England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION,
TECHNOLOGY & CONSTRUCTION COURT
(HIS HONOUR JUDGE TOULMIN CMG QC)

		Royal Courts of Justice Strand, London, WC2A 2LL
		13th February 2009

Lord Justice Jacob:

1. This is an appeal, with permission granted by me on the papers, from a judgment of 25 July 2007, and subsequent order dated 18 August 2008, of HHJ Toulmin QC, sitting in the Technology and Construction Court. It is about costs.
2. The appellants are a firm of architects called the Colman Partnership Limited ("Colmans"). The respondents, Richardson Roofing Company Limited ("Richardson"), are roofing contractors. The costs dispute between them arises in the following way:

A company called Comco Holdings Limited owned and was developing a building on the Brighton sea front. The main contractors were Ballast PLC.

Colmans were Comco's architects, their duties including both design and o overseeing the works.

Ballast subcontracted the roofing works with Richardson.

There were problems with those works, the details of which do not matter.

In October 2001 Richardson sued Ballast, contending it was entitled to be paid for some remedial works because they constituted variations. Richardson's Particulars of Claim in effect alleged negligence against Colmans, that being a part of why there had to be variations. Ballast joined Comco as a third party.

They settled as between them on the basis that Ballast could, using Comco's name, sue Colmans in breach of Colman's duties as architects to Comco. Ballast and Comco from then on had a common cause and were effectively just one party.

The upshot was that in this litigation Richardson were alleging that Colmans were guilty of professional negligence, although there was no direct lis between them to that effect.

3. There were other claims against Comco which are no longer material.
4. The matter came before HHJ Havery QC on 20 December 2002. He ordered a trial of preliminary issues relating to the roof. They were listed for June 2003 and came before HHJ Seymour QC. He took the view that the case was in a hopeless state and struck out the entire Particulars of Claim and adjourned the trial. Subsequently, both Colmans and Ballast applied for their costs of the action to date. The judge went into some of the debate about that; to my mind, it was not a helpful exercise.
5. In the end, following without prejudice discussions on 4 November 2003, the parties agreed an order. It reads as follows:

"Upon hearing Leading Counsel for The Colman Partnership Limited (TCP) and Richardson Roofing Company Limited (Richardson Roofing) and by consent:

IT IS HERE ORDERED THAT:-

1. Richardson Roofing pay to TCP the costs incurred and thrown away by the adjournment of the trial.

2. There be an interim payment by Richardson Roofing to TCP of £125,000 on account of the costs ordered at paragraph 1 above. The aforesaid interim payment to be paid by way of two instalments (without set off) direct to Fishburns client account, the first being made by 4pm on Wednesday 3 December 2003 in the sum of £65,000 and the second being made by 4pm on Tuesday 3 February 2004 in the sum of £60,000.

4. Detailed assessment of the costs due to TCP pursuant to the Order at paragraph 1 above to follow in due course.

6. TCP's application for the costs of and occasioned by the striking out of the Particulars of Claim to be adjourned."

6. Three years later, during which Ballast had become insolvent and was dissolved, the Fourth Party proceedings between Colmans and Comco were compromised without any provision as to the position between Colmans and Richardson.
7. As late as 16 March 2007, Colmans' solicitors served the draft bill of costs on Richardson's solicitors. It claimed just over £850,000, being effectively Colmans' entire costs of the proceedings up until the hearing before HHJ Seymour. Richardson objected saying these were not "costs incurred and thrown away by the adjournment". After some argument, Colmans issued the application which was to come before HHJ Toulmin.
8. The order sought was:

"the Costs Judge dealing with the detailed assessment of costs due to the Fourth Party, pursuant to paragraph 1 of the Order of the Court dated 4 November 2003, that the Claimant pay to the Fourth Party the costs incurred in throwing away by the adjournment of the trial of Preliminary Issues which took place before HHJ Seymour QC in June and July 2003 be directed that such costs, include the Fourth Party's costs of preparation and attendance at the trial in June and July 2003".

The reason given for this was:

"…there is now no prospect of the Claimant's claim being revived and no prospect of any of the relevant costs incurred by the Fourth Party will be used for the purpose of any alternative hearing."

