What a Relief ……. from Sanctions (CPR 3.14)

A second “replacement” budget was granted Relief from Sanctions - despite being filed late.

A decade on from the implementation of costs budgeting; we are all by now all too familiar with CPR 3.14 and the sanction for failing to file a costs budget on time. It is widely feared that “you will be treated as having filed a budget comprising Court fees only” where you file a budget late.

However, following the decision in Henderson and Jones Ltd v Stargunter Ltd & Anor [2023] EWHC 1849 (TCC) (19 July 2023), it seems as though there may be a glimmer of reprieve for those unlucky enough to miss a cost budget deadline (circumstance dependant, of course).

Though this is a construction contract case, the same rules and principles apply to any claim type where there is a requirement to serve/file a costs budget. In this case, the First Defendant (Stargunter) filed a costs budget in time. However, it was clear to all involved that it was “materially incomplete” in that:

  • there were no costs for the CCMC phase (incurred or estimated)
  • there were two differing front sheet, one of which had no figures for phases other than pre-action or issue statements of case (and instead simply said TBA). These front sheets together totalled £482,896.00
  • The budget was unsigned and therefore not verified by a statement if truth contrary to CPR 3.13(5)

The First Defendant later filed a second budget which they advised they intended to rely on in place of the previous document. This totalled £891,897.00. This costs budget was filed late (CPR 3.13(1)(b)).

The First Defendant didn’t make a formal Application for Relief From Sanction; instead, when challenged by the Claimant, they filed a witness statement which included detail of their intention to “invoke the saving provision in CPR 3.14.1 ('unless the court otherwise orders') at the hearing convened for costs management purposes on the basis, inter alia, that the service of the revised budget had no material impact upon the proceedings.”

The Judge held that a formal application notice was not necessary where the defaulting party sought to invoke the “saving provision” under CPR 3.14 given:

  • the witness statement filed by the First Defendant
  • said statement disclosed material which would arguably justify relief from sanctions
  • the Claimant had not been prejudiced by the absence of a formal application notice
  • and, importantly,
  • the Claimant did not oppose the First Defendant adopting that approach. (The Claimant had sought to rely on the First Defendant’s witness statement in their submissions)

The Judge then proceeded to consider the well known “three stage” Denton test and found:

  • the breach was neither serious nor significant
  • there was no good reason for the breach (inefficiency of the First Defendant such as IT issues/availability of relevant persons was not good reason)
  • and in taking all of the circumstances of the case into consider said “..granting relief will not prevent this litigation being conducted efficiently and at proportionate cost” and later continued with “Nor has the breach had any knock-on effects on other proceedings by taking up additional court resources.”

Relief from Sanctions was granted.

On review it was a sensible decision; but the writer cannot help but feel that this is a case which could have very easily gone the other way. Though we all strive to follow the Rules, mistakes are made and deadlines are sometimes missed; if you would like more information about this case or find yourself in a similar situation and need some guidance, please contact the writer here.

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