Mitchell ruling is not quite zero tolerance

Those hoping for any other outcome in the Mitchell costs judgment were always being wildly optimistic.

The Court of Appeal simply had to uphold the original decision to reject relief from sanctions – and in doing so set a marker for how the Jackson reforms will be implemented.

Any other decision and you might as well have taken Sir Rupert’s report and dumped it in the Thames (an appealing prospect for many of you, I’m sure).

I fully accept the Jackson reforms have made life a nightmare for firms in terms of costs budgeting. There are so many factors involved in compiling a budget, but the Jackson reforms require them to be both comprehensive and filed early. These are not always possible at the same time, as the firm in the Mitchell case, Atkins Thomson, has disastrously found to its (literal) cost.

It is difficult not to feel sorry for the firm in question, and there will be many solicitors thinking ‘there but for the grace of God go I’ when they read the details.

Atkins Thomson said it was a small firm, two of their trainee solicitors were on maternity leave, the senior associate dealing with costs budgets had left and the firm was engaged on work on other heavy litigation.

I suspect many people out there will find those circumstances perfectly understandable. As much as anything, this is terrible news for small firms running on small margins.

But the judgment was, ultimately right. The defendant firm got its budget in seven days before the costs management hearing and was entitled to expect its opponent to do the same. As it was, the Mitchell side’s budget was filed on the afternoon of the day before the hearing date – and not without an email from the judge asking where it was.

In his summing up, master of the rolls Lord Dyson agreed there had been ‘absolute failure’ to engage in discussions over the budget and no attempt to apply for extra time or to ask the court informally for relief from sanctions. Dyson really had no other choice.

Two certainties come from this ruling. One is the prospect of professional negligence claims. Someone, somewhere is going to lose a lot of money from this, and I’ve a feeling it won’t be Andrew Mitchell. There will be plenty of cases of clients suing their law firm if there is any evidence of Jackson non-compliance – a scenario that rather undermines Dyson’s suggestion that his ruling will reduce satellite litigation.

The second certainty is that insurers will be ever more edgy about the solicitors PII market if they think there is any increased risk. Don’t expect your premium to come down anytime soon.

But there is still not absolute certainty about the tolerance levels of our court. You’ll hear lots of hand-wringing about the draconian nature of the courts in future weeks, but actually this judgment could have been – whisper it quietly – much harsher.

Paragraph 40 is your key reference point. Dyson states that ‘if [non-compliance] can properly be regarded as trivial, the court will usually grant relief provided that an application is made promptly’.

He goes on to say the court will ‘usually’ grant relief if there has been no more than insignificant failure to comply with an order. This could include, he says, where there is a ‘failure of form rather than substance; or where the party has narrowly missed the deadline imposed by the order, but has fully complied with its terms’.

If there is ‘good reason’ for non-compliance, such as the solicitor suffering from debilitating illness or an accident’, relief may also be granted.

Clearly, the court wants to send the message out loud and clear that Jackson must be obeyed. And if you’re a law firm, your best bet is clearly to do so.

But this case came about because of one firm’s clear failings to comply with the new rules. In the bigger picture, there remains just a little wriggle room for those with a genuine reason for lateness – as long as you keep the court informed throughout. I certainly wouldn’t push it though.

John Hyde is a Gazette reporter