By Colin Richmond
I recently represented the Claimant/Appellant before HHJ Gosnell in Leeds in relation to an appeal against the refusal of an application for relief from sanctions at first instance.
The appeal was successful, with relief being granted and the Claimant being permitted to rely on his costs budget, despite it having been served over two months late, rather than being treated as having filed a budget comprising only the applicable court fees.
The Claimant was injured in an accident at work. The claim was allocated to the multi track by way of a Notice of Proposed Allocation, sent to the parties on 10th May 2016. Among the directions contained in that notice was an order that the parties file and exchange costs budgets by 10th June 2016.
The claim was listed for a “case management conference,” with an estimated length of hearing of one hour, to take place on 25th August 2016. The Notice of Hearing did not refer to it as a “costs and case management conference.”
The Defendant’s budget was filed and served on time. The Claimant’s budget was filed and served on 17th August 2016. That meant that the budget was on time as per CPR 3.13 (1) (b), the version of which was operative at that date, stating that budgets must be filed and exchanged no later than 7 days before the date of the first case management conference.
The difficulty for the Claimant, however, was CPR 3.13 (1), which prefaces the rest of the rule with the words “Unless the court otherwise orders.” Given that the court had ordered filing and exchange of the budgets by no later than 10th June 2016, the Claimant’s budget was a little over two months late.
The problem did not come to light until the parties arrived at court on the day of the hearing on 25th August. The District Judge took the view that the Claimant required relief from sanctions and adjourned the issue of budgeting, along with any such application, to the next CMC. He had already decided to list the matter for a further CMC in any event.
The Relief Application
The claim was listed for a further CMC and the hearing of the Claimant’s application for relief, to take place on 11th January 2017. The Claimant’s Solicitor candidly admitted that she had simply failed to notice the part of the order of 10th May 2016 providing the date by which budgets were to be filed.
The judge refused the relief application, referring specifically to the judgment in Jamadar v Bradford Teaching Hospitals NHS Foundation Trust  EWCA Civ 1001. It is worth noting that the first instance judge in that case was HHJ Gosnell, whose decision to refuse relief was upheld by the Court of Appeal.
The Appeal Judgment
16. Before embarking on an analysis of the merits of the appeal it is perhaps necessary to summarise what happened at the hearing on 25th August 2016 if only because there was a debate about what the District Judge said. The transcript reveals that the parties’ counsel introduced themselves and a discussion then took place about the appropriate directions going forward based on a draft order which had been submitted. The judge refused a contested application for expert evidence and then he was told the parties had agreed that a further case management conference would be listed to enable the respondent to review the appellant’s disclosed expert evidence. The judge then said ”we shall not be doing very much with this budget, I can tell you that now”. In my view, the judge was indicating that he was provisionally not minded to make substantial amendments to the parties’ submitted budgets. I say that because at this stage he was not aware that there was a problem with the appellant’s budget being filed late. He was then told by counsel for the respondent that the appellant had breached the previous order which required the budget to be filed and served by 10th June 2016. The judge invited comment from counsel for the appellant who reported that he had not been aware of the problem until the start of the hearing and he was unable to contact his instructing solicitor who was on holiday. The judge then asked counsel for the respondent whether the appellant would need to apply for relief from sanctions and she agreed he did. Counsel for the claimant said that he had no evidence to explain the reasons for the breach and the judge said the way to deal with ii was io adjourn costs budgeting to the next case management conference which he did. He did make a joke about finding other ways to avoid costs budgeting but it is clear it was a joke and in my view the judge was prepared to and would have dealt with costs budgeting if he had been asked to do so. It was clear from what he said later in the hearing that he had read and considered the budgets in advance of the hearing.
