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Response from the courts to the Mitchell decision

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The courts have mostly endorsed the Mitchell decision in numerous decisions. It is clear that lawyers must comply with court orders or face the wrath of the courts. We summarise some of the important post-Mitchell decisions.

Bianca Durrant v Chief Constable of Avon & Somerset Constabulary [2013] EWCA Civ 1624 

First decision following Mitchell reverses previous allowance of relief from sanctions 

The Claimant brought proceedings against the Defendant for false imprisonment, assault, malicious prosecution, misfeasance in public office, defamation, race discrimination and breach of the European Convention on Human Rights.

On 19 November 2012 an order was made that witness statements were to be exchanged no later than 21 January 2013 and the matter was listed in a trial window between 9 April to 28 June 2013 with a time estimate of 6 days.

The Defendant failed to comply with the date for exchange of witness statements and wrote to the Claimant on 21 January requesting an extension of 21 days; the Claimant refused the request.  The Claimant, a litigant in person, subsequently made a misconceived application that the Chief Constable be committed for contempt of court for failing to serve witness evidence; the application was dismissed but did result in an order that the Defendant do file and serve any witness statements by 12 March 2013.  The Defendant in supportive evidence had submitted that the delay was due to other professional commitments, the Christmas period, adverse weather and operational commitments of the witnesses.

On 12 March the Claimant posted a letter to the Claimant enclosing two of the statements; these arrived on 13 March – one day outside of the date of the order.  The Claimant complained that they were out of time.  The parties were notified that the trial date was to be 10 June 2013.  On 15 May the Defendant filed an application for relief from sanction citing that an error had been made in calculating how long it would take to obtain witness evidence from individuals who had since left the organisation and other witnesses with operational commitments.

On 22 May the Defendant sent the Claimant a further four witness statements.  The court did not have time to hear the application for relief from sanction and therefore it was listed to be heard before the trial judge.  On 5 June, just five days before the start of the trial the Defendant made a further application for relief from sanction in respect of a further two witness statements.

On 10 June, the first day of the trial, Judge Birtles considered both the old CPR 3.9 and the new CPR 3.9 introduced on 1 April 2013 and allowed the Defendant’s application for relief from sanctions, which resulted in the trial being adjourned.  The decision was appealed and was heard shortly after the Mitchell decision with the allowance of the relief from sanctions reversed on the basis that Judge Birtles had not given proper regard to the much stronger and less tolerant approach required under the new CPR 3.9 towards failure to comply with time limits.

Long v Value Properties & Anor EWCA Civ 2013 1537

Further evidence that the court is ‘taking no prisoners’ when it comes to compliance with the rules following the ruling in Mitchell

In accordance with Costs Practice Direction 32.5 (1)(c) & (d) a receiving party must when commencing detailed assessment proceedings serve the risk assessment or in the alternative a statement of reasons for the success fee (only in cases where non-fixed success fees apply) and a copy of the CFA or in the alternative a statement setting out the definition of certain terms within the CFA.

In the subject case the Claimant failed to do the above when serving her bill of costs, this was raised by the Defendants in its points of dispute; the Claimant thereafter promptly provided the information and proposed that the Defendants serve amended points of dispute if required; the First Defendant stated it would await sight of the replies before serving any amended points of dispute.  The Claimant thereafter filed an application for relief from sanctions 14 days after the points of dispute were received.

The application for relief was rejected and the success fee was disallowed in its entirety, although it is clear from the judgment that Master Rowley was uneasy with making the decision.

Burt v Christie [2014] ALL ER (D) 86 (Feb)

Cost Budget filed one day late not allowed

Further guidance that strict compliance with the rules is now mandatory and that in accordance with Mitchell unless it can be proved that there was either ‘good reason’ for the non-compliance or the non-compliance was ‘trivial’ the court will not be entertaining any applications for relief.

The Claimant had suffered serious injuries in a road traffic accident on 9 May 2010 and proceedings were issued on 12 April 2013.

The court issued a pre-allocation notice in form N149C dated 9 August 2013, in which the parties were asked to complete a directions questionnaire by 9 September; there was no express reference in the notice of a need to file and exchange costs budgets or when they should be filed by.  The Defendant filed his completed directions questionnaire and draft proposed directions (but no costs budget in Form H) on 3 September and the Claimant filed his directions questionnaire, draft proposed directions and a costs budget in Form H on 9 September 2013.

Directions were given on 9 December 2013 in which it was observed that the Defendant had not filed a Form H and therefore it would appear that CPR 3.14 would apply and the Defendant’s budget would be treated as comprising only the applicable court fees.  The matter was listed for a CMC on 24 January 2014.

