The Mitchell case was about a failure to file a costs budget in time. In Burt -v- Linford Christie the court refused relief from sanctions where the defendant filed to file the costs budget in time. The application was considered by District Judge Lumb in the Birmingham District Registry on the 10th February 2014. I have been sent a full copy of the transcript.
This was a personal injury case where liability was admitted. The pre-allocation notice gave dates for filing of the directions questionnaire and other steps to be taken. The claimant filed precedent H and a costs budget, the defendant did not.
THE ISSUES BEFORE THE DISTRICT JUDGE
District Judge Lumb carried out a review of the history of the requirement to file a costs budget
“The preliminary issue that arose before me at the CCMC on 24th January 2014 was whether the sanction imposed by CPR 3.14 should apply to the Defendant’s costs budget or whether the Court should order otherwise. Although adopting an essentially neutral stance that whether the sanction should apply was a matter for the Court only, the Claimant’s understanding of the time limit for filing a costs budget was with the Directions Questionnaire as he had done.CPR Part 3.13 provides;
“Unless the Court otherwise orders, all parties except litigants in person must file and exchange budgets as required by the rules or as the Court otherwise directs. Each party must do so by the date specified in the notice served under rule 26.3(1) or, if no such date is specified, seven days before the first case management conference.”CPR 3.14 provides;
“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.”
The first issue to be determined is when did the Defendant first breach the requirement of CPR 3.13? Was it by failing to file the costs budget with the Directions Questionnaire or by serving and filing it less than 7 days before the first case management conference?
The introduction of costs budgeting, like all the other Jackson reforms, was well publicised in a series of implementation lectures given by Lord Justice Jackson and other senior members of the judiciary. The objective of those lectures was to make sure that the legal profession and other users of the Court were well aware of the culture change that was coming and to understand the rationale behind the reforms.
Costs budgeting was the subject of the 16th implementation lecture given by Sir Vivian Ramsey on 29th May 2012. He began as follows;
“It is worth outlining the scheme of costs management as contained in those rules. First, it will apply generally to all multi-track cases commenced on or after 1 April 2013 in a county court, the Chancery or Queen’s Bench Division (except the Admiralty and Commercial Courts) unless the court otherwise orders and to any other proceedings where the court so orders. Secondly, unless the court otherwise orders, all parties except litigants in personmust exchange cost budgets in precedent H within 28 days after service of the defence. In default the budget will only comprise applicable court fees.”
Annexed to the transcript of his lecture were the draft cost budgeting rules as they then stood. Although the then draft of CPR 3.14 was the same as the implemented version set out at paragraph 12 of this judgment, CPR 3.13 was different to the final version set out in paragraph 11 above. That draft provided
“3.13 Unless the court otherwise orders, all parties except litigants in person must file and exchange budgets as required by the rules or as the court shall otherwise direct. Each party must do so within 28 days after service of any defence.”The second sentence in the rule has been replaced by;
“Each party must do so by the date specified in the notice served under rule 26.3(1) or, if no such date is specified, seven days before the first case management conference.”The logic behind the change is easy to follow. The notice in Form N149C served under rule 26.3 (1) prescribes a date (one month from the date of the notice) by which certain documents must be filed and steps taken. In the present case this was for Directions Questionnaires, and draft directions (to be agreed if possible) to be filed. If the draft rule had not been amended then the consequence would have been that the costs budgets would have been due to be filed before the Directions Questionnaires and draft directions. Inevitable delays in processing the volume of filed defences at the National Civil Business Centre in Salford would mean that Form N149C would be sent out at least some days after the filing of the defence. Better therefore to have a more efficient process that required the filing of all the documents – i.e. Directions Questionnaires, draft directions and costs budgets – together.This explains why section H of the Directions Questionnaire includes this;
“If your claim is likely to be allocated to the Multi Track form Precedent H must be filed in accordance with CPR3.13”
and a tick box to confirm that Form H is enclosed.”
