CoA clarifies ‘misunderstood’ Mitchell ruling by offering third way on costs

Litigators and courts widely misunderstood and misapplied the Mitchell test, the Court of Appeal said today as it sought to clarify the High Court ruling that was intended to help crack down on spiraling litigation costs.

The appellate court today delivered judgment for three joined cases that were directly affected by the Mitchell costs case. That High Court case, in which judgment was delivered last August, had the effect of restricting claimant costs should the litigant fail to comply with court orders (7 August 2013). 

The ruling, which was handed down by Master McCloud, meant that other courts were following suit and imposing sanctions for trivial breaches.

The appellant Decadent, for instance, was attempting to reverse a ruling in which its claim was struck out because of a late payment of the hearing fee in breach of an “unless” order. DWF partner Marie McMorrow instructed Blackstone Chambers’ Gerard Clarke for the appeal.

Today the CoA said “Mitchell has been misunderstood and is being misapplied by some courts” which is “leading to decisions which are manifestly unjust and disproportionate”.

It handed down guidance on how the case should be interpreted, stating that judges should address an application for relief from sanctions in three stages. The first stage is to identify and assess the seriousness and significance of the individual failure to comply. The second stage is to consider why the default occurred. The third stage is to consider “all the circumstances of the case so as to enable it to deal justly with the application”.

Whilst continuing to emphasise that there was to be a new “culture of compliance”, the CoA warned that parties which failed to cooperate in agreeing extensions or who “opportunistically and unreasonably oppose applications for relief from sanctions” would be heavily penalised in costs.

Lawyers welcomed the ruling as a victory for common sense.  

BLM partner Matthew Harrington, who was instructed for lead appellant Denton, commented: “This is a sea change away from circumstances over the past year, where many trivial breaches have been treated as significant, sometimes with disastrous results for claimants. Save for exceptional cases, trial dates should not be threatened – as had happened in Denton v T H White – and the new guidance should improve cycle times for cases because the rules are clearer-cut than before.”

Hardwicke Chambers’ barrister PJ Kirby QC added: ““This is a retreat from what most of us understood the effect of Mitchell 1 to be even if we had collectively been suffering from a common misunderstanding. Orders should be complied with but this decision allows justice and common sense back into the equation.”

The legal line-up

A2/2014/0126 appeal from HHJ Denyer QC’s order dated 23 December 2013

(1) Charles Graham Denton; (2) Mary Denton; (3) Roger Thomas Denton v (1) TH White Limited; (2) De Laval Limited

For the defendant/appellant (1) TH White Limited; (2) De Laval Limited

St John’s Chambers’ Andrew P McLaughlin instructed by BLM partner Matthew Harrington

For the claimants/respondents (1) Charles Graham Denton; (2) Mary Denton; (3) Roger Thomas Denton

St John’s Chambers’ Richard Stead instructed by Burges Salmon solicitor Thierry De Poerck

A3/2014/0767 appeal from HHJ Jarman QC order dated 18 February 2014

(1) Decadent Vapours Limited v (1) Joseph Bevan; (2) Jamie Salter; (3) Celtic Vapours Limited

For the claimant/appellant (1) Decadent Vapours Limited

Blackstone Chambers’ Gerard Clarke leading Mark Vinall instructed by DWF partner Marie McMorrow and solicitor Tom Nener

For the defendants/respondents (1) Joseph Bevan; (2) Jamie Salter; (3) Celtic Vapours Limited

Iscoed Chambers’ Ben Blakemore instructed by Beor Wilson Lloyd partner Paul Bevan

A3/2014/0870 appeal from HHJ Hodge QC’s order dated 24 February 2014

Utilise TDS Limited v (1) Neil Cranstoun Davies; (2) Bolton Community College Corporation; (3) Watertrain Limited

For the claimant/appellant Utilise TDS Limited

39 Essex Street Vikram Sachdeva and Jack Anderson of the same set instructed by Linder Myers solicitor Steven Boyd

For the defendant/respondent (2) Bolton Community College Corporation

Exchange Chambers’ David Mohyuddin and Ian Tucker instructed by Mills & Reeve partner Richard Dawson-Gerrard

For the intervener, the Bar Council and the Law Society

Landmark Chambers’ David Holland QC instructed by Colemans-CTTS and the Law Society