9. This application came before HHJ Toulmin, who appears to have heard it on a series of separated days: 28 February 2008, 23 April 2008 and 28 April 2008. He reserved judgment for nearly three months, finally giving it on 25 July 2008. As I have said, he unnecessarily recited an awful lot that went on before HHJ Seymour prior to the consent order being made.
10. At the end of his judgment he said what he thought ought to happen. He did so in paragraphs 84 to 90 of the judgment. These read as follows:

"84. In paragraph 1 (ii) of the original application (and as amended) TCP claimed the costs of and occasioned by the striking out of the Particulars of Claim, such costs to include, for the avoidance of doubt, those costs incurred by TCP in amending their pleadings (and other steps) consequent to Richardson Roofing's Particulars of Claim being struck out. I note that under paragraph 6 of the Order by Consent this claim was by consent adjourned.

85. I construe paragraph 1 of the Order within this context. I conclude that paragraph 1 of the Order by Consent cannot include the costs referred to in paragraph 1(ii) of the draft Order, ie the costs of and occasioned by the striking out of the Particulars of Claim. Paragraph 1 of the Order clearly refers to the costs incurred and thrown away by the adjournment of the trial of the Preliminary Issue in June 2003.

86. The words 'costs incurred and thrown away by the adjournment of the trial' must be construed in the light of what was reasonably contemplated as at the date of 4 November 2003 and not at the date of the provincial Order of his Honour Judge Seymour QC in June/July 2003. I am satisfied that the common intention of the parties was that the Order was framed in the context that it left open that the action might yet be revived by Richardson. I note that 4 November 2003 was only a few weeks after the end of the agreed period of the stay. It could not be said at that date that there was no prospect of the main action being repleaded and reviewed. Had this been the position no doubt the Order by Consent would have reflected the fact that the action was, in effect, struck out. On the other hand there is no evidence that the main action would have been revived immediately in November 2003.

87. The Practice Direction to Part 44 [44 PD No 2 (8.5)] does not give much guidance as to the meaning of costs thrown away since it relates to wholly different circumstances.

'Where for the example a judgment or order is set aside the party in whose favour the costs order is made is entitled to the costs which have been incurred as a consequence. This includes the costs of:

(a) preparing for and attending any hearing at which the judgment or order which has been set aside was made;

(b) preparing for and attending any hearing to set aside the judgement or order in question…'

88. The Consent Order itself makes a distinction between all the costs of the action and the costs 'thrown away' as a result of the adjournment. Even as at November 2003 it is arguable that all the costs involved in preparing for and attending the hearings which started on 24 June 2003 will have been thrown away but this will be a matter for the Costs Judge to decide on better evidence than is available to me. It will be for the Costs Judge in making his detailed assessment to consider also whether in fact any of the documents prepared for the hearing in June 2003 would in fact have any value in any renewed or revived proceedings which might have taken place after November 2003.

89. The submissions of the parties seemed to me to be getting closer together as the hearing proceeded. By the end of the oral hearings I had the impression that the parties were in fact in agreement that the relevant costs were the costs thrown away by the abortive hearing and not TCP's costs of the action or even TCP's costs consequential on the striking-out of Richardson's pleadings. Richardson seemed to view the costs of the adjournment on a restrictive basis as relatively modest on the basis that much of the material (which I have not seen) will be used on a later occasion. As I have said, the extent to which such material (or solicitors' or counsels' preparation) in June 2003 would be valuable in proceedings taking place after November 2003 is a matter for the Costs Judge.

90. [After further submissions] I conclude that the correct approach is that the Costs Judge should carry out the assessment taking into account the matters raised in this Judgment. The Costs of this application are to be costs in the assessment. For the avoidance of doubt the Costs Judge should make this assessment on the basis of CPR 47.18(2) disregarding the presumption in CPR 47.18(1). The assessment should be undertaken by the Senior Costs Judge or his nominee."

11. The order (which, the judge, despite some opposition by Counsel directed should be drawn up) was to my mind quite extraordinary. It reads as follows:

"The Costs Judge dealing with the detailed assessment of costs due to the Fourth Party, pursuant to paragraph 1 of the Order of the Court dated 4 November 2003, that the Claimant pay to the Fourth Party the costs incurred and thrown away by the adjournment of the trial of Preliminary issues which took place before HHJ Seymour QC in June and July 2003, be directed that he carry out the assessment using the guidance given in paragraphs 84-90 of the Approved Judgment dated 25^th July 2008.

