The post-Jackson hardline approach to costs budgeting was reinforced by a landmark Court of Appeal decision today (27 November) in a clear message to the profession that non-compliance will be ‘fatal’.
This latest decision – the most significant of the post-Jackson era – arises out of Andrew Mitchell MP’s ongoing ‘plebgate’ defamation claim against The Sun’s publisher, News Group Newspapers (NGN). It follows the High Court ruling in September that Mitchell, were he to win the claim, would not be entitled to recoup any of his costs from NGN after his solicitors, Atkins Thomson, failed to comply with a costs practice direction.
In a decision has been criticised by pockets of the legal profession as excessive, the Court of Appeal found that Atkins Thomson’s failure to engage in dialogue with NGN’s lawyers over the budget assumptions and failure to file their budget in time for the costs management hearing were ‘not minor or trivial and there was no good excuse for them’.
The judgment added: ‘They resulted in an abortive costs budgeting hearing and an adjournment which had serious consequences for other litigants. Although it seems harsh in the individual case of Mr Mitchell’s claim, if we were to overturn the decision to refuse relief, it is inevitable that the attempt to achieve a change in culture would receive a major setback.’
Costs lawyers Practico advised Simons Muirhead & Burton on the costs management process, and commenting on the judgment, Practico’s managing director Andy Ellis said: ‘The new culture is not zero tolerance – the court was clear that it is not concerned with trivial breaches. But the wriggle room is now extremely narrow when delay will result and especially if the court is inconvenienced.’
The Jackson reforms ushered in a fundamental and deliberate shift of emphasis towards the need for litigation to be conducted efficiently and at proportionate cost and to move away sharply from what Lord Justice Jackson described as ‘the culture of delay and non-compliance’.
However, Geraldine Elliott, a partner at RPC said: ‘This ruling will be seen as a blow for businesses and individuals that choose to pay for the very best legal advice because it introduces a risk that an administrative error will leave them having to pay their own legal costs even if they win.’
Elliott further warned: ‘The ruling could mean we see more professional negligence cases against law firms who fail to submit an accurate costs budget in time. Clients being forced to pay their own costs bills may seek to recover those costs from their lawyers if they think their legal advisers have made a mistake in submitting a costs budget.’
Colm Nugent, a personal injury and insurance barrister at Hardwicke Chambers added: ‘The decision has ramifications for practitioners beyond issues of libel and even costs.
‘The court has sought to provide the lower courts with guidance, but not tramlines; parameters and not a straightjacket. Nonetheless, the message is clear – compliance is required; failure will be fatal.’