The High Court has provided comment on the complex rules and discretions in relation to the filing of a partial costs budget, following a partially successful appeal.
Representatives for the Claimant, Mr Page, filed a costs budget excluding the stages of trial preparation and trial. This was a conscious decision by the Claimant's representatives. Master Thornett ordered that the Claimant's costs budget be limited to applicable Court fees only, on the basis it was non-compliant. The Claimant appealed and sought relief from sanctions.
The Claimant suffered a serious injury, and pursued a claim against the Defendant. Summary judgment on primary liability was granted in favour of the Claimant, yet issues of contributory negligence, causation and quantum remained.
The parties were ordered to file costs budgets. The Claimant elected to file an interim costs budget up to the CMC/pre-trial review stage, and including estimated time costs for a second CMC. The Claimant was of the view that a further CMC was required in order to assess the need for further medical evidence.
The Defendant's budget made no reference to the proposed second CMC. The budget contained entries for the trial preparation and trial phases.
The parties agreed budget figures for incurred and budgeted costs up to the CMC/pre-trial review stage. At the CCMC, Master Thornett concluded that there was no basis for the proposed second CMC, and that the matter should be listed through to trial.
As the Claimant's interim budget had not budgeted for those later stages, it was not treated as compliant with the CPR, and not filed in accordance with Practice Direction 3E. The budget was limited to applicable court fees only.
The Claimant appealed the decision and applied for relief from sanctions under CPR 3.9 stating that:
- It was incorrect to hold that CPR 3.14 applied where a budget was filed, and thus incorrect to limit the Claimant to applicable court fees.
- The costs management order should have reflected the agreement reached between the parties, and pursuant to CPR 3.15, the order should have given effect to the agreement.
- As CPR 3.14 should not have applied, and as the parties had agreed that later phases of the claim could be budgeted for at a later date, the order should have ordered the parties to file supplemental budgets at a later date.
The appeal was partially successful but the Claimant's budget was still subject to some sanctions.
The High Court disapplied the sanction of CPR 3.14, and allowed those costs which had been agreed previously with the Defendant.
However, the costs for trial preparation and trial were limited to applicable Court fees.
In considering the grounds of appeal, the High Court noted that:
- The Claimant was wrong to argue that an incomplete budget was still "a budget" for the purpose of CPR 3.14. The Claimant's argument that 3.14 applied only where there was no budget at all was also wrong. Important sections of the Precedent H had been omitted and there could be no "budget" if it was materially incomplete.
- The Claimant also argued that a court has no power to approve or vary budgets to the extent they have been agreed and that where, as here, the parties agree, CPR 3.14 can be overridden. That argument was also rejected by the judge: "It seems to me that on the ordinary use of language CPR 3.15(2)(a) is not engaged once CPR 3.14 has taken effect."
- The High Court did find, however, that Master Thornett was incorrect when failing to consider whether to disapply the sanction under CPR 3.14.
- Applying the approach from Denton v TH White, Walker J found the sanction of 3.14 should not have applied to those agreed phases of the budget, including those in those up to the phases of trial and trial preparation. Walker J found that the Claimant's representatives had not been "deliberately wrong" in considering that a second CMC was needed and that that a CMC could deal with the trial and preparation for trial phases.
What can we learn?
- This decision offers clear and unequivocal guidance that a costs budget must cover the entire proceedings unless the Court has ordered otherwise. Practitioners should take this guidance on board and act in a cautionary manner, filing complete budgets irrespective of what has or may be agreed with the opposing party.
- Whilst noting that Mitchell had warned of the dangers of partial sanctions, the High Court stated that this case was exceptional, Walker J highlighting "There is an unusually clear dividing line between the parts of the budget which were satisfactory and those which were not…" There was also stated to be an equally clear demarcation between an unjust sanction, and one which would not be.