England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
On appeal from the order of Master Thornett
dated 19 December 2017 in Case No: HQ17P01545

		Rolls Building 7 Rolls Buildings, Fetter Lane, London, EC4A 1NL
		15/10/2018

Paul Walker, 15 October 2018.

A. Introduction	1
B. Relevant CPR provisions	8
B1 The overriding objective	8
B2 Case Management: Section I of CPR 3	9
B3 Costs management	14
B3.1 Costs management: Section II of CPR 3	14
B3.2 Costs management: Practice Direction 3E	20
B3.3 Costs management: the Chancery Division Note	22
B3.4 Costs management: Costs & Funding Q & As	23
B3.5 Costs management: RGC's concession	25
B4 Case and costs management: leading cases	28
B4.1 The new more robust approach: Mitchell	28
B4.2 Mitchell: CPR 3.14 and proportionality	30
B4.3 Mitchell: meaning of "fails to file a budget"	31
B4.4 Mitchell: impact of failure to file a budget	32
B4.5 Mitchell: CPR 3.14 disapplication likened to CPR 3.9	33
B4.6 Mitchell: CPR 3.14 and the overriding objective	34
B4.7 Mitchell: relief against sanction	36
B4.8 Denton: a restated approach to CPR 3.9	38
B5 Appeals	43
B5.1 Nature of an appeal: CPR 52.21 (1)	43
B5.2 When an appeal will be allowed: CPR 52.21(3)	44
B5.3 The parties' observations on CPR 52.21	45
C. The proceedings	49
C1 The proceedings: case summary	49
C2 CCMC preparation up to 30 Nov 2017	55
C2.1 Mr Page's interim budget & draft directions	55
C2.2 RGC's budget	60
C2.3 Budget discussion reports	62
C3 Negotiations and agreement	67
C4 CMCC hearing, rulings and reasons	70
C4.1 CMCC hearing on Tuesday 5 December 2017: general	70
C4.2 Start of the CCMC: the master's concern and warning	72
C4.3 Proceeding in sequence: why not list to trial?	76
C4.4 Budgeting: what the master said on breach/relief	80
C4.5 RGC's budget	88
C5 The costs budgets order	91
D. Grounds of appeal, reasons for relief, & issues	92
D1 Grounds of appeal	92
D1.1 Grounds of appeal: overview	92
D1.2 Grounds 1 and 2: "a budget" had been filed	95
D1.3 Ground 3: "irrational" approach to incompleteness	97
D1.4 Ground 4A: CPR 3.15 agreement trumps CPR 3.14	100
D1.5 Grounds 4B and 5: consequences if CPR 3.14 is not engaged	102
D1.6 Ground 6: disapplying the default sanction	104
D2 Reasons for seeking relief against sanction	105
D3 Issues below	106
D4 Issues arising for determination	109
E. Applicability of CPR 3.14: grounds 1 to 5	116
E1 CPR 3.14 applicability: general	116
E2 Grounds 1 & 2: meaning of "a budget" in CPR 3.14	118
E3 CPR 3.14 applicability: agreement under CPR 3.15	125
E4 CPR 3.14 applicability: RGC's Budget	129
E5 CPR 3.14 applicability: potential consequences	132
E6 CPR 3.14 applicability: RGC's alleged bars.	133
F. Disapplying CPR 3.14: Ground 6	136
F1 Disapplication: general	136
F2 Disapplication: Mr Page's fundamental argument	137
F3 Disapplication: RGC's alleged bar	139
F4 Disapplication: consideration of disapplication below	146
F5 Disapplication: whether to order otherwise	159
G. The concession and relief against sanction	172
H. Conclusion	175

A. Introduction

1. This is an appeal from an order ("the costs budgets order") imposing a sanction which limited the claimant's costs budget to applicable court fees only. The costs budgets order was made by Master Thornett at a costs and case management conference ("CCMC") on 5 December 2017. It formed part of a more general order ("the CCMC order") giving directions to trial. Prior to the CCMC the parties agreed all directions and costs budget figures for phases up to and including a proposed second case management conference ("CMC") or pre-trial review ("PTR"). It was proposed that subsequent directions and costs budget figures be left over to be dealt with at the proposed second CMC.
2. The main issues arising on the appeal concern whether the claimant had filed a costs budget within the meaning of CPR 3.14, and if not whether the master ought to have disapplied the sanction under CPR 3.14. If the answer to both questions is "no", or the answer to the second question is "yes, but only in part", then subsidiary issues would arise on an application which the claimant has now made seeking relief against sanctions.
3. The claimant, Mr Justyn Page, appeals by permission granted by an order of Warby J on 22 February 2018. In addition, Mr Page applies in section 10 of his appellant's notice for an order granting relief from the sanction imposed by the master. Section 10 stated that the order granting relief was sought "by virtue of CPR 3.10." In support of that application, section 11 of the appellant's notice contained a short witness statement by Mr Page's solicitor. The order of Warby J directed that the application for relief be heard concurrently with the appeal.
4. The defendant is RGC Restaurants Limited ("RGC"). At the hearing before me, RGC's primary response to the appeal was that the appeal should be dismissed. Similarly, RGC's primary case in answer to the application for relief was that it should be dismissed. RGC recognised, however, that the court might consider that partial relief would be appropriate. In that event RGC's alternative submission was that Mr Page's cost budget should be limited to the figures which had been agreed by RGC.
5. At the hearing before me Mr Benjamin Williams QC, instructed by Fieldfisher LLP ("Fieldfisher"), appeared for Mr Page. Mr Andrew Roy, instructed by Keoghs LLP ("Keoghs"), appeared for RGC. Neither counsel appeared below. I have the benefit of detailed skeleton arguments from each of them.
6. Following the hearing I received further materials. I deal with the content of those materials at appropriate points later in this judgment. For present purposes I summarise:

(1) on 27 March 2018 RGC made a concession and drew attention to two recent authorities;

(2) on the same day, a response was sent on behalf of Mr Page;

(3) on 9 April 2018 I was sent a revised transcript of the proceedings below;

(4) on 20 April 2018 RGC drew attention to a further recent authority, and later that day a response was sent on behalf of Mr Page.

7. The concession made by RGC on 27 March 2018 was prompted by a question I asked during oral argument. My question arose because there had been agreed figures for various phases in both sides' budgets. In that regard I asked whether RGC might be estopped from going back on its agreement. In section B3.5 below I set out the details of RGC's concession. For present purposes I note that RGC described the effect of the concession as being that:

"… the sanction can only bite on those phases which were not agreed."

B. Relevant CPR provisions

B1 The overriding objective

8. CPR 1.1 provides, as amended in April 2013:

The overriding objective

1.1– (1) These Rules are a new procedural code with the overriding objective of enabling the court to deal with cases justly and at proportionate cost.

(2) Dealing with a case justly and at proportionate cost includes, so far as practicable –

(a) ensuring that the parties are on an equal footing;

(b) saving expense;

(c) dealing with the case in ways that are proportionate –

(i) to the amount of money involved;

(ii) to the importance of the case;

(iii) to the complexity of the issues; and

(iv) to the financial position of each party;

(d) ensuring that it is dealt with expeditiously and fairly;

(e) allotting to it an appropriate share of the court's resources, while taking into account the need to allot resources to other cases; and

(f) enforcing compliance with rules, practice directions and orders.

B2 Case Management: Section I of CPR 3

9. Section I of CPR 3 deals with case management. It compromises CPR 3.1 to CPR 3.11.
10. CPR 3.1 provides:

The court's general powers of management

3.1 – (1) The list of powers in this rule is in addition to any powers given to the court by any other rule or practice direction or by any other enactment or any powers it may otherwise have.

…

(7) a power of the court under these Rules to make an order includes a power to vary or revoke the order.

11. CPR 3.8 was amended in April 2013. There were further amendments in 2014. For present purposes, I need only set out provisions which took effect in April 2013 and were unaffected by the 2014 amendments:

Sanctions have effect unless defaulting party obtains relief.

3.8 – (1) Where a party has failed to comply with a rule, practice direction or court order, any sanction for failure to comply imposed by the rule, practice direction or court order has effect unless the party in default applies for and obtains relief from the sanction

(Rule 3.9 sets out the circumstances which the court will consider on an application to grant relief from a sanction)

(2) Where the sanction is the payment of costs, the party in default may only obtain relief by appealing against the order for costs.

…

12. General provision concerning relief from sanctions is found in CPR 3.9. With effect from April 2013 CPR 3.9 was amended to read:

Relief from sanctions

3.9–(1) On an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need–

(a) for litigation to be conducted efficiently and at proportionate cost; and

(b) to enforce compliance with rules, practice directions and orders.

(2) An application for relief must be supported by evidence.

13. In addition, CPR 3.10 confers on the court a general power to rectify matters where there has been an error of procedure. It states:

General power of the court to rectify matters where there has been an error of procedure.

3.10 Where there has been an error of procedure such as a failure to comply with a rule or practice direction–

(a) the error does not invalidate any step taken in the proceedings unless the court so orders; and

(b) the court may make an order to remedy the error.

B3 Costs management

B3.1 Costs management: Section II of CPR 3

14. Section ?? of CPR 3 deals with costs management. CPR 3.12(1) identifies the proceedings to which costs management applies. It is common ground that costs management applies to the present proceedings. Relevant for present purposes is CPR 3.12(2), which states:

Application of this section and the purpose of cost management

3.12 – …

…. (2) The purpose of costs management is that the court should manage both the steps to be taken and the costs to be incurred by the parties to any proceedings so as to further the overriding objective.

15. CPR 3.13 is concerned with the filing and exchanging of budgets and the filing of budget discussion reports. So far as relevant for present purposes it provides:

Filing and exchanging budgets and budget discussion reports

3.13– (1) Unless the court otherwise orders, all parties… must file and exchange budgets–

(a) …

(b)… not later than the 21 days before the first case management conference.

(2) In the event that a party files and exchanges a budget under paragraph (1), all other parties … must file an agreed budget discussion report no later than 7 days before the first case management conference.

16. CPR 3.14 is the provision which embodies the sanction applied by the master in the present case. It states:

Failure to file a budget

3.14 Unless the court otherwise orders, any party which fails to file a budget despite being required to do so will be treated as having filed a budget comprising only the applicable court fees.

17. Costs management orders are dealt with in CPR 3.15:

Costs management orders

3.15–(1) In addition to exercising its other powers, the court may manage the costs to be incurred (the budgeted costs) by any party in any proceedings.

(2) The court may at any time make a "costs management order".

… By a costs management order the court will–

(a) record the extent to which the budgeted costs are agreed between the parties;

(b) in respect of the budgeted costs which are not agreed, record the courts approval after making appropriate revisions;

(c) record the extent (if any) to which incurred costs are agreed.

(3) If a costs management order has been made, the court will thereafter control the parties' budgets in respect of recoverable costs.

(4) Whether or not the court makes a costs management order, it may record on the face of any case management order any comments it has about the incurred costs which are to be taken into account in any subsequent assessment proceedings.

18. CPR 3.17 provides:

Court to have regard to budgets and to take account of costs.

3.17 – (1) when making any case management decision, the court will have regard to any available budgets of the parties and will take into account the costs involved in any procedural step.

(2) paragraph (1) applies whether or not the court has made a costs management order.

19. The final rule in section II of CPR 3 concerns the effect which costs management should have when, on the conclusion of proceedings, one party was awarded costs against another and the amount of those costs cannot be agreed and so they fall for assessment by the court. This is CPR 3.18. As can be seen below, it is concerned with the position only when costs are being assessed on the standard basis:

Assessing costs on the standard basis where a costs management order has been made

3.18 In any case where a costs management order has been made, when assessing costs on the standard basis, the court will –

(a) have regard to the receiving party's last approved or agreed budgeted costs for each phase of the proceedings;

(b) not depart from such approved or agreed budgeted costs unless satisfied that there is good reason to do so;

(c) take into account any comments made pursuant to rule 3.15(4) or paragraph 7.4 of Practice Direction 3E and recorded on the face of the order.

