Henderson and Jones Ltd v Stargunter Ltd
| Jurisdiction | England & Wales |
| Judge | Neil Moody |
| Judgment Date | 19 July 2023 |
| Neutral Citation | [2023] EWHC 1849 (TCC) |
| Docket Number | Case No: HT-2022-000165 |
| Court | King's Bench Division (Technology and Construction Court) |
and
[2023] EWHC 1849 (TCC)
Neil Moody KC
SITTING AS A JUDGE OF THE HIGH COURT
Case No: HT-2022-000165
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Daniel Churcher (instructed by Berwick Law) for the Claimant
Cullum Monro Morrison (instructed by BDB Pitmans LLP) for the First Defendant
Hearing dates: 7 th July 2023
APPROVED JUDGMENT
This judgment was handed down by the court remotely by circulation to the parties' representatives by email and released to The National Archives. The date and time for hand-down is deemed to be 19 July 2023 at 10.30am
Neil Moody KC:
Introduction
I heard the first Costs and Case Management Conference in this case on 7 th July 2023. In advance of the CCMC, the First Defendant served a costs budget which was in time but materially incomplete, and then served a “replacement” budget which was complete but five days late.
The First Defendant made an application for relief from sanctions so that it could rely upon the second budget. Having heard argument, I granted relief and proceeded to deal with costs budgeting at the CCMC. In view of the number of authorities cited to me and the lack of time available, I confirmed to the parties that I would provide written reasons for my decision. These are my reasons.
Background
I take the background facts from the Claimant's Note for the CCMC. The proceedings arise out of a construction contract entered into between the First Defendant (“Stargunter”) and the Second Defendant (“Rudgard”) on 20 th November 2008. Stargunter is the owner of a property at 6 Tregunter Road, London, SW10, which was the subject of the contract. Rudgard was a construction company but has been insolvent since 2010. Rudgard's rights under the construction contract have been assigned to the Claimant (“Henderson”), although the effectiveness of that assignment is in issue in this action. Rudgard has taken no part in these proceedings.
Pursuant to the construction contract Rudgard undertook works to the property. During the works the parties fell in to dispute regarding, amongst other things, delay and the value of Rudgard's account. On 30 th April 2010 Stargunter issued a notice of specified default against Rudgard alleging that Rudgard was failing to proceed regularly and diligently with the works.
A further notice was sent on 11th May 2010 followed by a meeting between the parties. What happened at that meeting is disputed, but it is common ground that on 13th May 2010 Stargunter issued a notice purporting to terminate Rudgard's employment under the contract for default on 18th May 2010.
Rudgard's claims (now pursued by Henderson) are essentially for a valuation of Rudgard's termination account, raising issues of: liability for delay and delay losses; the valuation of Rudgard's works; and the validity of Stargunter's notices of default and termination. The total sum claimed by Henderson is £980,802.
The Relevant Rules
The CPR provide as follows:
3.9(1) On an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need –
(a) for litigation to be conducted efficiently and at proportionate cost; and
(b) to enforce compliance with rules, practice directions and orders. (2) An application for relief must be supported by evidence.
3.13(1) unless the court otherwise orders, all parties except litigants in person must file and exchange budgets –
(a) where the stated value of the claim on the claim form is less than £50,000, with the directions questionnaires;
(b) in any other case, not later than 21 days before the first case management conference.
…
(5) Every budget must be dated and verified by a statement of truth signed by a senior legal representative of the party.
…
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 Relevant Procedural History
On 1 st June 2023 the Court gave notice that the CCMC was listed for 7 th July 2023. It is common ground that, in accordance with CPR 3.13(1)(b), the parties' costs budgets had to be served not later than Thursday 15 th June 2023. Henderson served a compliant budget in Precedent H format on 15 th June 2023. It totalled £492,400.
Stargunter served a Precedent H budget on 15 th June, but it was materially incomplete. The document was unsigned, there were no incurred or estimated costs in respect of statements of case or the CCMC, and there were two differing front sheets. The first totalled to £338,084, and the second totalled to £144,812. The second front sheet included figures for pre-action and statement of case costs but, for all other phases, against the totals it stated “TBA”. It was not verified by a statement of truth.
