Managing Partner, Anthony Gold Solicitors, and Chair of the Law Society's Civil Justice Committee
For civil litigation lawyers, the last 6 months have been Kafkaesque. The Court of Appeal decision in Mitchell v News Group Newspapers Ltd  EWCA Civ 1537, where half a million pounds of costs budgeted were disallowed after the cost budget was filed a few days late, was interpreted as holding that huge consequences (eg claims struck out; evidence excluded, etc.) flowed from any slight (but ‘non-trivial’) errors where these were the result of human error (which was never a ‘good reason’ for relief). Stress levels soared and Professional Indemnity Insurance premiums threatened to go through the roof.
Talking to a non-lawyer friend about it all, I was met with 'So why don’t you lawyers just comply with the rules, then...'. The simple answer is that the Civil Procedure Rules were not substantially rewritten for the post-Jackson world. They were never designed for nor were fit for the purpose of absolutely strict compliance. They are littered with often previously unrecognised sanctions for minor breaches which were often obscure, inconsistent, disproportionate and unfair. Satellite litigation inevitably increased because of the potentially enormous windfalls available to parties if sanctions were imposed for technical breaches. A huge jurisprudence (only part of which is mentioned in the judgment) built up in a matter of months over what was and was not a‘sanction’, what was and was not ‘trivial’ and what was and was not a ‘good reason’.
In its judgment the Court accepted that the judgment in Mitchell had “been the subject of criticism” so “invited the Bar Council and the Law Society to intervene.” As Chair of the Law Society’s Civil Justice Committee, I was closely involved with the Society’s submissions.
The court concluded that Mitchell had “been misunderstood” and was “being misapplied”. The court recognised that the principal source of the misunderstanding had been “the use of the phrase ‘paramount importance' in respect of the two factors specified in CPR 3.9, namely, “(a) for litigation to be conducted efficiently and at proportionate cost; and (b) to enforce compliance with rules, practice directions and orders” and that “this may have given rise to some confusion”.
The court instead set out a three stage test for the judiciary in deciding whether or not to grant relief from sanctions:
(1) Identify and assess the seriousness or significance of the “failure to comply with any rule, practice direction or court order”. The court accepted that theword ‘trivial’ as used in Mitchell “has given rise to some difficulty”. The court accepted that the alternative ‘material’ (meaning which “neither imperils future hearing dates nor otherwise disrupts the conduct of the litigation” – but litigation generally, not just the specific case) as proposed by the Law Society will in many circumstances “be the most useful measure of whether a breach has been serious or significant”. However, the court preferred the words the “seriousness and significance” of the particular breach (without at this stage taking into account other conduct). Although the court’s intention in the first stage is clear, whether adding two new words as the test will in fact clarify rather than cloud matters is perhaps open to question.
If the breach is not serious or significant, that is the end of it.
(2) If it is, the second stage is to determine why the breach occurred and whether there was “good reason” for it. The court referred back to Mitchell (para 41) but said it was “inappropriate to produce an encyclopaedia of good and bad reasons.”
If there is a good reason, that is an end of it. However, if the breach is serious or significant without good reason, then this is where the court believed that there had been a misunderstanding of Mitchell in that it had been thought “the application for relief from sanctions will automatically fail”. This is not so. It is necessary instead to move to stage 3.
(3) At stage 3 it is necessary to apply the whole of r 3.9. This requires first that,in every case, the court will consider “all the circumstances of the case, so as to enable it to deal justly with the application”.
But at this point the decision of the Court of Appeal divides. The majority (Dyson MR and Vos LJ) held that ‘particular weight’ should be given to the specific factors mentioned in 3.9 (a) and (b) (set out above) even though they were not ‘paramount’, as was held to be the case in Mitchell. They pointed out that Jackson LJ’s own proposed rule 3.9 had not been adopted in the CPR and that there must have been a reason for mentioning factors (a) and (b) expressly. Jackson LJ disagreed and adopted the wording of the Bar Council’s submission that factors (a) and (b) should “have a seat at the table, not the top seats at the table”.
Sitting in court for the interveners’ submissions, my biggest concern had been that the court would produce three separate judgments that would add to the confusion. The Court of Appeal have avoided this, but it is unfortunate that a single definitive judgment could not have been agreed. I would have preferred Jackson LJ’s interpretation, and it is strange that the architect of the reforms is in the minority. However, as Jackson LJ says, his “construction of rule 3.9 leads to the same result in the three cases under appeal” but “there will be other less clear cut cases where the difference of opinion between my colleagues and myself may matter.” This will certainly require further consideration by the Court of Appeal. And if the result is “a harsh regime of almost zero tolerance”(which as Jackson LJ points out was not what he intended) then the rule itself may have to be revisited by the Rules Committee which, after all, was supposed to be implementing the Jackson reforms.
The result in the three appeals was that in Utilise two ‘trivial’ breaches did not make anotherwise ‘trivial’ breach non-trivial. In Decadent Vapours, the failure to pay a court fee late did not mean the case should be struck out. However, in Denton the late service of evidence shortly before trial in a case which had gone on for 13 years should not be allowed and trial should not have been adjourned.
The court deplored the satellite litigation and the culture of non-cooperation that has grown up post-Mitchell. There is an inevitable tension between the solicitor’s duty as an officer of the court to further the overriding objective and his duty to the individual client who may instruct him to take advantage of breaches to achieve a windfall gain. The majority of the court of appeal introduced an innovative addition to the ‘duty of care’ a solicitor owes his client to remind them of the duties of litigants to further the overriding objective and the risk of “heavy costs sanctions” for opportunistic, uncooperative behaviour. However, clients might be prepared to accept those risks if the prize is great enough. The message though in most cases is clear. Co-operate with your opponent or face penalties – reduction in costs or indemnity costs orders at the end.
In addition, the court helpfully reminded judges and parties of the need to make “realistic and achievable” directions. Hopefully that will see an end to orders being received from the County Court weeks after they were made by the district judge and where the date for compliance has already passed. Unless orders should also be very carefully considered before being made.
Overall, the court of appeal judgment is a pragmatic and sensible revisiting of the Mitchell principles. Courts will be less tolerant of breaches, but we are not in the Singapore world of zero tolerance. Substantive justice on the merits of the case still has a place in the English legal system.
This article was first published on the Anthony Gold website and is reproduced with kind permission.