Royalton Ltd v Prichard

On 18 October 2011 I heard an application issued by the Defendant (“Mr Prichard”) on 6 September 2011, which sought the following:-

“An Order setting aside or deferring the Claimant’s Notices of Commencement of detailed costs assessment until the conclusion of the main action of these proceedings …”

At the hearing, Mr Prichard appeared in person and Mr Daniel Saoul of counsel represented the Claimant (“Royalton”). At the conclusion of argument, I informed the parties that the application would be allowed with written reasons to follow. These are my reasons.

I need say little about the background which is set out in detail in Royalton’s hearing bundle. In brief, Royalton is a property development company. With effect from 19 May 2003, Mr Prichard was employed by Royalton as a project manager. His employment ended in late 2008, and on 19 February 2009, Royalton issued proceedings claiming damages for alleged breaches of his former contract of employment with the company. Mr Prichard denies the allegations and is defending the proceedings which, it is common ground, have yet to conclude.

On 28 October 2009, Royalton issued an application for specific disclosure against Mr Prichard within the proceedings. It was heard by Mr Justice Penry-Davey on 30 November 2009. In respect of the costs of the application, the Learned Judge made the following Order:

“The costs of this application to be the subject of a detailed assessment and to be paid by the Defendant to the Claimant. There be an interim payment by the Defendant to the Claimant of £5,000.”

It is agreed that the payment of £5,000 was made by Mr Prichard to Royalton.

By letter dated 23 August 2011, Fried Frank, solicitors acting for Royalton, wrote to Mr Prichard in the following terms:-

“ … your letters make clear that you do not intend to pay or enter into negotiations regarding our costs, and you have now had several weeks to consider the contents of our bill of costs.

We therefore enclose by way of service our bill of costs with a Notice of Commencement, including a copy of the Order of Mr Justice Penry-Davey dated 30 November 2009 … ”

The bill totalled £64,308.12 and had succeeded the draft bill, to which the letter referred. As I have said, on 2 September 2011, Mr Prichard issued his application for an Order setting aside or deferring the Notice of Commencement pending the conclusion of a main action in the proceedings against him.

Civil Procedure Rule 47.1 provides as follows:-

“The general rule is that the costs of any proceedings or any part of the proceedings, are not to be assessed by the detailed assessment procedure until the conclusion of the proceedings, but the Court may order them to be assessed immediately.

(The Costs Practice Direction gives further guidance about when proceedings are concluded for the purpose of this rule).”

The “further guidance” referred to is contained in Section 28 of the Costs Practice Direction which states that:

“(1)

For the purposes of Rule 47.1, proceedings are concluded when the Court has finally determined the matters in issue in the claim, whether or not there is an appeal …

(4)

The Court may order, or the parties may agree in writing that, although the proceedings are continuing, they will nevertheless be treated as concluded.

(a)

A party who was served with a Notice of Commencement (see paragraph 32.3 below) may apply to a Costs Judge … to determine whether the party who has served it is entitled to commence detailed assessment proceedings.

(b)

On hearing such an application, the orders which the Court may make include: an order allowing the detailed assessment proceedings to continue, or an order setting aside the Notice of Commencement.”

Although considerable material was put before the Court by both sides in relation to Mr Prichard’s application, his submissions are helpfully summarised in paragraph 18 of the continuation sheet to the application notice as follows:

“The Order [of Mr Justice Penry-Davey] and the provisions within it for payment of the Claimant’s costs relate to an interim application and the not the main application against the Defendant. Rule 47 of the Civil Procedure Rules 1998 provides that the costs of any part of the proceedings are generally not to be assessed by the detailed assessment procedure until the main proceedings are concluded. The rule states that the Court can order costs to be assessed immediately. Mr Justice Penry-Davey did not order costs to be assessed immediately and instead exercised his discretion to impose a payment on account of the costs of £5,000, which was duly paid by the Defendant on 14 December 2009.

19.

As the Defendant has already stated, negotiations to settle the main proceedings collapsed in February 2011 and the Claimant has been at liberty since February this year (or earlier if it so chose) to attempt to agree further directions to trial on the main proceedings, or to seek the same from the Court. The Claimant has, to the Defendant’s knowledge, made no attempt to do either.”

At the outset of the hearing, Mr Saoul accepted that the Order did not direct an immediate assessment. Royalton further agree that the proceedings have yet to conclude. In these circumstances, Mr Saoul recognises, correctly in my view, that the Court is charged with deciding, as a question of law, whether it is entitled to exercise the discretion provided for by CPR 47.1 and CPD s.28 to allow the costs to be assessed immediately, that is to say, by a Costs Officer now, without having to wait for the litigation to conclude.

