Lord Dyson MR set out the background to this case
“The correct approach to the application of this rule has given rise to much litigation and debate among practitioners and academics. As is well known, this court gave some guidance in its decision in Mitchell v News Group Newspapers Ltd (Practice Note)  1 WLR 795 which has been the subject of criticism…For the reasons that we give later in this judgment, we think that the judgment in the Mitchell case has been misunderstood and is being misapplied by some courts. It is clear that it needs to be clarified and amplified in certain respects.” 
It would be fair to say that this comment raised a few eyebrows amongst practitioners. Lord Dyson appeared to be saying that everyone had misunderstood his previous words.
Lord Dyson went on to say,
24 We consider that the guidance given at paras 40 and 41 of the Mitchell case remains substantially sound. However, in view of the way in which it has been interpreted, we propose to restate the approach that should be applied in a little more detail. A judge should address an application for relief from sanctions in three stages.
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)]”. We shall consider each of these stages in turn identifying how they should be applied in practice. We recognise that hard-pressed first instance judges need a clear exposition of how the provisions of rule 3.9(1) should be given effect. We hope that what follows will avoid the need in future to resort to the earlier authorities.
The first stage
25 The first stage is to identify and assess the seriousness or significance of the “failure to comply with any rule, practice direction or court order”, which engages *3936 rule 3.9(1) . That is what led the court in the Mitchell case to suggest that, in evaluating the nature of the non-compliance with the relevant rule, practice direction or court order, judges should start by asking whether the breach can properly be regarded as trivial.
26 Triviality is not part of the test described in the rule. It is a useful concept in the context of the first stage because it requires the judge to focus on the question whether a breach is serious or significant. In the Mitchell case itself, the court also used the words “minor” (para 59) and “insignificant” (para 40). It seems that the word “trivial” has given rise to some difficulty. For example, it has given rise to arguments as to whether a substantial delay in complying with the terms of a rule or order which has no effect on the efficient running of the litigation is or is not to be regarded as trivial. Such semantic disputes do not promote the conduct of litigation efficiently and at proportionate cost. In these circumstances, we think it would be preferable if in future the focus of the inquiry at the first stage should not be on whether the breach has been trivial. Rather, it should be on whether the breach has been serious or significant….We…prefer simply to say that, in evaluating a breach, judges should assess its seriousness and significance. We recognise that the concepts of seriousness and significance are not hard-edged and that there are degrees of seriousness and significance, but we hope that, assisted by the guidance given in this decision and its application in individual cases over time, courts will deal with these applications in a consistent manner.
27 The assessment of the seriousness or significance of the breach should not, initially at least, involve a consideration of other unrelated failures that may have occurred in the past. At the first stage, the court should concentrate on an assessment of the seriousness and significance of the very breach in respect of which relief from sanctions is sought. We accept that the court may wish to take into account, as one of the relevant circumstances of the case, the defaulter’s previous conduct in the litigation (for example, if the breach is the latest in a series of failures to comply with orders concerning, say, the service of witness statements). We consider that this is better done at the third stage (see para 36 below) rather than as part of the assessment of seriousness or significance of the breach.
28 If a judge concludes that a breach is not serious or significant, then relief from sanctions will usually be granted and it will usually be unnecessary to spend much time on the second or third stages. If, however, the court decides that the breach is serious or significant, then the second and third stages assume greater importance.
The second stage
29 The second stage cannot be derived from the express wording of rule 3.9(1), but it is none the less important particularly where the breach is serious or significant. The court should consider why the failure or default occurred: this is what the court said in the Mitchell case  1 WLR 795, para 41.
30 It would be inappropriate to produce an encyclopaedia of good and bad reasons for a failure to comply with rules, practice directions or court orders. Para 41 of the Mitchell case gives some examples, but they are no more than examples.
The third stage
31 The important misunderstanding that has occurred is that, if (i) there is a non-trivial (now serious or significant) breach and (ii) there is no good reason for the breach, the application for relief from sanctions will automatically fail. That is not so and is not what the court said in the Mitchell case: see para 37. Rule 3.9(1) requires that, in every case, the court will consider “all the circumstances of the case, so as to enable it to deal justly with the application”. We regard this as the third stage.
32 We can see that the use of the phrase “paramount importance” in para 36 of the Mitchell case has encouraged the idea that the factors other than factors (a) and (b) are of little weight. On the other hand, at para 37 the court merely said that the other circumstances should be given “less weight” than the two considerations specifically mentioned. This may have given rise to some confusion which we now seek to remove. Although the two factors may not be of paramount importance, we re-assert that they are of particular importance and should be given particular weight at the third stage when all the circumstances of the case are considered. That is why they were singled out for mention in the rule. It is striking that factor (a) is in substance included in the definition of the overriding objective in rule 1.1(2) of enabling the court to deal with cases justly; and factor (b) is included in the definition of the overriding objective in identical language at rule 1.1(2)(f) . If it had been intended that factors (a) and (b) were to be given no particular weight, they would not have been mentioned in rule 3.9(1) . In our view, the draftsman of rule 3.9(1) clearly intended to emphasise the particular importance of these two factors…”
Note the change. Factors (a) and (b) have gone from having ‘paramount importance‘ to ‘particular importance‘. That is a significant change of position.
Back to Denton…
“34 Factor (a) makes it clear that the court must consider the effect of the breach in every case. If the breach has prevented the court or the parties from conducting the litigation (or other litigation) efficiently and at proportionate cost, that will be a factor weighing in favour of refusing relief. Factor (b) emphasises the importance of complying with rules, practice directions and orders. This aspect received insufficient attention in the past. The court must always bear in mind the need for compliance with rules, practice directions and orders, because the old lax culture of non-compliance is no longer tolerated.
35 Thus, the court must, in considering all the circumstances of the case so as to enable it to deal with the application justly, give particular weight to these two important factors. In doing so, it will take account of the seriousness and significance of the breach (which has been assessed at the first stage) and any explanation (which has been considered at the second stage). The more serious or significant the breach the less likely it is that relief will be granted unless there is a good reason for it. Where there is a good reason for a serious or significant breach, relief is likely to be granted. Where the breach is not serious or significant, relief is also likely to be granted.
36 But it is always necessary to have regard to all the circumstances of the case. The factors that are relevant will vary from case to case. As has been pointed out in some of the authorities that have followed the Mitchell case  1 WLR 795 , the promptness of the application will be a relevant circumstance to be weighed in the balance along with all the circumstances. Likewise, other past or current breaches of the rules, practice directions and court orders by the parties may also be taken into account as a relevant circumstance.
37 We are concerned that some judges are adopting an unreasonable approach to rule 3.9(1) . As we shall explain, the decisions reached by the courts below in each of the three cases under appeal to this court illustrate this well. Two of them evidence an unduly draconian approach and the third evidences an unduly relaxed approach to compliance which the Jackson reforms were intended to discourage.”
A reading of the judgments under appeal left me with distinct impression that judges at first instance far from taking an ‘unduly draconian approach’ were in fact loyally following the Court of Appeal’s decision in Mitchell.