Late budgets arose in HEATHFIELD V AXIOM STONE (2020) 1075 (Ch). HHJ Simon Barker QC refused to grant relief. He agreed that the default was serious both in itself and as a continuing demonstration of D2’s lack of engagement with costs budgeting. He noted that D2 had a “history of tardiness in this litigation”.
An interesting aspect of this decision was that the Judge obiter mooted the possibility of imposing a partial sanction rather than denying D2 all costs. He observed that it was open to the Court to pitch the outcome somewhere between granting relief and imposing the full penalty. He invoked the opening words of CPR3.14; “unless the court orders otherwise”. He referred to shades of grey rather than a binary black or white outcome. However, the “outstandingly bad” conduct and attitude in this case justified upholding the penalty in full: relief refused. In a talk at the end of last year Jeremy Morgan QC observed that a Judge might want to impose a qualified sanction, say, recovery of 40% of costs. The 2021 ‘White Book’ does not mention HEATHFIELD but I have hopes that it will make it into a supplement.
Another possibility remember is partial relief under CPR 36.23. Where the guilty party makes a good Part 36 offer it will be able to recover 50% of costs from the end of the relevant period. This was first applied in ALI V CHANNEL 5 (2018) EWHC 840 (Ch).
The 2021 ‘White Book’ note at page 194 tantalisingly suggests that ‘The adverse consequences of R. 3.14 might also be minimised, or perhaps avoided altogether, if the party in breach is later awarded costs on the indemnity basis. The underlying logic is that the budget is only ever predicated upon the assumption that the victor will recover standard basis costs – CPR 3.18 .
Professor Dominic Regan
Special Advisor to Affiniti Finance
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