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Our panel of experts, Paul Jonson, Adrian Bell, Jonathan Sacher and Ravi Aswani examine the most important cases of 2013.
In the case of Mitchell , the Court of Appeal handed down judgment on 27 November 2013. This decision was much awaited by litigators as a litmus test as to how the Jackson reforms were going to be supported by the appeal courts. The decision may not have been a huge surprise to most observers but it rammed home the light in which the Jackson reforms are viewed by the judiciary. Lord Dyson, Master of the Rolls, said that granting relief from sanctions in the case would ‘give rise to uncertainty and complexity and stimulate satellite litigation’. The problems encountered by the claimant’s law firm, in terms of its resources being stretched very thinly, were not usual according to Lord Dyson, and there was ‘no good excuse’ for the defaults.
This decision makes it perfectly clear that the Jackson reforms will be enforced very strictly by the courts and compliance with the rules, practice directions and orders will be expected.
Adrian Bell (AB): In Mitchell , the Court of Appeal upheld the Master’s decision in the Plebgate libel case that, even if successful in every respect, Mr Mitchell could not recover any legal costs from the publishers of The Sun newspaper (estimated at over £500,000), other than £2,000 of court fees, because his solicitors filed a costs budget late. The court described its decision as potentially harsh, but stated that if it were to overturn the Master’s decision, the attempt by the Jackson reforms to shift litigation culture away from delay and non-compliance would be curtailed.
In the construction sector, Parkwood Leisure Ltd v Laing O’Rourke Wales and West Ltd  EWHC 2665 (TCC),  All ER (D) 221 (Aug) has confirmed that a collateral warranty may in the right circumstances be a ‘construction contract’ under the Housing Grant, Construction and Regeneration Act 1996 (HGCRA 1996) and be subject to the mandatory adjudication regime. This is the first time this matter has come before the courts despite the introduction of HGCRA 1996 over 15 years ago and the extensive amount of case law generated since.
Jonathan Sacher (JS): It is hard to look beyond the recent judgment in Mitchell. This Court of Appeal decision fundamentally alters how the courts approach case management, and gives full force to the new approach advocated by Sir Rupert Jackson.
I also think the Court of Appeal decision in Secretary of State for Health and others v Servier Laboratories Ltd and others; National Grid Electricity Transmission PLC v ABB Ltd and others  EWCA Civ 1234,  All ER (D) 238 (Oct) is interesting insofar as it demonstrates a strong readiness by the English courts to order disclosure by foreign defendants—even where the foreign defendants argue that compliance would leave them in breach of local laws.
The Supreme Court decision in BNY Corporate Trustee Services Ltd v Neuberger Berman Europe Ltd (on behalf of Sealink Funding Ltd); BNY Corporate Trustee Services Ltd v Eurosail-UK 2007-3BL Plc  UKSC 28,  3 All ER 271, which clarified the so-called ‘balance sheet solvency test’, has profound and far-reaching consequences for all securitisation market participants, ratings agencies, and almost any institution addressing financial difficulties.
Ravi Aswani (RA): In Starlight Shipping Cov Allianz Marine & Aviation Versicherungs AG, The Alexandros T UKSC 70,  All ER (D) 71 (Nov) the Supreme Court allowed an appeal from the Court of Appeal. It decided that claims to enforce an exclusive jurisdiction agreement in favour of the courts of England, brought in response to proceedings commenced in another EU member state (in breach of that agreement), need not be stayed to wait for the courts of the other EU member state to (hopefully) decline jurisdiction.
Had the Court of Appeal decision stood, then litigants would only have had the option of challenging the jurisdiction of the courts of the other EU member state and hoping that those courts could be persuaded of a breach of an exclusive jurisdiction agreement and that they should decline jurisdiction.
However, now the Supreme Court provided litigants with the possibility of bringing proceedings in England, while the foreign proceedings remain afoot, for a declaration that those foreign proceedings have been brought in breach of the exclusive jurisdiction clause, and for damages arising from this breach. The Supreme Court took the view that such proceedings were not the same as the foreign proceedings brought in the other EU member state—therefore the English Court was not obliged to stay the English proceedings under art 27 of the EU treaty.
The Jackson reforms have been in force since 1 April 2013, and to anyone who has read the implementation lectures and the amendments made to the Civil Procedure Rules 1998, SI 1998/3132 it was always clear that they had implemented a new change—seeking to change the entire culture of civil litigation in this country and remove the routine delays parties were guilty of in prosecuting their litigation.
