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

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		12th February 2014

Mr Justice Stuart-Smith:

1. On 24 January 2014, 7 days before the original date for this CMC, the parties exchanged costs budgets. The sums included in the Claimant's costs budget are not disputed as such but the Defendant takes a point on the form of the budget that was exchanged. The Claimant adopted Precedent H, but on the first page failed to include a full Statement of Truth. Instead, the document had the words "[Statement of Truth]" immediately above the place for signature and dating by the Claimant's legal representative. The document was signed and dated by a partner in the Claimant's firm of solicitors. Since then, a further copy of the Claimant's budget has been served which is in identical form save that a full Statement of Truth is included.
2. The Defendant submits that, on these facts, the Claimant failed to file and exchange a costs budget on 24 January 2014. The point was first taken in the evening of Monday 10 February 2014, 17 days after the budgets had been exchanged and one clear day before today's CMC. In response, the Claimant issued an application applying for relief from sanctions if the Court took the view that the Claimant had not filed and exchanged a costs budget on 24 January. The application is supported by a witness statement from the solicitor concerned who explains that, contrary to his normal practice, he had this costs budget prepared by external draftsmen who assured him that it was ready to sign. Acting on that assurance he failed to notice that the document did not include the full Statement of Truth. He says, and I readily accept, that when signing and dating the document his intention was to signify that to the best of his knowledge the budget was true and accurate.
3. CPR 3.13 and 3.14 provide:

"3.13 Unless the court otherwise orders, all parties except litigants in person must file and exchange budgets as required by the rules or as the court otherwise directs. Each party must do so by the date specified in the notice served under rule 26.3(1) or, if no such date is specified, seven days before the first case management conference.

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."

4. PD3E deals with the required format in the following terms:

"Budget format

1. Unless the court otherwise orders, a budget must be in the form of Precedent H annexed to this Practice Direction……A budget must be dated and verified by a statement of truth signed by a senior legal representative of the party……
(The wording for a statement of truth verifying a budget is set out in Practice Direction 22.)"

5. PD 22 specifies the terms to be adopted at [2.2A]:

"The form of the statement of truth verifying a costs budget should be as follows:

'The costs stated to have been incurred do not exceed the costs which my client is liable to pay in respect of such work. The future costs stated in this budget are a proper estimate of the reasonable and proportionate costs which my client will incur in this litigation.'"

