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Must End Solicitors’ Conduct - War of Attrition by Correspondence & Procedural Squabbles

14-July-2015 18:26
in Procedure
by Lawrence Power

Gotch & Gotch v Enelco Limited [2015] EWHC 1802 (TCC) (3 July 2015)

This is the one practitioners have been waiting for. Just what do we do about pointless letters and unnecessary applications? Is it time to call “time” on posturing and sabre rattling?

Mr Justice Edwards-Stuart, head of the Technology and Construction Courts (“TCC”) has said that the time is over in the pursuance of issues that are not central to the dispute. His decision criticised solicitors who waged war of attrition by correspondence and parties who did not have proportionality and the overriding objective at the forefront of their minds. He went on to hold that offending parties, at least in the TCC (for now), must expect to bear the costs of such conduct.

The case involved a construction dispute surrounding a purported repudiation of a contract to build two new residential properties in the West Country. The contract contained adjudication clauses which had been struck out. The parties had disputed as to whether there was still a valid contractual duty to have any disputes resolved by way of adjudication.

The Defendant, despite asserting that there was valid adjudication clauses, stated at least three times, that they would not be seeking adjudication and suggested another form or ADR to progress settlement.

The Claimants, who were arguing that there was no duty to resolve disputes by way of adjudication, subsequently made a Part 8 claim for the declaration as to whether the parties were bound by adjudication.

Mr Justice Edwards-Stuart dismissed the Claimants’ application on the basis that it was not relevant to the dispute as the Defendants had already made it clear, on more than one occasion, that they were not going to pursue adjudication in any event and any declaration would serve no purpose.

Mr Justice Edwards-Stuart then held at paragraphs 41 and 42 of the judgment, in matters pursuant to his decision for costs of the application, that “as a result of Jackson” there was an “additional requirement in the overriding objective to deal with cases at a proportionate cost” and that CPR 1.3 puts an onus on parties to “help the court to further the overriding objective”.

Unequivocally Mr Justice Edwards-Stuart said at paragraph 44 of the judgment “It is therefore time to say, in the clearest terms, that parties and their solicitors can no longer conduct litigation in a manner which does not keep the proportionality of the costs incurred at the forefront of their minds at all times”.

Applications on issues that have no real impact on the dispute and solicitors’ “procedural squabbles” (see paragraph 49 of the judgment), whether with instructions or otherwise, were on Mr Justice Edwards-Stuart’s radar and he warned parties in the TCC, at paragraphs 47 and 48 of the judgment, to abide in a manner both “expeditious and economical” or expect to face the consequences, as the Claimant was ordered with costs against them for the periods that they knew the Defendant was not to pursue adjudication.

The stance taken is similar to that in Denton v TH White Ltd [2014] EWCA Civ 906, in which Lord Justice Vos held that there would be “heavy costs sanctions” against parties who try to take advantage of minor procedural mistakes by their opposition. It seems that the post-recession Judiciary is taking a hard line on litigation that is not streamlined, focussed and efficient, in order to finally get parties compliant with the overriding objective.

Although, at paragraphs 47 and 48 of the judgment, Mr Justice Edwards-Stuart confined his comments to the TCC, it is our view that this dicta must be correct and is a re-statement of the Woolf reforms which introduced the concept of the overriding objective. Lord Justice Jackson’s review has really done no more than focus the courts mind back to efficient litigation which was the key reason the CPR was written to replace the RSC.

It shall be interesting to see how this stance is applied across the civil courts. It is our view that this decision is applicable to call cases and not restricted to the TCC. However, it is inevitable that lawyers will endeavour to get an upper hand in litigation and it is difficult to predict what sanctions a court could make when both parties are “tit-for-tat” in uneconomical and inappropriate conduct and in these circumstances will be difficult to police. There is more to come.

Link to judgment Gotch & Gotch v Enelco Limited

© 2015 Chambers of Lawrence Power, 4 King’s Bench Walk, Temple, London, EC4Y 7DL. Tel: 020 7822 8822. www.4kbw.net  email jr@4kbw.net