The Defendant wrote to the court on 10 January 2014 (there had been a delay in receiving the directions from the court) asserting that the time for filing of costs budgets was  not due until seven days before the first CMC.  The Defendant then served his costs budget on the Claimant by fax on 17 January but due to the court fax line being continually engaged was unable to file by fax and was received by the court by DX on 20 January 2014.

It was the court’s position that even on the Defendant's interpretation of when the Form H should have been filed they were still late; CPR 2.8 (2) requires that any period of days shall be computed as clear days; 7 days before the CMC was therefore 16 January and not 17 January.

The matter came before the court on 24 January 2014 and the preliminary issue was whether the sanction imposed by CPR 3.14 should apply.

The first issue to be determined was when did the Defendant first breach the requirement of CPR 3.13? Was it by failing to file the costs budget with the directions questionnaire or by serving it and filing it less than 7 days before the first CMC?

CPR 3.13 provides:

“Unless the court otherwise orders, all parties except litigants in person must file and exchange budgets as required by the rules or as the court otherwise directs.  Each party must do so by the date specified in the notice served under rule 26.3 (1) or, if no such date is specified, seven days before the first case management conference.”

The Judge commented that the alternative date provided in CPR 3.13 for filing costs budgets of seven days before the CMC was intended to deal with CPR Part 8 cases that are automatically allocated to the multi track as the notes in the White Book at 3.13.1 make clear.

It transpired that there is an ‘old’ version of N149C and a ‘new’ version; the old version in circulation, and which was sent to the parties in this claim, does not make any reference to costs budgets at all – this is because the draft CPR 3.13 provided that the Form H must be filed and served within 28 days of service of the defence.  The new, and correct, version makes an express provision for a date for filing costs budgets and is consistent with the wording of the published CPR 3.13.

As the Defendant had been sent the ‘old’ version of N149C as no date was specified for the filing and exchange of costs budgets the Judge concluded that the only date that could be used was the date of seven days before the CMC, even if this was not the intention of the rules.  Therefore the Defendant was not in breach of CPR 3.13 in failing to file its costs budget with its directions questionnaire.  However, the Defendant was in breach by failing to file its costs budget seven days before the CMC on 16 January 2014.  The court considered that the Defendant's failure to interpret the calculation of days in accordance with CPR 2.8 could not amount to a good reason within Mitchell.  The Defendant submitted that the filing of the costs budget one or two days late obviously fell within the category of trivial breach.  The court did not agree and made, inter alia, reference to the following factors:

  • both parties had known that costs budgets were going to be required at some stage; the Claimant filed his on 9 September 2013 some three and a half months before the CMC.
  • when the Defendant did eventually serve its budget, out of time, little time was left for the parties to negotiate on the budgets and the parties were unable to file details of their objections to the other’s budget as directed by the court.
  • the majority of the CMC on 24 January was taken up with whether the Defendant should be granted relief from sanctions and there was no time to deal with the budgets which led to the need for a further hearing causing an increase in costs and delay to other cases.

The Judge concluded that:

“Leaving matters to the last minute is inconsistent with conducting litigation efficiently and the thrust of the new overriding objective of dealing with litigation justly and at proportionate cost.  Early preparation is much more likely to lead to a narrowing of issues between the parties or even agreement of budgets, saving time at the first hearing, thereby freeing up court time to be allocated to other matters.  Consequently, in considering all the circumstances of this case I do not believe that the breach by the Defendant can be regarded as insignificant or trivial or that it would be just to grant relief to the Defendant by making an order otherwise than that the sanction in CPR 3.14 applies.  The Defendant will therefore be treated as having filed a budget comprising only the applicable court fees."

It is clear that the courts are firmly endorsing the Mitchell case and again we would advise practitioners to take heed and ensure that the filing of cost budgets are not left to the last minute to prepare.

Harrison v Black Horse EWHC/COSTS/2013/B28

This case again demonstrates the courts using the Mitchell decision to its fullest.  This was a complex PPI claim; the Claimants' costs totalled £2.5million.  Points of Dispute raised the issued that the Defendant had never received the Claimant's Notices of Funding and therefore the Claimants were unable to recover their additional liabilities which amounted to approximately £700,000.00.  During the course of the detailed assessment procedure, at a hearing in March 2013 re an application for payment on account, the court suggested to the Claimants that they may wish to pursue an application for relief of sanction re the Notice of Funding; the Claimants failed to do this until 30 August 2013; it would seem that if the application had been made pre 1 April 2013 the outcome may have been rather different.

The circumstances of the case are that the court accepted that the Notices of Funding had been prepared by the Claimant but never reached the Defendant and the Claimant was unable to provide any evidence as to what happened to the documents once they had been prepared and therefore there was no evidence that service had taken place.

