It has come sooner than some expected, but perhaps too late for some disappointed litigants and their lawyers who may now be facing claims for professional negligence. The Court of Appeal has allowed appeals in three cases concerning relief from sanctions and the application of the guidance given by it in Mitchell v News Group Newspapers Ltd
. A brief review of the facts of each case demonstrates the range of, sometimes, unfair decisions that have been faced by litigants over the last year.
Denton v TH White Ltd
This case concerned the late service of witness statements in proceedings arising from the defendant’s supply and installation of the claimants’ milking parlour. Following exchanges of witness and expert evidence in 2012, a CMC took place in February 2013 and directions were given for the exchange of further expert evidence together with schedules of loss. The trial date was fixed for 13 January 2014. At the pre-trial review on 2 December 2013, the claimants/respondents served five witness statements. The hearing was adjourned. The claimants served another statement on 6 December and made an application for permission to rely on all six statements (three were supplemental statements and three were from new witnesses).
At the re-listed pre-trial review on 23 December 2013, HHJ Denyer QC (sitting as a Deputy High Court judge) gave the claimants permission to rely on the statements and vacated the trial date. The defendant appealed to the Court of Appeal on the ground that the judge failed to apply, or misapplied, Mitchell
and erred in the exercise of his case management discretion.
Decadent Vapours Ltd v Bevan
The claimant/appellant failed to comply with an unless order to file a pre-trial checklist and pay the required court fee by 4pm on 19 December 2013. The checklist was filed by email on the afternoon of 19 December but the cheque for the fee was only sent that day. It was never cashed (it was not clear at what point the cheque went astray and there is a suggestion that it was lost at or by the court) but this did not come to light until the telephone pre-trial review on 7 January 2014. The consequence of the claimant’s failure to comply with the unless order meant that the claim stood as struck out. The fee was paid on 9 January 2014, almost immediately after the lost cheque was discovered.
HHJ Jarman QC refused to grant the claimant relief from sanctions, which seems a very harsh decision if in fact the court lost the cheque. Do practitioners now have to check their bank statements and seek relief from sanctions if the clearing process is slow? In this case the judge concluded that the claimant’s solicitor made a conscious decision not to take steps to ensure that the fee was paid on time and knowing that the cheque would not arrive until at least the day after it was due.
Utilise TDS Ltd v Davies
The claimant/appellant failed to comply with an unless order requiring the parties to file costs budgets by 4pm on 11 October 2013, in default of which they could only claim court fees by way of costs if they were successful. The claimant missed the deadline by 45 minutes. The order also imposed a stay until 8 November and required the claimant to notify the court of the outcome of negotiations by 4pm on 15 November, but it was 13 days late in doing so. DJ Matharu dismissed the claimant’s application for relief from the sanction for breaching the costs budget deadline, noting the lack of a good reason for the late filing and taking into account the claimant’s failure to comply with the other deadline in the order. The claimant appealed.
HHJ Hodge QC (sitting as a High Court judge) dismissed the appeal. He held that, following the Court of Appeal’s decision in Durrant v Chief Constable of Avon & Somerset Constabulary
, the court can take other breaches into account when determining whether the breach giving rise to the application for relief is trivial or not. Although, looked at separately, he felt the breaches may have been trivial, DJ Matharu was entitled to view them together and to refuse to give relief in the absence of any good reason for either.
The issues before the Court of Appeal
The three appeals were heard by a strong panel: the Master of the Rolls, who led the panel in Mitchell, Jackson LJ, whose recommendations led to the reforms and also Vos LJ. Jackson and Vos LJJ were not in Mitchell. The Law Society and the Bar Council intervened. Those interventions have allowed representatives of both sides of the profession to comment and their submissions were wide ranging, addressing concerns about the impact of the reforms in practice rather than simply the facts of the three cases.
Many key issues were raised, such as:
- The almost total loss of co-operation between parties to litigation. With the rise of “windfall” strike outs the approach following Mitchell meant it was no longer in the interest of litigators to ignore what are otherwise minimal breaches by the other side.