17. The judge did not explore with either party whether he could still deal with costs management even though the appellant was technically in breach. This is perhaps unfortunate as it is clear that budgets had been exchanged eight days prior to the hearing and both parties were presumably ready to deal with the issue as there had been some discussions prior to the hearing and the budgets were not particularly lengthy or complex. Counsel for the respondents did not advance any prejudice caused by the delay in service of the budget nor did she contend that she was not ready to deal with the issue if the judge decided to do so. It was not contended to the contrary on the appeal either. This was therefore a somewhat technical and in my view opportunist objection by the respondents as l can see no reason why the court could not have dealt with costs management on that occasion if the judge had decided to do
18. I am conscious of the fact that the order was not appealed and it is no part of my function in this appeal to say whether the judge was right or wrong in his decision on 25th August 2016. I suspect he was technically right to adjourn the issue because the costs budget was late, the sanction set out in CPR 3.14 would normally apply and the appellant’s counsel was not able to explain the delay or apply for relief from sanctions in the face of the court as he had no evidence he could put before the court as to the reasons for the breach. I think it is however relevant to the exercise of discretion in the decision under appeal that absent the technical objection by the respondents the court probably could and would have dealt with costs management at the original hearing.
19. This brings me to an assessment of whether the judge was right to reach the conclusions that he did in his judgment. The first issue is whether his assessment of the seriousness or significance of the breach was correct. He based his assessment mainly on the dicta of Lord Justice Jackson in Jamadar as the decision to adjourn the costs budgeting had caused case management and costs management to be conducted separately and a further hearing had to be convened when costs budgeting should have been dealt with at the first hearing. I am attracted by the argument put forward by counsel for the appellant in this case that the fact that a fresh hearing must be arranged to deal with an application for relief from sanctions and, if successful, costs budgeting, cannot be a conclusive reason for dismissing an application for relief. If that was the case, all separately listed applications for relief from sanctions would be effectively hopeless before they had begun. The need to list a fresh hearing is however clearly a factor which must be taken into account and weighed in the scales as indeed it was in Jamadar and Mitchell.
20. The assessment of the seriousness and significance of the breach is a process which involves both an analysis of the nature of the breach and the consequences caused by it. In the leading judgment in p enton v White this was addressed in paragraph 26:
26. “Triviality is not part of the test described in the rule. It is a useful concept in the context of the first stage because it requires the judge to focus on the question whether a breach is serious or significant. In Mitchell itself, the court also used the words “minor” (para 59) and “insignificant” (para 40). It seems that the word “trivial” has given rise to some difficulty. For example, it has given rise to arguments as to whether a substantial delay in complying with the terms of a rule or order which has no effect on the efficient running of the litigation is or is not to be regarded as trivial. Such semantic disputes do not promote the conduct of litigation efficiently and at proportionate cost. In these circumstances, we think it would be preferable if in future the focus of the enquiry at the first stage should not be on whether the breach has been trivial. Rather, it should be on whether the breach has been serious or significant. It was submitted on behalf of the Law Society and Bar Council that the test of triviality should be replaced by the test of immateriality and that an immaterial breach should be defined as one which “neither imperils future hearing dates nor otherwise disrupts the conduct of the litigation”. Provided that this is understood as including the effect on litigation generally (and not only on the litigation in which the application is made), there are many circumstances in which materiality in this sense will be the most useful measure of whether a breach has been serious or significant. But it leaves out of account those breaches which are incapable of affecting the efficient progress of the litigation, although they are serious. The most obvious example of such a breach is a failure to pay court fees. We therefore prefer simply to say that, in evaluating a breach, judges should assess its seriousness and significance. We recognise that the concepts of seriousness and significance are not hard-edged and that there are degrees of seriousness and significance, but we hope that, assisted by the guidance given in this decision and its application in individual cases over time, courts will deal with these applications in a consistent manner.
21. This is clearly not a binary approach, in the sense that a breach is either serious or it is not. In assessing the seriousness and significance of the breach there may be several factors to be considered not all of which will support the same conclusion. In the present case, the filing and service of the budget was over two months late and so this factor clearly points towards a serious breach. It should however be recorded that the budget was filed eight days before the hearing which was, before 2016, considered sufficient time to consider and comment on an opponent’s budget. Whilst I accept that the hearing on 25th August adjourned the costs management issues I think it is only fair to consider what prejudice there would have been to the respondents if the hearing had been allowed to proceed as planned. If the respondents had not raised the issue of the appellant being late in filing and serving the budget I doubt the District Judge would have been too concerned by it provided neither party had been disadvantaged by the delay. In my view costs management would have taken place at the hearing on 25th August 2016 and been concluded by the District Judge in relatively short order.
