Source: http://williamsassociates.co.uk/sigh-relief/
Timestamp: 2019-04-23 18:35:59+00:00

Document:
Without question, the most prevalent topic of discussion amongst litigators and costs practitioners in recent weeks has been that of relief from sanction. On 27/11/13, the Court of Appeal handed down judgment in the matter of Mitchell -v- News Group Newspapers Limited  EWCA Civ 1537, the widely-publicised defamation proceedings brought by Mr. Andrew Mitchell MP in connection with what has colloquially been daubed Plebgate in which the Court set out its view on the post-Jackson landscape of litigation in respect of compliance with rules, practice directions and orders. The judgment in Mitchell has, to say the least, caused a storm of protest bordering on abhorrence in myriad blogs and the social media, attracting stinging criticism from highly respected commentators to the effect that the Court has held that justice comes second to procedural compliance. See, for an excellent example, the firm views of Kerry Underwood.
“6.5 Enforcement of rules and directions generally. There is a wide spread of views about this issue, amongst both practitioners and distinguished academic commentators. The conclusions to which I have come are as follows. First, the courts should set realistic timetables for cases and not impossibly tough timetables in order to give an impression of firmness. Secondly, courts at all levels have become too tolerant of delays and non-compliance with orders. In so doing they have lost sight of the damage which the culture of delay and non-compliance is inflicting upon the civil justice system. The balance therefore needs to be redressed. However, I do not advocate the extreme course which was canvassed as one possibility in Preliminary Report paragraph 43.4.21 or any approach of that nature.
“25. In order to achieve this, the Woolf reforms and now the Jackson reforms were and are not intended to render the overriding objective, or rule 3.9, subject to an overarching consideration of securing justice in the individual case. If that had been the intention, a tough application to compliance would have been difficult to justify and even more problematic to apply in practice. The fact that since 1999 the tough rules to which Lord Justice Brooke referred have not been applied with sufficient rigour is testament to a failure to understand that that was not the intention.
“26. The revisions to the overriding objective and to rule 3.9, and particularly the fact that rule 3.9 now expressly refers back to the revised overriding objective, are intended to make clear that the relationship between justice and procedure has changed. It has changed not by transforming rules and rule compliance into trip wires. Nor has it changed it by turning the rules and rule compliance into the mistress rather than the handmaid of justice. If that were the case then we would have, quite impermissibly, rendered compliance an end in itself and one superior to doing justice in any case. It has changed because doing justice is not something distinct from, and superior to, the overriding objective. Doing justice in each set of proceedings is to ensure that proceedings are dealt with justly and at proportionate cost. Justice in the individual case is now only achievable through the proper application of the CPR consistently with the overriding objective.
A consideration of the nature of the failure will usually be the starting point on an application for relief from sanction. If such a failure is “trivial“, a “failure of form rather than substance” such as “where a party has narrowly missed the deadline imposed by the order, but has otherwise fully complied with its terms“, the court will usually grant relief from sanction “provided that an application is made promptly” (paragraph 40). If the failure is not characterised as trivial, then it is for the defaulting party to persuade the court to grant relief. If there is a “good reason” for the failure then the court “would be likely” (suggesting that even a good reason may not be determinative) to grant relief (paragraph 41).
So, a crystal clear message: the hitherto commonplace relaxed approach to compliance with rules, practice directions and orders will no longer be tolerated and successful applications for relief from sanction will be fewer and further between. Has that proved to be, in post-Mitchell decisions? Largely so, as can be seen below, including in the tribunals as well as the courts.
The issue in this case concerned the 2nd claimant’s failure to serve a notice of funding in the required Form N251 and thus whether or not relief from sanction, imposed automatically by the former CPR 44.3B(1)(c) and expressly preserved, post-01/04/13, by PD 48 para 1.4(b), ought to be granted so as to enable the 2nd claimant (or, in reality, it’s lawyers – see paragraph 39) to recover a success fee from the losing defendants. The 1st claimant provided notice of funding but the 2nd claimant (a company represented by the same lawyers as the 1st claimant and which appears to be inextricably linked to the 1st claimant) did not by reason of a simple oversight. However, it was apparent that the 2nd claimant did give notice, of sorts, of having entered into a conditional fee agreement (‘CFA’) by means of a reference to being represented under a CFA within ‘without prejudice save as to costs’ correspondence sent to the defendants’ representatives on 19/07/12, during the currency of the litigation.
