Several Liability And Security For Costs | No Automatic Quid Pro Quo In Multi-Party Litigation

The High Court’s decision in Rowe v Ingenious Media Holdings plc [2020] EWHC 235 (Ch) established that several liability applications and security for costs applications are separate matters, with no automatic quid pro quo required in multi-party litigation.

Background

The Ingenious litigation comprised multiple claims brought by over 500 investors who participated in tax-efficient schemes promoted by Ingenious entities between 2002 and 2007. The schemes involved investments in limited liability partnerships for film and video game production, with investors claiming sideways loss relief against other taxable income. HMRC disallowed these losses, leading to appeals by the LLPs. The First-tier Tribunal found the losses were largely capital in nature, and the Upper Tribunal held that the LLPs were not trading at all, meaning no loss relief was available. [§4-5] Consequently, investors faced not only the loss of their investments but also potential liabilities for arrears of tax, interest, and penalties.

The investors issued claims to recover their losses against a range of defendants, including Ingenious entities, associated individuals, and financial intermediaries. The claims are being managed together under an order of Morgan J dated March 2018, with 28 ‘Pleading Claimants’ selected to serve amended particulars of claim. [§6] Three firms of solicitors represent the claimants: Stewarts Law LLP, Peters & Peters Solicitors LLP, and Mishcon de Reya LLP. Many of the Stewarts Claimants and all Peters & Peters Claimants benefit from funding provided by Therium Litigation Finance AF IC (“Therium”), while some Stewarts Claimants are self-funded.

On 19 to 21 November 2019, the court heard applications concerning the funding of the litigation. The claimants applied for a costs-sharing order, primarily seeking a “several liability order” to limit their potential liability for adverse costs to several rather than joint. Several defendants applied for security for costs against Therium. The court provided an oral judgment on 21 November 2019 and subsequently issued this expanded judgment to address specific points in more detail. [§1-3]

Costs Issues Before the Court

The key costs issues for determination were:

(1) whether the claimants’ liability for adverse costs should be several;

(2) the basis for apportioning that liability (pro rata to cash investments or per capita);

(3) the appropriate form of the costs-sharing order;

(4) whether security for costs should be ordered against Therium;

(5) the quantum of any security;

(6) the form of security; and

(7) whether a cross-undertaking in damages should be required from the defendants. [§52]

A threshold question, though not on the formal list of issues, was whether the two applications—several liability and security for costs—were necessarily linked in a “quid pro quo” sense. [§7]

The several liability issue centred on whether the risk of non-recovery of costs should fall on the defendants (if liability were several) or on the claimants inter se (if joint). The apportionment issue involved balancing fairness between claimants with vastly different investment sizes. The security applications turned on whether there was a real risk that adverse costs orders would not be satisfied, considering the claimants’ resources, ATE insurance policies, and Therium’s position as a commercial funder.

The Parties’ Positions

The claimants, represented by Nicholas Bacon QC, argued for a several liability order, relying on authorities such as Ward v Guinness Mahon plc [1996] 1 WLR 894 and Davies v Eli Lilly & Co [1987] 1 WLR 1136. They contended that in large-scale litigation with multiple unconnected claimants, several liability was fairer and aligned with the default position under CPR r 46.6 for group litigation orders (GLOs). On apportionment, they advocated for a pro rata basis tied to cash investments, emphasising equity and the disparity in claim values, as seen in Greenwood v Goodwin [2014] EWHC 227 (Ch) (the RBS litigation). [§14-22] Their proposed costs-sharing order included detailed architecture for categorising common and individual costs.

The defendants, including the Ingenious Defendants, HSBC, UBS, and SRLV, resisted the several liability order or sought to link it to security for costs. The Ingenious Defendants, led by Simon Birt QC, argued most clearly that the applications were interconnected, with several liability depriving defendants of joint enforcement rights, necessitating adequate security. [§8] On apportionment, James Duffy for UBS alone argued for per capita sharing, citing administrative simplicity and the lack of a direct link between investment size and costs. The defendants criticised the claimants’ draft order as overly complex and premature, proposing instead a process to agree a costs list of issues at a later case management conference.

