COSTS, PROPORTIONALITY AND GETTING THE BUNDLES RIGHT: TAKE EVERYTHING OUT OF COURT NOW AND COME BACK TOMORROW

An earlier post reported on the observations of Mostyn J in J-v-J in relation to costs, proportionality and bundles.  If you take the indignation and sense of outrage  expressed in  J-v-J  about costs, preparation and bundles,  and then  quadruple it,  you could arrive at the views of Holman J in  Seagrove -v- Sulllivan (Practice Direction re Bundles and Citation of Authorities) [2014] EWHC 4110 (Fam). Again there are lessons here that go beyond the family courts, every prudent litigator should read this case.

THE OPENING LINES OF THE JUDGMENT

Sometimes you can sense the judge’s view from the opening lines of the judgment.

  1. Despite numerous attempts to rein it in, the scale, intensity and cost of family financial litigation remains often out of control and completely disproportionate to the issues at stake. This case seems to me to be a particularly obvious example, and I propose, therefore, to take a firm and robust line.

THE CASE

The action was an action between a couple who never married. The action was in relation to the ownership of certain land. The total value was £1 million the half share would be £500,000.

 

  1. I now turn to the costs expenditure. I stress that the figures I am about to quote are the figures that these two parties have expended on all the litigation between them, including that in relation to their son. That hardly dents the force of the point as to the appalling profligacy of their legal expenditure and the intensity of this litigation. It is the financial litigation which has engaged leading counsel as well as junior counsel, and the financial litigation which has generated the phenomenal amount of documentation to which I will shortly refer. I have no doubt that the considerable majority of all the costs expenditure is referable to these financial matters rather than the dispute in relation to their son.
  2. Since she first instructed solicitors following the breakdown of their relationship, Sandra has incurred (including her estimated costs to the end of a fully contested current hearing) costs of about £800,000 inclusive of VAT. She, indeed, currently appears to be heavily in debt as a result. Larry has incurred costs of about £506,000, inclusive of VAT. So, between them, these two parties, who lived together for over 20 years and bore three children, to whom I am sure they are each devoted, have now incurred, or anticipate incurring, expenditure of about £1,300,000 on legal costs.
  3. What are they arguing about? They are arguing about a claimed half share in an asset that may be worth around £1 million. So they are arguing about £500,000. What they have incurred in costs is not far short of three times the amount in dispute. Others might use other words of description, but as this is a judgment in a courtroom, I will merely say that the costs, and also the scale and intensity of this litigation, have been, and are, completely disproportionate.
  4. I wish to stress that I have absolutely no idea where the rights and wrongs and responsibilities lie as between these two parties. I do know that there was a private family dispute resolution event before a retired High Court judge. Of course, I know nothing whatsoever as to the content of that event, but only that it did not result in settlement. I have absolutely no idea what offers may have been made by the one side or the other and rejected.

DOCUMENTS AND BUNDLES

  1. I begin with what is described as “the overriding objective” in the Family Procedure Rules 2010, which of course mirrors the overriding objective in the Civil Procedure Rules of 1998. One only has to mention the dates of those respective rules to appreciate that what I am about to recite and refer to is nothing new. I absolutely understand that what I have been saying in court earlier this morning may well have struck each of Sandra and Larry as something of a bombshell; but they have each expended this phenomenal legal expenditure on two very well known firms of solicitors, and counsel of the utmost renown. So, although it may be something of a bombshell to them, it should not be remotely new to their lawyers.
  2. The overriding objective in the Family Procedure Rules 2010, which is applicable to this case, provides as follows:

“1.1 The overriding objective

(1) These rules are a new procedural code with the overriding objective of enabling the court to deal with cases justly, having regard to any welfare issues involved.

(2) Dealing with a case justly includes, so far as is practicable –

(a) ensuring that it is dealt with expeditiously and fairly;

(b) dealing with the case in ways which are proportionate to the nature, importance and complexity of the issues;

(c) ensuring that the parties are on an equal footing;

(d) saving expense; and

(e) allotting to it an appropriate share of the court’s resources, while taking into account the need to allot resources to other cases.”

  1. Paragraph 1.4 of the rules refers to the “court’s duty to manage cases” and provides that:

“(1) The court must further the overriding objective by actively managing cases.”

