Budgets and Relief from Sanctions

High Court awards partial relief from sanctions for partially completed Budget

Page v RGC Restaurants ltd [2018] EWHC 2688 (QB)

Mr. Page, who suffers from a severe nut allergy, was served a milkshake containing cashew nuts as a customer of the Defendant-owned restaurant, having been assured it would be a safe product for him to consume. The Claimant suffered respiratory failure and cardiac arrest, was resuscitated and kept in an induced coma for five days. The respiratory difficulties led to cerebral hypoxia resulting in brain injury.

Liability was disputed, however summary Judgment on primary liability was granted in July 2017 Master Thornett in the Claimant’s favour; contributory negligence, causation and quantum remained in issue.

Ahead of the Costs and Case Management Conference the Claimant submitted an “interim costs Budget” setting out £71,000 incurred costs and £115,000 budgeted costs. However, the costs budget failed to include figures for trial preparation of trial, with the view that a second Costs and Case Management Conference would be necessary to establish what further medical evidence would be required and Trial costs was be decided at that time.

The Defendant’s budget included incurred costs at £51,000, made no reference to a second Costs and Case Management Conference and included budgeted costs for all phases through to trial.

Both parties agreed all directions and costs budget figures for phases up to and including the proposed second Costs and Case Management Conference.

However, at the hearing, Master Thornett rejected the necessity for a second Costs and Case Management Hearing, concluding that this was a ‘case amenable for listing through to trial’.

Subsequently, as the Claimant’s interim Budget had failed to budget for phases relating to trial, it was effectively deemed to be non-compliant with CPR and the rule 3.14 sanction applied. The Claimant’s Budget was therefore limited to applicable Court fees only.

The Defendant’s costs budget was approved, subject to an increase in the trial phase to reflect a longer trial and excluding the provision for a Pre-Trial Review.

On appeal, Mr. Justice Walker said it was clear that the Claimant’s interim budget did not meet the requirements of Precedent H to set out the costs of the whole litigation.

Another aspect of the appeal was that CPR 3.14 provides that the sanction would be imposed ‘unless the Court otherwise orders’ and that Master Thornett had not considered this.

Walker J stated that it was a ‘striking feature’ of the case that the Claimant had undertaken ‘considerable work’ in preparing a costs budget, dealing with Precedent R and negotiating agreed costs, and had been deprived ‘of any credit’ for this with the sanction imposed. Walker J deemed it ‘necessary for the Court to consider whether the Court should take a different course’.

Whilst Walker J accepted that there ‘was a professional genuine judgment’ he did not accept that there was a lack of ineptness as in his mind ‘the requirements in the rule and practice direction were clear’.

Walker J ruled that Master Thornett erred in law in the approach that he took, applying himself the 3-stage approach established in Denton to decide whether to make an Order which disapplied the sanction.

The Judge allowed the Claimant budgeted costs as agreed before the Costs and Case Management Conference, with costs for subsequent phases limited to any applicable Court fees. Walker J concluded that although the course taken by the Claimant was wrong it was not deliberately wrong. The Claimant had genuinely believed its approach to ne right and the Defendant had been prepared to go along with it, ‘the culpability amounted to negligence, but it was no gross negligence’.

Walker J was ‘conscious that in Mitchell the Court of Appeal warned of the dangers of partial sanction’ and that there are only ‘very limited circumstances’ in which relief from sanctions should be granted. The present case, in that regard, seemed to Walker J to be ‘exceptional’. With such an ‘usually clear dividing line’ between compliant and non-compliant actions, it was possible to decide which sanctions would be unjust and which would not.

Litigants heed warning, a ‘partial’ budget is not a budget as defined by the rules; a budget must include all phases.