Regarding security for costs, the defendants applied under CPR r 25.14 against Therium, asserting a real risk of non-payment given the several liability order. They highlighted Therium’s commercial motive and the difficulties in enforcing costs against numerous claimants individually. They questioned the reliability of ATE policies, citing policy exclusions, termination clauses, and the fact that some ATE cover had to be discounted because self-funded claimants were also co-insured, reducing the recoverable portion for funded claimants. [§122, 127] They argued that Therium’s financial resources were undisclosed. The defendants sought security based on estimated costs to the end of CMC 3, with percentages ranging from 70% to 75% to reflect potential indemnity costs awards.

Therium, represented by P J Kirby QC, opposed security, contending that its potential liability under s. 51 Senior Courts Act 1981 extended only to funded claimants, not self-funded ones. [§80-83] It pointed to the claimants’ ATE policies and the wealth of some claimants as sufficient protection. Therium argued that the ATE policies, with aggregate limits of £7.25 million for Stewarts Claimants and £1 million for Peters & Peters Claimants, adequately covered adverse costs risks. It also offered to assign policy proceeds and waive certain rights under funding agreements to address defendants’ concerns.

The Court’s Decision

Several Liability: No Quid Pro Quo

The court granted the several liability order, holding that the claimants’ liability for adverse costs should be several rather than joint. It rejected the defendants’ argument that the applications were linked, stating that several liability could be considered separately from security. Nugee J held that the application for a several liability order was “not logically dependent on there being adequate security for the Defendants’ costs, and can be addressed on its own merits.” [§9] The court noted that courts had made several liability orders long before defendants could obtain security from third party funders.

The court rejected the premise that the default position was joint and several liability. Nugee J stated: “It is far from obvious, at any rate to me, that if such actions are unsuccessful at trial the default position, or starting point, is, or should be, that every single claimant, however small their personal stake in the outcome of the proceedings, should be jointly liable for what are bound to be very heavy costs running into many millions of pounds.” [§12]

The court found that in litigation with numerous unconnected claimants, several liability was fair, following Ward v Guinness Mahon and noting that no case law supported joint liability in such contexts. [§14-33] It emphasised that the discretion under CPR r 46.6 (for GLOs) informed the approach, even though no GLO was in place. The court noted the “formidable” practical difficulties defendants would face in enforcing joint liability against hundreds of individual claimants. [§111]

Pro Rata Apportionment

On apportionment, the court ordered that liability be shared pro rata to each claimant’s cash investments, not per capita. It cited the significant disparity in investment sizes—ranging from £36,000 to £10.5 million among Stewarts Claimants—and endorsed the reasoning in Greenwood v Goodwin, where pro rata sharing was adopted to align risk with potential reward. [§34-49] The court found per capita sharing inequitable, as it would impose equal liability on claimants with vastly different stakes.

Nugee J stated: “It seems to me fairer that the risks to a Claimant of participating in the litigation should be proportionate to the reward that he or she might obtain from the litigation.” [§41] He drew an analogy to the maritime law of general average, where those interested in preserving a vessel contribute proportionately to their interest. [§42-43]

The court rejected UBS’s argument that per capita sharing was simpler, noting that the claims would be managed together rather than separately litigated, so the cost of defending individual claims was not determinative of how liability should be apportioned. [§44]

Costs-Sharing Architecture

Regarding the form of the costs-sharing order, the court did not fully adopt either party’s draft. It articulated the general principle that common costs should be shared severally and pro rata among interested claimants but declined to impose a detailed structure prematurely. [§51-75] The court noted the complexity of defining “common costs” and “relevant claimants” across multiple defendants and schemes, suggesting that further refinement should await case management decisions.

