Penalty for failing to serve a costs budget is variable

The sanction for failing to file a costs budget is clear under CPR 3.14; court fees only, unless the court otherwise orders. The CPR is silent however on the penalty for failing to serve a costs budget.

An unreported case was referred to recently in the ACL Costs News bulletin which described how a claimant who failed to serve their budget had their CMC costs cut in half as a penalty. The result of the failure to serve the budget led to the opponent having a reduced timeframe to prepare the budget discussion report but it did not prevent the CMC from going ahead. In this instance the Claimant did not need to seek relief from sanctions as the requirement to do so, where the CPR is silent, is not automatic.

In Djurberg v London Borough of Richmond and Others [2019] EWHC 3342 (Ch) it was held that a party in breach does not need to apply for relief from sanctions where it is not expressly required. At paragraph 32 Chief Master Marsh stated:

“it would be wrong for the court to search out reasons for imposing sanctions that do not obviously arise out of the terms of the CPR or an order made by the court.”

The judgement in this case also explored the possibility of the order containing an implied sanction, a concept that R (Hysaj) v Secretary of State for the Home Department [2014] EWCA Civ 1633 referred to in relation to filing an appeal in time. In circumstances where there is an implied sanction, a sanction where relief from sanctions is not necessary but where it has become common practice to impose the same sanction as if it were, the consequence would be the same.

To rely on submissions that the opponent was not prejudiced by any failure to serve a budget does not therefore come without risk, and so to avoid any penalty whatsoever, the best approach to take when filing a budget is to serve it too.

This does not preclude parties agreeing to the mutual exchange of budgets and for certain cases this can be the best strategy to adopt. If this approach is accepted by the parties then any agreement of mutual exchange should be made prior to the final date for filing to avoid facing any criticism.

Bethany Collings is a Paralegal in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact her at Bethany.Collings@clarionsolicitors.com and 0113 227 3607, or the Clarion Costs Team on 0113 246 0622