Mr Justice Lindsay:
A. INTRODUCTION
- Mr Ioannis Frangos and his fellow defendants ("the
Receiving Parties" or "RPs") had a Costs Order made in their favour against
the 3 Claimants ("the Paying Parties" or "PPs") by the Court of Appeal on the
31st March 1999 ("the 1999 Order"). The Receiving Parties should have
commenced detailed assessment proceedings in respect of those costs by the
30th June 1999. In circumstances we shall need to explain more
fully, they did not commence such proceedings until the 1st July
2004. On the 9th September 2005 the PPs applied to Court asking
that some proportion of the RPs' costs should be disallowed on the basis that
the Notice of Commencement was 5 years out of time. On the 26th
September 2005 Master Seager Berry, Costs Judge, dismissed the PPs'
application in a full and reasoned judgment ("the Costs Judgment"). His Final
Costs Certificate of the 12th October 2005 orders the PPs to pay
£326,996.48 to the RPs within 14 days, with interest to run from the
1st April 2004. Nothing has been paid. The PPs now appeal. There is
nothing before us by way of challenge to the Costs Judge's Assessment as such;
the appeal is solely directed to his failure to disallow a proportion of the
RPs' costs on account of the delay in commencement.
- I sat in this matter with the two Assessors
above-named. This judgment is my judgment but as it has generated only
agreement from the Assessors and as I have benefited from their guidance and
experience it seems right for the judgment to be described as "ours" rather
than as mine. I shall thus speak throughout of "us", "we" and "our".
- Before turning to the applicable rules or to the
Costs Judge's judgment, we will first briefly summarise the course of the
proceedings in which the Court of Appeal came to make the 1999 Order.
B THE PROCEDURAL HISTORY
- Mr Loucas Haji-Ioannou, first-named of the PPs as
claimants, who, on unchallenged evidence, is a rich man, began proceedings on
the 19th September 1997 against the RPs in relation to an alleged
fund of some $49m said to have been advanced to the defendant-RPs for the
purpose of acquiring vessels. The PPs (and there is no need for our purposes
to distinguish between them) procured the arrest of 4 vessels. The RPs (and,
again, there is no need to distinguish between them) denied liability and by
Notice of Motion moved in the Chancery Division for, inter alia, the release
of the vessels. There was a 3 day hearing in November 1997 before Neuberger J
who stayed the PPs' proceedings and ordered the arrested ships to be released.
There was then both an appeal by the PPs and a cross-appeal by the RPs to the
Court of Appeal. On the 31st March 1999 the RPs largely succeeded
in resisting the appeal and the Court of Appeal by the 1999 Order ordered that
the PPs should pay the RPs' costs of the appeal, 25% of the costs of the
RPs'cross-appeal and 75% of the RPs' costs of the hearing before Neuberger J.
Leave to appeal to the House of Lords was refused. The PPs then petitioned for
that leave. On the 5th May 1999 the RPs' solicitors turned to the
subject of costs, inviting the PPs to make a substantial payment on account.
The next day (as the Costs Judge notes in the Costs Judgment) the PPs'
solicitors wrote a letter which, inter alia, said:-
"If our clients' appeal to the House of Lords is successful the
current Costs Orders would almost certainly be varied. What therefore is the
point of taxing your costs if they may not ultimately be recoverable? This
surely is a waste of time and expense."
- On the 23rd February 2000 the House of
Lords refused the PPs permission to appeal. Costs in the House of Lords are,
of course, the subject of quite different provisions than the CPR and have
their own tight timetable. The PPs by their solicitors offered £1542.08 in
satisfaction of the RPs' recoverable costs in the House of Lords. It seems
that that sum was agreed but it has not been paid. On the 30th June
2000 the PPs' solicitors wrote, as follows:-
"The refusal of the House of Lords to grant leave to appeal
means that the proceedings have effectively been transferred to Greece.
According to the Greek Supreme Court and the Court of Appeal Panel Judges,
considerable sums are due from your clients to ours and some mechanism needs
to be agreed for securing sums paid by our clients in respect of the cost of
the English proceedings in the House of Lords, Court of Appeal and at first
instance. May we have your proposals?"
There is no evidence before us of any response to that letter from the RPs.
Indeed, there is then, as it seems, silence on both sides until the
1st July 2004 when the RPs served Notice of Commencement – see
CPR 47.6 (1) (a) – with a Bill of Costs. At the request of the PPs an
extension of time was granted for serving Points of Dispute which were then
served on the 29th October 2004. The RPs served their response on
the 11th March 2005. The PPs' Points of Dispute foreshadowed the
launching of an application for a disallowance of part of the Bill of Costs on
the grounds of substantial delay in commencing the assessment proceedings and
on the 9th September 2005 an application was served by the PPs
asking that pursuant to CPR 47.8 and/or CPR 44.14 the Court
should "disallow a proportion of the RPs' costs being assessed including
and/or part of the costs of the assessment process ….. and/or all or part of
the interest otherwise payable under section 17 of the Judgments Act
1838 because the Defendant or his legal representatives have failed to
comply with a rule and/or practice direction in failing to commence
proceedings for detailed assessment within the period required by CPR 47.7.
The order for costs in this matter was made on the 31st March 1999.