Nevertheless, it was invariably the case that some poor litigant would find themselves on the wrong end of the reforms, possibly through no fault of their own. Andrew Mitchell MP is unfortunately the person who has had to bear the effect of the new reforms in his personal defamation action against Newsgroup Newspapers Ltd. The Court of Appeal, in upholding Master McCloud, decided that Mr Mitchell should not be granted relief from sanction for failing to lodge his costs budget in time. The effect of this would be to limit his costs recoverable from the defendant, in the event of success at trial, to court fees. This will have the practical effect of leaving Mr Mitchell to bear his own legal fees even if he wins in his defamation action.
PJ: In terms of the impact on the team at Pannone, we have reviewed our case management and diary systems to ensure they are ‘Jackson proof’. We have also re-drafted our engagement letter with clients to take account of the reforms and to spell out the consequences of non-compliance. The clients need to understand this is a ‘one strike and you’re out’ environment. We and the client work as a team and the client needs to know and understand the environment in which their case is being litigated.
AB: The Mitchell decision may lead to an initial increase in satellite litigation to determine the boundaries of what type of breach is ‘trivial’ or for which there is a ‘good reason’ (the only two situations where the Court of Appeal said relief from sanctions would be given).
Mitchell should also advance its laudable aim of encouraging compliance with court deadlines and orders. However, this stricter approach may result in a more aggressive litigation culture, with solicitors seeking to use procedural orders as tactical weapons, refusing requests for reasonable extensions of time and taking advantage of any minor (but not trivial) breach of the rules, contrary to the court’s aims of reducing adversarial litigation and the promotion of alternative dispute resolution.
The impact of Parkwood will depend on how drafters of collateral warranties adapt their practices. Parties using standard forms of warranty should carefully consider whether the statutory adjudication scheme will apply. For example, the JCT Collateral Warranty for Purchasers or Tenants (2011 version) specifically provides that the warranty is given ‘as at and with effect from practical completion’, which would probably not be considered a construction contract. By contrast, the JCT Collateral Warranty for Funders (2011) states: ‘The Contractor warrants that he has complied and will continue to comply with the Building Contract’, providing an ongoing obligation that would point towards the application of the CA 1996.
JS: The implications of Mitchell are significant for lawyers and clients alike. When the courts are adopting a very low tolerance approach to deadlines, solicitors will feel professionally obliged to adopt a similarly robust approach when asked by their opponents to consent to any extension of time that is more than trivial. This is bound to result in a deluge of court applications.
The Mitchell judgment also leaves unanswered several critical questions. For example, what will be the appropriate/default sanction for breaching a deadline with no specific prescribed sanction (such as late exchange of lists of documents)? Are all directions now to be treated as de facto unless orders, resulting in strike out for all but the most trivial of breaches? This would seem exceptionally harsh—even post-Jackson. If not strike out, what sanction can parties expect in the event of failure to meet deadlines?
In the very recent judgment in Durrant v Chief Constable of Avon and Somerset Constabulary  EWCA Civ 1624,  All ER (D) 186 (Dec) the defendant was debarred from relying on witness evidence submitted late. However, this sanction was imposed following breach of an unless order under which that sanction had been threatened. Would this still be the appropriate sanction if it had not been specifically forewarned?
RA: Mitchell is a sobering judgment which reminds all litigants, and their solicitors, that the court simply will not tolerate delays in the same way as before, and that it is vitally important for litigants, and their solicitors, to get things right the first time. The Court of Appeal made clear that unless the failure in question was trifling/de minimis, the (difficult) burden would be on the party seeking relief to explain just why it should be granted. It has already been suggested in the legal press that smaller firms who conduct some litigation work in the courts may find it difficult to obtain professional indemnity insurance for obvious reasons.
Paul Jonson is head of the dispute resolution and regulatory division at Pannone. Adrian Bell is a partner and solicitor advocate in the Energy, Projects and Construction Disputes team at CMS Cameron Mckenna. Jonathan Sacher is a senior reinsurance and insurance partner and the head of the litigation and dispute resolution department at Berwin Leighton Paisner. Ravi Aswani is a commercial dispute resolution barrister at Stone Chambers.
Interviewed by Nicola Laver. The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.
This article was first published on Lexis®PSL Dispute Resolution on 6 January 2014. Click here for a free 24 trial of Lexis®PSL.
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