Many Practitioners will be familiar with the draconian sanction under CPR 3.14, namely that "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." In Right Support Management Ltd v London Borough of Hillingdon [2025] EWHC 1680 (KB) (03 July 2025) the court had ordered that costs budgets to be filed by 18 January 2021. Neither the Claimant or the Defendant complied with the Claimant filing its budget two years and four months late whilst the Defendant filed its budget one day late. The Claimant's application for relief was not made until 27 September 2023 (two years and eight months late). The Defendant applied for relief on 14 June 2023 (over two years late). The court at first instance determined that relief would not be granted on the basis that the lack of promptness was a critical factor (in particular the delay between May and September 2023). This meant the Claimant was restricted to court fees only. The Claimant appealed the decision.
Whilst the court here did reverse the decision to deny relief, it was considered that a sanction should be imposed owing to the seriousness of the breach and lack of promptness in applying for relief. The court ordered that the Claimant the Claimant pay the costs of the application for relief from sanctions and that the Claimant be debarred from recovering 20% of its costs as assessed or agreed.
This is a reminder that you must understand and be aware of any court deadlines in the first instance and secondly that any application for relief from sanctions ought to be made promptly.
Speed Read
The case can be summarised as follows:
1. When considering whether to grant relief from sanctions the court must take into account all circumstances of the case, even where the breach is both serious/significant and there is no good reason for the default (as per the three stage test set out in Denton).
2. The fact that a breach does not delay or impact a part of the action is an important factor. The impact of any breach on court and court users should be considered.
3. Whether a default was a mistake or intentional is also important. Here there was no deliberate default and there was no breach any unless order.
4. There is no principle that a delay of more than 2 months is unacceptable when dealing with relief from sanctions. All cases are fact sensitive and there is nuance. Here the claim had been delayed in any event by the Claimant losing capacity and interim applications made by both parties.
5. Consideration also ought to be given as to whether the Defendant should have consented to the relief application. Here the Defendant did not do so (though this was ultimately held to be reasonable).
6. Every case on relief is fact specific so previous authorities may provide little assistance.
7. Just because relief is granted does not mean that no sanction should be imposed under CPR 52.20, 3.10 and 44. Here the court held that the Claimant would have its overall recoverable costs reduced by 20% and it would also have to pay the costs of the relief from sanctions application.
Grounds of Appeal
The Claimant appealed the decision to refuse relief from sanctions for late filing of their costs budget on the following grounds:
"(1) the Judge failed to mention or consider the Appellant's explanation.
(2) The Judge wrongly considered the delay between May and September 2023 as decisive in determining relief.
(3) The Judge ignored the effects of CPR rule 21 which froze the proceedings and prevented any action after DB was joined because he potentially lacked capacity.
(4) The Judge failed to take into account the increased in the claim value to £70,000.
(5) The Judge failed to consider alternative less punitive sanctions to those in CPR r.3.l4.
(6) The Judge failed to take into account the fact that no CCMC had taken place, for reasons not involving any default by the Claimant (but involving some Court maladministration), and so the late filing of the cost budget had no adverse effect on the action.
(7) The Judge failed properly to apply the overriding objective in CPR r.1.1 properly."
The Claimant accepted it had failed the first two stages of the Denton test. They accepted that it was a serious and significant breach and that there was not a good reason as to why the default had occured. It was contended, however, that the judge did not fully consider all the circumstances of the case and the overriding objective.
Further, the Claimant contended that:
"the breach had made no difference to the course of the action and the Judge was wrong to find that it had. Various applications by the Defendant, for instance to strike out the claim, and various orders relating to joining DB, then assessing his capacity and then deleting him from the action, had all delayed the course of the action. The secondary point which the Appellant made was that no CCMC hearing had taken place because of the other applications. That was still to come, so the late filing did not even delay the CCMC. The third point made was that- if the costs budget had been filed on 18.1.2021 it would have been updated at least once if not twice by the date of the relief hearing because of the multiple applications and due to joining DB and then deleting him as a party. The Appellant submitted that an important factor in the exercise of the Judge's discretion at limb 3, was the impact of the breach on the litigation and there had been no impact, save that one part of the hearing on 12.8.2024 dealt with that application, amongst 3 other applications."
The Defendant's position was that:
"the Judge was correct to have regard to British Gas when he concluded that the application "must have delayed these proceedings" (para. 13) and that it was very serious. The Respondent analysed the Claimant's witness statement in support dated 27.9.2023 and criticised the delay between May and September 2023 in making the application which was before DB's capacity was assessed. The Appellant did not raise CPR r.21 or CPR r.3.10 before the Judge. The misunderstanding of the date for filing the costs budget was also criticised. Overall, the decision was within the scope of the discretion available to the Judge and should not be overturned."
