1. The Claimant brought proceedings by Part 8 Claim Form seeking the sale of two properties co-owned with the Defendant. Evidence was exchanged in the usual way and it was apparent from the Defendant’s evidence that she alleged the transfer of one of the properties to joint names was conditional and that the condition had not been fulfilled thus invalidating the transfer. The District Judge made an order directing the listing of a case management conference with a direction that costs budgets be filed seven days beforehand and a case summary, proposed directions, agreed if possible and a one page summary of the Costs Budgets be filed three days beforehand. The case management conference was listed for a Friday and so costs budgets were due on the previous Thursday and the other documents were due to be lodged on the Monday.
  2. On the day before the costs budgets were due it became apparent to the Claimant from the form of draft directions proposed by the Defendant, that the Defendant was giving consideration to bringing a separate Part 7 Claim in which she would seek to set aside the questioned transfer.
  3. The Defendant’s costs budget was lodged on time on the Thursday, but the Claimant’s solicitor was a day late lodging her costs budget.
  4. The Claimant counter-proposed directions for the disposal of the existing Part 8 proceedings on the basis of the evidence already filed on the Monday.
  5. The response from the Defendant on the Tuesday was a letter pointing out that the Claimant’s costs budget was late, refusing to discuss costs budgets at all given the automatic sanction that had descended and promising to revert later in the day on the directions and case summary.
  6. The Claimant therefore filed the unagreed case summary, directions and a summary of the costs budgets on the Tuesday, again one day late.
  7. On the Wednesday the Claimant issued an application for relief from the automatic sanction. This was listed to be heard on the Friday ahead of the CMC.
  8. Also on the Wednesday the Defendant served a Response to the case summary, draft directions and costs budget. In this document it was asserted, for the first time, that the questioned transfer had been procured by undue influence but without any proper particularity of the allegation being given.
  9. By the Friday it was apparent that the parties were agreed that one of the two properties be sold and agreed upon a mechanism for that being done but also apparent that if the Defendant was to pursue the allegation that the transfer of the other property was invalid it should be done by way of Points of Claim in the Part 8 proceedings.
  10. The application for relief from sanction was strenuously opposed by the Defendant.Giving judgment the District Judge explained that she must consider the overriding objective and the need for the Court to allocate an appropriate share of the court’s resources to litigants as well as ensuring compliance with rules and orders. The District Judge pointed out that the case of Burt v Christie (District Judge Lumb, Birmingham District Registry, 10/02/2014), was not binding upon her but was persuasive. However she distinguished the case on the basis that there had been an express direction that the parties file objections to each other’s costs budgets 14 days before the hearing. She also observed that it appeared that in the present case both the relief from sanction application and the costs and case management conference could be dealt with within the already allotted time.
  11. As regards the late service of the other documents she considered that that was not the sole responsibility of the Claimant.
  12. In so far as there had been only limited consideration by the parties of the other side’s budget, that had been due to the Defendant’s solicitor’s refusal to discuss them because of the automatic sanction.
  13. The other matter that the District Judge considered made the factual matrix quite different from Burt was that the Defendant was contemplating bringing different proceedings and raising a new allegation of undue influence. As the District Judge pointed out this is relevant because until it is clear what issues are before the Court it is impossible for the parties to agree directions or consider costs budgets.
  14. The District Judge considered that the circumstances of the case including the proposed new proceedings and a new cause of action took the case out of the ordinary and therefore that the late filing of the costs budget was trivial and that relief from sanction should be granted.
  15. Given the uncertainties of the Defendant’s position the District Judge ordered that pleadings be served and that the costs and case management conference be adjourned until a date after close of pleadings.
  16. As to costs the District Judge acknowledged that the usual rule would be that costs should follow the event but considered that an application for relief from sanction was slightly different. She considered that it was not unreasonable for the Defendant to have opposed the application for relief from sanction in light of the current “state of flux”. Looking at matters in the round she ordered that the Claimant make a nominal contribution of £250 to the Defendant’s costs.
  17. Compare the case of Lakatamia Shipping Co Ltd v Nobu Su [2014] EWHC 706, where disclosure was given 46 minutes late in breach of an unless order. Hamblen J ruled that the costs of the initial application for relief (which was necessary) together with the supporting evidence and a response from the other party sufficient to clarify or put right any inaccuracies in the application and supporting witness statement should be borne by the applicant. However, a party who positively opposes the grant of relief from sanction and fails in doing so by some margin, should pay the bulk of the costs of the hearing. He sai

“it is important that the message goes out that when a party applies for relief from sanctions, the other party should not assume that it is going to get a free costs ride in opposing that application. If the court considers that it was unreasonable to do so, there will be costs consequences… The Mitchell guidance was provided in order to help avoid endless satellite litigation. If parties consider that they can always come to court to oppose any application for relief, then there will be no end to that satellite litigation”

  1. The moral of the story is to get costs budgets in on time. Parties who fail to do so cannot rely upon the other side suddenly announcing that they intend substantially to amend their case after such a breach has occurred.