BMCE Bank International Plc v Phoenix Commodities PVT Ltd & Anor, Court of Appeal - Commercial Court, October 19, 2018, [2018] EWHC 3380 (Comm)

Resolution Date:October 19, 2018
Issuing Organization:Commercial Court
Actores:BMCE Bank International Plc v Phoenix Commodities PVT Ltd & Anor

Case No: CL-2017-000674

Neutral Citation Number: [2018] EWHC 3380 (Comm)





Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 19/10/2018

Before :


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Between :

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MR D WALSH (instructed by COLMAN COYLE SOLICITORS) appeared on behalf of the Claimant

MR B DYE (instructed by HILL DICKINSON) appeared on behalf of the Defendants

Hearing dates: 19 October 2018

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  1. The parties have appeared before me today on what is the first costs and case management conference in this case. The claimants are BMCE Bank International PLC, represented before me today by Mr David Walsh of counsel. The defendants are Phoenix Commodities Pvt Limited and Phoenix Global DMCC, represented before me by Mr Brian Dye of counsel.

  2. Today's hearing, which carried with it a time estimate of two hours, was to deal with case management matters, including costs budgeting. In the event, this matter was listed for 11.30am, but in fact started at 11.45am or shortly thereafter. The time from 11.45am to approximately 1.10pm was spent not debating case management issues but debating a question that has arisen in relation to what I will call relief from sanctions under CPR 3.9, but which, more accurately, concerns whether to make an order other than the normal order set out in CPR 3.14 in relation to the defendant's failure to serve its costs budget in time. The entirety of the hearing to date has been spent on that issue, and by the time that this judgment is delivered this afternoon, the entirety of the time allocated for the costs and case management confere4nce will have been spent on the same, even before case management can be addressed.

    Service of costs budgets

  3. Pursuant to CPR rule 3.13(1)(b), the parties were required to file and serve costs budgets no later than 21 days before the CMC, which was by 27 September 2018. The claimant complied and filed and served its budget on 26 September 2018. The defendant did not. Instead, they served their costs budget much later, on 11 October 2018 at 4.32pm. That costs budget was served under a copy of an email from Mr Buchmann, who is a partner at Hill Dickinson LLP, the solicitors acting for the defendants. The email provided as follows:

    ``Please find attached the following documents served on behalf of Phoenix [that is the defendants]. 1. CMC information sheet; 2. proposed list of issues; 3. proposed case memorandum; 4. draft CMC order; 5. costs budget.

    Should you not agree with the revisions made in our proposed list of issues, case memo and draft order, then we suggest you include these in the index as additional items''.

  4. That email was responded to by Mr Howard Colman of Colman Coyle Solicitors acting on behalf of the claimant, the following day. He said as follows:

    ``I write in response to your email of yesterday evening. I note what you say with regard to your clients' information sheet and cost budget. At this stage, I simply reserve my client's position with regard to the late service/filing.''

  5. I note that, if the defendants' solicitors were not already aware, their attention was being drawn to the fact that there was late service of the defendants' costs budget. Mr Dye, on behalf of the defendants, accepts that his solicitors are to be taken to know the provisions of the CPR and what the consequences are of not serving a costs budget on time. In this regard, CPR 3.14 provides:

    ``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.''

  6. Mr Buchmann responded, again on 11 October, at 3.09pm, saying as follows:

    ``What late filing are you referring to? Our client's information sheet is due to be served and filed only by tomorrow. Our costs schedule is late, but so was yours.''

  7. There are two points to note about that. Firstly, the reference to `our costs schedule is late' shows that Mr Buchmann was aware that the defendants' cost schedule was indeed late and is to be taken to know what the consequences of that are under CPR 3.14. Secondly, there was an allegation that the claimant's costs budget schedule was late. In fact, that suggestion was erroneous, because, as I have stated, the claimant's costs budget was filed on time.