  1. Within the non-exhaustive matters identified in rule 1.1(2), I would particularly highlight, in this case, the references to proportionality to the nature, importance and complexity of the issues; saving expense; and, very importantly indeed, allotting to a given case an appropriate share of the court’s resources while taking into account the need to allot resources to other cases. That overriding objective has been part of our law now for many years under the Civil Procedure Rules, and about four years under the Family Procedure Rules.
  2. In order to try to exert some control over documentation, which always has a considerable knock-on effect on the length and complexity of hearings, numerous practice directions have been made over the years by Presidents of the Family Division and other heads of divisions. The current practice direction in relation to bundles and documents is Practice Direction 27A, which is itself part of Part 27 of the Family Procedure Rules. This practice direction was issued by the President of the Family Division in April 2014. It was issued after a process of consultation with the well known professional organisations and associations of both the solicitors’ and barristers’ branches of the profession. It did not come out of the blue, and its existence has patently been well known now for an appreciable period of time by all the lawyers engaged in this case.
  3. Of most relevance to the present situation is paragraph 5.1. That was specified by paragraph 13.2 to “have effect from 31 July 2014”. We are now four months on from 31 July 2014. Paragraph 5.1 provides as follows:

“Unless the court has specifically directed otherwise, being satisfied that such direction is necessary to enable the proceedings to be disposed of justly, the bundle shall be contained in one [I emphasise the word, one]A4 size ring binder or lever arch file limited to no more than 350 sheets of A4 paper and 350 sides of text.”

A later “statement”, to which I will shortly refer, makes plain that the 350 sides of text must be inclusive, not exclusive, of the sides of paper in counsel’s skeleton arguments.

  1. Pausing there, one wonders, against the background of that clear practice direction, at how it could be that it is now contemplated that I should consider all or part of 3,500 pages of documents. That is ten times more than the number allowed for in the practice direction.
  2. As long ago as 24 March 2012, the then Lord Chief Justice issued a practice direction headed “Citation of Authorities”. That practice direction is reproduced and very clearly available to family practitioners at page 2962 of the current, 2014 edition of the Family Court Practice. Paragraph 14 of the direction makes plain that it has been made with the agreement of, amongst others, the President of the Family Division. Paragraph 1 provides that:

“This Practice Direction is issued in order to clarify the practice and procedure governing the citation of authorities and applies throughout the Senior Courts of England and Wales, including the Crown Court, in county courts and in magistrates’ courts.”

It varies an earlier practice direction so that the relevant part of that practice direction now provides that:

“The bundle of authorities should comply with the requirements of Practice Direction: Citation of Authorities (2012) and in general –

(a) have the relevant passages of the authorities marked;

(b) not include authorities for propositions not in dispute; and

(c) not contain more than 10 authorities unless the scale of the appeal warrants more extensive citation.”

Although it is true that subparagraph (c) makes reference to “the appeal”, it is, frankly, inconceivable that more authorities should be liable to be cited at the level of first instance than at the level of an appeal. So the clear starting point is that a bundle of authorities should not contain more than ten authorities, unless the scale of the case warrants more extensive citation.

  1. Pausing there, one wonders what it is about this case that requires and justifies citation of three times the number of authorities that the Lord Chief Justice, with the agreement of the President of the Family Division, clearly stipulated.
  2. The practice direction with regard to bundles was later supplemented, in relation to financial matters in the High Court, by a document dated 5 June 2014, headed “Statement on the efficient conduct of financial remedy final hearings allocated to be heard by a High Court judge whether sitting at the Royal Courts of Justice or elsewhere”. Although that “statement” was made and promulgated by Mostyn J, it begins, at paragraph 1: “I am authorised by the President [viz of the Family Division] to release this statement.” So, although issued or released over the name of Mostyn J, this statement clearly has the authority of the President of the Family Division himself.
  3. Of course, a claim under TOLATA is not itself a financial remedy claim, but, as I have mentioned, in the present case it is consolidated with an undoubted financial remedy claim, namely Sandra’s claim for provision for the son under Schedule 1 to the Children Act 1989. In any event, I cannot see the slightest reason why a claim of this kind, following a 20 year relationship, even if not technically a “financial remedy” claim, should require or justify a greater length of hearing or expenditure of costs or assembly of documents than a financial remedy claim after 20 years of marriage.
  4. Paragraph 2 of the statement provides as follows:

“In order to enhance efficiency in the disposal of financial remedy cases allocated to be heard by a High Court judge, and to ensure that such cases are allotted an appropriate share of the court’s resources, the following standards must be observed.”

