Fail to file a revised costs budget to include the costs of a counterclaim: the costs of the counterclaim may not be recovered without relief from sanction (Bhat & Anor v Patel & Anor)
DEFENDANTS, WHO DID NOT FILE A REVISED COSTS BUDGET TO INCLUDE THE COSTS OF A COUNTERCLAIM, COULD NOT RECOVER THE COSTS OF THE COUNTERCLAIM WITHOUT RELIEF FROM SANCTION
In Bhat & Anor v Patel & Anor  EWHC 2960 (Ch), it was held that the Defendants, who had not filed a revised budget to include the costs of a counterclaim, were not entitled to recover the costs of that counterclaim unless a relief from sanctions application was successful.
The original possession claim, which had been budgeted, was consolidated with a separate beneficial ownership claim; “the counterclaim”. On consolidation of the claims, the parties were permitted to file and serve updated budgets (whilst not expressly stated, the revisions were presumed to include the costs of the counterclaim). The parties were ordered to seek to agree the revised budgets with the Trial Judge to determine any points of disagreement. However, the parties did not submit revised budgets. At Trial, the counterclaim was allowed, and the Defendants were awarded their costs of the counterclaim. The Claimants disputed, pursuant to CPR 3.14, that the Defendants were able to recover any costs of the counterclaim due to the Defendants’ failure to submit a revised budget so appealed.
On appeal, it was found that, in principle, the recovery of any costs of the counterclaim should have been subject to an application for relief from sanction due to the absence of a revised budget from the Defendants, i.e. the Trial Judge was wrong to conclude that the Defendants were not in default. However, matters were complicated by a supposed agreement between the parties to dispense with budgeting in respect of the counterclaim which had seemingly not been fully considered by the Trial Judge. Accordingly, it was determined that, to recover the costs of the counterclaim, the Defendants needed to obtain relief from sanction in relation to the failure to submit a revised budget or a declaration that the parties had agreed to waive budgeting. The Defendants were ordered to notify the Court within 14 days of the appeal as to whether they wished to pursue the costs of the counterclaim.
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Published 11 November 2021
Author – James Parkinson
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