  8. That email prompted a response from Mr Colman some 51 minutes later, also on 11 October, in which he said, amongst other matters

    ``I do not understand why you suggest our costs schedule was late. It was served and filed on 27 September. Please explain.''

  9. At 9.06am the following day on 12 October, Mr Colman sent a further email to Mr Buchmann, which provided, amongst other matters:

    ``I continue to reserve my client's rights in respect of late service/filing (...)

    I note you have not yet responded to the question I raised yesterday as to why you were stating that my client's budget had been served late. Please do so by return, or alternatively confirm you accept that this is not correct so that we can either consider any point you raise, or not waste time unnecessarily on this.

    On the subject of my client's budget, I note that it is significantly lower than the budget your client has put forward. I assume, therefore, that you do not take issue with my client's budget and can agree it. Please confirm, or if not, please identify any areas of dispute''.

  10. It can be seen, therefore, that Mr Colman continued to reserve his client's rights in respect of late service. Secondly, he asked for a response in relation to the allegation that the claimant's costs budget was late. Thirdly, in relation to the claimant's costs budget, there was a reference and comparison between the defendants' budget and that of the claimant. To that extent at least, there was some engagement on the part of the claimant with the defendants' late-served budget.

  11. The response to that from Mr O'Brien of Hill Dickinson at 9.52am the same day was, amongst other points, as follows:

    ``We will revert further on the costs budget in due course. For the avoidance of any doubt, this is not yet agreed.''

  12. The position in fact is that the defendants did not revert back on the claimant's costs budget in advance of the defendants' skeleton argument, which was served at around about 1.00pm yesterday, in compliance with the Commercial Court Guide. It is fair to say that in the skeleton argument there was substantive engagement with the claimant's costs budget.

  13. Continuing with the chronology of events, as already indicated, the defendants and their solicitors were on notice of the fact that their costs budget had not been served on time, if they were under any doubt about that. However, no application was made seeking an otherwise order under CPR 3.14. Absent any such application the position is that a party which fails to file a budget, despite being required to do so, shall be treated as having filed a budget comprising only the applicable court fees.

  14. It is also important to bear in mind CPR 3.13(2), which provides:

    ``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.''

  15. The defendants' costs budget was served at the time that the parties should have filed a budget discussion report, whether in precedent R form or any other form. The effect of the late service was essentially that no budget discussion reports were filed and Mr Walsh, appearing for the claimant, both in his skeleton argument and orally today, has confirmed to me that, given the short period of time, it is not in fact possible to deal with the question of the defendants' costs budget at this hearing today. That position, which is no doubt on instructions from his client, is not, and cannot be denied by Mr Dye, who appears on behalf of the defendant, and he accepts, therefore, that whatever the outcome of the application, which I am going to come onto in a moment, there will have to be another hearing, i.e. a costs management and costs budgeting hearing, as a result of the events that have occurred.

  16. Moving on in time, the time to lodge skeleton arguments in accordance with the Commercial Court Guide, was 1.00pm yesterday, that is 18 October 2018. Both counsel complied with that timescale. At no stage, prior to the lodging of those skeleton arguments, was any application made or foreshadowed, still less, supported by a witness statement, or any supporting skeleton argument on behalf of the defendants, for relief from sanctions, that is, for an otherwise order.

  17. In the skeleton argument served on behalf of the claimant, Mr Walsh made clear that any application for an otherwise order would be opposed, and that the default position set out in CPR 3.14 should apply.

  18. The detailed skeleton lodged by Mr Dye on behalf of the defendants addressed case management issues and the costs budget of the claimant. No reference was made, nor any argument developed or foreshadowed, about an application for relief from sanctions. Still less was any evidence served or foreshadowed in relation to such an application.

  19. Indeed, there was therefore no opportunity either on Thursday evening or in advance of today's list for me to prepare for such an application, if any such application was to be made. I would have expected that if an application was to be made, and in accordance with the principle that a party should act expeditiously when seeking relief from sanctions (at the very least as soon as the default has been noticed, and it has been realised that it will be necessary to...

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