Costs budget limited to court fees following failure to comply with court rules (High Court)

The High Court (Master McCloud) has limited a claimant's costs budget to the cost of court fees as a sanction for failing to exchange and file the budget within the time specified by Practice Direction (PD) 51D (the defamation proceedings costs management pilot scheme, which came to an end on 31 March 2013).

In proceedings brought by Andrew Mitchell MP (AM) against News Group Newspapers (NGN) for The Sun's coverage of the 'Plebgate' scandal, NGN had attempted to agree costs budgets with AM and had filed its own budget seven days in advance of the case management hearing, in compliance with PD 51D. AM did not produce his budget until the day before the hearing, after he had been prompted by the court. This was a breach of PD 51D and of the overriding objective.

As proceedings had been issued before 31 March 2013, the costs budgeting rules under PD 51D applied to the case, as opposed to the new costs budgeting rules in CPR 3 brought into force as part of the Jackson/civil litigation reforms (the New Costs Rules). However, because the hearing was taking place after 1 April 2013, the revised overriding objective had to be considered. With this in mind, the Master noted the court's requirement to deal with the case justly and at proportionate cost, and the need to secure compliance with court rules.

The New Costs Rules were nearly identical to those in PD 51D, with one exception: the mandatory sanction in CPR 3.14 limiting a costs budget to court fees where a party has failed to file the budget within the specified time; in PD 51D, the nature of sanctions was not stipulated. However, given that the circumstances of the breach in this case were identical to that envisaged by the New Costs Rules, and that practitioners have had "ample warning" with regard to the court's stricter interpretation of the application of the rules, the Master considered that the correct approach in this case would be to apply the same sanction as that in CPR 3.14.

There was not enough evidence at the hearing for the Master to address relief from sanctions. This application was heard on 25 July 2013 and was refused (see Litigation Futures: Tough enough? Failure to comply leaves 'Plebgate' MP with budget limited to court fees (8 August 2013) and Legal update, No relief from sanctions for failure to file costs budget in time under defamation costs management scheme).

This case is another example of the stricter approach courts are now taking towards parties' compliance with court rules following implementation of the Jackson reforms (for further examples, see Practice note, Jackson Live: judicial implementation of the Jackson/civil litigation reforms). It is also a stark reminder to parties to file and exchange costs budgets in adequate time in order to avoid potentially disastrous sanctions.

Case: Mitchell v News Group Newspapers Ltd [2013] EWHC 2179 (QB) (18 June 2013).