TWO FORMS IN EXISTENCE
The judge then considered the problem caused by there being two different versions of the same form.
“Unfortunately and confusingly it has transpired that there are two different versions of form N149C in circulation. The original one, used in this case, makes no reference to costs budgets at all. No doubt this was because originally it did not need to as the time for filing the costs budget was triggered by the filing of the defence (28 days of the filing of the defence under the original draft CPR 3.13). The other version which is the one currently available on the official HMCTS website does make express provision for a date for filing costs budgets, thus being consistent with the wording of the final version of CPR 3.13.
The alternative date for filing costs budgets of seven days before the first case management conference is intended to deal with CPR Part 8 cases that are automatically allocated to the multi-track as the notes in the White Book at 3.13.1 make clear.
Having set out what I believe the rule makers had intended I now return to what has happened in this case. The combination of the final wording of CPR 3.13 and the sending out of the “wrong” N149C by the court office has created an ambiguity which appears to have led the Defendant’s solicitors into error or at least contributed to their error.
CPR 26.3 (1) (b) sets out the purpose of the notice of proposed allocation in form N149C
“(b) the notice of proposed allocation will –”
i. Specify any matter to be complied with by the date specified in the notice;
ii. Require the parties to file a completed directions questionnaire and serve copies on all other parties;
iii. State the address of the court or the court office to which the directions questionnaire must be returned;
iv. Inform the parties how to obtain the directions questionnaire; and
v. If a case appears suitable for allocation to the fast track or multi-track, require the parties to file proposed directions by the date specified in the notice.
On a literal construction of the rules and the contents of the N149C in this case under CPR 26.3(1)(b)(i), the N149C would specify any matter to be complied with by the date in the notice. It did not specify the filing and exchange of costs budgets as one of those matters at all, let alone the date for doing so. Cross referencing back to CPR 3.13, as no date was specified, on a literal construction it seems that the only date left is seven days before the CMC. While I am sure that is not what was intended that does appear to be the consequence. “
THE JUDGE DID NOT FIND THAT THERE WAS A BREACH BY FAILING TO COMPLY A COSTS BUDGET WITH THE DIRECTIONS QUESTIONNAIRE
It is important to note that (in accordance with similar judgments on this issue) the District Judge did not find that the failure to file the costs budget with the Directions Questionnaire was a breach.
” It would be unfair to conclude that the failure to file the costs budget with the Directions Questionnaire by the Defendant on the facts of this case amounted to a breach of CPR 3.13. Even if it were a technical breach (as the Defendants solicitors should have known better from all the publicity surrounding the Jackson reforms and the Implementation Lectures; the need to consider draft directions that would necessarily involve the topic of costs budgets; and the prompt in the Directions Questionnaire itself albeit that this is a circular argument as it expressly refers to CPR 3.13), the contents of the N149C sent out by the Court in this case were so potentially misleading and the Defendant having been misled by them would amount to a good reason to order that the sanction in CPR 3.14 would not apply in accordance with the reasoning of the Court of Appeal in Mitchell v News Group Newspapers  EWCA Civ 1537.”
THE DEFENDANT FAILED TO LODGE THE COSTS BUDGET SEVEN DAYS IN ADVANCE OF THE COSTS BUDGETING HEARING
The budget was filed one day late. The judge considered the breach and declined to grant relief from sanctions.
“The first breach of CPR 3.13 as construed on the facts of this case is therefore by failing to file the costs budget by 16th January 2014 and instead sending it by fax the day after to the Claimant’s solicitors and by document exchange only to the Court.
The Master of the Rolls has made clear at paragraph 58 of his judgment in Mitchell that
“the expectation is that the sanction [in CPR 3.14] will usually apply unless (i) the breach is trivial or (ii) there is good reason for it. While the Court has power to grant relief, the expectation is that, unless (i) or (ii) is satisfied, the two factors mentioned in the rule will usually trump other circumstances.”
Failure to interpret the unambiguous rules of the Court correctly, in this case CPR 2.8 in relation to the calculation of 7 days, clearly cannot amount to a good reason within Mitchell.
