Mid-year review 2016—case management and procedure

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This article was first published on Lexis®PSL Dispute Resolution on 17 August 2016. Click for a free trial of Lexis®PSL

Dispute Resolution analysis: Gwendoline Davies, partner and head of commercial dispute resolution at Walker Morris, considers the key developments in case management and procedure so far in 2016, including in relation to predictive coding, relief from sanctions, the Briggs Review and the introduction of various pilot schemes (including those in the Rolls Building and the new Bill of Costs) and anticipates further changes to come this year.

What have been the most significant case law developments during the first half of 2016?

The requirement to help the court to further the overriding objective—enabling it to deal with cases justly and at proportionate cost—is brought into especially sharp focus in relation to disclosure. Controlling the disclosure exercise efficiently and cost-effectively is all the more challenging at a time when businesses are creating more and more electronic data for collection and review. One of the ways in which parties are addressing this is by exploring the use of automated search techniques, such as predictive coding technology. A senior lawyer’s decisions as to relevance (and privilege) are essentially extrapolated across the entire data set by a process of machine learning, so that those documents most likely to be relevant are identified and prioritised. This can lead to potentially significant time and cost savings and, arguably, better quality results compared with more traditional methods. 2016 saw the first reported High Court decisions expressly endorsing the use of this technology in the English courts: Pyrrho Investments Ltd v MWB Property Ltd [2016] EWHC 256 (Ch) (where the parties had agreed to its use) and Brown v BCA Trading Ltd [2016] EWHC 1464 (Ch) (where they had not). While predictive coding will not be appropriate in every case—it is likely to be best suited to large-scale projects—these decisions are significant because they pave the way for parties to consider and embrace ever more innovative approaches to the sensible management of e-disclosure in future.

Case law on compliance and relief from sanctions (under CPR 3.9) has continued to develop following the court’s clarification of the appropriate test in Denton v White [2014] EWCA Civ 906, [2014] EWCA Civ 906. After (1) assessing whether the breach is serious or significant and (2) the reason for it, the court goes on to (3) consider all the circumstances of the case. While this third stage has introduced an element of flexibility, it is very clear from recent decisions that the courts will continue to adopt a no-nonsense approach to non-compliance with rules and court orders. Applying promptly for relief is key.

In British Gas Trading Ltd v Oak Cash & Carry Ltd [2016] EWCA Civ 153, [2016] All ER (D) 128 (Mar), the defence was automatically struck out for failure to comply with an unless order requiring the filing of the defendant’s listing questionnaire. The questionnaire was filed two days after the deadline, but the defendant delayed in applying for relief from sanctions until just over one month later, after judgment in default of defence had been entered. The Court of Appeal refused to grant relief. When considering all the circumstances of the case, the delay in applying for relief was the critical factor. The late filing of the questionnaire did not have any adverse impact on the smooth conduct of the action. However, the trial date had already been lost by the time the application was made, and that had serious consequences. The decision also confirms that, in order to assess the seriousness and significance of a breach of an unless order, it is necessary also to look at the underlying breach, ie at what the defaulting party failed to do in the first place. The usual position is that the defaulting party’s other breaches of rules or orders are taken into account at the third stage of the test. This was recently clarified by the Court of Appeal in McTear v Engelhard [2016] EWCA Civ 487, [2016] All ER (D) 187 (May).

In Gentry v Miller [2016] EWCA Civ 141, [2016] All ER (D) 107 (Mar), the defaulting defendant’s insurer had delayed ‘inexcusably’ in applying for relief on its behalf, which was refused. Giving the leading judgment of the Court of Appeal, Vos J commented that:

Mitchell and Denton represented a turning point in the need for litigation to be undertaken efficiently and at proportionate cost, and for the rules and orders of the court to be obeyed. Professional litigants are particularly qualified to respect this change and must do so.’

This case is also an example of the wide application of the relief from sanctions test. Here, the Court of Appeal confirmed that the test applies to applications to set aside default judgments. Other examples from case law in the first half of 2016 include the test’s application to non-compliance in the tax tribunals of the first-tier tribunal and upper tribunal (BPP Holdings v HMRC [2016] EWCA Civ 121, [2016] All ER (D) 16 (Mar) and Grindley v HMRC [2016] UKFTT 384 (TC)) and to an application for a time extension under CPR 11 (Zumax Nigeria v First City Monument Bank [2016] EWCA Civ 567).

It is worth referring briefly to the Supreme Court’s December 2015 decision in Thevarajah v Riordan [2015] UKSC 78, [2015] All ER (D) 146 (Dec) confirming that, where a party which has already been unsuccessful in obtaining relief applies for a second time, that second application is effectively an application under CPR 3.1(7) to vary or revoke the original order refusing relief. There was no need for the Supreme Court, which is not usually in the business of ruling on case management issues, to consider Denton (or its predecessor Mitchell). In the words of Lord Neuberger, who delivered the judgment:

‘Quite rightly, there has been no suggestion that we should reconsider what was said in those decisions.’

