Nicholas Bacon QC on Costs budgets and applications for relief from sanctions

Nicholas Bacon QC on Costs budgets and applications for relief from sanctions

The new tougher approach to rule compliance and relief from sanctions under CPR 3.9 is considered by Nicholas Bacon QC, of 4 New Square, in the light of a recent Court of Appeal decision in the ‘Plebgate’ defamation proceedings.

Original news

Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537, [2013] All ER (D) 314 (Nov)

The Court of Appeal, Civil Division, set out guidance as to how the new approach to an application for relief from sanctions under the Civil Procedure Rules 1998, SI 1998/3132, r 3.9 (CPR) should be applied in practice and stated that the new more robust approach would mean that relief from sanctions should be granted more sparingly than previously. Accordingly, it dismissed the claimant’s appeal against a master’s refusal to grant him relief from the sanction she had imposed for non-compliance with a costs budget deadline. Her sanction had been that he was deemed to have filed a budget limited to court fees because he had failed to file his budget at least seven days before the hearing, as required under CPR PD51D Defamation Proceedings Costs Management Scheme, a pilot scheme in force when he had issued defamation proceedings.

Is the Court of Appeal’s approach consistent with its approach in Henry v News Group Newspapers Ltd which was also under a pilot scheme?

The only similarity between the two cases factually is that both were conducted pursuant to PD51D. However, in Mitchell , the failure to comply with the court’s order occurred after 1 April 2013 and therefore was subject to both the new overriding objective and the new CPR 3.9. This meant the Court of Appeal was not able to defer consideration of the impact of those new provisions in the manner in which the differently constituted court in Henry (Henry v News Group Newspapers Ltd [2013] EWCA Civ 19, [2013] 2 All ER 840) did.

What difference, if any, is there if the proceedings are under a costs budgeting pilot scheme (mandatory or voluntary) rather than the new CPR 3 provisions?

There are differences between the two regimes. Technically, a case proceeding under the PD51D falls outside of the new costs budgeting regime. This is because of the transitional provision contained in the Civil Procedure (Amendment) Rules 2013, SI 2013/262, r 22(12), which provides that any defamation proceedings commenced before 1 April 2013 within the scope of PD51D will proceed and be completed in accordance with that scheme.

However, this provision does not exclude the operation of the new post-1 April 2013 overriding objective or the application of the new CPR 3.9 to default of court orders made under the pilot. Accordingly, a breach under the pilot will be treated in the same way as a breach under any other rule, practice direction or court order.

What practical insights does the judgment provide as to application of the new provisions in CPR 3.9 concerning relief from sanctions?

As Sir Rupert Jackson made clear at Ch 39, para 6.5 of his Final Report in his Review of Civil Litigation Costs, the explicit mention in his recommendation for the new version of CPR 3.9 of the obligation to consider the need (i) for litigation to be conducted efficiently and at proportionate cost and (ii) to enforce compliance with rules, practice directions and court orders reflected a deliberate shift of emphasis.

The Court of Appeal described these considerations ‘as of paramount importance and [to] be given great weight’. It is significant that they are the only considerations which have been singled out for specific mention in the rule. From a practical point of view the Court of Appeal recognised that CPR 3.9 requires the court to consider ‘all the circumstances of the case, so as to enable it to deal justly with the application’ but it concluded that the two factors in CPR 3.9 should be given more weight than any other factors. The Court of Appeal emphasised the importance of courts having regard to the needs and interests of all court users when case managing in an individual case, rather than taking a purely case-by-case merits-based approach.

The Court of Appeal did give some guidance of its own as to the correct approach to take when applying CPR 3.9. It will usually be appropriate to start by considering the nature of the non-compliance with the relevant rule, practice direction or court order. If this can properly be regarded as trivial, the court will usually grant relief, provided that an application is made promptly. Thus the principle ‘de minimis non curat lex’ (the law is not concerned with trivial things) applies.

It follows that the court will usually grant relief if there has been no more than an insignificant failure to comply with an order, for example where there has been a failure of form rather than substance or where the party has narrowly missed the deadline imposed by the order, but has otherwise fully complied with its terms. If the non-compliance cannot be characterised as trivial, then the burden is on the defaulting party to persuade the court to grant relief.

The court will want to consider why the default occurred. If there is a good reason for it, the court will be likely to decide that relief should be granted. Debilitating illness and involvement in an accident preventing compliance may be good reasons. Later developments in the course of the litigation process are likely to be a good reason if they show that the period for compliance originally imposed was unreasonable although the period seemed to be reasonable at the time and could not realistically have been the subject of an appeal. Merely overlooking a deadline, whether on account of overwork or otherwise, is unlikely to be a good reason. Pressure of work will rarely be a good reason.

The Court of Appeal’s approach to applications for extension of time is worthy of note too. It decided that applications made before time has expired will be looked upon more favourably than applications for relief from sanction made after the event.

Aside from the specific rules dealing with relief, what other opportunities are there to escape the sanctions for failing to file, or filing incorrectly, a budget?

Very few, if any! If an order is made for the filing of budgets then absent an appeal against that order in the first place (which will be very exceptional), the order will have to be complied with and any failure to do so will be determined in accordance with CPR 3.9.

Interviewed by Robert Matthews. 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 December 2013. Click here for a free 24 trial of Lexis®PSL.

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