April of this year saw the biggest changes to the civil litigation landscape for some time, known broadly as the Jackson reforms. Among other changes, mandatory cost management and budgeting came into force for cases in the TCC worth less than £2million. For larger cases, the scheme is not mandatory, but it is likely that the exemption will be removed at a later date.

What this means in practice is that parties are expected to prepare, exchange and agree if possible their cost budgets for the whole case. The very broad aim of this is to make costs more predictable and more proportionate. The dangers of failing to adhere to the new rules are however severe, as Andrew Mitchell of the “Plebgate” case has discovered.

Mitchell is currently suing The Sun for defamation. In accordance with the new rules, Mitchell’s solicitors should have filed a cost budget 7 days before the first case management conference (“CMC”). They did not do so; one was however filed the day before. At the CMC, the costs of the whole action were limited to court fees only: so as things stand if Mitchell is successful in his claim, he will only be able to recover his court fees and not his legal fees.

Needless to say, Mitchell (and no doubt his solicitors) were not happy with this and promptly applied for relief from sanctions which, after a fully argued and evidenced hearing, was denied at the beginning of August 2013. The Judge made the following comments:

  • „„“even before the advent of the new rules the failure of solicitors was generally not treated as in itself a good excuse and I am afraid that however much I sympathise with Mitchell’s solicitors, such explanations [they were short staffed] carry even less weight in the post Jackson environment.” and
  • „„“what we now mean by ‘dealing with cases justly’ has changed, or if it has not changed then at the very least there is a significant shift of emphasis towards treating the wider effectiveness of court management and resources as a part of justice itself.”

The cost Judge’s decision was examined by the Court of Appeal and in a much-awaited decision, it upheld the decision. Lord Dyson stated:

“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.”

It certainly does – this signals a new and tough regime for litigants and their solicitors. Will this go to the Supreme Court in 2014? We will keep you posted.