Page v RGC Restaurants – Andrew Roy in important appeal on the effect of filing an incomplete costs budget.

In Page v RGC Restaurants Ltd [2018] EWHC 2688 (QB) Master Thornett held that a claimant’s budget which omitted figures for the trial and trial preparation fell foul of CPR 3.14.  The result was that the whole of claimant’s budget was deemed to comprise solely of the applicable court fees.  The claimant appealed to Walker J.  Andrew Roy, instructed by Keoghs, appeared for the defendant/respondent. 

Background

The claim arose from an acute allergic reaction suffered following the claimant’s ingestion of cashew nuts at the defendant’s café. Summary judgment was granted in favour of the claimant on liability. Contributory negligence, causation and quantum remained outstanding.   The matter was set down for a CCMC.

The claimant took the view that it would be best to have directions up to a further CCMC rather than all the way to trial.  He filed what was described as an interim budget reflecting this (i.e. it omitted any figures for trial preparation and trial).  The defendant agreed with this approach, albeit its own budget included figures for all phases.  All the phase figures for the claimant’s budget were agreed (save obviously for trial preparation and trial).

However, the claimant had not sought the court’s approval of this approach prior to the CCMC.  Master Thornett took the view that full directions should be given to trial.  He undertook costs management on that basis. He held that as the claimant had failed to file a costs budget that complied with PD 3E the sanction at CPR 3.14 applied, although he indicated that the claimant could return and apply for relief from sanctions.

Arguments on appeal

The claimant argued that:

  1. He had not failed to file a budget within the meaning of CPR 3.14.
  2. The court was required by CPR 3.15(1) to give effect to the agreement in respect of all the phases except trial preparation and trial.
  3. As the parties agreed that trial preparation and trial would not be subject to budgeting until a later stage, the Master should have directed that the parties serve supplemental cost budgets to address those phases.
  4. If CPR 3.14 was engaged, the Master was wrong not to “order otherwise” and disapply the default sanction having regard to the overriding objective of the CPR, and all the circumstances of the case.

The claimant in the alternative applied for relief from sanction.  It was directed that this application be heard by Walker J at the same time as the appeal.

The defendant argued that:

  1. The claimant’s arguments were not open to him on appeal, having not been raised below.
  2. The Master’s decision was correct.
  3. Relief should be refused, or in the alternative allowed only in respect of the agreed phases.

Following the appeal hearing the defendant conceded that it would not on assessment go behind the agreed figures.  It was thus conceded that the sanction could only bite on those phases which were not agreed (i.e. trial preparation and trial as per what was previously the defendant’s fall-back position).

Judgment on appeal

In the course of an exhaustive 75-page judgement, Walker J found that the sanction under CPR 3.14 was engaged.  He rejected the argument that a total failure to file a budget was necessary to do so, accepting the defendant’s position that material non-compliance with CPR 3.13 and PD 3E was sufficient for the sanction to apply.

The Judge also rejected the claimant’s argument that CPR 3.14 was displaced by agreement of the earlier phases.  He held that CPR 3.15 was not engaged once CPR 3.14 had taken effect.

However, he accepted the claimant’s argument that the Master had failed to apply his mind to the saving provisions of CPR 3.14 in accordance with the overriding objective and had therefore erred in law.  The words “unless the court orders otherwise” required the court to consider granting relief even in the absence of a standalone application.

The judge therefore decided afresh whether disapplication was appropriate. Applying the test in Denton v TH White Ltd [2014] EWCA Civ 906, [2014] 1 WLR 3926, he ruled that the sanction should not apply to the agreed phases but should apply to those where the claimant had failed to provide any figures (i.e. trial and trial preparation).

The Judge did not accept that the claimant’s failure to raise these points below precluded his doing so on appeal.  He held that the criteria on Pittalis v Grant [1989] QB 605 were satisfied.   The defendant (a) had adequate opportunity to deal with the points; (b) had not acted to his detriment on the faith of the earlier omission to raise them; and (c) could be adequately protected in costs.

The claimant having benefitted from the saving provision within the rule to confine the sanction, there was no scope for him to benefit from an application for relief.  The reasons for not disapplying the sanction were equally reasons for refusing relief.

The bottom line was therefore that there was no sanction in respect of the agreed phases, but the claimant was limited to court fees in respect of trial preparation and trial.

Comment

Three important points of general application emerge from this judgment.

Firstly, parties who seek to present the court with a fait accompli do so at their own peril.  In matters such as costs and case management the parties cannot unilaterally, or even bilaterally, displace the court’s authority.  To take a common example, it will often be the case that the parties will agree that liability will be tried as a preliminary issue.  Even if the case for doing so is overwhelming it cannot be assumed that the court will endorse such an agreement.  The appropriate course is to write to the court well before budgets have to be filed asking for confirmation that they can be prepared on that basis.  Unless and until such confirmation has been given, the only safe option is to prepare budgets on alternative basses (i.e. both a full budget and partial one).

Secondly, saving provisions such as that within CPR 3.14 are, according to this judgment, of much wider application than might previously have been thought to be the case.  On Walker J’s analysis the court should consider disapplication of its sanction of its own motion.  Perhaps more importantly, on his analysis, the hurdle for disapplication by reference to such a saving provision is significantly lower than an application for relief under CPR 3.9.  Under the latter the defaulter is precluded from arguing that the sanction itself is disproportionate.  There is no such prohibition when relief is sought under a provision (see paragraphs 157 and 171 of Page).  Likewise, there is no requirement (as there would be under CPR 3.9(2)) for evidence in support.

The importance of this point extends beyond budgets.  There are many rules in which the sanction is modified by such a saving provision.  See for example CPR 31.21  (a party may not rely upon a document which has not been disclosed or provided for inspection in time), CPR 32.10 (a witness may not give oral evidence if no witness statement or witness summary has been served in time) and CPR 35.10 (a party may not rely on an expert report which has not been disclosed in time).

It would thereafter appear that in some cases the defaulting party would be better off relying upon a saving provision rather than making an application for relief under CPR 3.9.  Paradoxically, the latter will often entail delay and expense in order to seek the same outcome by reference to a more demanding test.

However, a note of caution is required here.  In Page, only partial relief was granted by way of the “exceptional” circumstances of the case in the light of the “unusually clear dividing line between the parts of the budget which were satisfactory and those which were not”.  The facts in Page rather cried out for the claimant to be permitted, by one route or another, to rely upon the agreed phases of the budget.  It would be unwise to assume that the court would routinely rely upon such a saving provision in the absence of any formal (or even informal) application.

Moreover, in many cases it may be preferable to make a formal application supported by evidence rather than to rely upon impromptu arguments to invoke a saving provision.  Page suggests that there will be limited if any scope for a second bite of the cherry by way of a later application under CPR 3.9 if a party is not (wholly) successful in relying upon a saving provision.

Thirdly, Page underlines the need in any hearing of potential importance for an advocate to be instructed who will be capable of dealing on their feet with anything unexpected that might arise (and, even where the parties are agreed, identify beforehand any procedural issues and how they could be remedied).  Not doing so is liable to prove a false economy.

Click here for the full judgment.