16 June 2014Print This Post

Precedent H “irregularity” does not render it a nullity, High Court rules

Signature: costs draftsman not a senior legal representative

It would be disproportionate and unjust to strike down a Precedent H budget that was signed by a firm’s in-house costs draftsman, rather than by a “senior legal representative”, the High Court has ruled.

Mr Justice Stuart-Smith endorsed the view that the aim of the more robust approach being taken by the courts post Mitchell is not to make compliance an end in itself.

The Precedent H in Americhem Europe Ltd v Rakem Ltd [2014] EWHC 1881 (TCC) was compliant in all respects except that the statement of truth was not signed by a “senior legal representative” of the defendant, as required by practice direction 3E.

Instead, it was signed by an in-house costs draftsman at Shakespeares Solicitors, who the judge ruled was not a “legal representative” or – if he was – was not a senior one.

Though “senior legal representative” is not defined anywhere, Stuart-Smith J said the CPR 2.3(1) definition of “legal representative” seems “to connote someone who is representing in a legal capacity, which is not what is being done by a costs draftsman”.

It was argued that this rendered the budget a nullity and that the defendant’s budget should restricted to the applicable court fees.

But the judge disagreed. Though it was an “irregularity”, he noted that, while CPR 3.14 provides a sanction in the event that a party “fails to provide a budget”, it does not include the additional words “complying in all respects with the formal requirements laid down by PD3E”.

He said: “Here, the document was in a form which stated it was the defendant’s costs budget and would immediately be recognised as such. There was nothing to impede the normal constructive discussions on figures that would have been open to the parties if it had been fully compliant.

“To hold that it was not a costs budget at all would not, in my judgment, be a proper application of a robust approach: rather, it would lack in any form of reality or justification.”

As a result, no question of a need for relief from sanctions arose, but if it had done, the judge said he would have granted relief.

Though it may not have been a ‘trivial’ breach – recognising his earlier ruling in the Philip Pank case – Stuart-Smith J said: “Even in the more robust environment that now obtains, the consequences of refusing relief seem to me to be disproportionate, unjust and therefore contrary to the overriding objective.

“The proportionate and just response, given that no one has been significantly disadvantaged by the irregularity, is to require it to be remedied at the defendant’s cost and to compensate the third party for the modest cost involved in bringing the matter to the attention of the court, summarily assessed in the sum of £50.”

The judge noted that there have been various cases arguing that an irregularity renders the costs budget a nullity. He adopted Mr Justice Leggatt’s comments in Summit Navigation, in which he referred to the pre-Jackson speech of the Master of the Rolls, Lord Dyson, that it is not the aim of the reforms to turn rules and rule compliance into “trip wires”, nor into “the mistress rather than the handmaid of justice”, nor to render compliance “an end in itself”.

By Neil Rose

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