Court of Appeal emphasises the need for litigation to work for SMEs

In a recent judgment that has attracted little interest outside of the legal profession but plenty within it – dealing as it does with sanctions on parties if one of them (usually by their solicitors) misses a deadline or fails to comply with the terms of a case management order – the Court of Appeal reaffirmed one of the key considerations in running litigation: the impact it has on Small and Medium-sized Enterprises.

This acknowledgment, hidden away at paragraph 90 of 99, is easy to overlook but it is a nod from those at the top that for too long the litigation system has not fitted-in well with the effective running of a business, especially smaller businesses whose resources, in both time and money, could be better focused elsewhere.

Nonetheless, there will be times in business when it is necessary for matters to be litigated and the comment of Lord Justice Jackson in Denton that “it is necessary for the economy that the courts provide swift and just resolution of disputes involving SMEs” is unlikely to find many critics in such companies.

The new focus of the Civil Procedure Rules is one of efficient justice at a proportionate cost, where proceedings are a step of last resort.  If proceedings are issued then the Courts have, in this judgment, made it clear that the courts will take a dim view of those who cause unnecessary delay in proceedings and an equally dim view of those who do not give a little ‘wiggle-room’ to their opponents when it is the sensible thing to do.  It could be said that some of the lessons and principles of the business world are finding their way into the courtroom.

Prior to this decision the changes to the Rules had been, it now appears, focused too sharply on punishing minor slips. Those involved in litigation, solicitors especially, have been reminded that it is an obligation on both sides to a dispute to ensure its smooth running. This means cases should be able to be brought trial on timetable and on cost more often than previously, a benefit to all concerned but especially those in smaller businesses.

Despite the above, there remain pitfalls in litigation, major delays will still be expected to be dealt with by strong court sanctions on the defaulting party and litigants in person are being afforded fewer and fewer of the indulgencies of years gone.

It remains a balancing act and but if we run litigation as most people run their businesses the old reality, as Lord Justice Jackson puts it, of litigation being “a massive drain on management time” will hopefully be a thing of the past. Litigation done well is not easy, but it needn’t have been this hard either.

Mark Deverell, Dispute Resolution and Wills and Estate Disputes