22. Even if the court is limited to considering what in fact did occur because of the decision to adjourn the costs budgeting the court should consider whether the application for relief from sanctions has actually added to the costs of the litigation and placed additional demands on the resources of the court. In this case, it would be right to take into account that the application was listed to be dealt with at the same time as a pre-planned case management conference at which the previous case management decisions would be reviewed and if necessary, varied. Whilst I accept that in the event those case management decisions were not actually considered on 11th January 2017 this was only because the respondents had issued an application in November 2016 seeking a variation of certain directions. It would be wholly unfair if the appellant were treated as if it had caused a stand-alone hearing when in fact it only became a stand-alone hearing due to the respondent’s prior application (which itself took up court time) dealing with the issues in advance.
23. The judge clearly felt he was bound by the spirit if not the letter of the authority in the Court of Appeal decision in Jamadar. Whilst the guidance in that case was clearly binding on him, he would only be compelled to reach the same decision if the facts were the same or very similar. It seems to me there are two very important distinctions between this case and Jamadar. In that case the claimant had come to the costs and case management hearing having not filed and served a budget at all. His counsel attempted to submit an unsigned draft which had not previously been served. Understandably counsel for the defendant protested as he had been given no time to consider it and take instructions. In the present case, the budget was filed and served eight days before the hearing. The budgets had been considered by both parties, there had been some discussions about the contents and the appellant had filed a helpful schedule containing both sets of figures. The objection about the appellant’s budget being late was only raised minutes before the hearing started by counsel for, the respondents. Both counsel appeared to have been properly instructed and capable of dealing with costs management if they had been asked to do so. The second difference is that the application for relief from sanctions (and costs management) were listed to be heard at the same time as a case management conference which had been conceded by both parties to have been reasonably required. This contrasted with Jamadar where a stand-alone hearing was listed to deal with the application for relief from sanctions which, if successful, would have required a second hearing to deal with the costs management of the claimants claim. Whilst Jamadar was clearly a relevant and useful authority to consider, in my view, it did not compel any particular result in terms of the success or failure of the application given the different factual circumstances.
24. It is clear that sometimes a court can find that whilst there has been significant delay in complying with a rule or order this may not amount to a serious or significant breach where the consequences in terms of the progress of the litigation are not substantial. In Altomart Limited v Salford Estates ( no 2) Limited  EWCA Civ 1408 the respondent was about seven weeks late in filing a Respondent’s Notice in an appeal. The appeal was not however listed until 10th or 11th November 2014 so the appellant was not really disadvantaged by the respondent’s delay. Having analysed the principles in recent authorities Lord Justice Bick found:
“22. Applying the Mitchell principles as expounded in Denton, the first question for consideration was the seriousness and significance of the breach of the rules which had given rise to the need for the application. In terms of the lapse of time the delay was considerable,· but it was clear that it was likely to have had little, if any, effect on the course of the proceedings.
- Neither party suggested, for example, that it would lead to an adjournment of the hearing and there was no reason to think that the need to allow additional time for argument would be likely to interfere with the court’s other business. In those circumstances I did not think that the delay could properly be regarded as serious or significant in the sense in which those expressions were used in Denton. That suggested that relief should probably be granted: see Denton, paragraph 28.
23′. As I have already said, it did not seem to me that the explanation given for the delay was very persuasive, but, since the delay itself had had no real effect on the proceedings and had caused no substantive prejudice to Salford, I did not consider that to be of great significance. Altomart accepted that it should bear the costs occasioned by its need to seek the court’s indulgence. There was nothing else in its conduct of the proceedings o.r in the circumstances more generally that militated against granting relief and it would not have been appropriate to refuse relief simply as a punitive measure. I was therefore satisfied that the application should be granted.”
