The Court of Appeal has upheld a Master’s decision in the “Plebgate” libel case that, even if successful in every respect, Mr Mitchell cannot recover any of his legal costs from the publishers of The Sun newspaper (estimated at over £500,000), other than £2,000 of court fees, because his solicitors filed a costs budget late. The Court of Appeal described its decision as possibly seeming harsh, but stated that if it were to overturn the Master’s decision it was inevitable that the attempt by the Jackson reforms to achieve a change in culture away from delay and non-compliance would receive a major setback.
The decision is a wake up call to all litigators to ensure that all court deadlines are respected and it will inevitably have an impact on the culture of litigation. That change may not, however, be entirely positive, as this very strict approach may encourage aggressive litigators to use procedural orders as tactical weapons, refusing requests for reasonable extensions of time and seeking to turn every breach, however minor, into grounds for an adverse costs order or any other draconian sanction against their opponents.
Mr Mitchell brought defamation proceedings against The Sun over its reporting of the “Plebgate” affair. The case was proceeding under the Defamation Proceedings Costs Management Pilot Scheme, pursuant to which the parties were required to file a costs budgets for their entire case at least 7 days before a court hearing to consider such budgets. The parties were also required to try and agree those budgets between themselves in advance of the hearing.
On Thursday, 6 June, Mr Mitchell’s solicitors received notice that the costs budget hearing would take place on Monday, 10 June, but this was relisted for 18 June. Costs budgets were required to be filed 7 days before the hearing. The newspaper filed its budget on 11 June; Mr Mitchell’s was not filed until 17 June, and after prompting by the Master. At the hearing on 18 June, the newspaper argued that it had not had time to consider Mr Mitchell’s budget.
By filing his budget late, Mr Mitchell was in breach of the Pilot Scheme rules, but the rules did not specify what sanction should be imposed for such a breach. When deciding how to exercise her discretion as to what sanction to impose, the Master looked to the new court rules introduced on 1 April 2013 for guidance and decided that, consistent with the new CPR 3.14 a party that failed to file a budget should only be entitled to recover court fees. The Master made an order on 18 June to this effect and ordered that any application for relief from sanctions be heard on 25 July causing another of her cases due to be heard on that date to be delayed.
At that later hearing, the Master refused to give relief from this sanction applying the new CPR 3.9 on the basis that the sanction was necessary for litigation to be conducted efficiently and to enforce compliance with rules. Conscious that her decision rested on the interpretation of this new rule, the Master granted an appeal of her own motion.
The key question was: How strictly should the courts now enforce compliance with rules, practice directions and court orders?
The answer is very strictly indeed. The Court of Appeal rejected Mr Mitchell’s appeal and confirmed that relief from sanctions will only be given if either:
- the breach is “trivial”; or
- there is a “good reason” for the breach.
The Court of Appeal gave examples of a trivial breach as a failure of form over substance or narrowly missing a deadline given in an order, but otherwise fully complying with its terms; and examples of a good reason as the party or his solicitor suffering from a debilitating illness or being involved in an accident. In addition, later developments in the course of the litigation process are likely to qualify as a good reason if they show that the period of compliance initially imposed was unreasonable, although it seemed reasonable at the time. Good reasons are therefore only likely to arise from circumstances outside the control of the party in default.
The Court of Appeal concluded that, although its decision might seem harsh in Mr Mitchell’s case, any other decision would be a major setback in the attempt to achieve a change in the “culture of delay and non-compliance” underlying the new rules.
The Court of Appeal also confirmed that the sanction imposed by the Master was appropriate. The Master had discretion as to what sanction to impose and was guided in the exercise of that discretion by the sanction that was now to be applied under the new rules. The new rules represented the considered view of the Civil Procedure Rules Committee as to what constituted a proportionate sanction for failure to file a costs budget in time and was therefore an appropriate sanction in this case.
This decision is likely to lead to an initial increase in satellite litigation to determine the boundaries of what type of breach is "trivial" or for which there is a "good reason". The Court of Appeal acknowledged this fact, but said that this was inevitable in any regime which did not impose rigid rules from which no departure, however minor, was permitted and that such litigation would decrease with time, as parties and practitioners adapted to the new culture.
The decision will undoubtedly also result in an increase in professional negligence claims against solicitors, who fail to comply with procedural rules and are unable to fit their cases into either of the two categories above.
The case should also go a long way towards achieving its laudable aim of encouraging compliance with court deadlines and orders and will be welcomed by most litigants. It is possible, however, that this stricter approach may actually result in a more aggressive culture of litigation, with solicitors seeking to use procedural orders as tactical weapons, refusing requests for reasonable extensions of time and taking advantage of any minor (but not trivial) breach of the rules. This would be contrary to the culture of less adversarial litigation and the promotion of alternative dispute resolution that the courts are also trying to achieve.
Case Ref: Andrew Mitchell MP v News Group Newspapers Ltd  EWCA Civ 1537
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