DETAILED ASSESSMENTS WILL NOT OVERSTEP THE MARK: THE COURTS WILL NOT (GENERALLY) REVISIT MATTERS RELATING TO THE CONDUCT OF THE CASE ON ASSESSMENT
There is an interesting and important judgment by Deputy Master Friston in Andrews v Retro Computers Ltd  EWHC B2 (Costs) which highlights the dangers of attempting to use detailed assessment as a means of challenging the receiving party’s conduct. I suspect that the defendants incurred costs, and liability to pay costs, which were equivalent to (or more than) the costs they were challenging.
“… the court ought to guard against the possibility of double jeopardy. A costs judge will, of course, consider disallowing costs that have been incurred as a result of any unreasonable or improper behaviour, but even this must be done in such a way as to avoid double jeopardy. In my view, a costs judge would (in the absence of some special order, such an order expressly reserving certain issues to the assessment) be overstepping the mark if he or she got drawn into making wholesale reductions that would properly be the province of the judge who made the order for costs.”
During the course of an assessment of the claimants’ costs the defendants argued that the there should be an partial or total disallowance of those costs on the grounds of the claimants’ misconduct in the proceedings. This application was made during the first day of a post-provisional hearing of the costs. The defendants were ordered to particularise their allegations, there was a further case management hearing (by telephone) and a day long hearing where evidence was heard.
The judgment (unsurprisingly) contained a detailed and thorough analysis of the rules and cases relating to conduct on assessment.
REVIEW OF THE COURT’S POWERS ON ASSESSMENT
The Deputy Master reviewed the history of the exercise of discretion to allow disallow costs on assessment. He was sceptical of the argument that the court had a power to review, at the assessment stage, issues relating to the conduct of the action (as opposed to issues relating to the conduct of the assessment of costs).
Thus, the pre-CPR law was that misconduct could lead to sanctions in the form of a disallowance of part or all of the costs (which is what is sought in this application). Given the fact that the CPR have preserved the power to impose sanctions (and that the CPR expressly refer to a power to ‘disallow all or part of the costs which are being assessed’), one would have expected the court’s powers to impose a sanction under the CPR to be no less liberal.
This being so, the following comments of Dyson LJ ( Lahey at ) may come as a surprise:
‘The short answer to the defendant’s submission [that the cost should be reduced by a percentage] is that the costs judge has no power to vary the costs order that is deemed to have been made. In our judgment, this is a complete answer to [the paying party’s] submissions, whether based on [the-then equivalents of CPR, r 44.3 and 44.4 or 44.11]. It follows that the costs judge has no jurisdiction to make an order of the kind contended for by the defendant in this case.’
I pause here to say that Dyson LJ was dealing with a case in which a deemed costs order had been made, but he made it clear (at ) that his comments were of general application.
At first blush, it seems as if Dyson LJ had ruled out the exact form of penalty that one would expect to be imposed as a result of misconduct (that is, a reduction in the receiving party’s costs). This, however, was at a time when the power under what is now CPR, r 44.11(1)(b) was limited to misconduct during the claim itself (see paragraph 61 above). In more recent times, Hickinbottom LJ has had this to say (at Gempride at ):
‘The jurisdiction is not compensatory: it is not necessary to show that the applicant has suffered any loss as a result of the misconduct. It is a jurisdiction intended to mark the court’s disapproval of the failure of a party or of a legal representative to comply with his duty to the court by way of an appropriate and proportionate sanction.’
This implies that a costs judge has the ability to reduce costs in a way that is discretionary (as opposed to as a matter of assessment).
There is a certain tension between Hickinbottom LJ’s comment and those of Dyson LJ referred to above, but I take the view that (in the absence of some form of special order: see paragraph 78 below) the latter continue to apply where the alleged misconduct took place during the claim itself (as opposed to during the assessment). This is not only because Gempride was dealing with misconduct during the assessment (and is therefore distinguishable on that basis), but also because Longmore LJ has made it clear that the power to disallow costs by reason of unreasonable or improper conduct during the claim is limited to those costs that were incurred as a result of that conduct (see Haji-Ioannou at ). In my view, the changes to CPR, r 44.11 in 2013 have not changed this.