Nugee J expressed concern about the “tripwires” in the claimants’ proposed detailed architecture, noting that it might prove too prescriptive and have “unexpected and unwelcome side-effects.” [§68-70] The court approved maintaining a claimant register and quarterly accounting periods but left other details to be agreed or determined later. It emphasised that the key principle—that common costs should be shared by those interested—had been established, and “how one puts flesh on the bones” was less important. [§75]

Security For Costs Against Therium

The court ordered security for costs against Therium under CPR r 25.14, but only in respect of the funded claimants (Stewarts and Peters & Peters). It held that Therium could not be liable for costs attributable to self-funded claimants under s. 51 Senior Courts Act 1981, as it did not control or benefit from their claims. [§80-83] The court calculated that funded claimants represented approximately 83.73% of claims against Ingenious Defendants, 65% against HSBC, 78% against UBS, and 73% against SRLV, including one assumption regarding a Peters & Peters claimant bringing a claim against UBS. [§82]

On quantum, the court assessed the defendants’ costs to the end of CMC 3 and applied percentages to reflect potential costs recovery: 75% for Ingenious Defendants and HSBC (due to allegations of deceit and conspiracy, warranting consideration of indemnity costs) and 70% for UBS and SRLV (facing negligence claims). [§90-103] After adjusting for the funded claimants’ share, the court derived initial figures of £5.0 million for Ingenious, £1.25 million for HSBC, £1.35 million for UBS, and £0.8 million for SRLV.

ATE Policy Reliability

The court considered the ATE policies but found “a real, and not a fanciful risk, that the ATE policies will not respond in full.” [§138] It identified several concerns: risks of avoidance for fraud or deliberate non-disclosure; termination provisions that insurers might invoke; the fact that self-funded claimants were co-insured, reducing the portion available for funded claimants; and the presence of competing claims from other defendants under the same policies. [§115, 122, 137]

The court required the claimants to provide confirmations from insurers and assignments of policy proceeds to opponents as a condition for giving credit. Subject to these steps, it allowed deductions: two-thirds of the value for policies covering only Ingenious and HSBC, and half for policies covering multiple defendants. [§141-142] After deductions, it ordered Therium to provide security in rounded sums: £1.85 million for Ingenious Defendants, £0.6 million for HSBC, £0.95 million for UBS, and £0.55 million for SRLV. [§145]

Cross-Undertaking

The court declined to require a cross-undertaking in damages from the defendants. It held that any reallocation of recoveries between Therium and claimants under funding agreements was an internal matter, not an external cost warranting protection. [§149-153] However, it left open the possibility of revisiting this if external costs (e.g., bank guarantee fees) arose from providing security.

Finally, the court left the form of security to be agreed by the parties, with liberty to apply in case of disagreement. [§147-148] It emphasised that the orders were subject to further refinement based on practicalities and ongoing case management.

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Swift Post-Inquest Settlement Weighs In Favour Of Inquest Costs Recovery Rather Than Against It

The High Court’s decision in Fullick & Ors v The Commissioner of Police for the Metropolis [2019] EWHC 1941 (QB) upheld a costs award of £88,356 (including substantial inquest participation costs) against an £18,798 settlement in a death in police custody case, holding that the Deputy Master properly applied CPR 44.4(3)(c) by considering the importance of institutional accountability and public interest alongside financial recovery.

Background

A claim was brought by Diana Fullick, Clara Fullick, and Denise Bacchus, the close relatives of Susan Sian Jones, who died after becoming ill while voluntarily attending a police station as a witness [§3]. The claim was against the Commissioner of Police for the Metropolis for damages arising from breach of Article 2 of the European Convention on Human Rights, negligence, and misfeasance in public office [§3]. Solicitors were instructed by the claimants, and an inquest was conducted into the death. Pre-inquest review hearings took place on 11 June 2015 and in September 2016, with the claimants’ representatives in attendance [§4]. Disclosure was provided by the defendant and the London Ambulance Service in June 2015 [§4]. Protective court proceedings were commenced at the end of March 2016 but were stayed pending the outcome of the inquest [§4].