Lotus Cars v Mecanica Solutions [2014] EWHC 76 (QB)

Lawyers will be pleased to note that at least some of the judiciary are adopting a pragmatic approach when considering compliance with the Cost Budgeting and Relief from Sanction Rules.

In summary on 31st July 2013 the Claimant’s claim against the Defendant was joined with two other claims made by the Claimant against different Defendants; the order also provided for the parties to file and exchange costs budgets within 14 days of the service of the order and thereafter seek to agree them.  On 6th August 2013 the court made a standard allocation order, which was considered to be inconsistent with the order of 31st July 2013.

Both parties filed costs budgets in accordance with the order of 31st July; with the Claimant on 16th August filing a single combined costs budget encompassing the costs in all three cases totalling £588,136.40 and then on 3rd September filed a slightly revised budget. 

The Claimant agreed the Defendant’s costs budget.  However, the Defendant did not agree to the Claimant’s budget partly on the basis that it was a combined budget.  The matter was therefore listed for a CMC on 6th November 2013; prior to this hearing the claims against two of the Defendants were compromised and the Claimant filed a revised and reduced combined costs budget, amounting to a total of £587,861.01 in respect of the action against the remaining Defendant.

The Defendant objected to the Claimant’s combined budget in principle and also that the revised budget was out of time together with the usual arguments re proportionality and reasonableness.  The Defendant referred to the Mitchell decision and that the full rigour of CPR 3.14 and CPR 3.13 should be applied in that the Claimant had not complied and provided a proper costs budget and therefore should be restricted to recovery of court fees.

The matter came before Master Kay who had to decide whether the Claimant's provision of the first two combined costs budgets were in breach of the orders of 31st July and 6th August.

The Claimant submitted they had filed a costs budget in accordance with the CPR and that even if there was a breach then relief from sanctions should be allowed.  The Claimant averred that the subject case was distinct from Mitchell because in that case no budget had been filed and in the subject case there had, at least, been compliance with the substance of the rule if not the precise form.  The Claimant also stressed the importance of adopting a pragmatic approach and "if there are defects in the present case they are not so substantial that it should be treated as being a nullity".  It was the Claimant’s interpretation of the order of 31st July that the cases were to be case managed and tried together. And finally the Claimant submitted that “Where there has been a substantial compliance with the rule but there is a criticism of the form in which the costs budget has been produced or there has been a mistake as to the form of the cost budget it would be fair to permit relief from sanction under CPR Part 3.”

The Defendant’s interpretation of the orders of 31st July and 6th August was that separate costs budgets were required; the Claimant’s costs budgets failed to comply with the order and therefore no valid costs budget has been submitted by the Claimant; the Defendant did not consider there to be any good reason why the approach adopted in Mitchell should not apply.

Master Kay did not accept the Defendant’s submissions:

“A significant purpose of cost budgeting is to ensure that the cases are handled as economically as possible and it seems logical that if cases are to be managed and tried together a single cost budgeting exercise should be sufficient.  The provision of three separate budgets merely adds to the costs.  If the other two claims had not been settled the single budget approach would have proved effective and it may well be that the Defendant's multi budget approach might have been open to criticism.  In my view the Claimant's approach was not unreasonable. In my view the Defendant's assertion that the order clearly required separate cost budgets is putting the matter far too high.  The wording of the orders does not specify separate budgets and I am not persuaded that there is a "sensible" reason for assuming that it does."

Master Kay also stated that if the Defendant considered that the Claimant had misinterpreted the order in respect of its intention for there to be either one or three budgets then they could have applied to the court for a ruling.

If the Master had been persuaded by the Defendant’s arguments he also said that it would have been a case where it would have been appropriate to grant relief from sanctions; the failure to comply with the rules in Mitchell was much more serious and distinguishable from the present case where the Claimant attempted to comply with the order.  Adopting the Mitchell approach if non-compliance had been found in the present case then it would have been deemed trivial and even if it had not then there was good reason for the default.  The Master stated:

“Although the decision in Mitchell indicated that a more robust approach should be taken with applications for sanction from penalty it does not provide that a party should be penalised where the balance of justice and fairness would indicate that a contrary approach is appropriate. In my view, the reality of this case was that the Claimant was trying to comply with an aspect of the Orders and the rules which were not entirely clear and if, with hindsight it is found that it failed to do so properly I think that it would be contrary to the overriding principle to apply the penalty required by the Defendant. ”

Despite the court’s pragmatic approach in this case Paragon Costs would continue to urge all practitioners to fully comply with the cost budgeting requirements as every case will turn on its own circumstances and paying parties will undoubtedly be on the lookout for any potential defects.