6. Counsel pointed out that the document as signed on 24 January 2014 was in precisely the same format as the version of Precedent H set out on page 23 of the October 2013 Supplement to the White Book. In order to incorporate a full and compliant Statement of Truth the standard template has to be altered by deleting the words in square brackets and inserting the prescribed wording. The solicitor's evidence leads inexorably to the conclusion that his firm would make the alterations when preparing a costs budget in-house, but that the external costs draftsmen to whom he went in this case did not do so. Apparently the problem that has arisen is not unique to this case.
7. The Defendant's submissions may be shortly summarised. The original budget did not have a statement of truth. Therefore the Claimant is in breach of CPR 3.13. Therefore the Claimant requires relief from the sanction otherwise imposed by CPR 3.14, and CPR 3.9 applies. There is no reasonable excuse for the failure and therefore there should be no relief from sanction. Mr Quiney, who argued the issue economically and as persuasively as it is possible to imagine, points to the importance of Statements of Truth. He submits that their importance is pervasive in current procedure, featuring in the requirements for Statements of Case and witness statements as well as costs budgets.
8. Despite Mr Quiney's submissions, in my judgment these submissions have no merit, technical or otherwise.
9. Technically, I do not accept the first step in the Defendant's argument. CPR 3.13 requires that parties must file and exchange budgets "as required by the rules or as the court otherwise directs." CPR 3.14 provides for a sanction in the event that a party "fails to provide a budget" but does not include the additional words "complying in all respects with the formal requirements laid down by PD 3E" or any other words to similar effect. There is nothing in the rules or practice directions which requires any and every failure to comply with the formal requirements for budgets as rendering the budget a nullity, as opposed to being one which is subject to an irregularity. The logical consequence of the Defendant's argument would be that any failure to comply with the form of Precedent H or PD 22 would render the filing of a budget a complete nullity. It would, presumably, apply if the prescribed form for verifying a costs budget had been followed generally but words had been omitted, mis-spelt or muddled up; or even if the order of the two sentences had been reversed.
10. Such a conclusion would, in my judgment, serve only to bring the rules of procedure and the law generally into disrepute. Fortunately, it is not required or even permitted by the terms of the rules to which I have referred. What has happened here is that the Claimant has filed and exchanged a costs budget on time; but the budget suffered from an irregularity.
11. The importance of Statements of Truth must not be underestimated; but it varies depending on context. Thus a Statement of Case is only converted from being a series of allegations into a document upon which a party may rely as evidence by the attachment of a Statement of Truth. If a witness statement were served which was entire and complete save for a Statement of Truth, the Court might not permit it to be used in the absence of the witness; but it might well permit the evidence to be given upon the witness affirming the truth of the statement. With costs budgets, the purpose is that the solicitor should effectively certify the reasonableness of the budget. While I do not underestimate the importance of Statements of Truth in the scheme for the provision of costs budgets or elsewhere, the notion that a document which includes the words "Statement of Truth" and is signed by a partner in the firm of solicitors is a complete nullity seems to me to be quite unsustainable. In argument, Mr Quiney accepted that a recipient of a budget in this form would understand it was a costs budget and that these were the figures that the solicitor contended should be chargeable. He was realistic and right to accept that was so.
12. Since I do not accept that this is a case where CPR 3.14 applies, it follows that it is unnecessary to consider whether relief from sanction should be granted. However, in case I were wrong in my first conclusion, I should make clear that I would grant relief if it were necessary to do so.
13. Two citations may be regarded as complementary when considering the new and more rigorous application of CPR 3.9. The first is the passage from Mitchell in the Court of Appeal at [40-41], a passage that is already so well known that it is not necessary to set it out again here. The guidance includes the following points of particular relevance for this case. First, if the non-compliance can properly be regarded as trivial, the court will usually grant relief; and, second, relief will usually be granted where there has been a failure of form rather than substance.
14. The second citation is from Lord Dyson MR's 18^th Lecture in the Jackson Implementation Programme, which is set out in the notes in the White Book, where he said:

"Relief against sanctions is still available if the circumstances require it. The court's new no-nonsense approach does not make compliance an end in itself which is superior to doing justice in any case: it has not changed the CPR to trip wires for the unwary or incompetent, nor turned them into weapons for the unwary or incompetent, nor turned them into weapons for use by unscrupulous parties."

15. As I have said, statements of truth have an important role in the scheme for costs budgeting. It is therefore inappropriate to characterise the absence of the statement of truth as "trivial". However, on the facts of this case, the inclusion of the words "Statement of Truth" and the absence of the wording prescribed by PD 22 is a failure of form rather than of substance: there can have been no reasonable doubt in the Defendant's mind that the intention of the signing partner was to certify the costs as required by Precedent H but that he had made a mistake in the form of the document. As such, this case is far removed from the failure to file and exchange a costs budget at all and no sensible reason has been advanced for not following the usual course in accordance with the guidance in Mitchell to which I have referred. Particularly in the light of page 23 of the October Supplement, what happened here was a trip for the unwary as referred to in Lord Dyson MR's lecture.
16. The Defendant's submission is therefore rejected. The Claimant did not fail to file and exchange a costs budget on 24 January 2014. It filed and exchanged a budget that was subject to an irregularity that has since been rectified. No question of relief from sanctions arises. If the taking of this issue serves to alert others to the need to change the form of Precedent H from that set out in the Supplement, some useful purpose will have been served.