Page v RGC Restaurants Ltd

A materially incomplete costs budget engages the default sanction in CPR 3.14 unless the court orders otherwise. Agreement between the parties does not, by itself, displace that sanction. The court must nevertheless consider the saving provision when deciding the order to make at the costs and case management hearing, having regard to the overriding objective. Partial disapplication may be appropriate in exceptional circumstances where there is a clear dividing line between compliant and non-compliant phases, and applying the sanction to the compliant phases would be unjust.

The claimant appealed from Master Thornett’s costs and case management order dated 19 December 2017. The master treated the claimant as having failed to file a compliant costs budget under CPR 3.14 and limited his recoverable costs to applicable court fees. The parties had agreed budgets for phases up to a proposed second case management conference, but the claimant’s budget contained no figures for trial preparation or trial. The appeal concerned the meaning and application of CPR 3.14, its relationship with CPR 3.15, the court’s duty to consider disapplication, and whether relief should be granted.

1. Appeal allowed. The claimant’s materially incomplete budget engaged CPR 3.14. An interim budget which omits important parts of Precedent H is not “a budget” for the purposes of that rule. The sanction operates automatically once the relevant failure occurs, unless the court orders otherwise. Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 157 supported that construction, although it concerned late rather than incomplete filing (paras [118]–[123]).
2. CPR 3.15(2)(a) does not automatically override CPR 3.14. Once the sanction has taken effect, the only budgeted costs for CPR 3.15 purposes are the applicable court fees unless the court orders otherwise. Any agreement made after the sanction takes effect may raise a different issue under CPR 3.18, but that question did not arise (paras [125]–[128]).
3. The court hearing the costs application must actively consider whether to exercise the saving provision in CPR 3.14. This is distinct from relief under CPR 3.9: an application for relief starts from the assumption that the sanction was properly imposed, whereas the saving provision is considered before the court makes the relevant order. The master had referred to relief under CPR 3.9 but had not addressed whether the order should instead disapply CPR 3.14 (paras [136]–[158]).
4. The court applied the structured approach in Denton v TH White Ltd [2014] EWCA Civ 906. The breach was moderately serious and significant, arose from a negligent but genuine misunderstanding, and had not impeded costs management for the earlier phases. Applying the sanction to those phases would have been unjust, particularly because the parties had negotiated and agreed them.
5. The sanction remained appropriate for trial preparation and trial. Those phases had not been budgeted at all, and applying the sanction to them served the need for efficient, proportionate litigation and compliance. The case was exceptional because there was a clear dividing line between the earlier agreed phases and the omitted later phases (paras [159]–[171]).
6. The order was to be varied so that the agreed budgets were recorded for the phases before the proposed second CMC/PTR; that phase was not recorded because the master had directed the case through to trial. The claimant’s trial preparation and trial costs remained limited to applicable court fees, while the defendant’s corresponding costs were approved in specified amounts (paras [172]–[175]).

• High Court (Queen’s Bench Division): appeal from the order of Master Thornett dated 19 December 2017 allowed. The CPR 3.14 sanction was disapplied for the agreed earlier phases but maintained for trial preparation and trial.