England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		08/12/2017

Mr Justice Nicol

1. This is the judgment of the court to which we have both contributed.
2. The substantive judicial review in this matter was brought by the Claimant, David Haigh, to challenge an order for costs made against him by the Westminster Magistrates' Court. That costs order followed him withdrawing his request for a criminal summons or warrant to be issued against Messrs Patel, Al Rayes and Gray. In the judicial review proceedings, Mr Patel was the 1^st Interested Party, Mr Al Rayes, the 2^nd Interested Party and Mr Gray the 3^rd Interested Party. Alun Jones QC was leading counsel for Mr Haigh. The substantive application for judicial review was heard on 12^th October 2016 and dismissed in a reserved judgment on 16^th February 2017 by a Divisional Court comprising Gross LJ and Nicol J - see [2017] EWHC 232 (Admin). Certain matters remained outstanding and a further judgment was handed down on 22^nd March 2017 – see [2017] EWHC 559 (Admin). One of the outstanding matters was a possible application for wasted costs which had been mooted by the 1^st and 2^nd Interested Parties ('1&2 IP'). The 3^rd Interested Party had indicated that he did not intend to seek any such order. We said at [21] of that judgment,

'While we should not be taken as lending any encouragement to any wasted costs application, we consider that, if there is to be such an application, it should be made no later than 28 days after the formal order consequent upon this decision.'

3. The formal order was made on 22^nd March 2017 and any application for wasted costs had to be made by 19^th April 2017.
4. On that day 1&2 IP applied for Mr Jones to pay costs which were said to have been wasted by reason of his improper or unreasonable behaviour.
5. The Practice Direction to CPR part 46 envisages that the Court will deal with a wasted costs application in two stages. Paragraph 5.2(a) of the Practice Direction says that, at the first stage, the court must be satisfied—

'(i) that it has before it evidence or other material which, if unanswered, would be likely to lead to a wasted costs order being made; and

(ii) the wasted costs proceedings are justified notwithstanding the likely costs involved.'

6. On 19^th July 2017 we held a Stage 1 hearing. In our decision – see [2017] EWHC 2385 (Admin) we said that we were persuaded that there was enough material so that the application for wasted costs was likely to succeed if such material was untested or unchallenged in relation to the introduction of allegations of fraud into the substantive judicial review claim. We explained that we regarded the introduction of the without prejudice material at the substantive judicial review hearing as not having any discrete or independent existence apart from the introduction of unfounded allegations of fraud. We limited the claim to the costs of instructing Justin Fenwick QC for the purposes of the substantive judicial review hearing. We said at [5(d)] of that decision,

'To make it absolutely plain, stage two would be about the costs relating to the instruction of Mr Fenwick, not more generalised arguments about additional costs. The rather broad or generalised suggestions in that regard either seem to us to raise matters which will not carry significant financial weight and so would be disproportionate, or are altogether too general to now warrant yet more time before the matter is investigated by a costs draftsman, with yet further costs for all concerned. Stage two – Mr Fenwick will forgive me putting it that way – is about Fenwick, in terms of costs.'

7. Framed in this way we considered that the wasted costs application did pass the proportionality test in paragraph 5.2(a)(ii) of the Practice Direction. We gave directions for the Stage 2 hearing. They included the following,

'(2) By 4.0pm on 23^rd August 2017 [1 & 2IP] shall file and serve evidence in relation to the costs of Justin Fenwick for the hearing on 12^th October 2016.

…

(5) By 4.0pm on 13^th October 2017 the 1 & 2IP shall file and serve their outline submission for the stage 2 hearing together with an index for the proposed hearing bundle.

(6) By 4.0pm on 20^th October 2017 the parties shall agree and lodge a hearing bundle.

(7) By 4.0pm on 27^th October 2017 the 2^nd Respondent [Mr Jones] shall file and serve his outline submission for the stage 2 hearing.

(8) The stage 2 hearing shall be listed for hearing on the first available date not before 15^th November 2017, and if Listing allow, before the end of the Michaelmas Term 2017 with a time estimate of half a day, excluding judgment.'

8. The directions of 19^th July were subsequently varied by Ms Victoria Basset, an Administrative Court lawyer, on 2^nd October 2017. As varied, they now set the following timetable:

1&2 IP evidence in relation to the costs of Mr Fenwick by 1^st September 2017.

1&2 IP outline submission for the stage 2 hearing and index for proposed hearing bundle by 20^th October 2017.

Parties to lodge a hearing bundle by 27^th October 2017.

Mr Jones to file and serve his outline submission for stage 2 by 3^rd November 2017.

9. Ms Bassett's decision recorded her reasons as follows,

'Solicitors for the 1 and 2 IP have explained that the evidence required to be served in accordance with paragraph 2 of the order was late due to the exigencies of work during the summer vacation. The parties are in agreement that extensions of time ought to be allowed and it is in the interests of justice to grant the application. Paragraphs 5, 6 and 7 have also been varied to allow some further leeway in the circumstances. The extensions of time do not adversely affect the remaining timetable set by the Divisional Court or the fixing of a hearing date.'

