England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM NORTHAMPTON COUNTY COURT
(HIS HONOUR JUDGE MAYOR QC)

		Royal Courts of Justice Strand London, WC2
		7 February 2005

Monday, 7 February 2005

1. LORD JUSTICE BROOKE: I will invite Lord Justice Neuberger to give the first judgment.
2. LORD JUSTICE NEUBERGER: This is an appeal brought by Going Places Leisure Travel Limited, the defendant, against a decision of His Honour Judge Mayor QC in the Northampton County Court allowing an appeal against a wasted costs order made by District Judge McHale. The appeal raises two questions, namely: (a) the identity of the tribunal which should make a wasted costs order; and (b) the correct destination of an appeal where a district judge makes such an order.
3. The facts at their relevant minimum are as follows. On 10 January 2001 proceedings were issued on behalf of Anita Gray, the claimant, by her solicitors, Shoosmiths, against the defendant with the benefit of a public funding certificate granted in 1998. On 21 May 2001 the claim was allocated to the multitrack. On 5 December 2002 the case was listed for hearing on 4 and 5 February 2003 and directions were given. Meanwhile, on 3 December 2002 the certificate was discharged on the basis of the Legal Services Commission's costs benefit analysis of the proceedings. On 8 January 2003 the claimant applied for a review of that decision. On 20 January 2003 the defendant learnt of the discharge of the Legal Services Commission certificate.
4. On 29 January 2003 His Honour Judge Mayor, having looked at the papers, of his own motion made an order in the following terms. First, that the trial remain listed for 4 February; secondly, that unless the claimant lodged an indexed bundle as required by the order of 5 December 2002 by close of business on 31 January 2003 and attended for trial, the claim should be struck out; and thirdly, the defendant's witnesses should remain available but need not attend at court until instructed to do so.
5. The indexed bundle was not lodged in accordance with the order. The case was called on before Judge Mayor in the Northampton County Court on 4 February 2003. Neither the claimant nor any representative on her behalf attended. The solicitor for the defendant attended. The judge made an order in these terms:

"1. Claim dismissed;

2. Judgment for defendant with costs to be subject to detailed assessment if not agreed. Judgment to be paid forthwith.

3. Costs up to the 31 December 2002 not to enforced without further order of the Court. Costs after 31 December 2002 may be enforced."

6. On 19 June 2003 the defendant issued an application specifically returnable before the district judge. In that application the defendant sought a wasted costs order against Shoosmiths in respect of the costs incurred by and on behalf of the defendant between 31 December 2002 when the certificate was discharged, and 4 February 2003 when the claim was finally disposed of by Judge Mayor.
7. There then followed a relatively long procedure involving witness statements, skeleton arguments, a hearing for directions, two substantive hearings and further written submissions, at the end of which, on 26 February 2004, the district judge made the order for wasted costs sought on behalf of the claimant and summarily assessed those wasted costs.
8. Shoosmiths, against whom the wasted costs order was made, appealed to the judge. The hearing of their appeal took place before Judge Mayor on 2 July 2004. The judge did not deal with the merits of the district judge's decision, but he dealt with the two points before us, namely, (a) whether the Court of Appeal, rather than he, had jurisdiction to hear the appeal from the district judge, and (b) whether it was appropriate for the district judge, rather than he, to have entertained the application for wasted costs. He held the answer to both questions was in the negative; so he discharged the order for wasted costs.
9. The two issues now come before us on the claimant's appeal. If we accept either argument of the claimant Shoosmiths would seek to attack the order for wasted costs on the merits. The two points which are raised on the claimant's appeal are, to a significant extent, connected, as was recognised by Mr John Williams in his clear submissions on behalf of the claimant. Like him, I think it is helpful to take the second point first.
10. Judge Mayor decided that the district judge had no jurisdiction to determine the wasted costs application and expressed his conclusion in these terms:

"If the question of wasted costs was to be raised, then it should have been raised at the end of the brief hearing before me [4 February 2003], or if not then certainly very shortly after that hearing had been concluded, and I would have been entitled, certainly at the conclusion of the hearing before me, and according to the judgment of Patten J in the case of Melchior (which the researches of counsel have produced for my consideration), within a short time afterwards. However, the learned district judge had no authority to make any such order in the case. Perhaps, if I had been unavailable, then another judge might have been persuaded to look at the matter, but that was not the case here. If any application for wasted costs was to be made, then it should only have been made to and could only be adjudicated upon by the trial judge himself, namely me. Accordingly, there was in my view no jurisdiction for the learned District Judge to entertain this application and his purported order is of no effect and must be quashed."

