Historically courts took a relaxed attitude to deadlines, and it may seem strange to younger members of the profession, but in my working life parties could, and did, simply decide that they were not ready for trial and would tell the court to adjourn matters.
That all changed with the introduction of the Civil Procedure Rules and the very tough approach to relief from sanctions in Mitchell v News Group Newspapers Limited, considerably softened by the subsequent decision in Denton and others v TH White Limited.
However, in relation to costs deadlines, with the marked exception of costs budgets, which the courts have an unhealthy obsession with, life has gone on as before with deadlines missed with no penalty.
There is evidence that the courts are now beginning to adopt a tougher line in relation to time limits and in relation to costs’ proceedings.
Default costs certificates: two new cases rejecting applications to set aside
Cases on default costs certificates are not common, but there have been two recently which have refused applications to set default costs certificates aside.
(1) No points of dispute served with application
In National Bank of Kazakhstan and another v The Bank of New York Mellon Settlement Agreement/NV, London Branch and others, the court refused an application by the defendants to set aside a default costs certificate, noting in particular that the application was not accompanied by any points of dispute.
Here, the claimant served notice of commencement of detailed assessment proceedings on 15 December 2020 and no points of dispute were served, and the claimants obtained a default costs certificate for US$3 million on 6 January 2021, in accordance with CPR 47.11.
CPR 47.9 allows a party to file a request for a default costs certificate in the absence of points of dispute being filed within 21-days of the service of the notice of commencement.
CPR 47.12(2) provides:
“(2) …the court may set aside or vary a default costs certificate if it appears to the court that there is some good reason why the detailed assessment proceedings should continue.”
Paragraph 11.2 of Practice Direction 47 says:
“(1) An application for an order under rule 47.12(2) to set aside or vary a default costs certificate must be supported by evidence.
(2) In deciding whether to set aside or vary a certificate under rule 47.12(2) the matters to which the court must have regard include whether the party seeking the order made the application promptly.
(3) As a general rule a default costs certificate will be set aside under rule 47.12 only if the applicant shows a good reason for the court to do so and if the applicant files with the application a copy of the bill, a copy of the default costs certificate and a draft of the points of dispute the applicant proposes to serve if the application is granted.”
The court effectively applied the well-known test in Denton, stating that failure to comply with the time limit for serving Points of Dispute was a serious breach, for which there was no good explanation and thus the court’s task was to apply the third stage “all the circumstances” test in Denton.
The Points of Dispute, in some shape or form, were fundamental to the prospects of setting aside the default costs certificate in most cases, as, unlike setting aside a default judgment, the paying party in detailed assessment proceedings had already been found to be liable to the receiving party by virtue of the order for costs on which the bill is based.
This left just a general submission that on detailed assessment costs are usually reduced, but the court held that there would be no benefit in the default costs certificate procedure if the certificate could always be set aside on those grounds.
(2): Incorrect service rectifiable
In Serbian Orthodox Church – Serbian Patriarchy v Kesar & Co, the High Court allowed an appeal against the setting aside of a default costs certificate, holding that the incorrect service to the wrong email address could be rectified.
Here, the respondent solicitors had been made the subject of a wasted costs order on an indemnity basis, and the applicant served notice of commencement by way of email, the respondent having agreed to accept service by that method.
The respondent in fact had two email addresses, and the notice was served on the longer email address, but emails to that address were immediately and automatically forwarded to the other email address, so there was no doubt that the respondent had had the papers.
The costs master at first instance held that service on the long email address, which was not the one the respondent had agreed to accept service on, did not constitute valid service.
On appeal, the High Court considered in great deal CPR 6 (which deals with service) and the case law, both under the Civil Procedure Rules, and the old Rules of the Supreme Court.
The court also examined in detail CPR 3.10 and CPR 6.15.
CPR 3.10 provides:
“Where there has been an error of procedure such as a failure to comply with a rule or practice direction –
(a) the error does not invalidate any step taken in the proceedings unless the court so orders; and
(b) the court may make an order to remedy the error.”
CPR 6.15 provides:
“(1) Where it appears to the court that there is a good reason to authorise service by a method or at a place not otherwise permitted by this Part, the court may make an order permitting service by an alternative method or at an alternative place.
(2) On an application under this rule, the court may order that steps already taken to bring the claim form to the attention of the defendant by an alternative method or at an alternative place is good service.”
CPR 6.15 is given effect in relation to documents other than a claim form by CPR 6.27, which provides that “Rule 6.15 applies to any document in the proceedings as it applies to a claim form and reference to the defendant in that rule is modified accordingly”.
Here, the court held that there was good reason to order that the steps taken to serve notice of commencement constituted good service by virtue of a combination of CPR 6.15 and CPR 6.27.
Essentially, the documents were sent to an email address that the paying party had used and the documents had automatically been forwarded to them and they had suffered no prejudice.
Although the first instance decision held that there was no valid service, it said that had good service been established, then there was no good reason to set aside the default costs certificate, applying the Denton test.
Here, the High Court said that that finding was open to the master, who had not misdirected himself in relation to this aspect of the case and had not taken into account an irrelevant matter. Consequently, the default costs certificate would stand.
Both are correct decisions in my view. For reasons that are beyond me, many lawyers seem to treat the costs aspect of the case as secondary and are happy to treat the CPR in relation to costs in a cavalier manner, which they would never do in relation to the substantive action.
No costs schedule? No problem. Late budget? No costs.
In Tribe v Elborne Mitchell LLP, the court dealt with the position where a costs schedule was served late (that is, after the hearing it related to), and allowed the defaulting claimant to recover costs.
There needs to be consistency in the application of the rules relating to costs schedules and budgets, and so on.
File a budget late, but still well before the hearing, and all future costs except court fees are lost.
Do not file a costs schedule at all before the hearing: no penalty.
Serve detailed assessment proceedings late: lose interest only.
It is a mess.