We can’t say we weren’t warned – just before the Jackson reforms came into force on 1 April, the Master of the Rolls, Lord Dyson, declared that parties can “no longer expect indulgence if they fail to comply with their procedural obligations”.
Some have been sceptical about the extent to which judges would take this to heart, and while thus far we have seen the courts taking a stronger line on relief from sanctions, it has not been a real show of force.
That was, however, until Master McCloud’s ruling in Mitchell v News Group Newspapers  EWHC 2355 (QB). Following the claimant’s failure to comply with the costs budgeting rules, she applied the ultimate sanction of capping his budget to the applicable court fees.
The background is the high-profile ‘Plebgate’ affair and a libel action by former cabinet minister Andrew Mitchell MP over coverage in The Sun. The case was begun under the pre-1 April defamation costs management pilot, but in the ruling the master applied the new rule 3.9 on relief from sanctions and the revised overriding objective, as well as the new rule 3.14 by analogy (although doing this was a matter of dispute).
In June the master issued the sanction for two breaches of practice direction 51D: a failure to engage in discussion with the defendant as to budgets and budgetary assumptions, and a failure to file a budget seven days before the case management conference (CMC). The claimant applied for relief from sanctions.
The master had to exercise her judgment absent authority, against a backdrop not only of the rule changes themselves but also the Jackson report and “the non-binding but of course relevant guidance” of the Jackson implementation lectures and particularly Lord Dyson’s March lecture.
A key part of that had been criticism of courts at all levels – including the Court of Appeal – for focusing too much on securing justice in individual cases without considering the wider impact of non-compliance on the system.
The master observed: “Judicial time is thinly spread, and the emphasis must, if I understand the Jackson reforms correctly, be upon allocating a fair share of time to all as far as possible and requiring strict compliance with rules and orders even if that means that justice can be done in the majority of cases but not all.”
And while evidence of specific detriment to other litigants is not necessary, in this case she had had to vacate a half-day that had been allocated to deal with asbestos claims to list the application for relief.
The claimant’s solicitor outlined the resourcing problems that had caused the breaches, but the master was not moved. “The explanations… are not unusual ones. Pressure of work, a small firm, unexpected delays with counsel and so on. These things happen, and I have no doubt they happened here.
“However, even before the advent of the new rules, the failure of solicitors was generally not treated as in itself a good excuse and I am afraid that however much I sympathise with the claimant’s solicitors, such explanations carry even less weight in the post-Jackson environment.”
Nonetheless, she was not bound to dismiss the application simply due to the lack of a good excuse. The master continued that there was no evidence of particular prejudice to Mr Mitchell arising from her order, even if he had to represent himself as a result – given how many other claimants do the same.
Master McCloud admitted that she was troubled by whether the claimant had had enough time to produce his budget – four days, including a weekend, from being notified of the date of the CMC. But she concluded that all solicitors should now know that budgeting is integral to the litigation process from the start, meaning that setting the date for the CMC is not “the starting gun for proper consideration of budgeting”.
Further, “the very fact that the defendants, using cost lawyers, were well able to deal with this in the time allotted highlights that there is no question of the time being plainly too short or unfairly so”.
The case has been leapfrogged to the Court of Appeal, where we can hope for much-needed guidance, particularly given two recent judgments granting relief from sanctions – Wyche v Careforce Group plc (unreported, QBD, 25 July 2013) and Rayyan Al Iraq Co Ltd v Trans Victory Marine Inc (unreported, QBD, 23 August 2013). Given it will be the court’s first opportunity to send out a message on these issues, I would not be entirely surprised to see the hard line of Master McCloud maintained.
While I am in favour of a stricter use of sanctions, here the restriction on the budget looks harsh and disproportionate, presenting the defendant with a potentially huge windfall. But what it also demonstrates is that solicitors cannot afford to leave budgeting until the CMC is upon them.
They need to bring in expert costs lawyers from the outset and ensure they are part of the litigation team as the matter proceeds. As this case shows, they literally cannot afford to take budgeting lightly.
Murray Heining is Chairman of the Association of Costs Lawyers