  1. Pausing there, in that paragraph I emphasise, first, the reference to “allott[ing] an appropriate share of the court’s resources”. That, of course, is directed to the court discharging its duty under subparagraph (e) of rule 1.1(2) of the overriding objective in the overarching Family Procedure Rules 2010. Second, I emphasise the word “must” be observed. The significance of that will be further underlined when I quote shortly from a recent, publicly available decision and judgment of Mostyn J.
  2. Paragraph 8 of the statement provides as follows:

The court bundle for the final hearing must scrupulously comply with FPR PD27A. With effect from 31 July 2014 this limits the size of the bundle to a single file containing no more than 350 pages: a specific prior direction from the court must be obtained at the Pre-Trial Review if the bundle is to exceed that limit … The limit of 350 pages includes the skeleton arguments … and the agreed documents under para 7 above. Only those documents which are relevant to the hearing and which it is necessary for the court to read, or which will actually be referred to during the hearing, may be included …”

  1. Paragraph 12 of the statement gives due and fair warning that, if advocates (and this must extend also to solicitors) unreasonably fail to comply with parts of the statement, there may be sanctions in costs.
  2. I move on to the decision of Mostyn J in J v J, given in Manchester on 6 November 2014, in case number [2014] EWHC 3654 (Fam). Each of Miss Amber Sheridan, who is junior counsel on behalf of Sandra, and Mr Richard Todd QC, who is leading counsel on behalf of Larry, confirm that they were already aware of the existence and contents of this decision and judgment. As may be deduced from the fact that the statement to which I have referred was issued by Mostyn J, he is currently the lead judge of the Family Division in financial matters. He is also currently probably the most experienced judge of the Division in financial matters. So this is a very important judgment, which ought to be firmly in the minds of all lawyers who practise in this field. At paragraph 47 he recorded that, in that particular case, “no fewer than eight trial bundles, containing over 2,000 pages” had been produced. He commented:

“It is as if they had decided that the terms of the new PD27A (as issued on 10 April 2014) just did not apply to them.”

It seems to me that precisely the same observation and comment applies in this case.

  1. Mostyn J then quoted from paragraph 5.1 of the practice direction and also paragraph 8 of his own “statement”. At paragraph 51 he then said, very importantly, the following:

‘… Nor do I accept the argument, which I have heard, that it is unfair for an applicant to have to identify her “killer” documents by placing them in the single bundle in circumstances where non-disclosure is rife and where confrontation with a document buried deep in (say) File 19 will expose dishonesty. This is, with respect, an absurd argument. If the killer document exposes fraud let it be shown at the earliest opportunity so that a settlement might be achieved. This argument smacks of playing games.”

Of course, although in that particular passage Mostyn J referred to some argument that an applicant should not have to identify a killer document, precisely the same point applies also to respondents.

  1. Mostyn J continued in a very important passage:

‘I also deprecate a practice of circumvention of which I have become aware. That is for the lawyers for both sides to agree a single “core” bundle and, in addition, an archive of many volumes of expensively prepared secondary or background material. This archive is then brought to trial in the confident belief and expectation that the trial judge will grant permission pursuant to PD27A para 5.1 at the final hearing itself to use documents from the archive. This is no better than the old regime which the new prescription was designed to stamp out … It is possible, of course, that, unexpectedly, further documents may be need to be deployed at the final hearing; but the starting point, and the usual finishing point must be that all the relevant documents should be in the single bundle …”

  1. The arrival of a solicitor this morning, about twenty minutes before this case was due to start, bearing the cardboard box with five lever arch files and an additional 1,500 pages of documents (additional already to the 2,000 pages) is, of course, a paradigm example of what Mostyn J referred to there as bringing to trial “an archive of many volumes of expensively prepared secondary or background material”.
  2. At paragraph 52 of his judgment, which was given now almost a month ago, Mostyn J said:

“It must never happen again. If this requires a culture change in the way practices are run then so be it. I recall that in his minatory and mordant judgment of Re X and Y (Bundles) [2008] … Munby J threatened practitioners who defied the then practice direction about bundles with dire consequences. Since then the practice direction has been incorporated within the FPR and reissued on 10 April 2014 in its current form incorporating the one bundle rule. But routinely the profession pays no attention to it. Again, it is no use the courts feebly issuing empty threats …”

  1. Finally, I refer to paragraph 53 of that judgment, in which Mostyn J said:

“I would remark that if parties wish to have a trial with numerous bundles then it is open to them to enter into an arbitration agreement which specifically allows for that.”

