The High Court has penalised a claimant in costs for requiring the defendant to apply for relief from sanctions, where the defendant had relied on a letter from the court which (arguably) set out the wrong date for filing costs budgets: Freeborn v Marcal  EWHC 3046 (TCC).
The court emphasised that, following the court’s tougher approach to granting relief from sanctions established in Mitchell and Denton (as outlined here), it is extremely important for parties to ensure that they comply with the CPR. However, parties should not abuse this tougher approach. Parties need to consider whether it is proportionate and appropriate to require their opponent to make an application for relief from sanctions, or to oppose that application, in all the circumstances of the case.
This judgment is consistent with the warning in Denton that the courts are willing to penalise parties who try to hold their opponents to what the court sees as an overly strict approach to compliance with rules and court orders, and illustrates the fine balance litigating parties need to strike.
The court wrote to the parties identifying the date for the case management conference (CMC) and stating that the parties were required to file and exchange costs budgets not less than seven days before the CMC. This was, however, the time limit under the old version of CPR 3.13; the current version provides that “unless the court otherwise orders, all parties…must file and exchange budgets…not later than 21 days before the first case management conference”.
The claimant served its costs budget 21 days before the CMC, in accordance with the current version of CPR 3.13. However, the defendant relied on the letter from the court office and therefore served its costs budget just seven days before the CMC. The claimant then suggested (not having raised the point earlier) that the defendant’s budget should have been provided 14 days earlier and therefore the court should apply the sanction for late filing of budgets set out in CPR 3.14. In other words, it should treat the defendant as having filed a budget comprising only the applicable court fees.
Due to the claimant’s stance, the defendant was obliged to make a formal application for relief from sanctions, in case it was not entitled to rely on the letter from the court.
The court (Mr Justice Coulson) held that, in the circumstances, the defendant was not required to make an application for relief from sanctions. CPR 3.13 states that costs budgets must be filed and exchanged not later than 21 days before the first CMC “unless the court orders otherwise”. Here, the court’s letter amounted to the court ordering otherwise.
As the defendant filed its cost budget within the date set out in that letter, the defendant had complied with CPR 3.13. It was immaterial that the court’s letter may have erroneously contained the deadline set out in the old version of CPR 3.13 (seven rather than 21 days before the CMC). Coulson J commented: “A busy litigation solicitor is entitled simply to rely on the date specified in writing by the court office, rather than embarking on an investigation into whether or not the letter contained an error.”
In any event, if relief from sanctions was needed, the claimant would have satisfied the three stage test set out in Denton: (i) the breach was not serious and significant; (ii) there was good reason for the delay (given that it stemmed from the court’s error); and (iii) in all the circumstances, it was just and reasonable to grant relief.
The claimant was criticised for requiring the defendant to make an application for relief from sanctions and was ordered to pay the defendant’s costs of the application. The judge noted:
“It is, of course, extremely important, post-Mitchell and post-Denton, for the parties to civil litigation to ensure that they comply with the CPR. Courts will be far less forgiving of non-compliance than they ever used to be. But that tougher approach must not be abused in the way that occurred here. Parties need to consider carefully whether the alleged breach of the rules is, on analysis, any such thing and, even if it is, whether it is proportionate and appropriate to require or oppose an application for relief from sanctions in all the circumstances of the case.”