Jagdish Lakhani & anor v Ibrahim Sheikh Abadullah Mahmud & Ors (2017)
A judge had been correct to restrict the defendants' recoverable costs to court fees only under CPR r.3.14 where they had served their costs budget late without a reasonable excuse. Although the decision was on the tougher end of the spectrum as to substance and on the leaner end as to analysis, the defendants had not been deprived of a trial altogether.
The defendants in a dispute over the restoration of parking spaces on freehold land appealed against an order dismissing their application for relief from sanctions under CPR r.3.14 following their failure to comply with a case management order relating to the filing of costs budgets.
The claimants had sought an injunction to require the defendants to restore car parking spaces on specified land, which they contended should be done pursuant to a legal transfer. A district judge made an order which provided that the parties should file and serve updated costs budgets 21 days before the scheduled costs and case management conference to enable the parties to communicate with each other in good time prior to the conference to limit disputes over costs. The claimants served their costs budget on the correct day and the defendants served theirs a day late. The automatic consequence of the breach of the order was that, unless relief from sanctions was permitted, the defendants would not be able to recover any more than court costs if successful in the claim. The defendants initially disputed that the service was in fact late and the application for relief was only made just before the hearing.
The defendants contended that the judge (1) had erred in his approach by failing to take into account key matters in assessing the seriousness of the breach; and (2) had given too little weight to the fact that there were innocent reasons for the breach.
(1) The judge had been entitled to take the factors into account that he considered particularly relevant to determining whether the breach was serious or significant and he was not obliged to treat the fact that costs budgeting could be done as the overriding one. The instant case was on the borderline of sufficient seriousness to warrant refusal of relief from sanctions but the court could not properly interfere on that basis, having regard to the approach required. There was a risk of attempting a purist compartmentalisation of factors into the respective stages of Denton v TH White Ltd  EWCA Civ 906 and criticising judges if that was imperfectly done in ex tempore judgments. Some factors might be considered at more than one stage, Denton applied. In the instant case, even if the judge had concluded that the breach was not serious, he would have been entitled to conclude at the third stage of Denton that the manner in which it was sought to be remedied, including the dispute over whether there was a breach and the lateness of the application, meant that relief from sanctions should not be ordered. It was artificial to criticise his judgment on the footing that factors which had legitimately been considered at the first stage but which might better have been considered at the third stage also came in at the first, Mitchell v News Group Newspapers Ltd  EWCA Civ 1537 applied (paras 49-50 of judgment). (2) There was no basis for challenging the judge's conclusion that there was no reasonable excuse for the default. The evidence showed that the defendants' solicitors had only started to prepare the costs budget after receiving the claimants' costs budget. On any view, that was work undertaken at the last minute. A judge was entitled to make harsh comments about such conduct which the Court of Appeal would not overturn, Jamadar v Bradford Teaching Hospitals NHS Foundation Trust  EWCA Civ 1001 applied. Although the mistake was explicable the court was not satisfied that it was properly described as understandable. The judge did not think so and the court could not say that his evaluation was clearly wrong. The mistake was that of the party's legal representative and the judge had not expressly said that he had taken that into account. The decision was on the tougher end of the spectrum as to substance and on the leaner end of the spectrum as to analysis. But the defendants had not been deprived of a trial altogether. Had that been the consequence, the situation would have merited more detailed scrutiny than the judge gave it. His decision operated to deprive the defendants of their budgeted costs in the event that they succeeded at trial. If the claimants succeeded at trial, the decision would have a limited adverse impact on the defendants other than enabling the claimants to litigate without significant risk of having to pay the defendants' costs. It was hard to criticise it as disproportionate. It could not be shown that the claimants were using the rules as a tripwire and their solicitors had promptly pointed out that without an application for relief from sanctions the consequences of CPR 3.14 would follow (paras 51-61).