“46. In considering whether to grant relief from sanction I must have regard to the need, so far as is practicable to enforce “rules, practice directions and orders”. This does not mean that each of them must in all circumstances be regarded in exactly the same way, and that the enforcement of each will require exactly the same measures to be taken. This was a failure (through human error) to comply with a rule of general application: it may be contrasted with a conscious failure to comply with a specific order made in the action itself. The policy embodied in CPR 44.3B had at 19 July 2012 been fulfilled (albeit not in a technically correct way) and the substance of the rule was then complied with. The conveying of the requisite information in a letter instead of on form N251 had no discernible impact on the conduct of the action. The failure to convey the information until 19 July 2012 probably had an impact on the conduct of the action (because until then PMP was not in possession of all of the information relevant to a disposal of the claim) and MFPL has not demonstrated that it did not. The consequence of refusing relief may be that MFPL is contractually liable to pay a success fee but would not recover it from PMP: as against that it would appear to have a strong defence to a claim for a success fee from its solicitors, and a claim over against its solicitors in respect of any claim by Counsel. Granting relief would deprive PMP of what may properly be regarded as a windfall (in that it received the relevant information on the wrong piece of paper).
It is easy to think that that view is only right, to the extent that the defendants in Forstater had the most important information they were entitled to, such that the failing does appear to be trivial. However, the defendants did not know the date of the CFA, which would feature in the prescribed form and which can be, and frequently is, an important piece of information when considering tactics. Further, that view rather renders nugatory the additional requirement to serve notice of funding upon the issue of proceedings given that there existed (until 01/04/13, when the recoverability of additional liabilities between the parties was brought to an end) an essentially identical pre-issue requirement at Paragraph 9.3 of the Practice Direction – Pre Action Conduct. Indeed it is perhaps noteworthy that the judgment in Forstater is silent as to whether or not the 2nd claimant ever notified the Court of its funding arrangement, as required by the former CPD Section 19.2(2)(a) (a Form N251 was “never completed” so could not have been filed and the Court would not have received a copy of the ‘without prejudice save as to costs’ correspondence aforementioned), and whether or not a failure in that regard may, or may not, have had an effect on the efficient conduct of the litigation at proportionate cost (perhaps in the form of different directions for trial, the limiting of evidence to be relied upon and so on). Finally, while the judge expressly stated that he had taken Mitchell into account, it is far from clear whether or not the parties were permitted to make further submissions based on the Court of Appeal’s guidance. For those reasons, I would treat the decision in Forstsater with a degree of caution.
“I should make two final points. Firstly, I note that NHL’s costs of the appeal are said to be at £27,217. In view of the fact that i) the undertaking was most unlikely ever to have been triggered (for the reasons I have given); ii) it related to a default costs order worth £4,449; iii) the underlying claim in this case is worth just over £3,000; to spend such an amount on the appeal is both ludicrous and deplorable. It confirms all my concerns about NHL and Charles Henry and their conduct of this case.
Ouch. The decision in Norseman is of no precedent value but is of worthy note insofar as it is indicative of the judiciary’s attitude to procedural compliance post-Mitchell and indeed costs (one wonders how Coulson J may have interpreted the new proportionality test had it applied/arisen!).
This case concerned an application for relief from sanctions in the context of failures to comply with orders for security for costs in the Commercial Court and was heard ten days after the Court of Appeal had delivered its decision and guidance in Mitchell. The procedural history in this matter is a little convoluted such that the following ought to be considered against the full background set out in the judgment. For immediate purposes it ought to be appreciated that the claimant’s failures were numerous and that the claim ultimately stood struck out by reason of non-compliance with an ‘unless’ order. The claimant thereafter issued an application for relief from sanction and an application for an extension of time within which it might comply with previous orders.
“29. On an application under CPR 3.9(1) the Court will be engaged in looking more widely than at the case in hand, as well as at the case in hand; “the new approach … seeks to have regard to a wide range of interests”: see . I respectfully offer the observation that there are limits to the contribution that a party, especially a non-defaulting party, can usefully make in evidence or argument in respect of circumstances extending beyond the case in hand – for example on what is needed “to enforce compliance with rules, practice directions and orders.” This is pre-eminently an area for the judge. In Mitchell the Court of Appeal was not putting an enhanced tactical weapon into the hands of non-defaulting parties to the litigation. This is clear from the nature of the factors specified at (a) and (b) of CPR 3.9(1). It is reinforced by the concern of the Court of Appeal to reduce satellite litigation: see .
