England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
NOTTINGHAM COUNTY COURT
(MR JUSTICE NEUBERGER)

		Royal Courts of Justice The Strand London Wednesday 21 February 2001

Wednesday 21 February 2001

1. LORD JUSTICE MAY: This is a renewed application on behalf of Taree Holdings Ltd for permission to appeal against an order and judgment of Mr Justice Neuberger on 12 December 2000. Permission was considered on the papers by Lord Justice Parker and he refused it on 26 January 2001.
2. Mr Justice Neuberger allowed an appeal by Mr Robert Macdonald, the appellant before him, against an order that had been made on 3 October 2000 by Deputy District Judge Cooper. By that order, the Deputy District Judge set aside a statutory demand for some £25,000 issued by the applicant against Mr Macdonald. To that extent Mr Macdonald had been successful, but the Deputy District Judge made no order as to costs, thereby depriving Mr Macdonald of the costs of what turned out to be a successful application.
3. Mr Macdonald appealed against that part of the Deputy District Judge's order and it was that appeal which succeeded before Mr Justice Neuberger. Mr Justice Neuberger concluded that the Deputy District Judge had gone wrong in the exercise of his discretion in relation to costs and he awarded Mr Macdonald his costs of the application on the standard basis. Mr Justice Neuberger then proceeded to carry out a summary assessment not only of the costs before the Deputy District Judge but of the costs of the appeal to him. The applicant through Mr Burroughs now renews his application for permission to appeal against that order.
4. The proposed appeal is a second appeal. Accordingly, by section 55 of the Access to Justice Act 1999 and the rule made under it, the Court of Appeal will not give permission unless it raises an important point of principle or practice, or there is some other compelling reason why the Court of Appeal should hear it. Mr Burroughs submits that those requirements are met in this case and he seeks permission accordingly.
5. The Deputy District Judge acceded to Mr Macdonald's substantive application to set aside the statutory demand. After his judgment on that issue, counsel appearing for him applied for his costs. The basis of that application, as appears from the transcript of discussions which followed the substantive judgment, included that the applicant had deliberately served its evidence late with the result that additional costs had been incurred. Counsel went so far as to ask for costs on an indemnity basis.
6. In response to that, Mr Burroughs on behalf of the applicant before this court submitted that it was, by contrast, Mr Macdonald who had been responsible for filing evidence late. Mr Burroughs also made the point that the statement of costs which was produced for the purpose of summary assessment had been served by Mr Macdonald on the very day of the hearing, shortly before the hearing began. Mr Burroughs put it in terms that, so far from being 24 hours in advance of the hearing, it was not 24 minutes in advance of the hearing. The 24 hours was a reference to the Practice Direction which requires that a schedule of costs of this kind, where a summary assessment is likely to happen, must be served 24 hours in advance of the hearing. Mr Burroughs submitted to the Deputy District Judge as follows:

"It is a matter which you are obliged to take into account. It is not determinative of the matter, but it is a matter which you are obliged to take into account and in my submission the very worst that you should do, if you award costs against me, is order that there should be a detailed assessment of these costs so that I can take instructions and see what this piece of paper means."

7. The reference to the piece of paper was obviously to the schedule of costs. Counsel for Mr Macdonald once again sought to raise the question of late service of evidence, to which the Deputy District Judge said:

"Can I just stop you there? I do not think that is the point. The point is basically why your solicitors did not get a statement in at least 24 hours ago."

8. Further submissions followed and the Deputy District Judge delivered his decision on costs. He referred to Part 44 of the Civil Procedure Rules and then said:

"So I have to look, basically, at whether there is reasonable excuse to comply with the foregoing paragraphs as the Practice Direction at 4.6 asks me to do."

(That is a reference to the Practice Direction under Part 44 of the CPR).

"As this notification for hearing has been listed for some time, I cannot see any reasonable excuse why a schedule should not have been prepared at least 24 hours before and served upon the court and the other party, even if that did include estimates of what length of time today and the costs that would entail, should that have been the case as it has happened. In this instance I cannot accept that there has been a reasonable excuse and so there will be no costs as a result of the provisions I have just outlined."

9. On appeal to Mr Justice Neuberger, counsel for Mr Macdonald submitted that it was apparent from the terms of the judgment relating to costs that the Deputy District Judge had regarded Mr Macdonald's failure to serve a statement of costs not less than 24 hours before the hearing as a determinative factor. He submitted that that was wrong in principle. Mr Burroughs, on the other hand, submitted that when one looks beyond the terms of the judgment itself to the submissions made by the respective counsel on the question of costs, and in particular to his own reference to the fact that failure to serve the statement of costs in time was merely a matter to be taken into account, but was not determinative of the matter, it could be seen that the Deputy District Judge's exercise of his discretion was not based solely on Mr Macdonald's failure to serve his statement of costs in time but on a wider consideration of the matter. On that basis Mr Burroughs sought before Mr Justice Neuberger to uphold the costs decision of the Deputy District Judge. However, Mr Justice Neuberger did not accede to that submission. He observed that where a reasoned judgment has been delivered at first instance and is being considered on appeal, it is dangerous for the appellate court to go outside the words of the judgment that the judge actually used. He allowed for exceptional cases in which that court might be justified, but he concluded that it would be wrong in principle, except in a clear case, to suppose that a judge who has given a reasoned judgment took into account factors to which he made no reference in that judgment. He referred to some cases which suggested that a failure to serve a schedule of costs in time is often a ground, without more, of depriving a successful party of his costs or a part of the costs, and he then continued:

"In my judgment, the correct approach is this. Where there is a failure to comply with the Practice Direction and a schedule of costs is not served more than 24 hours before the hearing, the court should take that into account but its reaction should be proportionate."