Attention is drawn to rules 44.3(2)(a) and 44.3(5), which concern proportionality of costs.

B3.2 Costs management: Practice Direction 3E

20. Practice Direction 3E ("PD 3E") supplements Section ?? of CPR 3. Section B of PD 3E deals with budget format. It comprises paragraph 6 of PD 3E, which provides, so far as material:

6 (a) Unless the court otherwise orders, a budget must be in the form of Precedent H annexed to this Practice Direction.

… In substantial cases, the court may direct that budgets be limited initially to part only of the proceedings and subsequently extended to cover the whole proceedings.

…

(b) Parties must follow the Precedent H Guidance Note in all respects.

…

21. Section D of PD 3E duels with costs management orders. It provides, so far as material:

7.1 … If the court makes a costs management order under rule 3.15, the following paragraphs shall apply.

…

7.3 If the budgeted costs or incurred costs are agreed between all parties, the court will record the extent of such agreement. In so far as the budgeted costs are not agreed, the court will review them and, after making any appropriate revisions, record its approval of those budgeted costs. The court's approval will relate only to the total figures for budgeted costs of each phase of the proceedings, although in the course of its review the court may have regard to the constituent elements of each total figure. When reviewing budgeted costs, the court will not undertake a detailed assessment in advance, but rather will consider whether the budgeted costs fall within the range of reasonable and proportionate costs.

B3.3 Costs management: the Chancery Division Note

22. Volume 1 of Civil Procedure 2018 describes at paragraph 3.13.1 a Note sent to parties in Chancery Division cases. The description of this Note given in paragraph 3.13.1 includes:

… The parties are reminded in the Note that even if they do not wish there to be costs management they must serve and file a costs budget. This reminder reflects the terms of [CPR] 3.15(2) under which the court may decide not to make a costs management order but only after costs budgets have been filed and exchanged. [An informal note by the] Chief Master [has] stated that normally budgets in Precedent H would be required. However, an alternative, which may be acceptable to the court where all the parties agree to seek an order that the case should be taken out of the costs management regime, is for budgets to be prepared using only the first page of Precedent H …

B3.4 Costs management: Costs & Funding Q & As

23. The publishers of Civil Procedure (which is part of "the White Book Service") have in recent years produced a book entitled, Costs & Funding Civil Justice Reforms: Questions & Answers. I shall refer to this book as "Questions & Answers". It is sent to those who subscribe to Civil Procedure, and is described as part of "the White Book Service". It is produced by a distinguished team of contributors: Peter Hurst, the editor, who is both the general editor and a contributor, and was formerly Senior Costs Judge of England & Wales, Simon Middleton, who is a district judge and has been a Regional Costs Judge since 2005 and Roger Mallalieu, a barrister specialising in matters relating to costs, litigation funding and civil procedure. It does not however, fall within the responsibilities of the editorial team of Civil Procedure, although Simon Middleton is a member of that team.
24. Chapter 4 of Questions & Answers is entitled "Case and Costs Management", and is contributed by Simon Middleton. In 2017 the third edition contained what I shall refer to as "Q&A 2", which so far as material appears in the same terms in what I shall refer to as "Q&A 24" in the fourth edition 2018. It is as follows:

Q2. Should a party file its Form H on the basis of the way in which it thinks the claim should progress, e.g. if it thinks a split trial is appropriate should the budget be completed on that basis?

[A2.] CPR 3 PD E 6 is clear on this. The court may direct that budgets are limited initially to part of the proceedings. Accordingly, unless the court has so directed, the budget must cover the entire proceedings. This means that any party which proposes to seek costs management of part only of the proceedings has two options. The first is to file and exchange a budget of the whole proceedings and then seek a direction before the case management conference that budgets are filed and exchanged on the additional alternative basis. The second is to apply before the time expires for budgets to be filed and exchanged under CPR 3.13 for an extension of time to file budgets and for a direction that budgets should be limited initially to a discrete part of the proceedings.

The advantage of the first approach is that the party has complied with CPR 3.13 and does not face sanction under CPR 3.14. The disadvantage is that if the court agrees that the claim proceeds with budgeting of part only, then the parties may have incurred the cost of preparing two budgets instead of one.

The advantage of the second approach is that if the court agrees with it, then one or both parties may have saved the cost of preparing two budgets at this stage. The disadvantage is that whilst a prospective application will be treated as one for an extension of time and not as one involving relief from sanctions (see Hallam Estates v Baker [2014] EWCA Civ 661), in this age of robust case management, it is a brave course to adopt …

B3.5 Costs management: RGC's concession

25. When costs are being assessed on the standard basis, paragraph (b) of CPR 3.18 (see section B3.1 above) bars the court, for any phase of the proceedings, from departing from the receiving party's last approved or budgeted costs "unless satisfied there is good reason to do so". The concession made by RGC on 27 March 2018 was made in the context of this provision. It was as follows:

1. It may be recalled that the bench raised the question of whether D was estopped from going behind the figures it had agreed for various phases.

2. My response was that this may well provide a good reason for departing from the nil budgeted figures on assessment.   I did not have instructions on this point and expressly did not concede that this would be the case.

3. Having further considered the point and taken instructions, D accepts that it could not properly and in good conscience seek to go behind the agreed figures.  We therefore formally accept that the agreement in respect of those phases will constitute a good reason to depart from budgeted nil figures in favour the agreed figures.

4. The effect of this concession is that the sanction can only bite on those phases which were not agreed (i.e. trial preparation and trial as per what was previously our fall back position).

26. A response on behalf of Mr Page was emailed on 27 March 2018. For present purposes I set out what I have numbered as paragraphs [1] to [3] of that response:

[1] While we are grateful for the concession, this is actually an admission that the appeal must be allowed.  It necessarily follows that the defendant accepts that the master approached matters wrongly.  It cannot be a legitimate exercise of discretion for a master to make a costs management order that there will inevitably be a 'good reason' to depart from on grounds which were already known when the order was made.  Indeed, it makes the order a nonsense. 

[2] By the concession, either the defendant is accepting that CPR 3.14 was never engaged (because not only had the claimant filed a budget, but the defendant had agreed it!) or it is accepting that there was an exceptional feature of this case which should have caused the master to "otherwise order" under CPR 3.14 (the fact that the parties had agreed the approach to budgeting which the master rejected and also that the defendant had agreed all pre-trial phases of the claimant's budget). 

[3] On either view, the defendant tacitly accepts that the master's exercise of discretion cannot stand, and that this court must substitute its own judgment. 

27. The response suggests that either "actually" or "tacitly" RGC has accepted that certain of its contentions at the hearing of the appeal were unsound. I do not accept that RGC has done this. It has made a concession only as to what should happen if it is the paying party and if there is an assessment.

B4 Case and costs management: leading cases

B4.1 The new more robust approach: Mitchell

28. In Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 157, [2014] 1 WLR 795 the Court of Appeal was concerned with two decisions of Master McCloud in relation to budgeting. The first was her decision of 18 June 2013 that, because the claimant had failed to file his costs budget in time, he was to be treated as having filed a costs budget comprising only the applicable court fees. The costs budget belatedly filed by his solicitors was in the sum of £506,425. The second decision was her refusal on 25 July to grant relief under CPR 3.9 from her first decision.
29. The judgment of the Court of Appeal (Lord Dyson MR, Richards, Elias LJJ) dismissed appeals against these two decisions. As is well known, the judgment described a new more robust approach to breaches of rules, practice directions and court orders.

B4.2 Mitchell: CPR 3.14 and proportionality

30. In Mitchell the claimant's failure to file his costs budget in time occurred prior to the coming into force of CPR 3.14. The obligation to file the costs budget arose under Practice Direction 51D ("PD 51D"), which did not specify a sanction for late filing of a budget. On 1 April 2013 section II of CPR 3 came into force for applicable claims commenced on or after 1 April 2013. As the claim in Mitchell had been commenced earlier than 1 April 2013 it continued to be governed by PD 51D rather than section II of CPR 3. In her judgment giving reasons for her first decision, Master McCloud referred to the new CPR 3.14, which would have applied if the Mitchell claim had been commenced on or after 1 April 2013, and said that she considered it to be the best guide as to what the Civil Procedure Rule Committee considered proportionate (subject to the power to grant relief from sanctions). On appeal Mr Simon Browne QC submitted for the claimant that CPR 3.14 should not have been applied by analogy when it had not yet come into force. This submission was not accepted by the Court of Appeal. Paragraph 27 of its judgment stated:

27. Mr Browne accepts that the master was entitled in the exercise of her discretion to impose such sanction as she considered appropriate to satisfy the overriding objective. In our judgment, she was entitled to be guided by CPR 3.14 since this represented the considered view of the Civil Procedure Rule Committee as to what constituted a proportionate sanction for failure to file a costs budget in time unless the court otherwise ordered.

B4.3 Mitchell: meaning of "fails to file a budget"

31. The appeal from Master McCloud's first decision concerned the meaning of the words "fails to file a budget" in CPR 3.14. At paragraph 30 the Court of Appeal judgment said:

30. The second question is whether the master was wrong to construe CPR 3.14 as referring to a failure to file a budget within the time prescribed by CPR 3.13 (in the present case, seven days). Mr Browne says that it is significant that the words "within the time prescribed by CPR 3.13" are absent from CPR 3.14 and that CPR 3.14 is directed to the case of a party who does not file a budget at all. In our judgment, this is not a sensible interpretation and it cannot have been intended. If it were right, it would mean that CPR 3.14 would not apply to a party who filed a budget just before the hearing of the first case management conference, but would apply to a party who had filed the budget immediately after the conclusion of the hearing. The mischief at which CPR 3.13 and 3.14 are directed is the last-minute filing of cost budgets …

B4.4 Mitchell: impact of failure to file a budget

32. When determining the meaning of CPR 3.14, the Court of Appeal attached significance to the impact of failing to file a timely budget. In this regard, paragraph 30 of the judgment continued:

30. … As CPR 3.12(2) makes clear, the purpose of costs management (including costs budgets) is to enable the court to manage the litigation and the costs to be incurred so as to further the overriding objective. This cannot be achieved unless costs budgets are filed in good time before the first case management conference. No less important is the requirement that parties should discuss with each other the assumptions and timetable on which their respective costs budgets are based. This is to enable the hearing for which the costs budgets are required to be conducted efficiently and in accordance with the overriding objective. The history of what happened in the present case shows how important it was to comply with both of the obligations in PD 51D. As a result of the defaults of the claimant's solicitors, no costs budgeting or case management was possible on 18 June 2013. Having imposed the CPR 3.14 sanction, the master was unable to do anything other than adjourn the hearing.

B4.5 Mitchell: CPR 3.14 disapplication likened to CPR 3.9

33. The opening words of CPR 3.14 give the court the power to disapply the sanction in that rule. The Court of Appeal discussed considerations to which the court should have regard for this purpose in paragraph 32 of its judgment:

32. … the costs management hearing of 18 June proved to be abortive. The claimant was not in a position to invoke the saving provision in CPR 3.14 ("[unless] the court otherwise orders") and ask the master to make an order relieving him from the sanction imposed by the rule itself. That is because his solicitors had not produced evidence which might have persuaded the court to adopt that course. We should add that in our view the considerations to which the court should have regard when deciding whether it should "otherwise order" are likely to be the same as those which are relevant to a decision whether to grant relief under CPR 3.9. …

B4.6 Mitchell: CPR 3.14 and the overriding objective

34. In paragraph 31 of its judgment the Court of Appeal recorded a submission on behalf of the claimant that Master McCloud's first decision imposed a sanction that was disproportionate and contrary to the overriding objective:

31. The third question is whether the master's decision to impose the CPR 3.14 sanction by analogy was in accordance with the overriding objective. Mr Browne says that it did not give effect to the overriding objective, because it was not a proportionate decision. That is because (i) it did not reflect the fact that the breach of PD 51D was easily remedied; (ii) the breaches caused no prejudice to the defendant; (iii) they had no lasting effect on the conduct of the litigation; (iv) the breaches were minor; (v) the claimant had no history of default; and (vi) the order caused prejudice to the claimant.