Stargunter then served a second budget on Tuesday 20 th June. This was complete, but the total budgeted sum was now put at £891,897.
The position therefore is that Stargunter has not served a budget in accordance with the rules. The first budget does not comply with the requirement in CPR 3.13(5) that it should be verified by a statement of truth; the second budget was served after the deadline in CPR 3.13(1)(b). Accordingly, the sanction in CPR 3.14 applies, and Stargunter will be treated as having filed a budget comprising only the applicable court fees “unless the court otherwise orders”.
Stargunter now seeks to rely upon its second budget. It has not issued a formal application seeking relief from sanctions, but it has served a witness statement from Mr David Gwillim dated 4 th July 2023. He is a partner in BDB Pitmans LLP and has conduct of the matter.
Mr Gwillim says that he was not timeously notified of the order of 1 st June because the Court's e-mail was sent to his firm's former outdoor clerk who had left the firm on 24th January 2023. Fortunately, Henderson's solicitor wrote to Mr Gwillim on 7 th June enclosing the court notice and associated documents.
Mr Gwillim says that he obtained fees estimates from counsel's clerk and instructed his colleague, Ms Emma Dunkley, a trainee legal executive, to prepare a Precedent H budget based on his estimates. Mr Gwillim was in the Reading office and she was located in the London office. He then says:
“6. Ms Dunkley adopted the Precedent H from the gov.uk website in the form of an Excel spreadsheet. She reported to me on the morning of 15 June 2023 by Zoom that the Excel spreadsheet had not populated the first page, there appeared to be some issues with the formulae and the totals were not adding up. I phoned my firm's costs lawyer Elena Kostova to find out whether this was a known issue and if we could use her software which would be dependable. Ms Kostova explained that she was attending a training course and had only limited access to her PC of about 20 minutes that day. Ms Kostova sent Ms Dunkley a replacement Precedent H form, but that version did not calculate any of the figures. Ms Kostova was unable to access her system until her return to the office on Monday 19th June 2023.
7. Ms Kostova suggested that we should file and serve Precedent H in as complete a form as we could on or before the deadline and revise it as soon as practicable thereafter. I considered the draft Excel spreadsheet, and I was dismayed to discover that a considerable number of entries had corrupted and did not accurately represent the budgeted costs. I removed as many of the incorrect entries as I could. I attempted to apply my electronic signature to the form, but I was unable to do so. I asked my colleague Angela Burgess who is an Excel “super user” to help but she was unable to apply a signature. When all our attempts to amend the spreadsheet had failed, the corrupted and incomplete Precedent H was filed and served by Lyndsey McIntyre at 15:59 on 15 June 2023…
8. I spoke to Ms Kostova on Monday 19th June 2023, and she prepared a fresh Precedent H on her dedicated costs software for which only she has a licence. I considered it later the same day. I considered changes which were incorporated. I applied my electronic signature without incident and caused the document to be filed and served at 14:41 on 20 June 2023…”
The email from Ms Dunkley serving the first budget on 15 th June made no mention of any problems and said simply:
“Please find attached, by way of service, the Defendant's Costs Budget. There is an electronic signature which we will confirm with a hard copy shortly.”
The email from Mr Gwillim serving the second budget on 20 th June stated:
“We attach a revised Defendant's Costs Budget in substitution for the version served on Thursday. We apologise for any inconvenience. This is the version upon which we intend to relay. [sic] Please kindly discard the previous version.”
On 21 st June, Henderson's solicitors replied saying that if Stargunter wanted to rely on the second budget then a prompt application for relief from sanctions would be required. In the meantime they proposed to serve budget discussion reports in relation to both budgets.
On 28 th June Mr Gwillim replied saying that Stargunter intended to argue the point and “…invoke the saving provision in CPR 3.14.1 (‘unless the court otherwise orders’) at the hearing convened for costs management purposes on the basis, inter alia, that the service of the revised budget had no material impact upon the proceedings.”
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