There have been many cases demonstrating the potentially serious consequences faced by a party following a failure to file a costs budget in time. In all multi-track cases, parties are required to file and serve a costs budget 21 days before the first Case Management Conference. This forms a key part of the court’s cost management regime as it is intended to ensure litigation is conducted efficiently and at proportionate costs.

Where a party is failing to file a costs budget on time, CPR 3.14 provides that, unless the court otherwise orders, that party will be treated as having filed a budget comprising only the applicable court fees. This means that, if successful, the defaulting party will ordinarily be limited to recovering court fees only. In most cases, a party running a case that fails to file a costs budget should therefore apply for relief from sanction.

Relief from Sanctions for Failure to File and Serve Costs Budgets

An application for relief from sanctions will not be granted automatically. The court must consider the circumstances of the breach under CPR 3.9, including:

“The need for litigation to be conducted efficiently and at proportionate cost; and the need to enforce compliance with rules, practice directions and orders.”

The court will usually apply the Denton test, assessing:

1. Whether the breach is serious or significant;
2. Whether there is a good reason for the breach; and
3. All the circumstances of the case.

In earlier authorities, such as BMCE Bank International plc v Phoenix Commodities PVT Limited, the courts took a strict approach where budgets were not filed and exchanged on time. In that case, the late filing was found to be a significant breach, relief was refused, and the defaulting party was restricted to recovering only the applicable court fees.

Right Support Management Ltd v London Borough of Hillingdon [2025] EWCH 1680 (KB)

A more recent and important example of failure to file a costs budget and relief from sanctions is Right Support Management Ltd v London Borough of Hillingdon.

In this case, both parties failed to comply with the requirement to file costs budgets. The claimant’s breach was particularly serious: its budget was filed more than two years late. No prompt application for relief was made, and at first instance the court refused relief, applying the CPR 3.14 sanction so that the claimant’s recoverable costs were limited to court fees only.

The claimant appealed. On appeal, the High Court accepted that the breach was serious and that there was no good reason for the delay. However, the judge held that the lower court had placed excessive weight on the lack of promptness and had failed to properly consider all the circumstances, including the absence of real prejudice to the defendant and the wider interests of justice.

Relief from sanctions was therefore granted. Crucially, however, it was not granted unconditionally. The court imposed a tailored sanction: if the claimant ultimately succeeded, it would recover only 80% of its assessed costs, and it was ordered to pay the costs of the relief application. The decision demonstrates a more nuanced approach to CPR 3.14, showing that while compliance remains critical, the court retains discretion to impose proportionate consequences rather than an automatic and absolute bar.

Practical Lessons for Practitioners

This decision provides valuable guidance for parties dealing with a failure to file a costs budget.

• Filing deadlines matter. Budgets must be properly prepared, filed and served, and supported by the agreed discussion report ahead of the CCMC.
• Where there is a breach, parties should act promptly. Delay in seeking relief will weigh heavily against the applicant.
• Relief may still be granted even for serious breaches, but practitioners should expect financial penalties, such as costs deductions or adverse costs orders.
• The court will look closely at whether the breach has genuinely disrupted costs management or placed an unreasonable burden on the other party.

How Can the Greener Costs Team Assist?

The Greener costs team regularly advises parties dealing with the consequences of a failure to file a costs budget, ensuring they are properly filed and exchanged in accordance with the rules. We also advise on the merits of, and prepare an application for relief from sanctions, and provide advocacy at Costs and Case Management Conferences.

If you would like advice or assistance, please contact us at info@greenercosts.co.uk or by telephone on 01204 397302. Further details about our services can be found on our legal costs page.