The inquest commenced on 10 October 2016, lasting seven days and concluding on 20 October 2016 [§5]. The jury returned a narrative verdict that the death resulted from methadone and alcohol intoxication, coupled with inadequate police policies, procedures, and training [§5]. Without the service of a letter of claim or particulars of claim, the civil claim was settled in March 2017 for £18,798 [§6]. A Bill of Costs was presented by the claimants, claiming approximately £122,000, which included costs related to the pre-inquest hearings, the inquest itself, and approximately £36,000 for civil claim documents work [§7]. The costs were assessed by Deputy Master Keens, who awarded £88,356.22 to the claimants [§1]. The defendant appealed this costs determination.

Costs Issues Before the Court

The appeal concerned whether the Deputy Master erred in awarding costs of £88,356.22 as proportionate under CPR 44.3(2) and 44.4, given that the claim settled for £18,798 before service of a letter of claim or particulars of claim. The specific costs issues included the recoverability of costs incurred in attending the pre-inquest hearings and the inquest as costs of the civil claim, and whether these costs were proportionate and reasonable [§2].

      • Ground 1 of the appeal alleged that the Deputy Master failed to correctly apply CPR 44.3, particularly regarding proportionality under CPR 44.3(2)(a), and treated the inquest as though it were the civil trial [§18-20].
      • Ground 2 contended that the Deputy Master wrongly allowed the vast majority of inquest costs as costs of the claim by erroneously viewing the inquest as the “battleground” for the civil claim [§21-22]. Additionally, the defendant challenged specific items in the Bill of Costs, such as the level of legal representation and time claimed for various tasks, arguing they were not progressive of the civil claim or proportionate for evidence gathering [§22, §29].

The Parties’ Positions

The defendant, represented by Mr Nicholas Bacon QC, submitted that the Deputy Master erred in law by allowing inquest costs as recoverable in the civil claim without sufficient regard to proportionality under CPR 44.3(2) [§24-25]. It was argued that the inquest served an inquisitorial purpose distinct from the adversarial civil claim, and only costs relevant to evidence gathering for the civil claim should be recoverable [§24]. The defendant relied on authorities including Roach v Home Office [2010] 2 WLR 746 and Ross v Owners of Bowbelle [1997] 2 Lloyd’s Rep 196, emphasising that costs must be proportionate to the matters in issue [§24-25]. Reference was made to Kazakhstan Kagazy Plc v Zhunus [2015] EWHC 404 for the proposition that recoverable costs should be the lowest amount reasonably expected for proficient case conduct [§26]. The defendant also challenged the allowance of costs for pre-inquest hearings, preparation, and document work, contending that these were not reasonably incurred for the civil claim and were disproportionate given the settlement value [§28-29].

The claimants, represented by Mr Roger Mallalieu, supported the Deputy Master’s decision, arguing that he correctly applied the legal principles for assessing costs [§30]. It was submitted that the costs of the inquest, including pre-inquest hearings, were incidental to the civil claim under Senior Courts Act 1981, section 51(1) and CPR 44, as they addressed issues relevant to the claim, such as the cause of death and police procedures [§32-34]. The claimants relied on Re Gibson’s Settlement Trusts [1981] Ch 179 and Roach, asserting that costs incurred for evidence gathering and issues relevant to the civil claim are recoverable [§34]. They emphasised that the claim involved matters of public interest beyond financial compensation, including systemic police failings and Article 2 breaches, which justified the costs [§38]. The claimants also noted that the defendant had accepted in principle that inquest attendance costs could be recoverable (though disputed their proportionality and extent), and that the Deputy Master’s reductions in the Bill of Costs demonstrated a proper exercise of discretion [§24, §37].

The Court’s Decision

Mrs Justice Slade DBE allowed the appeal in part. The court reaffirmed the Gibson and Roach principles, applying them within the CPR 44 proportionality regime to guide assessment of inquest costs [§44-48]. The court held that the Deputy Master did not err in principle in allowing costs for attendance at the inquest and pre-inquest hearings as recoverable in the civil claim, as these were relevant to issues such as the cause of death and police procedures, which were central to the claim [§52-56]. However, the Deputy Master erred in law in respect of items 68 and 69 of the Bill of Costs, which concerned civil claim documents work. The court found that the Deputy Master failed to decide which parts of the work claimed were relevant to pursuing the civil claim and, without this assessment, could not determine whether those costs were proportionate in terms of utility and amount [§62]. The broad brush approach failed to distinguish between costs incurred in different steps in the inquest, and the Deputy Master was not in a position to assess whether the costs were proportionately and reasonably incurred [§62].

