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Mitchell – Is the tide turning?

Written by Muhammed Poswall on 09 May 2014

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The decision in Mitchell v News Group Newspapers sent a shiver down every litigator’s spine. Mr Mitchell’s solicitors failed to comply with the Order for Directions and file and exchange a costs budget at least 7 days before the case management hearing. Master McCloud sent an email to both parties on 17 June 2013 querying if the budgets had been agreed and notifying the parties that the Claimant had failed to file its costs budget. The Claimant’s solicitor filed the costs budget that afternoon prior to the hearing on 18 June 2013. The Defendant’s solicitor argued that they had not been given time to consider the Claimant’s cost budget. Master McCloud applied the rules and ordered that the Claimant’s costs budget only consist of court fees. A smidgen of the £500,000 the Claimant was seeking. Master McCloud also rejected the Claimant’s solicitor application for relief from sanction under CPR 3.9 and highlighted the overriding objective which required cases to be dealt with justly, at a proportionate cost and to ensure compliance with rules, orders and practice directions. The Court of Appeal upheld this decision adding that relief of sanction would be granted where the breach is minor and trivial in nature or there is a good reason for non compliance. This was not the case in this instance.

In light of the Mitchell ruling it seems the Courts are now taking a pragmatic approach to the strict principles set out in Mitchell. Take for example the case of Chartwell Estate Agents Ltd v Fergies Properties SA and Hyam Lehrer. The parties failed to serve and exchange witness evidence within the required time and continued to argue about disclosure. An application for relief of sanction and an extension to file the witness statements for both parties was filed by the Claimant. The penalty for failing to serve witness statements is that a party will not be able to rely on its evidence at trial unless the court gives permission. The court held that while the breach was not trivial and there was no good reason to explain the non compliance, the parties had failed to understand the requirements of the new rules and that the penalty would be too harsh if no relief was granted. The court allowed the parties a further seven days to comply with the order. No order as to costs of the application was made at the hearing.

In the case of Nelson v Circle Thirty Three Housing Trust Ltd the court held that even though the Defendant failed to comply with an unless order which required her to provide copies of her credit card statements the court granted relief of sanction. The court held that the Defendant had done everything reasonably possible to obtain the credit card statements and it was the fault of her bank that she was unable to comply with the order.

On the flip side, the case of Samara v MBI & Partners UK Limited sets out that the Jackson reforms apply to all of the CPR including rules regarding the setting aside of default judgments.

No doubt a shock has been sent throughout the legal system with the Mitchell decision, but it seems a level headed approach is pushing through and according to Mr Justice Ramsay the disquiet relating to the Mitchell decision is likely to settle down. We will have to wait and see.

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