2. The Costs of this application are to be in the assessment. For the avoidance of doubt the Cost Judge should make this assessment on the basis of CPR 47.18(2) disregarding the presumption CPR 47.18 (1). The assessment should be undertaken by the Senior Costs Judge or his nominee."

In these muddled circumstances the first question is: what are the questions before this court? All three members of this court have serious reservations as to whether there was any jurisdiction of the judge to consider the question at all. Secondly, even if he had, we have serious reservations as to whether he was right to try and decide the matter. The third point which comes before us is: was the basis of his order satisfactory? The fourth is what is the proper construction of the consent order? I will deal with each of these four points in turn.

12. The judge thought he had jurisdiction. He dealt with it at paragraphs 70 to 73. Although he seems to have thought that the parties were ad idem that there was jurisdiction, I am not convinced that was so. Richardson in particular seem to be accepting that there was only jurisdiction under the so-called slip rule order 40.12. This reads as follows:

"40.12(1) The court may, at any time, correct an accidental slip or omission in a judgment or order

40.12(2) […] a party may apply for a correction without notice"

13. There is a little amplication of this in the associated practice direction B under Part 40. Paragraph 4.5 of this practice direction says:

"The court has an inherent power to vary its own orders to make the meaning and intention of the court clear"

I cannot think that this application was anything of the kind. The order was a consent order. There was no application to vary it. It was an order which the parties themselves had in effect contractually agreed to. No slip was involved.

14. Apart from that provision, it has been suggested by Mr Wilmot-Smith QC on behalf of Colmans that there was a general jurisdiction by virtue of Section 51 of the Supreme Court Act. This says:

"51. -- (1) Subject to the provisions of this or any other enactment and to rules of court, the costs of and incidental to all proceedings in --

(a) the civil division of the Court of Appeal;

(b) the High Court; and

(c) any county court,

shall be in the discretion of the court."

15. He suggested it followed that the costs always remained in the discretion of the court, and the fact that the consent order had been made did not deprive it of jurisdiction to make decisions, at least in principle, as to costs.
16. Part 44 rule 44.7 says this:

"Where the court orders a party to pay costs to another party (other than fixed costs) it may either --

(a) make a summary assessment of the costs; or

(b) order detailed assessment of the costs by a costs officer, unless any rule, practice direction or other enactment provides otherwise."

That at least suggests to me that where there is no summary assessment, is to go to a costs officer for detailed assessment.

17. It was accepted before us that the normal procedure would be to do just that. I do not see why if there is an issue of principle, as it has been suggested there is here, that should not also be decided by the costs officer. Indeed, I think there is every reason why there should be. Costs judges have enormous experience in the field of costs. The order we are concerned with must be very familiar to them; one which they work out on a daily basis. To take it to a judge not experienced in the matters of costs and say "you decide and how this order is to be worked out" seems to me to be giving it to the wrong person in principle, at least at first instance.
18. Moreover, as Aikens LJ pointed out in the course of argument, by going direct to the judge one is seemingly bypassing the permission to appeal regime. The normal provision is set out in the White Book at page 1251 in the comment at 47.20.1:

"As to appeals in both summary assessment and detailed assessment the provisions of Part 52 apply [Part 52 is the part dealing with appeals]. Appeals from costs judges and district judges of the High Court are to a High Court judge; appeals from district judges of the County Court are to a [circuit judge]."

The citation for that is given:

"Permission is not required for an appeal from an authorised court officer to the costs judge or district judge of the High Court. Permission is required to appeal from a decision of the costs judge or district judge in such proceedings to a High Court judge."

The authority cited which we have not looked at are Tanford v Cameron Macdonald [2000] 1 WLR 131; one is also referred to another case to which we were not referred: Dooley v Parker [2002] EWCA Civ 1188.

