Following the decision in Mitchell v News Group Newspapers Limited  EWCA Civ 1537 ("Mitchell"), the courts encountered a dramatic increase in applications in which one party sought to secure a tactical advantage as a result of the other's failure comply with the CPRs or court directions within the prescribed timescales. This resulted in significant volumes of satellite litigation defeating the objective of the courts to ensure that litigation was conducted efficiently and at proportionate cost.
Following the decision in Denton v TH White Limited and Others  EWCA Civ 906 ("Denton"), where the court stepped back from the excessively draconian approach adopted in Mitchell, applications based on "minor" procedural errors, and the associated satellite litigation, had been in decline. However, recently the courts have begun to see another increase in such applications.
The recent decision of Mr Justice Coulson in the case of Freeborn & Anor v Marcal (t/a Dan Marcal Architects)  EWHC 3046 (TCC) ("Marcal") sends a fair but firm message to litigants who seek to take advantage of the courts' hard-line stance on procedural compliance.
In the case of Marcal the dispute surrounding the defendant's filing and service of its cost budget which arose in the CMC on 24 November 2017 was described by Mr Justice Coulson as "all too typical" and as such he set out a warning in his judgment that parties to civil litigation must ensure that they comply with the CPR, reiterating that the courts are "far less forgiving of non-compliance than they ever used to be". However, Mr Justice Coulson cautioned parties that they should carefully consider whether the alleged breach of the rules is in fact a breach, and even where it is, whether it is proportionate, given the circumstances of the case, to require the other side to make an application for relief from sanctions.
The court office letter
The TCC court office wrote to the parties on 20 September 2017 confirming that the date of the CMC would be 24 November 2017 (the "court office letter"). The court office letter expressly required the parties "to file and exchange costs budgets not less than 7 days before the CMC". This is in line with the current version of CPR r 3.13 which provides that:
"(1) Unless the court otherwise orders, all parties…must file and exchange budgets…not later than 21 days before the first case management conference."
Filing and service of the parties' cost budgets
The Claimants served their costs budget on 2 November 2017, in accordance with the standard position set out in CPR r 3.13.
The Defendant relied on the court office letter and did not serve their costs budget until 16 November 2017.
The judgment makes reference to there being inter-parte correspondence about matters concerning the CMC prior to the CMC. However, at no point did the Claimant make reference to the fact that he was waiting for the Defendant's costs budget. In fact, this matter was not raised at all.
On 16 November 2017, when the Defendant filed and served his cost budget, the Claimant wrote to the Defendant explaining that the cost budget should have been provided 14 days earlier, on 2 November 2017.
The Defendant explained their position on the filing and serving of their cost budgets, making reference to the wording of the court office letter. The Defendant also warned that they would seek the associated costs from the Claimant if they were forced to make an application to the court to address the alleged delay.
The Claimant maintained their position, saying that there had been a "gross delay" in the filing and service of the Defendant's costs budget. On the same day, the Claimant wrote to the court office, explaining that as a result the Defendant's late filing of their cost budget, "the Defendant should be treated as having filed a budget comprising only the applicable court fees, in compliance with CPR 3.14" which reflected the result in Mitchell.
As a result, the Defendant made a formal application for relief from sanctions. The matter was then debated at the CMC.
Mr Justice Coulson ruled that the Defendant was not required to make an application for relief from sanctions. He was of the view that CPR r 3.13(1) is clear that the 21 day period only applies "unless the court orders otherwise".
Mr Justice Coulson considered that the court office letter amounted to the court ordering otherwise. He reasoned that it was immaterial whether or not it would have occurred to the Defendants whether the court office letter may have contained an "error", explaining that "a busy litigation solicitor is entitled simply to rely on the date specified in writing by the court office, rather than embarking on an investigation into whether or not the letter contained an error".
Mr Justice Coulson did state that if he was in fact incorrect in his initial conclusion that and the Defendant was required to make an application for relief from sanctions, then he was in no doubt that under the three stage test in Denton, that application should be allowed on the basis:
- that the alleged breach was not serious or significant (first stage). Mr Justice Coulson explained that when the error was been pointed out to the Defendant's solicitor, they took immediate steps to discuss the costs budget, so as to ensure that the delay had no consequence;
- whether or not there was a good reason for the delay (second stage). Mr Justice Coulson concluded that the Defendant was entitled reasonably to rely on the court office letter, and to prepare for the CMC on the basis of the court office letter; and
- in all the circumstances, it was just and reasonable to grant relief (third stage). Mr Justice Coulson held that there was no deliberate breach. There was at worst an inadvertent breach because there was reliance on the court office letter. Mr Justice Coulson also noted that the "delays" caused no prejudice to the Claimant, whereas there would be considerable prejudice to the Defendant if he was not able to rely on his costs budget.
POINTS TO TAKE AWAY
Post-Mitchell and post-Denton, parties to civil litigation must ensure that they comply with the CPR. The court will continue to take a strict view and will not be afraid to apply sanction where a party fails to comply with the CPRs or the directions of the court. However, this "tougher" approach must not be abused by the parties merely seeking to secure a tactical advantage in the proceedings.