Lakhani & Anor v Mahmud & Ors

Relief from sanctions is governed by the three-stage approach in Denton: assess the seriousness and significance of the breach, identify the reason for it, and evaluate all the circumstances, giving particular weight to efficient and proportionate litigation and compliance with rules and orders.

Seriousness is a multifactorial question of degree. When a deadline is missed, the court may consider the time actually lost, the purpose of the order, effects on co-operative procedural tasks, immediate consequences, risks to the litigation, and wasted court resources. Actual compliance with the task does not necessarily make the breach insignificant. An appellate court should uphold a case-management decision falling within the generous ambit of discretion unless it involved an error of principle or was plainly wrong.

The defendants appealed from an order of HH Judge Lochrane in the Central London County Court dated 10 January 2017. That order refused relief from the automatic sanction under CPR 3.14 after the defendants served their costs budget one day late.

The costs budget was served on 20 December 2016 instead of 19 December. The parties nevertheless exchanged comments and were able to prepare for the costs and case management conference. The first-instance judge considered that the late service reduced an already limited period for co-operation, generated procedural dispute and affected the efficient conduct of the hearing.

The central issue was whether the refusal of relief involved an error of principle or fell outside the proper range of discretionary case-management decisions.

1. Appeal dismissed. The judge below had applied the correct principles and reached a conclusion open to him on the evidence.

2. Under CPR 3.9 and Denton, the court must assess the seriousness and significance of the breach, consider why it occurred, and then evaluate all the circumstances, including the need for efficient and proportionate litigation and compliance with rules, practice directions and orders. The latter considerations must receive particular weight.

3. Seriousness is not a binary question of primary fact but a multifactorial question of degree. In relation to a missed deadline for serving costs budgets, relevant matters may include the absolute and relative time lost, the effective time available, the purpose of the order, the effect on co-operative tasks, actual or potential disruption, the immediate consequences of the default, and the impact on court resources. The fact that the parties ultimately managed to address the costs budgets was important but was not conclusive.

4. A court may take account of the risk that a missed deadline makes co-operation more difficult, inconvenient or costly, even where the required task remains possible. It may also consider the procedural distraction caused by disputes about the breach or a late application for relief. However, the mere possibility of an application for relief does not automatically make a breach serious.

5. The stages in Denton should not be applied through rigid compartmentalisation. A factor may be relevant at more than one stage. The first-instance judge was entitled to regard the one-day default as serious in context, particularly because the usable period for co-operation was shortened, the breach generated dispute, and the costs hearing was substantially lengthened.

6. The defendants had no reasonable excuse. The costs budget was prepared at the last minute and the solicitor’s misunderstanding of the rules was not an understandable mistake warranting relief. The fact that the default was by a legal representative did not materially assist on these facts.

7. The appeal court’s function was to review rather than rehear the decision. Robustness in case management should be tempered where necessary to avoid procedural rules becoming a tripwire, but this decision was within the permissible range and was not disproportionate.

• High Court (Chancery Division): appeal from the order of HH Judge Lochrane in the Central London County Court dated 10 January 2017. Permission to appeal had been refused below but granted by Norris J. The appeal was dismissed.