Costs and compliance: a strict approach
Gwendoline Davies and Sue Harris analyse emerging trends from the key case management and costs cases that have hit the courts since the Jackson reforms were implemented on 1 April 2013.
In earlier articles [1] we have touched on the courts' readiness to expound the ethos behind the Jackson reforms (proportionality, efficiency and compliance in cost and case management) but, in the absence of strict precedent or significant guidance, we are also aware that judges' attempts to interpret and implement the amended Civil Procedure Rules have varied, so as to achieve apparently fair results in the particular cases heard before them so far. Previously it has been difficult to draw any firm conclusions as to how the new regime is working in practice, but as more costs and compliance cases are decided, certain key messages are beginning to emerge.
Case law shows courts packing the punches
There is no doubt that, immediately post 1 April 2013, the CPR emphasised strict compliance with rules and directions and that rhetoric from the courts (albeit not always decisions) had been consistent with that. An analysis of the latest Jackson litigation, however, indicates that judges are increasingly adopting a strict approach to compliance, and using costs budgets and sanctions to underpin this.
In FONS HF v Corporal Ltd [2] the claimant had been ready, willing and able to exchange witness statements on time, whereas the defendant was not. As must invariably be the case in these circumstances, the claimant did not therefore release its evidence. Adopting a stringent approach, the judge held that both parties were in breach of the relevant order, as it referred to an obligation to serve witness statements, not to exchange. The judge stated that, to comply with its obligations pursuant to the order in question and the amended CPR, the claimant should have served its witness statements on time, regardless of the readiness (or otherwise) of the defendant. At the very least, and taking into account tactical considerations, the claimant could have lodged its evidence at court and offered or provided statements to the defendant's solicitors in escrow in a sealed envelope.
The defendant in Thevarajah v Riordan [3] failed to comply with an unless order for disclosure. The claimant therefore sought to strike-out the defence and the defendant made an application for relief from sanctions. The amendment to CPR 3.9 is one of the key Jackson changes. The 'old' regime, which allowed the court to consider a range of nine factors when deciding whether to allow an application for relief from sanctions, has been replaced, with a significant change of emphasis, by a requirement for the court to consider the circumstances of the case along with the needs, only, to conduct litigation efficiently and at proportionate cost; and to enforce compliance with rules, practice directions and orders. In this case the judge, keen to take into account both the letter and intention of the new rules, stated that the 'old' checklist did still consist of matters which the court could consider but that the 'new' rule, despite being much less verbose, was not less rigorous but in fact much more so. He noted that the court should now be slow to draw the conclusion that relief from sanctions was appropriate and just and for that to be the case, a material change in circumstances would be required. In Thevarajah there had been no such material change, and no relief was granted.
In the June 2013 case of Igloo Regeneration Ltd and others v Powell Williams Partnership [4] the claimant had an inexperienced expert and severe evidential difficulties (which the judge in an earlier hearing had flagged as undermining the claimant's case), plus the claimant reneged on a settlement deal that it had only shortly before indicated it would accept. When the defendant won at trial on all counts, the judge awarded it full indemnity costs on the basis of the claimant's conduct. The clear message to come out of this case is that, in light of the Jackson regime and its emphasis on dealing with cases justly, at proportionate cost, with reasonable conduct, efficiency and achieving settlement where possible, any behaviour which undermines the likelihood of sensible settlement will be punished.
The case of Mitchell v News Group Newspapers Limited [5] was a high profile example of the courts taking a hard line on cost budgeting. Costs for the claimant in this case were ultimately limited to court fees only, in accordance with new CPR 3.14, due to MP Andrew Mitchell's (of 'plebgate' fame) failure to file a cost budget on time.
Finally in our round-up of recent Jackson cases, parties may be relieved to hear that discretion and common sense do still have a part to play in the administration of civil justice. In Wyche v Careforce Group Plc [6] the defendant did not comply with an unless order for e-disclosure, but the court was convinced that the failures in question (incorrect keyword searches, a mis-categorisation of certain documents as privileged and the like) were the result of genuine human error. The failures were inadvertent and speedily remedied once they came to light. The court did, therefore, order relief from sanctions in this case.
Comment
The message seems clear: in the post-Jackson world rules, orders and directions mean exactly what they say; they are there to be complied with; and there is no room at all for complacency. Only in instances of genuine mistake or absolutely justifiable conduct in the overall context of a case will non-compliances be tolerated. Even then (as becomes clear when the detail of the judgments are reviewed), parties will be expected and ordered to remedy their failures swiftly and cost-effectively.
Orders for indemnity costs have hitherto been rare. In light of the new requirements for cost budgeting and particularly following decisions like Igloo v Powell Williams, it remains to be seen whether that will continue to be the case.
Seemingly, any initial leeway that the courts may have allowed in light of uncertainty surrounding, and unfamiliarity with, the amended CPR is on the wane. Our advice remains that adopting your own very strict approach to the conduct of civil litigation will stand you in the best stead if and when your cases come to court.
Gwendoline Davies is Head of Commercial Dispute Resolution and Sue Harris is a Director at Walker Morris. Both regularly contribute articles and updates to reach.... ®, the free Walker Morris knowledge database and alerter service.
[2] [2013] EWHC 1278 (Ch)
[3] 9 August 2013, unreported
[4] [2013] EWHC 1859 (TCC)
[5] [2013] EWHC 2179 (QB)
[6] 25 July 2013 QBD, unreported