‘Trip Wires for The Unwary’ – When the No-Nonsense Approach to Relief from Sanctions may be Overlooked
In this particular case, the Claimant and Defendant exchanged cost budgets seven days before the original Cost Management Conference. As it happens, the Cost Management Conference was postponed, though this had no material impact on the issue in question.
The day before the Cost Management Conference was due to take place, the Defendant notified the Claimant of their intention to argue that the Claimant had failed to file and exchange a Costs Budget. The Defendant argued that as the disclosed budget contained only the words “[Statement of Truth]” rather than the correct wording of the Statement of Truth as per Practice Direction 22[2.2A] it was not compliant with CPR 3.13.
As a response, the Claimant issued an Application for relief from sanctions should the Court accept the Defendant’s argument that the Claimant had failed to file a costs budget in accordance with CPR 3.13.
The matter was heard before Mr Justice Stuart-Smith in the Queen’s Bench Division of the High Court.
Mr Justice Stuart-Smith determined that there was no breach of CPR 3.13 and that as a result the sanctions of CPR 3.14 did not apply. CPR 3.13 dictates that parties must file and exchange budgets ‘as required by the rules or as the Court otherwise directs’ and CPR 3.14 dictates that if a party ‘fails to provide a budget’, rigorous sanctions will apply.
Mr Justice Stuart-Smith differentiated between the failure to file a cost budget and the filing of a cost budget which contained an irregularity, explaining that the latter did not amount to a breach of CPR 3.13 and as a result the sanctions imposed by 3.14 did not in this case apply.
Firstly, failing to input the exact wording of the Statement of Truth as per Practice Direction 22[2.2A] does not automatically amount to a breach of CPR 3.13 and that as a result the sanctions of CPR 3.14 may not apply.
The consequences of the judgement are however significantly more far-reaching. Mr Justice Stuart-Smith explained that he would have granted relief from the sanctions of CPR 3.14 even if it was deemed that CPR 3.13 had been breached. This is with reference to passage 40 of the noteworthy case of Mitchell and News Group Newspapers Limited.
In Mitchell, guidance was provided with regard to when relief from sanctions should be granted in the new approach. The decision in Mitchell is covered in greater detail here, but to summarise, if the breach is either (1) trivial or (2) a failure of form rather than substance, then relief will usually be granted.
In the index case, relief would have been granted under (2) because despite the irregularity of the submitted cost budget, the irregularity was deemed to be one of form and not substance. Mr Justice Stuart-Smith explained that it was clear that all parties knew the served document was intended to be a budget, it was also clear what the Claimant’s solicitor intended to represent by endorsing the document. As such only the form of the cost budget was erroneous. According to Mr Justice Stuart-Smith, to deem this a breach of substance would amount to a tripwire for unwary solicitors, and as per Lord Dyson’s 18th Lecture in the Jackson Implementation Programme, this was never the intention of the new approach.
The case offers valuable insight into how the judiciary will approach relief from sanctions under the new approach, and represents a sensible respite to many solicitors in the wake of Mitchell and other more severe cases.