In Azure East Midlands Ltd -v- Manchester Aiport Group Ltd  EWHC 1644 (TCC) His Honour Judge Grant made an order for relief from sanctions where a costs budget was served two days late.
The claimant filed its budget five days ahead of the hearing rather than five. It was argued that, since the Costs Management Information Sheet had been served, then the obligation to lodge a budget had been complied with. This argument was rejected by the judge.
“In my judgment, completion of a CMIS does not in any way relieve a party from its separate obligations to file and/or serve a costs budget in accordance with the provisions of CPR rules 3.12 to 3.18.”
The claimant was, therefore, in breach and required relief from sanctions.
THE JUDGE’S REASONING
The judge reviewed the law in detail, and considered his earlier decision in Wain (which has been discussed on this blog)
- On 2nd April 2014 I had to consider those principles in Wain v Gloucestershire County Council & Others  EWHC 1274 (TCC). I held as follows:
“6. The Court of Appeal did not define what is meant by the adjective ‘trivial’ in Mitchell. It may well be said that there was no need to do so, the word having a plain meaning. In his judgment in Aldington & 133 Others v Els International Lawyers LLP  EWHC B29, HH Judge Oliver Jones QC, sitting as a judge of the High Court at the Birmingham Civil Justice Centre, drew attention to the interrelation between the nature of the non-compliance which was engaged, and the consequences of non-compliance: see paragraph 32 of his judgment.”
7. It is perhaps also appropriate to refer to a short part of the paper delivered by Lord Justice Jackson at the recent conference held on 21st March 2014 by the Civil Justice Council on the impact of the Jackson reforms. In paragraph 3.9 of that paper, having referred to the decision of the Court of Appeal in Mitchell, Jackson LJ wrote: ‘Nevertheless, parties should not be allowed to exploit trivial or insignificant breaches by their opponents, as Leggatt J stated in Summit Navigation Ltd & others v Generali Romania Asigurare Reasigurare SA (2014) EWHC 398 (Comm).”
14. … a good deal depends on the context. Much depends on the particular circumstances of the case, and in particular whether the parties are able to deal with the material contained in the costs budgets on the day in question, and whether or not any disruption to the court’s timetable has been or will be occasioned by such breach.”
- Matters have since moved on, and the Court of Appeal has now delivered its judgment in Chartwell Estate Agents Ltd v Fergies Properties SA & another  EWCA Civ 506, which concerned a failure to serve witness statements within the time specified by a previous court order. In paragraph 34 of his judgment, Davis LJ summarised the guidance which had been given in Mitchell as follows:
“(i) It is necessary to consider whether the nature of the non-compliance is such that it can be regarded as trivial;
(ii) If the non-compliance is not trivial, it is necessary to consider whether there is a good reason explaining the non-compliance;
(iii) The promptness (or otherwise) of an application to court for an extension of time and relief from sanction for these purposes will be material;
(iv) If the non-compliance is not trivial and if there is no good reason for the non-compliance then the ‘expectation’ is that the sanction will apply. The court has power to grant relief but, if the non-compliance is not trivial and if there is no good reason for it, the expectation is that the factors mentioned in (a) and (b) of the rule will ‘usually trump other circumstances’.”
On the facts of that case, the Court of Appeal upheld the finding of the first instance judge that the relevant non-compliance could not be classified as trivial and, further, that the defaulting party had not established any good reason to explain its non-compliance: see paragraph 47 of Davis LJ’s judgment. Nevertheless, in the particular circumstances of that case, the Court of Appeal held that the first instance judge had been entitled to depart from the expectation which otherwise would ordinarily arise: see paragraph 57 of Davis LJ’s judgment. In paragraph 49 Davis LJ held:
“The judge nevertheless was still required, by the provisions of CPR 3.9, to consider “‘all the circumstances of the case’ so as to enable him to deal with the application justly,” and in paragraph 50 he went on to hold that “Those circumstances included the important fact that the trial date would not be lost if relief were granted and a fair trial could still be had; and the fact that no significant extra cost would be occasioned if relief were granted.”
I venture to suggest that the point I made in paragraph 14 of my judgment in Wain, namely that much depends on the particular circumstances of the case, is consistent with those paragraphs of Davis LJ’s judgment inChartwell Estate Agents.
16.Having identified the relevant principles which are engaged, I therefore turn to consider the particular circumstances of the present case. Adopting the approach that I used in Wain I have come to the conclusion that this breach is, when properly analysed and having regard to all the circumstances of the case, a trivial breach. I do so for the following reasons:
(1) The delay here was of two days, in the context of a time period or time frame of seven days.
(2) As in Wain, that seven day period, namely for filing or serving a costs budget, is usefully to be compared with the three day period for service of an application notice before its hearing (see CPR rule 23.71).
(3) Again as in Wain, on behalf of the defendant Mr Whitfield has made it entirely clear in the course of his oral submissions that the defendant has not suffered any prejudice by reason of the delay of two days.
(4) Again as in Wain, the parties are each perfectly able to deal with the topic of costs management at today’s adjourned hearing, notwithstanding the fact that the claimant initially served its costs budget with only five clear days rather than seven clear days before the first initial hearing.
(5) Again as in Wain, and unlike the position which obtained in Mitchell, in this case no or no material disruption to the court’s timetable has been caused by the delay on the part of the claimant in filing and/or serving its costs budget. The only additional burden placed upon the court has been the need to take some time during today’s time to consider the point and also for me again to spend some time, both before the commencement of this hearing and during the interim period, to prepare this ruling.
(6) As I have already noted, I refer to and rely on what the Court of Appeal initially stated in paragraph 40 of its judgment in Mitchell, and also on what the Court of Appeal has now stated in its more recent decision in Chartwell Estate Agents. Having regard to both those decisions, I find that the claimant’s initial failure in missing by two days the requirement to file and serve a costs budget seven clear days before the first hearing of a case management conference was, or has become – in the context of the facts of this particular case – no more than an insignificant failure. That is because the court is considering the parties’ costs budgets not at the first, but at the second hearing of the case management conference; that additional passage of time (of some 7 weeks) somewhat dilutes any impact or effect of the initial delay.
(7) Again as in Wain, the reference by the Master of the Rolls to a situation where there has been no more than an insignificant failure is to be borne in mind. The introduction to and the reference to the concept of “significance” in my judgment, continues to resonate with the point made above, namely the relevance of the inter-relation between the breach, i.e., the non-compliance, on the one hand, and its consequences, on the other hand. Such reference to the concept of “significance” would also appear to be consistent with Jackson LJ’s short concurring judgement in Fred Perry (Holdings) Ltd v Brand’s Plaza Trading Ltd  EWCA Civ 224.
- I therefore, find the non-compliance or breach to be trivial and/or insignificant and/or inconsequential. In those circumstances, as in Wain, I am thus able to “otherwise order” pursuant to CPR rule 3.14.
18.However, again as in Wain, if I am wrong in construing or considering the non-compliance or breach as being trivial and/or insignificant and/or inconsequential, it would be right to observe that perhaps the only or main point advanced by Mr Warner as constituting a good reason for the breach was the understanding on the part of those instructing him as to the nature or effect of the notice of the case management conference which ante-dated the hearing of the first case management conference. However, as I have already indicated, in my judgment that does not of itself constitute a good reason for the breach.”
- Notwithstanding that, I have come to the conclusion that the claimant will be entitled to rely upon its costs budget as served and filed.”
SO: A TWO DAY BREACH IS (OR CAN BE) “TRIVIAL”
In the context of that case, therefore, a failure of two days was trivial. This adds to the debate as to what is meant by “trivial” in a relief from sanctions application.