Costs Budgets – trivial breaches and irregularities

Stuart-Smith J has today (13 June 2014) handed down a judgment dealing with the requirements of a valid costs budget and when an application for relief from sanctions is required.

In a commercial product liability claim in the TCC the Defendant filed a costs budget which was accepted to have been 41 minutes late. The costs budget was signed by someone described as a costs draftsman.

The Third party objected to the late service of the Defendant’s costs budget but the court found that the 41 minute delay was ‘trivial’ in the Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537 sense.

The court considered whether a costs draftsman satisfied the requirement of Practice Direction 3E that a costs budget include a statement of truth signed by a senior legal representative. The Third Party argued that signature by a costs draftsman meant that there had been a substantive failure to comply with the Practice Direction requiring an application for relief from sanctions.

tuart-Smith J noted that there is no definition of senior legal representative but held that a costs draftsman was not a legal representative as a costs draftsman does not give legal advice or representation. In addition, the Judge held that even if he was wrong about what constituted a legal representative, a costs draftsman was not a senior legal representative as this required someone “having conduct of the action who is in a position to gauge what resources are likely to be required.”

Although a costs draftsman was not a senior legal representative this did not mean that the costs budget should be treated as a nullity. The breach was to be treated as a mere irregularity as it did not prevent ‘normal constructive discussions’ about the costs budget.

Is the breach was a mere irregularity rather than a nullity there was no need for an application for relief from sanctions. Stuart-Smith J emphasised that it was not the aim of the civil justice reforms to turn rules and rule compliance into ‘trip wires’ for those conducting litigation.

Practice Points:

• While input from a costs draftsman can be useful in the preparation of a costs budget the costs draftsman should not sign the statement of truth. The person signing must have conduct of the case and must be ‘senior’.
• This is another decision where the court has favoured a pragmatic consideration of whether a breach of the rules has had any adverse consequences rather than penalising a party simply for non-compliance.

Malcolm Sheehan appeared for the Claimant Americhem Europe Limited.