Notice of Commencement was served on the 1st July 2004 and was 5
years out of time".
- The application was supported by a witness statement
from Mr S.J. Loftus, a partner in the PPs' solicitors. As the Costs Judge
notes in his Costs Judgment, that witness statement made no reference to any
prejudice suffered by the PPs. Indeed, no prejudice is said to have been
suffered by the PPs by Mr Bacon, who has represented the PPs at the hearing
before us.
- On the 19th September 2005 the RPs served
a witness statement in reply. As the Costs Judge notes in the Costs Judgment:-
"In the final paragraph [the RPs] conceded that interest would
not be claimed between the 31st March 1999 (the date of the Court
of Appeal judgment) to 1st April 2004 (3 months prior to the
service of the Notice of Commencement). The concession therefore excluded
the initial 3 months within which Notice of Commencement should be served.
At the conclusion of his submissions Mr Morgan [Mr Morgan Q.C., who appeared
both below and before us for the RPs] explained that the concession on
interest amounted to some £180,000 or 30% of the bill and was made up of
interest at 8% namely £36,000 for 5 years."
Because the RPs bill was taxed down the concession (as is not challenged)
can now be seen to be of some £123,000 if computed in that way. We now turn to
the relevant provisions of the CPR and , in the first place, we shall so do
without regard to such authority as there is on their construction.
C THE RELEVANT CPR
- A detailed assessment of the kind required by the
1999 Order is to be begun by the receiving party serving on the paying party a
Notice of Commencement in the relevant practice form and a copy of the Bill of
Costs – CPR 47.6. The prescribed time within which that is to be done
is 3 months after the date of the judgment – CPR 47.7. That is the
period within which "Detailed Assessment proceedings must be
commenced".
- Under the heading "Sanction for failure to commence
in time" CPR 47.8, so far as here relevant, provides as follows:-
(1) Where the receiving party fails to commence Detailed
Assessment Proceedings within the period specified –
(a) in rule 47.7;
(b) ……
the paying party may apply for an order requiring the
receiving party to commence Detailed Assessment Proceedings within such
time as the Court may specify.
(2) On application under paragraph (1), the Court may direct
that, unless the receiving party commences Detailed Assessment Proceedings
within the time specified by the Court, all or part of the costs to which
the receiving party would otherwise be entitled will be
disallowed.
It is important to note that if the receiving party does dally then the
paying party has a remedy in its own hands, one that, by way of an "Unless"
Order, may carry with it a very powerful sanction. Moreover, as Mr Morgan
points out, parties are, under CPR 1.3, required to help the Court to
further the overriding objective of, inter alia, ensuring that a case is dealt
with expeditiously. A paying party who sits on his hands whilst the receiving
party dallies is thus not himself wholly free of blame. To continue with
47.8, it provides also:-
"(3) If –
(a) the paying party has not made an application in
accordance with paragraph (1); and
(b) the receiving party commences the proceedings later than
the period specified in 47.7,
the Court may disallow all or part of the interest otherwise
payable to the receiving party under –
(a) section 17 of the Judgments Act 1838;
or
(b) section 74 of the County Courts Act
1984;
but must not impose any other sanction except in accordance
with rule 44.14 (powers in relation to
misconduct)."
- It is convenient to speak of those last words of
47.8 (3) – "but must not impose" onwards – as "the Proviso", a term used by
both sides during the hearing. Before we go on to look at the CPR 44.14
referred to, it is as well to pause to consider the terms of 47.8. The
power to disallow which it confers is exclusively as to one or other of the
two kinds of interest to which it refers; it does not permit any disallowance
of costs. But the sanctions available under 44.14 to which the
Proviso refers relate (as we shall come on to) exclusively to costs and not to
interest. The Proviso thus does not operate as a true proviso; it does not
operate to exclude some sanction which, but for the Proviso, would have been
capable of application under the body of the rule. Instead its serves to
emphasise to the Court the boundary – the disallowance of interest only – of
the sanction available under 47.8 (3). There cannot, in such a case,
for example, be anything deducted from the amount of any sum of principal
awarded to the receiving party in any judgment in his favour nor, say, can
there be some qualifying of the terms of any declaration or other relief which
he had obtained. It cannot sensibly be said where the pre-conditions of
47.8 (3)(a) or (b) are met and there is a disallowance of interest,
that no other sanction can then ever be imposed as that would be to stop at
the words "but must not impose any other sanction" without paying regard to
the remaining words "except in accordance with rule 44.14" (our
emphasis).
- Section 18 of the 1838 Act makes an order for
costs a judgment debt within the meaning of section 17 of the same Act – see
Powell –v- Herefordshire HA [2003] 3 All ER 253 at 255 paragraph 8. In the case at hand the Court of
Appeal, had it paused until the CPR came into effect, could have provided for
interest on costs to have run from some date other than the date of their
award – see CPR 40.8 and 44.3 (6) (g) – but as at 31st March
1999 no such power existed and the 1999 Order thus could not make any such
special provision as to interest on costs. Accordingly interest on costs runs
from the date of the 1999 Order. It runs from that date and not from either
the beginning or the end of the assessment process. By delaying his
commencement, the receiving party, at any rate where the paying party does not
intervene under 47.8 (1), thus, in the absence of a disallowance or
concession as to interest, prolongs the period in respect of which the paying
party would be required to pay interest. But the paying party has the remedy
of 47.8 (1) in his hands and could, of course, further or alternatively
reduce his liability as to interest by making a payment on account. Where the
receiving party suffers a disallowance of interest or makes a concession to
the same effect there is a corresponding benefit to the paying party who, in
any event, by reason of the receiving party's delay, has the benefit of having
still in his hands such principal monies as, had the receiving party acted
more promptly, would have had to be paid over to that receiving party. Delay
on a receiving party's part can in such circumstances thus represent a
self-inflicted wound on the receiving party and something of a gratuitous
windfall to the paying party.