For the Court to order otherwise than the application of the sanction, the Defendant therefore has to satisfy the Court that to give effect to the overriding objective the breach was a trivial one. Mitchell makes clear that in determining otherwise under 3.14, the Court is not entertaining an application for relief from sanctions under CPR 3.9 as such but that the principles to be applied are likely to be the same (Mitchell paragraph 45).
At paragraph 40 of his judgment in Mitchell, the Master of the Rolls sought to give some guidance as to how the new approach to non-compliance with rules, practice directions or court orders should be applied in practice.
“If [the nature of the non-compliance] can properly be regarded as trivial, the Court will usually grant relief provided the application is made promptly. …the Court will usually grant relief if there has been no more than an insignificant failure to comply with an order; for example, where there has been a failure of form rather than substance; or where the party has narrowly missed the deadline imposed by the order, but has otherwise fully complied with its terms.”
Miss Crapper on behalf of the Defendant submits that filing the costs budget one or two days late obviously falls within the category of a trivial breach. I do not agree that the position is so straightforward.
Even before the Jackson revolution and a more robust approach there have been plenty of examples provided by the higher courts where even attempted compliance one day late has been unsuccessful. One such is the line of cases on late service of a claim form beginning in 2001 with Vinos v Marks & Spencer PLC where the Court of Appeal stated their often repeated mantra that anyone who leaves matters to the last minute and gets it wrong have only themselves to blame. That is exactly what has happened here.
Both parties have always known that costs budgets were going to be required at some stage. The Claimant got on with preparing his in good time and filed it with his directions questionnaire. He was in a position to discuss his budget and any objections to it from 9th September 2013 onwards, some three and a half months before the CCMC.
In contrast, it is apparent from the Defendant’s solicitor’s letter of 10th January 2014 that at that stage just two weeks before the CCMC they had not even started preparing the Defendant’s budget.
Furthermore, having been put on notice on 3rd January by DJ Truman’s observations that the Court was concerned that the Defendant might already be late in filing his budget, one would expect that the Defendant would make absolutely sure that it was filed as quickly as possible, well in advance of any perceived deadline.
When they did eventually serve the budget, out of time, little time was left to negotiate on the budgets and the parties were unable to file details of their objections to the other’s budget as had been directed by DJ Truman in her order of 9th December 2013, or at all.
The majority of the CCMC before me on 24th January was taken up by consideration of whether the Court should grant relief to the Defendant from the sanction under CPR 3.14 by making some other order. This meant that there was no available time to deal with consideration of the parties’ budgets and I was obliged to reserve judgment.
In turn that has led to the need for a further hearing that should have been unnecessary and has caused extra expense in this case and delay to other litigants in other cases that would otherwise have been listed earlier.
Leaving matters to the last minute is inconsistent with conducting litigation efficiently and the thrust of the new overriding objective of dealing with litigation justly and at proportionate cost. Early preparation is much more likely to lead to a narrowing of issues between the parties or even agreement of budgets, saving time at the first hearing, thereby freeing up court time to be allocated to other matters as was envisaged by DJ Truman in her order.
Having left matters to the last minute and still missing a deadline is unlikely to attract sympathy from the Court in furthering the overriding objective of enforcing compliance with rules and practice directions, particularly when it leads to extra hearings, thereby allotting to the case a greater than appropriate share of the court’s resources, while taking into account the need to allot resources to other cases.
Consequently, in considering all the circumstances of this case I do not believe that the breach by the Defendant can be regarded as insignificant or trivial or that it would be just to grant relief to the Defendant by making an order otherwise than that the sanction in CPR 3.14 applies. The Defendant will therefore be treated as having filed a budget comprising only the applicable court fees.”
This case shows the importance of:
- Knowing the rules.
- Filing the costs budget on time (and why not ahead of ti
It also emphasises the fact that a short amount of time may not necessarily amount to a “trivial” breach.