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If in doubt, file that costs budget!!

View profile for Richie Rees
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The Court of Appeal has provided another clear reminder that the infamous Mitchell decision on costs budgets and relief from sanctions should not be forgotten following the emergence of the Denton test. In their recent ruling in Jamadar v Bradford Teaching Hospitals NHS Trust, [2016] EWCA Civ 1001, the Court of Appeal upheld decisions of both the District and Circuit Judge to refuse a Claimant relief from sanctions for failing to file a costs budget, limiting the Claimant to a budget of court fees only.

The Claimant's solicitors had decided not to file a Precedent H costs budget prior to a CCMC listed for 27 May 2014 on the basis that judgment had already been entered in their favour when the matter was transferred to Bradford County Court on 10 February 2014. The Defendant took the opposing view and filed their costs budget on 28 February 2014 along with the Directions Questionnaire and draft directions.

Despite several prompts from the Defendant, including a request for the Claimant’s costs budget on 16 May when the Defendant served an updated version of their own budget in order to discuss costs ahead of the CCMC, the Claimant maintained their position.

 

Court fees only

At the CCMC the Defendant’s budget was approved, whilst the Claimant was limited to a costs budget comprising of court fees only pursuant to CPR 3.14. Counsel for the Claimant presented an unsigned budget on the day but this was opposed by the Defendant and rejected by the Court.

The Claimant applied for a variation of the CMO / relief from sanctions under CPR 3.9 on 4 June, which was refused by the District Judge on 29 July 2014. The Claimant appealed this decision to the Circuit Judge, but the refusal to grant relief was upheld. The Court of Appeal has now considered these decisions and found that they were both correct. Whilst the District Judge had erred in his reasoning by simply stating that relief would not be granted based on the similarity of fact between this case and the Mitchell matter, the outcome was correct. The parties had agreed the existence of this mistake before the Circuit Judge ruled on the appeal of the District Judge’s decision, yet the Circuit Judge maintained the refusal following the proper application of the three-stage test established in the Denton case.

 

Court of Appeal affirmation

The Court of Appeal found no good reason for the Claimant’s failure to file a costs budget and subsequent breach of the CPR. The Claimant’s argument that their decision was based on a misinterpretation of the rules but represented reasonable actions in those circumstances was not accepted.  The Claimant's decision knowingly to refuse to file a budget before a deadline (or at all) amounted to an unjustified breach of CPR 3.13. The sanction imposed by CPR 3.14 was clear and the factors of the Denton test were not satisfied as to allow the Court to grant relief under CPR 3.9.

 

What should practitioners take from this judgment?

This decision reinforces the Court of Appeal's stance that, despite the slight lowering of the bar presented in the Denton case, the sanction under CPR 3.14 for failing to file a costs budget is automatic and relief from that sanction is far from guaranteed.

It is worth reading the relatively scathing comments of the Circuit Judge in relation to the Claimant solicitor’s decision not to file a budget in these circumstances. The Court of Appeal notes that these comments may be considered harsh, but that they were not incorrect.  The decision reinforces the importance of the Denton test in relief applications, and confirms that "all the relevant circumstances" will not automatically provide the defaulting party with a route to relief.

But in short the message is... “If in doubt, file that costs budget!!”

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