THE COURT DIDN’T TELL ME TO FILE PRECEDENT H! WHAT HAPPENS WHEN THE PARTIES FAIL TO FILE COSTS BUDGETS BECAUSE OF BEING MISLED BY A COURT FORM?
The penalties for failing to file Precedent H in time are draconian. What happens if the parties do not file Precedent H because they are misled by the court directions? In Aliasghas Porbanderwalla –v- Daybridge Ltd HH Judge Worster allowed an appeal against an order limiting both parties to Court fees when they had been misled by the form sent out by the court. Some interesting comments were made about relief from sanctions.
(ALIASGHAR PORBANDERWALLA –V- DAYBRIDGE LIMITED (30/1/2014 HHJ Worster Birmingham CC) Transcript available here.)
THE EVENTS LEADING UP TO THE APPEAL
- The Claimant issued the Claim Form on the 18th April 2013.
- On the 28th May 2013 a Notice of Proposed Allocation to the Multi-Track (N149C) was sent to both parties. This provided :
“It appears that this case is suitable for allocation to the multi track. If you believe that this track is not the appropriate track for the claim you must complete box D2 on the Directions Questionnaire (Form 181) and explain why.
You must by 28 June 2013
a) complete the Directions Questionnaire (Form 181) and file it with the court office.. and serve copies on all other parties; and
b) attempt to agree directions with the other parties; and
c) file proposed directions in accordance with CPR 29.1(2) (whether or not agreed) with the Directions Questionnaire
By the same date the allocation fee of £220 is due ”
- No reference was made to any costs budget or to any requirement to file a costs budget by a specified date.
- Both parties sent their Directions Questionnaires to the court. Section H of the questionnaire included a statement that “if your claim is likely to be allocated to the Multi Track form Precedent H must be filed in accordance with CPR 3.13”
- The Claimant told the court that they were not enclosing a Precedent H form and that it would be filed as an when directed by the Court in advance of the Case/Cost Management hearing.
THE DECISION OF THE DISTRICT JUDGE
The District Judge held that both parties had failed to file Form H within time and both had budgets confined to court fees.
THE CLAIMANT’S APPEAL
The Claimant argued that the District Judge was wrong to make the order restricting the parties costs. two lines of argument were advanced.
- CPR 3.12 provides that this section of the CPR applies to “multi track cases”. This case was not allocated to the multi track until the 3rd October 2013. The case was not a multi track case when the rule 26.3(1) notice was served and therefore 3.13 did not apply; there was no requirement for the parties to file or exchange budgets prior to the allocation.
- Because no date was specified in the notice served under rule 26.3 (1) for the filing of costs budgets, and there was no cause management conference, the requirement for the filing of budgets pursuant to rule 3.13 was never triggered.
WAS THE CLAIM A MULTI TRACK CLAIM PRIOR TO ALLOCATION ?
The judge rejected the Claimant’s first line of argument.
“The argument has the attraction of simplicity. How could the claim be a multi track case prior to allocation? To describe it as such for the purpose of this rule on the basis that it probably was, or that it was likely to be allocated to that track leads to uncertainty. It is easy to imagine cases where there is room for two genuinely held but diametrically opposite views on the subject. This case may be an example, for whilst in terms of value it is a multi track case, the content and time estimate (1 day) are such that it could easily be heard on the fast track. If it is not a multi track case how can this section apply?
The answer lies in the words of rule 3.13 which expressly provides that a budget should be served and filed … by the date specified in the notice served under rule 26.3 (1) or if no such date is specified, seven days before the first case management conference. That will be before allocation. This is the specific rule governing the procedure at this point, and the terms of the rule are clear. If I accepted the Claimant’s argument it would be to ignore those clear terms, and to make a nonsense of the rule and the procedure it provides for. To apply the clear terms of rule 3.13 however, does not deprive rule 3.12 of meaning or effect, for it is only if the case is (subsequently) allocated to the multi track, that the provisions of rule 3.14 and those rules which follow have operation. In that sense this section of the rules does apply to multi track cases. But rule 3.13 operates prior to that allocation. ”
HAD THE REQUIREMENT FOR THE FILING OF BUDGETS BEEN TRIGGERED ?
