England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
(CHANCERY DIVISION)

		Royal Courts of Justice Strand, London, WC2A 2LL
		09/12/2009

Lady Justice Arden :

1. On 13 March 2009, this court gave judgment on the appeal in this matter and made various orders for costs, including orders in favour of the claimants and against the third and fourth defendants in respect of the costs of the appeals, and against the claimants and in favour of the third and fourth defendants in respect of the costs of an application to strike out the appeals and an application to adduce fresh evidence. No provision was made in this order for the set off of any costs.
2. Prior to the hearing of the appeals, Thomas LJ made an order which required the third and fourth defendants to provide a guarantee for the claimants' costs of the appeals in the sum of €175,000. This guarantee was provided by Barclays Bank plc. The guarantee expires on 31 December 2009. A demand can only be made under the guarantee if one of a number of conditions is fulfilled, and one of those conditions is that there should be a document certified by the claimants' solicitors to be an order of this court ordering the third and fourth defendants to pay costs which have been assessed by the court, "such order to include... a final costs certificate issued by the High Court of Justice of England and Wales".
3. Deputy Master Rogers has completed the assessment of the claimants' costs but not those to which the third and fourth defendants are entitled. However, he has declined to issue a final certificate for the costs of the claimants payable by the third and fourth defendants because he considered that there were serious issues between the parties as to whether there should be a set off under the order of this court and as to the scope of the work attributable to late disclosure as opposed to the strike-out application. We are told that the Master concluded that these applications first needed to be determined by the Court of Appeal before Deputy Master Rogers could conclude the assessment of the third and fourth defendants' costs and issue a final costs certificate to the claimants.
4. The claimants have not appealed from that decision but have issued an application in this court for (1) a declaration that there is no provision in the order of 13 March 2009 for any set off between the costs of the claimants and those of the third and fourth defendants and (2) for an order that a final costs certificate be issued to the claimants forthwith in respect of their costs.
5. Notice of this application has been given to the third and fourth defendants. However they inform us that they are not in a position to attend or instruct counsel in relation to "the misconceived application" by the claimants.
6. Mr Robert Marven, for the claimants, submits that it would be unjust if there was any form of set off because this would have the effect of depriving the claimants of the security which this court ordered the third and fourth defendants to provide in respect of their appeal. He submits that the Deputy Master is in a position to issue a final costs certificate in respect of the claimants' appeal costs because he has assessed them, and that he be directed to do so. He also submits that the CPR does not make any provision for the issue of a composite certificate based on the difference between the two bills.
7. The claimants' assessed appeal costs are £128,678.29 and the third and fourth defendants' strike-out bill is in the sum of £255,718.01.
8. Mr Marven further suggests that this court might give guidance with respect to the costs claimed by the third and fourth defendants which are thought to relate to disclosure. He accepts that it is difficult to see what guidance the court could give. I agree. It is the task of the costs judge to decide on the allocation of the costs which have been incurred.
9. I take the view that this application is misconceived. First, I do not consider that this court has any original jurisdiction to grant the declaration sought as to the true meaning of its own orders. The jurisdiction of the Court of Appeal is almost exclusively statutory, and Mr Marven has not pointed us to any basis for us taking jurisdiction to grant a declaration in this matter.
10. The same objection applies to the further application for a direction that the costs certificate to be issued. I would however add the following observations. I do not accept that the costs judge does not have power to grant a certificate for the outstanding balance. Such a certificate can result from the process of set off pursuant to CPR 44.3 (9) which provides that

"Where a party entitled to costs is also liable to pay costs of the court may assess the costs which that party is liable to pay and either: (a) set off the amount assessed against the amount the party is entitled be paid and direct him to pay any balance; or (b) delay the issue of the certificate for the costs to which the party is entitled until he has paid the amount which he has liable to pay."

11. A similar result can be achieved under CPR 47.16, dealing with final costs certificates. CPR 47.16 (3) provides that when a completed bill is filed the court will issue a final certificate and serve it on the parties to the detailed assessment proceedings. CPR 47.16(4) goes on to provide that this sub-rule is subject to any order made by the court that the certificate is not to be issued until other costs have been paid. The court can effectively achieve set off in this way.
12. In short, it is not necessary that an order of this court for costs should provide a set off. It is a matter which the costs judge can deal with.
13. Furthermore, it is now established that the question of set off is one for the discretion of the judge: see R (O/A Burkett) v Hammersmith and Fulham London Borough Council [2004] EWCA Civ 1317. It is therefore for the costs judge to decide whether or not to order a set off of costs. If either party is dissatisfied with his decision, there can be an appeal to the High Court.
14. However, it is clear that the claimants are under time restraints due to the conditions in the bank guarantee provided pursuant to the order of Thomas LJ. What I have said so far might be thought unhelpful to the just resolution of this dilemma. The claimants need a final certificate, and they should not be deprived of the opportunity of making a claim under the guarantee provided that any rights of the third and fourth defendants are suitably protected. If there is no final decision in the claimants' favour on the set off point, it would be open to them, as it seems to me, to invite the costs judge to issue a final certificate against their undertaking to make a demand under the guarantee and pay the sums paid by Barclays Bank into court or some other account to await the final decision on set off. The costs judge could then consider their application for a final certificate knowing that the final outcome on the set off issue would not be prejudiced. It would be a matter for the costs judge in the first instance, having heard all the submissions placed before him, to decide whether to accede to that invitation.
15. However I would dismiss this application for the reasons given above. If and in so far as necessary, I would direct that this judgment may be referred to notwithstanding that it is not a judgment of this court on a full appeal.

Lady Justice Hallett:

16. I agree.