High Court wrong to say that Mitchell applies to default judgments, says costs judge

Service by e-mail: PD is good practice, not a requirement

The High Court erred in ruling that the Mitchell guidance applies to default judgments, a costs judge has suggested.

Master O’Hare also ruled that the practice direction governing service by e-mail is largely historic, meaning that the requirement to first ask the party who is to be served whether there are any limitations to their agreement need not be followed.

At the heart of the dispute in Brett v Colchester Hospital University NHS Foundation Trust [2014] EWHC B17 (Costs) was the giving of a notice of change by the defendant from the solicitors who conducted the case (Kennedys) to the costs lawyer conducting the costs proceedings, Ken Corness of Acumension.

Mr Corness said he gave a valid notice of change by e-mail before the bill was served and when the claimant went on to serve the bill at the former address for service, it was acting irregularly and that affected the default costs certificate it later obtained.

The claimant’s solicitors, Gadsby Wicks, said the notice was not received, but admitted that it had had problems with its e-mail address. It nonetheless argued that there had been a failure to comply with paragraph 4.2 of practice direction 6A, which says that a person intending to effect service by e-mail must “first ask the party who is to be served whether there are any limitations to the recipient’s agreement” to accept service by e-mail.

Acumension argued that it had regularly served documents on Gadsby Wicks and on solicitors in other cases, and no complaints about non-­compliance with paragraph 4.2 had ever been raised before. Further, Acumension had never received any phone calls from anyone about its own ability to accept service by e-mail.

The issue was actually the problem the claimant’s solicitors were having with their e-mail address, the defendant insisted.

Master O’Hare agreed and said the service was valid. He ruled that a telephone call pursuant to paragraph 4.2 is a recommendation of good practice only, not a pre-requisite, and in any case was “of historic interest only”. It dated back to a time when the court’s own preferred method of electronic delivery was WordPerfect, when few solicitors used that programme. Similarly there are no problems with limitations on file size anymore.

Master O’Hare said that if he were wrong, that would mean the default costs certificate was regularly obtained and he should consider whether to set it aside or vary it under rule 47.12(2), which allows it if there is “some good reason why the detailed assessment proceedings should continue”.

The parties disagreed on whether the Mitchell guidance applied to default judgments, and though Mr Justice Silber in Samara v MBI & Partners ruled that it does, Master O’Hare suggested that the judge had failed to spot “the difference in wording which applies in default judgment rules to the wording which applies to CPR rule 3.9”.

He said: “The Mitchell doctrine requires us to refuse relief from sanctions unless some good reason for the breach is shown or unless the breach is trivial. The default judgment rules look at something different. Under those rules, the question to be asked, if there has been a failure to lodge an acknowledgement of service, a defence, or, as in this case points of dispute, is there a good reason for the case continuing?

“I think there is a difference in the approach I should take because of that difference in wording. That difference in wording is relevant because a failure to serve a document on time which leads to a default judgment or a default costs certificate ordinarily has no effect on other court users except the parties themselves.

“Of course, those parties may have a dispute about its consequences and may come to the court to resolve that dispute, as these parties have done in this case. However, the fact that this court is here to resolve disputes between parties is not, by itself, a reason for saying, ‘You are in breach. You have caused another court hearing to occur and therefore the court should deal with you robustly’. I do not think that is the approach I should take.”

He also took succour from the Court of Appeal’s ruling last year in Henry, and added that where a claimant makes mistakes at the outset, it can issue a new claim form; a defendant does not have that option and so “they should not find the court taking a harsh attitude to forgiveness of those mistakes”.

Master O’Hare added that if he was wrong on this as well, then he would grant relief from sanctions as it was the problems of reception by the claimant, rather than the defendant’s failure to call, which had caused the problem, meaning the breach was insignificant.

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