In short, this case concerned a claim by 134 claimants for losses allegedly incurred in respect of failed investments in property in Spain. The issue giving rise to an application for relief from sanction was the claimants’ solicitors failure to comply with an unless order in respect of service of the particulars of claim of eight of the numerous claimants (there were eleven defaulting claimants all told but the defendant did not resist the granting of relief in respect of three of that total). In brief, it was argued that the relevant claimants were abroad or otherwise unavailable and so could not sign the documents (which had been prepared in advance of the deadline) in good time. The application for relief was heard some time before the decision in Mitchell but HHJ Oliver-Jones QC revised his draft judgment following further, written submissions permitted after the handing down in Mitchell. The evidence given as to the procedural history of the underlying claim (see paragraphs 11-20), paints a particularly chaotic picture replete with incompetence and hopeless optimism on the part of the claimants’ representative – although the judge also made clear his criticism of the defendant’s representative in certain (but much less extensive) respects – such that the reader of the judgment might be forgiven for expecting the judge to flatly refuse to exercise his discretion in favour of the defaulting claimants. However, please do read in particular the parties’ respective submissions (see paragraphs 26 and 27), from which the outcome of the application might be far less readily anticipated.
I must confess a degree of respectful difficulty in agreeing with the ‘good reason’ set out above. The guidance in Mitchell (see paragraph 43) refers to “circumstances outside the control of the party” and not the party’s representative. Furthermore, it is apparent from paragraph 12 of the judgment in Aldington that the claimants’ solicitor did not advise the claimants of the nature of the relevant order, namely that it was an unless order and what the consequences of non-compliance would be, and that there was a considerable delay (relative to the time allowed for compliance) in notifying the claimants of what was required. Taking such matters into account, I cannot help but think that the claimants themselves might have ensured that they would have been able to sign and return the documents in good time had they been possessed of all the relevant information. Further still, there appears to be no mention of the use of the resources of the court so as to facilitate a (fiercely contested and likely lengthy it seems) hearing arising from a party’s default (albeit that such an issue, in isolation, will likely carry little weight). At all events, having regard to all the circumstances of the matter, as far as they are set out in the judgment, I rather think that the claimants’ solicitor breathed a very heavy sigh of relief indeed when the application was allowed.
This case afforded the Court of Appeal an early opportunity to apply its own guidance in Mitchell. In brief (brief indeed), the defendant made two applications for relief from sanction following his repeated failure to serve witness statements in time: there were various difficulties and delays encountered in taking statements from serving / operational police officers and former employees and the defendant’s solicitor made candid admissions of tardy conduct, underestimating the magnitude/logistics of the tasks faced and her professional commitments to other matters. The situation was made worse for the defendant in that, following a change of counsel, the second application for relief from sanction was made just five days before the scheduled trial and sought permission to introduce the evidence of two further officers/witnesses. Even the first such application had been made a little more than two months after the missed deadline.
“38. The judgment in Mitchell reiterated (at para 52) that this court will not lightly interfere with a case management decision. It quoted the observation of Lewison LJ in Mannion v Gray  EWCA Civ 1667, para 18, that “it is vital for the Court of Appeal to uphold robust fair case management decisions by first instance judges”. Equally, however, if the message sent out by Mitchell is not to be undermined, it is vital that decisions under CPR 3.9 which fail to follow the robust approach laid down in that case should not be allowed to stand. Failure to follow that approach constitutes an error of principle entitling an appeal court to interfere with the discretionary decision of the first instance judge. It is likely also to lead to a decision that is plainly wrong, justifying intervention on that basis too. We do not share Mr Payne’s concern about this leading to an increase in appeals and thereby undermining the efficiency benefits of the Jackson reforms. As is stated at para 48 of the Mitchell judgment, “once it is well understood that the courts will adopt a firm line on enforcement, litigation will be conducted in a more disciplined way and there should be fewer applications under CPR 3.9. In other words, once the new culture becomes accepted, there should be less satellite litigation, not more”.
Particularly useful guidance, in my humble view.
This case concerned the claimants’ allegation that in numerous transactions taking place over a period of nearly eighteen months they paid to the defendant millions of pounds in cash/cheques under an agreement that the defendant would repay the monies after a fixed period together with a guaranteed return. A typical transaction would apparently involve the payment of a sum of tens of thousands of pounds to be repaid in eighteen months together with an uplift of 100% and such dealings were apparently linked to property transactions in Dubai. All very odd, as Turner J himself thought when (paragraph 38) voicing concerns that the parties’ dealings may have involved money laundering and/or tax evasion: he stayed execution of judgment pending investigation by the police and HM Revenue and Customs and even requested the attendance of a detective officer of the Economic Crime Unit at court when judgment was handed down.