Indeed, I take the view that the changes to the overriding objective in 2013 make Dyson LJ’s analysis more rather than less likely to be enduring. This is because when applying the overriding objective, the court must now have regard to the use of its own resources (see CPR, r 1.1(1)(e)). The court must seek to give effect to the overriding objective when it (a) exercises any power given to it by the Rules; or (b) interprets any rule (see CPR, r 1.2). It would, in my view, not be in accordance with the post-2013 overriding objective to interpret or apply CPR, r 44.11(1)(b) in such a way as to allow parties to lengthen detailed assessment proceedings by allowing them to have, what in effect, are second bites at the cherry. In my view, that would be wasteful of the court’s limited resources.
If I am wrong on this point, on the facts of this case, I reach almost the same conclusion by a different route, at least in so far as certain aspects of this application are concerned. This is because the court has already made an issues-based costs order that dealt with the Conduct Issues. To my mind, this means that the court has already decided certain issues, and this gives rise to issue estoppel in the sense that the court cannot revisit issues that were addressed at the time the costs order was made. In this regard, I bear in mind that it would have been open to the Defendants to have asked the court making the costs order not only to award them their costs of the Conduct Issues, but also to restrict or negate the Claimants’ entitlement to costs to take account of the Claimant’s alleged poor conduct. In this regard, I refer to the findings made at paragraph 27 above.
Counsel drew my attention to Waller LJ’s decision in Ultraframe (UK) Ltd v Fielding  EWCA Civ 1660. At , Waller LJ said this:
‘It seems to me that consideration of a party’s conduct should normally take place both at the stage when the judge is considering what order for costs he should make, and then during assessment. But the court will want to ensure that dishonesty is penalised but that the party is not placed in double jeopardy. Ultimately, the question is one of the proper construction of the order made by the judge. Thus it will be important for the judge, who is asked to take dishonesty into account at the end of a trial when considering the order as to costs, to consider what is likely to occur on assessment. Where dishonest conduct is being reflected in an order made by the trial judge, it must be wise for the future for judges to make clear whether they are making the order on the basis that, on the assessment, the paying party will still be entitled to raise the dishonesty in arguing that costs incurred in supporting the particular dishonesty were unreasonably incurred. Judges may also want to consider whether to make an order under rule 44.14 [the forerunner of CPR, r 44.11] and it would be wise to do that before considering precisely what order to make in relation to the costs of a trial generally. ’
This, to my mind, supports the notion that the court ought to guard against the possibility of double jeopardy. A costs judge will, of course, consider disallowing costs that have been incurred as a result of any unreasonable or improper behaviour, but even this must be done in such a way as to avoid double jeopardy. In my view, a costs judge would (in the absence of some special order, such an order expressly reserving certain issues to the assessment) be overstepping the mark if he or she got drawn into making wholesale reductions that would properly be the province of the judge who made the order for costs. Circumstances may exist, I would imagine, in which a costs order could be interpreted as being some form of special order that allowed a costs judge to exercise such powers, but this, in my view, is not even close to being such a case.
For all these reasons, I find that even if I were to find that there had been unreasonable or improper conduct, the court’s ability to impose the types of sanction sought by the Defendants is limited.
The above analyses boil down to what I believe to be a very simple principle, namely, that in ordinary circumstances on assessment, CPR, r 44.11(1)(b) is not to be used in such a way as to allow a paying party to adjust or negate his or her liability for costs for reasons that were or could have been addressed at the time that the costs order was made. Put otherwise, a costs judge is bound by terms of the costs order as properly interpreted, and there is nothing in CPR, r 44.11(1)(b) that allows a costs judge to revisit the formulation of that order.
The Deputy Master then went on to consider each aspect of the defendants’ complaints and dismiss them in any event.
The claimants’ costs in the substantive case were assessed at £38,392.20 (inclusive of vat). It would be interesting to know what the costs of the assessment process were. The defendants may well have increased their own liability to costs by a substantial amount.