35. As to this submission, the Court of Appeal set out the passage from paragraph 32 quoted above and continued:

32. … In each case, in deciding whether to "otherwise order", the court must give effect to the overriding objective: see rule 1.2(a).

33. We have concluded that the master was entitled to make the order that she made on 18 June. She did so in the knowledge that the claimant would have the opportunity to apply for relief at the adjourned hearing and that she would then be able to decide what response the court should give to the claimant's defaults so as to give effect to the overriding objective.

B4.7 Mitchell: relief against sanction

36. When considering the appeal against Master McCloud's second decision, the Court of Appeal began with general comments on CPR 3.9. For present purposes I need not set them out. That is because, so far as material, they have been clarified and amplified in Denton v TH White Ltd [2014] EWCA Civ 906, [2014] 1 WLR 3926: see section 4.8 below. It is nevertheless relevant to set out here observations in the Mitchell judgment at paragraphs 44 and 45 which stressed that an application for relief from a sanction presupposes that the sanction in principle has been properly imposed:

44. Mr Browne sought to rely on certain factors which, he contended, showed that the sanction should not have been imposed by the master in the first place. That was in our view a misguided submission. An application for relief from a sanction presupposes that the sanction has in principle been properly imposed. If a party wishes to contend that it was not appropriate to make the order, that should be by way of appeal or, exceptionally, by asking the court which imposed the order to vary or revoke it under CPR 3.1(7). The circumstances in which the latter discretion can be exercised were considered by this court in Tibbles v SIG plc (trading as Asphaltic Roofing Supplies) [2012] 1 WLR 2591. The court held that considerations of finality, the undesirability of allowing litigants to have two bites at the cherry and the need to avoid undermining the concept of appeal all required a principled curtailment of an otherwise apparently open discretion. The discretion might be appropriately exercised normally only (i) where there had been a material change of circumstances since the order was made; (ii) where the facts on which the original decision was made had been misstated; or (iii) where there had been a manifest mistake on the part of the judge in formulating the order. Moreover, as the court emphasised, the application must be made promptly. This reasoning has equal validity in the context of an application under CPR 3.9.

45. On an application for relief from a sanction, therefore, the starting point should be that the sanction has been properly imposed and complies with the overriding objective. If the application for relief is combined with an application to vary or revoke under CPR 3.1(7), then that should be considered first and the Tibbles criteria applied. But if no application is made, it is not open to him to complain that the order should not have been made, whether on the grounds that it did not comply with the overriding objective or for any other reason. In the present case the sanction is stated in CPR 3.14 itself: unless the court otherwise orders, the defaulting party will be treated as having filed a budget comprising only the applicable court fees. It is not open to that party to complain that the sanction does not comply with the overriding objective or is otherwise unfair. The words "unless the court otherwise orders" are intended to ensure that the sanction is imposed to give effect to the overriding objective. As we have said, the principles by which the court should decide whether to order "otherwise" are likely to be the same as the principles by which an application under CPR 3.9 is determined. In most cases the question whether to relieve a party who has failed to file a costs budget in accordance with CPR 3.13 from the CPR 3.14 sanction will therefore be dealt with under CPR 3.14. That did not happen in the present case. That is why the question of relief from sanctions was dealt with under CPR 3.9.

37. In a later passage, the Court of Appeal considered a submission as to proportionality and the possibility of partial relief from sanction. In that regard the Court of Appeal in Mitchell said this:

58. A central feature of Mr Browne's submission was that, whenever a sanction is imposed, the court must have regard to considerations of proportionality. In this case he says that a more proportionate response would have been to grant partial relief from the sanction, for example, by making an order that the costs budget should be 50% of the actual estimated figure or should not include the costs connected with the budget itself. We accept that the master had the power to make such an order. But we do not consider that the grant of partial relief from CPR 3.14 will often be appropriate. The merit of the rule is that it sets out a stark and simple default sanction. The expectation is that the sanction will usually apply unless [principles governing CPR 3.9 would lead to the grant of relief: see section B4.8 below]. If partial relief were to be encouraged, that would give rise to uncertainty and complexity and stimulate satellite litigation.

B4.8 Denton: a restated approach to CPR 3.9

38. In Denton the Court of Appeal (Lord Dyson MR, Jackson, Vos LJJ) considered three appeals in which one or other party had sought relief from sanctions pursuant to CPR 3.9. The majority judgment, given by Lord Dyson MR and Vos LJ, noted that guidance given in Mitchell had been the subject of criticism. It concluded that the Mitchell judgment had been misunderstood, and needed to be clarified and amplified in certain respects.
39. The clarified and amplified guidance given by the majority is conveniently summarised in the first paragraph of the headnote in the Weekly Law Reports:

A judge should address an application for relief from sanctions under CPR r 3.9(1) in three stages: (i) identify and assess the seriousness and significance of the failure to comply with any rule, practice direction or court order which engages rule 3.9(1); (ii) consider why the default occurred; (iii) evaluate all the circumstances of the case, so as to enable the court to deal justly with the application including the factors in sub-paragraphs (a) and (b) . The focus of the inquiry at the first stage should be not on whether the breach has been trivial but on whether it has been serious or significant. The assessment of seriousness or significance should not, initially at least, involve a consideration of other unrelated failures which may have occurred in the past. If a judge concludes that a breach is not serious or significant, relief from sanctions will usually be granted and it will usually be unnecessary to spend much time on the second or third stages. If the court decides that the breach is serious or significant, the second and third stages assume greater importance. Although the second stage cannot be derived from the express wording of the rule, it is important particularly where the breach is serious or significant …

40. The difference between the majority and Jackson LJ concerned the approach to sub-paragraphs (a) and (b) of CPR 3.9(1): see section B2 above. The approach of the majority is summarised in the second paragraph of the headnote:

Sub-paragraphs (a) and (b) of rule 3.9(1) are of particular importance and so particular weight should be given at the third stage, when all the circumstances of the case are considered, to the need for litigation to be conducted efficiently and at proportionate cost and to enforce compliance with rules, practice directions and orders. If the breach has prevented the court or the parties from conducting litigation efficiently and at proportionate cost, that will weigh in favour of refusing relief. The court must always bear in mind the need for compliance with rules, practice directions and orders, because the old lax culture of non-compliance is no longer tolerated. In giving particular weight to those two factors, the court will take account of the seriousness and significance of the breach (which has been assessed at the first stage) and any explanation (which has been considered at the second stage). The more serious or significant the breach the less likely it is that relief will be granted unless there is a good reason for it. Where there is a good reason for a serious or significant breach relief is likely to be granted. The factors which are relevant will vary from case to case. Relevant circumstances, to be weighed in the balance along with all the circumstances, will include the promptness of the application and other past or current breaches by the parties of the rules, practice directions and court orders.

41. Jackson LJ agreed with what the majority said about the first and second stages. As to the third stage, however, he said in paragraph 85 of his judgment:

85. I take a somewhat different view, however, in relation to the third stage. Rule 3.9 requires the court to consider all the circumstances of the case as well as factor (a) and factor (b). The rule does not require that factor (a) or factor (b) be given greater weight than other considerations. What the rule requires is that the two factors be specifically considered in every case. The weight to be attached to those two factors is a matter for the court having regard to all the circumstances. The word "including" in rule 3.9 means that factors (a) and (b) are included amongst the matters to be considered. No more and no less. As the Bar Council put it in their submissions, factors (a) and (b) should "have a seat at the table, not … the top seats at the table". Ultimately what rule 3.9 requires is that the court should "deal justly with the application".

42. In paragraphs 97 and 98 of his judgment Jackson LJ made it clear that, while there might be cases in which the difference of opinion between him and his colleagues might matter, he did not criticise the actual decision in Mitchell. In that regard he agreed with the majority that Master McCloud's order was not outside the permissible range of her case management discretion.

B5 Appeals

B5.1 Nature of an appeal: CPR 52.21 (1)

43. CPR 52.21 (1) states:

52.21 – (1) Every appeal will be limited to a review of the decision of the lower court unless –

(a) a practice direction makes different provision for a particular category of appeal; or

(b) the court considers that in the circumstances of an individual appeal it would be in the interest of justice to hold a re-hearing.

B5.2 When an appeal will be allowed: CPR 52.21(3)

44. CPR 52.21. (3) provides:

(3) The appeal court will allow an appeal where the decision of lower court was –

(a) wrong; or

(b) unjust because of a serious procedural or other irregularity in the proceedings of the lower court.

B5.3 The parties' observations on CPR 52.21

45. RGC noted that the Court of Appeal in Mitchell, citing Mannion v Ginty [2012] EWCA Civ 1667, stressed that an appeal court will not lightly interfere with a case management decision. As was said by Lewison LJ at paragraph 18 of Mannion:

… it is vital … to uphold robust fair case management decisions made by first instance judges.

46. RGC submitted that an appellant must demonstrate that the first instance judge's decision was wrong in substance, and that mere infelicities in expression are not enough. In support of this proposition RGC cited what was said by Lord Hoffmann in Piglowska v Piglowski [1999] 1 WLR 1360 (HL) at 1372:

The exigencies of daily court room life are such that reasons for judgment will always be capable of having been better expressed. This is particularly true of an unreserved judgment such as the judge gave in this case … These reasons should be read on the assumption that, unless he has demonstrated the contrary, the judge knew how he should perform his functions and which matters he should take into account … An appellate court should resist the temptation to subvert the principle that they should not substitute their own discretion for that of the judge by a narrow textual analysis which enables them to claim that he misdirected himself.

47. In addition, RGC cited an observation by Mr Daniel Alexander QC sitting as a High Court judge in Lakhani v Mahmud [2017] EWHC 1713 (Ch); [2017] 1 WLR 3482. At paragraph 18 Mr Alexander QC cited from the judgment of Lawrence Collins LJ in Walbrook Trustees Jersey Limited v Fattal [2008] EWCA Civ 427 at paragraph 33, stating that an appeal court should not interfere with a case management decision if the court below has:

… applied the correct principles and … has taken into account matters which should be taken into account and left out of account matters which are irrelevant, unless the court is satisfied that the decision is so plainly wrong that it must be regarded as outside the generous ambit of the discretion entrusted to the trial judge.

48. Mr Alexander QC commented that:

It goes without saying that, as with all such evaluations, multifactorial evaluations of degree which feed into case management decisions are particularly hard to disturb.

C. The proceedings

C1 The proceedings: case summary

49. Mr Page is in his mid-twenties. He suffers from a severe nut allergy. In June 2016 he was a customer at a café in London run by RGC. He explained about his allergy, and was told that a milkshake would be a safe product. However when he drank the milkshake he suffered an acute allergic and asthmatic anaphylactic reaction. The milkshake had in fact contained very substantial amounts of cashew nuts. The immediate consequence of Mr Page's reaction was respiratory failure and cardiac arrest. He was resuscitated, and was then kept in an induced coma for five days. His respiratory difficulties led to cerebral hypoxia, resulting in brain injury.
50. The present claim was begun in May 2017. RGC disputed liability, but in July 2017 Master Thornett granted summary judgment in favour of Mr Page on primary liability. The issues which remain to be tried concern contributory negligence, causation and quantum: see below.
51. As to quantum, Mr Page says that his reaction to anaphylactic shock has been atypical, and that his recovery has been much less complete than would usually be expected. The symptoms he describes include impaired respiratory ability, generalised physical weakness and fatigue, muscle pain and tremors, and altered gait, headaches, dizziness, poor memory, anger and depression.
52. Mr Page states that his long-term relationship with his girlfriend has broken down. He also advances what is described as "a potentially significant loss of earnings claim". This arises because he says that at the time of the accident he was a very successful amateur boxer who, after specialist training in New York City, had the intention of turning professional. His legal team note that there is inherent uncertainty in any professional sporting career, and thus his claim for loss of earnings "will be challenging to value with precision".
53. The master's order dated 18 July 2017 gave summary judgment in the first instance limited to a finding that Mr Page had suffered an anaphylactic reaction as a consequence of drinking a milkshake purchased from RGC as alleged in the particulars of claim. A strike out application issued by RGC was dismissed. Special provision was made in relation to the balance of Mr Page's application for summary judgment, which depended upon resolution of an outstanding issue of breach of duty. In that regard the onus was placed on RGC to issue an application for permission to amend its defence. In the absence of such an application by 4pm on Friday 28 July 2017, judgment was to be entered for Mr Page on issues of primary liability, legal causation, and medical causation of the anaphylactic reaction. This would leave over the issue of medical causation of Mr Page's other symptoms and the issue of contributory negligence to be dealt with as part of the assessment of damages. The parties in that event were to endeavour to agree initial directions, including listing for a CMC not before 4 December 2017.
54. No application for permission to amend was made by RGC. A consent order was accordingly made on 14 August 2017. It provided, among other things, that the matter be listed for a CCMC on the first available date after 4 December 2017 with a time estimate of one hour and thirty minutes.

