Filing a Costs Budget Late: High Court Decisions in 2020

Back in January of this year Lionel Persey QC, sitting as a Deputy Judge of the High Court, took a fairly lenient approach towards the defaulting party in the case of Manchester Shipping Ltd v Balfour Shipping Limited & Anor [2020] EWHC 164 (Comm) when he granted relief from sanctions to Defendants who filed a costs budget 13 days late.

The Judge took the stance that “The breach, although serious in terms of lateness, did not prevent the litigation from being conducted efficiently or at proportionate cost. No inconvenience was caused to the court or to other court users”. This ruling seemed to mark a shift from the strict application of CPR 3.14 which provides that: unless the court otherwise orders, any party which fails to file a budget despite being required to do so will be treated as having filed a budget comprising only the applicable court fees.

More recently however, His Honour Judge Simon Barker QC in Heathfield International LLC v (1) Axiom Stone (London) Ltd & (2) Medecall Limited [2020] EWHC 1075 (Ch) determined that the defaulting party, in this case the second Defendant, was to be treated as having filed a budget comprising only the applicable court fees.

The surrounding circumstances were that the defaulting party failed to file a Budget 21 days before the originally listed CCMC. This first CCMC was vacated 4 days before it was due to take place as a result of the parties making applications in respect of security for costs. The second Defendant attempted to excuse the fact it had not filed a budget on the basis that the parties had agreed for the CCMC to be relisted. The timing of this agreement was ambiguous and could not be substantiated. The second Defendant then failed to file and serve its budget 21 days before the relisted CCMC and did so late by at least 5 days. Furthermore, they did not file and serve a Precedent R or engage in budget discussions. Relief from sanctions was subsequently applied for 2 days before the re-listed CCMC.

Counsel for the second Defendant attempted to use Manchester Shipping in support but it was found to be incomparable on the facts.

HHJ Barker QC commented on the fact that the first Defendant’s response to the Claimant’s claim had been the cause of the second Defendant on a secondary alternative basis “but that does not entitle D2 to take a more relaxed or casual approach to participation as a party in this litigation”.

The sums of money in issue, at approximately £260k plus £100k for interest and statutory penalty, and the type of litigation as a claim for unpaid invoices were also referred to in the context that “costs may easily become disproportionate” thus “costs control and costs budgeting are all the more important”.

Reference was also made to the court’s discretion under CPR 3.14 being “entirely open”.

A form of hybrid relief was contemplated but ultimately it was decided that the defaulting party should be treated as having filed a budget comprising of court fees only.

Anna Lockyer is an Associate in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact her at anna.lockyer@clarionsolicitors.com and 0113 288 5619, or the Clarion Costs Team on 0113 246 0622