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Court fees-only budget for defendant that missed deadline

Barker: Persistent failure to engage with budgeting

A defendant whose conduct of its case has been “outstandingly bad” has seen its budget limited to court fees after being late in submitting one for £110,000.

His Honour Judge Simon Barker QC in Birmingham ruled that Medecall Ltd also “failed or refused to recognise” the seriousness of its default.

He was ruling on an application for relief from sanction by Medecall, the second defendant in Heathfield International LLC v Axiom Stone (London) Ltd [2020] EWHC 1075 (Ch) [1].

The claimant, as assignee of Quantum Medical, is seeking more than £260,000 plus £100,000 in interest for unpaid medico-legal services from the first defendant law firm. The claim against Medecall is an alternative and secondary claim arising from Axiom’s denial of the claim and assertion that Medecall was the relevant contracting party.

Initially budgets were to be filed by 18 November 2019 ahead of the case and costs management conference (CCMC). The claimant and Axiom did, but Medecall did not.

The CCMC was vacated in early December and relisted for 30 April to accommodate security for costs applications which both defendants intimated they intended to issue.

Medecall said it did not file its budget because the parties had agreed for the CCMC to be relisted, but HHJ Barker found this explanation “open to doubt”. However, he said it was not appropriate to determine this at an interim hearing, particularly one which, by consent, was being decided on paper.

Medecall filed a budget for the April CCMC six days late, despite having been reminded of the deadeline by the claimant. It only sought relief two days before the CCMC.

The budget was for £110,000, against which the claimant offered £80,000.

The company’s solicitor, Mobin Hussain of MB Solicitors, argued that the breach was not serious or significant because it did not have an impact on the litigation or cause the claimant inconvenience. He took responsibility for the missing the deadline, saying “the incorrect date [had been] diarised in my calendar”.

But the judge disagreed. “I regard the breach as serious, both in its own right and as a continuing demonstration of D2’s lack of engagement with costs budgeting,” he said.

“I also disagree with their contention that D2’s failure has not affected the efficient progress of the litigation. It placed an unreasonable burden on C in preparing for the CCMC and also on the court.”

It added 125 pages to the bundle, while Medecall had delayed in requesting relief.

Mr Hussain’s explanation of why the default happened was not a good reason, HHJ Barker said, noting the lack of evidence to support it too, especially as the claimant’s solicitor had reminded him about serving the budget nearly a week earlier.

Looking at all the circumstances, HHJ Barker said he kept in mind that the sum of money claimed was not small, but not that large either.

“This is relevant in at least two ways. First, this is the sort of litigation where each party’s costs may easily become disproportionate to the sum in issue and efficient conduct of the litigation is of paramount importance. Secondly, it follows that cost control and costs budgeting are all the more important.”

The judge continued that Medecall had demonstrated “an abysmal approach” to conducting the litigation efficiently including, “but also going well beyond”, costs budgeting.

He noted that its costs budget was not in the required form – it failed to take into account the requirement introduced last October that all costs up to and including the CCMC should be treated as incurred costs – and that two of Mr Hussain’s recent witness statements were non-compliant because they adopted an out-of-date version of the statement of truth.

Its counsel also had to blame late instructions for the “extreme lateness” of her skeleton argument.

HHJ Barker said he considered granting partial relief, but did not so mainly because Medecall’s attitude and conduct had been “outstandingly bad”.

He concluded: “In my view D2’s conduct shows a persistent failure to engage with the obligation to provide a costs budget and a total failure to engage in discussion of or commentary on opposing parties’ budgets.

“Even in relation to the lateness by several days before the 30.4.20 CCMC, D2 failed or refused recognise the seriousness of the failure. Even now there is no Precedent R report prepared by D2.

“On top of all of that there is a catalogue of other procedural and deadline failures and an apparent lack of comprehension of the overriding objective and responsibilities as a litigant.

“The result is, as provided for by CPR 3.14, that D2 is to be treated as having filed a budget comprising only the applicable court fees.”