Don’t get caught out with a ‘partial budget’.

A very clear warning was provided in the case of Mr Justyn James Page v RGC Restaurants Limited on the sanctions to be imposed for filing a ‘partial’ costs budget.

The claim

The Claimant filed a budget titled ‘Interim Costs Budget of the Claimant dated 30/10/2017’. Costs for the trial preparation and trial phases were not budgeted as it was agreed between the parties that all directions and costs budget figures would be for phases up to and including a proposed second CMC or PTR, with the subsequent directions and costs budget figures to be left until that stage.

The Claimant asserted within the budget that a second CMC would take place in approx. six months when directions for further experts and trial would be given and that it was too soon to budget to trial. It was also asserted that it was too soon to budget on quantum as expert evidence was in the process of being obtained.

Negotiations took place and directions and budgets were agreed between the parties. At the CMC, the Master took issue with the fact that the parties had not budgeted through to trial on a ‘relatively straight forward’ case. The Master provided a very clear warning, stating ‘what is my concern is the assumption that just 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 of action’.

In light of the above, the Master considered that the CPR3.14 sanction applied in light of the fact that the Claimant did not comply with CPR, PD 3E. The Claimant was therefore treated as having filed a budget comprising of Court fees only.

The appeal

The above decision was appealed by the Claimant on a number of grounds, this included the fact CPR3.14 had wrongly been applied because a budget had been served and that it was irrational for the Master to conclude that the Claimant had failed, within the meaning of CPR3.14, to file a costs budget simply because the budget was incomplete. The Claimant also appealed on the basis that CPR3.15 agreement trumps CPR3.14.

The issues to be determined on appeal were as follows:-

  • Whether and to what extent the Claimant was precluded from challenging the Master’s decision by reference to matters not raised below.
  • Whether the Master was correct to hold that the Claimant was in breach of CPR3.14.
  • Whether the Master was entitled not to disapply the CPR3.14 sanction at the hearing.
  • Whether the Claimant should be granted relief from sanctions, and if so, whether this should be full or partial relief.

The Judgment (a link to which is above) is particularly lengthy but provides a detailed analysis by Mr Justice Walker on the above issues. It is worth a read for anyone who deals with litigation and costs budgeting.

In summary, Mr Justice Walker rejected the argument that the Claimant had filed a costs budget and considered that a partially complete budget could not be construed as a budget within the meaning of the rules.

Mr Justice Walker considered and applied the test set out in Denton v TH White Ltd [2014] EWCA Civ 906 in order to consider whether the Claimant should be awarded relief from sanctions and concluded the following:-

  • First stage test – seriousness and significance
    • Mr Justice Walker found that the Claimant’s breach was moderately serious and moderately significant.
  • Second test – why the default occurred
    • Mr Justice Walker concluded that he was of the view that the Claimant 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 preparation and trial phase for consideration later. There was a culpable failure by the Claimant to complete the final parts of his budget. Mr Justice Walker advised that culpability amounted to negligence, but it was not gross negligence.
  • Third test – evaluation of the circumstances of the case so as to deal justly with the matter
    • It was held that it would be unjust to deprive the Claimant of everything when the Defendant was in agreement with the course proposed by the Claimant, with the benefit of the give and take which occurred during negotiations.

The appeal was allowed. The Claimant was allowed the costs of the phases agreed between the parties prior to the first CMC. However¸ the Claimant was, under CPR3.14, limited to only the applicable Court fees for the trial preparation and trial phases.

What to take away from this case

  • Do not assume – as above, even if the parties have agreed directions, the Court can Order differently. Do not take the risk – either seek a direction in relation to costs budgeting ahead of the CMC or prepare a budget covering the whole of proceedings.
  • Always check, and double check, Orders – under CPR, PD 3E, para 6, the Court may direct that budgets are limited initially to a part of the proceedings. Therefore, unless the Court has so directed, the budget must cover the entire proceedings.

If you require any advice on costs budgeting, please do not hesitate to contact bSquared Costs Law and we will be happy to assist and remember:

  • Incorrect and Incomplete budgets can be fatal in respect of costs recovery for your client.
  • Our costs for dealing with the budget drafting and process are in line with those provided within Practice Direction 7.2 (a) and 7.2 (b) supplementing Section II of CPR Part 3
  • We at bSquared costs law are up to date on costs law so let experienced draftsmen prepare the budget for you and your client.


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