10. In the result he concluded that it would not be right to deprive a successful party, at least in the case before him, of the entirety of his costs simply on the ground that he had failed to comply with the procedural requirement to serve a schedule of costs 24 hours before the hearing, except in circumstances where some other aggravating factors existed. He concluded in the present case that there were no such factors and that there had been a mere failure to comply, unaccompanied by anything that made matters worse. On that footing, he concluded that the Deputy District Judge was wrong to deprive Mr Macdonald of his costs and he proceeded to effect a summary assessment of his own, both of the costs before the Deputy District Judge and then subsequently of the costs of the appeal.
11. Mr Burroughs is conscious that he has to persuade this court that this second appeal falls within section 55 of the Access to Justice Act. He submits that the proposed appeal from Mr Justice Neuberger's order raises two important points of principle and practice. The first of those is the extent to which an appeal court should have regard to submissions made to a judge and comments made by him when considering on appeal a brief judgment of that judge. The second question is whether the failure by a party to comply with paragraph 13.5(4) of the Practice Direction to rule 44 of the Civil Procedure Rules should be taken into account in deciding what order should be made as to the costs at a trial hearing or application; if so, to what extent; and whether an element of sanction should be present when making a decision.
12. Mr Burroughs submits, orally, that in the present case the Deputy District Judge must have had a "brain storm" if he had thought that the failure to serve the schedule of costs 24 hours before the hearing was determinative. He must, it is submitted, have taken other factors into account and, if he did so, he cannot be said to have exercised his discretion improperly. Mr Burroughs submits that if he does not persuade me that that is either correct or an important point of practice or principle, nevertheless the application of the relevant part of this Practice Direction as to the service of a schedule of costs is one which the Court of Appeal ought to consider and give guidance on. He submits that one element that should in some or all cases be present is an element of real sanction so that those who provide schedules of costs for summary assessment should be encouraged to comply with the rule and should know that, if they do not, they may be penalised as to costs which would otherwise be awarded to them. Further, he submits that where the schedule is served very late, there should be an element of punishment because otherwise people will simply flout the rules. He submits that this is a matter that the Court of Appeal could and should deal with as a matter of principle and general guidance. He goes so far as to accept, if I am not persuaded that Mr Justice Neuberger was wrong to embark upon it, that he could scarcely hope to persuade the court to alter Mr Justice Neuberger's decision in the present case, but nevertheless submits that the court should entertain the appeal.
13. It troubles me, as I mentioned in discussion with Mr Burroughs, that the appeal on costs to Mr Justice Neuberger appears to have cost more on one side than the costs which were being appealed. The costs which Mr Justice Neuberger assessed as the costs of the appeal were £6,000. The schedule bill which was submitted for that assessment was as much as £9,900, when the costs appealed were allowed at £5,500 on a bill of £6,500, that having been increased by £1,000 for various matters from that which had been put before the Deputy District Judge. Put in those terms, the costs appeal to Mr Justice Neuberger had an element of disproportion about it and, it seems to me, an even greater element of financial disproportion in the possibility of an appeal to this court.
14. I do not think that any points of principle arise in this proposed appeal. On appeal a judge's reasoning is normally to be found in his judgment. There may be circumstances in which it is necessary to look outside the terms of the judgment, but scouring a transcript of a hearing is usually neither appropriate nor necessary. If a costs decision is challenged, the intrinsic considerations relevant to costs may be shortly stated without any need to refer to a transcript. In the present case, in my judgment, Mr Justice Neuberger was fully entitled to conclude that the Deputy District Judge's judgment contained the substance of his full reasons. For my part, reading the transcript of the hearing before the Deputy District Judge, I do not think that it shines out that he must have taken other matters into consideration.
15. Costs are pre-eminently in a judge's discretion. Permission to appeal on costs will only rarely be given. That is very well known. But in the present case I think that Mr Justice Neuberger was entitled to conclude that the Deputy District Judge's only reason for depriving Mr Macdonald of his costs could not stand alone and that the matter should be reconsidered. I do not think that that decision by Mr Justice Neuberger is properly amenable to appeal, let alone to a second-tier appeal.
16. Although Mr Justice Neuberger was entitled to reconsider the matter, the same does not apply to the proposed appeal from Mr Justice Neuberger who, in my judgment, made no appealable error of principle. As I have said, Mr Burroughs does not suggest that the actual result is appealable, but he wishes to have the Court of Appeal examine the guidance which Mr Justice Neuberger gave.
17. The Rules and Practice Directions make it clear that one consideration which a judge awarding costs may take into consideration is the conduct of the parties. One particular such consideration, if there is to be a summary assessment, is whether the party has complied with the requirement to provide a schedule of costs at least 24 hours in advance. It is, in my view, as plain as can be that a failure to do so, although it is a consideration, is not necessarily by itself determinative. Circumstances may vary enormously. First, there will be other material considerations in almost every case. Second, the failure may at one end of a spectrum make no difference at all to the court's ability to assess the costs fairly. At the other end of the spectrum, the failure may mean that the courts simply cannot justly undertake a summary assessment at all, and that no other course than to disallow all costs would be just. In between there may be every variety of possibility. It is not necessary or appropriate to give examples, since circumstances may vary almost infinitely. The court has a wide spectrum of possible orders to make or courses to take. There may be cases where a failure to serve the schedule of costs within 24 hours justly merits some element of sanction by way of reduction in the costs which would otherwise be awarded. Beyond that, in my judgment, no guidance from this court is required. I do not think that Mr Justice Neuberger's costs orders are amenable to appeal and I do not accede to the relatively academic suggestion that the court should be enabled to consider the matter generally. Accordingly, this application is refused.