England and Wales High Court (Technology and Construction Court) Decisions

IN THE BIRMINGHAM COUNTY COURT
TECHNOLOGY & CONSTRUCTION COURT

		Civil Justice Centre Bull Street Birmingham
		7th May 2014

1. JUDGE GRANT: This is the adjourned case management conference and also the cost management hearing in this matter. As I shall explain in a little more detail below, it appears that the claimant was two days late in filing its cost budget before the initial hearing, so that instead of having been served seven clear days before that hearing, it was in fact served five clear days before that hearing.
2. The claimant is represented by Mr Warner of counsel, and the defendant is represented by Mr Whitfield of counsel, as on the previous occasion. On that occasion, 18^th March 2014, towards the end of that hearing when I turned to consider the issue of costs management, Mr Whitfield informed me that he had only noticed on his way to court that day that it appeared that the claimant might have been two days late in filing and serving its costs budget. However, and understandably, in those circumstances Mr Whitfield had not been able to take instructions from those instructing him in respect of this aspect of the case.
3. It was in those circumstances that I made the orders in paragraphs 9 and 10 as follows; namely, that by 25^th March the defendant's solicitors were to inform the claimant's solicitors whether they intended to take the point that the claimant's costs budget was apparently served two days late, and if the defendant's solicitors did inform the claimant's solicitors that the point was being taken, then any application for relief from sanction should be filed and served by 1^st April 2014.
4. In the interim there has been some debate between the parties whether it was appropriate for the defendant to state initially whether or not it was going to take that point, rather than for the claimant first, and in any event (as the party apparently in breach), to make an application for relief from sanctions. As it happens, the claimant has now its application for relief from sanctions, which is dated 2^nd May 2014. No point is taken by the defendant that such application was made later than the date specified in paragraph 10 of the order of 18^th March 2014. Were it necessary for me to have done so, I would have granted the claimant an extension of time within which to make such an application.
5. The background to the case is as follows; as stated in the preamble to the order of 18^th March 2014, the gist of the action relates to whether the defendant has failed to comply with or to implement the expert determination, in the manner alleged in paragraph 15 of the amended particulars of claim. The case summary sets out the position in rather more detail as follows:

"1. The parties entered into an agreement for lease on 5^th March 2010 which included provision for the construction of hotel premises at Pegasus Business Park at East Midlands Airport. The agreement for lease was subsequently amended … and there was a variation agreement dated 25^th October 2011.

2. A dispute arose between the parties in respect of the works under the agreement for lease. The issues in dispute, which remain relevant to these proceedings are

(a) the provision of a mobile phone signal in the main public areas of the building and in the guest rooms in accordance with paragraph 1.1 of the schedule to the agreement to vary the agreement for lease …; and

(b) the paint finish in the hotel."

Mr Warner has reminded me that there is in fact a third area of dispute conveniently referred to as the 'Wheatcroft Management Suite issue' which is the subject of continuing discussion between the parties.

6. To return to the case summary:

"3. In accordance with clause 22 of the agreement for lease, the parties referred the disputed matters, along with others, for determination by a member of the RICS, Mr Don Smith, FRICS FCArb.

4. Following submissions by the parties, Mr Smith delivered his determination dated 4^th June 2013. The determination provided …

(a) that the first defendant had failed to provide a mobile phone signal and should forthwith take all necessary measures to provide such a signal; and

(b) that the painting of the hotel was inadequate in that the vinyl matt finish used on the walls in the corridors and public areas was not fit for purpose, and that the first defendant was liable to pay the claimant the proven or reasonable costs incurred up to the date of the determination of repainting the corridors and public areas ...

5. The claimant alleges that, notwithstanding the determination by Mr Smith, the defendant had failed or neglected to carry out the above matters.

6. In response the defendant asserts that it has taken all reasonable steps in connection with the provision of the mobile phone signal but that it has not been implemented due to delays by the contractors they have approached, and the redecoration quotes go beyond the scope of the determination.

7. There are further issues outstanding between the parties relating to the building management system controllers and the air handling unit serving the Wheatcroft Suite."

That is the matter to which I referred just a moment or two ago.

7. Since the first case management conference, the parties have now compromised the second of the issues identified in the case summary, namely the issue relating to the paint finish in the hotel, and that issue is the subject of a draft consent order dated 30^th April 2014.
8. The claimant's first point in the context of the cost budgets and cost management is that it was not in fact in breach of CPR rules 3.12 to 3.18 because it had filed its case management information sheet ("CMIS") in proper time before the first case management conference. At the bottom of page 3 of the CMIS the parties are required to give an estimate of their incurred and overall costs. Here both parties filed and served CMIS on 14^th March 2014, which was the date those CMIS were required to be filed and served before the first case management conference: see the notice of the case management conference at page 29 of the application bundle.
9. Mr Warner developed this point in the course of his oral submissions this morning, pointing to the distinction that can be drawn between the requirement to provide estimates of costs through the medium of filing a CMIS on the one hand, and the requirement to serve a costs budget on the other hand. The thrust of Mr Warner's point is that it was reasonable for those instructing him to construe the notice of case management conference to mean that the parties were required to file both their CMIS and their costs budget at the same time, namely the time stated in the notice, which in this case was by 4pm on 14^th March 2014. That would have been 3 clear days before the first management conference rather than the period of 7 clear days provided by CPR rule 3.13. However, in making those submissions Mr Warner accepted that this point is not made explicitly on the face of the notice of case management conference, and as a result the notice does not contain an express statement to the effect that the date for filing a CMIS is also to be taken as the date for filing and/or serving a costs budget.
10. In paragraph 11 of his written submissions on behalf of the defendant, Mr Whitfield submits as follows:

