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The effect of Mitchell on litigation lawyers and their clients

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Mitchell v Newsgroup Newspapers Limited [2013] EWCA Civ 1537 concerned a libel action by former government minister, Andrew Mitchell against The Sun newspaper.

The Sun newspaper which reported that Mitchell had called police officers at the entrance to Downing Street “f***ing plebs”.  For litigation lawyers, Mitchell has become synonymous not with the politically charged libel case, but its impact on the litigation process.

The question on appeal was how strictly the Court should enforce compliance with rules, Practice Directions and Court Orders. The traditional approach was to excuse non-compliance if any prejudice caused by the other party could be remedied, usually by an appropriate Order for costs.

In his review of the rules, Sir Rupert Jackson concluded a tougher, less forgiving approach was required and his recommendations were incorporated into the Civil Procedure Rules.  One of the reforms was to introduce a requirement for parties to file costs budgets, to allow the Court to control the costs of litigation before they are incurred, with a requirement to file a budget not less than 7 clear days before the case management hearing.  The new rules provided an automatic sanction for late filing of the budget. In this case, Mr Mitchell’s solicitors filed his budget figure of £589,558.00 on the afternoon of the day before the hearing.

Master McCloud ruled that there were “really no adequate excuses for this breach”. She ordered that Mr Mitchell’s solicitors be treated as having filed a budget comprising only the applicable Court fees, so that Mr Mitchell would not recover his legal costs (other than Court fees) even if successful.

On an application for relief from any sanction the Court will consider all the circumstances of the case so as to enable to deal with the application justly including the need (a) for litigation to be conducted efficiently and at proportionate costs; and (b) to enforce compliance with rules, practice directions and Orders. This is stricter than the previous test which included a list of factors which the Court should consider including whether the failure to comply was intentional, whether failure to comply was caused by the party or his legal representatives and the effect which the failure to comply had on each party. On 25 July 2014 the Master heard and refused the Claimant’s application for relief from the sanction imposed on 18 June 2013.

The Court of Appeal issued its judgment on 7 November 2013, saying that if the non-compliance cannot be characterised as “trivial”, then the burden is on the defaulting party to persuade the court to grant relief. The party or his solicitor suffering from a debilitating illness or being involved in an accident might be a good reason. Overlooking a deadline, whether on account of overwork or otherwise, was unlikely to be a good reason. The Court stated that the new more robust approach that it had outlined would mean that from now on relief from sanctions should be granted more sparingly than previously.

The Court’s belief that its decision would result in a culture change was correct, but perhaps not in the way it intended. Its effect was felt throughout litigation where compliance with rules or orders or relief from sanction was at issue.  The decision was widely criticised as unjust, disproportionate and creating satellite litigation as parties were incentivised to refuse extensions of time, actively oppose applications for relief even in less serious cases and generally to be uncooperative in the hope of a windfall if an opponent tripped up. It seemed inevitable that Mitchell would lead to an increased number of professional negligence claims against lawyers and a rise in their insurance premiums.

Following this widespread criticism, the Court of Appeal issued its decision in July 2014 in Denton v TH White Limited [2014] EWCA Civ 906 at the same time as two related appeals. The Court of Appeal said that Mitchell had been misunderstood and misapplied by some Courts. Denton introduced a new three stage test for the Court to apply in all applications for relief from sanction going forward.

  1. Identify the seriousness of the breach.  Was it “serious or significant”?
  2. If it was, why did the default occur?
  3. The Court should consider all the circumstances of the case to deal with the application “justly” including (a) the need for litigation to be conducted efficiently and at proportionate cost (b) the need to enforce compliance with rules, directions and Court Orders.

This test introduces arguably more flexibility and discretion into whether the Court grants relief.  In doing so, the Court issued a number of warnings to litigants and to their lawyers to cooperate to agree requests for relief from sanctions where the failure is neither serious nor significant, where there is good reason or it is otherwise obvious that relief is appropriate.  Contested applications for relief, the Court said, should be exceptional. Parties should agree limited but reasonable requests for time extensions up to 28 days and not to take advantage of opponents’ mistakes and try to obtain advantage.

The risk of high losses for small mistakes has been significantly reduced by Denton, which will come as relief to lawyers and their professional indemnity insurers.  However, some effects of Mitchell are likely to remain. In order not to fall foul of deadlines, there was even greater front loading of work. Litigants should expect their lawyers to continue to ask them for more information, earlier in the litigation process. As regards co-operation, the Court’s warning was a stern one, but where the prospects of obtaining relief are not clear cut, deeper pocketed litigants may still oppose applications for relief in the hope of achieving a heavy sanction.

If you have any questions please contact litigation partner Simon Young on 0113 222 3206 or John Mackle on 0113 336 3336. 

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