A well-known law firm that served its budget late due to human error has been left with a court fees-only budget after failing in its application for relief from sanction. An undertaking to cover the costs thrown away as a result on an indemnity basis was not enough to save it.
The decision of Mr Justice Bryan emphasised the importance of making the application as quickly as possible – here it was only made on the day of the case and costs management conference (CCMC).
The judge described it as “an archetypal case where it would not be appropriate to grant relief from sanctions”.
He explained: “There was a serious breach without good reason, followed by a very late application to seek relief, and a consideration of all the circumstances demonstrates that it is not an appropriate case for relief.”
In BMCE Bank International Plc v Phoenix Commodities PVT Ltd and Anor [2018] EWHC 3380 (Comm), the claimant’s solicitors, north London firm Colman Coyle, filed and served its budget a day before the 27 September 2018 deadline, ahead of the 19 October CCMC. However, Hill Dickinson’s budget for the defendant was not filed until 11 October.
As a result, no budget discussion report was prepared, and in its skeleton argument – filed the day before the hearing – the claimant made clear it would oppose any application for relief.
However, the defendant’s skeleton did not suggest any such application, which was only made at 9am on the morning of the CCMC, which was listed for 11.30am. In the end, the entire time set aside for the CCMC was taken up by the relief application.
Hill Dickinson partner Andrew Buchmann told the court that, while the firm had begun working on the budget in time, he had neglected to complete it due to an overseas work trip. “I accept that this may not be considered a good reason, but I assure the courts it arose from a genuine mistake on my part and was certainly not a deliberate disregard for the court rules,” he said in his witness statement.
Mr Buchmann gave an undertaking on behalf of Hill Dickinson to cover both parties’ costs on an indemnity basis for the CCMC and a further CCMC if required to consider the defendant’s costs budget, regardless of the outcome of that hearing.
Going through the Denton test, Bryan J found the breach to be serious with “the entirety of the time period for agreeing costs budgets in advance of this CMC… wasted”, while also being significant. “The effects of the late service of a costs budget have been such as to cause considerable inconvenience to this court and to other court users.”
The application for relief only being made on the morning of the CCMC had a similar effect. “Not only has it resulted in the wasting of time today before this court, but the inevitable consequence if relief was granted would be that there would have to be another CCMC. Unless matters, of course, were agreed… It was not at the low end of the scale. It was a serious breach.”
Bryan J said Hill Dickinson accepted that there was no good reason for the failure, but he acknowledged it was not deliberate. The solicitor “took his eye off the ball”. He said: “That regrettably does happen in life, but it does not amount to a good reason.”
Turning to the third stage of the test – considering all the circumstances of the case – the judge said “the effects of the failure to file the costs budget in this case have meant that this litigation has not been conducted efficiently”.
Had the application been made when the skeletons were filed and the claimant’s opposition to relief had been made clear, “at that stage it might still have been possible, for example, to reorganise the court day”.
The undertaking did not remedy the inconvenience to the court or other court users. Bryan J added: “It is important to send a clear and consistent message that there should be compliance with rules, practice directions and orders of this court…
“I reject any suggestion that the mere giving of the undertaking offered is some form of trump card or weighs so heavily in the weight of the balance of all the circumstances so as to outweigh all other factors. It is a matter that regard is to be had to, as I have done, as part of a consideration of all the circumstances.”
Decided against granting relief, he concluded: “Costs budgeting is an important part of case management. It is made clear by CPR 3.14 itself what the sanction is for failure to comply.
“Failing to comply with the provisions hinders agreement of costs budgets and cost management by the court, it causes delays, it causes inconvenience to the court and it causes inconvenience to the other party and other court users – it is also contrary to the need for litigation to be conducted efficiently and at proportionate cost.”