BMCE Bank International Plc v Phoenix Commodities PVT Ltd & Anor

Relief from the costs-budgeting sanction must be determined under the three-stage approach in Denton v TH White Ltd: assess the breach’s seriousness and significance, identify why it occurred, and consider all the circumstances. The requirements for efficient, proportionate litigation and compliance with rules, practice directions and orders receive particular weight. A solicitor’s oversight, including while away on business, is not a good reason for a substantial delay. An application made at the last moment is itself adverse. An undertaking to pay wasted costs may reduce party prejudice, but does not outweigh the need for compliance or the effect on court resources and other litigants. A substantial and consequential failure to serve a costs budget in time therefore justified the default sanction under CPR 3.14.

The claimant brought proceedings against the defendants. At the first costs and case management conference, the issue was whether the defendants should be permitted to rely on a costs budget served about two weeks late, despite CPR 3.14 providing that a party failing to file a required budget is treated as having filed a budget comprising only the applicable court fees.

The defendants sought an order otherwise under CPR 3.14. They relied on careful preparation of the budget, cooperation on other aspects of the litigation, an undertaking to meet costs, and the absence of substantial prejudice. The claimant opposed relief. The central issue was whether relief should be granted under the principles applicable to CPR 3.9.

1. Application refused. The defendants were treated under CPR 3.14 as having filed a budget comprising only the applicable court fees.
2. The court applied the three stages in Denton v TH White Ltd: seriousness and significance, the reason for default, and all the circumstances, including CPR 3.9(1)(a) and (b).
3. The breach was serious and significant. The budget was served about two weeks late, the normal budget discussion process was lost, the hearing time was consumed by the application, and a further costs-management hearing was inevitable.
4. There was no good reason. The solicitor’s absence on business and resulting oversight explained the default but did not excuse it. The breach was not deliberate, but that did not justify relief.
5. The third-stage factors favoured refusal. The default hindered efficient and proportionate litigation, affected court resources and other court users, and engaged the need to enforce the costs-budgeting rules. The application was not prompt: the defendants knew the budget was late and applied only on the morning of the hearing.
6. An undertaking to indemnify costs could mitigate prejudice to the claimant, but was not a trump card. It did not remove the prejudice caused by lost client time or the impact on the court and other litigants.
7. Relief applications should be made promptly and supported by evidence. Parties in commercial litigation should cooperate in advancing the overriding objective.