10. We must now consider the two applications before us.
11. By their application issued on 2^nd November 2017 the 1 &2 IP have sought further extensions of time. They seek

An extension of time to serve their outline submission and a proposed index from 20^th October to 3^rd November 2017.

An extension of time for lodging the hearing bundle from 27^th October to 10^th November 2017.

An extension of time for Mr Jones to file and serve his outline submission from 3^rd November to 17^th November 2017.

12. Mr Jones's application was issued on 6^th November 2017. He seeks an order that the application for wasted costs should be struck out as an abuse of process because the 1&2 IP failed to file and serve their outline submission together with a proposed index by 20^th October, that being the second time that the 1&2 IP had failed to comply with the court's timetable. In the alternative, Mr Jones sought further time to serve his outline submission for stage 2 – 14 days after service of the outline submission of the 1&2 IP's outline.
13. The Court notified the parties that it wished to have written submissions regarding both applications. Those have been received. Both applications asked the court to determine the matters without a hearing. Neither party's written submissions requested a hearing. We agree that a hearing is not necessary and we have therefore reached our decisions on the papers.

The evidence in support of the application by the 1&2 IPs

14. In their application notice the solicitor for the 1 and 2 IP says

'1. The 1&2 IP's leading counsel (Mr Ramsden QC) has been dealing with considerable work pressure, as has the solicitor with conduct of the matter (Mr. Dougans). They have simply been unable to complete the outline submissions by the date set out in the order.

2. In the circumstances the 1&2 IP did not consider it proportionate to instruct a different Leading Counsel, because of the sum at stake and the broad knowledge which Mr Ramsden QC has of this application in particular and the Haigh litigation in general.

3. In short I submit this further short delay will not inconvenience either [Mr Jones] or the Court. A hearing date has not yet been listed and accordingly there is neither any danger of [Mr Jones] having insufficient time to prepare for the hearing, nor is there any danger of a Court hearing which has been listed being vacated or the Court being otherwise inconvenienced, as no hearing date has actually been listed.'

The evidence in support of Mr Jones's application

15. Mr Jones's solicitor says that the 1&2 IP were in breach of the earlier obligation to file and serve by 23^rd August 2017 their evidence in relation to the costs of Mr Fenwick for the hearing on 12^th October 2016. This evidence was not provided until 1^st September 2017. They applied retrospectively on 26^th September 2017 for the time to be enlarged. It was this application which led to Ms Bassett's order of 2^nd October 2017. The 1&2 IP failed again to comply with the Court's direction to file and serve their outline submission for the Stage 2 hearing and proposed index by 20^th October. Mr Jones's solicitor says she wrote to the Court on 24^th October drawing attention to this default. The 1&2 IPs' solicitor had not responded to correspondence from Mr Jones's solicitor.

The principles to be applied to the application by 1 &2 IP

16. CPR r. 3.9 provides

'(1) On an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need—

(a) for litigation to be conducted efficiently and at proportionate cost; and

(b) to enforce compliance with rules, practice directions and orders.'

17. The Court's order of 19^th July 2017 as varied on 2^nd October 2017 did not specify any sanction for non-compliance, but on a retrospective application for an extension of time, the same principles are applied – see Altomart Ltd v Salford Estates (No.2) [2014] EWCA Civ 1408; [2015] 1 WLR 1825.
18. The leading authority on the approach to a r.3.9 application is Denton v T.H. White Ltd [2014] EWCA Civ 906; [2014] 1 WLR 3926. As summarised in the headnote:

'A judge should address an application for relief from sanctions under CPR r 3.9(1) in three stages: (i) identify and assess the seriousness and significance of the failure to comply with any rule, practice direction or court order which engages rule 3.9(1) ; (ii) consider why the default occurred; (iii) evaluate all the circumstances of the case, so as to enable the court to deal justly with the application including the factors in sub-paragraphs (a) and (b) . The focus of the inquiry at the first stage should be not on whether the breach has been trivial but on whether it has been serious or significant. The assessment of seriousness or significance should not, initially at least, involve a consideration of other unrelated failures which may have occurred in the past. If a judge concludes that a breach is not serious or significant, relief from sanctions will usually be granted and it will usually be unnecessary to spend much time on the second or third stages. If the court decides that the breach is serious or significant, the second and third stages assume greater importance. Although the second stage cannot be derived from the express wording of the rule, it is important particularly where the breach is serious or significant.'

