Fallout from Mitchell judgment

I write barely 24 hours on from delivery of the Mitchell judgment, yet I suspect it will be hard to find a lawyer who does not know the ramifications of the decision. Put simply, it is now considerably tougher to gain relief from sanction for procedural non-compliance. The Court of Appeal has made it plain that administrative efficiency and the need to comply with rules, practice directions and orders trumps all other considerations under the new post-April Civil Procedure Rule 3.9.  Nick Bacon QC has described it as a ‘one-way ticket to Singapore’, in reference to Singapore’s strict approach to compliance with rules and directions since it implemented its own Jackson-style reforms.

 Other colourful reactions to the judgment include high-profile solicitor Kerry Underwood characterising the decision as ‘breathtakingly Orwellian’ having earlier predicted that the Court of Appeal would soften the sanction of a ‘court fees only’ budget.  My favourite, however, was the costs lawyer who suggested that the obvious solution was to outsource budgeting to the costs supplier with the largest professional indemnity cover, and who then proceeded to nominate his own firm. I can’t quite visualise ‘make sure you instruct us before our next insurance renewal’ as the optimum pitch, but time will tell.

The Court of Appeal’s decision will have come as little surprise to those who were in court on 7 November and gauged the mood. The position of the claimant was not helped in a number of ways but pointedly by the absence of evidence as to any prejudice he may have suffered as a result of the refusal to grant relief. It was also fairly clear that mere inadvertence or pressure of work would not carry the claimant’s lawyers across the line.

If there is any comfort for the profession it comes in the confirmation that the new culture is not one of zero tolerance – the court was clear that it is not concerned with trivial breaches. But to reprise one of my comments as the judgment was announced, the ‘wriggle room’ is now extremely tight when non-compliance will result in delay, especially if the court is inconvenienced by that delay.

Rather than continue to pick over the bones of the Mitchell decision, the focus has to fall upon prevention (over which legal teams have some control) rather than securing relief from sanction.

A good starting point would be to identify in each litigation department its knowledge and experience of those rules, practice directions and orders that have clear sanctions attached to non-compliance, and prioritise controls by descending scale of exposure.  

In the costs arena, two obvious illustrations arise. The highest risk and largest exposure (Mitchell and CPR 3.14 aside) is to the imposition of a default costs certificate if points of dispute are not served within 21 days.  

I am unaware of any default costs certificate that has not been set aside upon a ‘normal’ costs penalty since the procedure was introduced in 1999 (which is in itself telling), although I imagine it must have happened. My firm had come to advise receiving parties against entering default certificates precisely because of the virtual certainty of relief being granted.

All manner of klaxons and back-ups now need to be in place in order to avoid the stress that will follow the arrival of any post-Mitchell default costs certificate.

In slight contrast, there is no defined sanction for delay by a receiving party in commencing detailed assessment beyond suspension of interest. Action is currently required by the paying party in the form of an application for an ‘unless order’ before anything more damaging can be imposed.  The warning procedures should therefore be calibrated appropriately in order to avoid blind panic.

There are numerous potential tripwires elsewhere within the costs rules and practice direction but readers might excuse me in the current climate for not fanning the flames. The temperature is already high enough.  They tell me it is hot all year round in Singapore.

Andy Ellis is a costs lawyer and managing director of Practico