Bank of Ireland v Philip Pank Partnership (2014)
Where a solicitor had filed and served a costs budget on time, but failed to notice when signing it that the words "statement of truth" appeared next to his signature without the actual statement of truth being present, his error did not render the costs budget a nullity; it was a valid document which suffered only from an irregularity and CPR r.3.14 was therefore not applicable. The court commented on the importance generally of statements of truth.
The defendant (P) applied for an order that the claimant (B) was in breach of CPR r.3.13 because it had filed a costs budget which did not contain a full statement of truth.
B's costs budget was in the form of Precedent H annexed to CPR PD 3E. Contrary to B's solicitor's normal practice, it had been prepared by an external draftsman, who assured him that it was ready to sign. Acting on that assurance, the solicitor failed to notice that the document did not include the full statement of truth. He signed it and the parties' costs budgets were exchanged seven days before the case management conference. An identical form was subsequently served with the full statement of truth included.
P submitted that as the original budget was in breach of CPR r.3.13, B required relief from the sanction otherwise imposed by CPR r.3.14 and that CPR r.3.9 applied. It emphasised the importance of statements of truth and asserted that there was no reasonable excuse for B's failure and that there should be no relief from sanction.
(1) There was nothing in the CPR or the relevant practice direction requiring each and every failure to comply with the formal requirements for budgets as rendering the budget a nullity. The logical consequence of P's argument was that every irregularity, even an omitted word or spelling mistake, would make the budget a nullity, which would achieve nothing except to bring the law generally into disrepute. The importance of statements of truth in costs budgeting was not to be underestimated, but it varied depending on context. Their purpose in costs budgets was for solicitors to certify the reasonableness of the budget. The notion that a document which included the words "statement of truth" and which was signed by the partner of a law firm might nevertheless be a complete nullity was unsustainable. The budget had been filed and served on time; it suffered only from an irregularity that had consequently been rectified. CPR r.3.14 was not, therefore, applicable (see paras 9-12 of judgment). (2) If the court was wrong that CPR r.3.14 did not apply, relief from sanction would have been granted on the basis that the non-compliance was trivial and a failure of form rather than substance, Mitchell v News Group Newspapers Ltd  EWCA Civ 1537,  1 W.L.R. 795 followed. It would not generally be appropriate to characterise the absence of a statement of truth as "trivial" but, on the facts of the instant case, P could have been in no doubt that the solicitor signing the budget was intending to certify the costs as reasonable. The case was far removed from one where there had been a failure to file and serve the budget (see paras 12-16 of judgment).
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12 Feb 2014
Queen's Bench Division