- Turning then to 44.14, it has the heading
"Court's powers in relation to misconduct". It provides, so far as here
relevant, as follows:-
"(1) The Court may make an order under this rule where
–
(a) a party or his legal representative, in connection with
a summary or detailed assessment, fails to comply with a rule, practice
direction or Court Order; or
(b) it appears to the Court that the conduct of a party or
his legal representative, before or during the proceedings which gave
rise to the assessment proceedings, was unreasonable or
improper.
(2) Where paragraph (1) applies, the Court may –
(a) disallow all or part of the costs which are being
assessed; or
(b) order the party at fault or his legal representative to
pay costs which he has caused any other party to
incur.
(3) …….."
Little is to be made of the word "misconduct" in the heading. It does not
appear in the body of the rule. Moreover, it is very easy to imagine
circumstances falling within 44.14 (1) (a) where nothing fairly
describable as "misconduct" has occurred. One would hardly describe as
involving "misconduct" the case of, say, a litigant in person whose failure to
comply with a rule is demonstrated to have been wholly referable to serious
illness or serious accident and injury.
- It is plain from its terms and it is common ground
before us that 44.14 includes no provision for disallowance of either
of the two classes of interest disallowable under 47.8; 44.14,
so far as concerns disallowance under 44.14 (2) (a) , provides only for
disallowance of costs.
- It has been suggested in argument that 47.8
and 44.14 are in conflict with each other or, at lowest,
inconsistent. We see no such conflict or inconsistency; one relates to
disallowance of interest and the other to disallowance of costs but the former
makes it clear that the possibility or fact of disallowance of interest does
not of itself preclude the disallowance of costs. Mr Morgan submitted that the
reference in 44.14 (2) (b) to "costs which he has caused any other
party to incur" required some corresponding causative link to be required
before costs could properly be disallowed under 44.14 (2) (a). If we
understood the argument it was that before there could be a disallowance by
reason of the receiving parties having failed, within 44.14 (1) (a), to
comply with a rule, practice or Court Order, it would have to be shown that
such failure had caused some identifiable tranche of costs to the paying party
and that it was only that tranche which then could be disallowed. We reject
any such requirement; there may be other answers to the submission but we
confine ourselves to pointing out that there is no express reference to any
causative connection being required in 44.14 (2) (a), that there is, as
far as we can see, no necessity to imply any such requirement, that the
draftsman shows, from the nature of the provisions he makes in 44.14 (2)
(b), that when he intends a causative link he knows how to provide one and
that the expressio unius canon of construction therefore suggests that no
causative link was intended under 44.14 (2) (a).
- It has also been argued that such is the
inter-relationship of 44.7, 47.8 and 44.14 that where the only
rule which the receiving party has failed to comply with is the 3-month time
limit of 44.7 then the only possible sanction is a disallowance of
interest under 47.8 and not any disallowance of costs under
44.14. That cannot be; had that been intended the Proviso would have
stopped at the words "but not impose any other sanction" whereas, as we have
already noted, they do not stop there but rather go on to refer to
44.14 sanctions being available. The concluding words of the Proviso
would hardly have referred to 44.14 sanctions were they to be
unavailable in all circumstances.
- It is also argued that where there is a
disallowance by the Court of interest under 47.8 then as a matter of
jurisdiction it is only in exceptional circumstances that there can be a
disallowance of costs under 44.14. Had that been intended one could
reasonably have expected to see the Proviso concluding with words such as "…..
save, and only in exceptional circumstances, in accordance with rule 44.14"
and to find some proviso in 44.14 (1) (a) excluding its applicability,
save in exceptional circumstances, where interest had been already or was to
be disallowed by order of the Court under 47.8. Nothing such is to be
found expressed in either rule and, as we find no inconsistency between the
two rules, we see no need to make any implications in order to avoid it. We
add that had exceptional circumstances been intended to be required then one
might also have expected some amplification as to what circumstances were to
be regarded as exceptional and yet further provisions might have been needed
so that a party could not escape the need for showing exceptional
circumstances by a timely concession as to interest such as might preclude a
formal disallowance by the Court under 47.8 (3). Perhaps also provision
would have been needed so that a disallowance of only a trivial amount of
interest under 47.8 (3) would not of itself and in the absence of
exceptional circumstances bar the applicability of 44.14.