- The failure by lower courts to look for any link between the breach and the nature of the sanction. All orders and timescales are being seen as unless orders, even those obligations in the CPR for which there is no sanction. The striking out actions or the debarring of evidence, which is often effectively the same thing, has become the only sanction being imposed, whether a breach is serious or minor.
- Ironically, given the aim of the regime was to help with the efficiency of the administration of justice, there has been a massive growth in satellite litigation with huge costs being incurred in making relatively unnecessary applications.
- A real inconsistency between courts such that advisers are unable to give any sensible advice about how to approach a failure to comply with the rules by their client, or the other side. There are even concerns amongst practitioners that judges in lower courts are using the rules to create local fiefdoms in which their decision is absolute.
Although the Court of Appeal can’t provide the Court Service with the much needed resources they need to administer the reforms, which is another concern, having arranged such a strong panel and having invited submissions from the profession, it was hoped that the Court of Appeal would use the opportunity to eradicate the worst consequences of the reforms. The decision certainly heralds a change to the approach which has been seen post-Mitchell.
Before turning to the decision, it is worth commenting that the reforms themselves are generally laudable and are to be welcomed. Unnecessary delay in litigation should be avoided. However it shouldn’t be at the expense of common sense and civility in civil litigation. Nor should the fact that there have been some extreme, some might say bizarre, applications of the new rules mean that the Jackson reforms should be effectively abandoned as a result of unduly harsh decisions, especially at district judge level.
So, has the Court of Appeal managed to achieve this balance between ending harsh decision making and ensuring that the rules have some teeth? Probably.
The Court of Appeal decision
The Court of Appeal has reviewed Rule 3.9. They have made it abundantly clear that this decision should be all that any litigator need consider when trying to apply the rules. Mitchell, and the subsequent decisions, need not be referred to.
The court was split as to the correct approach however. Lord Dyson MR and Vos LJ have set out a three stage approach. Jackson LJ, agreeing with the outcome in each appeal, opts for a much simpler approach at stage 3. Jackson LJ effectively wants the court to do no more than to “deal justly with the application”, considering all of the relevant factors, but without moving to the bad old days where any breach could be remedied by a costs penalty. That was the approach taken by the judge in Denton and Jackson LJ was clear that the judge was wrong to take no account of the wider impact on litigants and the court when considering the justice of the case.
Lord Dyson MR and Vos LJ advocate a more structured approach. They criticise the application of Mitchell rather than Mitchell itself. Their three stage approach is applied as follows:
- The test of whether a breach is trivial has morphed into a test of whether a breach is serious or significant, recognising that the test can encompass the effect on other litigation. Although the fact of prior breaches will be relevant, they will be relevant only at stage 3. Therefore a serial non-complier with rules may escape sanction if the breach in question is not serious or significant in itself.
- The court should then consider whether there was good reason for the breach. If there is good reason, that will tend to justify granting relief from sanctions.
- Only at this stage does the court need to consider the factors in Rule 3.9. Rule 3.9(1)(a) and (b) need to be considered and have a higher overall status than other reasons (Jackson LJ did not agree with this part of the decision) but the court must have regard to all the circumstances of the case. Persistent past breaches may therefore be a relevant factor, but only at this stage.
The guidance is helpful. It should make it easier to decide whether to oppose an application for relief from sanction. The Court of Appeal have made it clear that adverse costs will flow if applications are unreasonably opposed and therefore only clear-cut cases should get before the court, since the parties should just agree. This will make litigation easier, but there is a realistic prospect that except in matters where trial or other court dates are at risk, litigation will be back to the pre-Jackson approach.
What the Court of Appeal hasn’t addressed it what is to happen to those litigants who have had their cases struck out by judges adopting an “unreasonable approach to Rule 3.9”. Are their lawyers really liable for the loss of that litigation or was it the court? Should lawyers now be liable for adverse costs orders incurred in opposing applications for relief from sanctions when often the arguments have been encouraged by the approach of the local bench? Neither question is ever really likely to be answered, and I fear yet more claims against lawyers arising from the consequences of this decision. Few people ever feel sympathy for lawyers, but since Mitchell it has been hard to do right for doing wrong.
Read the full judgment here.