No sanctions for late Costs Budget as Relief from Sanctions granted
The case of Manchester Shipping Limited V Balfour Shipping Limited & Anor (2020) relates to relief from sanctions being granted to a Defendant who had filed their Costs Budget out of time.
A CCMC in this matter was listed on the 17th January 2020. The parties’ Costs Budgets should have been filed and exchanged no later than 21 days before this date. The Claimant filed and served its Cost Budget on the 24th December 2019. On the 9th January 2020, the Claimant’s Solicitors advised the Court that it had been served with the Defendants’ Cost Budget on the 8th January 2020 (with it also being filed at Court this day). The Claimant reserved its position with regard to this late service/filing.
The Defendants’ Solicitors advised the Court that the parties had agreed a procedural timetable which had significantly varied the ordinary procedural steps leading up to the CMC, but which did not make provision for any costs management steps. The Defendants’ Solicitors said that in light of this, they had not appreciated that the Claimant intended that costs management should take place at the CMC. They further observed that if the Claimant maintained that there had been a breach or that any sanctions should be imposed, the Defendants would if necessary, apply for relief from sanctions at the CMC in order to be permitted to rely on their Cost Budget. The Defendants did not make an application under CPR 3.9 for relief from sanctions.
CPR 3.14 provides that:-
“… Unless the court otherwise orders, any party which fails to file a budget despite being required to do so will be treated as having filed a budget comprising only the applicable court fees …”
The Defendants did not file their Cost Budget in accordance with rules and their Solicitor did not seek to contend otherwise. The Budget was filed 8 days before the dated fixed for the CCMC hearing, that is to say 13 days late.
Lionel Persey QC, sitting as a deputy High Court judge, had to decide whether to grant relief against the Denton criteria under rule 3.14.
It is common ground that, following the guidance given by the Court of Appeal in Denton V TH White Ltd (2014) 1 WLR 396, the Court should conduct a three stage exercise in determining whether to give relief from sanctions.
First, the seriousness and significance of a breach should be evaluated.
Secondly, the reason for the breach should be considered.
Thirdly, in every case, the Court should consider all the circumstances of the case so as to enable it to deal justly with the application.
Although it can be helpful to look at decisions in other cases, every case must be considered on its own merits and the guidance in Denton v White should be applied afresh to the particular circumstances of the case before the Court, save always that a consistent message should be sent out in relation to compliance with the rules as to costs budgeting.
The Defendants argued that, although the delay was not trivial, it was of “limited significance” because the Budget was submitted over a week before the CCMC and the Claimant had had sufficient time to consider it and to file a Precedent R.
Mr Persey said the failure was serious but accepted this argument: “The paperwork was all in order by the time the bundles were filed for the CCMC and the Claimant was able to deal without difficulty with the Defendants’ budget at the hearing. More importantly, I was able to hear full argument and rule upon both parties’ costs budgets at the hearing.”
Mr Persey also stated that “the default was understandable in that context, although the defendants should not have allowed themselves to be distracted in this way. The parties had not agreed that costs budgets would not be dealt with at the CCMC. I do not, however, regard Defendants’ default as egregious in the particular circumstances of this case.”
Standing back and looking at all of the circumstances, Mr Persey said it was appropriate to grant relief from sanctions.
“The breach, although serious in terms of lateness, did not prevent the litigation from being conducted efficiently or at proportionate cost. No inconvenience was caused to the Court or to other Court users.
“Against this background, and on the particular facts of this case, it would not in my view be proportionate to deprive the Defendants of the potential to recover their own costs should they ultimately be successful at trial.”
Although the Defendant overlooked the essential requirements to file a Cost Budget, they followed all other procedural steps, and did not cause any inconvenience to the procedural matters of the case, and therefore the Denton criteria was considered in their favour. That said parties should remain vigilante and proactive. The requirements for the filing of Costs Budget are set out in CPR r3.13. The sanctions are clear and can be catastrophic. Although the Defendant was successful in getting relief, the old adage that prevention is better than cure remains. None-the-less Manchester Shipping Limited remains an example for those who serve a Costs Budget late that in the right circumstances relief can be achieved.
If you are ever unsure on the rules in respect of filing a Cost Budget, the requirements for the same or should you find yourself past the deadline then PIC can help.
Nicola Smith | Costs Consultant | Partners In Costs Ltd
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