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Defendants who ‘stood Mitchell on its head’ must pay costs

High Court hits back after attempt to get 'free ride' following missed deadline

25 February 2014

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The High Court has warned defendants against relying on Mitchell to launch 'unreasonable' opposition to minor timetable changes, ignoring their duty to co-operate and reduce the cost of litigation.

Mr Justice Leggatt was ruling in a case involving a dispute over a marine insurance policy. The claim was stayed when the claimants failed to provide security for costs until the morning after the deadline.

Leggatt J said the defendants' conduct in refusing to agree to lift the stay was "unreasonable" and arguments that the claimants' default was material were "without merit".

He went on: "The defendants' stance disregarded the duty of the parties and their representatives to cooperate with each other in the conduct of proceedings and the need for litigation to be conducted efficiently and at proportionate cost. It stood Mitchell on its head."

Giving judgment in Summit Navigation and others v Generali Romania Asigurare Reasigurare [2014] EWHC398 (Comm), the judge said: "The defendants seem to have viewed their opposition to the stay being lifted as a potentially free ride whereby, if successful, they would obtain a fortuitous dismissal of the claim without a trial and, if unsuccessful, would still have their costs paid by the claimants as the defaulting party. It is important to discourage that approach.

"Quite apart from the fact that the claimants are the successful party, I think it right that the order for costs should reflect the defendants' unreasonable conduct in refusing to agree to the stay being lifted and the waste of time and money which that entailed."

Leggatt J granted the claimants' application for an order to lift the stay of the proceedings and dismissed the defendants' application for an order continuing it. Save for the issue costs, he ordered the defendants to pay the claimants' costs of both applications.

He said the reason for an "otherwise unnecessary hearing", which required the action to be re-timetabled, was not the claimants' failure to provide security for costs on time, but the defendants' response.

"Even if I had not concluded that the default can properly be characterised as 'trivial' or due to a sufficiently good reason, I would still have considered it just to grant the relief sought in this case.

"The fact that the claimants missed the deadline for putting up security for costs by a day did not in itself have any impact on the efficient conduct of these proceedings, nor on the wider public interest of ensuring that litigants can obtain justice efficiently and proportionately.

James Watthey, barrister at Hardwicke Chambers represented Summit Navigation.

He said the judgment was "likely to be met with relief amongst solicitors and copied by other High Court judges", keen to distinguish Mitchell on the basis that the sanction in question is of a different and less harsh nature.

"If litigants think that they can hitch a 'free ride', as the judge put it, on the back of their opponent narrowly missing a deadline, they are wrong," Watthey said.

"In all forums, but particularly the Commercial Court, parties are expected to work together to ensure that litigation is conducted efficiently and at proportionate cost."

Watthey said that if anyone thought that Mitchell meant they could "cry foul and sit back while a trial timetable was wholly derailed", they were wrong.

"The importance of these High Court judgments cannot be overestimated. Daily, at the coal face of litigation in the county court, the junior judiciary is refusing applications for relief in circumstances where the result produces a clear injustice between the parties, despite the lack of any real countervailing imperative."

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