C2 CCMC preparation up to 30 Nov 2017

C2.1 Mr Page's interim budget & draft directions

55. At the end of October 2017 Fieldfisher prepared a document headed "Interim Costs Budget of CLAIMANT Dated 30/10/17". I shall refer to this document as "Mr Page's interim budget". In relation to work already done, it itemized time costs amounting to £62,966.50 along with disbursements of £8,188.10, a total of £71,154.60.
56. As regards work to be done, Mr Page's interim budget set out various heads of estimated time costs amounting to £84,690.00 and disbursements amounting to £30,800, a total of £115,490.00. Among these heads were estimated time costs and disbursements of £4,500 and £3,000 respectively for a second CMC. As regards trial preparation and trial, the entries for estimated costs given in Mr Page's interim budget were "£0.00". Pages five and six of Mr Page's interim budget asserted, among other things:

A second CMC will take place in approx six months when directions for further experts and trial will be given. It is too soon to budget to trial.

It is too soon to budget on quantum as expert evidence is to be obtained …

57. Prior to serving Mr Page's interim budget on Keoghs, Fieldfisher emailed Keoghs on 7 November 2017:

… I anticipate that for present purposes parties should be looking at neurology and psychiatry and once those reports are available we can go back to court and see if any further expert evidence is necessary. It is likely that further specialisms may be required but to keep costs proportionate I would suggest that the parties look at this medical evidence as a starting point then return to court for a further CCMC for the court to consider if further evidence is required.

58. As set out in Section B3.1 above, CPR 3.13 (1) required the parties to file and exchange budgets not later than 21 days before the first CMC. Under CPR 2.8 the reference to 21 days is to be computed as "clear days", with the result that the deadline for filing and exchanging budgets was 13 November 2017. On that day Fieldfisher filed Mr Page's interim budget with the court. On the same day Fieldfisher served Mr Page's interim budget on Keoghs under cover of a letter stating:

You will note that we are proposing that the court approves an interim budget allowing parties to obtain Neurology and Psychiatry evidence before returning to court for a further CCMC to consider any further expert evidence as necessary and further directions before a trial on all issues. We believe that this a proportionate way of dealing with this case.

59. Fieldfisher's letter of 13 November 2017 also enclosed draft directions which would give effect to what was proposed in the covering letter.

C2.2 RGC's budget

60. Keoghs prepared a document headed "COSTS BUDGET OF DEFENDANT DATED 13 NOVEMBER 2017". Despite the date in this heading, the document bore a signature dated 14 November 2017. I shall refer to this document as "RGC's budget". It was emailed to Fieldfisher on 14 November 2017. By my calculation this was one day late, but no point appears to have been taken on this.
61. RGC's budget described work done under various heads giving rise to incurred time costs of £15,380.90 and disbursements of £2,940.00, a total of £18,320.90. Estimated time costs and disbursements for work to be done totalled £18,428.00 and £32,850.00 respectively, a total of £51,278.00. As to estimated future costs, RGC's budget made no reference to a second CCMC. However it provided for estimated costs of £2,900 for a pre-trial review ("PTR"). In order to provide for other aspects of trial preparation it included time costs of £1,636.00 with disbursements of £100.00, a total of £1,736.00. In relation to trial, it provided for time costs of "£0.00" and disbursements of £15,050.00, the resultant total being £15,050.00.

C2.3 Budget discussion reports

62. In accordance with CPR 3.13(2), as set out in section B above, budget discussion reports were required to be filed and exchanged seven days before the first CMC. Paragraph 6A of PD 3E encourages the use of Precedent R for this purpose. Applying CPR 2.8 the deadline was Wednesday 29 November 2017. Neither side, however, appears to have sought to discuss budgets until Friday 24 November 2017. On that day, Fieldfisher emailed Keoghs asking to hear from them in respect of Fieldfisher's directions. On Monday 27 November 2017 Keoghs emailed Fieldfisher attaching precedent R in response to Mr Page's interim budget. Among other things, Keoghs objected to a proposal by Fieldfisher to instruct Queen's Counsel for the CMC. In relation to trial preparation and trial, Keoghs commented:

The Claimant has not budgeted for this phase and as such the Defendant has no offers to make.

63. Turning to Fieldfisher's proposed directions, Keoghs' email of 27 November 2017 stated:

…No real objections save that we would not be able to obtain a neurological report or a psychiatric report in the time allocated. … We would like to propose sequential exchange… in order to consider whether we need to proceed to obtain our own evidence. I therefore propose as follows:

…7. [2^nd] CCMC on first available date after 19 November 2018…

64. Fieldfisher replied by email on Tuesday 28 November 2017:

… I am on this occasion agreeable to sequential exchange … however I do not think that the time table needs to be as long as you have set out …

Let's discuss tomorrow and hopefully we can agree directions leaving just budgets for the hearing.

65. Further emails were exchanged on Wednesday 29 November 2017. They included an email from Fieldfisher attaching a proposed index for the CCMC bundle and a case summary for Keogh's approval. At 15:14 that day Fieldfisher sent responses to Keogh's precedent R. Among other things, the responses stressed that:

…This is an interim Budget and the estimates are for the steps to be taken between now and the next CMC next year as it is too early to give directions to trial (or to budget for trial).

66. Also on 29 November 2017 Fieldfisher served Mr Page's Precedent R. Among other things, this document stated that RGC's estimate of £2,900 for a PTR was agreed on the footing that there would be a second CMC instead of a PTR. In addition, it noted that for the phases of trial preparation and trial RGC had claimed £1,736 and £15,050 respectively. The figures offered by Mr Page in response in each case were £0.00 with the comment, "The matter is not ready to be budgeted to trial."

C3 Negotiations and agreement

67. On 1 December 2017 Keoghs emailed Fieldfisher thanking them for providing comments on RGC's budget. The email added:

We note the position on trial and trial prep and therefore note that these will be budgeting at a later date. In terms of the remaining items we will be willing to accept £1,500 for issue/statement of case. We also note the position on witness evidence and therefore will need to increase our figures to account for the number of witnesses. With the amount of witnesses you propose we review the estimated costs to £9,000. Please confirm this can be agreed.

68. Also that morning Keoghs emailed Fieldfisher in relation to Mr Page's interim budget. Keoghs offered compromise figures for the phases of Issue, Disclosure, Witness, Experts, ADR. The email agreed Mr Page's figures for the phases of CMC and PTR. This was in the context of Mr Page's Precedent R, which explained that the PTR would become a second CMC. At 11:37 Fieldfisher emailed Keoghs agreeing all figures proposed by Keoghs save in relation to witness statements, where Fieldfisher's "best figure" was £28,500. Keoghs replied at 12:05 agreeing this item. They asked Fieldfisher to provide "something outlining the agreement for both budgets" which could be forwarded to counsel and confirmed to the court.
69. Mr Dushal Mehta, the senior associate at Fieldfisher dealing with the matter, was away on leave on Monday 4 December 2017. On Tuesday 5 December at 07:53 he emailed Keoghs attaching two budget tables setting out the figures as agreed for the two budgets. The budget table for each side included alternative dispute resolution/ settlement discussions and a "2^nd CMC/ PTR", but did not cover trial preparation after this, nor did it include trial. On this basis:

(1) for Mr Page a budget of £162,860.60 was agreed; this budget included incurred costs that were agreed in the amount of £71,154.60;

(2) for RGC a budget of £58,805.90 was agreed; this budget included incurred costs that were agreed in the amount of £18,320.90.

C4 CMCC hearing, rulings and reasons

C4.1 CMCC hearing on Tuesday 5 December 2017: general

70. The master did not give a formal oral judgment, and thus I have only such reasons as were given by the master during the course of argument. Unfortunately, the transcriber appears to have been working from a poor-quality recording. As noted in section A above, a revised transcript of the hearing was prepared. Even in its revised version, however, the transcript contains a number of passages which I suspect may not be accurate. Citations later in this judgement from the revised transcript include occasional insertions or substitutions by me in square brackets in which I have attempted to summarise the gist of what was being said.
71. At the hearing on Tuesday 5 December 2017 Mr Mehta represented Mr Page. Ms Rehana Azib of counsel represented RGC. Neither side, prior to the hearing, had informed the court of the agreement reached the previous Friday.

C4.2 Start of the CCMC: the master's concern and warning

72. At the start of the hearing Mr Mehta produced the agreed budget tables which Fieldfisher had sent to Keoghs earlier that morning. When doing so, he made what I shall call "Mr Mehta's opening submission":

MR MEHTA: The parties are, essentially, agreed on directions and budgets so I have a breakdown here of the budget which has been agreed by the parties.

73. The master's response, in what I shall call "the master's opening observation", was to raise a question as to why the proposed directions did not take the matter through to trial:

MASTER THORNETT: I did not follow in the case summary why this case should be subject to a [second] CMC, an absolute relatively straight forward case … On the face of it, it does not seem to have any distinction about it to distinguish it from other cases that are listed through to trial. …. The case summary did not assist me in deciding what it was that was so apparently necessary to be reviewed in a further CMC, so, unless there is more to be said about it, the fact that was agreed by the defendant is not my immediate concern.

74. What followed, in a passage which I shall call "the master's first breach/relief observation", was an explanation by the master of his concern. At the same time the master gave a warning that the approach taken on behalf of Mr Page appeared not to have complied with the CPR:

MASTER THORNETT: What is my concern is the assumption that because you have agreed, binds me and, more particularly, that justifies the filing of a very inadequate costs budget because you presume that the costs budget reflects directions that will be agreed but, in the absence of any prior approval of the court, it is a dangerous course. On the face of it you have not filed a budget that complies with the rules, …

75. This warning was important. I am sure that its importance was appreciated by those who heard it: if the costs budget rules had not been complied with, then CPR 3.14 might deprive Mr Page of the ability to recover any costs beyond the applicable court fees.

C4.3 Proceeding in sequence: why not list to trial?

76. The master then identified how he intended to proceed:

MASTER THORNETT: … let us take it in sequence. What is it that justifies the matter not being listed to trial today?

77. In response, Mr Mehta assured the master that there was no suggestion that the agreed directions bound the court. Both he and Ms Azib sought to persuade the master that it was sensible for there to be a second CMC. After summarising what he had heard, the master said:

MASTER THORNETT: … unless I am persuaded, I am not going to see a case simply postponed to another CMC with a view to exploring its way unless there appears to be good reason, and on the face of the evidence, … I am not persuaded. There is a broader point here which [is that it] is not appropriate [that claimants should be] finding their way and developing the case as they go along …

78. The master added that, in the absence of any "constructive picture" supporting the proposal for a second CMC:

MASTER THORNETT: … my conclusion is that this is a case amenable for listing through to trial.

79. After reaching this conclusion the master discussed individual directions to trial with the legal representatives, and gave rulings as he went along. These rulings included a refusal by the master to direct a second CMC and a refusal by him to direct a PTR. They also included a five-day estimate for trial rather than the two-day estimate which had been assumed in RGC's costs budget.

