The Court of Appeal has rejected a bid from City firm Mishcon de Reya to penalise former clients for serving notice of funding arrangements more than four months late.

The firm had argued that Antonio Caliendo and Barnaby Holdings, represented by international firm DLA Piper, should be denied relief from sanctions after the late notice of a conditional fee arrangement and after-the-event insurance.

Mishcon de Reya had acted for the claimants in their sale and disposal of shares in the London football club QPR, but they subsequently brought a professional negligence claim against the firm.

DLA Piper had entered the funding arrangement in February 2013 and informed Mishcon de Reya in June 2013 – despite notice supposed to have been given within seven days.

Civil Procedure Rules are that unless the court orders otherwise, late notice of funding arrangements will result in sanctions.

In October 2014, Mr Justice Hildyard granted relief from sanctions, giving weight to the presumption that the claimants would start off on a ‘false footing’ as to exposure in the event of liability against it being established at trial.

Following a hearing in the Court of Appeal in July, Lady Justice Gloster (pictured) said the late notice did not result in any material change of stance by Mishcon de Reya, such as the start of settlement proceedings.

‘There is no good reason to believe that there would have been any change of position on the part of the appellants, if notification had been given three and a half months months earlier,’ said Gloster.

The judge said that following the Denton ruling of 2013, even if there is a serious or significant breach of rules, and there is no good reason for the breach, it does not automatically follow that relief will be refused.

Gloster added that it was ‘preferable to grant relief, rather than encourage what would inevitably be satellite litigation involving the respondents suing their own solicitors’.

The appeal was dismissed, a decision agreed by Lords Justice Patten and Christopher Clarke.