CPR 3.14: Hardy v Skeels (4th March 2021, Stoke County Court)
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Part 3 of the Civil Procedure Rules deals with the Court’s costs management powers. CPR 3.13 deals with the filing and exchanging of costs budgets:
(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 their directions questionnaires; or
(b) in any other case, not later than 21 days before the first case management conference.
CPR 3.13 (3) addresses the Court’s powers in relation to seeking directions for costs budgets in cases where it may not be required by this section by default, and the remainder of CPR 3.13 addresses further powers the Court has in relation to costs budgets.
(4) The Court may, in a substantial case, direct that budgets are to be limited in the first instance to part only of the proceedings and extended later to cover the whole proceedings.
(5) Every Budget must be dated and verified by a statement of truth signed by a senior legal representative of the party.
(6) Even though a litigant in person is not required to prepare a budget, each other party (other than a litigant in person) must provide the litigant in person with a copy of that party’s Budget.
However, the focus of this article concerns CPR 3.14 and the sanctions that can apply in cases where a party fails to file budgets altogether. Rule 3.14 states the following:
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.
CPR 3.14 Hardy v Skeels
The recent matter of Hardy v Skeels, in the County Court at Stoke, dealt with CPR 3.14 sanctions where a party fails to file a budget, or in this case, where the party filed a Costs Budget late. The Claimant, in this case, filed their Costs Budget a day late. Five days after it was filed, the Defendant accepted the Claimant’s Part 36 Offer, which was proposed several years earlier.
In their Points of Dispute, the Defendant submitted that the Claimant’s filing of her Budget a day late automatically gave rise to CPR 3.14 sanctions.
The Claimant submitted that CPR 3.14 sanctions applied only to future estimated costs. The Defendant’s counter-argument was based on the case of Ali & Anor v Channel 5 Broadcast Ltd  EWHC 840 (Ch), where the Court accepted that CPR 3.14 should have an effect on incurred costs also and if it did not, then it would undermine the purpose of CPR 3.14.
The Defendant also relied on the case of Mitchell v News Group  EWCA Civ 1537, submitting this case had clearly proceeded to the Court of Appeal on the basis that CPR 3.14 sanctions applied to both incurred costs and future estimated costs.
On detailed assessment, the District Judge held the following:
“It has always been my understanding that CPR 3.14 referred to the entirety of the Budget. The word ‘budget’ is used as shorthand routinely by judges and advocates as the word which incorporates all costs and disbursements a party has or expects to incur.“
On appeal, HHJ Rawling concluded that CPR 3.14 had to be read in conjunction with CPR 3.18 (which relates to assessing costs on the standard basis where a costs management order has been made). HHJ Rawling stated that as well as the Civil Procedure Rules making it clear that incurred costs were not within the remit of CPR 3.18, this stance had also been confirmed by the Court of Appeal ruling in the case of Harrison .
Harrison v University Hospitals Coventry & Warwickshire Hospital NHS Trust  EWCA Civ 792
It was concluded on appeal that CPR 3.14 could not restrict the party that fails to provide a Costs Budget to court fees only in their incurred costs. It was therefore found that CPR 3.14 sanctions applied only to future estimated costs.
Steps To Be Taken to Prevent CPR 3.14 Sanctions?
It is important to ensure you file a Costs Budget in time. However, should you fail to file in a timely fashion, it is advisable to make an application for relief from sanctions promptly to the Court seeking permission to rely on your late-filed Budget. This will prevent any costs issues from being raised at detailed assessment proceedings.
If no application for relief from sanctions has been made at the time of the main action, this can cause issues during the detailed assessment proceedings, and it is better to be proactive than having to take retrospective action.
How Can ARC Costs Assist?
ARC Costs are a team of specialist Costs Draftsmen and Costs Lawyers with extensive experience in costs issues. We draft Costs Budgets regularly and ensure you are able to comply with any Court deadlines in filing the same.
If you have been successful in your claim, we can assist in conducting detailed assessment proceedings on your behalf. This can be in preparing the Bill of Costs, conducting negotiations, or in preparing Points of Dispute or Reply dependent upon whether you represent the paying or receiving party. We also provide advocacy services for any CCMC or Detailed Assessment Hearing.
Should you wish to discuss a costs query, please contact us on 01204 397302 or email us at firstname.lastname@example.org. Alternatively, you may complete our online enquiry form, and we will contact you to discuss your query further.