Heathfield International LLC v Axiom Stone (London) Ltd

Relief from the automatic costs-budgeting consequence under CPR 3.14 is a principled discretion governed by the overriding objective. The court must consider the seriousness and duration of the breach, the explanation, the effect on the parties, the court and other court users, and all the circumstances, including what is at stake.

The discretion is not confined to an all-or-nothing choice. Partial or hybrid relief may be available where appropriate. However, persistent failures to engage with costs budgeting, compounded by other procedural defaults and an inadequate explanation, may justify refusing relief entirely. The consequence is that the defaulting party is treated as having filed a budget comprising only the applicable court fees.

The claimant brought claims concerning unpaid invoices for medico-legal services against the first defendant, with an alternative and secondary claim against the second defendant. The second defendant was required to file and exchange a costs budget before the first case management conference but failed to do so by the original deadline and again filed its budget late after the hearing was relisted.

The second defendant applied for relief from the consequences of CPR 3.14. It relied on inadvertence, lack of prejudice and the availability of a budget discussion report. The claimant opposed relief, relying on the seriousness and persistence of the defaults, the inadequate explanation, and the resulting burden on the parties and the court. The issue was whether relief, full or partial, should be granted.

1. Application dismissed. The second defendant was treated under CPR 3.14 as having filed a costs budget comprising only the applicable court fees.
2. CPR 3.14 gives the court a discretion expressed by the words “Unless the court otherwise orders”. That discretion must be exercised judicially and in accordance with the overriding objective under CPR 1.1 and the criteria in CPR 3.9.
3. The court must consider all the circumstances. Relevant matters included the seriousness of the breach, the quality of the explanation, the effect of the default on the efficient conduct of the litigation, inconvenience and additional cost to the other parties and the court, compliance with rules and orders, and what was at stake.
4. The breach was serious in its own right and formed part of a continuing failure to engage with costs budgeting. The explanation that an incorrect date had been diarised was inadequate. The second defendant’s conduct included further delay, failure to engage in budget discussions, failure to provide a Precedent R report, late evidence and a late supplemental bundle.
5. The court rejected the contention that there had been no relevant inconvenience or impact. The defaults imposed an unreasonable burden on the claimant and the court and diverted judicial resources from other court users.
6. The discretion was not necessarily binary. Depending on the circumstances, partial or hybrid relief might be granted. In this case, however, the persistent and exceptionally poor conduct, together with the additional procedural failures, made even hybrid relief inappropriate.
7. Manchester Shipping Ltd v Balfour Worldwide Ltd and another was not analogous because the procedural context and degree of default were materially different. The court accepted that relief applications turn on their particular facts and that other decisions are of limited assistance.