19. (1) Seriousness and significance: In this case the 1&2 IP submit that the breach for which they sought a retrospective extension (the time to lodge their outline submission and draft index for the hearing bundle for Stage 2) was neither serious nor significant. The time for providing the missing documents had not been the subject of an 'unless' order. The extension was only some 14 days. The requested extension meant that other procedural steps had also to be adjusted. However, no hearing date had yet been set for Stage 2 and the aim of having a hearing before the end of the Michaelmas Term was still achievable.
20. We disagree. The context of the default is important. We are concerned with an application for wasted costs. Here the 1&2 IP allege that Mr Jones has been guilty of improper conduct. In these circumstances, compliance with the Court's directions and the expeditious conduct of the proceedings is particularly important. Furthermore, the practice direction to CPR Part 46 [5.6] says,

'The Court will give directions to be followed in each case to ensure that the issues are dealt with in a way that is fair and as simple and as summary as the circumstances permit. [our emphasis]'

21. It must not be forgotten that these are satellite proceedings, adjectival to the substantive judicial review application. In all the circumstances, a delay of two weeks is, in our view, a serious or significant default.
22. (2) Reason for the default: The second matter to be considered in accordance with the Denton guidance, is the reason for the default. We have quoted above the reasons given by Mr Dougans in the 1&2 IP application. We have to say that as an excuse for lateness it leaves much to be desired. At the request of the 1&2 IP, Ms Bassett had already extended time for the outline submissions and draft index by a week and it had been known since the Stage 1 hearing on 19^th July that outline submissions would be required for the Stage 2 hearing, as would an index to the hearing bundle. However unintentionally, it suggests a cavalier approach to the directions ordered by the Court. That is singularly inappropriate when the party concerned has itself chosen to pursue wasted costs proceedings. Having once chosen to do so, it was for 1&2 IP to ensure that it was in a position to comply with the Court's directions
23. (3) All the circumstances: The third stage of the Denton process is to 'evaluate all the circumstances of the case, so as to enable the court to deal justly with the application including the factors in sub-paragraphs (a) and (b) [of r.3.9(1)].'
24. Mr Ramsden on behalf of the 1&2 IP again emphasises that no date has yet been set for the Stage 2 hearing. It cannot be said that the extension which his clients seek would prejudice that hearing. He argues that the proportionate and just response is for the 1&2 IP to be granted the extension which they seek.
25. Mr Stewart QC on behalf of Mr Jones argues the contrary. He submits that there has been a history of procedural defaults by the 1&2 IP. Notably, they did not comply with the Court's order to file and serve evidence of the costs of instructing Mr Fenwick QC within the time required by the Court on 19^th July 2017. That had to be done by 23^rd August 2017. It was not. Mr Jones's solicitors chased a number of times. The evidence in relation to Mr Fenwick's brief fee was finally provided after 5.0pm on 31^st August 2017.
26. Furthermore, the evidence then produced showed that Mr Fenwick's brief fee had been £10,000. This contrasted with the figure of £35,000 given to the Court at the hearing on 19^th July 2017. That variation is material in deciding whether the wasted costs proceedings are still proportionate. Mr Stewart submits that they are not and this is another reason why the application by the 1&2 IP should be refused and, indeed, why Mr Jones's application for the wasted costs proceedings to be struck out should be granted.
27. In our view, Mr Stewart is right. As we have already said, wasted costs proceedings are ancillary to the substantive proceedings (in this case the substantive application for judicial review). For the reasons already given, there is an onus on the applicant for a wasted costs order in particular to proceed with due expedition. The applicants in the present matter have not done that.
28. We also consider it significant that the amount in issue in the wasted costs application now appears to be £10,000. As part of the Stage 1 proceedings, the court has to form a judgment as to whether the wasted costs proceedings are justified notwithstanding the likely costs involved. We took the view on 19^th July 2017 that this test was satisfied when we were told that the sum involved was in the region of £35,000. We have seen correspondence between the parties concerning whether the court was misled by that figure. We are content to accept the explanation of Mr Dougans that £35,000 was meant to include not only Mr Fenwick's brief fee but also additional costs incurred by Bryan Cave, the solicitors for the 1&2 IP. Be all that as it may, had we known that the amount in issue was £10,000, we would have taken a different view as to the proportionality of the wasted costs proceedings in all the circumstances of this litigation. While we have not been provided with any figures, we do not think that it is an extravagant assumption to proceed on the basis that the costs which each side has incurred will have substantially exceeded £10,000. The time estimate for the Stage 2 hearing is a half day which will involve yet further costs. Simply put, the exercise can now be seen to be disproportionate.
29. To recap, the 1&2 IPs' failure was serious and significant. The reason advanced for the failure is unsatisfactory. By themselves, these two factors would have inclined us towards refusing the 1&2 IPs an extension of time. When regard is had cumulatively, to these two factors and to the true amount at stake, now reduced to £10,000, the scales tip decisively against an extension of time. In all the circumstances and in a nutshell, these proceedings are now disproportionate and plainly so.
30. Accordingly, we refuse the application by 1&2 IP for an extension of time. We grant the application of Mr Jones for the wasted costs application to be struck out.