Tag: CPR3.14

Late costs budget? Not all lost…

Anna LockyerLeave a comment

The sanction imposed for failing to file a costs budget when required applied to future costs only in the recent appeal case of Hardy v Skeels (04.03.21, County Court at Stoke).

The ‘court fees only’ restriction was found to have been wrongly interpreted at the detailed assessment when only court fees were recoverable by the defaulting party who filed their budget a day late. Recovery of incurred costs, which can be substantial by the time a requirement for filing budgets arises, were seemingly overlooked.

In points of dispute, the paying party referenced Ali v Channel 5 [2018] to support their position, as the court took the view in this case that the purpose of the CPR 3.14 sanction would be undermined if it were applied to future costs alone and had no effect on incurred costs. The District Judge at the Hardy assessment sided with this stance, reportedly commenting that the sanction was intentionally draconian. This resulted in the sanction being applied to all costs.

In the subsequent overturning of this decision on appeal the CPR wording was scrutinised.

CPR 3.14: Failure to file a budget, states “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”.

Although the term ‘budget’ is a blanket reference to both incurred and future costs, the second reference to the term in the Rule was in effect found to mean costs comprising of only ‘future costs’ or ‘budgeted costs’. Incurred costs were therefore determined as recoverable subject to assessment. As the claim settled shortly after the budget filing deadline, the recovery by the receiving party of almost all costs became a possibility.

The rationale behind the appeal decision has brought to the fore how CPR 3.14 is not aligned with other Part 3 rules such as 3.15 and 3.18 which clearly define applicability to future costs. The Circuit Judge who dealt with the Hardy appeal was said to have commented on how CPR 3.14 was poorly worded and that the drafters may not have anticipated the effect of its literal definition. It seems the intention of the Rule was more meaningfully explored in the appeal as CPR 3.14 was found not be a standalone sanction of court fees and instead had to be read in conjunction with CPR 3.18 which has clear applicability to future costs only.

Anna Lockyer is an Associate in our Costs and Litigation Funding team. If you have any questions please contact her on 0113 2885619 or at anna.lockyer@clarionsolicitors.com.

This article was featured in our March 2021 newsletter, see the full newsletter here.

Penalty for failing to serve a costs budget is variable

Bethany CollingsLeave a comment

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