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Monday, 7 July 2014

Mitchell - heading back to planet earth?

I have gone on and on here about the insanity that followed the Court of Appeal decision in Mitchell v News Group Newspapers towards the end of last year. The madness was summed up by one insurance spokesman who commented that we no longer had a clue what we were doing!

Cases worth thousands of pounds were being struck out because of documents being filed a few days late. This all led to the bizarre and chaotic situation where solicitors were becoming so afraid of missing deadlines, however minor, that they had no choice but to issue application after application to extend time limits.

So there were sighs of relief on Friday as the Court of Appeal including Dyson LJ, who gave the Mitchell judgment, and Jackson LJ, he of the eponymous ‘reforms’, told us that enough was enough. The chaos was not caused by the Mitchell judgment itself. It was all a misunderstanding by judges who had been over enthusiastic in their draconian interpretation.

The Appeal judges heavily criticised the opportunism of parties who had used the judgment to their advantage. In future they can expect o be heavily penalised in costs if they refuse reasonable requests for extensions of time.

The judges laid out some guidelines for courts dealing with failure to comply with directions.

They have set out a 3 stage approach to such applications. Rather than summarise them I have set them out below for future reference. This is not quite returing us to planet earth but is certainly a very positive development. I do wonder what happens now to the claims being pursued against lawyers in relation to claims struck out due to the judicial 'misunderstanding'. I see some litigation ahead on that one!

 The full judgment is available here –

1. The seriousness of the breach

“It seems that the word “trivial” has given rise to some difficulty. For example, it has given rise to arguments as to whether a substantial delay in complying with the terms of a rule or order which has no effect on the efficient running of the litigation is or is not to be regarded as trivial. Such semantic disputes do not promote the conduct of litigation efficiently and at proportionate cost. In these circumstances, we think it would be preferable if in future the focus of the enquiry at the first stage should not be on whether the breach has been trivial. Rather, it should be on whether the breach has been serious or significant…”

“We therefore prefer simply to say that, in evaluating a breach, judges should assess its seriousness and significance. We recognise that the concepts of seriousness and significance are not hard-edged and that there are degrees of seriousness and significance, but we hope that, assisted by the guidance given in this decision and its application in individual cases over time, courts will deal with these applications in a consistent manner.”

2.The reason for the breach

“The second stage cannot be derived from the express wording of rule 3.9(1), but it is nonetheless important particularly where the breach is serious or significant. The
court should consider why the failure or default occurred: this is what the court said in Mitchell at para 41. It would be inappropriate to produce an encyclopedia of good and bad reasons for a failure to comply with rules, practice directions or court orders. Para 41 of Mitchell gives some examples, but they are no more than examples.”

3. Opportunism

“The important misunderstanding that has occurred is that, if (i) there is a non-trivial
(now serious or significant) breach and (ii) there is no good reason for the breach, the
application for relief from sanctions will automatically fail. That is not so and is not
what the court said in Mitchell: see para 37. Rule 3.9(1) requires that, in every case,the court will consider “all the circumstances of the case, so as to enable it to deal justly with the application”.

“Thus, the court must, in considering all the circumstances of the case so as to enable it
to deal with the application justly, give particular weight to these two important
factors. In doing so, it will take account of the seriousness and significance of the
breach (which has been assessed at the first stage) and any explanation (which has
been considered at the second stage). The more serious or significant the breach the
less likely it is that relief will be granted unless there is a good reason for it. Where
there is a good reason for a serious or significant breach, relief is likely to be granted.
Where the breach is not serious or significant, relief is also likely to be granted.
But it is always necessary to have regard to all the circumstances of the case.”

“We are concerned that some judges are adopting an unreasonable approach to rule

“It seems that some judges are approaching applications for relief on the basis that,
unless a default can be characterised as trivial or there is a good reason for it, they are
bound to refuse relief. This is leading to decisions which are manifestly unjust and

