Few words strike fear into the hearts of litigators more than reference to “the Denton principles’. These are the principles which the English court applies when considering an application for relief from sanctions. In other words, the yardstick against which petitions for leniency are measured when there has been a breach of the procedural rules.

The sanctions from which one is seeking relief can, of course, vary. The Civil Procedure Rules and in turn the court applying them impose different consequences depending on the breach in question. The sanctions that the court can apply range from disallowing certain costs, placing no weight on particular evidence, all the way to staying or striking out proceedings for the most egregious breaches.

In this article Emma Ruane and Philip Gardner discuss the recent case of Bangs -v- FM Conway [2024] EWCA Civ 1461 and its lessons for relief from sanctions applications.

Relief Granted By Mr Justice Jacobs

This appeal concerned a decision by Mr Justice Jacobs to set aside the striking out of proceedings relating to damage caused to a flat by water ingress. Mr Justice Bright had originally struck out the claim because the claimant had failed to file and serve particulars of claim within the 28 days required by the Commercial Court Rules. Because there was no debate that the first two Denton principles went against the claimant (the breach was a serious one and there was no good reason for it), the appeal turned on whether in all the circumstances of the case relief should be granted.

Jacobs J took the view that because there was a ‘very strong’ case on liability it would be unjust to strike out the claim and thus set aside the order (made on the papers) doing so. That evaluation of the strength of the merits, which was at the heart of this appeal, was a conclusion based largely on the defendant having originally admitted liability in pre-action correspondence (albeit they had subsequently sought to withdraw that admission).

Unfair Surprise of Reliance on the Merits According to the Court of Appeal

The Court of Appeal disagreed with the approach adopted by Jacobs J. It emphasised the limited circumstances where the underlying merits of a case should be taken into account at the interlocutory stage, whilst providing the following guidance:

 – First, too much is made by the applicant of the supposed underlying substantive merits of their claim when seeking relief from sanctions (as well as in other case management debates). Although the court needs to understand to the background to the proceedings, during what are essentially case management debates, it is ‘positively unhelpful’ to deploy extensive evidence intended to demonstrate the strength of a claim.

 – Second, for the merits of the claim to inform the analysis on such applications, they must be overwhelming and reach the threshold that the party seeking relief could otherwise be expected to achieve summary judgment if allowed to proceed. That position should be clear ‘without detailed investigation’ and any other circumstances would be ‘genuinely exceptional’.

 – Third, the applicant must forewarn the non-defaulting party of their intention to rely on the underlying merits of their claim. An indication in the applicant’s skeleton argument that they consider themselves to have such a strong case that they could achieve summary judgment is insufficient. This is because it deprives the other party of the chance to provide evidence or argument undermining that contention. However, in the event that a respondent was properly forewarned, the Court of Appeal made it clear that they need not lead evidence akin to that which they would have at trial: it is enough for them to show that ‘there are sufficient matters in dispute that summary judgment is likely to be inappropriate’.

In the particular circumstances of this case, there had been effectively no evidence or submissions to the judge below to the effect that the summary judgment test was met. The submissions had been confined to the (erroneous) contention that the admission made in pre-action correspondence could not be withdrawn. In those circumstances, the judge had been wrong to conclude that the merits were something he should take into account because the issue had not been properly raised, evidenced or argued out before him.

The Court of Appeal therefore considered that it was wrong to say that the striking out of the proceedings was unjust. Relief from sanctions should not have been granted. This was notwithstanding that the Court of Appeal rejected the other grounds of appeal, and expressly said that on the (insufficient) material available to the judge the merits did justify a conclusion as to summary judgment being available and that the decision otherwise being within his discretion.

Conclusion

The judgment of the Court of Appeal contains two very important take-aways for practitioners, being:

 1. Case management decisions are not immune from appeal: There is a significant body of case law which emphasises the reluctance of the appellate courts to interfere with case management decisions at first instance. Rightly, considerable deference is given to the judge ‘at the coal face’. However, where subtle errors of principle infect the application of well-known tests, the Court of Appeal remains ready to exercise those case management powers itself.

 2. Merits will only save you if they are strong enough and when the Respondent is forewarned: Contrary to the received-wisdom, a meritorious case will not necessarily trump a serious breach of procedure. Not only will the merits have to be very strongly in favour of the defaulting party, but that party must also give their opponent a proper opportunity to respond to their assertions.

It is flippant to say that the best way to avoid the awkwardness and high risk of litigating the Denton principles will always be to avoid procedural failings to begin with. Where relief is needed, applications should be made early, with frankness as to the reasons and, if the underlying merits are to be relied upon, fulsome forewarning that takes account of a realistic assessment of whether summary judgment would be available.