The recent Court of Appeal decision in favour of Sylvia Henry eloquently emphasised how unwise the headlong charge into the as-yet-unpublished new costs rules will be.
It is three-and-a-half years since the defamation costs pilot scheme came into operation. Only now are we beginning to get judicial scrutiny and guidance on what the rules and practice direction mean. In Sylvia Henry’s case, some commentators may have wanted the certainty that upholding senior cost judge Hurst’s decision would have given, but one can see how unappealing an outcome that would have been in the particular circumstances (Sylvia Henry v News Group Newspapers Ltd  EWCA Civ 19]).
Lord Justice Moore-Bick’s judgment essentially equates the underlying intention behind the defamation costs pilot scheme with the overriding objective. The intention of the costs budgeting scheme was not to create an entirely new framework but to enhance the effectiveness of the Civil Procedure Rules to deliver civil justice in accordance with the overriding objective. Indeed the proposed new rules for cost budgeting will be in Part 3 and form part of the courts’ case management powers.
In harking back to the underlying intentions of the overriding objective he reminds all of us what is at the heart of our civil justice system.
The overriding objective is intended to enable the court to deal with cases justly. It is a broad, amorphous concept that we know when we see it. It requires an intellectual flexibility to achieve what is just; not a rigid adherence to rules. In the past we have argued against any fetter on the discretion of the judiciary to determine cases justly or to limit their ability to deal with cases justly.
In Mrs Henry’s case Lord Justice Moore-Bick emphasises that the reference to unequal footing in the pilot scheme is not intended to be a rigid test of whether each party has strictly complied with provision of information in a given time frame, but is a much more esoteric concept. Nor does he feel it is appropriate for the court to provide an exhaustive definition of the circumstances in which there may be good reason for departing from an approved budget.
Critically, he says: ‘The words themselves are very broad and experience teaches that any attempt by an appellate court to provide assistance in a matter of this kind risks creating a set of rigid rules where flexibility was intended. Circumstances are infinitely variable and it is vital that judges exercise their own judgment in each case.’ The court must look ‘to ensure that one party is unable to exploit superior financial resources by conducting the litigation in a way that puts the other at a significant disadvantage’. He continues that putting parties on an equal footing is concerned with ‘the unfair exploitation of superior resources rather than with the provision of information about how expenditure is progressing’.
Under the as-yet-unpublished Jackson rules, due to come into force in April, we are told that the overriding objective has been enhanced to emphasise the impact of costs and proportionality. Would this have made any difference to the judgment in Henry? In the final paragraph of the judgment Mr Justice Moore-Bick seeks to emphasise what he sees as differences between the pilot scheme and the new rules. However, it is clear that the court will still have the power to depart from the approved or agreed budget if it is satisfied that there is a good reason to do so in all the circumstances.
Despite Lord Justice Moore-Bick’s deft attempt to steer a course between the pilot scheme and the new as-yet-unseen rules it is clear that the decision confirms what litigators have suspected. We are in for a bumpy ride of satellite litigation and uncertainty. Whilst it is unlikely all satellite litigation could be avoided a period of calm reflection and review of the rules before they come into operation would benefit all court users. It allows for amendments to be made to iron out unforeseen and unintended consequences before the rules take effect.
Henry does not hole Jackson below the waterline, as some have suggested, it merely emphasises that the reforms cannot be implemented in a vacuum. The overriding objective of dealing with cases justly should be balanced with robust case management, not overridden by it.
Francesca Kaye is president of London Solicitors Litigation Association and a partner in Russell-Cooke LLP