Where a claimant failed to file a costs budget by the required date, the court (Master McCloud) ordered that the claimant should be treated as having filed a budget limited to court fees, and refused the claimant’s application to grant relief from that sanction: Andrew Mitchell MP v News Group Newspapers Limited  EWHC 2179 and 2355 (QB). Subject to any appeal (for which the Master gave permission) the result is that if the claimant succeeds in the action he will not be able to recover any of his other legal costs, unless he persuades the court that there is “good reason” to depart from the budget.
This continues the recent trend of decisions taking a very strict line where parties have failed to comply with rules and court orders, both in relation to the costs budgeting regime (which may shortly be expanded to larger commercial cases – see post) and more generally.
The underlying case is a defamation action brought by the former chief whip relating to The Sun newspaper’s reporting of the so-called “plebgate” affair. The case was proceeding under the pilot costs management scheme which applied to defamation cases before 1 April 2013. Similar procedures have now been implemented more widely as part of the Jackson reforms (see here for more information).
Both the pilot scheme and the new rules require parties to file and exchange costs budgets not less than seven days before the relevant hearing (normally the first case management conference). The new rules also provide (at CPR 3.14): “Unless the court otherwise orders, any party which fails to file a budget despite being required to do so will be treated as having filed a budget comprising only the applicable court fees.” There is no equivalent provision under the pilot scheme rules.
Two other recent amendments to the CPR implementing the Jackson reforms from 1 April 2013 are relevant (see here for more information):
- An amendment to CPR 3.9 replacing the previous list of nine factors the court had to consider on an application for relief from sanctions with a statement that the court must consider: “all the circumstances of the case, so as to enable it to deal justly with the application, including the need – (a) for litigation to be conducted efficiently and at proportionate cost; and (b) to enforce compliance with rules, practice directions and orders”; and
- An amendment to the “overriding objective” at CPR 1.1 to add a new sub-paragraph (f) which makes it clear that dealing with cases justly includes “enforcing compliance with rules, practice directions and orders”.
Here the defendant filed a costs budget but, in breach of the pilot scheme rules, the claimant failed to do so until the very last minute in response to prompting from the Master. The court had to consider the appropriate sanction for the breach and whether the claimant should be granted relief from that sanction.
The Master ordered that the claimant’s budget be limited to court fees, effectively by analogy with CPR 3.14. She recognised that she had a range of options, from striking out the claimant’s case to simply adjourning the hearing and ordering the claimant to pay costs thrown away. She noted that the latter approach (coupled with an “unless” order) might have been the approach prior to implementation of the Jackson reforms, but added:
“But the Jackson reforms do mean something in terms of increased strictness with which we apply rules and if I simply proceed on the same basis as I would previously have proceeded then I would have as much effect on securing compliance with court orders and rules as courts had hitherto, that is to say insufficient compliance on the whole.”
Ultimately she concluded that the best guide as to what should be considered a proportionate sanction for the claimant’s breach was what the Rules Committee had decided should be provided for in the new rules, namely to restrict the party’s budget to applicable court fees under CPR 3.14, even though that rule did not strictly apply under the pilot scheme.
The Master adjourned the hearing to allow the claimant to apply for relief from sanctions, but ultimately refused that application.
She noted that the claimant’s firm of solicitors was a small one, with two London partners, two of its three trainee solicitors were on maternity leave, the senior associate solicitor who used to deal with costs budgeting had recently left the firm, and the firm was engaged in other significant litigation which put pressure on resources. These factors, she said, were not unusual. Even before the Jackson reforms the failure of solicitors was generally not treated as in itself a good excuse and “such explanations carry even less weight in the post Jackson environment”.
She said there was no evidence of particular prejudice to the claimant, who was on a CFA agreement with his solicitors. Even if the order affected him financially and as to representation “there are many claimants who manage without lawyers and it could not be said that he would be denied access to a court more than is the case for others if they have to represent themselves”.
The fact that the parties had only been given 11 days’ notice of the hearing, and therefore only four days’ notice of the deadline for budgets, did not amount to procedural unfairness. The parties were well aware that it was a case for which budgeting would be required and the mere fact that a date is set for a case management conference is not supposed to be the starting gun for proper consideration of budgeting.
This case is significant as a further stark example of the court’s new strict approach to compliance with rules and court orders, both in the costs budgeting context and more broadly.
The Master commented that the new overriding objective is “in marked contrast” to the old one both in form and in substance. In dealing with cases justly, the court must now ensure that they are dealt with at proportionate cost and so as to ensure compliance with rules, orders and practice directions. This, she said, is “at the very least a significant shift of emphasis towards treating the wider effectiveness of court management and resources as part of justice itself”.
As an example of the impact which breaches in one claim can have on other claims in the system, the Master mentioned that in order to find time in her diary to list the application for relief within a reasonable time, she needed to vacate a half day which had been pre-allocated to deal with mesothelioma claims. However, it would not be necessary to show specific detriment to other litigants; breach of the rules may be assumed to risk impact on other claims.
The Master commented: “Judicial time is thinly spread, and the emphasis must, if I understand the Jackson reforms correctly, be upon allocating a fair share of time to all as far as possible and requiring strict compliance with rules and orders even if that means that justice can be done in the majority of cases but not all.”