These notes come with same caveat as the Claimant’s notes in the previous post. They are from handwritten notes taken in court today. They do not purport to be a transcript. All that can be done is to give a flavour of the argument and the interaction with the court. Anyone with corrections or comments do not hesitate to get in touch.
DEFENDANT’S COUNSEL : Mr Nicholas Bacon QC
We are firstly concerned with application of 51pd or 3.14
3.14 is key. The sanction here was one which rule makers have composed . This Rule in 3.14 can be considered as the default position in these cases.
We are not in the arena of late service of particulars of claim etc. We are in a ground where specific rules apply.
So rules about proportionality and litigants are consequences and arguments going to the the default position itself. Not Master McCloud’s correct application of it.
The starting point is that this sanction (limiting costs to court fees) applies to this default (failing to file the cost budget properly). The Claimant ignores this.
Dyson LJ: your point is sui generis therefore general guidance is neither here nor there?
Yes the argument is whether Master McCloud was wrong in imposing the first sanction. The Defendant’s case is that she was not. So considering rule 3.9 is not relevant. Master McCloud was entitled to have regard to new guidance including the new rule in 3.14.
It’s applying the principles to cost budgeting.
Elias LJ : But what about the point that the costs regime in 3.13 and 3.14 does not apply due to the time of the case (as it started pre 1st April 2013 and under the pilot defemation cost scheme)?
Even assuming that 3.14 did not apply the order the Master made required budgets to be filed within 7 days. The consequence of the law before and after the 1st April 2013 is that if you are required do something by the court and fail to do so, you cannot rely on it. You need permission to subsequently rely on it. For example if you fail to file a witness statement, you are unable to rely upon it at trial.
But if you apply for permission before time expired parties are in a much better position. – you apply 3.9 by way of whether there should be an extension.
So whether rule 3.14 applies directly, by analogy or by basic principles of extension of time Master McCloud was able to say that the budget does not stand. It was a reasonable order and within the realms of her discretion.
Richards LJ: But the PD 51 does say that cases starting under PD51 are to continue under that scheme. But Master McCloud applied the general cost budgeting scheme.
Elias LJ: Under 3.12 I would not have thought the court had power to change the commencement date to before 1ST aPRIL 2013.
The rules are a development of the practice scheme they are an improvement on the regime. Why shouldn’t a judge say I like that rule better than pilot.
I will start on the principles of appeal. Both the orders are appealed against on the basis of discretion in a CMC footing.
He then referred to the Fred Perry case para 16 and 15
This master was very experiences and approached matters appropriately.
Putting aside arguments of analogy
Para 3.12 and 3.13 have to be read together. These require (1) a budget ; (2) that it is lodged in accordance with the timetable. Breach of one of these activates rule 3.14.
The Claimant has shifted and said only a total failure to file triggers 3.14 not late service (which is not in accordance with claimant counsel’s skeleton)
I fail to see why distinction should be made as both failures are as bad as each other. The Claimants’ submissions miss the importance of budgeting in new regime.
Master McCloud could not make CMC decisions without the cost budget, they go hand in hand.
The rules do contain draconian standards but that’s because cost budgeting is important.
The court was then referred to the White Book Supplement on 3.14 which states “this rule is explicit and failure of the consequences to comply draconian. The defaulting party is deemed not to have filed a budget.
Lord Jackson made similar observations in his lecture (16th lecture)
The parties knew well in advance what was happening post April
It cannot be said that the sanction came as a surprise. (See para 5 of lecture notes)
Dyson LJ : so what applies to you, weren’t you one day late?
The parties and Master McCloud acted and accepted that the Defendant were in full compliance. The Defendant has not been criticised.
Dyson LJ : but if you were a day late would the same apply to you?
Where have a contest between a draconian rule or fact sensitive case by case imposition. The strict approach of the draconian rule is preferable in light of new overriding objective and new approach.
If the court adopts a fact sensitive approach you end up with a quagmire of responses to different cases which endanger the purpose of the reforms.
Dyson LJ : but Lord Justice Jackson chose specifically not to adopt Singapore model to an extent Lord Jackson must have understood a quagmire would happen. If he did not want that he would have adopted the Singapore approach.
I agree outside 3.14 the court has to accommodate they circumstances of the case.
On 3.14 the court does still have a potential choice ‘ unless the court orders otherwise’. The rule does provide some discretion. But on the facts of this case the claimant filed 1 day before hearing and that is as bad as not filing at all.
In this case the default position of the sanction in 3.14 should apply.
Elias LJ : But when exercising the discretion over what sanction to adopt, is the discretion to be exercised in accordance with 3.9 ?
