Prior to the implementation of the Jackson reforms on 1 April 2013, discussion about the potential effects was focussed firmly on the changes to the rules governing litigation funding and costs management in general. However, it is the reforms to the courts’ case management powers that have already brought about fundamental changes, the serious consequences of which have forced litigators to sit up and pay attention.
Fundamentally, the overriding objective set out in CPR 1.1. has been modified. A key part of this change is the addition of subparagraph (f) to CPR 1.1(2). This provides that the courts must, when dealing with cases, ensure that they “enforce compliance with rules, practice directions and orders”.
Nowhere is this clearer than CPR 3.9, the rule which governs relief from sanctions. Previously, the rule required the court to consider all the circumstances of the case and provided a long check list of considerations which included factors such as whether the application for relief has been made promptly and whether there was a good explanation for the failure. That check list has now been brushed away and replaced by the following:
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 a 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.
The New Approach
In his report, Jackson LJ stated that “...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 on the civil justice system. The balance therefore needs to be redressed.”
And even before 1 April 2013, there were judgments in the Court of Appeal which suggested that the time had come for change. The prime example being the judgment of Jackson LJ himself in Fred Perry (Holdings) Ltd v Brands Plaza Trading Ltd (2012):
“Non-compliance with the CPR and orders of the court on the scale that has occurred in this case cannot possibly be tolerated. Any further grant of indulgence to the defendants in this case would be a denial of justice to the claimants and a denial of justice to other litigants whose cases await resolution by the court… I should however draw attention to the forthcoming amendments to rule 3.9 . There is a concern that relief against sanctions is being granted too readily at the present time. Such a culture of delay and non-compliance is injurious to the civil justice system and to litigants generally.
The message was being sent out loud and clear and it did not take long for other judges to take the baton and run with it.
Venulum Property Investments Ltd v Space Architecture and others (2013) was the first case to consider the consequences of missed deadlines under the new rules. The case involved a dispute which had arisen out of a contractual dispute over a property regeneration scheme. Despite becoming aware of its potential loss in February 2007, the claimant, for reasons which were not explained, did not instruct solicitors until September 2012. The claim form was finally issued in November 2012 and ultimately served on the very last day for service permitted by CPR 7.5(1). The claimant’s solicitors did not serve the particulars of claim at the same time as they wrongly believed, based on a mistaken reading of CPR 7.4(1) and (2), that they had a further 14 days to do so. The claimant applied for an extension.
The Hon. Mr Justice Edwards-Stuart refused the claimant’s application, stating that he considered the addition of sub-paragraph (f) to the overriding objective to mean that the court must take a more robust approach when exercising its discretion in this regard. In conclusion, he stated:
“In my judgment, when the circumstances are considered as a whole, particularly in light of the stricter approach that must now be taken by the courts towards those who fail to comply with rules following the new changes to the CPR, this is a case where the court should refuse permission to extend time.”
The cases immediately after Verulum have followed this stricter approach. In Fons HF v Corporal Ltd and another (2013), HHJ Pelling QC made it clear that he had come “very close” to refusing the defendant an extension of time for service of witness statements. The judge granted an extension until 4pm the next day with an accompanying order warning that failure to comply would result in a bar from relying on the evidence at trial. He added that “all parties and the wider litigation world should be aware that all courts at all levels are now required to take a very much stricter view of the failure... to comply with directions.”
In Biffa Waste Services v Ali Dinler & Ors (2013), the claimant’s solicitors, already facing an ‘unless’ order, filed witness statements 27 days late. They had also failed to file a pre-trial checklist and had not engaged in attempts to agree the contents of a bundle until the day before trial. However, the district judge rejected the defendant’s application to strike out the claim, preferring instead to apply costs sanctions. The defendants successfully appealed. Mrs Justice Swift held that there had been a flagrant disregard of court orders by the claimant and that the judge had erred in granting relief from sanctions. The decision was overturned and the claimant’s claim was struck out.
However, against this backdrop of a more robust approach, there have been some cases in which the judiciary have been seen to be somewhat more lenient. In Rayyan Al Iraq Co Ltd v Trans Victory Marine Inc (2013), Mr Justice Andrew Smith noted the change in attitude did not mean that relief should be refused where it would be disproportionate to do so or give an unjustified windfall to the opponent.
In Re Atrium Training Services Ltd and Connor Williams Ltd (2013), the applicants applied for a fifth extension of time for disclosure. Since the previous extension, they had appointed new solicitors who had essentially had to restart the disclosure process. The judge granted the extension on strict ‘unless’ terms that the claim would be struck out if the applicants failed to comply. Whilst stating that the court “must firmly discourage any easy assumption that an extension of time will be granted if it would not involve any obvious prejudice to the other side”, he also stressed that it was important “not to go to the other extreme, and not to encourage unreasonable opposition to extensions which are applied for in time and which involve no significant fresh prejudice to the other parties.”
Mitchell v News Group Newspapers Ltd (2013)
At the end of November 2013, the true impact of the Jackson reforms was made explicitly clear by the Court of Appeal when it handed down its judgment in Andrew Mitchell MP v News Group Newspapers Ltd (2013) – the first significant appellate decision enforcing the new approach brought about by the Jackson reforms.
The underlying claim was a libel action brought by Mr Mitchell against The Sun newspaper for its coverage of the “Plebgate” scandal in late 2012. Mr Mitchell’s solicitors failed to lodge a costs budget until the day before the CMC and only did so after being chased by the defendants’ solicitors and by the Master. Because of this failure, Master McCloud held that the claimant was to be treated as having filed a costs budget comprising only court fees. The costs budget actually filed by his solicitors was in the sum of £506,425. She subsequently refused to grant relief under CPR 3.9 from her first decision.
This decision is sober reading for those who doubt the court’s marked determination to punish failures to comply with orders, rules and practice directions. This, she said, is “at the very least a significant shift of emphasis towards treating the wider effectiveness of court management and resources as part of justice itself”.
The subsequent appeal, which was fast-tracked straight to the Court of Appeal given its importance, was forcefully dismissed. The Court of Appeal said:
“The defaults by the claimant’s solicitors were not minor or trivial and there was no good excuse for them... 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. In the result, we hope that our decision will send out a clear message. If it does, we are confident that, in time, legal representatives will become more efficient and will routinely comply with rules, practice directions and orders.”
What This Means for Practitioners
If some of the cases prior to Mitchell had given the impression that courts may be prepared to take a more lenient approach with parties that fail to comply with the rules, there is unlikely to be any doubt on this matter now.
Mitchell has set new and very clear standards which parties – and indeed their solicitors – will be expected to meet.
Whilst the decision to promote compliance and, in turn, to make the judicial system more cost-effective, is certainly one to be praised, it is inevitable that these long terms goals will not be achieved without causing some casualties along the way.
There will be far less tolerance of non-compliance or delays and practitioners should ensure that they do not fall foul of this new approach because, as we have seen in Mitchell, the penalty for doing so is likely to be severe.