D THE AUTHORITIES CITED
- Thus far, as we have mentioned, we have arrived at
conclusions on construction without regard to authority. Does such regard
require us to alter our conclusions? Before we go to the authorities put
before us we make some preliminary observations. Firstly, there is no
authority binding upon us that establishes that as a matter of
jurisdiction disallowance of costs under 44.14 is not possible
or is possible only in exceptional or specified circumstances where there has
been disallowance of interest under 47.8 or where the only rule not
complied with is that of the time limit as to commencement provided for by
47.7. Secondly, when one is considering an unfettered discretion such
as that in 44.14 (2) (a) (and, although the skeleton prepared for the
hearing by another Counsel may have aspired further, it is only the (2) (a)
limb which Mr Bacon relies upon) there is no warrant for any Court to write in
jurisdictional requirements that the rule in question does not contain. If the
body to whom the legislature has delegated rule-making has chosen not to put
in such a requirement then it is not for any Court to do so, Gardner –v-
Jay (1883) 29 Ch D 50 CA at 58 per Bowen L.J.. Thirdly, so far as any
authority illustrates how the conferred discretion has been exercised at
another time, by another Court and on different facts, it is at best only an
unbinding guide, one that can be adopted, shaped to fit or not followed.
Whilst, plainly, some consistency of application is desirable, there is no
formal need to distinguish an earlier authority where or to the extent
that it is only such a guide to the exercise of a discretion. Fourthly, it is
well established that it is very rarely appropriate, in construing the CPR, to
embark on a comparison and contrast with such provisions as were made in the
corresponding area under the superseded RSC. Fifthly, although there
occasionally can be an illuminating shaft of light thrown on what is the
proper exercise of a discretion under one rule or statute by examining
authorities as to how a not dissimilar discretion is exercised under a
different rule or statute, far more commonly no help will be derived from such
an attempt because the discretion under the one statute or rule is likely to
have a different purpose than has, and is likely to require to be exercised in
a different context than is, the other.
- With those general observations behind us we now
turn to the authorities cited to us. Mr Bacon took us first to Re Home
Assured plc [2002] Costs L.R. 71. A solicitor entitled to recover an
assisted person's costs from the Legal Aid Board might under the rules find
his recovery reduced or disallowed where he had without good reason delayed
putting in his bill for taxation. One solicitor put in his bill 4 years late.
Notwithstanding that the Board had suffered no prejudice thereby, the Deputy
Costs Judge had disallowed all that solicitor's profit costs. On appeal, Park
J. sitting with assessors, emphasised that there was no prejudice to the Board
by reason of the delay but emphasised also that there was real (albeit
self-caused) prejudice to the solicitors. He stated, by way of comment on an
earlier case under the RSC, one of delay in an inter-partes taxation of costs,
that the difference between such a taxation and a Legal Aid taxation was very
important – paragraph 26 and see paragraph 18. The Learned Judge
said:-
"The Deputy Costs Judge's decision amounts to fining the firm
£29,000 for a bad failure to meet a time limit. They deserved some penalty,
but surely not so severe one as that."
- He reduced the disallowance to one of only 30% of
the profit costs. But the context there was very different and it is both
fruitless and, indeed, impossible to attempt, on the grounds of a spurious
consistency, to seek to find the equivalent of a disallowance of 30% of
£29,000 (i.e. £8,700 or £2175 per annum of default) being appropriate to mark
delay over 4 years in a Legal Aid case to what would have been appropriate in
the case before us. Before us there was, as we have mentioned, by way of
concession, a self-inflicted penalty upon the RPs which was of some £123,000
(8% p.a. on the assessed costs of almost £327,000 over the conceded period).
Although we recognise that such a computation is not the only and perhaps not
the most appropriate way of computing the disadvantage suffered by way of the
concession, that would be a "penalty" of £24,600 per annum of default, almost
three times the rate in Homes Assured. We are far from saying that such
an arithmetical approach is appropriate. Plainly it is not but, were it to be
so, it would, if anything, suggest that no penalty beyond the self-inflicted
concession would here be appropriate.
- Next we were taken to Biguzzi –v- Rank Leisure
plc [1999] 1 WLR 1926 CA. A claim for damages for personal injury had been struck
out by the Deputy District Judge where there had been a failure to give
disclosure on time, punctually to prepare trial bundles, to set the case down
as had been ordered and to prepare a calculation of special damages. The
Circuit Judge on appeal restored the claim on the basis that there had been
delay on both sides and because, notwithstanding that delay, a fair hearing
was still achievable. The Court of Appeal upheld the Circuit Judge's decision.
Lord Woolf spoke of the importance (which we would have accepted with or
without authority) of the then-recent CPR Rules as to time and time-keeping
being observed and of the CPR representing a different regime to that of the
RSC. But the case does not materially help us in the very different context
before us where the cunctator's delay stands to inflict a penalty or
disadvantage on himself and a benefit on the other side and where, in any
event, the other side has had open to it a convenient and inexpensive
mechanism (47.8 (1)) by which to counter delay but where that other
side has not used it.
- Next we were taken to McGuigan –v- Tarmac,
of which a brief note appears in CLY ref 03/324. A defendant was
awarded costs. He served a schedule detailing costs of £58,000 but failed to
request a hearing date within the 3 months provided by CPR 47.7.
Presumably the paying party had served Points of Dispute but the receiving
party had then failed to file a request for a Detailed Assessment hearing. The
matter came on before H.H. Judge Collins in the Central London County Court.