The claim was listed for trial over seven days beginning on 12/12/13. However, on the morning of the first day of trial, counsel for the defendant informed the court that he had received an email from his client on the evening before and that the contents thereof would necessitate an application to amend the defence and to adduce a supplementary witness statement. In fact, the defendant wished to adduce two further witness statements obtained on the eve of trial – some seven months after the date by which witness statements were ordered to be exchanged. The claimants opposed the defendant’s application and urged the court to strike out the defence in its entirety.
Drawing on the decision in Boyle v The Commissioner of Police of the Metropolis  EWCA Civ 1477, the judge held that there was no difference between a failure to serve an expert’s report and a failure to serve a witness statement, such that where the court has ordered witness statements to be served by a certain date and they have not been served by that date then, to obtain the court’s permission under CPR 32.10 to call a witness to give oral evidence, the party in default must persuade the court to grant relief under CPR 3.9.
“28. It is a helpful illustration in this case to consider that, in order to find time in my diary to list this application for relief within any reasonable time, there being objections from Mr Mitchell’s side to a long wait, I needed to vacate a half day in my list which had been pre-allocated to deal with claims by persons affected by asbestos related diseases. There is an expedited list for such claims because life expectancies are often very short. The impact, therefore, of the admitted breaches in this case, was that the claims of those litigants which could have been listed in my diary were not listed, and in their place we have an argument about non-compliance with rules in this defamation claim.
The underlying case concerned the claimants’ allegation of being mis-sold PPI by the defendant bank and even found its way up to the Supreme Court, although shortly after permission to appeal was granted by the Supreme Court, the claim was compromised upon the defendant agreeing to pay to the claimants the sum of £33,099.08. Imagine the defendant’s surprise when the claimants’ claim for costs arrived in an eye-watering sum exceeding £2.5 million! The issues in respect of which applications for relief from sanction were made concerned the claimants’ failure to provide the defendant with notices of funding in respect of two (of four) CFAs. Adopting the same terminology of Master Gordon-Saker, the CFAs in question related to the claimants’ “first appeal” (i.e. to the High Court) and “second appeal” (i.e. to the Court of Appeal).
The claimants’ replies (dated 30/04/13) to the defendant’s points of dispute (dated 21/02/13) omitted to deal with the issue of notice of funding in respect of the first appeal but in respect of the second appeal, the claimants asserted that a notice of funding was sent to the defendant via the document exchange (“DX”) on 24/12/10. Before service of those replies, at the hearing of the claimants’ application for a payment on account of costs (on 07/03/13), the Master, rather kindly, mentioned that if notices of funding had not been served then the claimants might wish to pursue an application for relief from sanctions. In the event, the claimants were slow to heed such good (and free) advice and no application for relief from sanction was issued until 10/07/13 – and even then it related only to the second appeal (it was in fact an application for a declaration that notice of funding had been served in December 2010, with an application for relief in the alternative). At a directions hearing on 31/07/13, it was pointed out that no application for relief had been made by the claimants in respect of the first appeal such that the Master directed that any such application should be made by 30/08/13 so that the two applications could be heard together. The claimants’ application for relief from sanction in respect of the first appeal was received by the SCCO on 30/08/13 and was issued on 18/09/13. The claimants’ application in respect of the first appeal was subsequently withdrawn however, putting paid to the claimants’s success fee in that aspect of the litigation, leaving only the application in respect of the second appeal to be heard on 29/11/13.
As aforementioned, it was the claimants’ primary case that notice of funding had been sent to the defendant by letter via the DX on 24/12/10. It was not in issue that the claimants’ solicitors’ file contained a copy letter to the defendant’s solicitors dated 24/12/10 which refers to a notice of funding being enclosed, that the claimants’ solicitors prepared a notice of funding dated 24/10/10 (that date being explained as a simple typographical error – the CFA was not entered into until 02/12/10) and that the claimants’ solicitors successfully sent a copy of the notice of funding by facsimile to the Civil Appeals Office on 24/12/10. But the defendant’s solicitors did not receive the claimants’ solicitors’ letter dated 24/12/10. The conducting fee-earner within the claimants’ firm of solicitors gave evidence as to her recollection of events on 24/12/10 and how the letter of that date to the defendant’s solicitors came to be prepared but such evidence stopped at the point in time when the letter left her hand: she did not recall placing the letter in the post tray, she could not recall whether or not she put the letter in an envelope (although that was her standard practice, she conceded that her secretary colleague may have done it) and she conceded that she did not take anything to the DX box. The Master therefore held that as there was no evidence of the letter having entered the DX system and no evidence of the defendant having received the letter that he could not find that the claimants had served the letter, and the required notice of funding, on the defendant.
