Tread carefully

Andrew Mitchell could not have contemplated, when taking his case to the Court of Appeal (Mitchell v News Group), that his name would give rise to the verbs ‘Mitchelled’ and ‘Mitchelling’.

Mitchell was denied his costs, despite his win, because his solicitors had failed to lodge a costs budget seven days before the hearing. The effect has been chilling. Practitioners are now Mitchelling or being Mitchelled across the litigation landscape.

Why the concern, you may ask? Well, as was made clear in Mitchell and a string of subsequent Court of Appeal decisions, the court will no longer treat delay and failure to comply with orders, rules and practice directions with the leniency it once did.

Litigators are now faced with the risk of ‘procedural forfeiture’ where –but for compliance with a rule, order or practice direction – the case may be dismissed or so severely compromised that it is lost.

The broad position now is:

• The courts will take a robust approach to breaches of court orders, a rule or practice direction unless the breach is de minimis
  or trivial.

• In circumstances where the breach is not trivial, the burden is on the defaulting party to persuade the court to grant relief. Relief will only be granted if there is a ‘good reason’ for the default. Good reasons may be that the party or the solicitor suffered an accident or a debilitating illness (question: what amounts to ‘debilitating’?) or because of developments in the litigation.

• If a breach is anticipated, you should make a pre-emptive application to seek the other side’s and the court’s agreement to an extension. If this is not possible, the application must be made immediately or as expeditiously as possible after the default has occurred. Extensive delay in making an application will not
  be accepted.

• The absence of any prejudice to the non-defaulting party is now immaterial. Previously a defaulting party could rely on the ‘it doesn’t really matter because it causes no harm of the other side’ as an excuse; that excuse no longer washes.

A recent example of a case my firm dealt with illustrates the new attitude and its severity. The matter concerned our client seeking reasonable provision from the deceased’s estate under the Inheritance (Provision for Family & Dependants) Act 1975.

During the case, the court made an unless order of its own motion requiring the defendants to comply with an earlier order to file and serve a statement of case (alleging misappropriation of the deceased’s monies) by a certain date, failing which the defendants would be debarred from defending that particular claim.

The deadline came and went without sight or service of the statement of claim and an application, pursuant to the Mitchell guidelines, to debar the defendants from pursuing the case was issued. The court made the application.

Having successfully debarred the defendants from pursuing a claim, itself a defensive play on their part against our client’s claim, we achieved a significant tactical advantage. It put the defendants on the back foot: their case was lost and they suffered a costs order against them. Further, at a subsequent mediation, they lost all appetite to continue and defend the case. They effectively accepted the client’s claim in full.

It is critically important to adjust
to the new litigation landscape, the reality of which is with us. There are many cases where a clear tactical advantage can be gained for those parties who are in control of the litigation, and where the other party is in default and that default is non-trivial.

For any party who is in default,
the message is clear: act fast to remedy the default, and you had better have
a good excuse. 

Lloyd Junor is a senior associate at Thomas Eggar

He writes the regular in-practice article on wealth structuring for Private Client Adviser