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20 December 2013

“Plebgate” - The impact of Andrew Mitchell’s costs appeal

Andrew Mitchell's legal representatives (Atkins Thomson) missed the budget deadline in respect of his litigation against News UK which has had significant implications....

In brief, Andrew Mitchell MP was alleged to have called police officers "plebs" whilst on duty at Downing Street. Mr Mitchell brings a claim in defamation against the Sun newspaper in respect of its coverage of the "plebgate" affair.

Mr Mitchell lodged his initial claim for damages on 7th March 2013 and News UK thereafter filed a defence pleading justification and a Reynolds public interest defence.

An adjourned case management conference (CMC) was listed on 18th June 2013. Under the new "Jackson reforms", one of the most noticeable reforms was the requirement for parties to file and exchange costs budgets.

Costs budgets have to be filed at least 7 days prior to the CMC (CPR PD51D para 4.2). Further, the costs budgets have to be discussed with the Defendant's solicitors (CPR PD51D para 4.1).

However, in breach of para 4.2 Mr Mitchell's legal representatives filed their budget on the afternoon of 17th June 2013, less than 24 hours before the hearing.

By contrast, News UK had filed their budget of £589,558 on 11th June 2013, within the 7 day deadline.

The justification provided by Mr Mitchell's legal representatives for the delay in preparing the costs budget on time was that Atkins Thomson is a small law firm and was busy with "significant prior preparation". It said its firm had just two London partners and two of its three solicitors were on maternity leave.

The Defendant's solicitors submitted at the hearing on 18th June 2013 that they had insufficient time to consider Mr Mitchell's costs budget. Given the significant nature of the budget, it is likely to have taken more then a couple of hours to consider in any detail.

Following the failure to prepare the costs budget on time, Master McCloud of the High Court restricted those fees recoverable by Mr Mitchell's legal representatives to court costs only. This means that Mr Mitchell will be unable to recover his extensive legal costs from News UK even if his claim is successful.

Mr Mitchell's Solicitors applied for relief from sanctions under the "new" CPR 3.9, which states as follows:

(1) in an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will 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.

Master McCloud rejected the application and in doing so emphasised that the new overriding objective requires courts to ensure compliance with rules, orders and practice directions.

The much used "prejudice" argument was rejected by Master McCloud. This was despite there clearly being significant prejudice caused to Mr Mitchell given that the sanction was to prevent Mr Mitchell from recovering approximately £500,000 in costs. It is noteworthy that "prejudice" forms no part of the new CPR 3.9 although arguably it is a factor which ought to be taken into consideration given that the court is obliged to consider "all the circumstances of the case".

Mr Mitchell subsequently appealed against the decision to the Court of Appeal and his appeal was dismissed.  It was essentially argued by Mr Mitchell that Master McCloud had misdirected herself and a 100% reduction of costs was disproportionate.

Master of the Rolls, Lord Dyson, stated "The defaults by the Claimant's solicitors were not minor or trivial and there was no good excuse for them. They resulted in an abortive costs budgeting hearing and an adjournment which had serious consequences for other litigants. It seems harsh in the individual case of Mr Mitchell's claim, if we were to overturn the decision to refuse relief, it is inevitable that the attempt to achieve a change in culture would receive a major setback".

"In the result, we hope that our decision will send out a clear message. If it does, we are confident that, in time, legal representatives will become more efficient and will routinely comply with rules, practice directions and court orders. If this happens, then we would expect that satellite litigation of this kind, which is so expensive and damaging to the civil justice system, will become a thing of the past."

The outcome of Mr Mitchell's appeal is clearly significant in the individual case of Mr Mitchell. Atkins Thomson have vowed to continue with the action on behalf of Mr Mitchell despite the ruling and have stated that "We represent Mr Mitchell on a no-win, no-fee basis and he will not be effected financially by this judgment". Inevitable that means that those who will be financially effected by the judgment in question will be Atkins Thomson.

The decision, on the face of it, appears to be unduly harsh. Especially given that the budget, albeit prepared late, was prepared in time for the case management conference. Clearly the Defendant received a significant windfall as a result of the decision.

Not only is the outcome of the appeal significant in the individual case of Mr Mitchell, it has much wider implications. As Murray Heining, Chairman of the Association of Costs Lawyers said "This case can be regarded as easily the most important civil litigation judgment of the year."

Whilst the decision is unlikely to prove popular, it provides some much needed certainty in terms of the judicial approach to the changing civil procedure rule.

The excuse of being overworked will certainly not be tolerated. The outcome of the appeal may well have been different had the reason behind the delay been different. No doubt Mr Mitchell's case will not be the first of its kind. It is likely that a "good reason" for default will relate only to those reasons which are outside of a parties control.

The decision highlights the importance of complying with relevant deadlines including the preparation of witness statements, disclosure and the preparation of budgets.

It suggests that the failure to comply with court orders, rules and practice directions will not be tolerated, even if such failures cause little prejudice to the other side.

Even those who face significant sanction, such as Mr Mitchell, are unlikely to be provided relief.

The case has already been quoted in numerous hearings I have attended in the North West since judgment was handed down. Most notably one District Judge stated that in the absence of an application to extend time to put Part 35 questions to a medical expert, the extension would not be permitted. The Learned Judge stated that Mitchell was very clear; parties must comply with court orders. If there is a failure to comply with a court order a party must make an application supported by evidence. A party cannot simply attempt to ride on the back of an opponent's application and seek to make applications in the face of the court.

Those who are likely to be unable to comply with court deadlines are well advised to seek agreement with the other side to extend the time for compliance or make a prior application to the court to extend the same, before the default occurs.

It is clear that courts, at all levels, are much less willing to be forgiving in respect of breaches of rules, practice directions and orders. The new CPR 3.9 significantly limits the opportunity for relief....


HANNAH BROOKFIELD
7 HARRINGTON STREET CHAMBERS

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