  1. This morning, Mr Christopher Wagstaffe QC, on behalf of Sandra, and Mr Richard Todd QC, on behalf of Larry, have endeavoured to address these matters and, to some extent, to justify their positions. It is fair to say that, on behalf of Larry, Mr Todd immediately said that it was “absolutely right that the costs are disproportionate” and indicated that he and his side share my concern about the scale of the documentation. But even Mr Todd, in relation to the assembly of the 32 authorities in apparent disregard of the Lord Chief Justice’s practice direction, sought to justify his position. He fastened on the words “unless the scale of the appeal warrants more extensive citation”. He suggested in a general way that the law in relation to the topic of beneficial interests is complex, so that, somehow, the scale of this case warrants the citation of no less than 32 authorities.
  2. I completely reject that suggestion. When the Lord Chief Justice referred to “the scale of the appeal”, which may be paraphrased as meaning, in this context, “the scale of the case”, that does not simply refer to legal complexity, but to the actual scale of the underlying litigation. This is not litigation about tens of millions of pounds. It is litigation about a half share in the former home in which these parties lived with their three children, having an equity of around £1 million and a half share, therefore, of around £500,000. In the context of family financial litigation, this is, in fact, a relatively small scale case these days.
  3. The whole topic of beneficial interests following cohabitation has been the subject of recent consideration by the Supreme Court, in particular in the well known cases of Stack v Dowden [2007] UKHL 17 and Jones v Kernott [2011] UKSC 53. It would be surprising, frankly, if it was necessary to look beyond those two authorities; but most certainly, when the Supreme Court has, on more than one recent occasion, traversed all the historic law in relation to this topic, it is quite ridiculous and completely disproportionate to produce bundles of no less than 32 authorities. I know that some of Mr Todd’s authorities relate to some separate argument that he wishes to run with regard to “laches” and limitation, but that does not provisionally strike me as a very promising line of argument in this case.
  4. Mr Wagstaffe began by referring to the undoubted fact that, in the recent authorities to which I have just referred, the Supreme Court have said one has to have regard to the whole course of dealing between the parties; and of course I accept that. In a general way, one does indeed have to begin at the start of the relationship between Sandra and Larry in 1989 and look at their financial dealings since then. That is why, provisionally, it does not seem to me that Mr Todd’s argument based on laches and limitation is on very fertile ground.
  5. The Supreme Court, by what they said in those authorities, cannot have intended courts to disregard the overriding objective in both the Civil Procedure Rules and the Family Procedure Rules; nor to disregard such an integral part of the Family Procedure Rules as the practice direction with regard to court bundles. The court must, from first to last, have regard to proportionality and all the other non-exhaustive matters listed in rule 1.1(2). So I do not accept for one moment that there is something about the facts or legal context of this case which enables or requires proportionality and the practice direction to be disregarded.
  6. Mr Wagstaffe continued by saying that the bundles practice direction was not even in point because this is a TOLATA case. That, with respect to him, was completely mistaken, for it is headed “Universal practice to be applied in the High Court and Family Court”. By paragraph 2.1, it is made crystal clear that it applies to “all hearings” before a judge in the Family Division and also “all hearings” in the Family Court. So, whether this was a claim for a financial remedy following divorce, or is a claim to a beneficial interest under TOLATA, the bundles practice direction is in point.
  7. Mr Wagstaffe then referred to the language and content of an order made by Moor J at the final directions hearing in this case on 11 June 2014. It is right to say that that hearing apparently spanned more than one day, but, as I understand it, the main issue that occupied all the time at that hearing was an issue as to privilege and whether or not Larry could produce and rely upon a series of emails that Sandra had sent around the time of, and since, the breakdown of their relationship. I assume that the argument on behalf of Sandra was that the emails were sent in the context of some attempt to settle their differences and that, therefore, they should be treated as privileged. I assume that the argument on behalf of Larry was that they were not privileged and that she said, or omitted to say, things in them which may illuminate the reliability or otherwise of her case.
  8. At all events, Moor J ruled that those emails should be admissible. They are a very small part indeed of the 3,500 pages. I was invited to read them yesterday. I have not read them because, frankly, the way in which they have been reproduced has made them barely legible. In any event, they are what I would regard as cross-examining material and not pre-reading material.
  9. The directions made by Moor J at the conclusion of that hearing deal with further questions and replies; the preparation of final statements; updating the valuation of Sundial House, and other matters. I have been told that those directions were largely drafted by counsel and do not appear to have been the subject of much actual scrutiny by Moor J. They include, at paragraph 11, the following:

