In Mitchell v News Group Newspapers  EWHC 2355 (QB) the Court of Appeal has, in a ground breaking decision in the post-Jackson era, refused to grant relief from a High Court master’s imposition of a severe penalty as a result of a party’s failure to serve its costs budget in time. In doing so, the Court of Appeal has ushered in a new era of no- nonsense compliance with court rules, practice directions and orders post 1 April 2013. It should leave litigators in the English and Welsh courts in no doubt that in the absence of a good reason, non-trivial breaches are unlikely to be tolerated in future and instead will be severely punished.
Adopting a plainly tougher approach compared with the pre 1 April 2013 regime, this is a new playing field compared to the more relaxed pre-Jackson regime and it is of utmost importance that those involved in court proceedings are aware of the risks of failing to comply with applicable rules and deadlines. Legal representatives would be well advised to heed this warning and avoid suffering court sanctions which could in turn lead to claims by those they represent.
Background: Master McCloud’s original decision
The appellant (Mitchell), the former Government Chief Whip and claimant in defamation proceedings, appealed against the harsh sanction imposed by a High Court master for Mitchell’s solicitors’ failure to file a costs budget on time, and her refusal to grant relief from that sanction under rule 3.9 of the Civil Procedure Rules (CPR).
Mitchell’s solicitors had lodged their costs budget the day before the case management conference (CMC). This was after having been chased via email for the budget by the Master. This late filing was in breach of the pilot scheme in CPR Practice Direction (PD) 51D “Defamation Proceedings Costs Management Scheme” which stipulated that the budget had to be lodged at least seven days in advance of the CMC. Mitchell’s solicitors apologised and initially explained the delay as having been caused by a hold-up in receiving counsel’s costs figures. At the CMC they gave a different excuse: their own pressure of work.
The Master concluded that there were really “no adequate excuses for this breach.” PD 51D did not stipulate the sanction for breach. She therefore applied CPR rule 3.14 by analogy (“unless the court otherwise orders, any party which fails to file a budget despite being required to do so will be treated as having filed a budget comprising only the applicable court fees”) to order that Mitchell was to be treated as having filed a budget limited only to the court’s fees commenting:
“I consider that professionals have now had ample warning for many months that the court would adopt a strict approach to the interpretation of application and rules and orders and it should come as no surprise that, subject to any powers I have to grant relief from sanctions, the sanction I should impose is that the claimant’s budget will be limited to the court fees.”
At a later hearing, Mitchell applied to the Master for relief from that sanction pursuant to rule 3.9, but she refused to grant relief. Instead she held that she had been entitled to consider CPR rule 3.14, and to have regard to the overriding objective which included dealing with cases “justly” and “at proportionate cost” so as to ensure “compliance with rules, orders and practice directions.” She observed that in order to hear the application for relief, it had been necessary for her to postpone a half day hearing in a case involving asbestos claims. Other deserving court users had therefore been adversely affected. As for Mitchell’s solicitors’ breaches, there had been an “absolute failure” by them to engage in discussion of budget assumptions “when asked”; or to apply for extra time or seek relief informally before “running into time difficulties.” The budget had only been filed at the last minute before the CMC and following prompting by the court after it had reviewed the file by chance.
The Master had little sympathy for the work pressures cited by Mitchell’s solicitors, finding that they “were not unusual for solicitors” and observing that such explanations carry even less weight in the post-Jackson era than they did previously. Although she acknowledged that Mitchell had only been given a few days notice of the deadline, she did not consider it unreasonable to expect the budget to be filed on time. She concluded:
“the stricter approach under the Jackson reforms has been central to this judgment. It would have been far more likely that prior to 1/4/13 I would have granted relief on terms...”
The Court of Appeal’s decision
The Court of Appeal firmly dismissed Mitchell’s appeal both against the Master’s order that the costs budget was limited to court fees and the decision to refuse relief against sanctions under rule 3.9.
