The Jackson reforms: the aftermath
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Will the Jackson reforms reduce the cost of litigation as intended?
Discussion surrounding the Jackson reforms, which have been in effect since 1 April 2013, has focused mainly on the changes to the rules relating to litigation funding and the introduction of cost management and budgeting in the multi-track. Meanwhile, the reforms to the court’s case management powers have mainly passed under the radar. However, it has become apparent that these changes to the Civil Procedure Rules (CPR), in particular changes to the overriding objective and the criteria for obtaining relief from sanctions under CPR 3.9, are having serious consequences.
Changes to the Civil Procedure Rules
The overriding objective set out in CPR 1.1. has been amended. Whereas previously the rules were designed with proportionality as one of a number of factors in dealing with cases justly, proportionality in its own right now ranks equally alongside dealing with cases justly as part of the courts’ overriding objective. Further, the overriding objective includes an additional requirement in the form of a rule which requires the court to enforce compliance with rules, practice direction and orders.
There are new criteria in place for considering applications for relief from sanctions. Prior to 1 April 2013, an application for relief from sanctions would cause the court to consider "all the circumstances of the case", addressing a checklist of nine factors contained in CPR 3.9(1). The checklist included considerations such as whether the application for relief had been made promptly, whether the failure to comply was intentional and whether there was a good explanation for the failure. Post 1 April 2013, the court is still required to "consider all the circumstances of the case, so as to enable it to deal justly with the application", but the nine factors in CPR 3.9(1) have been scrapped and replaced with just two factors. The first expressly requires the court to consider the need for litigation to be conducted efficiently and at a proportionate cost; the second requires the court to enforce compliance with rules, practice directions and court orders.
The new approach
Lord Justice Lewison in Fred Perry v Brands Plaza Trading (2012) voiced his early support for the new, stricter regime, citing the proposed reforms in the Jackson Report: "courts at all levels have become too tolerant of delays and non-compliance with orders. In so doing they have lost sight of the damage which the culture of delay and non-compliance is inflicting on the civil justice system. The balance therefore needs to be redressed."
The views of Lewison in Fred Perry were subsequently cited by the judge in Venulum Property Investments Ltd v Space Architecture and others (2013), which involved a dispute arising out of the contractual dealings in relation to a property development. The claimant developer brought a claim against 13 defendant architects. The claimant was first aware of its potential losses in 2007 when a construction error was discovered. For reasons which were not explained to the judge, the claimant did not instruct solicitors until September 2012. The claim form was served on the last day of service permitted by CPR 7.5(1). However, the claimant’s solicitors misunderstood the combined effect of CPR 7.4(2) and 7.5(1) and mistakenly thought they had a further 14 days in which to serve the particulars of claim. Consequently they failed to serve these in time. They applied for an extension.
The application was made before 1 April 2013 so an issue arose as to the applicability of the revised CPR. The parties agreed that the change to the overriding objective in CPR 1.1 was applicable to the court's consideration of the application. As to CPR 3.9, the defendants' counsel was not prepared to say that the nine factors that had been set out pre-1 April 2013 were no longer to be taken into account by the court. However, he argued that the emphasis had shifted as a result of the amendments to the rules, so that the court was now required to take a much stronger and less tolerant approach to failures to comply with matters such as time limits. This was not disputed by counsel for the claimant.
In refusing the application to extend time, the judge relied on a number of factors specific to the case. However, a further factor in his decision was the post 1 April 2013 approach to the enforcement of - and compliance with - orders and time limits. He said: "In my judgment, when the circumstances are considered as a whole, particularly in the light of the stricter approach that must now be taken by the courts towards those who fail to comply with rules following the new changes to the CPR, this is a case where the court should refuse permission to extend time. The claimant has taken quite long enough to bring these proceedings and enough is now enough. I therefore refuse this application."
Shortly after the Venulum judgment, His Honour Judge Pelling QC considered an application for an extension of time to serve witness evidence in the matter of Fons HF v Corporal Ltd (2013). In this case, the claimant had been ready to serve witness statements for some time, but the defendant had not. Although both parties were in breach of the relevant order, which referred to service as opposed to exchange, the judge deemed the defendants more seriously in breach since they were not in a position to serve any evidence. The application for an extension of time was granted but only until 4.00pm the following day, with an order that any defaulting party be debarred from relying on any evidence at trial. The judge issued a stern warning that he had "come very close to refusing an extension to either of the parties", as "the amended Civil Procedure Rules now require the court to pay close attention on the failure of parties...a failure to comply with a rule, direction or order is of itself a clear breach of the overriding objective and is likely to result in severe sanctions". He went on to state that: "all parties and the wider litigation world should be aware that all courts at all levels are now required to take a very much stricter view of the failure by parties to comply with directions, particularly where the failure to comply is likely to lead to a waste of the limited resources made available to those with cases to litigate."