25. The respondent would no doubt say that Altomart is not a comparable case because the delay in filing the respondent’s notice did not cause a hearing to be adjourned and re-listed for an application for relief from sanctions to be made. This is technically correct but in my view in the present case the adjournment was only caused by the respondents taking a technical point on the appellants delay in filing the cost budget when the delay caused them no prejudice at all or at least should have caused them no prejudice at all. The warning given by the Master of the Rolls in Denton may be apposite:
“43. The court will be more ready in the future to penalise opportunism. The duty of care owed by a legal representative to his client takes account of the fact that litigants are required to help the court to further the overriding objective. Representatives should bear this important obligation to the court in mind when considering whether to advise their clients to adopt an uncooperative attitude in unreasonably refusing to agree extensions of time and in unreasonably opposing applications for relief from sanctions. It is as unacceptable for a party to try to take advantage of a minor inadvertent error, as it is for rules, orders and practice directions to be breached in the first place”
26. The judge dealt with the issue about the reasons for the breach quite briefly commenting that the failure to appreciate a change in the rules cannot amount to a good The appellant’s solicitor had thought the seven-day time limit in CPR 3.13 which r have recorded above as the rule before 2016 still applied but of course she had to concede that she failed to properly read the Notice dated 10th May 2016which was clear on its terms. I agree with the judge’s findings on this issue.
27. There are perhaps two other specific issues I should comment on: the increase in costs between the hearing on 25th August 2016 and the bearing on 11th January 2017 and the way the judge dealt with the prejudice to the claimant. I have to accept that the overall costs both estimated and incurred that the claimant put forward to the court for budgeting purpose had increased by £14,000 between the two hearing dates. It is perhaps unfortunate that there was a five-month delay between hearings but this was caused by the judge’s understandable wish to list the application for relief from sanctions at the case management conference he had already decided to convene. It cannot be the case however that the increase in costs was either caused by the delay or by the adjournment of costs budgeting. It must have been caused by a change in the way the litigation was being or was about to be conducted as a result of events which occurred in the intervening period. If that is right those costs would have been incurred anyway and perhaps have been subject to an application for variation of the budget in any event.
28. I can understand why the appellant feels the judge was somewhat unsympathetic when he found that the appellant personally would not be prejudiced although his solicitors might be by the order that the costs be limited to court fees. The judge was technically correct but it would I think be right to consider prejudice incurred by the appellant’s solicitor by such an order although I doubt it would carry much weight. I make that comment as this issue does not appear to have troubled the higher courts much when dealing with the many cases on relief from sanctions since Mitchell.
29. Standing back from the situation and taking all relevant factors into account I take the view that the judge placed too much weight on the authority of Jamadar virtually considering that it bound him to refuse the application for relief from sanctions. I have explained earlier in this judgment how that case can be distinguished factually from the present appeal. Whilst the judge was entitled to take into account that the need for an application for relief from sanctions had taken up additional court time he should have borne in mind that it was originally intended that it be dealt with as part of a pre-arranged case management conference where directions should be reviewed generally. I have explained why I am uncomfortable with the concept that the need to take up court time with a further application provides a knock-out blow against an application for relief from sanctions. This discomfort increases when the court reaches the conclusion (as I have) that the need for the adjournment of the hearing only arose because the respondents took a technical point on the appellant’s late filing of the budget in circumstances where they could have overlooked the delay and proceeded with the hearing without any prejudice to them. This would then have obviated the need for the adjournment and the subsequent application for relief.
30. For these reasons I have reached the conclusion that District Judge Hickinbottom was wrong to refuse the application for relief from sanctions as I think fairness demanded that it should be granted for the reasons I have already I have some considerable sympathy with him however. He may well not have recalled the circumstances surrounding the adjournment of the original hearing and it may well have not occurred to him at the time that he had intended to deal with the application for relief at the same time he dealt with other case management directions. With the benefit of all the history however I have reached a different conclusion and consider this is the right decision.”
The judgment can be found here: Hewitt v Smith Approved Judgment