Page v RGC Restaurants Limited [2018] EWHC 2688 (QB)



Judge: Walker J

Citation: [2018] EWHC 2688 (QB)

Costs Management and Costs Budgets – Rule 3.12ff

Summary:

A Master was justified in holding that ‘interim costs budget’ which did not include the cost of preparing for trial did not amount to a budget. However, the court disapplied the sanction under Rule 3.14 in part in relation to those parts of the budget that were satisfactory.

Longer Text:

Solicitors acting for the Claimant prepared an “Interim Costs Budget” which omitted the cost of preparation for trial of the trial itself, since they knew that expert evidence would be required and felt it was too early to budget for the trial.  A second Costs and Case Management Conference was proposed by the solicitors.  The incurred costs and future costs up to the proposed second CCMC were agreed by the Defendants, as were Directions, including for a second CCMC.  The Master refused to make an Order in the terms agreed by the parties and held that the Claimant’s budget failed to comply with PD3E and imposed the Rule 3.14 sanction limiting the budget to court fees.  On appeal, the Court held that Rule 3.14 would only apply if a party had “failed to file a budget”.  The words “Interim Costs Budget” suggested something that was not yet a “budget”.  The Court carried out an extensive analysis of Mitchell v Newsgroup Newspapers Limited and Denton v TH White Limited.  These cases represented the more robust approach of the Court to the observation of Rules and Practice Directions.  The obligation under PD3E was to file a budget “in the form of Precedent H” which included setting out the budgeted costs for trial preparation.  The negotiations between the parties had not resulted in a contract and even if they had, a contract made for costs management purposes had to give way to overriding provisions in the public interest.  There was a difference between the disapplication of Rule 3.14 and seeking relief under Rule 3.9.  The sanction imposed by the Master had deprived the Claimant of the benefit of the considerable amount of work done in preparing the budget, dealing with all but the last two phases in Precedent H.  The Master had failed to consider the saving provision under Rule 3.8 (unless the Court ordered otherwise).  It was accordingly up to the Appeal Court to consider whether to disapply Rule 3.14 in whole or in part.  The Costs Management process had not been impeded by the Claimant’s failure in relation to earlier phases.  The breach was, therefore, of no more than moderate seriousness and significance.  The Claimant’s advisers had genuinely considered that a second CCMC was needed, and mistakenly thought it was appropriate to file a budget which left over the trial phase for later consideration.  The Defendant had also been content to adopt that approach.  On the facts, it was appropriate to disapply the sanction to those parts of the agreed budget that dealt with the position up to those phases.  The sanction would remain applicable to the phases of trial preparation and trial.  The case was exceptional because of the unusually clear dividing line between the parts of the budget which were satisfactory and those which were not, and between those consequences of a sanction which would, in all the circumstances, be unjust and those which would not.

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