The award for items 68 and 69 was set aside and remitted for reassessment by a costs judge other than Master Rowley, who would apply the principles of relevance and proportionality outlined in the judgment [§63]. Importantly, the court directed that the total costs award should be reassessed following the re-evaluation of items 68 and 69 to ensure overall proportionality [§73-74].

On Ground 1, the court found that the Deputy Master correctly considered proportionality under CPR 44.3(2) and 44.4, taking into account the importance of the matter to the parties and the public interest, which extended beyond the financial settlement [§64-66]. The court emphasised that the case concerned institutional police failings and Article 2 breaches, engaging the factor of “the importance of the matter to all the parties” under CPR 44.4(3)(c), not merely financial recovery [§66]. The reduction of the claimed costs from over £122,000 to £88,356.22 was within the Deputy Master’s discretion, and no further reduction for disproportionality was warranted, except for items 68 and 69 [§68]. The court emphasised that each case must be decided on its facts, and the Deputy Master’s approach was consistent with authorities such as Roach and Gibson, which remain applicable post-Jackson reforms [§44-48].

On Ground 2, the court rejected the defendant’s argument that the Deputy Master treated the inquest as the civil trial. While noting that the term “battleground” was infelicitous, Mrs Justice Slade held that the substance of the Deputy Master’s observation was correct – the inquest determined liability issues that enabled settlement without progressing the civil proceedings [§53, §67]. The costs for pre-inquest hearings were properly allowed as they involved engagement with issues relevant to the civil claim, such as expert evidence on causation and police safeguards [§54-56]. The challenges to other specific items in the Bill of Costs were largely dismissed, as the Deputy Master’s reductions and conclusions were within his discretionary bounds [§57-61]. The appeal was allowed only to the extent of the reassessment of items 68 and 69, with the costs of the appeal to be determined by the reassessing costs judge [§78].

Application of the Re Gibson’s Settlement Trusts Principles

Mrs Justice Slade reaffirmed the long-established Re Gibson’s Settlement Trusts principles—governing whether costs are ‘of and incidental’ to civil proceedings—and expressed them in practical, three-stage terms for use under CPR 44 [§69–70]. This formulation restates, rather than replaces, the Gibson approach:

    1. Identify outstanding issues which are necessary to the civil claim in respect of which the claimant’s case would be advanced by participation in the inquest
    2. Identify what participation would assist with those issues in the civil claim
    3. Weigh the value of that assistance against the cost of pursuing that particular point in the inquest

The court emphasised that performing this exercise may be onerous but is necessary, and it may be prudent to stand back and consider whether total inquest participation costs are proportionate to utility and relevance to outstanding civil claim issues [§70]. The judgment provides a clear restatement of the Gibson and Roach principles within the modern proportionality context of CPR 44, rather than introducing a new test. Each case must be determined on its own facts [§47, §71].

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Proportionality: A View From The High Court

Court Deprecates Paying Party’s Opportunistic Conduct In Detailed Assessment Proceedings

The decision in Long v Value Properties Ltd & Anor [2014] EWHC 2981 (Ch) establishes that a short delay in serving additional liability information during detailed assessment proceedings constitutes neither a serious nor significant breach. Paying parties who exploit such oversights rather than cooperating to remedy them engage in opportunistic conduct that detailed assessment and CPR 3.9 applications appropriately condemn, as established in Denton v TH White Ltd

Background

The dispute originated in approximately 2011 concerning the use of parking spaces adjoining property where the claimant, Norah Christina Long, and her late husband were lessees. The claimant’s solicitors informed the defendants, Value Properties Limited and Ocean Trade Limited, that the claimant was represented under a conditional fee agreement dated 12 October 2011 with a success fee [§2]. A notice of funding (N251) was served on the defendants in accordance with the Civil Procedure Rules [§2]. Proceedings were issued on 7 February 2013 [§3]. Following the death of the claimant’s husband, the claim continued in her name alone [§3]. The matter was settled by a consent order made on 15 August 2013, which required the defendants to pay the claimant’s costs, to be subject to detailed assessment on a standard basis if not agreed [§3].

