Hallam Estates Ltd & Anor v Baker

This judgment is in five parts, namely:

This appeal arises out of proceedings for the detailed assessment of costs. The paying parties appeal against a decision of the High Court reversing a decision of the costs judge, whereby he declined to set aside his earlier order granting an extension of time for serving the points of dispute. The principal issues in this appeal are whether the costs judge was dealing with relief from sanctions and whether he exercised his case management discretion in a proper manner.

Hallam Estates Limited and Michael Stainer were claimants in the underlying litigation. They are the paying parties in the detailed assessment proceedings. They were the applicants for an extension of time before the costs judge. They were respondents in the application to set aside and they were respondents in the appeal to the High Court. They are appellants in this court. I shall refer to them as the claimants.

Ms Teresa Baker was defendant in the underlying litigation. She is receiving party in the detailed assessment proceedings. She was respondent in the application for extension of time, but applicant in the application to set aside. She was appellant in the appeal to the High Court, but is respondent in this court. I shall refer to her as the defendant.

All references in this judgment to “rules” are to the Civil Procedure Rules 1998 as amended. Rule 47.9 provides:

“Points of dispute and consequence of not serving

(1)

The paying party and any other party to the detailed assessment proceedings may dispute any item in the bill of costs by serving points of dispute on –

(a)

the receiving party; and

(b)

every other party to the detailed assessment proceedings.

(2)

The period for serving points of dispute is 21 days after the date of service of the notice of commencement.

(3)

If a party serves points of dispute after the period set out in paragraph (2), that party may not be heard further in the detailed assessment proceedings unless the court gives permission.

(Practice Direction 47 sets out requirements about the form of points of dispute.)

(4)

The receiving party may file a request for a default costs certificate if –

(a)

the period set out in paragraph (2) for serving points of dispute has expired; and

(b)

the receiving party has not been served with any points of dispute.

(5)

If any party (including the paying party) serves points of dispute before the issue of a default costs certificate the court may not issue the default costs certificate.”

Rule 47.11 provides:

“Default costs certificate

(1)

Where the receiving party is permitted by rule 47.9 to obtain a default costs certificate, that party does so by filing a request in the relevant practice form.

(Practice Direction 47 deals with the procedure by which the receiving party may obtain a default costs certificate.)

(2)

A default costs certificate will include an order to pay the costs to which it relates.

(3)

Where a receiving party obtains a default costs certificate, the costs payable to that party for the commencement of detailed assessment proceedings will be the sum set out in Practice Direction 47.”

I shall refer to the Senior Courts Costs Office as “SCCO”.

After these introductory remarks, I must now turn to the history of the proceedings.

The claimants brought proceedings for defamation which Tugendhat J dismissed on 15^th May 2012. Tugendhat J ordered the claimants to pay the defendant’s costs, subject to detailed assessment if not agreed. He also ordered them to pay £15,000 on account of costs by 1^st June 2012. The claimants paid part of that sum in time, but did not pay the full sum until early October 2012.

The defendant delayed in preparing her bill of costs. Under rule 47.7 she should have done this by 15^th August 2012. In fact, the defendant did not serve her bill of costs and notice of commencement of detailed assessment proceedings until 18^th April 2013. The bill was 66 pages long and totalled £86,463.49. That was significantly more than the figure previously indicated (£72,610.28).

Under the rules the claimants were required to serve their points of dispute by 14^th May 2013. By letter dated 8^th May the claimants’ solicitors asked for a 21 day extension of time. They gave sensible reasons for this request and I would have expected the defendant to agree. Given her own delays, she could hardly complain about that modest extension. Pursuant to rule 3.8 (3) the court’s approval would have been required for any such agreement, but that would have been a formality.

By way of digression I comment that rule 3.8 will shortly be amended so that in the ordinary way parties can, without reference to the court, agree extensions of time up to 28 days, provided that this does not put at risk any hearing date. A variety of circumstances may arise in which one or other party (however diligent) may require a modest extension of time. Under rule 1.3 the parties have a duty to help the court in furthering the overriding objective. The overriding objective includes allotting an appropriate share of the court’s resources to an individual case. Therefore legal representatives are not in breach of any duty to their client, when they agree to a reasonable extension of time which neither imperils future hearing dates nor otherwise disrupts the conduct of the litigation. On the contrary, by avoiding the need for a contested application they are furthering the overriding objective and also saving costs for the benefit of their own client.