The Current Law note, not said to be approved by the Judge, records a decision
which attempts a "reconciliation" between rule 44.14 and 47.14 (5) and is
summarised as concluding that the proper reconciliation of the rules "Was that
44.14 was not, in this context, triggered by mere delay but by delay
sufficiently beyond that sometimes encountered as to amount to misconduct".
The District Judge had reduced costs under 44.14 by 60% to mark delay
of over 2 years but the Learned County Court Judge reduced the disallowance to
25%, the receiving party having, both below and before the Circuit Judge,
conceded not only that no award for interest on costs could be asked for but
also that some further sanction would be appropriate. Although a
reconciliation between 44.14 and 47.14 is not quite the same as
one between 44.14 and 47.8 (as under the former the receiving
party has already served a bill and the paying party has already identified a
dispute) they are not wholly dissimilar but, for the reasons we have already
given, we do not find there is any need to "reconcile" 47.8 and
44.14 and even if we did find such a need, we would not have found that
44.14 could only be triggered upon satisfaction of so unexpressed and
vague a test such that 44.14 was not triggered by "mere delay" but only
by delay "sufficiently beyond that sometimes encountered as to amount to
misconduct". It is a pre-condition of an implication that what it is that is
to be implied is clear; it cannot be that so vague a test could be implied. It
may be that the brief note does not do justice to the Learned Judge's
reasoning but it does not in any event bind us and for the reasons we have
given we do not accept that 44.14 is fettered in the way that the note
suggests.
- Then Mr Bacon took us to the now-superseded RSC
Order 62 rule 10 (1) and rule 28. We shall not take up time listing
the many ways in which those earlier provisions differ materially from those
we now have to consider. Had the RSC and the CPR been to the same effect then
citing the RSC would have added nothing; as they are very different one can
only conclude that the difference was intended. Either way a study of the RSC
does not help us.
- Next we went to Botham –v- Khan and Lamb
–v- Khan, [2004] EWHC 2602 (QB); [2005] Costs LR 259 per Richards J.. At the end of
lengthy trials Costs Orders were made in favour of the defendants but, either
in respect of earlier or simultaneous orders for costs, there were Costs
Orders going the other way in both actions. Both claimants lodged appeals in
the actions. 7 years elapsed before Notice of Commencement had been served by
the defendants as receiving parties. The claimants argued, inter alia, that
the defendant's costs of both actions should be disallowed under CPR
44.14. Richards J. set out the convoluted history of the matter, which
included a "without prejudice" letter from the receiving party that appeared
to extend time for the lodging of bills of costs but provided also that either
side could bring the extension to an end by serving 14 days notice. Such
notice was not given. As in our case, the receiving party did not claim
interest – paragraph 36. Richards J. had no need to consider in detail
the construction of CPR 47.8 or 44.14 as to the jurisdictions
thereby conferred and did not do so; the case represents no other than an
exercise of the 44.14 discretion on its own particular facts. It was,
as the Learned Judge held – paragraph 37 – far from being a case as to
which blame lay on only one side. At paragraph 44 the Learned Judge
said:-
"The conclusion I reach on this issue is that the delay,
although deeply regrettable, ought not in the circumstances to cause me to
impose any greater sanction than that already conceded by the defendant in
the form of disallowance of interest."
The case says nothing as to jurisdiction and, so far as concerns
discretion, does nothing to suggest that any costs should have been or must
now be disallowed in the case before us.
- Last of Mr Bacon's authorities is Less and
others –v- Benedict [2005] EWHC 1643 (Ch) per Warren J.. In February 2001 a Costs Order had been made in
the defendant's favour against all claimants. Notice of Commencement was
attempted or thought to have been served by the defendants within the CPR
47.7 limit – paragraph 12. But some wrong addresses were used in
that process and, save as to the third claimant, there was a dispute as to
whether the Notice had been duly served. Points of Dispute had been served by
the third claimant by May 2001 but no further steps were taken by any paying
party until July 2004. In December 2004 the Master ordered fresh service of
Notices of Commencement on all claimants – paragraph 21 – and that
order was complied with. On the 11th March 2005 the claimants
applied under various headings, one of which, relevant to us, was that the
Court should impose a sanction for delay under CPR 3.4 ("power to
strike out Statement of Case") or under 44.14. Master O'Hare rejected
that and the claimants appealed. The Master had not expressly dealt with
CPR 44.14 in his written judgment but, as Warren J. indicated in his
paragraph 54:-
"The Master did not deal with the question of imposing a
sanction under that rule (CPR 44.14) in his written judgment. He did,
however, add a rider to it dismissing the application for such a sanction.
The only sanction he applied was the disallowance of interest between the
21st May 2001 and the 14th December 2004, his power to
do so being contained in CPR 47.14 (5). That sub-rule provides for
the disallowance of interest where the receiving party has failed to request
a Detailed Assessment hearing within the time-limits referred to in CPR
47.14 (2). But any other sanction for failure to request a hearing is
expressly prohibited other than in accordance with CPR 44.14.