“Bundles are to be agreed between the solicitors (in consultation with counsel) and prepared by no later than 14 days before the final hearing.”

  1. The submission of Mr Wagstaffe is that the words of paragraph 11 amounted to the court “specifically [directing] otherwise” for the purposes of paragraph 5.1 of the bundles practice direction.
  2. I absolutely reject that submission and argument. It is true that paragraph 11 uses the word “bundles” in the plural, whereas paragraph 5.1 specifically says that there shall be only one bundle. I suppose, to that tiny extent, it may be said that the order of Moor J contemplates and permits that there are more than one actual lever arch file; but nothing more than that can, frankly, turn on the inclusion or exclusion of the letter “s”. Indeed the use of the plural, bundles, may mean no more than that several copies of the single bundle will be required, one for the judge, one for the witness, one for each party and so on.
  3. The argument was that, by saying that “bundles are to be agreed between solicitors”, Moor J was giving some apparent carte blanche to the parties, through their solicitors, to include in the bundles anything that they wished to do so. Mr Wagstaffe denied that he was advancing such an argument, but, frankly, that is what his argument amounts to. He submits that the use of the words “bundles are to be agreed between solicitors” amounted to a “specific direction otherwise” and authorised bundles to exceed a total of 350 sides of text. Logically, his argument does mean that all and any documents that the solicitors “agreed” could go into the bundles could indeed be included, no matter how many or how long.
  4. To my mind, that argument is spurious. It is inconceivable that, at the same time as ruling, by paragraph 10 of his order, that skeleton arguments were not permitted to exceed 25 pages, Moor J could have intended, or for a moment contemplated, that he was giving carte blanche to these solicitors and parties to put in whatever documents they liked, no matter how many pages. In my view, there is no “specific direction” otherwise in this case and, as castigated by Mostyn J at paragraph 47 of J v J, the lawyers in this case have approached the case as if the terms of the practice direction “just did not apply to them”.
  5. The courts have to exert discipline in relation to this. I stress, as Mostyn J did in J v J at paragraph 53, that if parties wish, at their own expense, to litigate to their hearts’ content, with thousands and thousands of pages of documents, there is a mechanism available to them known as private arbitration. But litigation within the courts has to be the subject of much more rigorous discipline and structure, precisely because the courts have a duty to ensure that an appropriate, but only an appropriate, share of the court’s resources are allocated to any one case. The same judges have to deal also with an enormous number of very difficult cases involving the future of vulnerable children, and the care and treatment of sick people, including mentally incapacitated people. It is simply not tolerable that we go on and on affording to people like Sandra and Larry an estimated eight days of court time on a dispute that ultimately is measured in something not exceeding about £500,000.
  6. The cost of running these courts is not inconsiderable. I cannot specify what the daily cost is, for I do not know, but the state has to provide and pay for the judge, the court staff, the “back office” staff, the provision of the courtroom, the maintenance of the courtroom and all the other associated costs. It is obvious that the daily running costs of a court and courtroom such as this run into several thousands of pounds. Multiply that by eight and one can see at once that there is an expectation that this state, which as we all know is struggling still to rein in the deficit following the recession, should expend completely disproportionate amounts on resolving issues and disputes of this kind.
  7. A large part of the ridiculous time estimates in this and other financial cases is referable to the sort of volume of documents, including authorities, that parties still assemble and marshal. This case was given an estimate of eight days, with a detailed trial template. That template contemplates that, after one day of reading and six days of evidence and argument, the judge should be able to give an ex tempore judgment on the afternoon of the eighth day, after merely the morning of the eighth day for consideration. It is fair to the parties and their lawyers to say that that “trial template” was annexed to the order made by Moor J on 11 June 2014. It may be that that particular judge has the mental capacity to listen to seven days of evidence and argument, to absorb up to 3,500 pages of documents and 32 authorities, and still give an ex tempore judgment in what, on that scenario, would be a very detailed case, after merely one morning of consideration. Frankly, I doubt it.
