Loud and clear: are litigators getting the message a year after Jackson?

Lord Dyson's ruling in Mitchell v NGN was intended to "send out a clear message" about how robustly the courts would enforce the civil justice reforms.

While the message of compliance was loud and clear, further case law was required to clarify the circumstances in which relief would be granted. There followed a flurry of cases which provided both clarification and confusion in equal measure.

So, on the eve of the first anniversary of the Jackson reforms and four months on from the Court of Appeal ruling in Mitchell, where do we stand and when can a litigant expect relief from sanction?

As a primary point, the paramount considerations for relief, as stated at CPR 3.9, are"(a) for litigation to be conducted efficiently and at proportionate cost; and (b) to enforce compliance with rules, practice directions and orders."

The court in Mitchell provided that "the sanction will usually apply unless (i) the breach is trivial or (ii) there is a good reason for it".

TRIVIALITY

According to the ruling in Mitchell, "the principle 'de minimis non curat lex' applies here… the court will usually grant relief if there has been a no more than insignificant failure to comply with an order; for example, when there has been a failure of form rather than of substance; or where the party has narrowly missed a deadline imposed by the order, but has otherwise fully complied with its terms".

Burt v Christie (10 February 2014) is an example where relief was refused for a minor delay. This was a case where form N149C was silent so the defendant attempted to file its costs budget in compliance with the CPR. However the budget was filed seven days, and not seven clear days, before the case management conference (CMC). It was held that the breach was not trivial. The court considered the day’s delay together with various other circumstances including the efficient conduct of the litigation. In the court’s opinion, the parties had not had time to contemplate each others’ budgets and much of the CMC was taken up discussing the application.

District Judge Lumb also cited “Vinos v Marks & Spencer plc where the Court of Appeal stated their often repeated mantra that anyone who leaves matters to the last minute and gets it wrong have only themselves to blame” thereby forcing the party in default to rely on ‘good reason’.

Conversely, in Aldington v ELS International Lawyers [2013] EWHC B29, the parameters of trivial seem to have been stretched to the limit. In this case, particulars of claim were provided 14 days late, in breach of an order. The court considered "whether the failure was significant or insignificant having regard to the consequences of the case" and decided that there were no adverse consequences at all to the efficient conduct of the litigation.

Most recently, however, in Lakatamia Shipping v Nobu Su [2014] EWCH 275 (which seems most consistent with Mitchell) the defendant missed a disclosure deadline by 46 minutes. Mr Justice Hamblen held that narrowly missing a deadline was "a circumstance which … Mitchell expressly contemplated as being de minimis and usually deserving of relief from sanctions", particularly given that the application was made promptly. The fact that the defendant was ready to serve within 15 minutes was considered by the judge. He seemed to indicate that the claimant's decision to withhold its disclosure weakened its opposition to the application for relief. He also considered any prejudice caused to the claimant as the triviality of the non-compliance "is also borne out by its effect" but felt that none was caused. This case however is more favourable to defaulting parties than Mitchell as it created a presumption in favour of relief being granted unless "compelling" reasons are given.

Further, in response to the claimant's assertion that the disclosure list was defective, and thus the default is turned in to a serious breach, Mr Justice Hamblen concluded that the court was unlikely to make a finding of breach or non-compliance with a disclosure direction unless it can be said that the defective list was somehow illusory or submitted in bad faith.

There was discussion on breach of form as against breach of substance in Bank of Ireland v Philip Pank Partnership [2014] EWHC 284 where a claimant failed to provide a proper statement of truth when it filed its costs budget and instead signed under the words "Statement of Truth". The court hearing the application for relief from sanctions concluded that the budget was merely irregularly signed; there was no breach by the claimant and thus no need for relief. In any event, if relief had been needed then it would have been granted, as this was a failing of form rather than substance.

