The Law Society has welcomed Lord Dyson’s new guidance on dealing with Civil Procedure Rule non-compliance, saying that it will clarify the way that civil litigation is conducted and make it less adversarial and more co-operative.
Following an intervention by the Law Society in three linked appeals related to the interpretation of the Mitchell ruling, the Court of Appeal decided, last week, to try and plot a clear path for dealing with costs sanctions.
The Master of the Rolls, in passing favourable judgment on three appeals – Denton & Ors v TH White (an appeal against relief from sanctions being granted), Decadent Vapours Ltd v Bevan & Ors and Utilities TDS Ltd v Davies (both appealing for a more lenient approach) – said that Mitchell had been “misunderstood and is being misapplied by some courts”.
In what is now being referred to as Mitchell 2, he went on to explain that a judge 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 “failure to comply with any rule, practice direction or court order” which engages rule 3.9(1),” he said.
“If the breach is neither serious nor significant, the court is unlikely to need to spend much time on the second and third stages. The second stage is to consider why the default occurred. The third stage is to evaluate “all the circumstances of the case, so as to enable [the court]to deal justly with the application including [factors (a) and (b)]”.”
Law Society chief executive Desmond Hudson said that Lord Dyson’s ruling was welcome news for solicitors and their clients.
He said that the court’s previous decision in Mitchell and the way it was being applied by the lower courts had resulted in “disproportionate penalties and a breakdown in co-operation between parties to litigation”, which had clogged up the system and introduced huge uncertainty into the whole process of civil litigation.
“This in turn had led to a significant amount of unnecessary satellite litigation, a waste of costs and court resources and the risk of big increases in professional indemnity insurance costs for our members,” he said.
“This decision is a success for the Law Society who intervened on behalf of our members and for common sense. We will, of course, continue to closely monitor the litigation process to ensure that the problems since Mitchell now fall away.
“If the problem of interpretation of the rules is to be eradicated then we also need the courts to be more consistent in the application of the rules”.