A refusal to grant relief from sanctions has been overturned by a circuit judge, where a costs budget was served a week late, in the case of Murray v BAE Systems PLC (Liverpool County Court, 1 April 2016).
The costs budget was due to be served by the Claimant on 19 August 2015. This was emailed two days late to the Defendant, on 21 August 2015 and was later emailed to the Court, on 24 August 2015. An application for relief from sanctions was also made on 24 August 2015.
The hearing took place on 26 August 2015 before District Judge Harrison. The Claimant confirmed that the failure to file and serve the costs budget was due to a lack of communication between the fee earner and her predecessor, each thinking that the other was to lodge the costs budget. A further reason advanced was the absence of an automatic diary entry system at the firm's offices to cater for Orders, which are silent on their face as to dates for compliance.
The District Judge, in her decision, considered the three stage test (including consideration of "all the circumstances of the case") identified in Denton and Others v TH White and Another  EWCA Civ 906 and also the earlier authority of Mitchell v News Group Newspapers Ltd  EWCA Civ 1537.
The Claimant’s explanation was accepted and the District Judge also accepted that it was a genuine mistake and not a disregard for the Court rules. Furthermore, it was acknowledged that the question of costs management could have been dealt with at the Costs and Case Management Conference, notwithstanding the breach.
Despite the above, the delay of 7 days was considered to be "serious and significant" and, therefore, relief from sanctions was refused. In light of this, the Claimant was treated as having filed a costs budget comprising only of the applicable Court fees, in accordance with CPR3.14.
This decision was appealed by the Claimant on 22 December 2015, before HHJ Gregory. The Claimant submitted that it was wrong for the District Judge to categorise the failure to serve a costs budget as "serious and significant" when the effect of the breach had no impact on any procedural aspects of the case.
The Claimant referred HHJ Gregory to a number of cases. One of which was Azure East Midlands Limited v Manchester Airport Group Property Developments Ltd  EWHC 1644 (TCC), which is another case involving the failure to serve a costs budget on time (by two days). In this case, the judge considered the relevance of the interrelation between the breach on the one hand and its consequences on the other hand. In this particular case, it was found that the non-compliance or breach was trivial and/or insignificant and/or inconsequential.
The Claimant also referred to Mitchell and Denton. The Claimant distinguished the case of Mitchell, where the sanctions prescribed at CPR3.14 was upheld by the Court of Appeal on the basis that the late filing of the costs budget was such that the Court was not in a position to proceed with the Costs and Case Management Conference. Neither had the Claimant made an application for relief from sanctions.
Furthermore, the Claimant listed all of the features of the claim which a more nuanced evaluation of ‘all the circumstances of the case' (as advocated at Paragraph 38 in Denton) would have pointed towards relief from sanctions: namely that the litigation could be conducted efficiently, at a proportionate cost and without being adversely affected by the Claimant's failure to serve a costs budget on time; that the application for relief had been made promptly; that there had been no previous breach in the proceedings; that the District Judge could have proceeded to assess the costs budget in any event; and that the Claimant's solicitor's mistake was an isolated one and due to a genuine breakdown of communication.
HHJ Gregory held that the above factors heavily outweighed the only factors which could sensibly count against the Claimant, being the 7 day delay and the need to enforce compliance with Rules, Practice Directions and Orders.
HHJ Gregory considered whether the breach was material and found ‘considerable force' in the Claimant's argument that the District Judge erred in her approach in rejecting the consideration of consequences of the breach.
It was held that in this particular case, the Claimant's breach could not be categorised as "serious and significant" in the sense in which that term is used in the reported case law. Furthermore, HHJ Gregory was unable to identify any more appropriate basis upon which to evaluate the test of "serious and significant", other than by reference to materiality.
In light of the above the appeal was allowed. The Claimant's costs of and incidental to the appeal were also allowed.
This case highlights the importance of an application for relief from sanctions being made promptly and also indicates the case specific approach taken by the Court in relation to the late filing of a costs budget, by taking into account all of the circumstances of the particular case.