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Make sure you file a budget through to trial

In Page v RGC Restaurants Ltd [2018] EWHC 2688 (QB) (15 October 2018) Mr Justice Walker was considering an appeal from Master Thornett who imposed a sanction which limited the Claimant’s costs budget to applicable Court fees only.

The parties had agreed directions and phases up to and including a second CMC. However the Master formed the view that the case was appropriate for directions to be made through to trial; which was what he did . In only presenting a budget for part of the proceedings, the Master concluded that Claimant was deemed to have failed to file a budget at all and was therefore limited to Court fees only, subject to any application for relief from sanctions.

The Claimant appealed and sought an order granting relief from the sanction imposed by the Master. The Defendant conceded that the sanction can only apply to those phases which were not agreed. The only phases which were not agreed were trial preparation and trial.

Mr Justice Walker considered Mitchell v News Group Newspapers Ltd and Denton v TH White Ltd.

The Appellant argued that a budget had been filed and therefore CPR 3.14 did not apply. Walker J found that describing it as an "Interim Costs Budget", led to the correct conclusion that it was not yet a “budget”. Despite the ordinary meaning of the names used, the question was whether it could be regarded as a “budget”. The interim budget did not meet important requirements of a Precedent H, as per the Costs & Funding Civil Justice Reforms: Questions & Answers book, which is that the budget must cover the entire proceedings, unless, the Court otherwise orders.

Where the Master erred was in failing to apply his mind to the subjective aspect of CPR 3.14 which provides “Unless the Court otherwise orders…” and instead asserting that the sanction was automatic. It is necessary for the Court to consider whether it should take a difference course.

Accordingly Mr Justice Walker considered whether to order otherwise, applying the principles of Denton. He concluded that the breach was moderately serious and moderately significant. He had regard to the fact that default was not intentional and that the action taken was appropriate, notably with no objection from the Defendant. Applying the sanction to the entre budget was unjust, however applying the severe sanctions at CPR 3.14 to trial preparation and trial phases, would serve the important considerations of encouraging efficiency, proportionality and compliance.

In applying the sanction to trial preparation and trial phases, Mr Justice Walker turned to the application for relief from sanctions. For the reasons stated above that application failed and thus those fees were limited to Court fees only.

Moral of the story

File a full budget for the entire process unless the Court has ordered otherwise.