

The Claimant maintained that the failure was simply an oversight and that human error had been the cause. However, as determined by Master Rowley in Long –v- Value Properties & Anor, this alone would not be sufficient to justify relief.

The Claimant went on to say that the oversight had only been discovered when the pleadings were being prepared for issue. Upon preparing the Notice of Funding, the fee earner had noticed that no notification of the funding arrangement had been given, and accordingly the application had been made immediately upon this realisation.

Under CPR 44.3(B), the receiving party may not recover any additional liability during a period where the paying party were not on notice of said funding arrangement. In addition, the ATE premium was at risk.

Hearing of the Application

The hearing of the Claimant’s Application was adjourned on 11th October 2013, given the upcoming decision in the case of Mitchell v News Group Newspapers Ltd. As the Court’s judgement was not finalised, the parties’ written submissions were invited.

Following consideration of these submissions, and the outcome of the Denton case, Mr Justice Hildyard considered the three elements of CPR 3.9(1):

  1. The Court must identify the failure to comply with any rule, practice direction or court order;
  2. The Court must consider all the circumstances so as to deal justly with the application;
  3. The Court must ensure that consideration of the efficient conduct of the case and the litigation in general.

Consideration of the Elements

The first element was satisfied immediately as the Court could readily ascertain that the sanction was brought about by the failure to comply with CPR 44.15(2) and the Practice Direction. In the present case, as it related to the second element, the Court considered the circumstances; the reason for the breach. The Claimant could offer no good explanation, other than human error. This was accepted by the Claimant as insufficient to be granted relief on those grounds.

In relation to the third element, it was contended by the Claimant that the breach should be regarded as trivial as there had been no impact of the conduct of the litigation, and no disruption to the court timetable. They averred that the breach had occurred pre-action and that the first opportunity to make the application had been upon issue of proceedings. They also pointed out that no prejudice had been caused to the Defendant due to the late notice, however the Defendants countered this by stating that the entire dynamic of the claim from the Defendants standpoint can be affected depending on the nature of the funding arrangement. This was accepted by the Court but were advised that they had failed to provide any evidence that, had they been served with the details of the funding arrangement earlier, they would have conducted the claim differently and as such could not show material prejudice.

Mr Justice Hildyard went on to say that this was not a case like Mitchell. The circumstances were very different, and did not centre around the effect on the litigation process (and subsequently affecting other Court users’ cases). He also stated that the judgement in Mitchell was “very tough” and that orders such as that were not required in every case where breaches occur. Accordingly, it was determined that it would be unjust to deny relief on the basis that it affected the efficient conduct of the litigation (factor a).

In relation to the litigation in general, it was noted that the Claimant had not acted in breach of any other order or rule, and that – should the sanction remain in place – the Claimant would cause substantial prejudice.

On consideration of the circumstances of the case, the reasons for the breach and also despite the need to encourage compliance, the Court allowed relief.

In summary, as long as the breach is identified swiftly, and an Application made immediately upon discovery of the breach, the Court will find it more difficult to deny the relief from sanctions.

Of course, there will always be a paying party that will try to aver that they would suffer prejudice if relief is granted; they would argue that the Claimant would have a claim against their Solicitor which would be impossible to counter. But this would undoubtedly lead to satellite litigation that would deter from the culture change that is required post-Mitchell.

If you have any questions or queries in relation to this blog please contact Simon Sharpe ( and 0113 3363430) or the Clarion Costs Team on 0113 2460622.

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