Statement of Truth signature – Nullity or Irregularity?

There is yet more evidence that the post Mitchell world is not as robust as once anticipated, following the recent judgment of the High Court in Americhem Europe  Ltd  V Rakem Ltd [2014] EWHC 1881 (TCC).

The now infamous Mitchell judgment placed so much emphasis on “ensuring compliance with rules, orders and practice directions”, that sanctions for trivial errors seemed ‘disproportionate’ in themselves. Ironic, since proportionality seems to be the very key principle of the new overriding objective.

In Americhem Europe  Ltd  V Rakem Ltd, the dispute was in respect of the Defendant’s Precedent H’s statement of truth, which was signed by a legal costs draftsman as opposed to a senior legal representative, which is specified in Practice Direction 3E as a formal requirement.

The first question for the court was whether or not a signature by a legal costs draftsman was a breach of Practice Direction 3E. Who exactly is a Senior Legal representative?  And can a Legal Costs Draftsman still be classed as a ‘Senior Legal Representative’? CPR 2.3(1) assisted on this question, where the definition of a Senior Legal Representative was said ‘to connote someone who is representing in a legal capacity, which is not what is being done by a costs draftsman.’ So the answer was no, a Legal Costs Draftsman is not a Senior Legal representative as they are not in real position to be able to certify details of the case and sign the statement of truth.

The second question for the court was whether the Precedent H should be struck out in light of this finding. Whilst recognising that the signature was an ‘irregularity’, the High Court ruled that it would be unjust and disproportionate to strike down the Precedent H budget and to reduce the costs to Court fees only for this reason alone.

Whilst an incorrect certification of a statement of truth is by no means a ‘trivial’ breach, Stuart-Smith J found that the shortcoming did ‘nothing to impede the normal constructive discussions on figures’ that the parties would have held had the Precedent H have been fully compliant.  If the budget was rendered a nullity then the Defendant’s costs would have been restricted to the applicable court fees, which would have had a much bigger impact on the Defendants than any disadvantage suffered by the Claimant.

The Claimant costs for bringing the matter to the attention of the Court were assessed at £50 and whilst no criticism was made, it is clear that parties should be dissuaded from taking such technical points.

The recent flurry of judgments indicate that the courts are becoming more sympathetic to ‘accidental’ and ‘harmless’ shortcomings and are exercising a more holistic approach to proportionality.  Whilst all parties should of course continue to ensure compliance, the rules are and have always been there to protect justice and fairness rather than to punish and trick which is a great sigh of relief for all.

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