11. I agree with that conclusion. In my view the position is as follows. First, the making of an order as to who should bear the costs and on what basis in respect of proceedings which go to a trial are, in principle, part of the overall order made by the court at the conclusion of the trial. Hence, in relation to costs on interlocutory applications, the need for an order that the costs be reserved or be ordered "in the case" where the tribunal hearing the interlocutory application decides to defer the question of allocation of the costs on an interlocutory issue. Hence also the need to rely on the slip rule to raise an issue of costs after final order has been drawn up as in Inchcape [1942] Ch 394, and the cases cited in it. Secondly, in the absence of at least a good reason to the contrary, the costs of proceedings (in so far as they have not already been disposed of at an interlocutory stage) should be dealt with by the tribunal which determines the issue which disposes of the case immediately after the judgment in disposing of the case. Thirdly, in principle, there is no difference in this connection between a costs order against a party and a costs order against a non-party. They are all part of the judicial function involved in disposing of a case.
12. In this connection, it appears to me there is force in the submission made by Mr Simon Brown, on behalf of Shoosmiths, that sections 51(1) and 51(6) of the Supreme Court Act 1981, when read together, emphasise that wasted costs (the costs dealt with in principle in section 51(6)) are all part of the costs allocation exercise which is to be implemented by the judge hearing the trial in relation to the costs of the action. Section 51 provides:

"Subject to the provisions of this or any other enactment of the rules of court, the costs of and incidental to all proceedings

...

(c) any county court

shall be in the discretion of the court.

...

"(6) In any proceedings mentioned in subsection (1), the court may disallow, or (as the case may be) order the legal or other representative concerned to meet, the whole of any wasted costs or such part of them as may be determined in accordance with rules of court."

13. Fourthly, it is fair to say that where a wasted costs order is sought in respect of an interlocutory matter before trial, it is often better for the application for wasted costs only to be made after the trial: see paragraph 53(1) of the Practice Direction forming part of CPR Part 48 and the observations in Ridehalgh v Horsefield [1994] Ch 205 at 238. However, that point does not apply here because we are concerned with an application for wasted costs which relate to part of the proceedings which were before Judge Mayor on 4 February 2003 and could and should have been applied for at the end of the hearing before the trial judge.
14. Fifthly, having made that point, it is right to record that, in agreement with the judge, it is not mandatory that the application for wasted costs is made at the end of the trial. In many cases a party considering an application for wasted costs order will ask the judge for time to consider whether to make such an application and, even if such an application is made, the normal course is for the court to give directions in relation to the disposal of the application rather than to deal with it straightaway.
15. Sixthly, it is right to record that the application for a wasted costs order can be made after the order in relation to the proceedings have been drawn up. That is not to say the court entertaining the application late will necessarily grant it if there is no good reason for the delay. However, in principle, the application can be made after the matter has otherwise been disposed of for the reasons given by Patten J (and referred to by Judge Mayor) in Melchior (unreported) 25 May 2001. However, that does not alter the fact that it is the court that determines the outcome of the proceedings which has the jurisdiction to make any order for wasted costs, and it is, in the absence of good reason, only that court which has that jurisdiction. It is of course possible, because of the death or retirement of the judge concerned, or because of his unavailability for other reasons, for another judge to determine the issue of wasted costs. However, in this case it seems to me that, for the reasons given much more shortly by Judge Mayor, it was for him to determine the issue of wasted costs and not for the district judge.
16. We were taken by Mr Brown to CPR Rule 44.14 which, in certain circumstances, gives the court which is assessing the costs power to make a wasted costs order. As he fairly accepts, that is of no assistance to the claimant in the present case because it is concerned with a wasted costs order made in the course of assessment proceedings. It appears to me that Rule 44.14(1)(b) should apply in a case where for some reason it would be inappropriate to make the application for wasted costs to the judge who heard the trial. For instance, where it only appears for the first time from the documents revealed on the assessment that a wasted costs order is appropriate. In that connection I would respectfully agree with the analysis in paragraphs 20 and 21 of the judgment of Jack J in Aaron v Sheldon [2004] 3 ALL ER 561, that it is appropriate for a wasted costs order, or indeed any other costs order sought in relation to proceedings, to be made to the judge who hears or has heard the proceedings, not to a different judge.
17. Quite apart from this, as this was a multitrack case, it seems to me that the district judge in the absence of a specific provision such as CPR Rule 44.14 would have had no jurisdiction to make a wasted costs order as it was part of the final order disposing of the case. In that connection we were helpfully taken to the Practice Direction-Allocation of Cases to Levels of Judiciary, from which it is clear from paragraph 11.1l(d) that a multitrack case can only be heard by the district judge "with the consent of the parties and the permission of the designated civil judge in respect of that case."
18. Mr Brown contends that the order for wasted costs was not really part of the trial as a matter of principle. In my view that is wrong, for the reasons I have given. The question of the costs of the proceedings, even in so far as they were sought to be laid at the door of a non-party, were part of the trial exercise and the determination of the proceedings between the parties. He also contended that on the special facts of this case there was no trial before Judge Mayor. It is perfectly true that, in his first order, Judge Mayor ordered that if the bundle was not lodged the claim would be struck out. However it is equally clear from that order that the trial was to stand out as a trial because he so declared. Further, when the matter came before him on 4 February he made an order disposing of the claim on the basis that it was before him. Furthermore, I think it would be undesirable that nice distinctions as to precisely what happened before the judge on the day when the case was listed for hearing should determine whether or not the judge or a district judge had jurisdiction to make the order that he did. In those circumstances I consider that Judge Mayor reached the right conclusion.
19. At first sight that conclusion may paradoxically appear to assist the claimant on the first point, namely, that the appeal from the district judge's decision should have been to this court and not to a circuit judge on the basis that the decision on costs should have been part of the decision on a multitrack case, therefore falling within paragraph 4 of the Access to Justice Act 1999 (Destination of Appeals) Order 2000 and within paragraph 2A.4 of Practice Direction appeals. However, it seems to me that the district judge was not purporting to - indeed it was fundamental to his decision that he could not - exercise the power to make a final order in a multitrack proceedings. He was purporting to exercise a separate free-standing power to make an order for costs after the multitrack proceedings had been determined. In those circumstances, it does not seem to me that the route of appeal was to this court, but to the circuit judge under paragraph 3(2) of the 2000 Order. Accordingly, I consider that the judge had jurisdiction to deal with this appeal.
20. I conclude (a) Judge Mayor had jurisdiction to entertain the appeal from the district judge, and (b) he was right to quash the district judge's reasons for the reasons he gave. I would therefore dismiss this appeal.
21. LORD JUSTICE LATHAM: I agree.
22. LORD JUSTICE BROOKE: I agree. I only wish to add that it is an unhappy feature of this case that nobody appears to have suggested to District Judge McHale that he had no jurisdiction to hear the application for wasted costs order until new counsel instructed by the claimant raised the issue just before he delivered a reserved judgment on 26 February 2004. There had been two hearings before him on 18 July and 26 November 2003, followed by written submissions about a new case that had just come to light on which he requested the parties' observations. But it was never suggested to him by anyone during the course of those proceedings that he had no jurisdiction at all. In these circumstances it was hardly surprising that he revised his judgment at the last minute so that it reads:

"There does not appear to have been any application made before His Honour Judge Mayor QC for a wasted costs order, the application being made by separate application dated 19 June 2003 whereby the Defendants applied for a wasted costs order in respect of 'wasted costs incurred from 31 December 2002 to date'. The Claimant's solicitors have not raised any argument against my jurisdiction to make such an order in this case."

23. In the context of the appeal to the circuit judge, now instituted by the claimant, counsel Mr Simon Jonathan Brown, said in his skeleton argument:

"HH Judge Mayor QC determined the costs of the action on 4 February 2003. The Defendants say that they did not then present any application for wasted costs. It [is] unclear why not. The Defendants had intimated that they were going to make an application for wasted costs prior to the trial date.

Whether or not the point had been raised by the Claimant's Solicitors in the application it was for the District Judge to consider whether or not he had jurisdiction to make a costs order that necessarily overlapped with the order made by HH Judge Mayor QC. Since the order of 4 February 2003 had been made in the exercise of the discretion of HH Judge Mayor QC it followed that any application for wasted costs should have been made to the same judge."

24. When Judge Mayor received this skeleton argument he asked the parties to make written submissions which they duly did. On 6 May Judge Mayor gave his written reasons for indicating that he was minded to quash the wasted costs order as having been made per incuriam. In the course of those reasons he said this:

"I do know that having considered the matter further DJ McHale has severe doubts about the jurisdiction which both parties assumed him to have."

Unhappily, as I have said, a great volume of costs were incurred before the district judge, with nobody taking the point that he had no jurisdiction.

25. I have only added this short judgment of my own to make it clear to litigants' advisers how important it is that they should satisfy themselves that a judge does have jurisdiction to make an order sought on an application if very heavy costs of subsequent ancillary litigation are to be awarded.
26. This appeal is therefore dismissed.

(Appeal dismissed; Appellant to pay Respondent's costs of the appeal summarily assessed in the sum of £4,790.82).