C4.4 Budgeting: what the master said on breach/relief

80. After dealing with directions to trial the master returned to costs budgeting. He was reminded by Ms Azib that RGC's budgeted figures were agreed, but not in relation to phases connected with trial. The transcript records the master responding ("the master's second breach/relief observation"):

MASTER THORNETT: Let us grasp the nettle, [Mr Page's] budget [makes] an assumption that the directions proposed are the directions that will be awarded … and that is in breach of the practice direction, that is in breach of the rule book.

81. Mr Mehta ("Mr Mehta's first breach/relief reply") explained that the approach taken had been:

MR MEHTA: … to try and keep costs proportionate by doing a costs budget [up to] further CMC –

82. At this point the master interrupted him, making this observation ("the master's third breach/relief observation"):

MASTER THORNETT: …it overrides the whole obligation of the rules, which is to file a Form H, that is compliant with the practice direction and is through to trial.

83. After the master had made his third breach relief observation quoted above, he continued ("the master's fourth breach/relief observation"):

MASTER THORNETT: … Only if there has been a dispensation order about that, … unless the court orders otherwise, can the solicitors assume that they are entitled to avoid the obligation of the law.

84. Mr Mehta then said ("Mr Mehta's second breach/relief reply"):

MR MEHTA: Yes, … the budgets prepared have canvassed the defendant's view about the case… the parties knew that we were going to file or there was [? not] a dispute on that –

85. Here the master interrupted again ("the master's fifth breach/relief observation"):

MASTER THORNETT: I think, that is an irrelevant assumption, as I already canvassed.

86. The master continued ("the master's sixth breach/relief observation"):

MASTER THORNETT: Well, you are not precluded from applying for relief, as I see it. You have not filed a budget that is compliant with the laws. …

87. In the passage following this the master repeats points made earlier. The transcript then continues ("the master's seventh breach/relief observation"):

MASTER THORNETT: … Well, unless there is anything more I take the view that the 3.14 sanction applies and I am asking you to apply for the relief from sanction in it but currently, on the basis of the budget, [it] does not comply with [PD 3E]. The claimant should be [treated as having filed a] budget comprising of court fees only.

C4.5 RGC's budget

88. The master then turned to RGC's budget. He indicated that RGC's budget would be treated "as a budget to be subject to costs management". In that regard he noted, among other things, that RGC's budget envisaged that no solicitors would be in attendance at trial.
89. Ms Azib made submissions that RGC should be allowed the figure it had given in its costs budget for trial preparation, and that in relation to trial, the increased estimate for the length of the trial warranted adjustments so that the figures in RGC's budget for experts and for counsel should be increased. Mr Mehta did not object to those submissions. The master directed that a draft order should be prepared which recorded that Mr Page was in breach of CPR 3.14, "and therefore sanction applies", and also that:

MASTER THORNETT: … Costs analysis took place in respect of defendant's budget which was approved … in an adjusted sum of, and then that bottom line figure and file amended budget please.

90. The costs analysis referred to by the master in the passage cited above had not involved any examination of RGC's figures for phases prior to preparation for trial. The master's intention cannot have been, however, that RGC should be allowed the figures in its costs budget filed on 14 November 2017, in circumstances where RGC had agreed to change those figures. Both sides instead, in my view rightly, proceeded on the basis that RGC's approved budget comprised, as regards phases other than trial and trial preparation, the agreed figures, other than for "2^nd CMC/PTR", that had been handed in on 5 December 2017.

C5 The costs budgets order

91. The order as drawn up by the parties and approved by the master included the following:

UPON hearing the Solicitor for the Claimant and Counsel for the Defendant at a Costs and Case Management Hearing

AND UPON the Court finding that the Claimant had failed to file a costs budget that complied with PD 3E and is in breach of CPR 3.14 such that the sanction under CPR 3.14 applies and the Claimant shall be treated as having filed a budget comprising only the applicable court fees

IT IS ORDERED that

COSTS BUDGETS

Upon it being noted that hourly rates and incurred costs are not agreed:

1.1 The Claimant's costs budget is limited to applicable court fees only

1.2 The Defendant's costs budget is approved in the sum of £66,321.00 excluding VAT (see attached full budget as allowed).

D. Grounds of appeal, reasons for relief, & issues

D1 Grounds of appeal

D1.1 Grounds of appeal: overview

92. There were 6 numbered grounds of appeal. Grounds 1 to 3, and what I shall call ground 4A, in effect identified reasons for saying that the master wrongly held that CPR 3.14 was engaged in the present case. If so, then the master was wrong in law to limit Mr Page's costs budget to applicable court fees.
93. What I shall call ground 4B, along with ground 5, dealt with the orders which Mr Page submits should have been made in circumstances where CPR 3.14 was not engaged.
94. Ground 6 arose only if the master been right to conclude that CPR 3.14 was engaged. If so, Mr Page nevertheless submitted that the master ought, in favour of Mr Page, to have used the express power given in CPR 3.14 to disapply the default sanction in that rule.

D1.2 Grounds 1 and 2: "a budget" had been filed

95. Ground of appeal 1 and ground of appeal 2 assert:

1. The master was wrong in law to find CPR 3.14 applied in this case. CPR 3.14 did not apply, as the claimant had filed a costs budget.

2. The master was therefore wrong in law to hold that the claimant's budgeted costs were, by operation of CPR 3.14, limited to court fees.

96. If, as is effectively asserted in ground of appeal 1, Mr Page had indeed filed "a budget" within the meaning of CPR 3.14, then it will inevitably be the case that ground of appeal 2 is correct. Ground of appeal 1 and ground of appeal 2 therefore can conveniently be taken together.

D1.3 Ground 3: "irrational" approach to incompleteness

97. Ground of appeal 3 is in these terms:

3. In addition, it was irrational of the master to conclude that the claimant had failed, within the meaning of CPR 3.14, to file a costs budget simply because the claimant's budget was incomplete, in circumstances where he made no such finding in respect of the defendant's budget, although that was also incomplete. The master should instead have found that CPR 3.14 applied to neither budget.

98. As I understand it, this ground of appeal is alleged to apply even if Mr Page's interim budget did not constitute "a budget" within the true legal meaning of CPR 3.14. What is asserted seems to me to involve the following steps:

(1) RGC's budget was incomplete;

(2) the master made no finding that RGC's incomplete budget engaged CPR 3.14; and therefore

(3) in these circumstances, the master could not rationally conclude that the incomplete nature of Mr Page's interim budget was such as to engage CPR 3.14.

99. In essence, then, ground of appeal 3 appears to be a public law "unreasonableness" challenge, predicated on the basis that RGC's budget was incomplete.

D1.4 Ground 4A: CPR 3.15 agreement trumps CPR 3.14

100. As indicated in section D1.1 above, I have divided ground of appeal 4 into two separate grounds. Ground 4 consists of two sentences. It seems to me that the second sentence may be read as involving an assertion which would be logically prior to the first sentence. Accordingly, when setting out ground of appeal 4 below, I have inserted "[B]" ahead of the first sentence, and "[A]" ahead of the second sentence:

4. [B] The master was therefore wrong not to make a costs management order recording that the defendant had agreed the claimant's costs budget in specified sums for all phases except trial preparation and trial, with those agreed sums therefore to stand as the claimant's budget for those phases. [A] The defendant had indeed agreed those phases, and as such the master was obliged by CPR 3.15(1) to give effect to that agreement.

101. In the second sentence the reference to sub-paragraph (1) of CPR 3.15 must be mistaken: sub-paragraph (1) imposes no obligation on the court. In context it is clear that the intended reference is to sub-paragraph (2)(a), which imposes an obligation on the court to record the extent to which the budgeted costs are agreed between the parties. It seems to me that the second sentence is intended to make an assertion as to the relationship between CPR 3.14 and CPR 3.15. The assertion would be that, even if CPR 3.14 would otherwise apply to an incomplete costs budget, where there has been agreement on any element in that incomplete costs budget then CPR 3.14 must give way to the obligation in CPR 3.15(2)(a). It is for that reason that I refer to this second sentence as constituting ground of appeal 4A.

D1.5 Grounds 4B and 5: consequences if CPR 3.14 is not engaged

102. Ground 4B is set out in section D1.4 above. It asserts that, on the footing that CPR 3.14 is not engaged, the master would have been required in relation to the agreed phases in Mr Page's interim budget simply to record the amounts that had been agreed.
103. Ground of appeal 5 is concerned with the trial preparation and trial phases of the budget, which had not been agreed. As to those phases, it states:

5. As to the trial preparation and trial phases of the budget, in circumstances where CPR 3.14 did not apply, and given that the parties had agreed that they would not be subject to budgeting until a later stage, the master should at most have directed that the parties serve supplemental costs budgets to address those phases, making provision for any further costs management to follow as necessary.

D1.6 Ground 6: disapplying the default sanction

104. As noted in section D1.1 above, ground of appeal 6 arises only if the master was right to conclude that CPR 3.14 was engaged. When asserting that the master ought, in such circumstances, to have disapplied the default sanction, ground 6 identifies four particular factors. I set out ground 6 below, identifying each of the four particular factors in square brackets:

6. Even if, contrary to the claimant's contention, CPR 3.14 did apply to this case, that rule is expressly subject to the court's power to 'order otherwise' and to disapply the default sanction provided for. In this case, the master was wrong not to 'order otherwise' and to disapply the sanction having regard to the overriding objective of the CPR, and all the circumstances of this case. These included:

[Ground 6(1)] the claimant's substantial compliance with the obligation to prepare a budget;

[Ground 6(2)] the agreement between the parties of all the pre-trial preparation phases of the claimant's budget; and

[Ground 6(3)] the defendant's express agreement with the claimant that budgeting for the trial-related phases of the case should be deferred; and therefore

[Ground 6(4)] [the defendant's] own resulting omission fully to budget for those phases.

D2 Reasons for seeking relief against sanction

105. In section 10 of his appellant's notice. Mr Page made an application "by virtue of CPR 3.10" to be given "relief from the sanction which the master held to have applied". The witness statement in section 11 of the appellant's notice (see section A above) was made by Mr Mehta. It described the "reasons" that Mr Page wished to rely upon for this purpose. Paragraph 6 of the statement set out Mr Page's reasons discursively. They can conveniently be broken down into 6 specific reasons:

(1) reason (1) is that "relief is clearly just on application of the familiar principles in Denton …;

(2) reason (2) is that the present is not a case of "no compliance": on the contrary, there had been substantial compliance because the budget "fully addressed all phases [up] to trial preparation and trial";

(3) reason (3) is that the later phases in the budget were omitted for rational reasons;

(4) reason (4) is that the later phases in the budget were omitted with RGC's agreement;

(5) reason (5) is that the master's sanction fails to place the parties on an equal footing, as the master failed to impose any sanction on RGC, even though it to had not completed its full budget through to trial;

(6) reason (6) is that to maintain the sanction of CPR 3.14 in these circumstances is manifestly unjust.

D3 Issues below

106. Prior to the hearing I asked the parties to prepare a list of the issues which arose for consideration before the master, along with a list of the issues which the parties considered arose for determination by me. The second of these is dealt with in section D4 of this judgment.
107. As to issues for consideration before the master, it is common ground that by the end of Friday 1 December 2017 there was no issue between the parties. The reason is that by that time:

(1) both sides had agreed that directions should be given which included a second CMC and which did not go beyond a second CMC;

(2) both sides had agreed on the budgeted costs down to and including a second CMC;

(3) both sides had agreed on the recoverable incurred costs to date; and

(4) neither side suggested that the court should at this stage deal with costs arising after the proposed second CMC.

108. In their list of issues which arose for consideration before the master, the parties, accordingly, did not identify any issue which was in dispute between them. Instead, they identified matters raised by the master under 3 heads:

(1) the first head identified by the parties was:

Whether it was proportionate to have two CCMCs. The master concluded not…

(2) The second head identified by the parties was:

Compliance with CPR 3.14. The master concluded that [Mr Page] had not filed a budget which complied with PD 3E and that the sanction at CPR 3.14 applied, subject to any application for relief…

(3) The third head identified by the parties was:

Timetabling and directions…

D4 Issues arising for determination

109. As to the issues to be determined at the hearing before me, the parties formulated five issues. The first was:

Whether and to what extent [Mr Page] is precluded from challenging the master's decision by reference to matters not raised below.

