30 Apr 2014
Mitchell v News Group - the full horror show: what will the consequences be?
by Tony Allen
Solicitor, Mediator and Senior Consultant to CEDR
Has fresh panic broken forth among the law firms still with litigation (sorry- dispute resolution) departments in business, after renewing their PII insurance, fighting off the competition from Alternative Business Structures, or revising their relationship with their bank manager and their clients after losing the right to claim 100% success fees from hapless opponents (i.e. insurance companies)? Have they read the judgment in Mitchell v News Group  EWCA Civ 1537, and taken aboard its implications for future litigation work?
The warning is clear. Solicitors must now provide accurate cost budgeting (probably incurring the further expense of a costs lawyer to do the job) a process in which they are also to co-operate with opponents, as well as being subject to court scrutiny. If they fail to lodge it within the time required by the relevant Practice Direction, they may find recoverable costs being limited to court fees and as a result be unable to claim any profit costs at all against their opponent even if they win. A combination of the Court of Appeal judgment and the Master of the Rolls implementation speech (quoted importantly in Mitchell) makes the fierceness of the new regime clear, as well as the breadth of its application.
This is emphatically and wholly judge-made law - or at least judge-made rules of practice. Introducing a rule or an approach to rule enforcement which might deprive a party of a usual remedy is indistinguishable from making law. Also, it derives from a purely judicial initiative. Whilst the Woolf Reports were commissioned by the Lord Chancellor on behalf of the Executive (being answerable to Parliament) , the Jackson reforms were commissioned by Sir Anthony Clarke, then Master of the Rolls, and there has been little positive involvement by the Ministry of Justice with either his reports or their implementation, apart from side-line approval. No Parliamentary debate has been required, and the Rules Committee has wrought all the changes. Explication has largely been by Jackson LJ and the Master of the Rolls themselves in implementation lectures, and a cadre of Court of Appeal judges (including those two) have been nominated to hear all related appeals This has of course intensified the howls of rage from some of the legal profession –a profession which has been consulted but has effectively had the outcomes forced upon them. Of course there is nothing intrinsically wrong in judges regulating the work of their courts, but they have to accept that many have been affected by what has been done and many appear to disapprove. The interesting question is for whose benefit has this all been done? Is it for the benefit of the general litigating public or the court? It certainly does not appear to be regarded as for the benefit of the legal profession, certainly by the profession themselves.
The “philosophical” (jurisprudential?) nub of the change is to be found in paragraph 29 of the 18th implementation speech of Lord Dyson, as quoted by himself in his judgment in Mitchell at paragraph 38. He gave this speech to District Judges a week or so before the Amendment Rules were due to take effect on 1 April 2013, and I confess not to have noted it before now. He discusses the amendments to the overriding objective made in April 2013 (which add the need for proportionate cost and better enforcement of obligations under Rules, Practice Directions and Orders) and says:
The tougher, more robust approach to rule-compliance and relief from sanctions is intended to ensure that justice can be done in the majority of cases. This requires an acknowledgement that the achievement of justice means something different now. Parties can no longer expect indulgence if they fail to comply with their procedural obligations. Those obligations not only serve the purpose of ensuring that they conduct the litigation proportionately in order to ensure their own costs are kept within proportionate bounds. But more importantly they serve the wider public interest of ensuring that other litigants can obtain justice efficiently and proportionately, and that the court enables them to do so.
Lord Dyson asserts that “He asserts that the relationship between justice and procedure has changed”, though he is not entirely clear as to whether this was done by the CPR in 1999 or by the 2013 amendments. He claims that the 2013 changes are needed to clarify the CPR but that they do not extend them , an argument that I find rather hard to follow. He sets this out a little more clearly in para 15 when he says;
Dealing with a case justly does not simply mean ensuring that a decision is reached on the merits [he means, I think, in each particular case]. It is a mistake to assume that it does. Equally, it is a mistaken assumption, which some have made, that the overriding objective of dealing with cases justly does not require the court to manage cases so that no more than proportionate costs are expended. It requires the court to do precisely that; and so far as practicable to achieve the effective and consistent enforcement of compliance with rules, PDs and court orders.
Again, in paragraph 18 he says:
It is easy to see why, not least given the long heritage we have of striving to secure justice on the merits in each case and the intuitive understanding that doing justice is to reach a decision on the merits, mistaken assumptions took hold. This was compounded by the failure to make explicit in the overriding objective that it includes a duty to manage cases so that no more than proportionate costs are incurred and so as to enforce compliance. By making these features explicit the Rule Committee has clarified the meaning of the overriding objective.
As I understand his reasoning, he is saying:
- Dealing with a case” justly” does not mean simply between the parties: it is permitted to measure justice by reference to all court users - both to limited court resources, and to the needs of other litigants to have access to the courts.
- For this reason, stricter enforcement of case management obligations is justified, such directions and rules being intended to allocate no more than a proportionate time to each case, and requiring no more than proportionate cost to be allocated to it, since an excess allocation of time to one case ousts another.
