Defendant restricted to Court Fees only after late service of Costs Budget!
Our Kelly-Anne Kent, Senior Costs Consultant, reports on the case of BMCE Bank International Plc –v- Phoenix Commodities PVT Limited & Anor.
This case provides an important reminder of the importance of filing a costs budget on time.
A large national law firm that served its budget two weeks late failed in its application for relief from sanctions only made on the day of the Costs Case Management Conference (CCMC).
The Honourable Mr Justice Bryan, refused the application for relief from Hill Dickinson (representing the Defendant) and effectively denied the firm its costs for the case.
Under CPR 3.13 the parties’ costs budgets were due to be filed by the 27th September 2018. The Claimant complied but the Defendant’s costs budget was not delivered until the 11th October 2018 because the Partner with conduct of the case had been away on business. It then took several days to submit an application for relief.
As a result of the late service, no budget discussion report was prepared and as a consequence budgets could not be dealt with at the Case Management Conference, with the result that an additional appointment would be needed.
Mr Justice Ryan explained that ‘there was a serious breach without good reason followed by a very late application to seek relief, and a consideration of all the circumstances demonstrates that it is not an appropriate case for relief.’
The court heard that the Defendant had offered to pay costs of any extra case management hearing which might have been made necessary by the late delivery. The Defendant asked the court to take into account its ‘cooperative and helpful approach’ and said the breach had not been a deliberate refusal to engage with the costs process. While it was important to bear in mind the need for compliance with rules and practice directions, it was submitted it was also important to ‘make the penalty fit the crime’, taking into account the Solicitor involved also ‘unreservedly apologise[d]’ for the breach.
Mr Ryan concluded that it was important to consider the inconvenience caused to the Court and other litigants. While there were cases where relief would be granted, the rules were ‘there to be observed and for good reason.’
The judge refused to grant relief from sanctions as the breach had been serious and significant, with no good reasons in terms of explanation for it, and directed that the Defendants were treated as having filed a budget comprising only the applicable court fees.
Under CPR3.13 the rule stipulates that for matters where the value of the claim on the claim form is less than £50,000, the budget must be filed and served with the Directions Questionnaire but in any other case (value equal to or exceeding £50,000) the budget must be served no later than 21 days before the first CMC. As ever, Solicitors will need to keep a keen eye on the timetable.
The rules state “less than £50,000” and not “£50,000 or less”. So (on the face of it) if the claim is limited to £50,000 then these specific rules do not apply. However, this is not legal advice. It is wise to check any directions made carefully, some courts may make directions that the costs budget be filed with the directions questionnaire when the case is limited to £50,000.
This case is a useful reminder of the importance of filing costs budgets within time limits. PIC are always happy to help on any costs budgeting issues.