The Master did not expressly state that “on an application for relief from a sanction … the starting point should be that the sanction has been properly imposed and complies with the overriding objective” (see Mitchell, paragraph 45) but he did refer to the sanction being “automatic” (at paragraph 32). Thereafter he went on to consider the parties’ contrasting submissions/evidence – including the defendant’s solicitor’s evidence (“phrased quite carefully“) that “had notice been given of the CFA in relation to the second appeal, the Defendant’s approach to that appeal might have been different and [the solicitor’s] advice in relation to settlement would have been different” (at paragraph 40), which the Master held was evidence of prejudice as such evidence was not challenged via cross-examination by the claimants. Taking that and various other issues into account, the Master opined that under the former incarnation of CPR 3.9 this would have been a borderline case. He went on to say that all such matters are still relevant under the new form of CPR 3.9, because the Court must have regard to all the circumstances of the case, but that “they now play second fiddle to the factors specifically listed in the new rule” (at paragraph 44).
“49. This may seem harsh, particularly given my view that the failure was not intentional. But the Claimants’ solicitors should have known of the change that was coming. The amendment of CPR 3.9 was recommended by Lord Justice Jackson in his final report published in December 2009. The change of approach and the “Singapore experience” were emphasised by him in the 5th implementation lecture on 22nd November 2011. The new, tougher approach to relief from sanctions was again emphasised by the Master of the Rolls in the 18th implementation lecture on 22nd March 2013.
A very expensive lesson learned.
The judge went on to consider all the circumstances of the case and indeed the factors in both versions of CPR 3.9, correctly giving less weight to all such circumstances and factors other than the two remaining factors in the revised CPR 3.9. He held that HMRC’s failure to provide the notice of appeal for a period of 56 days after the time limit for doing so had expired was neither minor nor trivial and, with reference to the ‘slipping through the cracks’ aforementioned, equated the same with the “well-intentioned incompetence” mentioned in Mitchell. Accordingly, the judge refused to admit HMRCs’ notice of appeal. Beyond his decision in the instant case, the judge helpfully went on to provide more general guidance, specifically that the guidance of Morgan J in the matter of Data Select -v- HMRC  UKUT 187 (TCC), as to the approach to be taken in respect of applications to extend time, involving a trawl through the former checklist at CPR 3.9 and a number of questions such as “what is the purpose of the time limit?“, can no longer be regarded as correct in the light of the guidance given by the Court of Appeal in Mitchell. While regard may still be had to the former checklist, as part of all the circumstances of any case, Mitchell, principles are to be applied in tribunal matters.
The claimant’s solicitors, upon receiving the defendants’ points of dispute (served some 28 days after the Form N252, it will be noted, as the claimant’s solicitors agreed an extension of time) and reading the defendants’ challenge, appreciated their omission and sent the CFA and other documents to the defendants’ representatives just six days later (thus just 34 days after the Form N252) with the suggestion that amended points of dispute be served, if necessary, “rather than … take up the court’s time with an application … for relief from sanctions“. In response to that suggestion, the first defendant stated that it would await sight of the claimant’s replies before deciding on whether to serve amended points of dispute. Replies were served a week later and the claimant’s application for relief from sanction was issued on the following day (thus 14 days after the points of dispute). All in all, a short period of time and a prompt application for relief.
> The defendants’ costs lawyers said nothing of the statement of reasons during ‘pre-N252′ discussions; the point was first taken in the defendants’ points of dispute.
> The defendants suffered no prejudice.
> The claimant’s barrister would be affected if relief were not granted.
> The claimant’s solicitors constructive and conciliatory approach to the detailed assessment proceedings in agreeing an extension of time for serving points of dispute*, providing documents promptly and proposing dealing with any amendments required to the points of dispute in a costs-effective manner.
* Tangent: Paul Hughes of Kings Chambers, Manchester raises an intriguing point in respect of parties agreeing to extend time for service of points of dispute in an article on his blog, which has recently been updated to include consideration of the judgment in M A Lloyd & Sons Limited discussed below).
> By contrast to the claimant’s solicitor’s approach, the defendants took an opportunistic approach to the claimant’s solicitor’s oversight and chose to remain silent in respect of the missing documentation, despite that they must have known it existed, until the point was taken in points of dispute.