"The application for relief appears to suggest that the claimant is not in default of rule 3.13 because it completed section G of the CMIS concerning costs. This cannot be right. Section G of the CMIS simply seeks estimates of costs incurred and costs to be incurred. It has no bearing on the requirement to file the costs budget under CPR rule 3.13. The order of 27^th January 2014 did not displace the costs management provisions of Rule 3.12."

I should observe straight away that no order was in fact made on 27^th January 2014; instead that was the date of the standard form of notice which is sent out by the court office to the parties giving notice of the data of a forthcoming case management conference. But putting that minor point to one side, I generally accept Mr Whitfield's submissions in this regard. In my judgment, completion of a CMIS does not in any way relieve a party from its separate obligations to file and/or serve a costs budget in accordance with the provisions of CPR rules 3.12 to 3.18.

11. I therefore turn to consider the claimant's substantive application for relief from sanction. The claimant's primary submission here is that its breach was trivial. The defendant does not advance any positive case in this respect. In paragraph 15 of his written submissions Mr Whitfield submits as follows:

"In this application the claimant refers to the judgment … in Wain v Gloucester CC [2014] EWHC 1274 TCC In that case it was held that a delay of one day in the context of a time period of seven days was trivial. The claimant here submits that a delay of two days is also trivial. This is self-evidently a matter for the court to decide."

In the course of his oral submissions today, Mr Whitfield confirmed that that indeed was the defendant's position.

12. As is now well known, the relevant principles were set out by the Court of Appeal in Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537 in which the Court of Appeal gave guidance as regards the relevant principles that were engaged by the new rules. In paragraph 40 of his judgment the Master of the Rolls held as follows:

"It will usually be appropriate to start by considering the nature of the non-compliance with the relevant rule, practice direction or court order. If this can properly be regarded as trivial, the court will usually grant relief

provided that an application is made promptly. The principle 'de minimis non curat lex' (the law is not concerned with trivial things) applies here as it applies in most areas of the law. Thus, the court will usually grant relief if there has been no more than an insignificant failure to comply with an order: for example, where there has been a failure of form rather than substance; or where the party has narrowly missed the deadline imposed by the order, but has otherwise fully complied with its terms."

13. On 2^nd April 2014 I had to consider those principles in Wain v Gloucestershire County Council & Others [2014] EWHC 1274 (TCC). I held as follows:

"6. The Court of Appeal did not define what is meant by the adjective 'trivial' in Mitchell. It may well be said that there was no need to do so, the word having a plain meaning. In his judgment in Aldington & 133 Others v Els International Lawyers LLP [2013] EWHC B29, HH Judge Oliver Jones QC, sitting as a judge of the High Court at the Birmingham Civil Justice Centre, drew attention to the interrelation between the nature of the non-compliance which was engaged, and the consequences of non-compliance: see paragraph 32 of his judgment."

7. It is perhaps also appropriate to refer to a short part of the paper delivered by Lord Justice Jackson at the recent conference held on 21^st March 2014 by the Civil Justice Council on the impact of the Jackson reforms. In paragraph 3.9 of that paper, having referred to the decision of the Court of Appeal in Mitchell, Jackson LJ wrote: 'Nevertheless, parties should not be allowed to exploit trivial or insignificant breaches by their opponents, as Leggatt J stated in Summit Navigation Ltd & others v Generali Romania Asigurare Reasigurare SA (2014) EWHC 398 (Comm)."

14. … a good deal depends on the context. Much depends on the particular circumstances of the case, and in particular whether the parties are able to deal with the material contained in the costs budgets on the day in question, and whether or not any disruption to the court's timetable has been or will be occasioned by such breach."

