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The 22 April 2014 CPR amendments will state that the costs budgeting is to apply to all Part 7 claims. However, we understand that the provisions in CPR 3.13 are not subject to amendment. This means that the position taken in this case, that the seven day provision within rule 3.13 was intended for Part 8 claims, does not apply. The seven day provision should therefore been seen as the default position in the event that the court does not stipulate a date for filing and exchanging costs budgets.
(update added 14 March 2014)
Original post follows:
In the latest instalment in litigation concerning the costs budgeting provisions, the County Court has refused relief from sanctions re the late filing of a costs budget.
Burt v Christie (Case no 3BM90218) was brought by Michael Burt following a road traffic accident in which he was injured when the taxi in which he was travelling was hit by the vehicle driven by Linford Christie.
Lumb J ruled that filing a costs budget even one or two days late is not a 'trivial breach' and the Defendant will therefore be treated as having filed a budget comprising only the applicable court fees.
Lumb J considered the interplay between CPR 3.13 (Filing and exchange of costs budgets) and CPR 26.3 (Directions questionnaires) alongside the approach in CPR 3.14 (failure to file a costs budget). The sanction in CPR 3.14 was ultimately applied/
Note: Porbanderwalla v Daybridge Limited, a judgment by HHJ Worster dated 30 January from the Birmingham county court, also considered the same issue i.e. the interplay between CPR 3.13 and CPR 26.3. Given that it takes a different slant on this issue we have slightly changed the report below since its first publish date on 10 February to ensure that the report refers specifically to the Burt case. For practitioners we would advise taking the approach in Burt to ensure that CPR 3.14 does not become an issue should a court take a different view to that set out in Porbanderwalla.
In some instances, the court does not provide any time period for filing a costs budget when sending the parties to directions questionnaires to complete. What should practitioners do in such cases?
In this case the court considered that when dealing with a Part 7 claim the costs budget must be filed with the directions questionnaire.
The provisions relating to service seven days prior to the case management conference (CPR 3.13) are intended to deal with Part 8 claims, which do not require directions questionnaires as they are automatically allocated to the multi-track.
• costs budgeting applies to all multi-track cases, unless an exception applies or the court orders otherwise
• on receiving any communication that the matter is suitable for allocation to the multi-track the clear message is that the legal team need to consider how to deal with costs budgeting (save if an exemption applies)
• generally when serving notice under CPR 26.3(1) for direction questionnaires the court will specifically set out the date by which the parties must file and exchange costs budgets
• if the court does not state a date in the notice this does not mean that cost budgets are not required.
Section H of the directions questionnaire itself states:
'If your claim is likely to be allocated to the Multi-track form Precedent H must be filed in accordance with CPR 3.13'.
In addition, the questionnaire requires a tick box to be completed to confirm that the Form H has been enclosed with the directions
• it is imperative that parties use the correct version of the directions questionnaire. The old version does not make any reference to costs budgeting. Therefore when using a directions questionnaire make sure it addresses costs budgeting.
The difficulty for practitioners and the courts arises as a consequence of the wording in the second paragraph of CPR 3.13, which provides that provides where a date has not been specified to file and exchange costs budgets in the notice served under CPR 26.3(1) the date is seven days prior to the first case management conference.
The intention behind this provision was that it would apply to Part 8 claims where no directions questionnaires were used. However, practitioners have been using this provision as a default position in Part 7 claims where the court has not stipulated a date for filing and issues the Form H. The issue is whether the courts should allow this.
CPR 26.3(1)(b)(i) provides that the notice of prosed allocation should: 'Specify any matter to be complied with by the date specified in the notice'.
On a literal construction of these words Lumb J held that the consequence, although not the intention, was that where no date is specified by the court the only date left for practitioners on which to file and serve is that in CPR 3.13, ie seven days before the CMC.
Where the contents of the allocation notice is potentially misleading, a party could apply the time provisions in CPR 3.13. However, the better course is to file and serve with the directions questionnaire.
(See also our post When to file precedent H if no CMC is anticipated)
What happens where a party fails to comply with the seven-day provision?
The court will apply the sanction in CPR 3.14, ie the party will be regarded as having filed a costs budget for court costs only, unless the party can show the court that it should order otherwise. As seen in Mitchell a party will need to satisfy the court that the breach of the CPR provisions was a trivial breach:
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.
The issue on filing and serving a costs budget is what will be regarded as a trivial breach?
Is serving it a day or two late a trivial breach? The publicity surrounding the implementation of the Jackson reforms and subsequent cases have shown that the courts will apply a robust approach to dealing with parties that fail to comply with the CPR provisions. In this case, the court when determining whether to grant relief or not considered the following:
• both parties knew costs budgets would be required
• the claimant provided theirs with the directions questionnaire and was in a position to discuss some 3.5 months prior to the CMC
• the defendant, as appeared from correspondence, had not started to prepare theirs two weeks' prior to the CMC
• serving it late meant that there was very little time for the parties to negotiate the budgets or to file objections
• the majority of the CMC was then spent dealing with the issue of late service of the costs budget rather than considering the costs budgets themselves, which resulted in the court having to reserve judgment
• this has a knock-on effect on the amount of time the court has to give to other cases
• early preparation of costs budgets is 'much more likely to lead to a narrowing of issues between the parties or even agreement of budgets'
Court: Birmingham District Registry, High CourtJudge: Mr Justice LumbDate of judgment: 10 February 2014
This article was first published on Lexis®PSL Dispute Resolution on 10 February 2014. Click here for a free 24 trial of Lexis®PSL.
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Janna is a dispute resolution lawyer. She deals primarily with cross border issues and is active in the work being undertaken in relation to the implications of Brexit for Dispute Resolution lawyers. Janna also heads up a LexisNexis costs team bringing together expertise from across the company to deal with the costs issues facing the profession.
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