In Lewis v Ward Hadaway [2015] EWHC 3503 (Ch), [2016] All ER (D) 46 (Jan), parties were warned that attempts to avoid paying a higher court fee by deliberately understating the value of a claim on the claim form will be met with a robust response—summary judgment was granted against eleven of the claimants on grounds of limitation (a claim is ‘brought’ for limitation purposes when the claim form is delivered to the court for issue together with the appropriate fee).

What have been the most notable procedural developments during the first half of 2016?

The current pace of change in civil litigation is relentless. Against a backdrop of rising court fees and a push to bring the justice system into the modern age, we are seeing a considerable amount of activity including a raft of pilot schemes and proposals for radical reform (including an extension to the fixed costs regime for all claims worth up to £250,000, which I will not go into here).

In July last year, the Lord Chief Justice and Master of the Rolls commissioned an urgent review of the structure of the civil courts in England and Wales. Lord Justice Briggs published his interim report in January. The much-anticipated final report was recently published and recommends sweeping changes to the existing system. Key proposals include the creation of an ‘Online Court’ for the resolution of money claims valued at up to £25,000 (with minimal, if any, lawyer involvement) and a substantial increase in the current £100,000 threshold below which claims cannot be issued in the High Court to £250,000 (with a view to raising it to £500,000 in future). It is understood that the Ministry of Justice (MoJ) has agreed to implement the concept of the Online Court, with legislation being prepared to provide for a new online procedure and for the development of a completely new set of simplified procedure rules.

The review coincides with a wider five-year programme to fundamentally reform and modernise courts, tribunals and the administration of justice generally. The MoJ confirmed in February its intention to close 86 courts. Plans for full digitisation are already underway, with the aim that the civil courts will essentially be ‘paperless’. This will have a major impact on case management. One example is the indication that the concept of the District Registry as a place for the issue of High Court proceedings will eventually be replaced by a single portal for the issue of all civil proceedings. This will uncouple the issue of proceedings from geographical location and give the courts control over the location for the handling, management and determination of a claim.

We have continued to see the implementation of various court fee increases initially proposed in 2015 (following the radical, and highly controversial, increases introduced in March that year), including a general 10% uplift on fees across a wide range of civil proceedings. (The £10,000 issue cap for money claims is being retained—for now.)

In addition to the various pilot schemes already operating (Shorter and Flexible Trials, Electronic Working, Financial Markets Test Case Scheme, New Bill of Costs), April 2016 saw the launch of a pilot for Insolvency Express Trials in the Bankruptcy and Companies Courts of the Chancery Division in relation to proceedings before the Bankruptcy Registrars. The scheme will run for two years and deals with simple applications which can be disposed of in no more than two days, require limited directions and disclosure of documents, and where the costs of each party will not exceed £75,000 (excluding VAT and court fees).

What developments are you expecting during the rest of 2016?

We are yet to see the implementation of proposed new fees in the Court of Appeal—it is expected that these will be introduced later this year.

The Civil Procedure Rule Committee (CPRC) will be looking at ways of reducing the volume of the CPR, including CPR 3 dealing with case management. It will certainly be interesting to learn the outcome of those deliberations.

It is likely that the Briggs review will lead to major reform. It is not clear which recommendations will be implemented, how and by when, but I would expect to hear more on this topic at some point this year.

One of Briggs LJ’s recurring themes is the current burden on the Court of Appeal. Steps have already been taken to address this issue. Various changes to the procedural rules in respect of appeals to the Court of Appeal will come into effect in October. (The package of reforms in this area also includes changes to the routes of appeal—the relevant legislation has been published in draft.)

The voluntary Electronic Working pilot in the Rolls Building courts is due to run until mid-November. CPR changes are anticipated in this area in October. Briggs LJ mentioned in his report that the CPRC has recently approved the beginning of a staged process of making the use of the ‘CE-File’ system compulsory for court users in the Rolls Building, which is expected to be completed by April 2017.

What have been the most notable features of your practice so far this year?

While there is a lot of emphasis placed on the court’s power to impose sanctions for non-compliance and to grant relief, this year I have been reminded of just how wide-ranging the court’s case management powers are, including the power to adjourn or bring forward a hearing, the duty to set timetables, the power to control issues and evidence, and to make an order of its own initiative. On top of that, the court’s power to manage costs—taking into account proportionality—informs every case management decision made throughout the lifecycle of a claim.

One way for the parties to regain some control over case management and the content, timescale and cost of litigation, is to make use of the Shorter and Flexible Trials pilot schemes currently operating in the Rolls Building courts. Some aspects of the litigation process are dispensed with altogether, with flexibility introduced into case management procedures appropriate to the individual claim. I have noted with interest a new scheme proposed this year for the resolution of Technology and Construction Court claims (and possibly others) in the North East region, to allow parties to make informed decisions at the outset, with reasonable certainty as to the time and costs involved in concluding the litigation process.

Interviewed by Jenny Rayner.