110. This first issue reflects a stance taken by RGC as to the consequence where points raised in the appeal were not taken on behalf of Mr Page before the master. The suggested consequence was a bar, said to arise because it was not open to Mr Page to advance those points now. I deal with matters arising in relation to this issue to the extent necessary when considering relevant grounds of appeal.
111. The second issue identified by the parties for determination was:

Whether the master was correct to hold that [Mr Page] was in breach of CPR 3.14.

112. Matters relevant to this issue are canvassed in section E below, where I deal with ground of appeal 1 to ground of appeal 5.
113. The third issue identified by the parties for determination was:

Whether the master was entitled not to disapply the CPR 3.14 sanction at [the] hearing [below].

114. Matters relevant to this issue are canvassed in section F below, where I deal with ground of appeal 6.
115. The fourth and fifth issues identified by the parties for determination were whether Mr Page should be granted relief from sanctions, and if so, whether this should be full or partial relief. Matters relevant to these issues are canvassed in section G below where I deal with Mr Page's application for relief against sanction.

E. Applicability of CPR 3.14: grounds 1 to 5

E1 CPR 3.14 applicability: general

116. In grounds of appeal 1 to 4A Mr Page relies on three bases for asserting that the master wrongly held CPR 3.14 to be applicable to Mr Page's interim budget. It is convenient to take these three bases in the following order:

(1) the scope of CPR 3.14, as to which Mr Page notes that CPR 3.14 only applies if "a budget" has not been filed, and says that an incomplete budget is "nonetheless a budget" for the purposes of CPR 3.14 (grounds of appeal 1 & 2);

(2) the relationship between CPR 3.15 and CPR 3.14, as to which Mr Page notes that RGC agreed his interim budget, and says that by CPR 3.15 (2)(a) the parties' agreement overrides CPR 3.14 (ground of appeal 4);

(3) alleged irrationality on the part of the master entreating RGC as outside CPR 3.14 when, says Mr Page, RGC's budget was incomplete (ground of appeal 3).

117. I examine these bases in sections E2 to E4 below. For the reasons given in those sections I conclude that each of these bases lacks legal merit. In these circumstances I deal only briefly with matters that do not need to be resolved:

(1) Mr Page's assertions as to the consequences if CPR 3.14 did not apply (ground of appeal 4B and 5: see section E5 below);

(2) RGC's reliance on a bar which it said prevented Mr Page from raising relevant arguments on appeal because he had not relied on them below (issue (1) for determination, see section E6 below).

E2 Grounds 1 & 2: meaning of "a budget" in CPR 3.14

118. CPR 3.14 will only apply to Mr Page if he "failed to file a budget". Mr Page's first contention is that, on an ordinary use of language, he had filed a "budget". In this context, RGC accepted that a mere irregularity would not nullify what would otherwise be a costs budget. I agree. It seems to me that RGC's approach in this regard is consistent with the decision of Stuart-Smith J in Americhem Europe Ltd v Rakem Ltd [2014] EWHC 1881 (TCC). There a solicitor had served and filed a costs budget in the form of Precedent H in time, but it was signed by a costs draftsman and not by a senior legal representative within the meaning of PD 3E. Stuart-Smith J found that while this was contrary to PD 3E, there was nothing to impede the normal constructive discussions on figures. In those circumstances what went wrong in that case was entirely different in nature from the present case, where what was filed omitted important sections of Precedent H.
119. I disagree with Mr Page's contention that on an ordinary use of language he filed "a budget". It is inconsistent with the terminology used on Mr Page's behalf: the document filed on 13 November was not described as "a budget", nor was it described as "a costs budget". It was described as an "Interim Costs Budget". On an ordinary use of language, as it seems to me, an interim budget is something which is not yet a budget.
120. I accept that the name used when filing is not determinative. If, despite the ordinary meaning of the name used, what was filed can properly be regarded as a "budget" within the meaning of CPR 3.14 then that provision will not be engaged. The question is whether that word should be interpreted as being satisfied by filing a materially incomplete budget. It was submitted for Mr Page that such an interpretation was required because the policy of costs management was to allow the court, to the extent that it is not agreed, to set a budget. I shall refer to this policy as the "manage only what is not agreed" policy. I accept that this is a policy which underlies certain aspects of costs management rules and practice directions. But it does not follow from this that CPR 3.14 was not engaged by filing an incomplete budget.
121. RGC submits that a contention that only a total failure to file a budget engages the sanction is precluded by the Court of Appeal decision in Mitchell. I agree. In paragraph 30 of its judgement (see section B4.3 above) the court rejected a contention that CPR 3.14 was directed to the case of a party who does not file a budget at all.
122. I recognise that Mitchell was not concerned with an incomplete budget. Nevertheless it seems to me that the approach taken in Mitchell is equally applicable to a case where what is filed is materially incomplete. Important factors in this regard are:

(1) First, there is a need for certainty. When Mr Page's interim budget was filed no one knew whether RGC would agree with the approach that was taken in it. The parties and the court need to know where they stand once the time for filing has expired. It seems to me that CPR 3.14 gives a clear answer: once a party has failed to file a budget despite being required to do so, that party will, unless the court otherwise orders, be treated as having filed a budget comprising only the applicable court fees. It was submitted on behalf of Mr Page that the operation of CPR 3.14 was not automatic. I disagree. CPR 3.8 makes it plain that the operation of a sanction such as that in CPR 3.14 is not dependent upon there being any further order by the court. On the contrary, the sanction applies unless the court otherwise orders. The natural meaning of this provision is that once there has been a relevant failure, then in the absence of any contemporaneous or earlier order to the contrary, CPR 3.14 bites. From that time on, unless and until there is an order by the court to the contrary, the party in question is deemed to have filed a budget comprising only the applicable court fees. Whether that continues to be the case for the purposes of costs budgeting is a matter for the court.

(2) Second, on its face what was filed was contrary to the "manage only what is not agreed" policy. Mr Page's interim budget made it clear that Mr Page was not content to allow the management process, within the timeframe prescribed by rules and practice directions, to be agreed by the parties or conducted by the court in relation to the phases of preparation for trial and trial itself: see section C2.1 above. The failure to complete relevant parts of Precedent H carried the risk that there might be similar adverse consequences to those identified in the second part of paragraph 30 of the Mitchell judgment: see section B4.4 above.

(3) Third, there can be no doubt that the obligation under CPR 3.13 as amplified in PD 3E is, unless the court otherwise orders, to file a budget "in the form of Precedent H", and which follows the Precedent H Guidance Note in all respects. Paragraph 6 of PD 3E says so: see section B3.2 above. In the present case it is clear that Mr Page's interim budget did not meet important requirements of Precedent H. Precedent H required Mr Page to set out his budgeted costs for trial preparation and for trial. Mr Page's interim budget did not do this.

(4) Fourth, PD 3E expressly set out what should be done if it were proposed to limit budgets initially to part only of the proceedings. Under paragraph 6(a) the first question was whether the present case fell within the category of "substantial cases". If so then the court might direct a limitation of the kind proposed. It is plain that the Practice Direction contemplates a prospective direction by the court: in the absence of such a direction there would be no restriction, at the time of filing, on the requirement that the budget must be in the form of Precedent H.

(5) Fifth, it was submitted that failure to comply with CPR 3.13(1) and PD 3E could be adequately dealt with under CPR 3.10. I do not agree. The mischief at which CPR 3.13 and CPR 3.14 are directed is the last moment filing of costs budgets: see Mitchell paragraph 30, cited in section B4.3 above. CPR 3.14 is the sanction designed to ensure compliance with CPR 3.13. Accordingly it can be expected that it is this sanction which will apply where there is material non-compliance with CPR 3.13, or PD 3E which amplifies what CPR 3.13 requires.

(6) Sixth, there was an oral submission on behalf of Mr Page that CPR 3.14 should be interpreted as imposing a sanction only in relation to such phases in Precedent H as had not been completed. RGC would, if necessary, have adopted a fall-back position to that effect. I am not persuaded that such an interpretation can be adopted. There is no hint of any such approach in the express words of CPR 3.14. The new policy of greater robustness is consistent with the sanction being applicable, unless the court orders otherwise, for any material breach.

(7) Seventh, it was urged more generally that the severity of the CPR 3.14 sanction should lead the court to adopt a restrictive interpretation of CPR 3.14. This argument would have more force if CPR 3.14 had not contained the words, "unless the court otherwise orders …". This saving provision is intended to ensure that the sanction is imposed to give effect to the overriding objective: see Mitchell paragraph 45, cited in section B4.7 above. In circumstances where the saving provision will ensure compliance with the overriding objective, there is no need to read down CPR 3.14 for fear that the sanction it imposes may be too severe.

123. I add that the passage from Q&A 2, now Q&A 24, in Questions & Answers cited in section B4.3 above is consistent with my conclusion. It was noted on behalf of Mr Page that what is said in Questions & Answers does not come under the responsibility of the editorial team of Civil Procedure. That is true, but it remains the case that Questions & Answers is prepared by experts in the field. Mr Page also relied on the apparent assumption in the Chief Chancery Master's informal note (see section B3.3 above) that a party could, without sanction, file a limited version of Precedent H where all parties sought to agree an order that the case should be taken out of the costs management regime. As to that, however, it seems to me that the informal note was not specifically addressing the question of sanction under CPR 3.14.
124. Finally on grounds of appeal 1 and 2 I turn to RGC's concession. In my view nothing in that concession assists Mr Page in relation to the question of the true meaning of CPR 3.14. The concession recognises only that it would not be right for RGC, in the event that it were the paying party, to object at the assessment stage to allowing Mr Page the specific amounts which had been agreed for specific phases. This gives no basis for thinking that the concession points to any flaw in the reasoning leading to my interpretation above of CPR 3.14.

E3 CPR 3.14 applicability: agreement under CPR 3.15

125. I deal in this section with what I have called ground of appeal 4A: see section D1.4 above. CPR 3.15(2)(a) lays down that by a costs management order the court will record the extent to which the budgeted costs are agreed between the parties. At paragraph (2)(b) it adds that "in respect of the budgeted costs which are not agreed" the court will record its approval after making appropriate provisions. Mr Page derives from this a proposition that the court has no power either to approve or vary budgets to the extent that they have been agreed. He asserts that because ours is an adversarial system, it follows that agreement between the parties on the amount of recoverable costs will be final. Such an agreement may have, and Mr Page submitted in the present case did have, contractual effect. In oral submissions it was asserted that CPR 3.14 served to protect the opposing party, and nothing in it ousted a subsequent agreement of the parties.
126. By contrast, RGC submitted that nothing in the rules stated CPR 3.14 could be displaced by agreement, and that there was no good reason to imply anything to that effect. I agree, at least in the context of the present case. It seems to me that on the ordinary use of language CPR 3.15(2)(a) is not engaged once CPR 3.14 has taken effect. Once the time for filing a budget had expired, and Mr Page had not complied with that requirement, then unless and until the court ordered otherwise the only "budgeted costs" within the meaning of CPR 3.15 as regards Mr Page were the applicable court fees.
127. Moreover, there are sound policy reasons for adopting this approach: see section E2 above. The sanction in CPR 3.14 is so important that disapplication of the sanction should not automatically result from the mere fact that figures are agreed.
128. In these circumstances I am not persuaded by Mr Page's contention that CPR 3.15 trumps CPR 3.14. I do not accept that the negotiations between the parties resulted in a contract. But even if they had resulted in a contract, it seems to me that a contract made for costs management purposes must give way to overriding provisions in relevant rules, practice directions and orders. Nevertheless, I recognise that the costs management provisions create a tension between the importance, in the public interest, of forcing parties to grapple with potential costs consequences on the one hand, and principles of freedom of contract on the other under which parties should, unless the costs management provisions require otherwise, be able to reach agreement as to costs consequences. Thus in circumstances where the parties are aware that the sanction in CPR 3.14 has taken effect, but nevertheless reach a new agreement intended to supersede that sanction, then it might be arguable that under CPR 3.18 on assessment the court is to have regard to the new agreed budget in place of the deemed budget under CPR 3.14. The argument is not straightforward, however, and as it does not arise in the present case I do not think it is desirable to say more about it.