- It is also legitimate to take into account the pressures on the civil justice budget: as Lord Dyson says:
We have limited resources. Demand for those resources outstrips that limit. We have to cut our cloth accordingly. The wider public interest in the proper administration of justice requires us to do so.
“The wider public interest” is the only reference to the intended beneficiaries of this policy. So it is the public, or the parties to litigation (and not their lawyers) whom the courts seem to have in mind as the beneficiaries of this tougher policy.
Part of the problem with all this is that CPR Part 1 as now drawn rather confuses the normal management theory distinctions between aims, objectives and activities. The overriding objective is “ to deal with cases justly and at proportionate cost”. Proportionality is certainly not an “aim” in the strictest sense. It might be an objective or (more likely) an activity to achieve the objective. Furthermore, this may be one of the rare occasions when it would be better to substitute “but” for “and”, as proportionality clearly seeks to qualify and narrow the rather open concept of “justly”.
In any event, Mitchell certainly finds the Court of Appeal baring its teeth. A failure to lodge a costs budget in time (it was six days late, filed just the day before the costs budget hearing) was found both to justify an order limiting the claimant’s costs to court fees, and also to justify the Master’s refusal of relief from that sanction. The Court of Appeal effectively doubted two previous decisions in which judges had given relief. Since then, the Court has followed the Mitchell decision in Durrant v Chief Constable of Avon and Somerset  EWCA Civ 1624, using the same approach to deny the defendants the right to call evidence from witnesses whose statements were disclosed later than ordered in case management directions.
In his entertaining blog, Kerry Underwood suggests that the Court of Appeal has itself taken a more lenient course in another decision – Abercrombie v AGA  EWCA Civ 1148 – which might give hope (and helpful authority) to litigators who need to seek relief. I cannot read that case as doing any such thing. The court granted permission to amend a claim outside a statutory time limit in a claim for guaranteed payments for lay-off, and did not engage with the CPR at all. A footnote in the judgment refers to the 1885 judgment of Bowen LJ in Smith v Cropper which proposes flexibility when doing justice in interlocutory applications. Alas, I think the Court of Appeal will take the same attitude as Lord Dyson took in dismissing the relevance in the 21st century of Lord Esher’s very similar remarks about avoiding injustice in a particular case in Coles v Ravenshear made in 1907. The Court of Appeal is so unswervingly emphatic in Mitchell and Durrant, rightly or wrongly, that we must surely regard the tough regime as a question of settled judicial policy.
How right or wrong is this approach? The Court has expressed hope that once it settles in, the risk of satellite litigation (of the kind precisely exemplified by Mitchell and Durrant) will reduce. I cannot be so hopeful. If a windfall is on offer, potential beneficiaries will push their luck as far as they dare, arguing that a given procedural breach by an opponent is not merely trivial, thus placing a burden on defaulters to excuse themselves from sanction. There is also the risk of increasing professional indemnity claims if lawyers fail to comply in ways that prejudice their clients’ cases, and of defences to procedural attacks being funded up to appeal by professional indemnity insurers. There is also the worry of a large increase in new litigation as between former clients and their negligent solicitors.
The other worry (ironically in the light of the furore over mandatory mediation and Article 6 of the European Convention in Human Rights) is that such an approach will itself be open to challenge as being in contravention of Article 6, by strikings-out denying parties access to the courts. One wonders what the European Court of Human Rights will make of the suggestion that justice will be done under the new regime “in the majority of cases”. What of the (possibly) 49% minority of cases where it will admittedly not be done? In an interesting article in the Civil Justice Quarterly by Dr Shirley Shipman entitled Compulsory Mediation: the Elephant in the Room, she argues that mandatory mediation might well infringe Article 6 of the ECHR after all (despite Lord Dyson’s recantation). I take a different view to some of what she says about mediation (it seems to me incorrect to suggest that “Since the aim of mediation is to settle, and the expectation of the parties is that parties will undertake the process in good faith, the aim of the process is also to preclude access to the court”) – the aim (like any lawful settlement discussion) is to explore the possibility of settlement with the right to return to trial left freely and entirely open. But substitute striking out under CPR 3(9) for mandatory mediation in her article and the point becomes clear.
As I have noted before, the Jackson reforms do little to encourage mediation positively. Possibly they may represent such a deterrent to litigating that parties and their lawyers might choose it before issuing, and I hope that many lawyers will see the attractiveness of doing so before getting entangled with the enormous demands of satisfying the CPR’s new insistence on binding advance costs budgeting, coupled with the fear of serious sanction for noon-compliance. But surely now that the admission has been made that finite judicial resources are a legitimate consideration, the time has also come for judges to accommodate mediation as a proper bed-fellow to litigation, and one in which parties are expected to engage unless there is very good reason to the contrary, with the burden of proving this lying with the refusing party. This approach begins to emerge in Briggs LJ’s judgment in PGF v OFMS, placing the responsibility for considering and managing mediation in the shoulders of lawyers and their clients beforetroubling the court to make ADR Orders, while warning parties reluctant to mediate when before the court that they must justify their reluctance cogently of they are to avoid a costs sanction even if they prove to be the technical winner of the litigation.
 CJQ Vol 30(2) 2011 p.163