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Proportionate Relief?

Andy Moroz, Senior Costs Consultant

Andy Moroz, Senior Costs Consultant

Proportionate Relief?

Readers of the legal press during 2013-14 could have been forgiven for deciding that the practice of law was akin to operating in a stifling procedural strait-jacket, with claims (and the solicitors who ran them) being thrown to the wolves on an almost daily basis for minor breaches of the arcane minutiae of the law. Combined with the wave of litigants in person created by the embarrassing false economy that is LASPO, it seemed that the legal system was heading for a “perfect storm”. All procedural defaults appeared, for a time, to be fatal to a claim or elements thereof, and defaults which impacted upon a listed hearing seemed to be classed as a particularly virulent form of heresy.

This was followed by the “clarification” of Mitchell in Denton which, it appeared, marked the beginning of the end of the regime of absolute compliance sparked by the Mitchell decision. Denton opened up the possibility that relief from sanctions could be obtained even for “serious or significant” procedural defaults.

The same reforms which sparked the furore over applications for relief from sanctions also included apparently draconian (if rather vaguely worded) alterations to the test of proportionality, which, in part, included an amendment to the overriding objective of the Civil Procedure Rules to include reference to the need for matters to be dealt with “at proportionate cost” (CPR 1.1(1)).

In Home Group Ltd –v- Matrejek [2015] EWHC 441 (QB), the Claimant, upon receiving a rather vaguely worded directions order which required it to attend a directions hearing. In the interests of proportionality, now enshrined in the overriding objective, the Claimant sought to avoid the costs of the hearing by not attending, possibly assuming that the Court would deal with the directions administratively. The Court did not do so and the Claimant was found to be in breach of a Court order. Relief from sanctions was promptly applied for and duly granted; however, Denton had not yet been decided and the Defendant appealed.

On appeal, the Judge’s finding that the default had been “a misguided attempt to save costs upon an apparent misunderstanding of an earlier court order which was, on one reading, potentially partially valid” and that “…..there was just about a reasonable excuse…” was upheld, despite the fact that Court time had been lost as a result of the procedural breach.

The new proportionality regime appears to the writer to be open to abuse in that a Defendant backed by a wealthy insurer could simply drag a matter out, knowing that proportionality rulings could well limit the costs recoverable inter partes and render it uneconomic for a comparatively impoverished Claimant to continue with a claim; however, it seems that the concept is not simply a stick with which to beat successful Claimants.

While the Home Group judgment highlights the need for procedural compliance (and certainly does not promote the disregarding of vaguely worded directions) it does show that attempting to save costs can, in some circumstances, prove a valid reason for granting relief from sanctions, even where the breach in question is “serious or significant” to the point where Court time is lost.

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