Lakhani v Mahmud [2017] EWHC 1713 (Ch)

The modern and oft-repeated advice to legal practitioners is that non-compliance with time-limits may lead to sanctions and will result in the costs and embarrassment of a potentially unsuccessful application for relief from the sanctions under CPR 3.14. The best advice is comply and failing that make your application for relief from sanctions promptly.

A good example of the pitfalls of a dilatory approach leading to arguably ‘disproportionate’ sanctions centre in Lakhani v Mahmud [2017] EWHC 1713 (Ch).


As is standard practice, parties were ordered to file and serve updated costs budgets 21 days before a costs and case management conference (CCMC). This was to enable the parties to communicate with each other in good time prior to the hearing to limit disputes over costs budgeting. The Claimant’s solicitor complied but the Defendant’s solicitor failed and filed and served it a day late. The automatic consequence under the CPR was that, unless relief from sanctions was permitted, the Defendant would be unable to recover any more than court costs if successful.

In the meantime and prior to the CMCC the parties’ solicitors got on with the exercise of commenting on each other’s costs proposals. Thus the Defendant argued on its application at the CMCC for relief from sanctions on the basis that the Claimant had suffered no prejudice by missing the deadline by a day.

The Decision

At first instance HH Judge Lochrane held that being one day late with a costs budget “might not be regarded as terribly serious”.  However in this case it was serious because (i) it was only accepted belatedly that the costs budget was late, (ii) the situation was made worse by the solicitor’s annual Christmas closure, (iii) the solicitor was aware that filing late would restrict a period already limited, (iv) the fact that budgets had not been agreed in any event was irrelevant and (v) late service had ‘created an environment’ which was not conducive to agreement.

Thus although no actual prejudice had been suffered, it was a serious not a trivial breach and there was no sensible excuse for the breach (applying Clearway Drainage Systems Ltd v Miles Smith Ltd [2016] EWCA Civ 1258).

The Appeal and the Test

On appeal to the Chancery Division, Daniel Alexander QC upheld the decision at first instance and held that relief from sanctions should not be given.

As a matter of principle Case Management decisions should not be interfered with if the court below has “applied the correct principles and…has taken into account matters which should be taken into account and left out of account matters which are irrelevant, unless the court is satisfied that the decision is so plainly wrong that it must be regarded as outside the generous ambit of the discretion entrusted to the trial judge”.

The High Court applied the 3 stage test in Denton [2014] EWCA Civ 906 which is as follows:

  1. The first stage is to identify and assess the seriousness and significance of the "failure to comply with any rule, practice direction or court order”. If the breach is neither serious nor significant, the court is unlikely to need to spend much time on the second and third stages.
  2. The second stage is to consider why the default occurred.
  3. The third stage is to evaluate "all the circumstances of the case, so as to enable [the court] to deal justly with the application including [factors (a) and (b)]"."

At the first stage the test is not whether a future hearing date is imperilled. A breach may be incapable of affecting the efficient progress of the litigation and may still be serious. At the second stage, the fact that solicitors may be under pressure and have too much work will rarely be a good reason for a default. As to the third stage, the factors set out in CPR 3.9(1) (a) and (b) ((a) efficient conduct of litigation at proportionate cost and (b) enforcement of rules, PDs and Orders) may not be of paramount importance but are of particular importance.

The High Court considered that the following factors rendered the breach ‘serious’.

(i) The absolute and relative amount of time lost by missing the deadline had to be considered. Although a comparatively generous period for compliance was provided in terms of number of days the effective useable time was more limited. It is legitimate for a court to take account of the effective amount of time available and how much of that was lost as a result. The amount of time lost can be more significant where a task involves a degree of co-operation, such as attempting to agree a matter, rather than the unilateral performance of an act.

(ii) Whether missing the deadline affected the litigation or a procedural step in it or was likely to do so. If litigation is adversely affected as a result of breach of an Order, necessitating an adjournment or by making it much harder to reach agreement without a hearing on given issues or by making other steps in litigation more difficult or complex to perform, that is a powerful factor in favour of finding that the breach was serious or significant. However it is not an over-riding factor and in the case of orders whose performance requires a degree of co-operation it may make it more inconvenient and costly, since extra time may need to be made available.

(iii) The direct consequences of missing the deadline and how it was addressed. The mere fact that an application for relief from sanctions might need to take place at the same time as an attempt to complete the tasks required by the Order does not mean that the breach should necessarily be regarded as serious on the basis that such may risk distraction. However, where a party in default makes “a mountain of procedural annoyance out of a molehill of missing a deadline” it may be serious.

(iv) The impact of missing the deadline on litigation generally. In this case what should have been a short hearing on costs-budgeting turned into a long one dominated by relief from sanctions, using valuable court time.

Secondly, the High Court also found that there was no reasonable excuse for the default. An error made by a legal representative as to a particular deadline for compliance should not be treated as a reasonable excuse.

Thirdly, the High Court held that the sanction dealt justly with the breach. Although “on the tougher end of the spectrum” the simple effect of the Rules is that the Defendant is deprived of their budgeted costs in the event that they succeed and if they lose at trial the sanction will have had a limited adverse impact on the Defendant


Thus the moral of the story must be to diarise, diarise and diarise and then comply with Court deadlines. As Shakespeare wrote “Better three hours too soon than a minute too late” (The Merry Wives of Windsor)