What Mitchell means in practice following the Court of Appeal’s response to calls for guidance

In the now infamous case of Andrew Mitchell MP v News Group Newspapers Limited1, the Court of Appeal wrestled with the issue of how strictly the courts ought to enforce court rules, practice directions and orders in the light of the recent Jackson reforms. Its decision essentially confirming that judicial enforcement will be strict and to the letter sent shockwaves through the legal profession, spawning a raft of satellite professional negligence litigation against solicitors. The message was simple: comply with the court timetable or your case will be struck out.

But, with the first round of post-Mitchell decisions producing some bizarre outcomes, and with the courts awash with queries and applications from anxious solicitors keen to avoid falling foul of the austere regime, there started to be some (albeit inconsistent) signs of a relaxing of the rules. The position has now, with a view to relieving the administrative headache that had arisen, been clarified following the Court of Appeal’s judgment in relation to three linked appeals: Denton, Decadent and Utilise2. Whilst the decision is seen by some as a missed opportunity for the Court of Appeal to draw a line in the sand and state that non-compliance will simply not be tolerated, the new three stage test (as summarised in the box below) should allow common sense to prevail and ensure that the subject matter of the dispute can be dealt with rather than just the procedural concerns. Indeed, and in little more than a month since the Court of Appeal handed down its guidance, the application of the three stage test was tested with NNN v D13 and another seeing the setting aside of a default judgment which had been obtained for breach of  anunlessorderfordisclosure.

So, now that things have bedded down a little and judicial knees have ceased to jerk, what are we left with? Is the current fear and trepidation surrounding civil procedure still justified? Or can litigation solicitors and their PI insurers dare to breathe again? We have identified some key areas that remain sensitive and a few others where, with a little manoeuvring, litigious life can continue relatively unscathed.

The three stage test

  1. Assess the seriousness and significance of the breach
  2. Consider whether there is a good reason for the breach
  3. Evaluate all the circumstances of the case

Factors for consideration will include the need for efficient case management at a proportionate cost and the need to enforce compliance with rules, directions and court orders.

  1. Set a good precedent with Precedent H

The Precedent H costs-budgeting procedure was at the heart of the original Mitchell case.  In that case, because the procedure had not been followed to the letter, Mr Mitchell’s solicitors were denied the opportunity to claim anything more than their court fees at the successful conclusion of the case. The position was then repeated at first instance in the case of Utilise TDS Ltd v Davies4, when following the claimant’s filing of its Precedent H budget 41 minutes late, the claimant’s application for relief from sanctions was refused because the claimant had given no reason for its non-compliance. However, despite these stark warnings (and whilst relief from sanctions in Utilise TDS Ltd has now been granted), the correct procedure still goes unheeded far too often – risking the need for an application to the court and for further costs having to be incurred.

The most common error seems to be in misinterpreting court orders. The Civil Procedure Rules (CPR) require parties’ cost-budgeting documentation to be filed at court either on  the date that has been ordered or, if no date is prescribed, seven (clear) days before the first case management conference (meaning that if the case management conference is on a Friday, the budget falls due on the Thursday of the previous week). Sadly, there remains a lack of clarity from the courts in their orders, meaning that parties are filing and serving their Precedent H forms at a whole host of different times during the litigation; sometimes early (ie at the same time as submitting directions questionnaires) but, unfortunately, often late, thereby rendering their entire cost budgets invalid. Of particular concern are cases where the court makes a (very common) order requiring that the parties submit a “case management  file” to the court a few days (typically three) in advance of the case management conference;  in these cases, parties will often serve the Precedent H documentation at that time, rather than doing it seven clear days before. An easy mistake to make – but terminal in respect of theircosts.

The message is not to get caught out by misleading orders; always remember the seven day rule and, if in doubt, ask the court for a specific order dealing with the filing of Precedent H forms. Whilst the appeal in Utilise TDS Ltd was allowed, defaulting parties should ensure that budgets are filed as soon as possible once the default has been discovered and that clear reasons are given as to exactly why the breach has occurred.

  1. Extensions of time aren’t impossible

There had been much commentary suggesting that Mitchell had single-handedly removed litigating parties’ ability to extend the procedural timetable. Whilst this may have been the initial impact of the Mitchell decision, CPR 3.8(3) has now been amended (with effect from 5 June 2014) to allow parties to agree in writing, before time expires, an extension of time for up to 28 days without needing to apply to the court (provided that any such extension does not put at risk any hearing date). The amendment has commonly been referred to as the “buffer rule”.