> Relief from sanction perhaps wasn’t necessary in that the relevant rules did not specify that the statement of reasons must be served with the Form N252 and bill of costs and thus could be served at a later point in the detailed assessment proceedings. In this specific regard, counsel for the claimant referred to the matter of Middleton -v- Vosper Thornecroft (UK) Ltd & Others (Unreported). Notwithstanding that in Middleton it was held that the statement of reasons must be served with the Form N252, the judgment was not binding on the Master such that it was open to him to take a contrary view and so support the claimant’s position. In support of taking a view contrary to that taken in Middleton, it was argued that the rule should be construed narrowly in light of the draconian sanction that would result from a breach; that there was a lack of prejudice to the defendants – “or at least none that could not have been cured by the Defendants’ own actions of asking for the missing information“; and that the granting of relief would not cause the defendants’ position to deteriorate from that set out in their points of dispute (the defendants having not amended their points of dispute once they had been provided with the statement of reasons).
> In the event that the Master was against the claimant on the ‘Middleton point’, the approach in Forstater, rather than Mitchell should be taken. The failure arose out of human error and there was no prejudice to the defendants: to deny relief would be to deprive the claimant’s solicitors of significant sums and to provide the defendants with a windfall whereas if relief were granted the defendants would suffer no prejudice.
> The approach in Ian Wyche v Careforce Group Plc  EWHC 3282 (Comm) would be a “more just” approach (although there does not appear to have been much store placed behind such a submission).
> Finally, counsel for the claimant submitted that he believed that the decision in Mitchell was to be the subject of an appeal to the Supreme Court, such that if the Master were to be against the claimant on Mitchell-principles, his decision should be deferred pending determination of that appeal.
> Mitchell is clear in that greater weight must be given to the two factors now featuring in CPR 3.9, the breach was not trivial (as conceded on behalf of the claimant), no good reason for the breach had been given and the starting point is that the sanction has been properly imposed and complies with the overriding objective.
> There had been prejudice to the defendants in that their lawyers had been unable to properly advise the defendants as to an appropriate offer of settlement without the relevant information (albeit, further to questioning by the Master, it was conceded that such prejudice was relatively short-lived, amounting to just 2-3 weeks).
> The rules/practice direction were quite clear in that the time for providing the statement of reasons was upon commencing detailed assessment proceedings, as was held in Middleton.
> It was not for the defendants to ‘pick up the ‘phone’ to request missing information / documentation nor was it for them to show their opponents how to do things properly.
> There was nothing in the fact that the defendants had not amended their points of dispute – the same had not been amended simply because the application for relief from sanction had been issued promptly and the defendants chose to await the outcome of that application before considering whether or not any amendments were necessary.
> The changes brought about in April 2013 were well-publicised such that the non-compliance in this case was set against a backdrop of a changing culture.
The Master expressed having been troubled by the apparent “one strike and your out” nature of the aforementioned rule and practice direction relating to the timing of providing a statement of reasons. As was submitted on behalf for the claimant, parties are able to amend their statements of case and yet if the defendants were correct on their case, the claimant was irretrievably in default and subject to sanction the moment the letter not enclosing a statement of reasons left her solicitors’ offices. Referring to Mitchell (paragraphs 34 and 35) and Sir Rupert Jackson’s Final Report, the Master observed that the “extreme“, or Singaporean, approach of non-compliance always suffering a sanction save in exceptional circumstances was not to be followed and yet, if the defendants were correct in their submissions, that would be the case. The Master also compared the rules in respect of providing a statement of reasons with those in respect of providing notice of funding: in respect of the latter, the sanction was more proportionate in that, absent relief, it would be disallowance of an additional liability for the period of delay in providing notice and not wholesale disallowance. In the Master’s view that was surprising as the absence of knowledge of the existence of a CFA “always seems to cause more prejudice than a failure to serve information regarding a CFA whose existence was already known“.
The Master considered that the claimant’s failing was potentially a trivial one (any prejudice was short-lived, the defendants could have minimised that prejudice by asking for the statement of reasons, the error was quickly rectified and the application for relief was made extremely quickly) but ultimately it was not on Mitchell principles. Moreover, he considered that the claimant’s concession on this point was a “telling indication of the parties’ views as to whether the lack of provision of this information could be considered trivial“. In the result, the Master correctly went on to consider the second limb of the Mitchell test and held that the claimant’s solicitors’ oversight, or human error, in failing to serve the statement of reasons, could not be a good reason. Accordingly, the Master refused relief from sanction.
ii) costs consequences in the event of failing to beat a withdrawn offer of settlement (Trustees of Stokes Pension Fund v Western Power Distribution South West PLC  EWCA Civ 854).