"
- It was argued before Warren J. that where there
was nothing that could be complained of save delay, the provisions of CPR
47.14 (5) (very similar, mutatis mutandis, to those of 47.8 and,
like 47.8, including those words which, in 47.8, we have
described as the Proviso) precluded any disallowance save of interest and
hence precluded a disallowance of costs under CPR 44.14. At his
paragraph 60 Warren J. continued:-
"However, reading CPR 44.14 together with CPR 47.8 and 47.14 I
agree that CPR 44.14 (1) (a) must be intended to cover the case of a breach
of rules, practice direction or Court Order which go [sic] beyond the mere
non-compliance with a time-limit under CPR 47 (perhaps including even one
laid down in a Court Order save where it is in the form of an "unless"
order). But I am reluctant to decide, and do not do so, that this is because
there is no jurisdiction to apply such a sanction other than in
serious cases. Rather, I consider that the issue is one of the proper
exercise of the discretion and that it would only be in the most exceptional
case (which it is not easy to envisage) that mere delay could result in an
exercise of the power; I would not want, however, wholly to rule out that
possibility."
He said that he would turn to that subject later in the judgment. He did
return, at paragraph 71, where one finds:-
71. It is true that if D did not in fact serve his Notice of
Commencement on all Cs within the time-limit under CPR 47.7 he was in breach
of the rules. However, the consequence is not automatic that costs must be
disallowed either in whole or in part. The primary sanction is disallowance
of interest and, indeed, any other sanction is prohibited save by the
application of CPR 44.14. For reasons already given, I do not consider that
CPR 47.8 was unavailable to those Cs (if any) who were not served in April
2001.
72. The Master by his order of the 2nd December 2004
took steps to cure the doubt which he had about service in April 2001. At
the full hearing on the 8th March 2005 he refused to impose a
sanction under CPR 44.14. It is not clear whether he did so because he
considered that he had no jurisdiction or because he refused, in his
discretion, to exercise that jurisdiction. In the latter case I see no
reason to interfere with his discretion. In the former case (assuming that I
am correct in holding that there is in fact jurisdiction) it is open to me
to exercise the discretion afresh. In my judgment, no sanction should be
imposed under CPR 44.14 taking into account all the factors which have been
identified in this judgment (including those referred to by the Master in
his judgment). The Master acted sensibly and well within his discretion in
ordering re-service in order to allow the detailed assessment to
continue.
Mr Morgan asserts that the passages as to CPR 44.14 are ratio, that
the decision is right and that it should therefore be that only in the "most
exceptional" case should there be a disallowance of costs under 44.14
where there is only "mere delay" (namely nothing but delay and, in particular,
no prejudice to the paying party). Mr Bacon says that the passages as to
CPR 44.14 are obiter and, if not obiter, are wrong. Certainly, he says,
Less does not help the Receiving Party. It was not a case such as the
one at hand, where there was delay only in commencement of the assessment
process.
- To revert to Warren J.'s paragraph 60, he
first says, as is irresistible, that 44.14 (1) (a) must be intended to
cover cases "Which go beyond mere non-compliance with a time-limit under CPR
47 ……..". But, conspicuously, he does not there say that the rule is intended
to cover only such cases as thus "go beyond". He then makes it clear
that so far as concerns jurisdiction he does not hold that there is no
jurisdiction under 44.14 "other than in serious cases". Nothing in his
judgment thus bars there being jurisdiction under 44.14 where there is
nothing that can be complained of other than delay in commencement beyond the
3 months allowed by 47.7.
- We would accept that the Learned Judge's remarks
as to the discretion (which he did not exclude as having been conferred as a
matter of jurisdiction even in "mere delay" cases) require detailed attention.
He took the view that in "mere delay" cases the discretion would only be
exercised "in the most exceptional case". Firstly, as we have already
indicated, neither 47.8 or 44.14 has any express
requirement as to the 44.14 discretion ever being exercisable only in
exceptional cases. Secondly, as we have shown, we do not see there to be some
conflict or inconsistency between the two rules such that any such limitation
on the discretion has to be implied. Yet no other ground for the implication
is asserted. Thirdly, as, again, we have already mentioned, where, as a matter
of jurisdiction, a discretion is conferred in unfettered terms so far as
express provision is concerned and where there is no necessity for implying a
fetter, it is not open to any Court to restrain its operation save by
reference only to the universal implication that it should be judicially
exercised – Gardner –v- Jay supra. Fourthly, when in his paragraph 72,
Warren J. decided by way of exercise of a discretion (albeit an assumed one)
to impose no sanction under 44.14, he did not indicate that there was
an absence of whatever factors would have made the case "most exceptional" or
the presence only of factors that made it run-of-the-mill. Fifthly, his
observation as to the exercise of the discretion in the latter part of
paragraph 60 is not, it seems, limited to those cases where there has been a
disallowance of or concession as to interest under 47.8 (3). In such
other cases there would be no conceivable inconsistency or need to regulate
any inter-action between 44.14 and 47.8 and the need to read
them together, the very thing which generated the observation, would in such
cases would thus fall away. Properly understood the last sentence of Warren
J.'s paragraph 60 is intended by him, in our view, to be no more than a
tentative view as to the existence of an unexpressed but arguable fetter on
how the discretion, accepted as conferred as a matter of jurisdiction even in
non-serious cases, might commonly be exercised. If that is right, then the
sentence does not constrain us even at the level of comity and we have no need
to say, as Mr Bacon would have us do, that the sentence is wrong as we are
entirely free to take a different view.