14. Matters have since moved on, and the Court of Appeal has now delivered its judgment in Chartwell Estate Agents Ltd v Fergies Properties SA & another [2014] EWCA Civ 506, which concerned a failure to serve witness statements within the time specified by a previous court order. In paragraph 34 of his judgment, Davis LJ summarised the guidance which had been given in Mitchell as follows:

"(i) It is necessary to consider whether the nature of the non-compliance is such that it can be regarded as trivial;

(ii) If the non-compliance is not trivial, it is necessary to consider whether there is a good reason explaining the non-compliance;

(iii) The promptness (or otherwise) of an application to court for an extension of time and relief from sanction for these purposes will be material;

(iv) If the non-compliance is not trivial and if there is no good reason for the non-compliance then the 'expectation' is that the sanction will apply. The court has power to grant relief but, if the non-compliance is not trivial and if there is no good reason for it, the expectation is that the factors mentioned in (a) and (b) of the rule will 'usually trump other circumstances'."

15. On the facts of that case, the Court of Appeal upheld the finding of the first instance judge that the relevant non-compliance could not be classified as trivial and, further, that the defaulting party had not established any good reason to explain its non-compliance: see paragraph 47 of Davis LJ's judgment. Nevertheless, in the particular circumstances of that case, the Court of Appeal held that the first instance judge had been entitled to depart from the expectation which otherwise would ordinarily arise: see paragraph 57 of Davis LJ's judgment. In paragraph 49 Davis LJ held:

"The judge nevertheless was still required, by the provisions of CPR 3.9, to consider "'all the circumstances of the case' so as to enable him to deal with the application justly," and in paragraph 50 he went on to hold that "Those circumstances included the important fact that the trial date would not be lost if relief were granted and a fair trial could still be had; and the fact that no significant extra cost would be occasioned if relief were granted."

I venture to suggest that the point I made in paragraph 14 of my judgment in Wain, namely that much depends on the particular circumstances of the case, is consistent with those paragraphs of Davis LJ's judgment in Chartwell Estate Agents.

16. Having identified the relevant principles which are engaged, I therefore turn to consider the particular circumstances of the present case. Adopting the approach that I used in Wain I have come to the conclusion that this breach is, when properly analysed and having regard to all the circumstances of the case, a trivial breach. I do so for the following reasons:

(1) The delay here was of two days, in the context of a time period or time frame of seven days.

(2) As in Wain, that seven day period, namely for filing or serving a costs budget, is usefully to be compared with the three day period for service of an application notice before its hearing (see CPR rule 23.71).

(3) Again as in Wain, on behalf of the defendant Mr Whitfield has made it entirely clear in the course of his oral submissions that the defendant has not suffered any prejudice by reason of the delay of two days.

(4) Again as in Wain, the parties are each perfectly able to deal with the topic of costs management at today's adjourned hearing, notwithstanding the fact that the claimant initially served its costs budget with only five clear days rather than seven clear days before the first initial hearing.

(5) Again as in Wain, and unlike the position which obtained in Mitchell, in this case no or no material disruption to the court's timetable has been caused by the delay on the part of the claimant in filing and/or serving its costs budget. The only additional burden placed upon the court has been the need to take some time during today's time to consider the point and also for me again to spend some time, both before the commencement of this hearing and during the interim period, to prepare this ruling.

(6) As I have already noted, I refer to and rely on what the Court of Appeal initially stated in paragraph 40 of its judgment in Mitchell, and also on what the Court of Appeal has now stated in its more recent decision in Chartwell Estate Agents. Having regard to both those decisions, I find that the claimant's initial failure in missing by two days the requirement to file and serve a costs budget seven clear days before the first hearing of a case management conference was, or has become - in the context of the facts of this particular case - no more than an insignificant failure. That is because the court is considering the parties' costs budgets not at the first, but at the second hearing of the case management conference; that additional passage of time (of some 7 weeks) somewhat dilutes any impact or effect of the initial delay.

(7) Again as in Wain, the reference by the Master of the Rolls to a situation where there has been no more than an insignificant failure is to be borne in mind. The introduction to and the reference to the concept of "significance" in my judgment, continues to resonate with the point made above, namely the relevance of the inter-relation between the breach, i.e., the non-compliance, on the one hand, and its consequences, on the other hand. Such reference to the concept of "significance" would also appear to be consistent with Jackson LJ's short concurring judgement in Fred Perry (Holdings) Ltd v Brand's Plaza Trading Ltd [2012] EWCA Civ 224.

17. I therefore, find the non-compliance or breach to be trivial and/or insignificant and/or inconsequential. In those circumstances, as in Wain, I am thus able to "otherwise order" pursuant to CPR rule 3.14.
18. However, again as in Wain, if I am wrong in construing or considering the non-compliance or breach as being trivial and/or insignificant and/or inconsequential, it would be right to observe that perhaps the only or main point advanced by Mr Warner as constituting a good reason for the breach was the understanding on the part of those instructing him as to the nature or effect of the notice of the case management conference which ante-dated the hearing of the first case management conference. However, as I have already indicated, in my judgment that does not of itself constitute a good reason for the breach.
19. Notwithstanding that, I have come to the conclusion that the claimant will be entitled to rely upon its costs budget as served and filed. Again, because of the continuing current general interest in these matters, evolving as they are, I will direct that a transcript of this ruling be made available to the parties at public expense.
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