Since 01/04/13, the (identical) practice direction dealing with when a summary assessment should be carried out is at PD 44 para 9 and so the above citation is a minor (trivial?!) error in the judgment of the court. It is not difficult to envisage such prospective orders for costs, which are expressly provided for at PD 44 para 9.6, as they were at the former PD 44 para 13.6, being common place in these post-Mitchell days. That said, there is anecdotal evidence of far harsher results arising from a failure to file and serve a schedule of costs 24 hours before a hearing, where applicable, such as that reported by Cost Advocates here.
The underlying litigation concerned the terms of an agreement for the claimant’s purchase of substantial assets, or assets of substantial value, from the defendants. However, this judgment saw the Court of Appeal again troubled with an appeal by the claimant against a decision of the judge below to grant relief from sanction following non-compliance with an ‘unless’ order (relating to disclosure – see paragraphs 2 to 5 for greater detail). Rather unusually, the order subject to appeal, of Mr Andrew Sutcliffe QC sitting as a deputy High Court Judge in the Chancery Division (“the deputy judge”), concerned the very same relief sought from and previously refused by Hildyard J. Accordingly, there was the added factor of whether or not the judge was right to entertain the defendants’ second application at all.
Not an order made on Mitchell principles but undoubtedly an order made in the spirit of Mitchell principles. Notably, the defendants did not subsequently appeal the order of Hildyard LJ. The litigation thereafter proceeded towards a trial listed to start on 03/10/13. On 01/10/13 however, the defendants filed a second application for relief from sanction and the trial before the deputy judge was subsequently re-listed to start on 07/10/13 with the application for relief to be heard on the first day of trial. Surprisingly, the deputy judge allowed more than four of the five days allotted to the trial to be spent on merely the application for relief.
Various submissions were made on behalf of the defendants (including ‘we’ve complied now‘, the order was onerous, there were difficulties in securing litigation funding which added to the delay and the defendants’ previous solicitors were at least in apart to blame) whereas the claimant’s opposition was quite simple – the second application for relief from sanction was an abuse of process, the order of Hildyard J having not been appealed and absent the application of CPR 3.1(7), and ought to be dismissed for that reason alone. In the alternative, it was argued that the sanctions were wholly appropriate and the defendants had still not in fact complied with the unless order.
The deputy judge went on to hold that the defendants had complied, belatedly, with the unless order and that they were entitled to rely on their then solicitors’ erroneous advice that they had complied with the orders of the court. The deputy judge even referred to the claimant’s own non-compliance with earlier directions in respect of disclosure and inspection. Referring to Woodhouse v Consignia Plc  EWCA Civ 275 as authority that a second application for relief from sanctions is permissible, and distinguishing the decision in Tarn Insurance Services Limited as relied on by Hildyard J, the deputy judge also rejected the claimant’s primary submission to the contrary.
Accordingly, the defendants’ application was granted, the trial window was vacated and a new trial window was set commencing on 27/01/14. The claimant appealed against the deputy judge’s order and the appeal was heard on 12/12/13.
The claimant’s appeal against the order of the deputy judge was therefore allowed, thus effectively restoring the ‘Mitchell-friendly’ decision of Hildyard J, and again the Court of Appeal emphasised the “robustness” now required when dealing with applications for relief from sanction.
One can almost picture counsel for the claimant sinking in his seat. In the course of the litigation, the claimant raised the issue of the defendant company’s right to litigate in this jurisdiction and asserted that it was legally extinct. It was in connection with the claimant’s application relating to those issues that the non-compliance arose. At the hearing of the claimant’s application on 11/10/13, which, remarkably, the claimant failed to attend, directions were given which required the claimant to file and serve its witness statement(s) and skeleton argument by no later than 25/10/13. The order also provided for the defendant to file and serve its statement(s) and skeleton argument in response by 29/11/13. The claimant failed to file and serve its statement(s) and skeleton argument (although there was served a “very curious document” which, for a moment at least, counsel for the claimant sought to argue complied with the order). The defendant, itself out of time for complying with the order of 11/10/13, but perhaps forgivably so given that its statement and skeleton were to be in response to those of the claimant (a point not lost on Turner J – see paragraph 29), issued an application for an extension of time on 09/12/13. It was that application with which Turner J was dealing at a hearing on 16/01/14.