The Decision on Appeal - Relief Should be Granted
Mr Justice Ritchie considered that "the following factors were relevant and material factors which, where indicated below, should have been taken into account but were not":
(i) The requirement and need for litigation to be conducted efficiently and at proportionate cost. The failure to file the costs budget did not increase the cost of the litigation, save for the need for an application. The efficient running of the action and the timeline thereof were wholly unaffected by the failure. The other previous applications took the time and resulted in hearings. The relief application was heard with 3 other applications, one of which was from the Defendant. The case was delayed by the joining and then the assessment of the capacity of DB. It was delayed by the Defendant's failed strike out application. The Judge's finding at para. 12 of the judgment that it "must have delayed these proceedings" was unexplained. The Judge did not identify any part of the action which had been delayed or affected by the breach. This factor was not properly taken into account by the Judge.
(ii) The need to enforce compliance with rules, practice directions and orders. This need remains a relevant factor but the Judge did not take into account that this was not an unless order. I take into account the evidence which the Judge accepted from the Claimant's solicitor. The solicitor accepted that his default was serious. He said the reason for the default was in part his confusion over the order and CPR r.3.13(a) or (b). This was a claim with continuing and increasing debt, issued for £44,252 which had accrued to 10 October 2020 and which increased to £70,000 by 2024. There was potential confusion in his mind between paragraphs 4(a) and (b) of the order of 16.12.2020 which stated: "4. In accordance with CPR 3.13 all parties, except litigants in person, must file and exchange budgets (a) with the Directions Questionnaire where the value of the claim form is less than £50,000; (b) in any other case, not later than 21 days before the first case management conference." The Claimant's solicitor took (b) as the applicable directions (wrongly). The Judge did not find that this was a case of intentional default. Thus, the need to enforce compliance with the Rules was less engaged than on cases of intentional or negligent default and breach of unless orders. The Judge did not consider this element of this factor.
(i) The seriousness of the breach. The Judge found the breach to be serious, this was admitted and is not appealed. However, it was not a breach of an unless order and it was not found to have been intentional. It was a mistake. The Judge did not mention this as a factor taken into account at stage 3.
(ii) The seriousness of the consequences of the breach on the action, the parties and the Courts. The Judge did not allocate any weight to this factor. I have mentioned it at (i) above. There was no effect on the timeline of the action. No CCMC had occurred, disclosure had not taken place, witness statements had not been exchanged and the trial was not listed. Neither the Court nor other Court users were inconvenienced.
(iii) The promptness of the application. The Judge took into account the lack of promptness between the date when the Claimant realised its mistake (basically this was when the Defendant itself made an application for relief in 2023) and the time of the Claimant's application, some 4 months later. But the Judge did not put that finding in context. In the context of the action and the forthcoming capacity assessment, the delay made no difference to the action. The costs budget would have had to have been revised at least once, if not twice, before the CCMC in any event. The Judge placed weight on the decisions in British Gas and Diriye and applied a principle that more than 2 months of delay is unacceptable. In my judgment there is no such rule. All cases are fact sensitive. There is nuance here.
(iv) Any other breaches of directions and orders by the parties. The Judge did not mention that there were no other breaches by the Claimant.
(v) The principle that compliance is not an end in itself. The Rules are the servant of justice and not vice versa. This principle was not mentioned by the Judge.
(vi) The opposing party should consent where appropriate so as to avoid satellite litigation, so that it should be the exception that contested applications for relief are tried and those cases should arise where the breach and consequences are serious. The Defendant did not consent to the application, despite the lack of any adverse effect on the action or upon the Defendant caused by the breach. This factor was not considered by the Judge.
(vii) Each case is fact sensitive so previous authority may be of little assistance. The Judge placed weight on British Gas and Diriye, both of which, in my judgment, provided little or no assistance on the facts of this case.
59. Because relevant and material factors were not taken into account at stage 3, I consider that ground 2 is made out and the Judge's order on the relief application should be set aside."
What Sanction Should Apply?
Whilst Mr Justice Ritchie determined relief should be granted for the late service of the Costs Budget he turned to consideration of what an appropriate sanction would be:
"60. I consider that the Judge was wrong not to have granted relief from the sanction in imposed by CPR r.3.14. However, that does not mean that no sanction should have been imposed on the Claimant. It is appropriate to consider what sanction should have been imposed under CPR r.52.20, r.3.10 and CPR r.44. I consider that the Claimant should pay the costs of the application for relief from sanctions, despite succeeding on the application. I do not consider that the Defendant's opposition was unreasonable, save as to the sums claimed which were not limitation barred. However, in my judgment the costs of the application are not a sufficient sanction to match the seriousness of the default and the lack of promptness in applying for relief. Costs sanctions are generally the sanction for failure to file a costs budget on time and I consider that a deduction from the Claimant's overall recoverable costs of 20% would be the appropriate sanction."
20% is a significant reduction to the overall costs recovery though the Claimant solicitor is likely to breathe a sigh of relief that it was not as great as it could have been.
Whenever judgments and decisions like this appear I go back to the point that compliance is ultimately always the best defence.
If you're ever unsure about deadlines then do not hesitate to ask. We are often asked about when a Costs Budget in a particular case is due as it differs depending on the claim value, the court's own orders and whether the claim proceeds on the Damages Claims Portal (DCP). It can make it confusing.
Should you have any queries arising from this article or upon costs generally then please do not hesitate to get in touch with our friendly team either via phone 01482 534567 or e-mail info@carterburnett.co.uk.
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