High Court confirms discretion to award costs to a party despite budget sanctions

England and Wales

The High Court has confirmed that the court has discretion to award costs to a party subject to sanctions for not filing a budget in time.

Background

In Pasricha v Pasricha (Rev 1)[2021] EWHC 1017 (Ch),  a property dispute claim, the defendant had not filed a budget in time and accordingly had been restricted as regards recovery of post-budget costs to court fees only under CPR Part 3.14. The claimant subsequently failed to pay the trial fee on time, but it was eventually paid, and relief from sanctions was granted. The trial was adjourned on the morning of the first day of three due to judicial unavailability, although reference was made to the trial fee not being paid. No order for the costs of the adjourned trial was made. That the defendant was limited to recovery of court fees alone materially influenced the court’s decision. The defendant appealed, seeking to recover costs from the claimant on the basis that it was responsible for the adjournment.

The issues

Smith J, hearing the appeal, identified two issues to be determined: whether the court had discretion to award the defendant costs under the restricted budget, and then whether the correct order for costs was made.

Decision

On the question of discretion, Smith J referred to a number of factors:

  • the phrase “unless the court orders otherwise” in CPR Part 3.14, which gives the court a wide discretion in relation to budgeted costs;

  • the absence of any time restriction on the discretion;

  • the facility for parties to apply to amend a budget following a significant development (now enshrined in the CPR as Part 3.15A); and

  • the discretion of the court in CPR Part 3.18 to depart from a costs management order if satisfied that there is good reason to do so. 

Taking all of this together, Smith J found that under CPR Part 3, the court has discretion to award costs despite prior budget restrictions under Part 3.14.

On the question of whether no order for costs was the correct order in the circumstances, Smith J found no clear reason to find the claimant responsible for the adjournment. The order granting relief for the late payment of the trial fee was not contested and was effective. The reference to this late fee at the adjournment of the trial was unfortunate, but the reason for the adjournment lay with the court administration. Smith J found that the appropriate costs order was no order for costs and dismissed the appeal.

Comment

The decision on the issue of discretion will provide some relief to parties restricted to recovery of court fees only. A court can now approve a change to budgeted costs following a significant development on application under CPR Part 3.15A, and, as this decision confirmed, has discretion to award costs despite budget restrictions under Part 3.14 or depart from a restricted budget if persuaded there is good reason to do so under Part 3.18. Of course, identifying such a reason is another matter, with this case demonstrating that developments related to judicial administration will not normally be sufficient.

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