28 November 2013Print This Post

Mitchell costs ruling – the reaction

Ellis: wriggle room is now extremely narrow

Yesterday’s Mitchell costs ruling received a hostile reaction from many lawyers, with warnings of a return to tactical litigation, more satellite litigation, and a knock-on effect on firms’ professional indemnity insurance.

Others focused on the clarity of the message that the courts will need considerable persuasion to grant relief from sanctions for failures to comply with rules, orders or directions, and that solicitors need to get their houses in order to avoid getting themselves into the situation in the first place.

Nick Bacon QC of 4 New Square – who together with Roger Mallalieu represented the successful defendant in Mitchell (instructed by Louis Charalambous at Simons Muirhead & Burton) – told Litigation Futures that “we are on a one-way ticket to Singapore” – a reference to the no-nonsense Singaporean approach to compliance with rules and directions after its own Jackson-style reforms.

“Expect turbulence on the way,” Mr Bacon continued. “There will be casualties in the short term. Solicitors will have to improve case management systems and up their game on meeting deadlines.” The “journey time” would be two to three years, and litigators should “expect no further delays”.

Andy Ellis, managing director of costs firm Practico, which also acted for the defendant, said: “This decision will have come as less of a surprise to anyone who was in court for the appeal hearing and was able to gauge the mood music.

“The position of the claimant was not helped by the absence of evidence as to any prejudice he may have suffered as a result of the refusal to grant relief. It was also evident that mere inadvertence or pressure of work – unkindly described by some as ‘the dog ate my homework’ form of excuse – will not get you home when seeking relief from sanctions.”

He emphasised that the new culture is not zero tolerance – the court was clear that it is not concerned with trivial breaches. “But the wriggle room is now extremely narrow when delay will result and especially if the court is inconvenienced.”

Mr Ellis added: “It is also telling that the first major decision that will help shape the administration of civil justice post-Jackson concerned compliance with costs management. There have been whispers that the courts’ commitment to budgeting might be waning – Mitchell shows that this is far from the case.”

Murray Heining, chairman of the Association of Costs Lawyers, said having firm guidance on how courts should approach breaches of orders and rules is “surely welcome”.

“This a judgment that will give Ethelred the unready-type lawyers sleepless nights. Those lawyers working with a team of experts, including costs lawyers, should sleep more comfortably.

“The court expressed hope that the decision would send out a clear message to litigators. Those practising in civil litigation, if they have not already reviewed their practices and procedures, must do so now and ensure that they have the resources to ensure compliance with the CPR and all orders made. They must also ensure that they have the resources to meet procedural obligations.”

Rod Evans, the president of the Forum of Insurance Lawyers, said that while many will understand “the positive reasons why such a robust approach has been adopted, this may well mark a retrograde step in personal injury litigation”.

He explained: “For years we have been encouraged to adopt a ‘cards on the table’ approach to litigation and to work sensibly together to resolve the matter as soon as possible at proportionate cost.

“The Court of Appeal’s (almost) zero tolerance to delay will mark a return to the tactical litigation that had reduced significantly, certainly in the most serious cases. I have no doubt that parties will now be tempted to try and catch each other out. In particular, this decision reinforces the advantages to the claimant of frontloading a case prior to issue and then forcing the defendant on the back foot with strict timetables.

“This decision will also encourage opposed applications rather than consent orders, which may well negate the Court of Appeal’s desire to avoid satellite litigation. This will make Mr Justice Ramsay’s review of pre-issue conduct next year even more important.”

Francesca Kaye, president of London Solicitors Litigation Association, agreed that the assertion strict adherence to the rules would stem a rise in satellite litigation was “questionable”. She said: “There’s every chance that there will be a great deal of satellite litigation around professional negligence claims. So, we may simply be moving the problem not eliminating it.”

Sue Nash, founder of Litigation Costs Services, argued that whilst the sanction itself was Draconian, “the reasoning behind the first instance judgment was sound – Master McCloud made reference to the Master of the Rolls’ 18th lecture in the implementation programme of the Jackson reforms, in which he highlighted ‘the need to further the proper administration of justice, where that goes beyond the interests of the immediate parties’.

“Whether this judgment sees a knock-on effect in terms of paving the way for more professional negligence claims brought against solicitors who make costs budgeting errors remains to be seen.”

Certainly James Field of Triton Legal thought it would do. “Negligence claims can be expected to be for bigger amounts than before,” he said. “Previously, the quantum of negligence claims relating to procedural errors were often restricted to the limited cost of a court application to put matters right. From now on lawyers and their insurers can expect to pay more in compensation for negligence claims arising out of litigation errors.

“How will this impact on insurance brokers and insurers? It may be that the Mitchell decision will make firms with a litigation department a less attractive risk. Firms could see their insurance premiums increase from next renewal to reflect this.

“It may be that a litigation firm’s diary systems will be under even more scrutiny than before from insurers, and brokers may face difficulty placing insurance for firms whose systems are not sufficiently robust. While most firms are now pretty good at keeping track of key dates such as expiry of limitation or deadlines for service, an equally rigorous approach will now be vital for all other deadlines and procedural steps in litigation.”

 

By Neil Rose


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