It is now more than 18 months after the introduction of the Jackson Reforms on April Fool’s Day 2013. It is a relief, at least in some respects, that 2014 has seen the senior judiciary attempt to re-strike the balance between the competing interests of justice, compliance with Court Orders and the CPR, and costs (or proportionate cost as it now says in the Overriding Objective).
At the start of 2014, we were all reeling from the shock of the Court of Appeal’s decision in Mitchell v News Group Newspapers9. The Court of Appeal declared that zero tolerance was the order of the day. Court Orders and the CPR were to be complied with and woe betide any party who failed to do so, especially if that party applied for relief from sanctions after the time limit had expired. Mr Mitchell continued his losing streak to the trial itself.
Late 2013 and early 2014 saw chaos as subsequent decisions piled up implementing the Court of Appeal’s new approach. Risk management circulars and updates appeared in litigation departments as never before. It reached the stage where a number of firms were not prepared to seek to extend deadlines even where the other party agreed, if an order could not be made prior to the deadline.
Co-operation between parties ended. In the new regime why bother agreeing a request for an extension – let the opponent founder on the court’s intolerance! Applications were issued automatically and courts already overstretched with the extra time needed for costs case management conferences (CCMC) became clogged with the extension applications. Whatever decision the first instance court made, an appeal was virtually automatic. All of this increased costs exponentially, and insurers saw a marked increase in notifications by solicitors of claims or potential claims for the failure to meet deadlines and the dire consequences that may follow.
Common sense ultimately dawned in a summer retrenchment. First, an amendment to the CPR was rushed through and became effective on 5 June 2014. Parties could and can now agree an extension of time of up to 28 days for any Court Order or CPR deadline without involving the court provided that it did not impact adversely upon a hearing. Second, the Court of Appeal heard three cases under the lead case of Denton v T H White Ltd10. The judgment on 4 July 2014 (less than three weeks after the hearing) clarified the Mitchell decision and reined in its excesses. When considering an application for relief from sanctions a court must now:
- assess the seriousness of the breach
- consider whether there is a good reason for the breach
- evaluate all the circumstances of the case.
The profession breathed a huge sigh of relief. Inevitably, it took some time for all the applications to work their way through the courts, and that particular backlog has just about cleared. The change in approach is most recently demonstrated by the Court of Appeal’s decision on 12 December 2014 in Walsham Chalet Park Ltd v Tallington Lakes Ltd11. The defendant applied to strike out the claimant’s case for breach of a Court Order which the Court of Appeal considered was serious. The Court of Appeal upheld the judge’s decision not to strike out the case. It was relevant that the Defendant was also in breach of a Court Order. The Court of Appeal was doing justice between the parties. If it had been December 2013 there is no doubt that the Court of Appeal would have struck out the claimant’s case.
Whilst common sense has returned to dealing with court deadlines, cost management is still bedding in. The scope of cost management has been extended so that it now applies to all multi-track cases commenced on or after 22 April 2014 where the damages claimed do not exceed £10m. The trends identified so far appear to be:
- it can take several months for a CCMC to be listed after filing Directions Questionnaires
- CCMCs are being listed for 1.5 – 2.5 hours compared with 0.5 hours for the old CMCs
- as courts cannot interfere with costs already incurred there is even more front loading of costs
- parties are agreeing costs to avoid judicial consideration of cost budgets
- there is no consistent approach to cost management by Masters and District Judges even within the same court centre
- some Courts will scrutinise cost budgets whilst others will take a broad brush approach. Sometimes CCMCs will be adjourned and the parties sent away to agree costs.
What is certain is that cost management is here to stay. Rather than wait for the CCMC, parties must co-operate and progress the case. The court cannot interfere with costs already incurred but will take these into account when considering future costs.
Costs are an ever present source of client complaints and sometimes claims. Cost management should assist firms in keeping clients appraised of the costs of the litigation and may in time reduce complaints and claims.