Court of Appeal sends clear message on need for strict compliance in Mitchell decision

In its decision handed down this morning in the high-profile Mitchell case, the Court of Appeal has dismissed an appeal against tough sanctions imposed for a failure to file a costs budget in time: Andrew Mitchell MP v News Group Newspapers Limited [2013] EWCA Civ 1537.

In doing so, the Court of Appeal has confirmed that the Jackson reforms mean a real change to the court's approach toward compliance with rules and court orders, not only in relation to the costs budgeting regime but in the conduct of litigation more generally, and has given guidance on how the new approach should be applied. A number of first instance decisions since the reforms were implemented on 1 April had highlighted a tension between the increased focus on compliance and the desire to do justice in the individual case. The Court of Appeal's decision comes down firmly on the side of compliance.

The upshot is that courts are likely to take a firm line on those who breach rules or court orders. As the Master of the Rolls put it in the judgment: "well-intentioned incompetence, for which there is no good reason, should not usually attract relief from a sanction unless the default is trivial". Key points that come out of the decision include:

• Where non-compliance is "trivial" or "insignificant" and an application for relief from sanctions is made promptly, the court will usually grant relief.
• Otherwise the defaulting party must persuade the court that there was good reason for the default. Overlooking a deadline is unlikely to be a good reason.
• The courts will look more favourably on applications for an extension of time made before time has expired than applications for relief from sanction made after the event.
• An application for relief from a sanction presupposes that the sanction was properly imposed in the first place. If a party wishes to contend otherwise, the proper route is an appeal or, exceptionally, an application to vary or revoke the order.

Background

This is the high profile defamation action brought by Andrew Mitchell MP relating to The Sun newspaper’s reporting of the so-called ”plebgate” affair. The case proceeded under the pilot costs management scheme which applied to defamation cases before 1 April 2013, rather than the broader costs budgeting regime implemented as part of the Jackson reforms (see here for more information).

Both the pilot scheme and the new rules require parties to file and exchange costs budgets not less than seven days before the relevant hearing (normally the first case management conference). The new rules also provide (at CPR 3.14): “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.” There is no equivalent provision under the pilot scheme rules.

There are two other relevant amendments to the CPR which apply from 1 April 2013, both of which emphasise the  increased focus on compliance as a result of the Jackson reforms (see here for more information):

• An amendment to CPR 3.9 which replaces the previous list of nine factors the court had to consider on an application for relief from sanctions with a statement that the court must 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”; and
• An amendment to the “overriding objective” at CPR 1.1 to add a new sub-paragraph (f) which makes it clear that dealing with cases justly includes “enforcing compliance with rules, practice directions and orders”.

In this case the defendant filed a costs budget but, in breach of the pilot scheme rules, the claimant failed to do so until the day before the case management conference. In determining the appropriate sanction for the failure, the Master looked to the new rules that apply from 1 April. She ordered that the claimant’s budget be limited to court fees, effectively applying the new CPR 3.14 by analogy. The Master considered but refused the claimant's application for relief from the sanction she had imposed. (Click here for our blog post on the Master's decisions.)

Decision

The Court of Appeal (Lord Dyson MR, Richards and Elias LJJ) dismissed the claimant's appeal and gave guidance as to how the new approach should be applied in practice.

Lord Dyson, who gave the judgment of the court, said that the new CPR 3.9 reflects a deliberate shift of emphasis. The two considerations which were singled out for specific mention in the rule (i.e. the need for litigation to be conducted efficiently and at proportionate cost and the need to enforce compliance) should be regarded as of paramount importance and be given great weight. Although the court still has to consider "all the circumstances of the case", those other circumstances should be given less weight than the two considerations which are specifically mentioned.

The court specifically endorsed comments made by the Master of the Rolls in his 18th implementation lecture on the Jackson reforms, delivered on 22 March 2013, in which he highlighted a shift away from an exclusive focus on doing justice in the individual case:

"The tougher, more robust approach to rule-compliance and relief from sanctions is intended to ensure that justice can be done in the majority of cases. This requires an acknowledgement that the achievement of justice means something different now. Parties can no longer expect indulgence if they fail to comply with their procedural obligations. Those obligations not only serve the purpose of ensuring that they conduct the litigation proportionately in order to ensure their own costs are kept within proportionate bounds. But more importantly they serve the wider public interest of ensuring that other litigants can obtain justice efficiently and proportionately, and that the court enables them to do so."

In giving guidance on how this new approach should be applied in practice, the court said:

• If the non-compliance can properly be regarded as trivial or insignificant, the court will usually grant relief provided that an application is made promptly. Examples include where there has been a failure of form rather than substance, or where a party has narrowly missed a deadline imposed by an order but has otherwise complied fully.
• If the non-compliance cannot be characterised as trivial, then the burden is on the defaulting party to persuade the court to grant relief. If there is a good reason for the default, the court will be likely to grant relief. Examples may include where a party or his solicitor "suffered from a debilitating illness or was involved in an accident", or where later developments show that the original period for compliance was unreasonable. The court emphasised, however, that merely overlooking a deadline, whether on account of overwork or otherwise, is unlikely to be a good reason.
• Applications for an extension of time made before time has expired will be looked upon more favourably than applications for relief from sanction made after the event.

The court described as "misguided" the claimant's attempt to rely on factors to show that the Master should not have ordered the sanction in the first place. An application for relief from a sanction presupposes that the sanction has in principle been properly imposed. If a party wishes to contend that it was not appropriate to make the order, that should be by way of appeal or, exceptionally, by asking the court which imposed the order to vary or revoke it under CPR 3.1(7).

In considering the application for relief in the present case, the Court of Appeal started by re-iterating that it would not lightly interfere with a case management decision. As stated in Mannion v Ginty [2012] EWCA Civ 1667 "… it is vital for the Court of Appeal to uphold robust fair case management decisions made by first instance judges".

Here, the court said, there was no proper basis for interfering with the Master's decision. She did not misdirect herself in any material respect or reach a conclusion that was not open to her. Although the court acknowledged that it was a robust decision, it said the Master was right to focus on the essential elements of the post-Jackson regime, adding:

"The defaults by the claimant's solicitors were not minor or trivial and there was no good excuse for them. They resulted in an abortive costs budgeting hearing and an adjournment which had serious consequences for other litigants. Although it seems harsh in the individual case of Mr Mitchell's claim, if we were to overturn the decision to refuse relief, it is inevitable that the attempt to achieve a change in culture would receive a major setback."