A similar point was addressed Forstater v Python (Monty) Pictures [2013] EWHC 3759 where a letter providing details of a conditional-fee agreement (CFA) was filed instead of a form. In that case relief was granted as the default was held to be a breach of form and thus trivial. The court in this case also had regard to the impact on the conduct of litigation.

GOOD REASON

The court in Mitchell held that "if the non-compliance cannot be characterised as trivial, then the burden is on the defaulting party to persuade the court to grant relief. The court will want to consider why the default occurred. If there is a good reason for it, the court will be likely to decide that relief should be granted". Illness or accident were considered good reasons but it would depend on the circumstances.

In Nelson v Circle Thirty Three Housing Trust [2014] EWCA Civ 106, the claimant was late in providing documents she was required to disclose under an unless order. Relief was granted for "good reason" since the failing was that of the bank holding the information and not the claimant.

In Aldington v ELS International Lawyers [2013] EWHC B29, although the judge found that the non-compliance was trivial, he nevertheless decided that he would have granted relief on the grounds of good reason. He considered that the holiday arrangements of the missing claimants were not in the solicitor's control and were therefore a good reason. We consider that this does stretch the boundaries of "good reasons" and Mitchell expressly states that good reasons will be outside of the "control of the party in default".

In Newland Shipping v Toba Trading [2014] EWHC 210, the court provided that non-compliance for inadequate disclosure and failure to provide witness statements was serious. The loss of legal representation was not considered to be a good reason as the defendant had every opportunity to avoid it or plan around the situation. The court held that any difficulties arose because of the foreseeable consequences of the defendant not being prepared to pay its solicitor's fees. Relief from sanctions was refused.

TAKING PROCEDURAL POINTS

The implications of Mitchell are clearly draconian and, as the Court of Appeal accepted, very harsh.

With the courts' strict approach to compliance, non-defaulting parties found themselves in a position where they may have felt that in not taking procedural points perhaps they were not acting in the best interests of their clients. Recently however, the High Court has hit back.

Rattan v UBS AG [2014] EWCH 665 sought to enforce the message that "the commercial court will firmly discourage the taking of futile and time wasting procedural points". The case concerned (what the defaulting party considered) an agreement that costs budget be filed by a certain date which was six clear days and not seven clear days (as required by the CPR) before the CMC. The judge considered that there had been an agreement and found in favour of the defaulting party.

In Summit Navigation and Ors v Generali Raminai Asigurare Resigurare, the court held that "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". Therefore, in order to best comply with case law and their duty to their client, solicitors may wish to put themselves in a position where they are not forced to take procedural points. One way of getting around this is to add a degree of flexibility into orders allowing for directions to be varied by small margins by agreement to ensure that litigation is conducted in compliance with the reforms and in the spirit of the overriding objective.

 

BLACK AND WHITE AND GREY What we know • It is clear that where a breach results in prejudice to another party, to the court or prejudices the conduct of litigation (say, a trial date), then the courts will impose sanctions and are unlikely to grant relief. • In cases of default the opponent should still attempt as far as possible to comply with the rules, practice directions and/or orders. • To maximise their prospects of obtaining relief parties should make an application promptly and act proactively. • The history of default may be a relevant general circumstance to take into account but it does not affect thecharacterisation of the relevant non-compliance or metamorphose a trivial default into a serious default. • It is likely to be inappropriate to give consideration to the circumstances set out in the previous wording of CPR r.3.9. • The commercial court will firmly discourage the taking of futile and time wasting procedural points. Grey areas • Applications for relief from sanctions are continue to entail a degree of judicial discretion in the consistency of application of Mitchell. • There will be cases with particular facts where it may be more difficult to predict the outcome of an application for relief. For example, in Lakatamia it was indicated that a delay measured in minutes rather than hours would be trivial, but there was no clarity on when a period of time is no longer considered trivial.

 

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Eleanor Kilner is a solicitor at Weightmans

www.weightmans.com

 

 

 

 

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