What comes first – Mitchell ruling or part 36?

Havenhand: major cultural change for the district judges

The questions raised by the Mitchell ruling, such as the effect on a part 36 offer of a budget being disallowed, are already emerging as the impact of the Court of Appeal’s decision is felt.

Barrister Barry Havenhand of Clerksroom has supplied Litigation Futures with details of one case where the failure to file a budget in sufficient time saw the defendant’s budget restricted to its court fees, as in Mitchell.

On 2 December he was representing the claimant at a telephone case management conference (CMC) in a county court case which had already been allocated to the multi-track. It was the first CMC, meaning the parties needed to file their Precedent H costs budgets.

The claimant’s budget was filed on 22 November, but the defendant did not file theirs until 29 November.

Near the end of the hearing, which mainly dealt with directions, Mr Havenhand raised the issue of when the budgets were filed and sought an order that the defendant should get no costs, other than court fees.

According to Mr Havenhand, the deputy district judge asked his opponent – a trainee – for her comments; she said her principal had not told her about this, and went on to say that they had not known they needed to file a budget, and had only done so when they received the budget from the claimant.

“As the judge remarked, when duly making the order I sought, that probably scuppered any chance of an appeal,” he reported.

However, in this case, the sting for the defendant was effectively removed, because it had already admitted liability and so was not going to get its costs anyway. “But what part 36 offers?” he asked.

“If they make an early offer which the claimant rejects, goes to trial and fails to beat, does the defendant get costs from the expiry of the offer period, under the part 36 procedure, or does the Mitchell costs order take precedence, meaning the defendant can never get their costs? If so, does that not undermine part 36?”

More broadly Mr Havenhand questioned how district judges will apply Mitchell on a day to day basis.

“District judges are used to doing ‘justice’ by applying a combination of rules and flexible common sense, to achieve the right result in individual cases. The DDJ in my case had no problem in applying a rigid rule, in relation to an unimportant error, despite the potential consequences – but it is a major cultural change for the district judges, and some may be resistant.”

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