In relation to the order that the budget be limited to court fees the Court of Appeal confirmed that:
- There was nothing wrong with the Master’s decision to apply rule 3.14 by analogy. This approach was not unfair as the parties would have known they were at risk of a sanction being imposed. Rule 3.14 was not a “bolt from the blue” but the considered view of the Civil Procedure Rule Committee as to what constituted a proportionate sanction for failure to file a costs budget on time
- Rule 3.14 was not directed exclusively to parties who had failed to file a costs budget at all and the sanction could also be applied where the costs budget was filed late. Both rules 3.13 and 3.14 were aimed at discouraging the last-minute filing of documents
- The Master had acted in accordance with the overriding objective in imposing the sanction on Mitchell
The Court of Appeal also emphasised that the requirement for discussion between the parties was as important as filing documents on time.
As to the challenge under rule 3.9 to the Master’s decision to refuse relief, the Court of Appeal gave the following guidance on the application of that rule to “send out a clear message”:
- The dual aims under rule 3.9 of first, litigation being conducted efficiently and at proportionate cost, and secondly, enforcing compliance with court rules, orders, and practice directions, are of paramount importance and should be given greater weight
- Rule 3.9 requires the court to consider “all the circumstances of the case” and where a breach is trivial relief should normally be granted provided an application is made promptly
- Where the breach is not trivial, the burden of persuading the court to grant relief is on the defaulting party and relief should only be granted where there is good reason
- Good reasons are usually circumstances outside the party’s control such as a debilitating illness or an accident, or a change of circumstances in the litigation which render it unreasonable to expect compliance within the original period
- Merely overlooking a deadline, because of overwork or otherwise, cannot be expected to amount to good reason. The Court of Appeal commented that “solicitors cannot take on too much work and expect to be able to persuade a court that this is a good reason for their failure to meet deadlines. They should either delegate the work to others in their firm or, if they are unable to do this, they should not take on the work at all...”
- “Well-intentioned incompetence” for which there is no good reason, is equally unlikely to attract relief from sanction where the default is not a trivial one
- An application for an extension of time made before the expiry of a deadline is more likely to be successful than one made after the event
The Court of Appeal went on to endorse the approach set out by Lord Dyson, the Master of the Rolls, in the 18th Implementation Lecture on Jackson where he stated:
“The tougher, more robust approach to rule compliance and relief from sanctions is intended to ensure that justice can be done in the majority of cases ..... this requires an acknowledgment that the achievement of justice means something different now.” (para 27)
It also observed that this new post-Jackson approach must mean that relief will be granted more sparingly than in the past and that the express aim was to remove the previous culture of “delay and non-compliance” even if that led to apparently harsh results in individual cases.
This decision is plainly intended to send a clear signal to litigators that post 1 April 2013 a new culture of compliance with the CPR following the Jackson reforms is to be instilled. All legal representatives must take careful note of the Court of Appeal’s pronouncement and ensure that they are completely familiar with all relevant rules, practice directions and orders which apply to their cases and the deadlines which they impose.
UK lawyers must realise that they have entered an era of virtually zero tolerance of missed deadlines and other rule breaches. Infringements which would previously have resulted in a minor judicial rebuke may now result in a serious sanction including dismissal of the claim or the defence. What will pass as a trivial breach is likely to be a circumstance where there has been no more than an insignificant failure and the litigant has otherwise fully complied with the terms of an order or rule, although even here the Court acknowledged that the question of whether a default is insignificant may give rise to disputes. On an application for relief from sanctions, only the most extenuating of circumstances are likely to attract any sympathy from the court. Over-work, inefficiency or oversight will not be enough.
The prospect of a severe sanction for procedural breaches has now risen considerably. Henceforth, where a breach has taken place or an extension of time is required, opponents are bound to take an uncompromising approach and a flood of applications is inevitable. Applying ahead of time may help but clearly cannot be seen as a general panacea. It remains to be seen just how harsh the courts will be in cases involving different circumstances and rules to those involved in Mitchell.