If extensions beyond the 28 days are ever needed, cases such as Hallam Estates v Baker5 confirm that any applications to extend time that are brought before the expiry of the applicable deadline are not caught by the relief from sanctions provisions and should not, therefore, be subject to the Mitchell principles (or three stage test) in any event.

  1. Don’t trivialise trivial breaches

According to the Court of Appeal’s guidance in Mitchell, where non-compliance is “trivial” and an application for relief from sanctions is made promptly, the court will usually grant relief. This has led to a great deal of debate in recent cases as to when a breach might be termed “trivial”.

In the case of McTear v Engelhard6 – a case heard prior to the Court of Appeal’s guidance in Denton, Decadent and Utilise – a party sought relief in respect of his failure to serve witness statements on time. He had served them 50 minutes late. Whilst the court confirmed that, ordinarily, such a breach would be considered “trivial”, the party had also failed in other respects, including the fact that the witness statements exhibited documents that had not previously been disclosed. Given the combination of breaches, the court refused to grant relief.

The Mitchell concept of “trivial” has how been replaced by “serious or significant” – and forms stage one of the three stage test. Factors to consider will be whether the breach risks a hearing date or otherwise disrupts the conduct of the litigation.

As a result of the above, and whilst it may be that the court will now focus on the breach that is the subject of the application (as opposed to including previous breaches as in McTear) it still remains more important than ever to be “squeaky clean” in litigation – and to ensure that hearing dates are not prejudiced. The court will be unlikely to look upon an application for relief from sanctions favourably if to do so will involve a hearing date having to be vacated.

  1. If in doubt, apply (and quickly)

One of the outcomes of the Mitchell decision (and, indeed, the Jackson reforms as a whole) was the lack of clarity and consistency that had resulted. Relief was being granted in cases where one might have assumed it would not be and vice versa. It was therefore a worryingly unpredictable time to be a litigator. Whilst the Court of Appeal’s guidance in Denton, Decadent and Utilise has sought to address those inconsistencies, it is still early days and it remains to be seen how the new three stage test will apply in practice and what factors the courts will have regard to (eg the court refused to give a definitive list of what it considered to be good and bad reasons for breach).

As stated above, the one certain aspect of the new regime is that the three stage test does   not apply to applications made before a deadline expires. As such, litigators should constantly monitor their cases against the timetable – and ensure that when agreeing directions at the outset that enough time has been allowed for each stage of the proceedings. In the event that a 28 day extension cannot be agreed or additional time is required, make proactive applications as soon as it is felt that an impending deadline may not be met. If an application is required,  give a full explanation as to why further time is required and seek to demonstrate that the extension, if granted, is a one that will not be prejudicial to the case being dealt with promptly and at proportionate cost.      

  1. Think twice about taking opportunistic points

Another side-effect of the Mitchell case was a significant reduction in the level of cooperation between litigating parties; a missed deadline – even by minutes – seemed to result in all sides rushing off to Court either to seek relief from sanction or to hammer home a perceived tactical advantage.

But, whilst the courts had shown themselves to be ruthless in enforcing the rules, they also displayed disdain for parties attempting to exploit the current climate for their own ends – a position that has now been confirmed following the Denton, Decadent and Utilise appeals. In Rattan v UBS7 – a case heard prior to the Court of Appeal’s guidance – the defendant served its costs budget six days (rather than seven) before a hearing. The claimant applied to the court seeking an order that the defendant’s costs should be limited to court fees. The court referred to the claimant’s application as “a misguided piece of opportunism” and described their solicitors’ actions as “futile and time-wasting”. A wasted costs order was made against  the claimant to reflect the court’s views.

In light of the above, whilst the new three stage test may be beneficial for defaulting parties, non-defaulting parties will have to give greater consideration as to when it is appropriate to refuse to agree to an extension of time for compliance (particularly given the buffer rule). If they do refuse, then it could well be the non-defaulting party that faces costs sanctions from the court. Parties should, therefore, give careful consideration as to how they approach and respond to such requests.

Conclusion

It is hoped that the Court of Appeal’s new guidance will bring to an end the previous state  of flux, where the litigation landscape had found itself fraught with pitfalls and hazards. It is, however, still early days – and it remains to be seen to what extent previous refusals of relief from sanctions will be appealed and what the outcomes of those appeals will be. For now, the message remains that parties should agree realistic time frames with the other side from the outset and be aware of the potential consequences of non-compliance, particularly where the CPR imposes automatic sanctions.