Criticism of the claimant was not to end there. By reason of its non-compliance with the order of 11/10/13, CPR 32.10 operated to prevent the claimant from calling at trial any intended witness or witnesses in respect of the issues aforementioned (although, at paragraph 17, Turner J gave rise to a possible argument that the wording of the rule might be interpreted to mean that a party in default may not be permitted to call a witness to give oral evidence on any matter unless the court gives permission, even if the statement not served in time relates only to a distinct part of the evidence relied upon and his other evidence is contained within in other statements which have been served in time – an argument for another day). Thus, CPR 3.9 was engaged and counsel for the claimant signalled the claimant’s intention to issue an application for relief from sanctions (to be heard at a case management conference listed for 30/01/14).
* A point which has potential to cause litigators all manner of problems: while the rule has seemingly been in place since the advent of The Civil Procedure Rules, this ‘highlighting’ by the High Court may give rise to it being commonly used tactically. A useful suggestion/workaround for this particular problem was recently made by Hardwicke Chambers’ Charles Bagot (via Twitter): “Put provision in Order permitting parties to agree 14 day extensions without an application; QB Master approved it“.
The underlying litigation concerned a claim for losses stemming from an allegedly negligent property valuation, although, as Turner J began his judgment, it is another case “about the consequences of failing to comply with the rules of court against the background of the Jackson reforms“. Such non-compliance concerned the failure of the defendant to renew its application for permission to appeal, from an unfavourable decision in the detailed assessment of the claimant’s costs of the compromised litigation, within the prescribed time limit.
In short, Master O’Hare refused permission to appeal against his assessment of the claimant’s costs and the defendant sought permission from a High Court judge. That application was refused, on the papers, by Haddon-Cave J on 29/07/13. The defendant’s solicitors, a firm specialising in costs, asserted that they did not receive the order of 29/07/13 until 10/10/13 and on 22/11/13 they issued an application for an extension of time within which to seek an oral hearing of their application for permission. On 27/11/13, Blair J, upon hearing representations from an advocate acting for the defendant, extended time and also granted permission permission to appeal Master O’Hare’s assessment.
The claimant sought to set aside the order of 27/11/13 pursuant to CPR 23.11(2), having not been represented at the hearing before Blair J. Given that the hearing on 27/11/13 concerned an application for an extension of time and for permission to appeal, Turner J had sympathy with the claimant not being represented at the same in light of the Court of Appeal’s guidance in Jolly -v- Jay  EWCA Civ 277 as to a respondent’s limited involvement in the preliminary stages of the appeal process. However, the judge also observed that the judgment in Jolly also emphasised that a court would be very slow to revisit a single judge’s decision on such an application and further, cited his own judgment in M A Lloyd (above) in respect of the power of the court, under CPR 23.11, being exercised sparingly so as to ensure that the court’s resources are appropriately allotted to any given case. Nevertheless, the judge was entirely satisfied that it was appropriate in this case to revisit the order of Blair J on the basis that certain, and highly relevant, information was not brought to the attention of the court on 27/11/13.
“It is respectfully submitted that the time allowance of seven days is not a sufficient timescale for the Appellant to consider the impact of the decision, advise the client of the decision, advise as to the merits of possible actions and to make the application.
E-Surv Limited are not legally trained and cannot be considered to be a legally sophisticated client. They are a firm of Chartered Surveyors and cannot be expected to be able to consider the ramifications of a refusal to allow an appeal.
When liaising with E-Surv it is necessary to speak initially with the case handler, in this case a Lisa Jarrett, who in turn liaises with the Finance Director of E-Surv Limited. Instructions are then fed back “down” the chain to Just Costs. Once instructions are received to proceed, an advice is provided to E-Surv who in turn consider the same and advise accordingly.
The claimant’s application was therefore successful: the order of Blair J was set aside, the defendant’s appeal was out of time and permission to extend time was refused.
The above cases demonstrate the seismic shift in the approach of the courts (and tribunals) to litigants’/lawyers’ compliance with rules, practice directions and orders. While there are whispers of some judges not taking the hard line the Court of Appeal has decreed they should, and while there are those who believe that there are other decisions of the Court of Appeal which may be (and reportedly have been) used to persuade a judge to depart from ‘Mitchell principles’ (see, again, the views of the omniscient Kerry Underwood), it would be a fool who believes that obtaining relief from sanction is going to be anything but unlikely. I very much suspect that many a professional indemnity insurance policy will be called upon in the coming months although, longer term, I rather think that the furore will fade away as lawyers become more accustomed to doing things… err… properly.

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