Summary
In the aftermath of the Jackson Reforms, the Court of Appeal has flexed its muscles and demonstrated that any failure to comply with the Civil Procedure Rules ("CPR"), practice directions and orders will be swiftly punished.
Background
Andrew Mitchell MP recently issued defamation proceedings against The Sun following the appearance of an article claiming he had shouted "you're f...ing plebs" at various police officers situated outside Downing Street.
These proceedings were subject to the new Defamation Proceedings Costs Management Scheme. This obligated the parties to: firstly, discuss the assumptions and timetable upon which their costs budgets were based during their preparation; and, secondly, to both serve and file their costs budget not less than 7 days before the first Case Management Conference ("CMC").
The solicitors acting for Mr Mitchell failed to comply with either obligation. At the CMC on 18 June 2013, the Master explained that, although the new scheme did not outline a specific sanction for such failures, she would have regard to the new rule regarding failure to file a costs budget as an indication of an appropriate sanction for the purposes of her order. That rule provides as follows:
"Unless the court otherwise orders, any party which fails to file a budget despite being required to do so will be treated as having filed a budget comprising only the applicable court fees."
Accordingly, as no evidence was given by the Claimant to invoke the saving provision of the new rule, the Master ordered that, despite the late filing of a costs budget amounting to £506,425, Mr Mitchell's solicitors would be treated as having filed a costs budget comprising only the applicable court fees. They subsequently applied for relief from this sanction under the relief from sanction rule set out at CPR 3.9.
Applications under CPR 3.9
The wording of CPR 3.9 was revised as part of the Jackson Reforms and is now as follows:
(1) On an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need:
(a) for litigation to be conducted efficiently and at proportionate cost; and
(b) to enforce compliance with rules, practice directions and orders.
(2) An application for relief must be supported by evidence.
The application under CPR 3.9 for relief from the sanction was heard by the same Master on 25 July 2013. A number of reasons were put forward by the solicitors acting for Mr Mitchell to explain their failures, including the small size of the firm, the recent departure of a senior associate experienced in costs budgeting, and the heavy workload they were under. It was submitted that the revised CPR 3.9 did not necessitate "no tolerance", but simply "low tolerance", and that relief should therefore be granted.
This was not accepted by the Master. The reasons put forward for failing to comply were not unusual, and given that the parties were well aware of the budgeting requirements from the start, she refused to grant relief. This was, she believed, in accordance with the focus on requiring strict compliance with rules and orders arising from the Jackson Reforms. Nevertheless, given the absence of authority concerning how strictly CPR 3.9 ought to be interpreted, she granted permission to appeal. Because of the importance of the case the appeal was fast tracked directly to the Court Appeal.
The Court of Appeal's Decision
The Court of Appeal endorsed the Master's application of CPR 3.9 and applauded her "impressive judgment". The absence from the revised CPR 3.9 of the specific list of circumstances that were found in the previous version of CPR 3.9 represented a deliberate shift in emphasis. The Court stated that the Master was correct to recognise that this required a more robust approach to granting relief to parties from the consequences of their defaults.
Guidance from the Court of Appeal
The Court of Appeal's judgment provides valuable guidance to litigating parties and their legal teams. It is now of paramount importance that everyone appreciates the time that costs budgets take to compile and factor that in to their schedules for litigation. It is clear that even minor breaches could potentially result in serious sanctions.
The CPR, practice directions and orders are there to be followed much more strictly than before the Jackson Reforms. Fail to comply and it is likely that you will be punished.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
