Jackson’s Reforms and Relief from Sanctions – Where we are now and where we are going
/Following an in-depth review of Civil Costs by Sir Rupert Jackson, on 1 April 2013 a number of changes to the English court procedures came into effect, the so called “Jackson Reforms”. The primary aim of these Reforms is to reduce the cost of litigation across all the English Courts and to make better use of court time and facilities.
The Reforms introduced a revised test for applying for relief from sanctions under CPR Part 3.9(1) which now provides:-
“On 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 deal justly with the application, including the need –
(a) For litigation to be conducted efficiently and at a proportionate cost; and
(b) To enforce compliance with rules, practice directions and orders.”
The departure from the old CPR 3.9(1) nine point checklist means that the court has now shifted away from exclusively doing justice in the individual case. Tied in with the above is CPR 1.1 and the overriding objective enabling the court to deal with cases justly and at a proportionate cost.
In the landmark decision of Andrew Mitchell MP v News Group Newspapers Limited the court applied sanctions against the claimant for failing to file a cost budget seven days prior to the Case Management Conference. As a result the claimant lost its right to recover costs in the event that it succeeds, apart from the court fee it paid on issuing the claim form.
The claimant appealed and lost. The Court of Appeal emphasised that the two considerations set out in the new CPR 3.9(1) are to be regarded as of paramount importance.
The court will only grant relief from sanctions if:
(a) the nature of non-compliance was trivial and;
(b) there was a good reason for the breach and;
(c) that the application for relief was made promptly.
A trivial breach is an insignificant failure to comply, a failure of form rather than substance such as a narrow miss of a deadline by minutes not hours.
Good reasons for missing deadlines are those which arise outside the control of the party in default; serious illness of a key person, natural catastrophe or default by a third party. Religious holidays, inability to get instructions, unavailability due to case load are not good reasons.
A party who knows in advance that it will not be able to meet a court deadline should apply early for relief rather than do so retrospectively. A party that does apply early for relief is more likely to gain the sympathy of the court, although there still has to be a good reason. The courts have emphasised that litigation should be conducted efficiently and without inconveniencing other court users. Relief from sanctions will be granted much more sparingly and what Sir Rupert Jackson described as “the culture of delay and non-compliance” will cease to continue.
Where we are now
The most recent examples of the court’s decisive position toward defaulting parties are considered in the following cases:
Particulars of claim (Raayan Al Iraq Co Ltd v Trans Victory Marine Inc )
This is a pre-Mitchell case which was heavily criticised by the Court of Appeal in Mitchell for following the old CPR provisions. Particulars of a subrogated cargo claim were served 2 days late due to unavailability of clients. The relief from sanction was granted. The Court of Appeal commented that:
“the judge was focusing exclusively in doing justice between the parties in the individual case and not applying the new approach which seeks to have regard to a wide range of interest”.
Witness statements (Durrant v Chief Constable of Avon and Somerset Constabulary )
The defaulting party made its second application to serve further witness statements on the day of trial and was granted relief from sanction. This decision was appealed. The Court of Appeal found that the judge hadn’t taken the robust approach as prescribed in the new CPR 3.9 or “approached the exercise with focus or degree of toughness called for by the guidance in Mitchell”. The appeal was allowed, the decision set aside and the late witness statements excluded from trial.
Costs budget (Burt v Linford Christie (2014))
The defendant lodged its costs budget one day late. The judge refused the defendant’s application for relief as the failure was considered not to be trivial under the circumstances.
Disclosure (Lakatamia Shipping Co Ltd v Nobu Su and Others )
An order was made that “unless standard disclosure is provided on … the defence and counterclaim shall be struck out…”. The defendants provided standard disclosure 46 minutes after the deadline. The claimants refused to accept the disclosure. The court found that the defaulting party narrowly missed the deadline, caused no prejudice to the claimant and that an application for relief was made promptly, consequently relief was granted.
