6 things we need to consider about buffer agreements after Mitchell/Denton

The Court of Appeal decision in Denton last week brought sighs of relief as it was felt that the perceived harshness of the Mitchell principles had been reined back to allow a more common sense approach to prevail.

While the decision centered on seeking relief from sanctions, the impact of the decision will surely reverberate wider than that. One example must be in relation to so called buffer agreements.  Brought in only a few months ago by the CPR Committee, through a new provision at CPR 3.8(4), these agreements are intended to ensure cooperation between parties so enabling litigation to progress smoothly and to avoid the technical point scoring that soared following the decision in Mitchell along with the commensurate time and costs for the court that such conduct involved.

Whether a party agrees to enter into a buffer agreement will clearly depend on the circumstances in the case. Clearly, where both parties are having difficulties complying with time limits, e.g. for service of witness statements, the agreement to enter into a buffer agreement will be relatively straightforward and the only issues to be addressed will be ensuring compliance with the provisions in CPR 3.8(4).

However, what about the party who is asked to agree an extension of time but for strategic reasons does not want to agree? The Court of Appeal decision in Denton, as well as that in Hallam, provides some guidance as to the considerations that a party should take into account when deciding whether to agree or not.

1. overriding objective

Jackson LJ in Hallam Estates, in an obiter part of the decision, stated that when dealing with the recent civil justice reforms he had not recommended that parties should not agree sensible extensions of time, ie those that do not disrupt the proceedings, nor did he recommend that a court should refuse to grant reasonable extensions of time. He also did not consider that the new provision in CPR 1.1(2)(f) made provision for courts to refuse applications for reasonable extensions of time. He went on to refer to the new provision in CPR 3.8(4) and highlighted the requirement of parties to assist the court in furthering the Overriding Objective, which includes ensuring that any proceedings only takes up an appropriate share of the court's time and resources. He emphasised that when considering whether to use the new provisions and reach such an agreement, a party needed to consider the impact of a contested application and the costs to clients of such hearings. The intention of CPR 3.8(4) is to enable parties to agree reasonable extensions of time, which do not imperil future court hearing dates or disrupt the litigation.

2. opportunism

The Court of Appeal in Denton made it very clear that the stricter compliance regime under the Jackson Reforms should not be used by parties as 'trip-wires' in litigation. The courts will be ready to penalise any such opportunism.

3. length of extension requested

Following the Court of Appeal decision in Denton, practitioners should consider the impact of the length of the extension of time requested and the extent to which it impacts on the case management of the proceedings, ie what would the seriousness and significance of the other party’s failure to comply with a rule, practice direction or court order be? If not serious or significant, the court would, under Denton, grant relief from sanctions and so the court would more than likely allow an application, which was actually brought within the time limit. Therefore this points towards agreeing the extension of time sought.

4. costs of the application

A failure to agree an extension of time may result in the other side having to bring an application for a court order for an extension of time. Such applications should be brought in time, as discussion as to the agreement must take place before expiry of the relevant time period. The issue is whether any guidance in relation to the costs of such applications can be taken from the Court of Appeal decision in Denton notwithstanding that, there, the Court of Appeal was looking at applications for relief from sanctions. It is very likely that the courts will take the same approach whether an application for an extension of time is made in time or out of time, where respondents unreasonably oppose the application, ie they should face 'heavy' costs consequences. In Lakatamia, a relief from sanctions case determined prior to Denton, the Commercial Court ordered the respondent to pay the bulk of the costs of the application. The court noted that there was no justification for the strength of opposition by the respondent, which had extended the half-hour listing into a half-day hearing.

5. prejudice

Would your client suffer any prejudice as a consequence of agreeing to the extension of time sought? If not, it may be very difficult to justify to the court why you refused to agree to the extension sought.

6. continual breaches

A series of minor breaches by the other side may well be annoying, but will not be seen as cumulative by the courts, following the Court of Appeal decision in Denton.  In any event they will not be taken into account unless the court gets to the third limb stage of the test where any serious persistent offending can be taken into account. The impact of continual breaches therefore, when deciding whether to agree a buffer agreement, will depend very much on the circumstances.

It can be seen there is plenty to think about.  A clear understanding of the approach the courts will take when dealing with relief from sanctions will be an asset when determining whether to agree to extensions of time.  But be warned there are some areas where agreement is simply not permitted under the rules…