E4 CPR 3.14 applicability: RGC's Budget

129. In this section I deal with ground of appeal 3. As explained in section D1.3 above, it starts with a premise that RGC's budget was incomplete. From the fact that the master made no finding that RGC's was incomplete, it proceeds to a contention that the master could not rationally conclude that the incomplete nature of Mr Page's interim budget was such as to engage CPR 3.14. The skeleton argument for Mr Page, however, put the matter in a more nuanced way. It said that this ground of appeal was "relied upon as an additional illustration of the irrationality of the master's approach, and as fortifying the submission that it cannot be allowed to stand."
130. Whichever way the matter is put, it seems to me that this ground of appeal is fundamentally misconceived. There are two reasons for reaching that conclusion. The first is that, taking Mr Page's allegations at their highest, it is simply not possible to say that RGC's budget was "incomplete". Unlike Mr Page's interim budget, RGC's budget dealt with all phases in Precedent H. Mr Page asserted that RGC's figure for the trial phase had failed to allow for certain matters which RGC's solicitor would need to deal with as part of that phase. For present purposes, however, that is neither here nor there. RGC put in its figure for the trial phase, along with its explanation for that figure. There was no basis whatever for asserting that RGC was in a similar position to Mr Page.
131. Second, it is difficult to see how any "irrationality" on the part of the master could assist Mr Page on this appeal. As RGC pointed out, even if (which seems to me to be far from the case), the master had reached a conclusion that was not rationally open to him as regards RGC's budget, and ought to have held that CPR 3.14 applied, then it would be open to Mr Page to challenge the master's decision as regards RGC's budget: but Mr Page has not done so.

E5 CPR 3.14 applicability: potential consequences

132. I noted in section D1.5 above that ground 4B is concerned with what the master would have been required to do if CPR 3.14 were not engaged. The same is true of ground of appeal 5. For the reasons given above, however, I have held that CPR 3.14 was engaged, and thus these questions do not arise.

E6 CPR 3.14 applicability: RGC's alleged bars.

133. Under CPR 52.21(1) an appeal is, unless the court orders otherwise, limited to a review rather than a rehearing: see section B5.1 above. There was a tentative suggestion on behalf of Mr Page that a rehearing might be the appropriate approach in the present case. This was not, however, pursued.
134. It was in those circumstances that RGC raised what I have called the first issue for determination: see section D4 above. RGC's contention was that none of the arguments raised on appeal had been raised below. RGC submitted that in a review it was not open to an appellant to seek to rely on arguments not raised below. It could not have been wrong of the master not to accede to arguments which were never made, and it would be unfair to him and RGC if Mr Page were permitted to raise new arguments on appeal.
135. So far as questions as to the applicability of CPR 3.14 are concerned, this argument on the part of RGC is superfluous. I have held, for reasons given above, that none of Mr Page's arguments for challenging the applicability of CPR 3.14 has merit. In those circumstances it is unnecessary to resolve this particular point in the present context, and I do not do so. I return to RGC's suggested bar in section F3 below.

F. Disapplying CPR 3.14: Ground 6

F1 Disapplication: general

136. In this section I deal with ground of appeal 6. It concerns the saving provision in CPR 3.14, which envisages there may be circumstances in which "the court" otherwise orders: see section D1 above. In this regard, what was said to be a fundamental argument on behalf of Mr Page was that the master was required by law to consider whether to disapply the sanction under CPR 3.14 but did not do so. I describe this argument in section F2 below. The question then arises whether RGC's suggested bar applies to this argument. I examine that question in section F3 below, where I give my reasons for concluding that it does not. In section F4 below I examine the merits of the argument, and give my reasons for concluding that it is sound. The consequence is that this court must consider whether to disapply the sanction under CPR 3.14 in whole or in part. In section F5 I explain why, in the exercise of my discretion, I consider it appropriate to disapply the sanction in part.

F2 Disapplication: Mr Page's fundamental argument

137. At an early stage in the oral submissions on behalf of Mr Page a premise underlying ground of appeal 6 was identified. It was said, in this regard, that there was a question of law whether the master had failed to consider the saving provision in CPR 3.14 in circumstances where, as a matter of law, he was required to consider it.
138. I noted in section F1 above that this was described by Mr Page as a fundamental argument. In particular, it was stressed that there is a vital difference between disapplication under CPR 3.14 and seeking relief under CPR 3.9. The vital difference is that on an application under CPR 3.9 the starting point is that the sanction has been properly imposed and complies with the overriding objective: see section B4.7 above. By contrast, while the factors calling for consideration when deciding on disapplication under CPR 3.14 are similar to those which arise on an application for relief under CPR 3.9, the context is very different. When considering disapplication there has been no prior judicial decision that the sanction was appropriate and in accordance with the overriding objective. Thus a significant fetter on the court's ability to grant relief does not apply to consideration by the court of whether the sanction under CPR 3.14 should be disapplied using the express power to do so in CPR 3.14.

F3 Disapplication: RGC's alleged bar

139. The bar relied on by RGC was said to arise because the appeal is by way of review rather than rehearing: see section B5.3 and D4 above. In oral argument, however, it was acknowledged by RGC that the bar was not absolute. In the remainder of this section I analyse submissions at the hearing in this regard, and explain why on the basis of those submissions I conclude that Mr Page's fundamental argument does not fall within RGC's alleged bar. For my part, I am concerned that relevant authorities were not analysed in the skeleton arguments, and were dealt with at short notice in oral argument. I am sceptical as to whether Mr Page is under any restriction in raising his fundamental argument. That argument asserts that the master should have considered exercise of the saving provision even though neither party asked him to do this at the hearing below. By definition, if the argument is sound, then the law does not require Mr Page to have raised the point before the master.
140. Turning to the submissions that were made at the hearing before me, RGC accepted a contention on behalf of Mr Page that the principles of law I must apply are found in judgement in the Court of Appeal (McCombe, Beatson, Briggs LJJ) in R (Humphreys) v Parking Adjudicator [2017] EWCA Civ 24, [2017] RTR 22. At first instance in that case Her Honour Judge Coe QC, sitting as a deputy judge of the Administrative Court, quashed a decision of the parking adjudicator. The result of her decision was that a parking contravention notice issued to Mr Humphreys by Camden London Borough Council ("Camden") ceased to have effect. Camden had taken no part in the judicial review at first instance. That being so, Mr Humphreys asserted that it was not open to Camden, on an appeal to the Court of Appeal, to rely on arguments which had not been put to the judge below.
141. At paragraph 29 of his judgment Beatson LJ, with whom Mcombe and Briggs LJJ agreed, said:
142. .[2008] EWCA Civ 978 Thus in cases where these principles apply:

(1) The appeal court has a discretion to exclude a point which could have been raised at first instance but was not;

(2) If conditions identified in Pittalis ("the Pittalis conditions") are met, then the usual practice is for an appeal court to allow the point to be raised;

(3) The Pittalis conditions are:

(a) that the opposing party ;

(b) that the opposing party hthat party's detriment and

(c) that the other party

(4) However satisfaction of the Pittalis conditions does not of itself guarantee that the appeal court will allow the point to be advanced: the appeal court retains a residual discretion to refuse to allow a point to be advanced even though the Pittalis conditions are met.

143. Applying these principles to the present case, Pittalis conditions (a) and (c) can be dealt with shortly. RGC conceded that condition (a) was met. As to condition (c) RGC said that Mr Page had made no offer in this regard. For my part, however, I do not doubt that the court can provide RGC with adequate protection in an order for costs should such protection be called for.
144. RGC's main objection was that condition (b) had not been met. The prejudice identified was that RGC did not have the benefit of knowing the views which the master would have expressed if he had been invited, at the hearing below, to deal with the question whether CPR 3.14 should be disapplied. It seems to me however that this suggested prejudice would arise in every case where the Pittalis conditions arose for consideration. It is the fact that there has been no consideration of the matter below that has given rise to the formulation of the conditions set out in Pittalis. RGC suggested that there might be cases where an absence of reasons from the court below caused no prejudice. As it seems to me, mere absence of any indication from the court below of what it would have done if the point had been raised below cannot of itself constitute prejudice within the meaning of condition (b).
145. For these reasons I conclude that all three of the Pittalis conditions are met. RGC did not contend that in these circumstances I should nevertheless utilise the residual discretion to bar Mr Page from relying on his fundamental argument. I accordingly hold that there is no bar on Mr Page proceeding with that argument.

F4 Disapplication: consideration of disapplication below

146. In the exceptional circumstances of the present case it is a striking feature that:

(1) considerable work had been done by Mr Page in preparing a budget dealing with all but the last two phases in Precedent H, preparing Precedent R commenting on RGC's budgets in relation to those phases, responding to RGC's Precedent R dealing with those phases, and negotiating agreed costs for all those phases;

(2) the effect, as regards Mr Page, of the master's unmodified application of the CPR 3.14 sanction was that Mr Page's failure to do what he should have done in relation to two later phases deprived Mr Page of any credit whatever for all the work he had done on the earlier phases; and

(3) by contrast, the effect on RGC was not only (because its original budget included figures for the last two phases) to give RGC the benefit of the master's determination of budget costs for the final two phases, but also to give RGC the benefit of the agreement that had been reached on all but the last two phases.

