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Procedure: Costs budgets – Looking out for the sanctions trip wire

Under the new cost budgeting regime parties are required to file and serve budgets by a date specified by the Court or, in the absence of a date, at least 7 days before the first case management conference (CPR 3.13).

Where this rule is breached, the defaulting party is deemed to have filed a budget comprising only the applicable court fees (CPR 3.14), unless relief from sanctions is granted.

In The Governor & Company of the Bank of Ireland & anr v Philip Pank Partnership [2014] EWHC 2844 (TCC) the question was whether a budget provided in time, but omitting the prescribed wording of the statement of truth as set out in PD 22, breached CPR 3.13.

Stuart-Smith J held that there had been no breach of CPR 3.13 by the Claimant. The cost budget had been provided timeously. The sanction imposed by CPR 3.14 was in respect of a failure to provide a budget, not a failure to comply with all the requirements of the relevant practice direction. Technically, the budget was subject to an irregularity, but the failure to comply with the full requirements did not render it a nullity. Accordingly, CPR 3.14 did not apply.

If CPR 3.14 had applied, Stuart-Smith J was robust in his dictum that relief would have been granted. The decision in Mitchell highlighted that the Court would usually grant relief where a default was trivial or where there had been a failure in form rather than substance. Due to the importance of statements of truth, its absence was not “trivial”. Yet, on the facts of the case, the insertion in the budget of the phrase “Statement of Truth” instead of the prescribed wording was a failure in form rather than substance.

As Stuart-Smith J wisely reminded the parties, in citing Lord Dyson MR’s 18th Lecture in the Jackson Implementation Programme, “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 use by unscrupulous parties.”

Elizabeth Dwomoh / 1st Mar 2014


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