Common Sense Prevails

On 25th February 2014 our client was granted relief from sanctions from an Order made by Nottingham County Court that the Claimant’s budget shall comprise only of court fees. This Order was made following a submission advanced by the Defendant that the Claimant had filed a budget that was defective as the Claimant’s budget was not verified by a Statement of Truth which incorporated the wording of Practice Direction 22, 2(.2).A:

“The costs stated to have been incurred do not exceed the costs which my client is liable to pay in respect of such work. The future costs stated in this budget are a proper estimate of the reasonable and proportionate costs which my client will incur in this litigation.”

The original Order in this matter was made on 20th January 2014.   We immediately lodged an Application for Relief from Sanctions and as a precaution also lodged an Appeal Notice.

The Defendant’s argument in our case was that the CPR 3.14 sanctions for failure to file a budget also extended when the party failed to file a budget which did not contain the additional words in the Statement of Truth set out in Practice direction 22.

The Judge at first instance felt that she had no discretion on this point and therefore went on to order that the Claimant’s budget should comprise purely of court fees.

Whilst awaiting a listing for our Application for Relief, it became apparent that we were not the only practitioners that had fallen foul of this minor technical error.   It came to our knowledge that there was a pending Appeal and 2 further Applications for Relief waiting to be listed on an identical point. Which further confirmed that this is a very easy mistake to make in view of the fact that the prescribes precedent h does not contain the wording and it must be inserted manually on a  precedent H down loaded from the MOJ website

Thankfully the judgment of His Honourable Mr Justice Stuart Smith in The Governor and Company of the Bank of Ireland & anr –v- Philip Pank Partnership [2014] EWCH 284,  was released before our Application was listed on 25th February 2014.

In the Philip Pank  case The Honourable Mr Justice Stuart Smith did not agree with the Defendant’s submission that the sanction extends to the form of words contained in the Statement of Truth as it clearly states in the event that a party “fails to provide a budget”.  CPR 3.14 does not include the additional words “complying in all respects with the formal requirements laid down by PD 3E” or indeed any other words to similar effect.

Indeed, he went on to say:

”… such a conclusion would, in my judgment, serve only to bring the rules of procedure and the law generally into disrepute…”. 

The Claimant in the Philip Pank case had fully complied with the rules in that the Claimant had filed and exchanged a costs budget on time but the budget had suffered from an irregularity.   He added the Statement of Truth must not be underestimated.   With costs budget the purpose is that the solicitor should effectively certify the reasonableness of the budget.  In the Philip Pank Partnership case the budget had been signed by a partner at the Claimant’s firm of solicitors but the only words contained therein were “[Statement of Truth]”.

The facts of the Philip Pank case are on a par with the case we dealt with.  The costs budget had also been signed by a partner at the Claimant’s firm of solicitors but the statement of truth did not contain the specified wording set out in Practice Direction 22.

The advocate dealing with the matter at our budget hearing ( had also personally prepared the Claimant’s Precedent H) and was willing to provide the Court with a Statement of Truth there and then but the Court felt unable to deal as the Judge’s concern was that in light of Mitchell that there was no discretion.

In light of the Philip Pank authority we were able to have our opponent confirm in a consent order that they had no objection to an Order being made granting the Claimant relief from sanctions.  Furthermore we were able to seek agreement from our opponent that the appropriate costs order would be costs in the case.