“Litigation cannot be conducted efficiently and at proportionate cost without (a)
fostering a culture of compliance with rules, practice directions and court orders, and
(b) cooperation between the parties and their lawyers. This applies as much to
litigation undertaken by litigants in person as it does to others. This was part of the
foundation of the Jackson report. Nor should it be overlooked that CPR rule 1.3
provides that “the parties are required to help the court to further the overriding
objective”. Parties who opportunistically and unreasonably oppose applications for
relief from sanctions take up court time and act in breach of this obligation.
We think we should make it plain that it is wholly inappropriate for litigants or their
lawyers to take advantage of mistakes made by opposing parties in the hope that relief
from sanctions will be denied and that they will obtain a windfall strike out or other
litigation advantage. In a case where (a) the failure can be seen to be neither serious
nor significant, (b) where a good reason is demonstrated, or (c) where it is otherwise
obvious that relief from sanctions is appropriate, parties should agree that relief from
sanctions be granted without the need for further costs to be expended in satellite
litigation. The parties should in any event be ready to agree limited but reasonable
extensions of time up to 28 days as envisaged by the new rule 3.8(4).”

“It should be very much the exceptional case where a contested application for relief
from sanctions is necessary. This is for two reasons: first because compliance should
become the norm, rather than the exception as it was in the past, and secondly,
because the parties should work together to make sure that, in all but the most serious
cases, satellite litigation is avoided even where a breach has occurred.”

“Heavy costs sanctions should, therefore, be imposed on parties who
behave unreasonably in refusing to agree extensions of time or unreasonably oppose
applications for relief from sanctions. An order to pay the costs of the application
under rule 3.9 may not always be sufficient. The court can, in an appropriate case,
also record in its order that the opposition to the relief application was unreasonable
conduct to be taken into account under CPR rule 44.11 when costs are dealt with at
the end of the case. If the offending party ultimately wins, the court may make a
substantial reduction in its costs recovery on grounds of conduct under rule 44.11. If
the offending party ultimately loses, then its conduct may be a good reason to order it
to pay indemnity costs.”

Friday, 4 July 2014

Cracking Whiplash - the latest instalment

There is mixed news today for victims of motor accidents and their advisers, in the fourth report of the transport select committee on the cost of motor insurance.

It is disturbing that the committee express concern that lawyers are commissioning unnecessary medical reports to maximise their own income. This refers in particular to the obtaining of psychiatric evidence. It is not surprising that the Association of British Insurers has weighed in and alleged that unqualified individuals are assessing psychological injury. If any lawyers are sending clients to unqualified experts then they deserve all they get. But it is hard to envisage any circumstance in which this would be worthwhile. Insurers and/or the courts would be quick to reject any such unreliable evidence.

I suspect that this is a tactic by the ABI to try and get any psychiatric evidence barred in whiplash cases.

Solicitors actually have no choice here. The Solicitors’ Code of Practice has 10 Core Principles one of which is to act in the best interests of each client. If a client describes symptoms consistent with a psychological injury then the solicitor has a professional duty to investigate. If a solicitor fails to do that and it later turns out that there is such injury then they are likely to be sued by their client and possibly disciplined. This is not a matter that can be dictated by the ABI.

The committee has suggested extending the idea of accredited panels of experts beyond whiplash. Apart from very minor injuries it is hard to see how this can work. In the case of serious or complex injury there can be a range of opinion with wide disagreement between experts. It is hard to see either side in such cases wanting to commit to a single opinion. It is the job of the court to weigh the evidence in those cases. This is something which courts in this country have done for centuries.

The committee supports the proposed ban on solicitors owning medical agencies and from offering inducements to their clients. I think the first is inevitable and the MOJ seem committed to this. As far as inducements go I am far from convinced that they encourage dishonest claims. If a criminal is of a mind to cheat a few thousand pounds from the system, the inducement is the money not the iPad. But if it helps restore credibility for victims then a ban may not be a bad thing.

The committee's criticism of the insurance industry focuses on their continued practice of making offers without medical evidence. They call for these to be banned. I would suggest that this goes to the core of the problem. The likelihood of getting a settlement with no scrutiny by way of evidence, presents a huge temptation to fraudsters.

Anyone involved in these cases has to be committed to eliminating fraudulent claims. They add to the cost of insurance and undermine the credibility of the overwhelming majority of genuine victims. These proposals are an interesting contribution to that process.

But there are still concerns that there is a presumption that there is a compensation culture and also that most claims are not genuine.

The other concern is that lawyers are accused of being in it to make money for themselves. At a time when record numbers of firms are closing or quitting this area of work that is a fantasy.

The full report is available here –