The success fees of counsel and solicitors together totaled £48,462, forming part of a total bill of £131,937 [§8].

Detailed assessment proceedings were commenced on 17 October 2013 when the claimant’s solicitors served the notice of commencement (Form N252) and the bill of costs, as required by CPR r.47.6(1) [§4]. However, the claimant’s solicitors failed to serve the Further Information, comprising a statement of reasons for the percentage increase or a copy of the risk assessment, and a copy of the conditional fee agreement itself, as mandated by Practice Direction 47PD.32.5(1)(c) and (d) and 47PD.32.7 [§5].

On 5 November 2013, the second defendant requested a 14-day extension to serve points of dispute, and on 6 November the claimant agreed to extend time for both defendants [§6]. Points of dispute were filed on 14 November 2013 [§6]. These points of dispute raised, for the first time, the claimant’s non-compliance with 47PD.32 [§6-7]. The claimant served the Further Information on 22 November 2013 [§7] and issued an application for relief from sanctions on 28 November 2013 [§7].

The application was heard by Costs Judge Master Rowley on 13 January 2014. Master Rowley expressed “qualms” about the ease with which a breach of this requirement could occur compared with the draconian nature of the sanction, and noted the difference between this situation and the less severe sanctions for failure to serve notice of funding (N251) [§14]. Nevertheless, he found a breach of the CPR, applied the sanction under CPR r.44.3B(1)(d), and refused relief [§9]. Permission to appeal was granted [§9].

Costs Issues Before the Court | Opportunistic Conduct and CPR 3.9

The appeal raised three principal costs issues [§16]. First, whether the claimant had breached the CPR by failing to serve the Further Information at the commencement of the detailed assessment proceedings. Second, if a breach had occurred, what was the applicable sanction under the CPR, particularly whether it fell under CPR r.44.3B(1)(c) or (d). Third, if the more severe sanction under r.44.3B(1)(d) applied, whether relief from that sanction should be granted pursuant to CPR r.3.9.

Significantly, the appeal was heard before the Court of Appeal’s decision in Denton v WH White Ltd [§1], but both parties subsequently provided written submissions on the effect of that judgment in the context of the appeal [§1, §56].

The Parties’ Positions on Relief From Sanctions and Opportunistic Conduct

The claimant argued that there was no breach of the CPR because the rules did not explicitly require the Further Information to be served at the commencement of detailed assessment proceedings; it could be served at any time during the proceedings [§36]. In the alternative, if a breach was found, the applicable sanction was under CPR r.44.3B(1)(c), which imposed a graduated disallowance for the period of default, rather than the “all or nothing” sanction under r.44.3B(1)(d) [§42-44]. The claimant further submitted that, even if r.44.3B(1)(d) applied, the breach was trivial or, in all circumstances, relief should be granted under CPR r.3.9 [§55]. The claimant relied on the lack of prejudice to the defendants, the prompt rectification of the omission, and the defendants’ opportunistic conduct in not notifying the claimant of the oversight earlier [§7, §68-70].

The defendants contended that the Further Information was required to be served at the commencement of detailed assessment proceedings by necessary implication from the structure of the CPR and Practice Direction [§26-31]. They argued that the applicable sanction was under CPR r.44.3B(1)(d), as the breach related to a failure to disclose reasons for the percentage increase [§42]. The defendants submitted that the breach was serious and significant, caused by an oversight which was not a good reason, and that relief should be refused to enforce compliance with rules and practice directions [§67]. They emphasised the tight timetable for points of dispute and the prejudice caused by having to amend them [§67].