Unfortunately in this case the defendant’s solicitors did not agree to any extension of time, save upon onerous terms.

On 14^th May 2013 the claimants (at this stage acting in person) filed in the SCCO an application for an extension of time until 18^th June for service of the points of dispute. They paid the requisite fee at 2.43p.m. They sent a copy of the application notice by email to the defendant’s solicitors later that day and also put a hard copy in the post.

On 15^th May 2013 an official in the SCCO stamped the claimants’ application notice, thereby formally issuing it. On the same day the defendant’s solicitors sent a letter to the SCCO requesting a default costs certificate. That request was ineffective because the two accompanying cheques (each for £60 in respect of court fees) were unsigned.

Although the claimants’ application notice asked for a hearing the costs judge, Master Gordon-Saker, decided to deal with the matter ex parte on the papers. On 16^th May he made an order granting the extension sought and giving both parties liberty to apply to set aside or vary the order. That was an extremely sensible and cost-efficient course to take.

On 24^th May 2013 the defendant applied to the costs judge to set aside his order and issue a default costs certificate. Mr Jonathan Sherlock, a partner in the defendant’s solicitors, Girlings, filed a supporting witness statement. Mr Sherlock contended that the order of 16^th May impermissibly granted the claimants relief from a sanction. In paragraph 2 of his statement he asked the costs judge to deal with the matter on the papers. Master Gordon-Saker duly did so. On 31^st May he dismissed the defendant’s application, stating the following reasons:

“The Second Claimant’s application was for an extension of time, not for relief from sanctions; there being no sanction from which to seek relief. An application for extension of time may be made retrospectively: see CPR 3.1(2)(a). Given the significant delay by the Defendant in commencing detailed assessment proceedings the extension of time sought by the Second Claimant was not unreasonable. In making the order dated 16^th May 2013 the court had assumed that the Defendant had refused to agree an extension of time; otherwise the application would not have been required. The court having already ordered a payment on account of costs, it would not be appropriate to make a further order. The Defendant may apply for an interim costs certificate once a request has been made for a detailed assessment hearing.”

On 17^th June 2013 the claimants served their points of dispute.

The defendant appealed against the costs judge’s order of 31^st May with the permission of Openshaw J. His Honour Judge Richardson QC (“the judge”) heard the appeal on 19^th July and announced his decision with reasons to follow later. The judge allowed the defendant’s appeal. He ordered that the claimants’ points of dispute were of no effect. He directed that the SCCO do issue a default costs certificate. The SCCO duly issued a default costs certificate in the sum of £86,463.49.

The judge gave the reasons for his decision in an oral judgment, which he delivered on 31^st July 2013. I would summarise the judge’s reasoning as follows:

The claimants are aggrieved by the judge’s order. They appeal to the Court of Appeal on two separate grounds, namely:

I must deal with each of those issues separately.

Before the start of this appeal Mr Jonathan Lewis, for the defendant, very helpfully conceded that he could not support the judge’s finding of non-disclosure. That aspect of the case therefore falls away. The issue becomes whether, absent any non-disclosure by the claimants, the judge’s order can stand.

Mr Imran Benson (who did not appear below) submits on behalf of the claimants that the judge erred in two respects:

I shall deal first with the character of the claimants’ application for an extension of time. Since it was filed in the SCCO on 14^th May 2013, the application was made before the expiry of the time allowed for filing the points of dispute. The fact that the SCCO staff did not date stamp the application until the following day is immaterial: see rule 23.5.

An application for an extension of the time allowed to take any particular step in litigation is not an application for relief from sanctions, provided that the applicant files his application notice before expiry of the permitted time period. This is the case even if the court deals with that application after the expiry of the relevant period. The Court of Appeal established this principle in Robert v Momentum Services Limited [2003] EWCA Civ 299; [2003] 1 WLR 1577: see in particular [33]. This still remains the case following the recent civil justice reforms. See Kaneria v Kaneria [2014] EWHC 1165 (Ch) at [31] to [34]. I agree with those four paragraphs in the judgment of Nugee J.