19. The question of jurisdiction is not been fully argued before us so I would be loath to decide it finally. Accordingly, for present purposes, I will assume there is jurisdiction, although I have to say I am very doubtful about it.
20. That brings me to the second question: should the Judge have exercised it? To my mind the answer is certainly no. He should not have done for all the reasons I have indicated as to why one doubts that there is jurisdiction in the first place.
21. I turn to the third point. The basis of the Judge's order, an order by reference to a number of paragraphs of his judgment. They are, with all due respect, extremely diffuse, and I doubt that any costs judge could really follow them in the sense of knowing what it was he was supposed to be doing.
22. As a matter of practice, it is thoroughly undesirable that this kind of order be made. Judgments are reasons for orders; they are not the orders. Any order of the court should make it clear to those concerned with it what it is they are supposed to be doing or not supposed to be doing. The order should stand on its face. I hope such orders will not be made in the Technology and Construction Court again. We were told they had been made from time to time; the practice should stop.
23. Finally I come to the last question, one which, as far as I can see, the judge did not address and the only one which, if it was open to him to deal with, he ought to have dealt with; that is, what is the proper construction of the order itself?
24. Mr Wilmot-Smith in effect invited us to look at paragraph 1 of the order out of context. His argument ran like this. The day the order was made, one did not know whether some of the costs that had been incurred up until then might or might not be useful in future. You could only tell that at a later stage in time. If and when the action came back and was tried, you could work out which costs were thrown away and which costs were useful for the trial. Moreover, as time passes, the costs of getting the case up, finding the witnesses again and so on, all increase. So the longer you left it the more the costs incurred and thrown away by the adjournment of the trial would be. And if the trial did not happen at all, then all the costs would be incurred and thrown away by the adjournment.
25. With respect, that does not follow for a moment, even on the wording upon which Mr Wilmot-Smith relies. They are costs, true, but they are not thrown away by the adjournment of the trial: they are costs which have simply not been dealt with.
26. This order is not to be construed by reference to just that provision in any event; it contained express provision which could have been used to deal with what happened after. Firstly, paragraph 4 provided for detailed assessments of the costs. Mr Wilmot-Smith agreed that that would have meant that, if Colmans chose they could have proceeded to go to the costs judge straight away. It says in "due course", but that could have been any time. I do not see how the amount of costs can vary depending on when you bring the proceedings for assessment.
27. Next, paragraph 6 made particular provision for Colmans' costs -- those concerned with the striking out of the Particulars of Claim were to be adjourned. Mr Wilmot-Smith said, "ah yes, but they will now also be included as part of the costs thrown away". Well, that is not a natural construction of a document which has a separate provision about it.
28. But most significantly of all, this order contained liberty to apply. It was that liberty to apply which was what could be used and was intended to be used on its true construction for post-order events, or non-events such as the non event of the trial. I do not think that paragraph 1 of the order has the ambit suggested by Mr Wilmot-Smith. It is simply the usual kind of order that is made when a trial has to be adjourned; any further questions of costs comes in under a liberty to apply and must be dealt with by a separate application.
29. The consequence is that the judge's order cannot stand, so to that extent the appeal must be allowed. What else the consequence is I would want to hear counsel upon.

Lord Justice Aikens:

30. I agree. Like my Lord, I have very grave doubts whether the judge had jurisdiction to entertain the application that was before him. It was certainly not a case of the court having to exercise its inherent power to vary its own order to make the meaning and intention of the court clear with regard to a paragraph in the order of HHJ Seymour dated 4 November 2003. That was a consent order. It had been drawn up by the parties. It was their draftsmanship and it was their meaning and intention that was in issue, not that of the court or the judge. Like my Lord, I agree that even if the judge did have jurisdiction, he certainly should not have exercised that jurisdiction in this case. The matter should have gone off to a costs judge for assessment under the provisions of CPR part 47. The costs judges are those who have experience in these matters. This was a standard type of wording in a standard type of clause which has been used in a situation which turns up in the courts day in, day out, week in, week out.
31. Unfortunately the judge also failed to answer the construction issue that was put to him in the application dated 30 November 2007. Paragraphs 84 to 90 of his judgment did not give the costs judge any assistance in deciding how to construe paragraph 1 of the order of 4 November 2003. I agree with the comments of my Lord that the order of the judge should not have been drawn up in the form that it was. It is an improper order, in my view. If it has been the practice of the TCC in the past to draw up orders in this form, then I hope that this practice will cease immediately.
32. As to the construction of the order of 4 November 2003, I entirely agree with what my Lord has said.
33. When this matter came before HHJ Seymour QC for trial in June 2003, he described the claim as "shambolic". I fear that that description applies somewhat to the subsequent proceedings. The costs that must have been incurred since then will have been large and the delays have been extensive. In the end this is a dispute between businessmen and professionals. I would hope very much that the matter can now be quickly and efficiently disposed of in a businesslike manner without any further delay or incurring of much further cost.

Lord Justice Sullivan:

34. I agree with both judgments and have nothing to add.

Order: Order of the judge discharged; replaced with no order