No it would not be the same considerations under 3.9
Breach of 3.13 leads to the 3.14 sanction. This ties in with the extension of time argument. The Claimant’s solicitors should have applied for extension before the deadline. If you approach by 3.14 directly, or by analogy, you reach the same conclusion
The court was then referred to the case of Robert -v Momentum Services 
In this case the solicitors wisely applied for an extention of time before the deadline expiry.
Where a party foresees difficulties it is open to them to apply for an extension. If they do they do not run the risk of major problems, the court is not inconvenienced as much and it removes the risk of having costs disallowed.
So although 3.14 is a draconian rule it is less of a problem in light of the above.
I can deal with this breifly . Master McCloud was faultless in the way she proceeded. Any properly directed master would have done the same. They would have looked at comparable rules for a proportionate sanction.
This is summarised by the Master McCloud in para 32 ( of her 2nd judgment). Master McCloud took an impeccable approach. If we have a system of parties failing to file cost budgets the system just will not work.
He then took the court to relevant emails in the bundle about filing the costs budget.
Nothing was communicated to the court about the Claimant’s problems to file a cost budget. Master McCloud sent an email before the hearing telling the claimant to being evidence re the cause of the breach but he failed to do so. His excuse is that someone else opened it or he did by mistake and did not notice. But Mr. Fox did respond to the email apologising for the failure so the firm did receive the email. There can be no criticism of the Master McCloud at all. If you look at the appeal notice there is no appeal on the Master’s findings in those paragraphs. Master McCloud had the jurisdiction to impose the sanction.
RELIEF FROM SANCTIONS HEARING
If you look at the Master McCloud’s judgment at page 9 she approached relief from sanctions in an impeccable way. She considered everything including the new overriding objective.
She was a busy Master who had to reallocate serious claims. There was inconvenience to the court.
The rule in 3.14 should apply in all cases regardless of value.
It is draconian but that is the accepted position. The rule anticipates that the party will not recover its costs the overriding objective does not come into it. That is the rule.
From the Masters’ view that was the rule. It was unimpressive that the claimant tried to provide a number of excuses such as rule 3.14 doesn’t apply and that they could not file their cost budget due to pressure in the firm.
Dyson LJ: yes in her first judgment she made somthing of the difference, but in her second judgment she puts the excuse squarely on firm pressure.
That is correct and she says that it is not a good enough reason. To allow it would have the effect of driving a carriage and horses through the reforms.
I note they were involved in the mass litigation of the phone voicemail cases in the civil courts. These cases also had budget management. It is therefore disingenuous of the Claimant to claim no knowledge of the rules or sanctions.
There is no real prejudice to the Defendant. There is prejudice in the sense that the Defendant was unable to engage in the cost budget process and had no idea of the Claimant’s budget prior to the afternoon before the hearing.
It does leave the Defendant with a good result but that is the effect that the rule envisages. It is not really open to the court to question that on a relief from sanctions application.
However there is also no evidence of prejudice to the Claimant. There is no mention in the solicitor’s statement. It is lamentable that it says nothing about prejudice. There is nothing from the Claimant himself saying that he is unable to pursue a remedy for his claim. There has been no striking out. His claim has not been stopped.
There is no evidence of prejudice and that is the minimum to expect of the Claimant.
My learned friend made four points and I would like to give the Defendant’s response to those now :
1.If there is going to be an order the party needs time to comply – the claimant had 7+ days.
2. They must be informed of the sanction – it is implied in the failure to apply for an extension.
3. Discretion must b exercised properly re sanction – we argue it was.
4. The sanction must be proportionate to the effect of breach – it was proportionate considering the overriding desire of the new reforms and the proper administration of justice.
Dyson LJ: Mr Bacon I appreciate that your argument is that the answer lies in the rule that has its own built in test. But do you have any general submissions about rule 3.9 ?
Yes 3.9 is fundamentally amended due to the recent reforms. It is not just the removal of factors but a specific focus on the enfocement of parties compliance with court orders.
The new regime on 3.9 is a clean blackboard. The old cases cannot apply as much. There is a greater emphasis on compliance. I accept it says all the circumstances but it outlines two key considerations. There is also a new regime for the overiding objective and that it is proportionate to the wider interests of justice and this is very important.
This is a key moment. The court has two options :
There can be a finding that there is a new rule but that this gives the court a discretion. This achieves nothing but a quagmire.
It can be said that the starting point now is that you really dont get relief unless you have a really really good reason. A message needs to be sent in those terms. We stop arguments by having a clear rule which is what 3.14 was intended to be.
The Claimant’s submissions are summarised at:
The Mitchell case (in the context of relief from sanctions) has been discussed:
Discussions of relief from sanction applications can be found at: