Jagdish Lakhani and another v Ibrahim Sheikh Abadullah Mahmud and Others
| Jurisdiction | England & Wales |
| Judge | Daniel Alexander,Mr Daniel Alexander |
| Judgment Date | 05 July 2017 |
| Neutral Citation | [2017] EWHC 1713 (Ch) |
| Docket Number | County Court Case No.: C01CL619 |
| Court | Chancery Division |
| Date | 05 July 2017 |
[2017] EWHC 1713 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
ON APPEAL FROM HH JUDGE LOCHRANE
IN THE COUNTY COURT AT CENTRAL LONDON
Royal Courts of Justice
Rolls Building, Fetter Lane, London, EC4
Mr Daniel Alexander QC
Sitting as a Deputy Judge of the Chancery Division
County Court Case No.: C01CL619
Appeal ref: CH-2017-000032
Ms Alice Hawker (instructed by IBB Law) for the Appellants/Defendants
Ms Philomena Harrison (instructed by Blake Morgan LLP) for the Respondents/Claimants
Hearing date: 30 June 2017
Approved Judgment
I direct that, pursuant to CPR PD39A para 6.1, no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Daniel Alexander QC
Mr Daniel Alexander QC
Introduction
This is an appeal by the defendants to this claim from the order of HH Judge Lochrane sitting in the Central London County Court, dated 10 January 2017, whereby he dismissed the defendants' application for relief from the sanctions provided for by CPR 3.14 in respect of the failure to comply with one of the case management orders relating to the filing of costs budgets made by District Judge Jackson sitting in the Central London Country Court on 18 November 2016. Permission to appeal was refused by the judge but was granted by Norris J.
The claim and the order which was not complied with
The case concerns a claim for an injunction brought by the freehold owners of land in a London suburb to require the defendants to restore car parking spaces of certain land to a condition in which they are available to the claimants, which it is contended should be done pursuant to a transfer dated 8 August 1986.
The order of 18 November 2016 provided that the parties should file and serve updated costs budget 21 days before the costs and case management conference which was scheduled to take place on 10 January 2017. It is common ground that the purpose of this order was to enable the parties to communicate with each other in good time prior to the costs and case management conference to limit disputes over costs budgeting and to smooth the resolution at that hearing.
Service of costs budgets
The claimants served their costs budget on 19 December 2016, the correct day. According to the evidence, this prompted the defendants' solicitor with conduct of the case, Mr Fellows at IBB Law, to ask a colleague to prepare the defendants' Precedent H costs budget. This was served the next day on 20 December 2016. The claimants' costs budget sought over £100,000 in costs and the defendants' budget was approximately half that amount. Because the defendants' costs budget was served late, the automatic consequence under the rules is that, unless relief from sanctions is permitted, the defendants will not be able to recover any more than court costs if successful in the claim.
In correspondence following service of these documents exhibited to the statement of Mr Fellows, which was itself served only just before the hearing at which the judgment under appeal was given, the solicitors engaged in debate as to whether the defendants' costs budget was in fact out of time. However, it was ultimately not in dispute before the judge that it was. HH Judge Lochrane was unimpressed with the attempt to argue that the 20 th was the right day rather than the 19 th, referring in his judgment to the "obvious reality" of the rules.
The parties' comparison of and comments on the costs budgets
Despite the defendants missing the deadline for their costs budget, the parties' solicitors got on with the exercise of commenting on each other's costs proposals. The parties exchanged Precedent R reports shortly before the hearing. The parties' respective positions for the costs budgeting hearing were reflected in a document served the day before the hearing before HH Judge Lochrane entitled Costs Budget Comparison which helpfully summarised the parties' respective positions on costs. Both parties were able to make sensible comments on the other side's costs' schedules. In the case of the defendants' costs budget, the majority of the costs estimates were agreed. In the case of the claimants' costs budget, the defendants' solicitors provided comments on why they considered the claimants' costs estimates were too high. In some cases, these comments were detailed and in others they questioned more briefly why the claimants' costs should be higher than the defendants. Although the defendants did not, in that document, provide specific sums as to what they regarded as reasonable, under almost all of the heads they challenged the claimants' costs on the footing that there was no good reason for the disparity in costs between the parties.