The court later ruled on costs and found that the costs of the initial application (which was necessary) together with the supporting evidence and a response from the other party sufficient to clarify or put right any inaccuracies in the application and supporting witness statement should be borne by the applicant. However, a party who positively opposes the grant of relief from sanction and fails in doing so by some margin, should pay the bulk of the costs of the hearing. Hamblen J took the view that the opposition at the hearing was unreasonable in all the circumstances and that that was the cause of the substantial costs of the hearing. He concluded by saying:
“It is important that the message goes out that when a party applies for relief from sanctions, the other party should not assume that it is going to get a free costs ride in opposing that application. If the court considers that it was unreasonable to do so, there will be costs consequences… The Mitchell guidance was provided in order to help avoid endless satellite litigation. If parties consider that they can always come to court to oppose any application for relief, then there will be no end to that satellite litigation”.
Amending defence and witness statement (Karbhari & Anor v Ahmed )
On the first day of trial the defendant applied to amend its defence and introduce a substantially amended witness statement which contradicted the previous version. The court decided to strike out the defence altogether.
Particulars of claim (Associated Electrical Industries Limited v Alstom UK )
The claimant was 20 days late in serving their particulars of claim. Some two months later the defendants made an application to strike out the claim. The defaulting party applied for a retrospective extension of time, which was refused. The claim was struck out.
Security (Summit Navigation Ltd and Others v Generali Romania Asigurare and Others )
The claimants were a day late in providing security in the form of a bond because it couldn’t get the underwriter’s signature on the new deed. The action had been stayed automatically and the claimants had to apply for relief from sanctions. The court decided to grant relief from the sanction stating that the default in this case was not material as there was no impact on the efficiency of the conduct of the litigation. The court was unimpressed by the conduct of the defendants’ disruptive and uncooperative behaviour and ordered them to pay the claimants’ costs.
This decision was affirmed in Vivek Rattan v UBS AG, London Branch. The parties had agreed to file and exchange costs budgets six days before the Case Management Conference. The defendant served its budget on the agreed date, six days before the CMC. The claimant then argued that the agreement was that exchange would take place “by” the given date and as it did not the defendant had to apply for relief as it breached CPR Part 3.13. Mr Justice Males took the sensible commercial approach by granting relief and penalising the disruptive claimant with the defendant’s costs of application. He described the Claimant’s argument as “manifest nonsense” and a “misguided piece of opportunism by the claimant or his lawyers.”
Following the changes to the CPR the court’s primary concern is now to ensure that all litigation is conducted efficiently and at proportionate cost to all court users and not just the parties involved in the litigation. If deadlines are missed the prospects of successfully applying to court for an extension of time or other relief from sanctions are now remote. Parties may complain that the strict approach will cause them injustice, but the Mitchell decision and subsequent cases make those considerations only of secondary importance. The primary considerations, which trump all others, are for litigation to be conducted efficiently and at proportionate cost and to enforce compliance with rules, practice directions and orders.
Where we are going
The courts are now sending out a strong message to all practitioners and court users that wasting the court’s time by missing deadlines and disrupting court’s timetables by non-cooperation will no longer be tolerated.
Following the Mitchell decision the courts have been inundated with applications for relief from sanctions. This was anticipated by the Court of Appeal in Mitchell, but it hoped that phase would soon pass as users of the courts become familiar with their guidance on the new rules.
The Commercial Court has been trying hard to inject some common sense and to reduce the number of opposed applications, whilst still upholding the underlying principles of the Jackson Reforms, but if deadlines and timetables continue to be missed, even by a small margin, it is now essential that an application for relief from sanctions is made without delay. This will inevitably lead to more costs.
If parties to litigation, and their insurers, wish to avoid these additional and usually unnecessary costs, the message is clear: make sure that you are well prepared for each stage in the litigation so that deadlines are complied with. Do not leave anything to the last minute.
Eventually, these changes ought to lead to a reduction in costs and the more efficient running of disputes before the English courts. That was certainly the intention of the Jackson Reforms, but whether that comes at the expense of the traditional notion of justice remains to be seen.
Interestingly, although the changes have met widespread opposition from elements of the legal profession in particular, feedback from clients who have heard our talk on which this article is based, has been generally positive: their view is that anything that achieves a quicker and less expensive resolution of disputes is to be welcomed.
Clients frequently also asked whether the new rules will apply to arbitration. To date they do not, but it remains to be seen how tribunals respond, if at all.
Co-Author Sarah J. Caldwell
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