The Court of Appeal concluded by stating:
“Although it seems harsh in the individual case of Mr Mitchell’s claim, if we were to overturn the decision to refuse relief, it is inevitable that the attempt to achieve a change in culture would receive a major setback. In the result, we hope that our decision will send out a clear message. If it does, we are confident that, in time, legal representatives will become more efficient and will routinely comply with rules, practice directions and orders. If this happens, then we would expect that satellite litigation of this kind, which is so expensive and damaging to the civil justice system, will become a thing of the past.”
The immediate future?
This decision will mean that UK practitioners and clients alike may need to bring about changes to their litigation mentality, strategic and tactical planning with an inherent need for to adopt robust reminder/diary systems in order to adhere to deadlines and procedure.
Some commentators have also suggested that this decision may result in more undesirable changes in litigating parties’ attitudes and in some quarters this may manifest itself in ‘sharp practice’ with co-operation deliberately and unnecessarily being withheld between litigating parties resulting in increased litigation costs.
Whilst the judiciary’s underlying intentions should be applauded, in trying to bring about a more efficient and cost effective legal system, the speed at which some practitioners may need to change their in-house practice methods and systems, will no doubt see an initial increase in applications for relief and further likely dispute arising between lawyers and their clients.
As an additional footnote, at the time of this article going to press and despite the Court of Appeal rhetoric in the Mitchell judgment, relief from sanction has been granted in two known cases which are said to have considered the principles contained within the Mitchell authority, namely Adlington & 133 others v Els International Lawyers LLP (in administration) wherein HHJ Oliver Jones QC confirmed that the relationship between justice and procedure “has not changed so as to transform rules and rule compliance into trip wires” and found that the failure to comply with an unless order to serve particulars of claim in relation to eight out of 134 claimants in a group professional negligence action was a trivial breach.
Mr Justice Norris in Forstater & Anor v Python (Monty) Pictures & Anor  EWHC 3759 (Ch) has taken the Mitchell decision into account when granting relief from sanctions where a successful party failed to serve a notice of its funding arrangements on form N251. Whilst his judgment was drafted before the Court of Appeal handed down Mitchell, Mr Justice Norris said he took account of the decision and did not need to revise his draft ruling, “which I consider proceeds upon correct principles”.
Robin Knowles QC, sitting as a deputy High Court judge has also suggested that parties will be wrong to think that the examples given in the Mitchell ruling defined the limits of the decision. In SC DG Petrol SRL & Ors v Vitol Broking Ltd  EWHC 3920 (Comm) , the Judge refused to give relief from sanction. He referred first to the Court of Appeal’s statement that the court should seek “to have regard to a wide range of interests”, and not just the case in hand, when considering granting relief:
“I respectfully offer the observation that there are limits to the contribution that a party, especially a non-defaulting party, can usefully make in evidence or argument in respect of circumstances extending beyond the case in hand – for example on what is needed ‘to enforce compliance with rules, practice directions and orders’. “This is pre-eminently an area for the judge. In Mitchell, the Court of Appeal was not putting an enhanced tactical weapon into the hands of non-defaulting parties to the litigation. This is clear from the nature of the factors specified at (a) and (b) of CPR 3.9(1). It is reinforced by the concern of the Court of Appeal to reduce satellite litigation.”
He went on to note that when citing Mitchell, the parties referred him closely to the examples given by the Court of Appeal, with the defendants pressing the point that their case was captured within one or more examples cited by the Court of Appeal.
“I respectfully doubt that is the right approach. The examples are there simply to illustrate the principles described by the Court of Appeal. The court’s inquiry should be guided by the principles.
“My own view is that ideally the jurisdiction to extend time and grant relief from sanctions is one in which (as Lord Templeman urged in The Spiliada  AC 456, HL in relation to service out of the jurisdiction) a judge would not be referred to other decisions on other facts.”
Whilst the judiciary’s approach to the grant of relief post Mitchell is in its infancy, in the post Jackson and Mitchell era of litigation, UK practitioners should adopt ‘best practice’ measures and ensure compliance with court deadline and procedure. Failure to do so may come at an expensive cost.