Sign and your winning

The World Cup is in full swing at the time of writing and again the decisions of referees are being closely scrutinised with already some very harsh calls being made and in many cases criticised; back in the less glamorous but equally competitive world of Case Management it appears that a more sympathetic approach is being exercised when dealing with “technical” challenges that attempt to deprive a receiving party of its costs or potential costs.

In the matter of Americhem Europe Ltd v Rakem Ltd [2014] EW HC 1881 (TCC) before Mr Justice Stuart-Smith the Third Party cried “foul” and sought a “penalty” depriving the Defendant of future costs save for court fees on the grounds that the Precedent H budget had been signed by a firm’s in-house costs draftsman rather than by “a senior legal representative” of the firm.

Accepting that it did not appear that there was a definition of what a “senior legal representative” was Stuart-Smith J was satisfied that CPR 2.3(1) defined a legal representative as someone “who is representing in a legal capacity” not a role undertaken by a costs draftsman.

The Third Party argued that the budget was rendered a nullity and the same should be restricted to applicable court fees only.

The judge disagreed and whilst noting the signature by the costs draftsman was “an irregularity” the judge considered that whilst CPR 3.14 provided for sanction in the event of failure to provide a budget the rule did not include the additional words “complying in all respects with the formal requirements laid down by PD3E”.

The judge considered that the Defendant had provided a costs budget that would be immediately recognised as such and there was nothing to impede the parties from engaging in the normal constructive discussions as to the figures set out.

“To hold that it was not a costs budget at all would not, in my judgment, be a proper application of a robust approach: rather it would lack in any form of reality or justification”.

Acknowledging his previous decision Bank of Ireland v Philip Pank Partnership (2014) EWHC 284 (TCC) the judge added that though it may not have been a “trivial” breach that “even in the more robust environment that now obtains, the consequences of refusing relief seem to me to be disproportionate, unjust and therefore contrary to the overriding objective”.

Noting that there had been various cases arguing that an irregularity renders a budget a nullity the judge preferred to adopt the comments of Mr Justice Leggatt in Summit Navigation Ltd and Other v  Generali Romania Asigurare Reasigurare  [2014] EWHC 398 (Comm) wherein reference was made to the pre-Jackson speech of the Master of the Rolls, Lord Dyson who opined that it was not the aim of the reforms to turn rules and rule compliance in to “trip wires”, nor into the “mistress rather than the handmaid of justice”, nor to render compliance “an end in itself”.

The judge kept the “red card” firmly in his back pocket though he did award the Third Party the modest sum of £50.00 by way of a summary assessment of bringing the matter to the attention of the Court.

One imagines the Defendant’s solicitor was tempted to run around the court swinging his shirt over his head before sliding on his knees before the bench with his opponent gesturing to the judge and chanting “you don’t know what you’re doing” in keeping with the football theme of this note but that is probably just a result of World Cup overdose on the part of the writer.

Gary Knight, Partner and Costs Lawyer