The Bank of Ireland & Anor v Philip Pank Partnership

A costs budget is not a nullity merely because it fails to comply perfectly with the formal requirements for a statement of truth. Filing and exchanging a budget on time, despite an irregularity in its form, does not engage the automatic sanction under CPR 3.14 unless the party has failed to provide a budget. The significance of a statement of truth depends on context. Where the defect is one of form rather than substance, and the document clearly communicates the solicitor’s certification of the budget, the court should ordinarily treat the budget as filed. Alternatively, relief from sanctions would normally be granted for a trivial or formal defect under the guidance in Mitchell.

The claimants filed and exchanged a Precedent H costs budget seven days before the case management conference. The document was signed and dated by a solicitor partner, but contained the words “Statement of Truth” instead of the prescribed statement. A corrected version was later served.

The defendant argued that no budget had been filed, so that CPR 3.14 imposed the costs-fee-only sanction and relief under CPR 3.9 was required. The court had to decide whether the formal defect meant that the claimants had failed to file a budget and, alternatively, whether relief from sanctions should be granted.

1. Costs budget filed. The defendant’s argument was rejected. CPR 3.13 required filing and exchange of a budget, while CPR 3.14 imposed its sanction where a party failed to provide a budget. Neither rule treated every failure to comply with the formal requirements in the practice directions as rendering the budget a nullity.
2. Effect of the irregularity. The claimants had filed and exchanged a costs budget on time. The omission of the prescribed wording was an irregularity. The document identified itself as a statement of truth, was signed by a solicitor partner and clearly showed the figures which the solicitor contended should be chargeable. The defect was therefore one of form rather than substance.
3. Context matters. Statements of truth are important, but their significance varies. They convert statements of case into evidence, whereas in a costs budget their function is to certify the reasonableness of the budget. The court declined to treat the defective document as a complete nullity.
4. Alternative conclusion. If relief from sanctions had been necessary, it would have been granted. Applying the guidance in Mitchell, the defect was formal and the consequences were far removed from a failure to file a budget at all. The court also relied on Lord Dyson MR’s warning that procedural compliance is not an end in itself and that the rules should not operate as traps.
5. No question of relief from sanctions arose. The budget had subsequently been rectified.

Not stated in the judgment. This was a first-instance decision on the effect of an alleged formal defect in a costs budget.