Defendants granted relief from sanctions after solicitors’ IT problems lead to late costs budget

Birmingham: firm should have provided evidence of IT problem

Defendants who filed their costs budget 10 days late because of problems with their solicitors’ IT system have been granted relief from sanctions after the High Court ruled that decisions at the case management conference (CMC) would have required them to revise their budget anyway.

His Honour Judge Grant, sitting as a High Court judge in Birmingham, said “the fact that the parties are now in precisely the same procedural position in which they would have been so far as the process of cost budgeting is concerned, had the defendants served their cost budget in time, is a highly significant circumstance in the case”.

In Mott & Anor v Long & Anor [2017] EWHC 2130 (TCC), the partner running the case at the defendant’s solicitors, Plexus Law, thought the budget had been prepared, filed and served in time.

However, unspecified IT difficulties meant that an incomplete and incorrect version of the budget had been prepared, and not filed or served anyway.

The proper version was filed and served 10 days after the deadline, although still nine days before the CMC, a factor the judge later took into account.

Going through the Denton test, HHJ Grant found first that “the period of delay in this case answers the description of being serious or significant, perhaps with particular emphasis on the latter word”.

He explained: “As a pure matter of time, filing a cost budget 10 days late is not of the same relatively modest order of time as being a few hours or even one or two days late…

“I accept [the claimant counsel’s] main submission that lateness in serving a cost budget has the capacity to prejudice the very process of co-operation in the cost budgeting process which the rules are designed to achieve.”

On whether there was a good reason for the default, the judge found that the lack of detail on what the IT problems were – such as a witness statement from someone from Plexus’s IT department – meant he was not satisfied on the evidence that there was one.

Moving to the third stage of the test, HHJ Grant said the huge disparity between the parties’ budgets – the claimants’ was £281,000 and the defendants’ £48,000 – was down to them taking “very different approaches and stances to the case”, in particular over expert evidence and as a result the length of the trial.

The claimants argued that, had the defendants filed and served its cost budget in time, the extra 10 days would have given the parties more time to agree some of the issues in dispute.

The judge said: “However, it is also to be contemplated that, despite proper and appropriate co-operation, the parties might not have been able to agree those matters.

“In those circumstances those issues would then have become the subject of oral submissions at this case management conference, and the court would then have made its decision on those issues (which is what has already occurred at an earlier stage of today’s hearing).

“In such circumstances a party who has filed a cost budget reflecting its own views on such aspects (here as regards expert opinion evidence and estimated length of hearing) both of which, of course, have a significant impact on the overall content of any cost budget, is likely to be ordered to file and serve a revised cost budget which reflects the orders which the court has in fact made at the CMC, with a view to the parties discussing such revised budget, and in default of agreement a cost management hearing would be listed, often taking place by telephone.

“In those circumstances, the process of cost budgeting would not have been completed today in any event. In my judgment, the inability of the parties to discuss the defendant’s cost budget dated 21 July is to be viewed in that context.”

HHJ Grant concluded that given the need for the defendant to file and serve a revised cost budget in wake of the CMC, he should grant the defendants relief from sanction.

“The fact that the parties are now in precisely the same procedural position in which they would have been so far as the process of cost budgeting is concerned, had the defendants served their cost budget in time, is a highly significant circumstance in the case, and one to which the court should have proper regard.

“However, such relief from sanction will come at a cost to the defendants. I will order that they are to pay the claimants’ costs of and occasioned by the application.”

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