That’s a relief! Relief from sanctions for late budget

In Manchester Shipping Ltd v Balfour Shipping Ltd and Anor [2020] EWHC 164 (Comm) the Defendants, having failed to file and serve their costs budgets in time, were granted relief from sanctions.

The timetable is relevant: the CCMC was fixed for 17 January 2020; costs budgets were to be filed not later than 21 days before the CCMC (CPR Part 3.13(1)(b)); on 16 December 2019 the parties agreed a timetable of 19 pre-CCMC procedural steps (avoiding any ‘deadlines’ in the holiday period of 12 December 2019 to 6 January 2020); the timetable was silent as to the filing and exchange of costs budgets; the Claimant filed and served its costs budget on Christmas Eve.

The Defendants had assumed that the pre-CCMC timetable did not make provision for any costs management steps because, they understood, the Claimant intended that costs management be dispensed with. The Defendants filed their budget on 8 January 2020 – 13 days late.

By the time of the CCMC, on 17 January 2020, the Defendants had not made an application under CPR 3.9 for relief from sanctions.

The Claimant submitted that “it is incumbent upon a party seeking relief from the sanction to make a timeous application for relief from sanctions under CPR 3.9” and directed the Judge to BMCE Bank International Plc v Phoenix Commodities PVT Ltd & Anor [2018] EWHC 3380 (Comm) (“where there is a failure to comply with rules … an application for relief from sanctions should be made promptly, supported with evidence…”). The Judge, however, noted that the “Draconian” sanction provided by CPR Part 3.14 included a saving provision: “Unless the court otherwise orders, any party which fails to file a budget despite being required to do so will be treated as having filed a budget comprising only the applicable court fees” (emphasis added). The saving provision was considered in the guidance to the White Book (2019 Edition) at paragraph 3.14.2: “A party in default of r.3.14 need not make a separate application for relief from sanctions under r.3.9. Instead it may seek to invoke the saving provision in r.3.14 itself (“Unless the Court otherwise orders”) by seeking to persuade the court to adopt that course at the hearing convened for costs management purposes …”.

There is no doubt that reliance on the saving provision in CPR Part 3.14 is a very high-risk strategy (the Judge in fact stated that “There will no doubt be cases (BMCE being one such) where a party seeking to invoke the saving provision would be well advised to do so by making a prompt CPR 3.9 application”). Our view is that, regardless of the nature of the default or the reasons for it, there is no excuse for any delay in making an application for relief. Delay may well prove fatal, rendering a forgivable breach unforgivable.

Having allowed the invocation of the saving provision, the Judge considered the three stage Denton test: first, the seriousness and significance of the breach; second, the reason for the breach; and third, all the circumstances of the case.

As to the first, the failure was serious but “The paperwork was all in order by the time the bundles were filed for the CCMC and the Claimant was able to deal without difficulty with the Defendants’ budget”. As to the second, the judge accepted that the default was inadvertent, borne out of reliance on the agreed table of procedural steps which was silent as to budgets.

In all of the circumstances it was appropriate to grant relief from sanctions.

Leave a Reply

Your email address will not be published. Required fields are marked *

%d bloggers like this: