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

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT

		Royal Courts of Justice Rolls Building, Fetter Lane, London, EC4A 1NL
		28 November 2017

The Hon. Mr Justice Coulson :

1. Following the decision in Mitchell v News Group Newspapers Limited [2013] EWCA Civ 1537, there was a rash of applications in which one party sought to take advantage of the other's failure to serve a cost budget within the prescribed time. Following the decision in Denton v TH White Limited and Others [2014] EWCA Civ 906, those applications, and others like them based on minor procedural glitches, dried to a trickle. However, in recent times, such applications have begun to increase again. The dispute which arose at the CMC on 24 November 2017 was therefore all too typical, as was the result. I said that I would produce a written judgment on the issue pour encourager les autres.
2. On 20 September 2017, the TCC court office wrote to the parties to identify 24 November 2017 as the date of the CMC. The letter expressly required the parties "to file and exchange costs budgets not less than 7 days before the CMC." That was in contrast to the current version of CPR 3.13, which provides that:

"(1) Unless the court otherwise orders, all parties…must file and exchange budgets…not later than 21 days before the first case management conference."

3. The claimants' solicitor served their costs budget on 2 November 2017, in accordance with r.3.13. The defendant's solicitor relied on the letter from the court office (and there is a witness statement to that effect), and therefore did not serve his costs budget until 16 November 2017. Although there was a good deal of correspondence about the CMC between the solicitors during the interim, at no point did the claimants' solicitor ever complain that he was waiting for the defendant's costs budget. The matter was not raised at all.
4. However, following service of the defendant's costs budget on 16 November 2017, the claimants' solicitor then wrote to say that the budget should have been provided 14 days earlier. The defendant's solicitor explained his position in the letter of 16 November 2017, but warned that, if the defendant was forced to make an application to the court to address the alleged delay, then he would seek his associated costs. Despite that, the claimant's solicitor maintained his stance, saying that there had been a "gross delay" in the service of the defendant's costs budget. On the same day, in a lengthy letter to the TCC court office, the claimant's solicitor maintained expressly that, as a result of these events, "the defendant should be treated as having filed a budget comprising only the applicable court fees, in compliance with CPR 3.14" (ie the result in Mitchell).
5. As a result of this uncompromising stance, the defendant's solicitor was obliged to make a formal application for relief from sanctions, supported by a witness statement. Such an application was required if the defendant's primary position, that he was entitled to rely on the letter of 20^th September from the court office, was wrong. The matter was then debated at the CMC.
6. The first issue for me to decide is whether or not the defendant was required to make an application for relief from sanctions. In my view, he was not. Rule 3.13(1) is clear, that the 21 day period applies, "unless the court otherwise orders". I consider that the letter from the court office of 20 September 2017 amounted to the court 'ordering otherwise'. It stipulated when the costs budget should be provided. The defendant was quite entitled to conclude that the court had 'ordered otherwise' than r.3.13, and to rely on the content of the letter.
7. It is immaterial that, on further consideration, it might have occurred to the defendant's solicitor that the letter may have contained an error, and was referring to the old r.3.13, which stipulated 7, not 21, days. A busy litigation solicitor is entitled simply to rely on the date specified in writing by the court office, rather than embarking on an investigation into whether or not the letter contained an error.
8. At paragraph 24 of his skeleton argument, Mr Liddell argued that, if this had been a genuine variation to r.3.13, the court would have worded the letter differently. In my view that is a pedantic point which again ignores the reality of litigation and, indeed, the reality of court administration. Court offices will often word letters in a way that a judge would not, but a judge cannot check, let alone sign off, every letter that goes out.
9. On the basis of my finding that the defendant complied with r.3.13 (because it complied with the letter), there is no need for the application for relief from sanctions. But if I am wrong about my primary finding, and the defendant was required to make an application for relief from sanctions, then I am in no doubt that, under the three stage test in Denton, that application should be allowed.
10. The first question is whether the breach was serious and significant. In my view it was not. No hearing has been lost and no delay to the costs budget process has in fact occurred. Once the error had been pointed out to the defendant's solicitor, they took immediate steps to discuss the costs budget, so as to ensure that the delay had no consequence. The costs budget process was dealt with at the CMC and, by the end, the estimated figures were agreed.
11. Mr Liddell referred me to the case of Mott v Long and Long [2017] 4 Costs LR 817, a recent decision of HHJ David Grant. On the facts of that case, a delay of 10 days was thought to be serious and certainly significant. But the test is fact-sensitive and, for the reasons that I have given, I do not consider that the delay in this case can be so described.
12. The second stage is whether or not there was a good reason for the delay. In my view, in the present case, there was the best possible reason for the delay. Even if the letter from the court was not an order varying the terms of r.3.13, the defendant was still entitled reasonably to rely on the letter, and therefore entitled to plan its preparation for the CMC by reference to the timetable which the letter contained.
13. The third stage is whether, in all the circumstances, it is just and reasonable to grant relief. Plainly in these circumstances it is. There was no deliberate breach. There was at worst an inadvertent breach because there was reliance on a letter from the court office which, on this assumption, contained an error. In addition, the delays have caused no prejudice to the claimants, whereas there would be considerable prejudice to the defendant if he was not able to rely on his costs budget.
14. Accordingly, if it had been necessary for the defendant to apply for relief from sanctions, I would have granted such relief.
15. For all these reasons, therefore, I have concluded that the claimant's stance in the pre-CMC correspondence was erroneous. The defendant's solicitor properly warned the claimants that, unless they changed that stance, he would have to make the application and would seek his costs of so doing. That did not change the claimant's approach. Thus there had to be a debate, which the defendant won. In those circumstances, costs must follow the event, and the claimants must pay the defendant's costs of and occasioned by the unnecessary application, in an amount which I have summarily assessed at £1,300.
16. It is, of course, extremely important, post-Mitchell and post-Denton, for the parties to civil litigation to ensure that they comply with the CPR. Courts will be far less forgiving of non-compliance than they ever used to be. But that tougher approach must not be abused in the way that occurred here. Parties need to consider carefully whether the alleged breach of the rules is, on analysis, any such thing and, even if it is, whether it is proportionate and appropriate to require or oppose an application for relief from sanctions in all the circumstances of the case.