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Court won't budge on budget


In a post-Jackson reform first, the High Court has refused to grant relief from a draconian sanction it imposed on a party for his failure to file a costs budget within a specified timeframe, which limited any costs recovery to applicable court fees. This is the latest example of the hardline approach now being taken by the courts to parties' non-compliance with rules and orders in the wake of the Jackson reforms.

Case - Andrew Mitchell MP v News Group Newspapers Limited [2013] EWHC 2355 (QB)

In defamation proceedings brought by Andrew Mitchell (AM) against News Group Newspapers Limited (NWG) relating to what has become known as the 'Plebgate' controversy, the High Court found that, as a result of AM's failure to comply with costs budget obligations, he should be treated as having filed a costs budget comprising only the applicable court fees.

The case was governed by transitional provisions contained in the defamation costs management rules (the Scheme Rules), a pilot scheme for the general costs management rules which applies in respect of most multi-track cases (the Costs Rules).

AM had failed to comply with requirements that the parties:

  • discuss the assumptions and timetable upon which their respective costs budgets are based during the preparation of their budgets; and
  • exchange and file their costs budgets at least 7 days before the hearing for which the budgets are required.

AM (or rather, his solicitors) had done neither. His costs budget was filed only the day before a Case Management Conference and only after prompting by the Court.

The Court's sanction for failure to comply (excluding recovery of general legal costs) was imposed by reference to a 'failure to file' provision contained in the Costs Rules and to the revised Overriding Objective (CPR Part 1.1) which now emphasises the need for cases to be dealt with "at proportionate cost".

Master McCloud then rejected AM's application for relief and determined that her decision to restrict AM's costs budget to applicable court fees was consistent with the new emphasis placed on the stricter enforcement of court rules and orders post-Jackson.

The Master noted that the breach was unilateral, the Defendant having been ready with its budget, and that the parties were well aware that costs budgets needed to be addressed in advance of the hearing. Stretched resources at AM's solicitors was no excuse. Instead, the Court had to place greater emphasis on the effective allocation of limited court and judicial resources between cases.

Recognising the severity of the sanction imposed, Master McCloud granted AM leave to appeal to the Court of Appeal and we understand that an appeal has been filed. In the meantime, the decision sends a clear and stark warning to all those involved in civil litigation. In the words of the Master of the Rolls, to which the Court made reference: "Parties can no longer expect indulgence if they fail to comply with their procedural obligations".

As this case proves, a failure to take heed of the harsher reality of the post-Jackson regime can have disastrous consequences for litigants and their lawyers.

For further information about this article or advice on the effect of the Jackson Reforms, please contact Robert Naylor or Ed Fiddick of TLT's Commercial Dispute Resolution team.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at May 2012. Specific advice should be sought for specific cases; we cannot be held responsible for any action (or decision not to take action) made in reliance upon the content of this publication.
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