In Re Atrium Training Services v McNally and others (2013), the applicants applied for a fifth extension of time to give disclosure. A fifth extension was required as, since the fourth, new solicitors had been appointed and the whole disclosure process had to be restarted.
The judge, Mr Justice Henderson, did grant a fifth extension of time for disclosure, but on "unless" terms that the claim be struck out if the applicants failed to comply. In his judgment he considered Venulum, noting that the circumstances were different from those of the present case. He also cited the passage from the Fred Perry case. In reaching his decision, he noted that the court "must firmly discourage any easy assumption that an extension of time will be granted if it would not involve any obvious prejudice to the other side". However he did also stress that it was important "not to go to the other extreme, and not to encourage unreasonable opposition to extensions which are applied for in time and which involve no significant fresh prejudice to the other parties".
In Dass v Dass (2013) the High Court dismissed the defendant’s appeal against a case management decision which debarred him from relying on expert evidence due to his failure to comply with an order to serve such evidence made more than two years previously. The defendant argued that there was no real prejudice to the claimant arising out of the delay, as the trial date had not been fixed and the claimant had not sought an unless order until just prior to the case management conference (CMC) at which the debarring order was made.
The judge emphasised the limited circumstances in which case management decisions can be appealed. Notwithstanding that the case fell under the pre-1 April 2013 CPR rules, the judge had no hesitation in upholding the debarring order. The defendant had failed to comply with the order made over two years previously, not just because of error, but for tactical reasons. The fact that the claimant did not press hard - or apply earlier to the court for an unless order - was beside the point. The overriding interest of justice includes orders of the court being respected and obeyed. The judge had no doubt that the same decision would have been made before and after 1 April 2013 and stated: "Let this be a lesson that parties who deliberately refuse to comply with court orders for tactical reasons do so at their peril."
Finally, in Andrew Mitchell MP v News Group Newspapers Ltd (2013), the full harshness of the post-Jackson regime was exposed. The claimant, former cabinet minister Andrew Mitchell MP, is suing The Sun for its coverage of the 'Plebgate' affair.
The claimant had failed to engage in attempts to discuss budgets and failed to comply with the requirement to file and exchange a budget no later than seven days prior to the CMC. Master McCloud recognised that her options ranged from striking out the claimant's case to simply adjourning the hearing and ordering the claimant to pay costs thrown away. She noted that the latter option, coupled with an 'unless' order, might have been the right approach prior to the Jackson reforms. However, she said: "The Jackson reforms do mean something in terms of increased strictness with which we apply rules and if I simply proceed on the same basis as I would previously have proceeded then I would have as much effect on securing compliance with court orders and rules as courts had hitherto, that is to say insufficient compliance on the whole."
McCloud adjourned the hearing to enable the claimant to apply for relief, which he duly did. In all the circumstances, McCloud was not persuaded that it would be just within the rules to grant relief and so dismissed the application. The claimant's budget is, in consequence, limited to court fees and no more. The judgment is sober reading for any who doubt the determination of the courts to adopt a stricter approach to time limits under Jackson. McCloud commented that the new overriding objective is "in marked contrast" to the old one both in form and substance. In dealing with cases justly, the court must now ensure that they are dealt with at proportionate cost and to ensure compliance with rules, orders and practice directions. This, she said, is "at the very least a significant shift of emphasis towards treating the wider effectiveness of court management and resources as part of justice itself".
The stark impact of this decision means that Mitchell will be entitled to recover only court fees, not the costs of his solicitors in preparing the case, which could run into hundreds of thousands of pounds. However, as the fault lay with Mitchell's solicitors, the reality is that they will probably have no option but to bear the costs of their oversight, rather than risk being sued by their client for breach of their retainer.
Leave to appeal was immediately granted and the case has leap-frogged to the Court of Appeal to be heard by three of the five lord justices appointed to hear Jackson-related challenges.
What the new approach means for litigators
The main theme of the aforementioned cases is the changing approach of the courts to non-compliance with the rules, practice directions and orders. There will be less tolerance of delays. As we have seen in the Mitchell case, practitioners must pay heed to the new approach, otherwise non-compliance in the future is likely to cost them dearly.
If solicitors require the cooperation of clients to comply with directions, they must make it clear to the clients how catastrophic a failure to provide instructions in a timely way might be - which thus shifts part of the risk firmly towards clients.
Until there are clear guidelines from the court of appeal - which will presumably be given in the Mitchell case – solicitors will be well advised to err on the side of extreme caution when it comes to compliance with court rules.
Solicitors with heavy caseloads might need to reduce workloads and increase personnel in order to avoid falling foul of the rules. This may have the ironic effect of increasing the cost of litigation, contrary to lord justice Jackson's intentions.
Gabrielle de Blaquiere is a second-year trainee at Ince & Co.