Solicitors Failure to file a costs budget [Precedent H & R]
The consequences for failing to file a Precedent H (solicitor’s budget) or indeed Precedent R (solicitors budget report) can have disastrous results. In short, the solicitors at fault may have to work for free.
Civil Procedure Rules provides 3.14
The provision provides:
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.’
Simple and short to the point. This can apply to both the Claimant and Defendant. The timely filing of cost budgets in legal proceedings is crucial, as outlined by CPR 3.14. Failure to file a Precedent H on time results in the budget being treated as if it only comprises applicable court fees, leading to the loss of recoverable costs. Filing a cost budget late means running a claim without the ability to recover solicitors’ fees therefore the solicitor will be running the case for free.
However, CPR r36.23 allows recovery of 50% of assessed costs if a party successfully beats a part 36 offer during the final hearing. An application for relief from sanctions must be made to remedy the breach and if granted the court will have regard to a three-stage test:
- Seriousness of the breach,
- Understanding the reason for the failure, and
- Review of all case circumstances of the case
A case illustrating the severity of filing a cost budget late is BMCE Bank International PLC v Phoenix Commodities PVT PTD & Anor [2018] EWHC 3380 (Comm). The High Court refused the defendant relief from CPR 3.14 sanctions for filing their budget two weeks late. Despite filing for relief only on the morning of the costs Case and Costs Management Conference, relief was rejected due to the serious and significant nature of the breach and the lack of prompt application.
This emphasises the importance of adhering to rules, even in multi-track cases. Mistakes, such as late filings, can negatively impact claimants, with the expectation of full cost recovery being slim, and significant penalties still applying even with judicial leniency.
What about Failure to File Precedent R?
An agreed budget discussion report must be filed following the filing of Precedent H. So, what if a party fails to file in time Precedent R?
Civil Procedural Rule 3.13
The sanction for non or late filing of a costs budget are well know. In relation to filing the budget discussion report the rules, at 3.13, state:
“(2) In the event that a party files and exchanges a budget under paragraph (1), all other parties, not being litigants in person, must file an agreed budget discussion report no later than 7 days before the first case management conference.”
There is no express sanction for non-service or late service of the budget discussion report however see Alexandra Handy v Dr Mohammed Azhar Aslam & Linia Limited [2021], this case highlights the consequences of not filing a budget discussion report (Precedent R) in legal proceedings, using the case of Alexandra Handy v Dr. Mohammed Azhar Aslam & Linia Limited [2021] as an example. The Deputy District Judge refused the Second Defendant permission to challenge the Claimant’s Cost Budget due to the failure to file a Precedent R budget discussion report. Despite the Second Defendant’s argument about insufficient time, the judge emphasized that the absence of a discussion report meant the Claimant’s Costs Budget was considered unchallenged and allowed at £298,208.90.
The case serves as a cautionary reminder about the importance of adhering to filing requirements.
