A recent case concerning costs management in litigation provides a timely reminder of the court’s powers to impose sanctions where parties do not comply with the Civil Procedure Rules (CPR).
In Page v RGC Restaurants Ltd  EWHC 2688 (QB), the claimant submitted a budget which did not include provisions for the ‘trial preparation’ and ‘trial’ case stages. Even though this approach was agreed with the defendant beforehand, the court held on appeal that the claimant was limited to court fees only for these two case stages.
The claim arose from the claimant’s ingestion of a milkshake containing nuts at the defendant’s café, despite informing the defendant of his allergy beforehand. He suffered an acute allergic reaction, which led to brain damage. Summary judgment was granted in favour of the claimant on the issue of liability, but several other issues were left to be determined. The case was then listed for a costs and case management conference (CCMC), meaning that the parties were required to file complete costs budgets under CPR 3.13.
The claimant proceeded on the basis that directions would be sought up to a further CCMC rather than all the way up to trial. He therefore submitted an ‘interim budget’, excluding budget allowance for costs of trial preparation and trial. This was agreed with the defendant, although the defendant did still submit a full budget. Crucially, the claimant did not seek the court’s approval for this approach.
At the CCMC, the judge ordered directions all the way to trial and therefore that the costs budget was not compliant with the CPR. It was not filed in compliance with Practice Direction 3E, and was therefore limited under CPR 3.14:
“Unless the court otherwise orders, any party which fails to file a budget despite being required to do so will be treated as having filed a budget comprising only the applicable court fees”
The claimant’s appeal was partially successful in that all other agreed costs in his budget were allowed. The judge had failed to engage the ‘saving provisions’ of CPR 3.14, as the court had the power to order otherwise. The costs budget filed was materially non-compliant for all stages of the case, but these sections of the budget had been completed and agreed between the parties beforehand.
However, the budgeted costs for trial preparation and trial remained restricted to the applicable court fees. Although the claimant benefitted from the saving provision which confined the judge’s original sanction, he was not granted relief from the order of applicable court fees only for trial preparation and trial. He was therefore deprived of his ability to recover any other costs for these case stages, including solicitor’s fees and counsel’s fees incurred.
Although this is an exceptional case, important lessons can be learned from the judgment here of Walker J.
Firstly, you should always seek the court’s permission in respect of costs and case management – the court’s authority is generally paramount. In default of this, it would have been wise for the claimant to file alternative budgets: one budgeting for all directions up to trial, and one budgeting up to a second CCMC as envisaged.
Secondly, any budget that does not include all phases is not a ‘budget’ for the purposes of the CPR. This was described as “grossly negligent” by Walker J, so ensure that budgeting for all case stages is completed before filing it with the court.
Costs budgeting in litigation can be a speculative exercise, especially in serious personal injury or clinical negligence cases. It is often not clear at the early budgeting stage how long a case will take, whether the progress of the case will be smooth and how much evidence will need to be considered. Despite this, it is important to be as accurate as possible in estimating your costs for each case stage and to seek the approval of the court as well as the approval of other parties.
For further advice on costs management, sanctions for failure to comply with the CPR and all other litigation and dispute resolution matters, please visit our page here: https://www.hcrlaw.com/service/dispute-resolution/