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Costs and Compliance: making sense of Jackson post Mitchell and Denton

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24/02/2015

Jackson, Denton, Mitchell… anyone involved with civil litigation over the last two years will have heard these names repeatedly and will be aware of their importance to compliance with the new rules and the cost consequences of failure to comply. But in light of all of the rule changes and satellite cases, where are we now on the crucial question of when should the court grant relief from sanctions under CPR 3.9, and what other key principles have been established in the post-Jackson world?

Civil Procedure in Practice: What you need to know

  • It is possible to be guilty of a breach of the CPR – potentially even a significant breach – and still get away with it [1].The Court of Appeal has softened the very strict approach to compliance that we saw in Mitchell [2] by its establishment, in Denton, of a 3-step test for determining whether to grant relief from sanctions:-
  1. Was the breach serious or significant;
  2. What was the reason or excuse for the breach; and
  3. What were all the circumstances of the case?

If there is a genuine reason or excuse for a breach of the rules, or if the overall circumstances so justify, then even a significant instance of non-compliance might be excused.

  • Solicitors have a duty not to take trivial points. In Denton the court went so far as to specify that a lawyer or innocent party should not attempt to rely on the Mitchell strict approach to compliance in a tactical way by pursuing bad points or exploiting minor technicalities, or heavy costs sanctions may be applied.
  • The emphasis on effect. In applying CPR 3.9 and the Denton test the court will consider how draconian or severe an effect on the outcome of the case, or access to justice, would result from a refusal to grant relief [3].
  • The Yeo [4] case provides practical costs budgeting guidance:-
  1. Even though incurred costs are not subject to the budgeting process [5], a costs budget may be reduced for reasons that also apply to incurred costs and so recording those reasons at budget approval is likely to assist the parties to later agree costs;
  2. Although overall reasonableness and proportionality is the principal criterion for assessing costs budgets, the court may also consider rates and estimated hours;
  3. Any anticipated work which falls outside Precedent H categories must be identifiable and only included in a costs budget if it is more likely than not to be incurred; and
  4. Early filing and exchange of budgets might be appropriate in some cases (for example if there is a wide disparity in parties’ resources) and can be limited to part of proceedings and later extended if necessary.
  • Even better, there are ways to limit the court’s involvement in cost management! If costs budgets are agreed between parties then, under CPR 3.15 (2), the court will not interfere. Similarly, significant payments on account for winning parties (say, 90 – 100% of the budgeted amount) will mean that there is little appetite for detailed assessment, and this may become commonplace [6].
  • The importance of being proactive. Various cases, in various contexts, have highlighted the import, in the post-Jackson world, of being prompt and upfront when it comes to costs and compliance. Do not delay, prevaricate or confound: an honest and timely application may well deliver the desired result [7].
  • Is there still higher procedural guidance to come?Unusually for a procedural case, Thevarajah v Riordan [8] is headed to the Supreme Court. In that case a defendant had been debarred from defending and sought to rely on CPR 3.1 (7) (the court’s power to vary or revoke an order) to undo the debarring order. The Court of Appeal said that 3.17 (7) only applies where an order has been made in ignorance of a critical detail or where a critical subsequent event affects the position, otherwise a party should make a CPR 3.9 application for relief. It will be interesting to see what comments the Supreme Court has to make in this context. Walker Morris will watch with interest and report.

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[1] Denton v White (and others) [2014] EWCA Civ 906 (For further detail, see our previous insight Costs and Compliance: Mitchell Take 2 – revised guidance for those seeking relief from court sanctions)
[2] [2013] EWCA Civ 1537
[3] Chartwell v Fergies Properties [2014] EWCA Civ 506; Newland v Trading Fzc [2014] EWHC 1986 (Comm); Henry v News Group [2013] EWCA Civ 19
[4] [2015] EWHC 209 (QB)
[5] CPR 3.12 (2) and 3.15
[6] In Thomas Pink Ltd v Victoria’s Secret UK Ltd [2014] EWHC 3258 an interim award of 90% of the winning claimant’s cost budget was made on account of costs pending detailed assessment.  Similarly see Excelerate Technology v Cumberbatch and others [2015] EWHC 204 (QB)
[7] Durrant v Avon and Somerset Constabulary [2013] EWCA Civ 1624; Baho v Meerza [2014] EWCA Civ 669; Samara v MBI & Partners UK Ltd [2014] EWHC 563 (QB); Hallam v Baker [2014] EWCA Civ 661
[8] [2014] EWCA Civ 15

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