High Court judges grant relief over inadequate statement of truth and ‘near miss’ compliance

Time running out: confusion over deadline for compliance

The growing caseload of post-Mitchell relief from sanction cases has been bolstered by two High Court rulings where relief was granted.

One concerned the claimant’s failure to include a full statement of truth on its Precedent H, while the other saw the defendants fail to comply with an unless order relating to disclosure by 46 minutes.

In The Bank of Ireland & Anor v Philip Pank Partnership [2014] EWHC 284 (TCC), the defendant said the lack of a full statement of truth meant there had been a failure to file and exchange the costs budget.

The document instead had the words ‘[Statement of Truth]’ immediately above the place for signature and dating by the claimant’s lawyer. A further copy was subsequently served which had the full statement of truth.

Mr Justice Stuart-Smith rejected the defendant’s argument, saying “there is nothing in the rules or practice directions which requires any and every failure to comply with the formal requirements for budgets as rendering the budget a nullity, as opposed to being one which is subject to an irregularity”.

He continued: “The logical consequence of the defendant’s argument would be that any failure to comply with the form of Precedent H or PD 22 would render the filing of a budget a complete nullity. It would, presumably, apply if the prescribed form for verifying a costs budget had been followed generally but words had been omitted, mis-spelt or muddled up; or even if the order of the two sentences had been reversed.

“Such a conclusion would, in my judgment, serve only to bring the rules of procedure and the law generally into disrepute. Fortunately, it is not required or even permitted by the terms of the rules to which I have referred. What has happened here is that the claimant has filed and exchanged a costs budget on time; but the budget suffered from an irregularity.”

As the budgeting sanction in CPR 3.14 was not triggered, Mr Justice Stuart-Smith said there was no need to consider relief from sanction – but if he was wrong in this conclusion, he said he would grant relief.

“Statements of truth have an important role in the scheme for costs budgeting. It is therefore inappropriate to characterise the absence of the statement of truth as ‘trivial’.

“However, on the facts of this case, the inclusion of the words ‘Statement of Truth’ and the absence of the wording prescribed by PD 22 is a failure of form rather than of substance: there can have been no reasonable doubt in the defendant’s mind that the intention of the signing partner was to certify the costs as required by Precedent H but that he had made a mistake in the form of the document.

“As such, this case is far removed from the failure to file and exchange a costs budget at all and no sensible reason has been advanced for not following the usual course in accordance with the guidance in Mitchell.”

In Lakatamia Shipping Co Ltd v Nobu Su & Ors [2014] EWHC 275 (Comm), the defendants were 46 minutes late on the day of disclosure, although it could have been around 15 minutes if the claimant had agreed to exchange.

The court found the delay was due to the defendant solicitors’ belief that they had until 5pm to provide disclosure; however, the Commercial Court Guide provides at D19.2 that absent specific provision in an order, the latest time for compliance is 4.30pm. This was not a “good” reason, as per Mitchell, but it was explicable.

Mr Justice Hamblen said that narrowly missing a deadline was a circumstance which the Court of Appeal in Mitchell expressly contemplated as being de minimis and usually deserving of relief from sanctions. “That the non-compliance is also trivial is also borne out by its effect. It has caused no prejudice to the claimant, and none is suggested,” he added.

He rejected the claimant’s attempt to put the failure in the context of other defaults in the case. “What matters is whether the non-compliance which resulted in the sanction is trivial and in my judgment that involves a consideration of the default in question, not other defaults at other times.

“The history of default may be a relevant general circumstance to take into account but it does not affect the characterisation of the relevant non-compliance or metamorphose a trivial default into a serious default.”

Mr Justice Hamblen added: “In the light of the importance of compliance and the ‘robust” approach to relief from sanctions exemplified by the Court of Appeal decision in Mitchell v News Group Newspapers Ltd, it may be preferable for Commercial Court orders to specify the time of day by which an order is to be complied with, notwithstanding D19.2 of the Guide. The present case illustrates the desirability of doing so.”


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