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Chartwell Estate Agents and the Mitchell decision

Having delivered and attended several post Mitchell case updates, one recent decision that surprised and interested me (in the context of other post Mitchell decisions) was Chartwell Estate Agents Ltd v (1) Fergies Properties SA and Another [2014] EWHC 438. This decision was appealed and the Court of Appeal’s decision appeared on Lawtel last week.

So why did I find the first instance decision surprising? We know from Mitchell and subsequent case law that a) if a party is in breach of a rule, order or practice direction and that breach is more than trivial and b) there is no good explanation for it, then the chances of obtaining relief from sanctions were looking rather slim. Not impossible, but slim.

The background to Chartwell’s application was as follows:

  • The underlying dispute concerned non-payment of £450,000 of commission which was alleged to be due;
  •  The non-compliance related to service of witness statements and the cross over between relief from sanctions and CPR 32.10.
  •  Both parties had failed to comply with the direction for service of witness statements;
  •  Notably, the Claimant alleged that they could not comply with the direction because they were awaiting further disclosure from the Defendant and without that disclosure it was unable to prepare its witness statements;
  •  There was correspondence passing between the parties which suggested that they were unaware that they could not agree extensions between themselves and/or that CPR 32.10 would serve so as to exclude their evidence at trial;
  •  Cleary, failure to allow relief from sanctions was most significant for the Claimant because without this evidence the Claimant could not prove their claim and would (without striking it out) effectively bring the claim to an end;
  •  Further disclosure was finally provided by the Defendant and witness statements were exchanged several weeks late.

At first instance it was noted that the failure could not be characterised as trivial – the statements were several weeks late.

Further, the reason for failure was not to be regarded as a good reason. The judge took the view that the Claimant’s solicitors could and should have prepared and served statements and then dealt with any issues arising out of a further disclosure in supplementary statements. The judge also noted that there was no good reason as to why the parties had not made applications for an extension of time before the time for expiry of the time for exchange. Indeed, the Claimant’s could have made an application for specific disclosure in good time to allow them to complete their witness statements. There was no good reason as to why these steps hadn’t been taken.

Nonetheless, despite the above conclusions the judge concluded that in all of the circumstances of the case relief should be allowed and referred to the following:

  • Both parties were in default;
  • It would be a disproportionate result if the Claimant were deprived from pursuing their claim (it wouldn’t result in strike out, but effectively the claim couldn’t be proven because there was no factual evidence);
  • Whilst 3.9 placed proportionality and compliance with rules as paramount considerations, it did not mean that other considerations were irrelevant.




The Court of Appeal upheld the decision and made the following points:

  •   Had the parties applied prior to the time for service, the application fell to be decided according to the overriding objective as opposed to 3.9 and so would not have been a relief from sanctions application – this is a great reminder of the need to make prospective applications;
  •  The judge had been required by r.3.9 to consider all the circumstances of the case, including that the trial date would not be lost and no significant extra cost would be occasioned if relief were granted;
  •  Mitchell had not said that the factors specified in r.3.9 would always prevail over any other circumstances;
  •  The judge had been entitled to attribute importance to the fact that refusal of relief effectively meant the end of the action. This could not, however, necessarily be a determinative factor in the Claimant's favour, because of the requirements in Mitchell circumstances other than those in r.3.9(a) and (b) were ordinarily to be given less weight than those matters;
  •  The White Book suggested that where a witness statement was served late it would be unjust to exclude the evidence from trial save in very rare circumstances, but that stated the position too broadly. The revised r.3.9 and Mitchell required an altogether more rigorous approach. The judge had not decided to grant the Claimant relief solely because of a disproportionately severe consequence. He had concluded that it would be too severe a consequence when set against all the background history and other matters. That had entitled him to depart from the expectation which otherwise would have arisen;
  •  A further factor was the Defendant’s default. They had also needed relief to rely on their witness statements, but had not applied for relief (no doubt having calculated that if the Claimant could not rely on witness evidence it would not matter if they likewise could not do so). That would be an unattractive result and the judge had been entitled to attach importance to that factor;
  •  The decision at first instance was sound and properly applied 3.9 and Mitchell. The Court of Appeal could not see any basis for interfering with that decision.

Mitchell is an incredibly important case, this is without doubt. But the Court of Appeal decision in Chartwell reminds us that Mitchell is not to be elevated to the status of a rule or legislation. It is an interpretation of 3.9 and, in appropriate cases “all of the circumstances of the case” and the relative prejudice to the parties may just trump other considerations. The result being that, even where the breach is not trivial and there is no good reason, relief may still be granted.

The Court of Appeal also expressed its unwillingness to interfere with decisions where the law has been properly applied.  This is a further reminder of the need for precision and thoroughness in the evidence at the initial application stage. 

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