[2023] UKUT 247 (LC)

These are tribunal proceedings. Nevertheless, for reasons I will explain, it is appropriate to refer to the approach to non-compliance with directions which has been developed in the civil courts. The modern emphasis in the courts is on the importance of compliance with procedural rules (the Civil Procedure Rules, or “CPR”), and on the need, in the interests of the parties and in the wider public interest, for litigation to be conducted efficiently and at proportionate cost. With that in mind the courts have developed a stricter, systematic approach to the consequences of non-compliance by the imposition of appropriate sanctions, from which relief is made available only after consideration of the causes and consequences of the relevant default.

The basis of procedural enforcement in the civil courts is now CPR 3.9(1) which provides that on an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need for litigation to be conducted efficiently and at proportionate cost and the need to enforce compliance with rules, directions and orders. An application for additional time to comply with a direction made after the time for compliance has expired is treated as an application to which rule 3.9(1) applies, on the basis that, unless time is extended, the party will be unable to take the relevant step and will be prevented, for example, from relying on evidence not filed in time.

In applying CPR 3.9(1) the civil courts have adopted a consistent and systematic approach. In Denton v TH White Ltd [2014] 1 WLR 3926 the Court of Appeal gave guidance recommending a three stage approach to applications for relief against sanctions.

At its first stage the Denton guidance requires an assessment of the seriousness or significance of the breach in respect of which relief from sanctions is sought. If, after considering its effect on the particular case and on litigation generally, a court concludes that a breach is not serious or significant, relief from sanctions will usually be granted. If, however, the court considers that the breach is serious or significant, the second and third Denton stages of the guidance become of greater significance.

The second stage is to consider why the failure or default occurred. The burden is on the defaulting party to persuade the court to grant relief and it must therefore explain what happened and why. If there is a good reason, such as illness or accident, relief against sanctions is likely to be granted, but merely overlooking a deadline, for whatever reason, is unlikely to be a good reason. That is not to say that, in the absence of a good reason for default, an application for relief will inevitably fail, as the Court of Appeal emphasised in explaining its third stage (paragraphs [12], [29-30] and [38]).

At the third stage the court must consider all the circumstances of the case, to enable it to deal justly with the application. Rule 3.9(1) itself expressly so requires, but it also emphasises the particular weight to be given to two important factors, namely, the need for litigation to be conducted efficiently and at proportionate cost and the need to enforce compliance with rules, directions and orders (paragraphs [32] and [35]). In looking at all the circumstances, the court may take into account the promptness of the application for relief against sanction and any other past or current breaches by the parties of the rules, practice directions and orders (paragraph [36]).

In Denton, at paragraph [37], the Court of Appeal warned against an unduly draconian approach to relief and emphasised that compliance was not to be regarded as an end in itself; rules and rule compliance were the handmaids not the mistresses of justice and could never be allowed to assume a greater importance than doing justice in any case.

So much for courts. What about non-compliance with procedural directions in tribunals?

The FTT’s Rules contain no equivalent of CPR 3.9(1). Its overriding objective is expressed differently and, in particular, it lacks the courts’ emphasis on enforcing compliance with rules and orders (CPR 3.9(f)). The closest it comes to the court’s concept of “the efficient conduct of litigation” is where it identifies “dealing with the case in ways which are proportionate” as one aspect of dealing fairly and justly with proceedings. Nevertheless, a similar approach to compliance has become more widely adopted by tribunals following the decision of the Supreme Court in a tribunal appeal, BPP Holdings v Commissioners for Her Majesty’s Revenue and Customs [2017] UKSC 55.

At paragraph [24] of BPP Holdings, Lord Neuberger PSC described decisions of the courts on the application of the Civil Procedure Rules as providing “a salutary reminder as to the importance that is now attached in all courts and tribunals throughout the UK to observing rules in contentious proceedings generally.” Those decisions were strictly applicable only to courts, “save to the extent that the approach in those cases is adopted by the UT, or, even more, by the Court of Appeal when giving guidance to the Ft-T.”

BPP Holdings concerned an application by a taxpayer to debar HMRC from further participation in a tax appeal following its failure to comply with an order which included a warning that non-compliance might result in the making of a debarring order. At paragraphs [14]-[15] the Supreme Court considered that the FTT had correctly proceeded on the basis that the application was for the imposition of a sanction, and not an application to be relieved from an automatic debarring order.

The FTT had treated the CPR cases, culminating in Denton, as providing useful guidance to it. The Supreme Court approved the FTT’s approach and found that it had been entitled to determine the application by taking into account all relevant factors, while giving significant weight to ensuring the parties were on an equal footing and saving expense as part of the consideration of the overriding objective to deal with cases fairly and justly (BPP Holdings (paras. [20], [27]–[28]). Lord Neuberger summarised the position, at [26]:

“In a nutshell, the cases on time-limits and sanctions in the CPR did not apply directly, but the tribunals should generally follow a similar approach.”

Similar encouragement for the adoption of the Denton guidance by tribunals had been given by the then Senior President of Tribunals, Sir Ernest Ryder, sitting in the Court of Appeal in BPP Holdings ([2014] 1 WLR 3926) when he said this (at [37]):

“… I can detect no justification for a more relaxed approach to compliance with rules and directions in the tribunals and while I might commend the Civil Procedure Rules Committee for setting out the policy in such clear terms, it need hardly be said that the terms of the overriding objective in the tribunal rules likewise incorporate proportionality, cost and timeliness. It should not need to be said that a tribunal's orders, rules and practice directions are to be complied with in like manner to a court's. If it needs to be said, I have now said it.”

The same approach has been adopted by this Tribunal in responding to procedural default in its own jurisdictions and in giving guidance to the Valuation Tribunal for England in rating appeals (SimpsonsMalt Ltd v Jones [2017] UKUT 460 (LC)). In Hammerson UK Properties PLC v Gowlett [2017] UKUT 469 (LC) I said this, in reaction to BPP Holdings:

“The civil courts approach the imposition of sanctions and the grant of relief from sanctions by adopting the three stage approach recommended by the Court of Appeal in Denton. Following BPP it is now to be expected that the Tribunal will do the same. The Tribunal may not follow the approach developed by the courts in every respect, and will respond to applications in specific circumstances as they arise. But the principle that the Tribunal’s orders are to be complied with in like manner to any court’s has been definitively established and requires that the Tribunal have regard to the manner in which the courts achieve that compliance in developing its own consistent approach.”

When determining previous appeals from decisions of the FTT, the Tribunal has continued to encourage the adoption of the Denton guidance, as in Block A9 The Upper Drive Limited v Copse Mill Properties [2019] UKUT 337 (LC)is Silber v London Borough of Barnet [2021] UKUT 206 (LC). In the latter case the Tribunal (Judge Cooke) highlighted the risk that a failure to take into account the Denton criteria could lead a tribunal to make a decision which fell outside the range of decisions available to it in the exercise of its discretion.

Although Denton may rightly be seen as requiring a stricter approach to compliance with directions, its importance and usefulness is just as much in its provision of a framework for consistent decision making when the consequences of non-compliance are considered by a court or tribunal. The guidance provided by the Court of Appeal and which it, and the Supreme Court have indicated all tribunals should adopt, requires a systematic consideration of three stages: assessing the seriousness of the relevant failure to comply; considering why the default occurred; and evaluating all of the relevant circumstances to enable the tribunal to deal fairly and justly with the case. It is for each panel to decide for itself what fairness and justice requires in the case before it, but if all panels adopt the same framework for their decision making the risk of inconsistency, and therefore unfairness, will be reduced.