  8. Currently, this estimate is an unrealistic estimate for a case on the scale that the parties or their lawyers contemplate. If this case were to run, including all the evidence and submissions, to the end of day seven, it would manifestly require at least two days for preparation of a detailed, considered judgment, and then a day for delivery of the judgment and working out the aftermath. In other words, frankly, as things stand, the estimate that the parties are putting forward is one not of eight, but of ten days.
  9. I am absolutely determined, in this case, not to allow that to happen. There has been wholesale breach of the practice direction and of Mostyn J’s statement with regard to documents, and total disregard of the Lord Chief Justice’s direction with regard to the citation of authorities. I propose to deal with it, in this case, as follows. Except for the two skeleton arguments and the chronology, every single piece of paper that has so far been lodged will be taken away from this courtroom now. All the bundles of authorities will be taken away from this courtroom now.
  10. I will adjourn this case now until 10.30 tomorrow morning. At 10.30 tomorrow morning, unless by then the parties have reached an overall settlement of this case, they must attend with one, single, composite bundle, containing not more than 300 pages as the President’s direction requires. I say 300, for I am excluding and retaining the two existing skeleton arguments, which, as I have said, extend to about 50 pages. There must be only one bundle of not more than five authorities.
  11. If the parties cannot agree as to the contents of the documents bundle, then each side can select 150 pages of their own choosing, thereby making the total of 300. If they cannot agree on authorities, then they must at least agree on one essential authority (probably Jones v Kernott) and they may each include two further authorities of their own choosing.
  12. I wish to emphasise as strongly as I can by this judgment, which I propose will be immediately transcribed at the expense of public funds and made publicly available on BAILII, that the President’s practice direction, the statement by Mostyn J, and the practice direction by the Lord Chief Justice mean what they say and must be adhered to. There is no more room at all for courts being resigned or fatalistic when the sort of thing that has happened in this case happens again. As Mostyn J said in J v J at paragraph 52, it is no use the court continuing feebly to issue empty threats. There is only one effective sanction, and that is what I propose to apply. The whole lot must be taken away and we start again.
  13. Before I break off, I wish to repeat, with the utmost clarity, to each of these parties that they have already expended a truly absurd amount of money on litigating about the aftermath of their relationship. I assume that, at times at any rate, that was a relationship which gave them both happiness and pleasure. It has certainly resulted in the birth of three children to whom, I am sure, they are each devoted. There are wider issues in this case than simply whether or not Sandra can establish a beneficial interest in the home. She and their children need to have some arrangement going forward which provides for her appropriate security and dignity.
  14. This case should have been settled long ago. Larry is a businessman. He ought to know better than anyone the profligacy of spending money on lawyers when it would be better spent on the other party. Even now, there are costs savings to be made, for the figures which I have cited include provision for four barristers and teams of solicitors to attend for another six or seven days. That is capable still of being saved. So, as we now break off, I very strongly urge each of these parties, who are advised by highly experienced lawyers, to bend every endeavour to now seeing if they cannot resolve their differences. If they cannot, I will proceed, and I will hear the evidence (which I will time limit) and rule on the issues between them; but I am only willing to do so in a time and costs proportionate way, and limiting the documentation in the way that I have described.

WELL THIS BLOG IS NOT A COURT OF LAW: WHAT HE SAID BLOODY WELL WORKED

Look at the very closing words, at the end of the transcript.

[NOTE: On the following morning the parties announced that they had reached a comprehensive settlement; and the judge was invited to make, and did make, a “Tomlin order” in which their detailed agreement is contained in a confidential schedule.]

POSTS ON TRIAL BUNDLES

Strangely (or maybe not) the posts on preparing trial bundles are the most read posts on this blog.

 

One comment

  1. NQ Solicitor · · Reply

    What a fantastic judgement!

    Keep up the good work with the blog, extremely helpful.

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