Americhem Europe Ltd v Rakem Ltd

A costs budget signed by a person who is not a senior legal representative is irregular, but it is not thereby a nullity. CPR 3.14 imposes its automatic sanction where a party fails to provide a budget; it does not extend that sanction to every formal defect in an otherwise recognisable budget. The court should apply the rules robustly, but compliance is not an end in itself. Where the objective of efficient and proportionate litigation has not been impaired, treating the budget as nonexistent may be disproportionate and unjust. Any defect may instead be remedied at the defaulting party’s cost, with compensation for the reasonable expense caused by the irregularity.

The claim arose from the delivery of the wrong chemical. At the first case management conference, the Third Party challenged the Defendant’s costs budget because it had been signed by a costs draftsman rather than a senior legal representative. The Defendant’s budget was otherwise compliant and had been filed only a few minutes late, although the lateness was not the issue requiring determination.

The central questions were whether the signatory was a senior legal representative within PD3E and, if not, whether the defective signature meant that the Defendant had failed to provide a budget for the purposes of CPR 3.14.

1. The signature requirement. Mr Crossland was not shown to be a solicitor and had no involvement in the litigation beyond preparing the costs budget. The definition of “legal representative” in CPR 2.3(1) was persuasive because PD3E supplements CPR Part 3. It connoted representation in a legal capacity. A costs draftsman who merely prepares a budget and gives no legal advice or legally based representation was not acting in that capacity.

2. Even if Mr Crossland could be regarded as a legal representative, he was not a senior legal representative. The purpose of the certification requirement was that the budget’s reasonableness should be effectively certified by someone conducting the action who could assess the likely resources required and the legal, factual and documentary complexity of the case.

3. Effect of the irregularity. The defective signature was an irregularity, comparable to failing to set out the statement of truth in full, as explained in The Governor & Company of the Bank of Ireland v Philip Pank Partnership [2014] EWHC 284 (TCC). It did not make the budget a nullity. CPR 3.14 applied where a party failed to provide a budget. It did not state that the document had to comply in every respect with PD3E before it counted as a budget. The document was recognisable as the Defendant’s costs budget and remained capable of serving the purpose of facilitating proportionate costs discussions.

4. No application for relief from sanctions was therefore necessary. If relief had been required, it would have been granted because refusing it would have been disproportionate and unjust where no significant disadvantage had resulted. The appropriate response would have been correction at the Defendant’s cost and compensation of £50 for the Third Party’s expense.

5. The court adopted the reasoning of Leggatt J in Summit Navigation Ltd v Generali Romania Asigurare [2014] EWHC 398 (Comm): the Jackson reforms did not make procedural compliance an end in itself or turn rules into procedural traps where the compliance objective had not been impaired.

6. The Third Party’s submission was rejected. The Defendant was not treated as having filed a budget limited to the applicable court fees.