The judge, however, was persuaded by the Claimant’s second argument
“11.On my first reading of rule 3.13 I thought that was right. But the words of the second sentence of rule 3.13 do not actually say that the parties must file and exchange budgets by the date specified in the notice for the filing of budgets; simply that they must do so by the date specified in the notice served under rule 26.3(1). So the rule can be read as requiring a budget to be filed and served by the date specified in the notice – here 28 June 2013, even though that is a date by which other specified matters are to be complied with. That must be how the District Judge understood the rule. He is in good company.
12. The Claimant drew my attention to two matters. Firstly the use of the word specified after date in the second sentence of rule 3.13. Secondly, that rule 26.3(b)(i) requires that the notice of proposed allocation will specify any matter to be complied with by the date specified in the notice [my emphasis]. The link between these two rules is plain, and they should be read together.
13. The principal point of construction which has persuaded me is as follows. The notice envisaged by rule 3.13 is a notice which will specify any matter to be complied with by the date specified in the notice. Those words are apt to include the requirement for the exchange and filing of a costs budget. Rule 3.13 adopts the date in the notice as a trigger in that context – in other words on the basis that the notice will specify when that matter is to be complied with. I construe rule 3.13 as referring to a rule 26.3(1) notice which specified a date by which the costs budget was to be filed.
14. Further, the second sentence rule 3.13 is to be read with the first sentence. The words must do so refer back to the requirement to exchange and file budgets in the first sentence. The words by the date specified in the notice can also be read in the context of a requirement to exchange and file budgets. It is by no means clear, but does the rule really mean that there is a requirement to file a budget by the date specified in the notice for doing something different -here the filing of Directions Questionnaires and the like? It makes more sense to refer (back) to a requirement to exchange and file a budget, than to a requirement to do something else.
15. I also have in mind that the failure to comply with the requirement of rule 3.13 is the potentially serious sanction provided for by 3.14. The more serious the sanction, generally the greater the need for clarity. Whilst it is not the determinative point in my decision, and would give way to positive arguments of construction, a genuine ambiguity in the rules ought to be resolved in favour of the defaulter.
17. Whilst I can see that the words of rule 3.13 can be read in a way which justifies the order appealed against without doing any particular violence to the language used, the more natural reading of the rule is that contended for by the Claimant. Absent a requirement for the exchange and filing of a budget in the rule 26.3(1) notice or a CMC, the requirement is not triggered. The appeal is allowed on that ground. Paragraph 1 of the order of 3 October 2013 is set aside, and I make the orders sought as to the exchange and filing of budgets and for the case to be listed for a Costs Management hearing.
WOULD RELIEF FROM SANCTIONS HAVE BEEN GRANTED?
The Judge considered that had the appeal failed, he still would have granted both parties relief from sanctions:
“Finally I should add that had I refused this appeal I would have been minded to grant both parties relief from sanction. Each case will turn on its particular facts, but this was not a case where the parties were refusing to engage with the requirements for cost budgeting. Their approach to the requirements of the rule was understandable, they had otherwise complied with all the orders and directions of the Court, the Claimant had indicated that it would file a budget as and when directed to in the covering letter I refer to, and the appeal was brought promptly. The default would not have been a trivial one, but there was a good reason for it.”
A POINT ABOUT COURT FORMS
The Claimant also raised a specific point relating to the form N149C. Both parties had been sent a form which was different to the form available on the Court Service Website and did not include the requirement for the filing of a budget.
- This was a common problem; lawyers in the case had come across a number of cases where a similar form had been sent to them by the court.
- This suggested there is more than one version of N149C in circulation; one providing for a costs budget to be filed by a specified date and the other not.
- This is very undesirable, particularly at a time when the profession and the Courts are working out the effects of these new rules.
POINTS TO WATCH
- Unless the notice served under rule 26.3 (1) specifies that the budget must be filed by the date contained in the notice or a CMC the requirement to file a budget is not triggered. However remember that this is not a binding precedent. IF THERE IS ANY DOUBT FILE FORM H IN ADVANCE. IN FACT FILE FORM H IN ANY EVENT. The only safe course of action is to always it has to be filed.
- It is important to know the rules relating to cost budgeting and when it has to be filed – otherwise you may end up working for nothing.
- Check that the court has sent the correct version of N149C (the one on the Court Services Website). This may save time and confusion in the long run.