Kim Murray and Another v Neil Dowlman Architecture Ltd
| Jurisdiction | England & Wales |
| Judge | The Hon. Mr Justice Coulson |
| Judgment Date | 16 April 2013 |
| Neutral Citation | [2013] EWHC 872 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 16 April 2013 |
| Docket Number | Case No: HT-12-355 |
[2013] EWHC 872 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr. Justice Coulson
Case No: HT-12-355
Mr Darren Naisbitt (of Just Costs Solicitors) for the Claimant
Mr Luke Wygas (instructed by CMS Cameron McKenna) for the Defendant
Hearing date: 27th March 2013
Introduction
This application raises a potentially important question about the circumstances in which a costs budget, which has been approved by the court as part of a costs management order, can subsequently be revised or rectified. It comes at a critical time, as the CPR is radically amended to introduce costs budgeting and costs management for most types of civil litigation.
The background facts are straightforward. On 26 March 2012 the claimants' solicitors entered into a Conditional Fee Agreement ("CFA") with each of the claimants. These CFAs provided for a success fee. The following day, 27 March, the claimants obtained the benefit of After The Event ("ATE") insurance. The premium was to be the subject of staged payments. There is no dispute that the day after that, 28 March 2012, the claimants served Form N251, giving notice to the defendant of both the CFA and the ATE insurance.
Court proceedings began in the TCC. The TCC is one of the courts in which costs management, a part of the raft of reforms being introduced following the report of Sir Rupert Jackson on the costs of civil litigation, is being piloted. The relevant Practice Direction covering that pilot scheme is PD51G.
The relevant parts of the PD are as follows:
"Filing of costs budgets
3.1 Save where the court otherwise orders, as part of its preparation of the further case management conference, at the same time as filing its Case Management Information Sheet, each party shall file and exchange its costs budget substantially in the form set out in Precedent HB annexed to this Practice Direction…
Purpose of Costs Management
4.3 At any case management conference or pre-trial review, the court will have regard to any costs budgets filed pursuant to this Practice Direction and will decide whether or not it is appropriate to make a costs management order.
4.4 If the court decides to make a costs management order it will, after making any appropriate revisions, record its approval of a party's budget…
Revision of Approved Budget
6. In a case where a costs management order has been made, at least seven days before any subsequent costs management hearing, case management conference or pre-trial review, and before trial, a party whose costs budget is no longer accurate must file and serve a budget revision showing what, if any, departures have occurred from that party's last approved budget, and the reasons for any increased budget. The court may approve or disapprove such departures from the previous budget…
Effect on Subsequent Assessment of Costs
8. When assessing costs on a standard basis, the court-
(1) will have regard to the receiving party's last approved budget; and
(2) will not depart from such approved budget unless satisfied that there is good reason to do so."
Although that PD remains in force for all cases where costs management orders have been made thereunder, from 1 April 2013, the relevant costs management provisions are at CPR 3.12 – 3.18 and 3EPD.1. Although the wording of these rules is not always the same as PD51G, it is very similar, and allows the court to "approve, vary or disapprove [any proposed] revisions, having regard to any significant developments which have occurred since the date when the previous budget was approved or agreed". Revisions will only be allowed where there is good reason to do so.
The Problem
Prior to the first CMC before Stuart-Smith J on 1 February 2013, the parties exchanged costs budgets. The claimants' costs budget was not in Form HB, an omission that was the subject of adverse comment by the judge. However, because the costs budget appeared to contain all the information required by Form HB, and could therefore be said to be "substantially" in the right form, the judge considered the budgets and made a costs management order. The claimants' costs budget was approved in the sum of £82,500.
On 8 March 2013, the defendant's solicitor pointed out to the claimants' solicitor that their approved costs budget did not say that it excluded a success fee and an ATE insurance premium. The letter went on:
"Accordingly, our client intends to argue at trial/on an assessment that your client should not be permitted to recover any sum (to include success fee and ATE premium) over and above the costs budget approved by the court on 1 February 2013."
In consequence of that clear warning, on 14 March 2013, the claimant issued an application pursuant to CPR 3.9 for relief from sanctions. I heard that application on 27 March 2013. At the conclusion of the hearing, I resolved the substantive dispute in favour of the claimant and gave brief reasons for my conclusion. However, because of the other cases that had to be dealt with on that day – the last day of term —I said that I would provide detailed reasons in writing. Those reasons are set out in this Judgment.
Relief from Sanctions
In support of his application for relief from sanctions pursuant to CPR Rule 3.9, Mr Naisbitt relied on three cases: Supperstone v Hurst [2008] EWHC 735 (Ch); Manning and Beggs v Kings College Hospital NHS Trust [2011] EWHC 3054 (QB) and Scott v Duncan [2012] EWHC 1792 (QB). Those cases were all concerned with the situation where the existence of a CFA or ATE Insurance had not been properly disclosed to the paying party and issues about the recoverability of success fees and ATE premiums had arisen at the detailed assessment of costs. It is right to say that relief from sanctions was granted in each of those cases, although this was by reference to the old r.3.9, not its significantly modified successor (see paragraph 13 below).
In my judgment, the situation that has arisen here is not one to which r.3.9 obviously applies. There is no sanction as such from which the claimant requires relief. Detailed assessment is months, if not a year or more, away. Unlike the cases noted above, there has been no failure of notification: the defendant here has always known about the success fees and the ATE insurance premiums.
Instead, in the present case, what the claimant wants is akin to permission to revise the approved budget, or for it to be rectified, or at least clarified that the approved budget excludes the success fee...
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