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Life after Mitchell: The fightback begins

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16 Apr 2014

There has been much excitement following the Mitchell decision, and concerns from many that the Court of Appeal’s ruling on costs would lead to gamesmanship and unreasonable refusals of extensions of time by parties in the hope that they would gain a tactical advantage over their opponents at any subsequent hearing.

In Mitchell, the Court of Appeal gave guidance to the lower courts as to how to decide what sanctions, if any, should be applied to a party’s breach of the CPR or a court order. The guidance was basically a two-stage test which was as follows:

  • If the non-compliance was trivial, then the court will usually grant relief;
  • If it was not trivial, the party will have to persuade the court that there was a good reason for the default.

Two recent Commercial Court decisions have had to deal with this issue in the wake of Mitchell.

Summit Navigation

In Summit Navigation Ltd v Generali Romania Asigurare Reasigurare SA [2014] EWHC 298 (Comm), the Defendants failed to accept delivery of a bond for security of costs. The order for security of costs had stated that the security had to be provided by 4pm on 5 December 2013 or the action would be stayed. However, there were some delays obtaining a signature from the relevant underwriter and the bond was not delivered until the morning of 6 December 2014.

At the Commercial Court, Leggatt J granted the Claimant’s application to lift the stay. Leggatt J focused on the difference between a permanent and a temporary sanction. He stated that in Mitchell the Court of Appeal was dealing with a sanction that was permanent, i.e. the failure to file a costs budget meant that the party was permanently deprived of recovering their costs apart from court costs. In Summit Navigation the sanction was only temporary as a stay could be lifted at a later stage of the litigation.

Therefore, Leggatt J was of the view that Mitchell could be distinguished.

However, even if the Mitchell test did apply, then Leggatt J was of the view that that he would still have granted relief as non-compliance was not material, or trivial, as default had no impact on the litigation as a whole.

In the alternative, Leggatt J stated that even if he found that the default was not trivial, there was a good reason for the default which was beyond the control of the party and their solicitor. The reason the deadline had not been met was because of the failure of the underwriter to sign off the relevant documents in time. They had not merely overlooked the deadline, as had occurred in Mitchell.

Leggatt J did not stop there. Perhaps to warn off other litigants who wish to useMitchell in shows of gamesmanship, Leggatt J reminded us that the Jackson reforms are not