It therefore follows that on 16^th May 2013 the costs judge was dealing with an in-time application. This was a straightforward application to extend time under rule 3.1(2)(a). The principles concerning relief from sanctions which the Court of Appeal enunciated in Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537; [2014] 1 WLR 795 are not applicable.

It behoved the costs judge to deal with the application in accordance with the overriding objective, as recently amended. In my view the costs judge did so. The claimants made a reasonable application for an extension of time, which did not imperil any future hearing dates or otherwise disrupt the proceedings. The costs judge granted that application.

Since I am the author of the report upon which the recent civil justice reforms are based, I wish to say something about extensions of time. For the reasons set out on pages 396-399 of the report, I recommended:

“The court should be less tolerant than hitherto of unjustified delays and breaches of orders. This change of emphasis should be signalled by amendment of CPR rule 3.9.”

That remains my firm view and I welcome the fact that the recommendation has been implemented, although some issues remain to be worked out in relation to the operation of the new rule 3.9. There is now a new and more disciplined approach to the conduct of civil litigation, as illustrated in many recent cases. See, for example, MA Lloyd & Sons Ltd v PPC International Ltd [2014] EWHC 41 (QB).

Nevertheless it was no part of my recommendations that parties should refrain from agreeing reasonable extensions of time, which neither imperil hearing dates nor otherwise disrupt the proceedings. The contrary is the case, as explained in paragraphs 11 and 12 above. Nor was it any part of my recommendations that the court should refuse to grant reasonable extensions of time in those circumstances.

The Rule Committee has inserted a new sub-paragraph 1.1(2)(f) into the overriding objective. In my view this new provision (which was not one of my recommendations) does not require courts to refuse reasonable extensions of time, which neither imperil hearing dates nor otherwise disrupt the proceedings.

Accordingly, in my view the costs judge’s decision to grant an extension of time on 16^th May 2013 was a proper exercise of his case management discretion. The defendant’s application to set aside that order was based upon the misapprehension that the costs judge had granted relief from a sanction. The defendant also alleged non-disclosure by the claimants, but she has now abandoned that allegation. The costs judge rejected the application to set aside, giving perfectly sensible reasons. In my view this too was a proper exercise of his case management powers.

Accordingly, the judge erred in reversing the costs judge’s decision of 31^st May 2013. I would allow the claimants’ appeal on the first ground.

In those circumstances the second ground becomes academic. Nevertheless I ought to deal with it briefly, since the matter has been the subject of argument.

This issue only arises if the claimants fail on their first ground of appeal. On that assumption, the costs judge incorrectly failed to set aside his order extending time. The points of dispute which the claimants served on 17 June 2013 would have become out of time, once the judge had reversed the decision of the costs judge. As a result the sanction set out in rule 47.9 (3) would have come into operation. The effect of this sanction is that the paying party “may not be heard further in the detailed assessment proceedings unless the court gives permission”. That is the only sanction provided under the rules.

I have set out the relevant provisions of rule 47.9 in Part 1 above. Significantly for present purposes, rule 47.9(5) prevents the issue of a default costs certificate after the paying party has served its points of dispute. This rule applies whether the points of dispute were served before or after expiry of the permitted time for service. It therefore follows that if the receiving party wishes to obtain a default costs certificate, he must file his request (a) after expiry of the time permitted for serving the points of dispute and (b) before the points of dispute actually are served. That did not happen in this case.

In my view, the judge did not have power on 19^th July 2013 to direct that a default costs certificate be issued. Accordingly, I would (if relevant) allow the claimants’ appeal on the second ground.

In detailed assessment proceedings the paying parties applied for a reasonable extension of time in which to serve their points of dispute. That extension of time would not imperil any hearing dates or otherwise disrupt the proceedings. The costs judge granted that extension of time and subsequently rejected an application to set it aside.

The receiving party appealed to the High Court against the latter decision. The judge allowed the appeal on the grounds that (i) there had been non-disclosure and (ii) the costs judge had impermissibly granted relief from sanctions. The allegations of non-disclosure are now withdrawn. Furthermore, the costs judge was not dealing with relief from sanctions. He was making a case management decision about extension of time. The judge ought not to have interfered with the costs judge’s exercise of discretion.

If my Lords agree, this appeal is allowed.

I agree.

I also agree.