Mr Saoul submits that I have jurisdiction to exercise the discretion provided for in CPR 47.1, and should do so. So far as that rule is concerned, this provides for the discretion it embodies to be exercised by “the Court”. In this context, CPR 2.4 makes it clear that:-

“Where these rules provide for the Court to perform any act, then except where an enactment, rule or practice direction provides otherwise, that act may be performed –

(a)

In relation to proceedings in the High Court, by any Judge, Master or District Judge of that Court …”

In the present circumstances, there is no enactment, rule or practice direction which provides that a Costs Judge cannot exercise the discretion provided for by CPR 47.14. It follows, in Mr Saoul’s submission that I, as a Costs Judge, am fully entitled to do so.

Were that not the position, Mr Saoul submits that this would be very surprising. It would mean that a party who did not obtain a “forthwith” order on an interlocutory application, would thereby be prevented from seeking any assessment of the costs to which he had been deemed entitled, until the end of the case. He contends that this would introduce an unhappy inflexibility into the law since the upshot would be to keep a receiving party out of his money for a prolonged period. In the present case, there is an unquantified debt owing by Mr Prichard to Royalton in circumstances where there is uncertainty about whether Mr Prichard will be good for the money (see paragraph 22 of the witness statement of Nigel Mark Heilpern of Fried Frank dated 28 September 2011). All that Royalton is seeking is that the assessment process be expedited rather than delayed. In the present case, the fact that Royalton is being kept out of its money and that Mr Prichard’s financial position is uncertain, both militate in favour of the Court exercising its discretion in permitting a detailed assessment to take place now and not at the conclusion of the case.

Given that Mr Prichard is in person, in the best traditions of the Bar, Mr Saoul drew the Court’s attention to all relevant authorities, including those that did not advance Royalton’s case. These included Crystal Decisions (UK) Ltd & Others –v- Vedatech Corporation & Others [2007] EWHC 1062 (Ch) on appeal from decisions of Master Gordon-Saker and myself. At paragraph 78 Patten J said this:-

“ … the purpose of CPR 47.1 is to lay down a general rule that the costs of part of the proceedings are not to be assessed until the conclusion of the proceedings as a whole, unless the Court orders them to be assessed immediately, which the Court of Appeal did not …

78.

I shall also add (although this is not strictly necessary for my decision) that I am far from persuaded that Section 28.1(4) [CPD] gives to the Costs Judge power to order the continuation of a detailed assessment in circumstances where the Court making the original order for costs has not done so. The power containing Section 28.1(4)(b) to allow the assessment to continue seems to me to consequential and contingent upon the power contained in Section 28.1(4)(a) for a Costs Judge to decide whether the party serving a Notice of Commencement is entitled to do so. The reference to being entitled to do so must be a reference to the terms of CPR 47.1, and calls for a judicial determination of whether, under that rule, the party in question is entitled to proceed. It would be odd for the Costs Judge to be entitled to allow the assessment to continue, notwithstanding the ruling that CPR 47.1 did not justify an immediate assessment, and I do not consider that Section 28.1(4)(b) conferred on the Costs Judge any such dispensing power. The only Court entitled to permit a deviation from the general rule is the Court making the costs order. If that power is not exercised, the Costs Judge must apply the general rule …”

Although this quotation gives the appearance of being against Royalton, Mr Saoul submits that the Learned Judge’s comments in paragraph 78 are obiter and are not binding. In addition, he argues that with all due respect, Patten J was wrong. The correct question is whether this Court is entitled to exercise the discretion set out in CPR 47.1. In his submission, the answer to that is “yes” because of CPR 2.4. For the purposes of that rule, the Costs Judge is “the Court” and he is permitted under CPR 2.4 to apply CPR 47.1, which includes, in terms, the ability to order an immediate assessment. That is what should be done in this case. Such an outcome , Mr Saoul submits, would be on all fours with that reached by Hamblin J in GB Gas Holdings Ltd –v- Accentura (UK) Ltd & Others [2010] EWHC 2928 (Comm). In that case, the Learned Judge was asked to order an immediate assessment of both the trial costs which had taken place before a different Judge, Field J, and the appeal costs, in relation to which the Court of Appeal had already made a substantive costs order that had not included a direction for immediate assessment.

At paragraph 32, Hamblin J had said this:

“32.

