Active case management and unfair settlements – can judges be to blame?

Watson v Sadiq [2013] EWCA Civ 822

Picture the scene. A judge arrives at court on Monday morning. The trial bundles have finally arrived. They are in a mess as each side has submitted their own. There is no skeleton argument from C as he is a litigant in person. D has submitted a skeleton argument but it is unclear whether C accepts that the issues have been identified correctly. The case has been listed for four days. It is a dispute between businessmen who have fallen out, and many factual issues are in dispute on the claim and counterclaim. “Excellent, I’m really looking forward to getting my teeth into this one and providing a detailed analysis of the evidence en route to an appeal-proof conclusion on the law, all within four days” is most unlikely to be the judge’s reaction. “For goodness’s sake, let’s hope this one settles” might be more like it, even if never expressed on tape. And the issue in Watson was whether the judge went too far in encouraging settlement with the result that the trial process was unfair or led to the unrepresented claimant entering the settlement under duress or undue influence.

Case management and settlement

Judges under the Civil Procedure Rules are meant to encourage settlement at every turn. “Active case management” is the mantra by which all litigants, lawyers and judges are meant to live – identify issues, resolve as many of them as possible as soon as possible (preferably pre-issue, or without a hearing at any rate). Parties are meant to explore alternatives to a final trial, such as meditation and / or stays for settlement discussions and JSMs etc. Part 36 and other types of offers carry costs penalties if a sensible offer is rejected. Some courts make greater use of their CPR powers than others e.g. courts in the Southampton / Portsmouth / Bournemouth area where larger cases are not listed for trial until a CMC and settlement hearing has been heard by a DJ. Other courts will point to the large costs that both side are running up and appeal to commercial common sense. But when the matter reaches the day of trial without settling, how much can the trial judge do without getting into difficulties? If he indicates his views too early or over-forcefully, he risks a dissatisfied party feeling that the judge has made his mind up in advance and asking him to recuse (or complaining on appeal). He might end up being told about offers that might prevent him from hearing the trial. If he encourages further settlement discussions and the case does not settle, the time taken may mean that the trial cannot be finished in the time left, which might cause listing difficulties.

How much time should the judge allow?

Watson is perhaps an extreme example of the court allowing the time for trial to be taken over in settlement discussions. The judge said at the outset that, if he actually had to read the papers to the point of being “entirely au fait” with them, this would take him a couple of days. Discussions were taking place while he started to read the bundles. The trial started at 2pm on day 2 and the day ended with C still being cross-examined by D’s counsel. There was a long discussion about matters on the morning of day 3, which included the judge saying that it was “absolutely mind boggling” and “a grotesque waste of time and money that we should be having to litigate all this”. After a further adjournment, points of principle were agreed later on day 3 and discussions on the detail continued onto day 4. By the afternoon, most issues had been agreed apart from two specific items and interest. The judge expressed dissatisfaction with the preparation of the case and said that this might be reflected in costs against C at the end of the day. After further discussion, the judge suggested that he could rule on costs and interest if the parties were unable to agree but happy to leave those points to him. During the costs discussion, the judge said that “…in a bizarre sort of way the Court almost became a mediation and I hope Mediators don’t behave like me.” A Tomlin order was finally made, reflecting the judge’s ruling on the contested matters of costs and interest and with a schedule for the matters agreed between the parties.
On the day after the hearing, C was pressing for payment of the sums due to him but within a month he was trying to appeal the decision on the grounds of the judge’s conduct.

On the day after the hearing, C was pressing for payment of the sums due to him but within a month he was trying to appeal the decision on the grounds of the judge’s conduct. It was said that the judge’s persistent adjournments rendered completion of the trial in the allotted time impossible and involving himself in the intricacies of settlement put the judge in a position where he would have to recuse himself from further involvement, leading to a position where C had a unfair choice between settlement or an adjournment of the trial with probable costs penalties. C’s right to a fair trial under Article 6 had been breached.

The appeal

The Court of Appeal did not agree. The matter had been settled by a Tomlin order i.e. there was a contractual compromise. If C wanted to set aside the contract using the law of contract on duress, for example, that could not be done on appeal and would require a separate action. On the issue of whether the judge had overstepped the mark, he had not, in the CA’s view. A judge can indicate that a case seems to be one that should be settled and can ask whether settlement has been explored. He can allow the parties court time to discuss matters but should try to ensure that this time does not prevent the case from being heard within its allotted time, in the interests of the parties and other litigants waiting their turn. However, if the parties know that time is slipping away and they risk not having a concluded trial in the remaining time, that is their choice and the court cannot be blamed for it. Having said that, judges must not exert pressure on parties to try and settle to spare themselves the trouble of deciding messy cases. On the facts, this was a poorly prepared case and although some of the judge’s interventions might have been unwise and “surpassed the desirable levels of judicial encouragement of sensible compromise”, there was no breach of the right to a fair trial. “The judge’s handling of a badly prepared case and intractable settlement negotiations were clearly carried out in good faith and with the best intentions, even if his allowing time to slip by as he did may have amounted to poor trial management”, said McCombe LJ. He would not say that Tomlin orders could never be set aside for reasons of judicial unfairness, but the facts here did not justify it. In any event, C had affirmed the agreement by seeking payment of the sums due to him under it, and he could not later try to resile from it.

Practice points

If you are going to try to settle at court, keep an eye on the clock. Watson now means that judges (perhaps particularly in messy cases) can let parties take their time in settlement negotiations at their own risk as to adjournment and costs if settlement doesn’t take place. Parties will have to decide whether the other side would be more disadvantaged by an adjournment, particularly on costs, and that will require some thought as to why the parties are only seriously discussing settlement at the door – has one side been late with some evidence? Has one side raised new issues late in the day? Were suggestions of settlement discussions ignored earlier?

Lawyers and their clients will need to be particularly careful with litigants in person – Watson’s arguments would have been very unlikely to get off the ground if he had been represented, since it would have been said that any inappropriate attempts to make him settle were irrelevant because he had his own lawyers to advise him on settlement. Lawyers should also be aware of the effect of firm judicial intervention on their client – if a judge is saying “this case ought to be settled” when the lawyers are saying to the client that the bottom line has already been reached, then the lawyers will need to explain very carefully why they are right and the judge and the opponents are wrong…

Tim Petts
July 2013