- As to the far from easy question as to whether
paragraph 60 was obiter or not, if (as is one familiar test of whether a
matter is or is not ratio) one looks to see whether the Learned Judge could
have come to the same conclusion even had the relevant passage, here paragraph
60, been deleted, he plainly could have done. Ultimately, he deals with
jurisdiction as a matter of assumption; he takes himself to be open to
exercise the discretion under 44.14 afresh and then exercises it not
simply by disallowing costs because of the absence of factors making the case
"most exceptional" but by reference to "all the factors which had been
identified in this judgment (including those referred to by the Master in his
judgment".
- In reply, Mr Bacon referred us to Mainwaring
and Anor –v- Goldtech Investments Ltd (No 2) [1997] 4 All ER 16 and, in
turn, Mr Morgan was entitled to and did add comments on that case but it was a
case under the RSC, it was dealing with very different facts and was, in any
event, reversed by the Court of Appeal, at [1999] 1 All ER 456 CA. In
Mainwaring Robert Walker J. said at p. 26 b-c that delay
longer than two years:-
"….. will in most cases be wholly inexcusable and deserving of
more drastic action than a mere disallowance of interest …."
But even leaving aside that the Learned Judge was there considering a
different rule and different facts, the extent of disadvantage or "penalty"
represented by a disallowance of interest can only fairly be assessed by
reference to the size of the principal sum on which interest would otherwise
have been paid and the generosity or otherwise to the putative recipient of
the rate of interest which is foregone. There cannot be (and CPR 44.14
does not attempt to impose) some rule that after two years or, indeed, any
other specific period, a disallowance of interest must be taken not to suffice
to penalise the receiving party. In the case at hand, the principal sum was
large – almost £327,000 – and the rate of interest – 8% p.a. - so generous
that a disallowance of interest, be it volunteered or imposed, represented a
considerable sanction even were one to look at a period a good deal shorter
than a full five years.
- So far we have found nothing in the authorities to
require us to take a different view of the construction of the relevant
provisions to that which we had formed without authority nor, indeed, anything
that suggests that the Costs Judge's conclusion must have been wrong in
law as to jurisdiction. Was he, then, wrong in some way on the facts or in
his application of the law to the facts such that his discretion might be
overturned? We need to return to the Costs Judge's judgment.
E THE EXERCISE OF A DISCRETION BY THE COSTS JUDGE
- The Costs Judge, after setting out the provisions
of the CPR and going through the procedural history, then continued with some
background material which we shall cite as it affected his conclusions. At his
paragraph 15 he said:-
"It is necessary briefly to set out some background information.
A bitter family feud had been waged between the First Claimant and the First
Defendant. The First Defendant had married the daughter of the First
Claimant. Sadly the marriage did not last and after some three years the
parties separated. In addition to the litigation which had been instituted
in England, there had also been proceedings in Greece. In 1994 the Claimant
had brought proceedings against the First Defendant in the Piraeus Court for
embezzlement. Those proceedings were dismissed in 1996 and in 1998 the
appeal by the Claimant had been dismissed. In May 1995 the First Defendant
brought proceedings against the Claimant for perjury, false accusations and
aggravated damages. Those proceedings were concluded in June 2000. In 1999
the Claimant brought fresh civil proceedings before the Multi Member First
Instance Court in Piraeus based on alleged failure by the Defendant to repay
some US $49,000,000. Proceedings were continuing in the Piraeus County Court
and a hearing was due to take place on 20 January 2006. The proceedings are
estimated to take some two to three years and there are likely to be further
appeals. The present proceedings were commenced in 1997 and served on the
First Defendant during a visit to England. Thereafter four ships had been
arrested in South Africa, Netherlands, The Netherlands Antilles and Teesside
(England)."
- The Costs Judge accepted – his paragraph 46 –
"that the test to be applied is that set out in para 60 of the judgment of
Warren J." in Less. He did not indicate what he understood to be that
"test" but presumably he was taking the view that the discretion conferred by
CPR 44.14 was reserved exclusively for cases where, if nothing other
than a failure to comply with CPR 47.7 was shown (nothing, in other
words, beyond "mere delay") the case could fairly be described as "most
exceptional". If that was what the Costs Judge had in mind as a pre-condition
of the exercise of the discretion then, for the reasons we have given, he was
in our view wrong.
- After going through the authorities the Costs
Judge recorded that the PPs had not said that a fair hearing of the assessment
proceedings was not possible and that they did not allege that they had
suffered any prejudice. He pointed out that the PPs themselves had delayed;
they had served Points of Dispute on the 29th October 2004 but did
not serve the CPR 44.14 application until the 9th September 2005.
He pointed out that throughout the period the PPs had continued to have the
use of such money as a timely assessment would have required them to have paid
to the RPs. Of course, as he said, the RPs had also sat back and allowed time
to pass by. He regarded McGuigan supra as distinguishable; for the
reasons that we have given he was right in our judgment not to regard it as a
reliable guide. He then turned to Botham supra and cited Richards J.
there holding that in that case there had been an agreed extension of time on
agreed terms between the parties, terminable on 14 days' notice. The Costs
Judge then continued:-
"In the present case a similar approach has been adopted
…."
and later (his paragraph 44) he held:-
"There has been a tacit agreement by conduct for the continued
extension of time for the commencement of the assessment proceedings in
England while the bitter family feud continues to be waged in Greece and
South Africa."
see also his paragraph 46. Mr Bacon attacks that finding and Mr Morgan does
not defend it.
