Mishcon De Reya & Anor v Caliendo & Anor 
In Mishcon De Reya (a firm) & Anor v Caliendo & Anor  EWCA Civ 1029 (13 October 2015) this matter came before Lord Justices Patten and Clarke and Lady Justice Gloster in the Court of Appeal with the lead judgment given by Lady Justice Gloster.
An order had originally been made by Judge Hildyard in the High Court dated 21st October 2014 where he granted to the Respondents, relief pursuant to CPR 3.9(1) from sanctions under CPR 44.3B in relation to their failure to:
- Serve notice of the existence of a conditional fee agreement (CFA)
- Serve notice of an after the event insurance (ATE) within the period prescribed under CPR rule 44.15 and paragraph 9.3 of the Practice Direction on Pre-Action Conduct.
The Appellants, in this matter, had been instructed by the Respondents in respect of a transaction involving the sale and disposal of various interests of the Respondents. The firm who had previously acted for the Respondents had sent a letter of claim under the Professional Negligence Pre-Action Protocol to the Appellants on the 18th December 2009.
The Appellants representative, acting on their behalf and the professional indemnity insurers, sent a holding response on the 18th January 2010 to the letter of claim. Before this there had been protracted correspondence which continued up to May 2012.
On the 13th February 2013 DLA Piper commenced acting for the Respondents who they entered into CFAs with on the 20th February 2013 and 18th March 2013. On the 11th June 2013 they informed the Appellants’ representative that they were ready to issue proceedings and the Appellants had until the 14th June 2013 to make an offer for settlement. If there was no offer, proceedings would be issued and served 17th June 2013. The letter also gave details of the funding arrangements.
Lady Justice Gloster observed that this was late notice. The funding arrangements should have been notified to the Appellants by, in respect of DLA Piper’s CFA, the 27th February 2013, in respect of Leading Counsel’s CFA, the 25th March 2013 and, in respect of the ATE policy by the 27th February 2013. She continued:
- “(1) CPR rule 44.15(2) provides that: “A party who seeks to recover an additional liability must provide information about the funding arrangement to the Court and to other parties as required by a rule, practice direction or court order.”
(2) Paragraph 9.3 of the PDPAC requires that a party who enters into a funding arrangement must inform the other parties “as soon as possible and in any event within 7 days of entering into the funding arrangement concerned or, where a claimant enters into a funding arrangement before sending a letter before claim, in the letter before claim.”
Lady Justice Gloster noted that Counsel for the Respondents had submitted that the Judge’s decision, to grant relief or not, had been at his discretion which Lady Gloster considered, in accordance with well-established principles, the Court of Appeal should not interfere with unless the Judge had erred in principle, omitted a material point or that his conclusion had been overtly wrong.
She continued that the Appellants had put forward seven grounds for appeal. Grounds 2 and 3 examined the decision by the Judge in respect of the first stage in the Denton analysis. Ground 6(i) looked at the second stage with the remaining grounds the third stage of the analysis.
She observed that the Judge set out the principles and approach to be followed with reference to the decision in Mitchell and Denton
- “The first stage is to identify and assess the seriousness and significance of the “failure to comply with any rule, practice direction or court order” which engages rule 3.9(1). If the breach is neither serious nor significant, the court is unlikely to need to spend much time on the second and third stages. The second stage is to consider why the default occurred. The third stage is to evaluate “all the circumstances of the case, so as to enable [the court] to deal justly with the application including [factors (a) and (b)]”.”
Lady Justice Gloster considered that she could not interfere with the Judge’s conclusion in respect of stage one as he was entitled to find that conclusion on the evidence before him. In respect of stage 2, she considered that the Judge was entitled to have the opinion, taking into account all the circumstances, that the failure to notify
- “was not a factor that had to be weighed heavily in the balance against the respondents”.
With regard to stage 3, Lady Justice Gloster examined all the submissions and considered that none of them were strong enough to substantiate the Appellants’ criticism of the discretion exercised by the Judge.
She concluded that she saw no justification in interfering with the exercise of the Judge’s discretion and dismissed the Appeal. Both Lord Justices Clarke and Patten agreed.