I don’t know about you, gentle reader, but we are generally of the view that the punishment should fit the crime.
The Court of Appeal’s decision in Andrew Mitchell MP v News Group Newspapers Ltd  EWCA Civ 1526 was handed down today. On the basis of this decision, one could argue this maxim seemingly no longer applies to the heinous offence of missing a costs related court order by a few days, if the same inconveniences the court.
In brief, the Court of Appeal upheld a first instance decision by a Master to sanction the Claimant (Mr Mitchell) by limiting the costs he will be able to recover from NGN in litigation to his court fees.
In other words, even if he wins his case, he will not be entitled to recover his legal costs from NGN which, going on the basis of the Defendant’s costs estimate, could be more than £500,000.00.
So what has Mr Mitchell (or more specifically his legal team) done to merit such treatment?
On 07 March 2013, Mr Mitchell issued proceedings against the Sun Newspaper (NGN) alleging defamation in connection with the “plebgate” saga that has rather plagued the former chief whip’s year.
The fuel for the subsequent fire lay in the pilot costs management scheme found at Part 51 of the Civil Procedure Rules, which applied to defamation actions until 31 March 2013 and was implemented on 01 April. Two key elements of the rules or scheme (as it then was) are:
– Parties to litigation should prepare costs budgets and discuss the assumptions and timetable upon which their budgets are based.
– The parties must exchange and lodge cost budgets in a specific form at Court not less than 7 days before the date of the hearing for which costs budgets are required.
On 05 June 2013 the Court made an order which, once amended to provide the parties with the 7 day window, required them to file their budgets not less than 7 days before 18 June. NGN filed theirs on 11 June, but there was no sign of the Claimant’s budget which, in the event, was filed on the afternoon of the 17 June, by which time the Court had noticed the breach and flagged it up to the parties.
So there was a six-day delay in complying with a court order. There is no doubt this was a breach of the court’s order and it would thus be wholly reasonable to expect that some penalty might be imposed. A number of possible penalties come to mind, such as an adjournment of the hearing to give the Defendant the time to consider the budget, coupled with an order that the Claimant pay for the Defendant’s wasted costs of the hearing, perhaps on the indemnity basis to make the Court’s displeasure eminently clear.
However, the penalty in fact imposed went much further. The 18 June hearing was before Master McCloud who held that the new costs rules:
“provide a mandatory sanction… that where a party fails to file a cost budget within seven days prior to the date of the first hearing, the party is deemed to have filed a budget which is limited to court fees…”
Whilst the Master went on to acknowledge her duty to act “proportionately”, she considered in reference to Jackson that the legal profession:
“… have now had ample warning for many months that the court would adopt a strict approach to the interpretation of application of rules and orders and it should come as no surprise that… the sanction I should impose is that the claimant’s budget will be limited to court fees…”
The Claimant submitted an application for relief from the sanction which was heard on 25 July. At that hearing, the Claimant submitted a host of reasons why it had not complied with the order as grounds which were sufficient for the Court to grant the relief. These included the pressure of other litigation work, and staff absences leaving them thin on the ground. These “not unusual” explanations were met with short shrift.
Whatever the reasons, the sanction applied appears to many to be wholly disproportionate. As the Claimant submitted, the effect of the order is to grant the Defendant a “windfall” in the form of costs protection. The net effect, arguably, is that the Defendant could run the litigation through to trial, safe in the knowledge that its costs exposure (excepting its own legal costs) would be capped at a fraction of what it might otherwise be ordered to pay. The Master rebuffed this argument by saying “that is the way with sanctions”.
The Master was also of the view that Mr Mitchell’s Article 6 rights under the European Convention on Human Rights were not infringed, because the sanction was “proportionate” and he was not being “driven from the court.”
So, to recap, a penalty that might cost Mr Mitchell somewhere around £500,000.00 for a few days delay by his solicitors in submitting a budget is on this analysis “proportionate”.
We have to say that in our view, it is not proportionate. The breach was relatively trivial, but the punishment draconian. If the effect is to prevent Mr Mitchell’s lawyers continuing to represent him in the litigation, or to so increase his costs risk that he cannot continue the case, it might also give rise to considerable injustice.
This, after all, is civil litigation. The courts are providing a dispute resolution service that should treat all who use it fairly. Particularly in the post-Jackson era, in our view it beggars belief that this decision can be regarded as remotely fair.
But there is one advantage. It provides further weight to the argument that you should steer well clear of the courts. There are many and possibly better ways of settling disputes.
A link to the full judgment can be found here: http://www.judiciary.gov.uk/Resources/JCO/Documents/Judgments/andrew-mitchell-mp-news-group-newspapers-ltd-27112013.pdf