- There was obviously, given the PPs' Solicitor's
letter of the 6th May 1999 supra, reason for the RPs to fear that
to attempt assessment before the House of Lords had ruled on the Permission
Application would be quite fruitless. That letter makes it at least
hypocritical on the PP's part to complain of delay prior to the House of Lords
refusal of leave on the 23rd February 2000. The PP's Solicitor's
later letter of 30th June 2000 would be likely to have given rise
to some pessimism on the RPs' part as to recovery of costs before other,
foreign and protracted proceedings were concluded. But there is nothing in the
facts that justifies the finding by the Costs Judge that there had been an
agreement, tacit or otherwise, as to the extension of time. A further
difficulty in the way of the RPs asserting that there had been some form of
agreement that both sides would tolerate delay is that nothing can be
identified as having occurred so to have terminated the supposed agreement
that the RPs were free to serve their Notice of Commencement. The absence of
any end to the supposed agreement assists in a finding that it had no
beginning.
- That mistaken view of the facts entitles the PPs
to say, as Mr Bacon does say, that in exercising his discretion the Costs
Judge took into account a matter which he should not have done and that his
exercise of the discretion is thus to be set aside. We do not say that there
was no other material which, had it stood alone, would not have enabled the
Costs Judge to conclude as he did. His emphasis on the lack of any prejudice
to the PPs, to the benefit they had had in the continued use of the money
during the period of delay and the substantial self-inflicted "penalty"
represented by the RPs' concession as to interest could, on their own, have
led, in our view, to an invulnerable conclusion, as the Costs Judge did
conclude, that there was no need for any further imposition upon the RPs.
F CONCLUSION
- However, as the Costs Judge's exercise of the
discretion was flawed, it falls to us to exercise the discretion conferred by
44.14 afresh. We see force in Mr Bacon's submission that delay was here
so prolonged, so unexplained and so unexcused that it would be wrong for the
Court not to mark it with clear disapproval.
- Some disapproval is appropriate even in the case
where the chance of an assessment leading to any early recovery was likely to
be thin. The PPs, as we have mentioned, have not paid the sum they agreed as
to costs in the House of Lords and although, by this application, only 25%-40%
of the RPs' costs have been sought to be disallowed, the remaining 60%-75% has
not been paid. But we cannot ignore the very substantial disadvantage which
the RPs have voluntarily accepted by way of their concession as to interest.
Even if the disadvantage were taken to be the interest at 8% p.a. on some
£327,000 not over the full period but only over such shorter period as would
have been likely to have been taken up had there been a timely commencement,
the disadvantage could not be ignored. The likelihood would have been the
assessment would have been stalled until the House of Lords refused the PPs
permission to appeal in February 2000. Extensions of time would be likely to
be sought by the PPs. Unable to complain of the RPs' delay, the PPs could well
instead have embarked on a close contest of the assessment. History does not
suggest that payment to the RPs of the sum eventually found due would have
been prompt. Interest at 8% over the period, even with a timely start, would
still have been substantial. Had such a disadvantage been imposed by the Court
under 47.8 it would have represented a very substantial mark of
disapproval by the Court but we do not see that the RPs should be in a worse
position because the "penalty" has been conceded from the outset. If anything,
their willingness to accept the medicine without argument should be a factor
in their favour. Nor is it that by conceding interest the RPs are conceding
something which they could never have recovered; it is accepted that for our
immediate purposes we should approach the question of interest on the basis
that, to the extent that the PPs would have been held liable to pay it, it
would have been paid.
- If our reasons for setting aside the Costs Judge's
exercise of his discretion are themselves flawed then we see no good reason
for disturbing his conclusion; it was a conclusion, in our view, at which a
Costs Judge, properly directing himself, could reasonably have arrived on the
correct view (as we see it) that, even in the absence of exceptional
circumstances, there can be a disallowance of costs where the complaint cannot
be of anything but delay upon a failure to comply with CPR 47.7 and
even if (as was the case) there had been no agreement between the parties,
tacit or otherwise, to accept or condone delay.
- If, however, our conclusion that the discretion as
exercised below should be set aside is correct then it falls to us to exercise
the discretion afresh and in so doing we reach the same conclusion as did the
Costs Judge; there is, in our judgment, no case for imposing on the RPs the
further sanction of disallowance of any part of their costs under CPR
44.14. It has not been said that the RPs' delay was wilful, deliberate or
contumelious. As Mr Morgan argues, it is hard to think of any other area of
civil litigation where, in the absence of prejudice, so substantial a
"penalty" would be imposed as is here represented by the RPs' concession as to
interest. That there has also been a related benefit to the PPs, despite their
not themselves being models of cooperative expedition, only serves to
underline that further sanction would be disproportionate and is not needed.
The Costs Judge had refused permission to appeal. We granted that permission
at the conclusion of argument before us but, as we announced at the end of the
hearing, the PPs' appeal is dismissed.-
