Costs News

21 May 2020
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“Persistent failure” to engage with costs management leads to court fees-only budget

A defendant that showed a “persistent failure” to engage with the costs budgeting process – leading to missing the deadline for submission – as part of a wider picture of default has seen its budget limited to court fees.

His Honour Judge Simon Barker QC in Birmingham was ruling on an application for relief from sanction by Medecall, the second defendant in Heathfield International LLC v Axiom Stone (London) Ltd [2020].

The claimant, as assignee of Quantum Medical, is seeking more than £260,000 plus £100,000 in interest for unpaid medico-legal services from the first defendant law firm. The claim against Medecall is an alternative and secondary claim arising from Axiom’s denial of the claim and assertion that Medecall was the relevant contracting party.

Initially, budgets were to be filed by 18 November 2019 ahead of the case and costs management conference (CCMC). Medecall failed to do so. The CCMC was vacated in early December and relisted for 30 April. Medecall said it did not file its budget because the parties had agreed to vacate the hearing – HHJ Barker found this explanation “open to doubt” but did not make a ruling on it.

Medecall filed a budget for the April CCMC six days late, despite having been reminded of the deadline by the claimant. It only sought relief two days before the CCMC. The budget was for £110,000, against which the claimant offered £80,000.

The company’s solicitor, Mobin Hussain of MB Solicitors, argued that the breach was not serious or significant because it did not have an impact on the litigation or cause the claimant inconvenience. He took responsibility for the missing the deadline, saying “the incorrect date [had been] diarised in my calendar”.

But the judge disagreed. “I regard the breach as serious, both in its own right and as a continuing demonstration of D2’s lack of engagement with costs budgeting,” he said.

“I also disagree with their contention that D2’s failure has not affected the efficient progress of the litigation. It placed an unreasonable burden on C in preparing for the CCMC and also on the court.” It added 125 pages to the bundle, while Medecall had delayed in requesting relief.

Mr Hussain’s explanation of why the default happened was not a good reason, HHJ Barker said, noting the lack of evidence to support it too, especially as the claimant’s solicitor had reminded him about serving the budget.

Looking at all the circumstances, HHJ Barker said he kept in mind that the sum of money claimed was not small, but not that large either. “This is relevant in at least two ways. First, this is the sort of litigation where each party’s costs may easily become disproportionate to the sum in issue and efficient conduct of the litigation is of paramount importance. Secondly, it follows that cost control and costs budgeting are all the more important.”

The judge continued that Medecall had demonstrated “an abysmal approach” to conducting the litigation efficiently including, “but also going well beyond”, costs budgeting.

He noted that its costs budget was not in the required form – it failed to take into account the requirement introduced last October that all costs up to and including the CCMC should be treated as incurred costs – and that two of Mr Hussain’s recent witness statements were non-compliant because they adopted an out-of-date version of the statement of truth. Its counsel also had to blame late instructions for the “extreme lateness” of her skeleton argument.

HHJ Barker concluded: “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.”

Martin Budworth (instructed by The Wilkes Partnership) for the claimant and Natasha Dzameh (instructed by MB Solicitors) for the second defendant.

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