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Although obviously only one of many first instance judgments on applications for relief from sanctions post-Mitchell, the ruling of Master Rowley in Long v Value Properties Ltd & Anor highlights the more stringent approach now being taken by Courts when considering whether to grant relief.
The Claimant had failed (through an inadvertent omission) to provide the information required by Costs Practice Direction 32.5(1)(c) & (d) when serving her Bill of Costs - namely a statement of reasons for the success fee (or a copy of the risk assessment) and a statement setting out the definition of certain terms within the CFA (or the CFA itself).
CPR 44.3B provides that a party may not recover any percentage increase where it has failed to comply with a requirement in the Costs Practice Direction or a Court Order. The chronology of events is set out below.
17 October 2013 Claimant served her Bill of Costs on both Defendants.
14 November 2013 Points of Dispute been served by both Defendants (an extension having been agreed) in which the Claimant’s non-compliance with CPD 32.5 was raised.
20 November 2013 The relevant information was provided by the Claimant. It was proposed that the Defendants serve Amended Points of Dispute if required.
27 November 2013 Following an indication by the First Defendant that it would await sight of the Replies before deciding to serve Amended Points of Dispute, Replies were served.
28 November 2013 Application for relief from sanctions made.
The Claimant’s submissions highlighted the ‘constructive and conciliatory approach’ taken by the Claimant’s solicitors in ‘agreeing an extension for the Points of Dispute, providing the documents when requested and proposing dealing with any amendments required to the Points of Dispute in a cost effective manner.’ Attention was also drawn to the draconian nature of the sanction and lack of prejudice caused to the Defendant.
The Defendant’s submissions were principally based on the guidance given in Mitchell; it was stated that the breach was not trivial and that that no good reason for it had been put forward. The submission that there was no prejudice was also disputed on the basis that the Defendants’ solicitors had been unable to advise their clients on suitable offers to make.
The Master ultimately found that:
the non-compliance is not of the sort suggested by Mitchell as being trivial – for example a matter of form over substance
it is clear that oversight, or human error, is no longer to be required as a good reason [for non-compliance with the Rules]
Relief from sanction was therefore refused.
Interestingly, the Master indicated that the ‘one strike and you’re out issue’ had troubled him throughout the hearing. He reflected that, although Sir Rupert Jackson had indicated this approach was not one to be followed, this was “the logical outcome of the paying parties’ position” as “unless the Claimant’s solicitor recognised his error before the Points of Dispute were served (and even then it may have been too late) he had breached the rule and oversight would not be sufficient to bring him back into play however promptly an application was made.”
The effect of the sanction, which was to disallow the whole success fee, was also considered ‘strange’ when compared with the sanction for delay in serving a Notice of Funding, where the success fee would only be disallowed for the period where notice had not been given.
Nevertheless, the Master felt constrained to apply this sanction and to refuse relief.
The post-Mitchell Court of Appeal decisions of Durrant v Avon & Somerset Constabulary  EWCA Civ 1624 and Thevarajah v Riordan & Ors  EWCA Civ 15 have shown that the hard line on relief is here to stay.
Long provides a clear example of the effect of this new stricter line on relief. Under the old rules, relief would almost certainly have been granted in this case; indeed, as is touched on in the judgment, applications would often be successful even if made orally at the start of the detailed assessment hearing.
It could perhaps be suggested that the Claimant in Long could have made more submissions on the issue of whether or not the breach was trivial. It appears that the Claimant essentially conceded this point, on the basis that their breach did not fall into either of the two examples quoted in Mitchell (being compliance in substance but not form or where a deadline has only been narrowly missed).
However, the wording used in Mitchell was that ‘the Court will usually grant relief if there has been no more than an insignificant failure to comply’ - the previous two examples were then listed. It could be said that the Claimant’s interpretation of Mitchell was too restrictive in this respect; and therefore that it could perhaps have been argued that, although not falling into one of the two examples, the breach in this case was no more than an insignificant failure to comply.
It could further be argued that this is supported by the indication given in Mitchell (and by other commentators) that the issue of whether or not a breach constitutes an ‘an insignificant failure to comply’ will be the issue on which most of the contested applications will be fought, given the high bar set to establish a ‘good reason’ for non-compliance.
It is understood that permission to appeal in Long has been granted. However, appeals in such an uncertain climate will be expensive and their outcome will be extremely hard to predict.
Obviously, the safest way for a solicitor to ensure their success fee (and other costs) are safe is to ensure they have complied with the relevant costs law. It goes without saying that instructing costs experts is the best way to ensure such compliance.