Mott & Anor v Long & Anor [2017] EWHC 2130 (TCC)

The facts

This is an interesting case where the defendant submitted that due to IT difficulties an incomplete and incorrect version of their costs budget had been served and they had not been aware of this. The defendant was 10 days late in serving the correct and complete version of their costs budget after being notified by the claimant that the costs budget, previously served, was incomplete.

The defendant made an application for relief from sanctions submitting that IT difficulties had led to the error and they were unaware that the incorrect costs budget had been filed. It was specifically argued that they had experienced problems with saving and printing documents and that their computer systems had crashed when they had been working on documents. Also, it was argued that a complete costs budget had been prepared and this is what was believed to have been filed.

Decision

The court addressed the three stage test under Denton v TH White Ltd [2014] EWCA Civ 906, in respect of relief from sanctions.

Firstly, the court held that the breach was serious and significant because it prejudiced the process of co-operation and negotiation in the costs budgeting process which was against what the rules were designed to achieve.

Secondly, it was held that there was no good reason for the default because even though the defendant’s solicitors had referred to “IT difficulties”, insufficient detail about these difficulties had been provided. Also, it was concluded that the evidence did not make clear whether the breach was due to human error or a system error, or both.

Thirdly, the court considered all of the circumstances of the case including the need for litigation to be dealt with efficiently and at proportionate cost and the need to enforce compliance with rules, practice directions and orders. The fact that the defendant’s solicitors had served their costs budget within the relevant timescales was taken into account. It was also noted that the defendant would need to serve an updated costs budget, due to directions being provided in respect of expert opinion evidence and the estimated length of trial.

The court concluded that the parties were in the same position which they would have been in had the defendant served the correct costs budget in time. It was seen that this was a significant factor and that it was appropriate to grant the defendant relief from sanctions.

What this means for you

This case shows that the courts will, in some circumstances, permit an application for relief from sanctions where there has been a serious or significant breach and no good reason for it.

In this case, the defendant’s application for relief was permitted due to the fact that the parties were in the same position that they would have been in had the correct budget been served in time. When considering this against the circumstances of the case, it was seen as being appropriate to permit the application.

It would be interesting to know whether this case would have been dealt with differently had the hearing not raised new matters that required revised costs budgets, because arguably the parties would not have been in the same position procedurally.

Although this was a case where IT difficulties had been argued, this is not something that can simply be relied on if there has been a breach. In this case, there were plausible arguments that the defendant’s solicitor could have checked the budget before it was served or printed a copy and taken immediate remedial action. As a result, IT difficulties will unlikely be good enough reason to justify why a breach had occurred when the courts apply stage two of the Denton test.

It is crucial that defendants comply with rules, practice directions and court orders because any breaches will result in urgent applications needing to be made for relief from sanctions. It is also uncertain whether an application for relief from sanctions will be successful because cases are fact specific and judges have a high amount of discretion when applying the three stage Denton test. Also, even if an application for relief is successful, the party who was required to make the application will likely be ordered to pay their opponent’s costs.