The significance of this document, which was before the judge, albeit not referred to by him in his judgment, is that it shows that the parties had been able to engage in debate about costs estimates and that, in most cases as regards the defendants' costs, there was little, if any, dispute that they were appropriate. It provides concrete support for the evidence of the defendants' solicitors on the application for relief from sanctions that the claimants had suffered no prejudice by missing the deadline by a day and had ample time to consider and comment on the defendants' cost budget prior to the costs and case management hearing on 10 January.
At the hearing, the claimants' proposed costs budget was significantly reduced by the judge under a number of heads. However, because relief from sanctions was not granted, the defendants' costs budget was not considered by him at all. The court would have had to determine two main issues: costs for witness statements (where the difference between the claim and that agreed by the claimants was, in context, modest — about £2000) and trial (where this difference was less than £1000). Had relief from sanctions been ordered, there is little doubt that it would have been possible for the court to exercise its costs budgeting powers relatively easily although it is unclear whether time would have permitted that to be done at the same hearing, given the time taken on relief from sanctions and the claimants' costs budget. This point lies at the heart of this appeal because it is said that this was a minor default which did not affect the procedure to any significant extent and that the judge was wrong to treat it as a serious breach.
The application for relief from sanctions and the judgment under appeal
The application for relief from sanctions was not advanced in a manner calculated to optimise the chances of success. First, the application was not made in a timely manner on or immediately after the 20 December. Instead, it was made at the last minute just before the hearing, with the defendants' solicitor holding the position until late in the day that no application was needed. Prior to that, there had been dispute in correspondence as to whether such an application was necessary. Second, the circumstances in which the application was made and the late service of evidence precluded the claimants from serving evidence in response to it or having a reasonable time in which to consider whether it should be opposed. Third, the 45 minute hearing to determine comparatively simple costs budgets was turned into a 1/2 day hearing, dominated by the issue of relief from sanctions. Fourth, the late service of the costs budget and the consequential dispute over relief from sanctions had potential to disrupt agreement over costs budgets.
The judgment
The judgment under appeal is short and was given ex tempore. HH Judge Lochrane began by setting out the relevant provisions of CPR 3.14 and recorded the basic chronology.
The judge said, in my view rightly, that in certain circumstances being one day late with a costs budget "might not be regarded as terribly serious".
However, he went on to record a number of matters which led him to take a different view in paragraphs 5–6. In summary they were as follows. First, that the defendants' solicitor only accepted belatedly that the costs budget may have been out of time which, as the judge said, meant that days which should have been devoted to agreeing costs were cluttered with arguments about whether or not there had in fact been a breach of the rules. Second, that the situation was made worse by the defendants knowing that their office would be shut between 23 December 2016 and 3 January 2017, limiting the time available for agreement on costs (in effect to just a few days before Christmas and a few days after the New Year). Third, that the defendants' solicitor was aware that filing late would restrict a period already limited. The judge said that it was "clear" that the late filing had "artificially restricted an already restricted timetable". Fourth, he rejected an argument that it did not matter because the budgets were not agreed anyway. Fifth, he said that the impact of late service had created an environment which was not conducive to agreement and was more conducive to the defendants presenting the costs as highly contentious.
He then referred to the relevant authorities of Denton and Mitchell albeit that he summarised the principles in those cases very briefly.
He considered that this was not a breach for which there was a sensible excuse. He said at paragraph 14 that the defendants' solicitor had "failed properly to interpret the Rules which are there for all to see" and that the rule was not particularly complicated and that everyone was very familiar with it.
HH Judge Lochrane's overall conclusion in paragraph 16 was as follows:
"My conclusion is that this is not a trivial breach. It is a serious breach....
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