The Court of Appeal has today handed down a crucial judgment which will make civil litigation in England and Wales less adversarial and more co-operative, following an intervention by the Law Society
Following an intervention by the Law Society in three linked appeals, the Court of Appeal has decided to issue guidance which will clarify the way civil litigation is conducted.
The Law Society had called for clear guidance on costs sanctions and a re-emphasis of parts of the law to make civil litigation less adversarial and more co-operative.
The significance of today’s ruling is that it will help to clarify the interpretation of Civil Procedure Rules and the Court of Appeal’s earlier guidance in the leading case of Mitchell v News Group Newspapers Ltd, which led to significant issues for all solicitors involved in litigation.
The Law Society said the Mitchell decision had a ”significantly detrimental” effect on the conduct of civil litigation as the judgment’s strict application of case management rules has led to ”a raft of satellite litigation” that has clogged up the courts. It has also led to inconsistent lower court decisions and a much more adversarial, non-cooperative litigation culture with increased costs.
Having considered the Law Society’s argument the Court of Appeal has now set out and explained a three-stage test to be applied. The court anticipates that a contested application for relief from sanctions should now be exceptional and it has warned the profession that ”opportunism” would be penalised.
Commenting on the judgment Law Society chief executive Desmond Hudson said:
”The Court of Appeal’s decision in these three cases and their conclusion that the earlier judgment in Mitchell had been misunderstood and misapplied by some courts is welcome news for solicitors.
”I am pleased to say that as a result of the submissions which were made by the Society, and which were gratefully welcomed by the court, further guidance has been issued. The court’s previous decision in Mitchell and the way it was being applied by the lower courts had resulted in disproportionate penalties and a breakdown in co-operation between parties to litigation, clogging up the system and introducing huge uncertainty into the whole process of civil litigation. This in turn had led to a significant amount of unnecessary satellite litigation, a waste of costs and court resources and the risk of big increases in professional indemnity insurance costs for our members.
“The guidance has clarified the factors which the court believes should be taken into account.
”This decision is a success for the Law Society who intervened on behalf of our members and for common sense. We will, of course, continue to closely monitor the litigation process to ensure that the problems since Mitchell now fall away. If the problem of interpretation of the rules is to be eradicated then we also need the courts to be more consistent in the application of the rules.”
Notes to editors
The principal criticisms of Mitchell were summarised as:
- the ‘triviality’ test amounted to an ‘exceptionality’ test, which had been rejected by Jackson LJ in his Review of Civil Litigation - Final Report, and that it was unjustifiably narrow.
- the description of factors a) and b) in CPR 3.9(1) as ‘paramount considerations’ gives too much weight to those factors and is inconsistent with CPR 3.9 when read in conjunction with CPR 1.1 and that they should be given no more weight than all of the other relevant factors.
- the result has been the imposition of disproportionate penalties on parties which have had little practical effect on the course of litigation - the result unsatisfactory, adding to the costs of litigation, an increase in insurance premiums and a windfall for one party.
The Court of Appeal was of the view that the ‘Mitchell guidance’ remained substantially sound but that the problem was the way it had been interpreted. It was critical of the unreasonable approach, as either too draconian or unduly relaxed, which had been adopted in some cases by the judiciary. The Court then went on to explain in detail a three stage approach, which it hoped would avoid the need to refer to earlier authorities, which are, briefly, were as follows:
1. Identify the seriousness or significance of the failure to comply with any rule, practice direction or court order.
Whilst ‘triviality’ was a useful concept at the first stage (despite not being part of the test described in the rule) it would be useful if, in future, the focus of the enquiry was not whether the breach had been trivial but whether it was ‘serious or significant’.
This assessment should not, initially, involve a consideration of other unrelated matters which had occurred previously. However, it was accepted that the court may wish to take into account previous conduct as one of the relevant circumstances.
If it is held that the breach was not serious or significant relief from sanctions should usually be granted making it, usually, unnecessary to go any further. However, if serious or significant, the second and third stages assume greater significance.
2. The court should consider why the failure or default occurred.
3. If there is a serious / significant breach without good reason it will not necessarily follow that the application for relief from sanctions should fail because CPR 3.9(1) requires that, in every case, the court will consider ”all the circumstances of the case, so as to enable it to deal justly with the application”.