Heathfield International LLC v Axiom Stone (London) Ltd [2020] EWHC 1075 (Ch)

At this time of year, we are often reminded of the cautionary tale of Ebenezer Scrooge in A Christmas Carol and how the visitation of three ghosts helped to change his ways. The making of an order under CPR 3.14 and a cost budget being treated as being filed comprising only court fees should bring a chill to any litigator; just as when the Ghost of Christmas Yet to Come showed Scrooge his name etched on his own gravestone. The following case is just one example of how failing to change your ways resulted in this horrifying outcome.

Background

This was a matter brought against two Defendants. Budgets were due to be filed by 18 November 2019. The Claimant and the First Defendant did so. The Second Defendant (D2) did not. The CCMC Hearing was relisted to accommodate an application for security for costs. Even after this seemingly initial reprieve D2 still proceeded to serve their cost budget late by 6 days, even though the Claimant had warned them a week earlier. An Application for Relief from Sanctions was not made until two days before the CCMC Hearing. The Application for Relief stated that D2 did not consider the breach to be significant and offered the reason for the breach to be that there had been error in diarising the date for filing.

Decision

The Judge disagreed with the D2 and found that the breach was indeed serious ‘both in its own right and as a continuing demonstration of D2’s lack of engagement with costs budgeting’. Furthermore, the Judge found that D2 had not provided a good reason for the default either. Even more damningly, the Judge found that the D2’s Precedent H had not been completed correctly and that incorrect statements of truth had also been used on the witness evidence.

The Judges damning conclusion is best expressed in his own words:

‘In my view D2's conduct shows a persistent failure to engage with the obligation to provide a costs budget and a total failure to engage in discussion of or commentary on opposing parties' budgets. Even in relation to the lateness by several days before the 30.4.20 CCMC D2 failed or refused recognise the seriousness of the failure. Even now there is no Precedent R report prepared by D2. On top of all of that there is a catalogue of other procedural and deadline failures and an apparent lack of comprehension of the overriding objective and responsibilities as a litigant.

The result is, as provided for by CPR 3.14, that D2 is to be treated as having filed a budget comprising only the applicable court fees’.

Comment

So, the cautionary tale concludes for those who continue to consider costs budgeting a ‘humbug’. A failure to change your ways and not engage properly in costs management will ultimately lead to significant loss of costs. The Court will address each application for Relief on the facts of its case but it is clear that any failure to engage will lead to significant consequences.

The best way to avoid having to make Applications for Relief from sanctions is to ensure that the cost budget is prepared in advance of any deadline and that you engage with the costs management process. At Paramount Legal Costs our experienced team can provide a helping hand through the costs management process, from preparing and negotiating the costs budget to attending CCMC Hearings.

And in the immortal words of Scrooge ‘We will honour costs management in our hearts, and try to keep it all the year’.

The judgment can be found here.

For further information, please contact Kris Kilsby here.

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