The same considerations do not however apply to the appeal costs. They involve no particular disentanglement between preliminary issues and main trial costs. They themselves are discrete costs relating to the appeal and therefore any assessment, if there is to be one, should not be either particularly lengthy, costly or disruptive. However, the defendants submit that I have no jurisdiction so to order, since the costs order was made by the Court of Appeal, and the Court of Appeal did not order immediate assessment, and it appears that it was not asked to do so.

33.

I accept that the usual practice would be for a party to ask the Court of Appeal to order immediate assessment of costs if that is what it wishes to have done. I also accept that the Claimants did not do so in this case and that, in those circumstances, the effect of the order is, in the light of CPR 47.1, that the costs as ordered by the Court of Appeal, as matters stand, will not be assessed until the conclusion of proceedings. But the court may order them to be assessed immediately. In my judgment, that is an order which this court can make. This court has the conduct of the proceedings generally. It has before it a specific issue of whether it is appropriate for there to be an immediate assessment of costs. Those costs include, as part of the costs of the proceedings, the appeal costs. I am therefore satisfied that I do have jurisdiction to order immediate assessment of those costs and, because they are discrete costs and because they involve no great issue of disentanglement, I accept that it would be appropriate to order immediate assessment of the appeal costs.”

Mr Saoul submits that self-evidently Hamblin J’s decision is at odds with Patten J’s earlier obiter view, and that just as he, Hamblin J, considered himself entitled to direct an immediate assessment of the Court of Appeal costs, I am permitted to do so in respect of the Penry-Davey J costs and should so order. Indeed, he contends that it would be extremely odd (not to mention inconsistent with CPR 2.4) if Costs Judges were to be deprived of the discretion set out in CPR47.1 when all of the other powers contained in that part of the Civil Procedure Rules, not only remain at their disposal, but are, generally speaking, within their unique domain.

Attractive though they are, I cannot accept Mr Saoul’s submissions. In the first place, I do not consider that it was ever Penry-Davey J’s intention that there should be an immediate assessment in this case. At the end of the hearing, the Learned Judge could have carried out a summary assessment of the costs by quantifying them there and then, with payment to be made within 14 days (applying CPR 44.8). Alternatively, he could have ordered that they be assessed by detailed assessment and paid forthwith, but it is common ground that he did not do so. In the further alternative, he could have done as he did, namely to order that the costs be quantified by way of detailed assessment butthat there should be a down payment of £5,000 so that Royalton would not be out of pocket for all the costs it had incurred until the conclusion of the case . In these circumstances, as it seems to me, were I to permit the assessment to continue, I would, (if I may adopt Patten J’s description of my decision in Crystal Decisions at paragraph 77), be rewriting CPR 47.1 in the sense that I would be departing from the general rule that the only Court permitted to deviate from that rule is the court making the costs order, here Penry-Davey J’s Court. That sits comfortably with my second reason which is that I consider that it is for the Court which makes the order for costs, to decide when they should be assessed and paid and the function of the Costs Judge is to implement that order, not to alter it. It follows that I consider the reference to “the Court” is to the Court that makes the order, and not to the Costs Judge who is tasked with assessing the costs pursuant to that order. Thirdly, contrary to Mr Saoul’s submission, I consider that it would be a surprising state of affairs if, on every occasion that the Court made an order for costs without directing an immediate assessment, the receiving party could make or renew his application for that purpose before the Costs Judge. In that event, this Court would be inundated with applications for detailed assessment where the receiving party wished to secure payment long before the proceedings had concluded. As it seems to me, Penry-Davey J’s order was designed to prevent that happening in this case, namely by directing part payment to Royalton now of a sufficient sum to recompense it on a rough and ready basis for its expenditure on the application, with any balance to be paid (with interest) following detailed assessment. Finally, so far as GB Gas is concerned, Hamblin J considered that he was able to order immediate assessment of the Court of Appeal costs because they were “discrete” and would not involve any great issue of “disentanglement”. I am not in that situation. This is hotly contested litigation proceeding in the Queen’s Bench decision. Without an examination of the issues, I am not in the position to decide the extent to which the disclosure costs are discrete and can be disentangled from the costs of the action. That is a further reason for not permitting assessment of the Penry-Davey J costs at this stage.

For reasons I have given, they will be a stay of the detailed assessment of the costs awarded in Royalton’s favour by Penry-Davey J until the conclusion of the litigation or further order. As I stated at the hearing, Royalton’s time for applying to me for permission to appeal is extended and will elapse 14 days after the date of this judgment. To save costs, any such application should be made to me briefly and in writing. No one should attend when this judgment is handed down.