Court of Appeal bares its teeth on delay
The Jackson reforms are going to be tough on default the Court of Appeal decided today, though not absurdly so. Having heard the appeal on behalf of Andrew Mitchell MP in his libel action against News Group Newspapers arising out of the plebgate debacle as recently as 7 November, the Court was clearly keen to release quickly its wider guidance on how default would be treated in the new regime. While this is unlikely to be the last word from the Court of Appeal on this area as other marginal issues on default are still likely to be taken up to that judicial level, we do now have some guidance that will resolve problems across a range of scenarios, and will allow insurers to know where they stand on the issue generally.
The Mitchell appeal
The court today predictably rejected the Mitchell appeal, upholding as they did so the order of Master McCloud that as Mitchell’s solicitors were late in filing their costs budget, the costs that they can recover on behalf of their client if the case succeeds should be limited to the court fees payable. This of course is a token sum in any claim and hardly worth having at all, but that is what CPR rule 3.14 specifically provides as a sanction.
There is indeed to be a culture less tolerant of delay, with relief from sanctions being granted less frequently than pre Jackson. The Court of Appeal expects that once that culture becomes accepted, there should be less default, and fewer applications for relief. They want a clear message to be sent out to that end, and recognise that had they allowed the appeal these aims would have had a major setback. All of this is why the appeal was always very likely to be rejected.
The problem of default
Most defaults within litigation are not in fact set against the background of costs budgeting with its specific default provision at rule 3.14, but can be of many different types, such as failing to serve proceedings in time, being late with disclosure of documents, witness statements or expert evidence, omitting to start detailed assessment proceedings in time – the list is almost endless. Many of these examples are ones where either party can be in default, but in fact the majority of non-compliance tends to be on the part of claimants as more frequently the burden is on them to take a specific step by a certain date. The robust decision we now have from the Court of Appeal is therefore primarily a threat to claimants, or at least those who do not operate an efficient operation that is able to pick up important dates, diarise them, and can ensure compliance, and if the worst happens and there is going to be delay, do not know how to proceed, which is quickly and decisively.
It is rule 3.9 that is key here as it sets out the basis under which applications for relief from sanctions are dealt with. In Mitchell the Court of Appeal has stressed the importance of the rule having been rewritten in April. It has reaffirmed the importance of the new two key factors to a relief application which were added to the rule at that time, that is to ensure “litigation is conducted efficiently and at proportionate cost”, and “to enforce compliance with rules, practice directions and orders”. Yes, the court said today, it is also relevant that the same rule says that on a relief application the court has to “consider all the circumstances of the case”, which includes the factors that were removed from the former rule 3.9 in April, but these were now only subsidiary factors and the key points of importance now were efficient conduct of litigation/compliance with rules and orders/proportionality. Doing justice in the case is now effectively redefined and no longer means allowing cases to proceed with merely a sanction in costs for default, but instead involves seeing justice as compliance with the CPR and court orders – we now have official confirmation of that.
Guidance was given covering these situations:
The starting point is that any sanction is properly imposed.
Trivial breaches will usually get relief, such as narrowly missing a deadline.
Non-trivial breaches will require a good reason to get relief, such as the delay being caused unavoidably by illness, accident or an unexpected development.
Administrative issues within the lawyer’s office (as in Mitchell) are unlikely to be a good reason.
Relief applications need to be made promptly.
In Mitchell, the breach was held to be non-trivial, and as there was no good reason (admin issues not being a good reason), the sanction stood and the appeal failed.
The court recognised that their view as to administrative problems usually being insufficient reason could be seen as harsh to solicitors who might already be experiencing financial issues, as of course some claimant operations will be during this period of transition, but saw that had to be the interpretation of the rule nevertheless. There is a warning here for claimant firms as they adjust to keep pace with the new landscape of extended portals and more fixed fees, as well as any transition in their own operational set up as a result, that they cannot take their eye off the ball as to the timetabling of their litigation. The challenge for insurers and their lawyers is to ensure that their houses are in order and that compliance happens on their side. There is confirmed now to be no future in tactical non-compliance with a timetable to allow other steps such as surveillance to be undertaken in the meantime, instead tactics will need to be formulated around court directions so as to ensure compliance happens. If insurers’ position is protected in this way, then advantage can be taken of default by opponents.
Finally, it’s worth noting that the judgment shows support for costs management by the court. This after all was the background to the case. It’s clear from the judgment that this is seen as an important exercise, and that budgets need to be put in in time so costs management can happen. It would be ironic indeed if this judgment was given against a background of certain judges (hopefully diminishing in number) remaining adverse to exercising their powers of costs management when the budgets are before them. We expect more news from the Civil Procedure Rule Committee in support of costs management from their response to their consultation on that subject shortly.
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This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.