The Court’s Decision

The court held that there was a breach of the CPR [§37-40]. It found that the obligation to serve the Further Information at the commencement of detailed assessment proceedings was implied from the interaction of CPR r.47.6, r.47.9, and Practice Direction 47PD.32 [§37-39]. This interpretation was necessary to ensure the efficiency and fairness of the assessment process, aligning with the overriding objective under CPR r.1.2 [§40]. The court referenced Middleton v Vosper Thorneycroft (UK) Ltd [§30-31] and Light On Line Ltd v Zumtobel Lighting Ltd [§32-33] in support of this conclusion.

On the applicable sanction, the court determined that CPR r.44.3B(1)(c) applied, not r.44.3B(1)(d) [§54]. The wording of r.44.3B(1)(c) addressed failures to provide information “by the time required”, imposing a graduated sanction for the period of default, whereas r.44.3B(1)(d) was intended for complete failures to disclose [§42-54]. This interpretation avoided anomalies and better served the overriding objective, particularly given the disproportionate nature of the sanction under r.44.3B(1)(d) for minor delays [§53-54].

In the alternative, if r.44.3B(1)(d) applied, the court found that relief from sanctions should be granted under CPR r.3.9 [§55-74]. Applying the three-stage Denton guidance [§57-66], the breach was neither serious nor significant [§71]. The delay of approximately three weeks was short [§67], rectified promptly once brought to the claimant’s attention [§13, §68], and caused no substantial prejudice [§13, §70].

Critically, the defendants had contributed to the length of the default by seeking an extension for service of points of dispute without notifying the claimant of the omission [§68]. The court found it unclear whether the defendants knew of the breach when the second defendant sought the extension on 5 November 2013, though they were certainly aware by 14 November when they served points of dispute [§68]. Had the defendants wished to shorten the length of default and save costs, they could have informed the claimant before preparing points of dispute and sought an extension to take stock of the Further Information when supplied – the claimant would have agreed to such a request [§68].

Instead, the defendants “preferred to take advantage of the claimant’s oversight by choosing not to inform the claimant earlier, and going ahead with service of points of dispute (after obtaining an extension of time for that purpose) which they knew would require amendment once the Further Information was received” [§69]. Thereafter they declined to cooperate with the claimant and were unwilling to amend the points of dispute to avoid the need for an application for relief [§69].

The court concluded that “in so far as there has been unnecessary cost, delay and use of the court’s finite resources in hearing the application for relief from sanctions and this appeal, this is the result of what in my view was the unreasonable, opportunistic and non-cooperative approach of the defendants to the claimant’s unfortunate oversight” [§70].

The judge found that when looked at in its context, “the breach here is properly regarded as ‘insignificant’ and therefore ‘trivial’ as those expressions are understood in the light of the guidance in Mitchell… For the same reasons I consider the breach to be neither serious nor significant in the terms of the Denton guidance” [§71]. The judge noted that Master Rowley “appears to have fallen into the error by attaching insufficient weight to the circumstances surrounding the breach as well as to the absence of any significant prejudice of any kind to anyone” [§71].

Master Rowley had also fallen into the error identified by the Majority in Denton, in that having concluded the breach was not trivial and that there was no good reason for it, he regarded the application for relief from sanctions as bound to fail, without going on to consider whether that was the appropriate outcome in “all the circumstances of the case” as required by r.3.9 [§72].

Considering all circumstances, including the nature and effect of the breach, the defendants’ conduct, the speed with which the claimant remedied the default and applied for relief, and the need to enforce compliance with rules, practice directions and orders, the just disposal of the application required complete relief from the sanction to be granted [§73].

The court added that “the defendants’ behaviour here has been precisely the kind of opportunistic, and non-cooperative conduct in litigation condemned by the Court of Appeal in Denton” [§76]. Had the defendants taken a different course, “the matter could probably have been completely resolved within the overall period of the extension of time which they applied for and were granted by the claimant, or very soon thereafter. This would have saved the parties and the court the time and expense of a lengthy hearing before the Judge and an even longer appeal hearing” [§76].

The appeal was allowed on both grounds [§75].

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