147. At the hearing below Mr Mehta, in his first and second breach/relief observations, referred both to the reasons for Mr Page's approach of budgeting for the period up to a proposed second CMC, and to the fact that agreed figures had been produced as a result of canvassing the matter with RGC. As it seems to me, those matters, and the three features identified above, would in any event have been plain to the master from what had been filed and from the agreed documents handed to him at the start of the hearing.
148. The approach of the master in his fourth breach/relief observation was that only if there had been a dispensation order [i.e. an order made under the saving provision] could solicitors assume that they were entitled to file a budget which did not comply with the rules and the practice direction. That is right, and (for the reasons given in section E above) in the absence of an earlier dispensation order the sanction under CPR 3.14 took effect. There was, however, no reference to the possibility of a dispensation order being made at the hearing.
149. Mr Mehta, in his second breach/relief reply, referred to what had been canvassed between the parties. The master interrupted him, stating in his fifth breach/relief observation that he thought this irrelevant. If the master had in mind the need to consider the overriding objective in the context of the saving provision, it is difficult to see how he could have dismissed this consideration as "irrelevant". What the master then contemplated in his sixth and seventh breach/ relief observations was that there could or would be an application for relief from sanction. This did not, however, take account of the point made in Mitchell that an application for relief assumes that the sanction was in principle appropriate.
150. RGC accepted that there was a discretion to disapply the sanction in CPR 3.14. It submitted that, applying the principles described in section B5.3 above, the appeal court should assume that the master knew he had a discretion. The appeal court should accordingly hold, submitted RGC, that in the absence of any submission to the master asking him to exercise that discretion the master was entitled to decide not to exercise it.
151. The difficulty with that submission is that it is inconsistent with what happened at the hearing below. I pay particular regard to what was said by Lord Hoffmann in Piglowska. In the present case, however, it is not a "narrow textual analysis" which leads to the conclusion that the master misdirected himself. It was the master who, without prompting, contemplated that there could or would be an application for relief from sanction. This was in circumstances where the master had already made reference to the saving provision in CPR 3.14, but only as a provision which could have been utilised prior to the hearing in order to file an interim budget of the kind which Mr Page had filed. In these circumstances it is clear that the master simply did not apply his mind to the question whether the order to be made at the hearing should be anything other than an order imposing the CPR 3.14 sanction.
152. It was urged by RGC that the master should not "descend into the arena". However in circumstances where CPR 3.14 expressly states that the sanction is to apply unless "the court otherwise orders" it would be entirely appropriate for the court to pause, and canvas with the parties whether there is any reason for the court to make a different order. Doing so is certainly no less permissible than what the master actually did of his own motion when he repeatedly made reference to a possible application for relief.
153. In the circumstances described above, the approach taken by the master did not involve any such "multifactorial" evaluation of degree as was contemplated in Lakhani. Nor was it a case management decision of the kind identified in Mannion.
154. In the email sent on 27 March 2018 RGC referred to the decision of the Court of Appeal in Marcan Shipping (London) Ltd v Kefalas [2007] EWCA Civ 463; [2007] 1 WLR 1864 concerning the jurisdiction of the court to grant relief from sanction of its own initiative, despite the requirements in CPR 3.9 for there to be an application for relief supported by evidence. The decision in Marcan holds that the court can act on its own motion in that regard, but it is under no duty to do so and the party in default cannot complain if that party fails to take appropriate steps to protect that party's own interests.
155. The present case, as it seems to me, is to be distinguished from Marcan. The reason is that CPR 3.14 itself embodies the saving provision. Thus at the stage when the court becomes involved, and proposes to make a formal decision continuing to treat Mr Page as subject to the CPR 3.14 sanction, it is necessary for the court to consider whether the court should take a different course.
156. RGC submitted that the approach I have just described should not be adopted because it would "leave no entry point for CPR 3.9 where there has been a failure to file a budget", and because the preferable route was to leave the defaulting party to an application under CPR 3.9 rather than insisting that an unprepared legal representative should make submissions at the hearing in relation to exercise of the saving provision. I do not agree. As to the first point, what is stressed in Mitchell is that there are only very limited circumstances in which it would be appropriate for the court to grant relief under CPR 3.9. The "entry point" for CPR 3.9 is accordingly very narrow. The approach I have described above does not remove that possible entry point. I accept that it makes it less likely that such an "entry point" will either be needed or be available in many cases. If that is the result it seems to me to be entirely consistent with Mitchell.
157. The suggestion by RGC that the defaulting party might be better off if left to make an application for relief ignores the vital points stressed on behalf of Mr Page: at the stage of an application for relief, the court proceeds on the basis that the sanction applied by the earlier order was in accordance with the overriding objective. It may well be that if the court canvasses whether the saving provision should be exercised, then one or other party may make an application for an adjournment in order to deal with it. Any such application would fall to be dealt with in accordance with the overriding objective.
158. For these reasons I am satisfied that Mr Page's fundamental argument is sound, and that the master erred in law in the approach taken at the hearing.

F5 Disapplication: whether to order otherwise

159. It follows from my conclusions thus far that I must consider, in the light of the parties' submissions to me, whether I should make an order which disapplies the sanction under CPR 3.14 in whole or in part. Both sides agree that for this purpose I must adopt the structured approach set out in Denton.
160. The first Denton stage is to identify and assess the seriousness and significance of the failure to comply with the relevant rule. Here it is relevant to note that in ground of appeal 5 Mr Page identified what he said should have happened at the hearing in relation to the parts of his budget (and, he contended, RGC's budget) which were incomplete. This was that, "… the master should at most have directed that the parties serve supplemental costs budgets to address those phase, making provision for any further costs management to follow as necessary."
161. Oral submissions from Mr Page went further: it was suggested that it would have been possible to identify budget figures for trial, and for preparation for trial, "on the hoof". By contrast, RGC strongly contended that, by necessitating at least two and possibly more hearings rather than one, Mr Page's approach had undermined the very thing which the master had sought to achieve: directions to trial with no need for any further hearing in the meantime. It was, submitted RGC, an attempt by Mr Page to force an agreed position on the court.
162. In my view Mr Page's breach of the rules and the practice direction was moderately serious and moderately significant. The first point I would stress is that costs budgets should be prepared, and utilised, in order to assist the court when the court is making case management decisions. Mr Page wanted the court to make a case management decision under which directions to trial would proceed in two stages. If he were to persuade the court of this, it was in his own interests to prepare, as suggested in Questions & Answers, a full budget through to trial without a second case management conference. That could then be compared with an alternative budget which would, on his case, demonstrate the advantage of providing for a second case management conference with budgets for later costs to be looked at then.
163. While I am attracted by the submission that it could have been possible to remedy the deficiencies in Mr Page's budget "on the hoof", I do not consider that this significantly alters the seriousness and significance of what occurred. At the hearing Mr Metah did not try, and probably did not feel able, to take this course. In the circumstances it was inevitable that if Mr Page were to be given the benefit of budgeted figures for trial and preparation for trial then those aspects of the matter would have to go off for further consideration. However there had been a full discussion of the trial phase at the hearing. In the light of that discussion I consider that it would have been possible for Mr Page's proposed figures for the last two phases to be identified immediately after the hearing, discussed promptly with RGC and submitted, either as agreed or with the benefit of RGC's observations, for paper consideration by the master. Nevertheless I cannot conclude that Mr Page's breach was of minor seriousness or significance.
164. On the other hand, however, it was clear that the stance taken by Mr Page had not impeded the costs management process in relation to earlier phases. On the contrary, there had been service of budgets which complied what was required for those phases, and which had enabled the parties to negotiate and reach agreement on both the costs incurred and the costs to be incurred for those phases. In those circumstances I assess the breach on the part of Mr Page as having been of no more than moderate seriousness and significance.
165. The second Denton stage is to consider why the default occurred. As to this, I am satisfied that Mr Page's advisors genuinely considered that a second CMC was needed and mistakenly thought that in such circumstances it was appropriate to file a budget which left over the trial phase and preparation for trail phase for consideration later. The course adopted was wrong, but I do not consider that it was deliberately wrong. Moreover, the approach so far as case management was concerned was an approach which RGC was content to adopt. RGC was equally content first, that the court should be presented with agreed figures for phases up to and including a second case management conference, and second, that the court should be asked to defer subsequent costs management until the second case management conference. In these circumstances there was a culpable failure by Mr Page to complete the final parts of his budget. The culpability amounted to negligence, but it was not gross negligence.
166. At the third Denton stage the court must evaluate all the circumstances of the case so as to deal justly with the matter, including taking account of the need (a) for litigation to be conducted efficiently and at proportionate cost, and (b) to enforce compliance with rules, practice directions and orders. Looking at the matter in the round, it seems to me that there was a clear distinction between what happened in relation to the phases of trial and preparation for trial and what happened in relation to earlier phases. As regards the earlier phases, I return to the striking features I identified in section F4 above. Application of the CPR 3.14 sanction to all that had been done by way of work on those phases by Mr Page can, if a pause for reflection is taken, be seen on the face of it to be unjust: it would provide RGC, which had been in agreement with the course proposed by Mr Page, with the benefit of the give and take that had occurred in negotiations, while at the same time depriving Mr Page of almost everything. For that reason I am not persuaded by RGC's submissions that the present was a case that can be compared with Mitchell or Lakhini.
167. Turning to the crucially important considerations identified at (a) and (b) of CPR 3.9(1), application of the CPR 3.14 sanction to the phases of trial and trial preparation would have severe consequences for Mr Page. Those severe consequences, in my view, would be such as would fully serve the important considerations of encouraging efficiency, proportionality, and compliance.
168. On behalf of Mr Page forceful submissions were made that the sanction should be disapplied as regards the trial phase and the phase of preparation for trial. The key elements of those submissions, and my comments on them are:

(1) There had been substantial compliance with the requirements for the filing of costs budgets: I disagree, for in relation to the phases of trial and trial preparation there had been no compliance;

(2) There had been no ineptness or disregard of the rules, but rather a genuine professional judgment: I accept that there was a professional genuine judgment, but I cannot accept that there was a lack of ineptness, for to my mind the requirements in the rule and the practice direction were clear;

(3) The approach adopted had been agreed with RGC: in general terms this is true, but there had been no specific agreement on the part of RGC that it was within the rules for Mr Page to omit the later parts of his cost budget;

(4) RGC's budget was incomplete: I disagree, for the reasons given in section E4 above;

(5) Mr Page had no history of prior default: this is true, but I do not consider that it can be more than a makeweight factor.

169. Accordingly I am persuaded that the CPR 3.14 sanction should not be applied to those parts of the agreed budget as deal with the position up to the phases of trial and trial preparation, prior to the proposed "2^nd CMC/PTR". The consequence will be that they, and the corresponding phases in RGC's budgets, can and should accordingly be recorded as agreed. The suggested phase for "2^nd CMC/PTR" should not be recorded, as the master's case management directions do not permit any such phase. As regards the phases of trial and preparation for trial, however, I am not persuaded by Mr Page that it would be right to disapply the CPR 3.14 sanction. In my view it is necessary to apply that sanction to those phases in order to recognise the importance of the considerations identified at CPR 3.9(1)(a) and (b).
170. I am conscious that in Mitchell the Court of Appeal warned of dangers in a partial sanction. The present case, in that regard, seems to me to be exceptional. There is an unusually clear dividing line between the parts of the budget which were satisfactory and those which were not, and an equally clear dividing line between those consequences of a sanction which would in all the circumstances be unjust, and those which would not.
171. This approach is, to my mind, consistent with the two remaining authorities relied upon by RGC in its emails of 27 March and 20 April 2018:

(1) Kimathi v Foreign and Commonwealth Office [2018] EWHC 605 (QB) concerned a saving provision in a court order. The court there applied the same approach as has been adopted under CPR 32.10 where, subject to a saving provision, a witness may not be called to give oral evidence if no witness statement or witness summary has been served within the time specified by the court. Under that approach the question is not whether the sanction is of itself disproportionate or unjust, but whether the sanction should be disapplied in the particular case, a matter to be determined in accordance with CPR 3.9. This is, in essence, the approach described in paragraph 32 of Mitchell: see section B4.5 above.

(2) Ali v Channel 5 Broadcast Ltd [2018] EWHC 480 (Ch) concerned CPR 3.14 in the context of a failure to file a costs budget in December 2016. In April 2018 it was suggested "somewhat tentatively" that the court should disapply the sanction by reference to the saving provision. As was observed on behalf of Mr Page, in such circumstances, it was hardly surprising that the court concluded that there was no basis for an order disapplying the sanction in CPR 3.14.

G. The concession and relief against sanction

172. The conclusion I have reached in section F above has the consequence that Mr Page would not need to rely upon the concession made by RGC. Accordingly I need say no more about the concession in the present judgment.
173. I turn to the application for relief. That application is purportedly made under CPR 3.10. The first point to note is that CPR 3.10 is a general provision which must give way to the more specific provision in CPR 3.9. Accordingly I treat the application for relief as made under CPR 3.9, supported in accordance with CPR 3.9(2) by Mr Mehta's witness statement: see sections A and D2 above.
174. I can deal with the merits of the application shortly. There is, as it seems to me, no scope for any suggestion that Mr Page could benefit from his application for relief against sanction once that sanction has been confined so as only to apply to the phases of trial and trial preparation: see the reasons given in section F above for maintaining the CPR 3.14 sanction in relation to those phases.

H. Conclusion

175. I ask counsel to seek to agree on appropriate consequential orders on the basis that:

(1) I allow the appeal.

(2) The words of various parts of the master's order will need to be appropriately modified. In that regard I envisage (1) removal, in the second recital, of the words "and the Claimant shall" onwards; and (2) removal in its entirety of the last recital "Upon it being noted .. not agreed:".

(3) I also envisage varying paragraphs 1.1 and 1.2. The variation will, as regards all matters other than "2^nd CMC/PTR", record:

(a) that the budgeted costs of each side are agreed as set out in the documents submitted to the court at the hearing on 5 December 2017,

(b) that RGC's costs for the phases of trial preparation and trial are approved in specified amounts [which are to be taken from the approved budget attached to the master's order], and

(c) that Mr Page's costs for those phases are limited to any applicable court fees for those phases.