The background to this case is well known. The Sun newspaper reported that the then Chief Whip of the conservative party had engaged in a foul mouthed rant against police officers at the entrance of Downing Street. Mr Mitchell alleged defamation against the Sun and the Sun defended the action on the basis of justification and public interest.
While the case was proceeding on the defamation costs management pilot scheme, the new costs management rules were used as guidance as to what sanctions could be applied under the court’s general powers of case management.
Mitchell at first instance
One of Mr Mitchell’s failings was that he did not file and exchange a costs budget no later than seven days prior to the CMC, contrary to PD 51D, paragraph 4.2. Instead, a costs budget in the sum of £502,425 was filed the day before the CMC. This was at the court’s instigation and followed Master McCloud’s email to the parties. One thing to note in this case is the very short timescale: the court only gave the parties 11 days’ notice of the CMC, meaning just four days to prepare the costs budget (only two of which were business days).
Unfortunately, two inconsistent explanations for the delay were provided. Mr Mitchell’s solicitors emailed Master McCloud saying that the delay in filing the cost budget was because they were chasing counsel’s figures, whereas counsel at the hearing told her that it was because the solicitors were under pressure of litigation on another case. In any event, Master McCloud found that neither explanation was a sufficient justification for the breach.
A question which then arose concerned CPR Parts 3.13 and 3.14. Did the automatic sanction for failure to file a costs budget at least seven days prior to the CMC apply, or did that sanction only apply when there was a failure to file a costs budget altogether?
Master McCloud found that the sanction applied if the costs budget was not filed seven days prior to the CMC. Therefore, Mr Mitchell was deemed to have filed a budget consisting of only the applicable court fees. Master McCloud went on to refuse Mr Mitchell’s subsequent application for relief from sanctions. Consequently, even if Mr Mitchell ultimately wins his case against the Sun, he will not be able to recover any other of his costs.
Court of Appeal’s judgment in Mitchell
The Court of Appeal hearing took place before the Master of the Rolls, Richards LJ and Elias LJ. They upheld what they described as Master McCloud’s “robust” decision and agreed that the sanction under CPR Part 3.14 applied if the cost budget was not filed seven days before the CMC, not just if it wasn’t filed at all.
Key guidance from the judgment
The wider implication of the Court of Appeal’s judgment is not just relevant to cost budgets but the question of how strictly the courts should now enforce compliance with rules, practice directions and court orders. The answer to that question, put simply, is very strictly.
Therefore, it is worth being aware of some of the key guidance from the judgment:
- The starting point is to consider the nature of the non-compliance. If this can properly be regarded as trivial, the court will usually grant the relief provided that an application is made promptly.
- A trivial non-compliance when the court will usually grant relief occurs where, for example, there has been a failure of form rather than substance, or where a party has narrowly missed the deadline imposed by the order, but has otherwise complied with its terms.
- If the non-compliance is not trivial, then the burden is on the defaulting party to persuade the court to grant relief.
- Unless there is a good reason for the non-compliance then the court will be unlikely to grant relief. Good reasons include the debilitating illness of a key solicitor or the client, but does not include overlooking a deadline or missing it because of overwork.
- Applications for extensions of time will be looked upon much more favourably by the courts than relief from sanctions made after the event.
Effect of Mitchell
Overall it is clear that the Court of Appeal wanted to send out a message to all court users. They said that, in light of the Jackson reforms, they wanted legal representatives to:
“become more efficient and… routinely comply with rules, practice directions and order. 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.”
This is obviously a laudable aim, and no doubt we are all in favour of litigation certainty, but one wonders whether it will really have the positive effects that the Court of Appeal intended:
- It remains to be seen whether all judges at all levels of the justice system will adhere rigidly to the Mitchell principles when considering applications for relief from sanctions. Anecdotal evidence of judges’ case management decisions post Mitchell suggests that such decisions have not been terribly predictable and consistent. Discretion has not always been exercised as robustly as one might have expected.
- It is easy to envisage that Mitchell will, at least at first, cause satellite litigation into whether the non-compliance was “trivial” or whether there was a “good reason” for it.
- Given that the sanctions for missing a deadline are potentially so severe, one possible unintended consequence of Mitchell is that parties (possibly with judicial approval) will seek to have longer and more lenient timetables so as to avoid any risk of having to make a relief from sanctions application. This could make litigation more costly and less time effective.
- It is hard to imagine that county courts judges will take such a strict approach with litigants in person. Therefore, while there has always been a sense of one set of rules for represented parties and one set of rules for litigants in person, this distinction might become even more marked.
- It is likely that an anticipated rise in the number of professional negligence actions against solicitors will result in increased insurance premiums for those undertaking litigation.
Practical tips in light of Mitchell
There are a number of things that legal representatives can do to ensure that they don’t succumb to the same situation in which Mr Mitchell found himself:
- It is patently obvious, but all rules, practice directions and court orders should be complied with.
- If it becomes clear that a deadline will be missed, then you should seek the other side’s consent for an extension or, if necessary, apply to the court at the earliest opportunity. The court will look more favourably on such an application (if it gets to that stage) if it is made before the deadline expires.
- In this regard, it is useful to bear in mind Henderson J’s judgment in Re Atrium Training Services and Connor Williams Ltd, which stated that it was important not to encourage unreasonable opposition to extensions that are applied for in time and which involve no significant prejudice to the parties.
- If the other side seeks your consent for a reasonable extension of time in advance of a deadline then you should grant it as long as it will not involve any significant prejudice to you.
- If the other side seeks your consent for relief from sanctions under CPR Part 3.9 (that is, after the non-compliance has occurred), then you should agree to if the non-compliance is trivial. However, if the non-compliance is not trivial then you should ask the other side to explain the reason for the non-compliance:
- if it is a CPR rule or practice direction that has not been complied with then, more often than not, this transgression will have resulted from an error or lack of knowledge on the part of the relevant legal representatives. Following Mitchell, you will no doubt want to do all you can to force the other side into an admission of incompetence on the grounds that you are entitled to assess the reasons behind the non-compliance to see whether it is a “good reason”;
- if it is a deadline that has not been complied with then you will probably want to find out from the other side why this happened. I would suggest that you ask for information such as the number of solicitors and the amount of time dedicated to the task in hand so that you can assess whether the deadline was missed because of poor case management or overwork.
- If it becomes apparent that you are going to be in breach then consider whether you can partially, or to the best of your ability, comply with the deadline, rule or practice direction. For instance, using the Mitchell facts, one of the explanations that the solicitors gave for failing to submit a costs budget was that they could not get hold of counsel’s fee estimate. However, even if this were correct, they should still have completed the relevant section of the cost budget using their experience and submitting a potentially generous figure expressly explaining on the form that an estimate had been formulated by solicitors because of difficulties in obtaining actual fees from the barrister’s clerk. Similarly, if you are able to serve some but not all of your witness statements by the relevant deadline then you should consider doing so.
- Give yourself enough time at the outset when you agree the timetable at the first CMC. We all know that commonly missed deadlines relate to expert reports and witness statements so consider asking for a slightly more generous period for compliance at the start.
- Finally, from a case management perspective, make sure that your clients and experts are aware of the more rigid approach that the courts are now adopting so that they also take responsibility for complying with deadline and court orders.
You have been warned!