COSTS ORDERS MADE WITHOUT A HEARING: HENRY VIII AND THE RELEVANT CRITERIA FOR VARYING ORDERS

We are looking again (and not for the last time)  at the decision of Mr Justice Mostyn in   Kuznetsov, R (On the Application Of) v London Borough of Camden [2019] EWHC 3910 (Admin). This time on the question on the criteria to be applied when the court is exercising its powers to set aside an order without a rehearing.   There are interesting points made here which I will return to in future posts. In particular the weight to be given to an order made without notice.   I am not certain that the judge is right on this issue.  If an order is made without a party being present then the better view is that any application to set aside that order is a total rehearing of all the issues.  Otherwise the party who has obtained that order has obtained a strategic advantage in circumstances where the respondent has had no opportunity at all to make representations.  The judge does not refer to the Court of Appeal decision in Al-Zahra (PVT) Hospital & Ors v DDM [2019] EWCA Civ 1103 indeed there are other decision to the contrary.

 

“I would formulate the test as follows, that the court should give due weight to the decision of the judge who dealt with the matter without a hearing and should be able to identify a good reason for disagreeing with his or her decision. That is the standard I shall apply in judging this application.

COURT OF APPEAL AUTHORITY THAT APPEARS TO CONTRADICT THIS VIEW

The judge held that a court should give “due weight” to the decision made without a hearing. It is worthwhile reading the Court of Appeal decision in Al-Zahra (PVT) Hospital & Ors v DDM [2019] EWCA Civ 1103. In that case the Court of Appeal considered the rules relating to orders made without notice.

    1. At paragraph [63] of his Judgment Foskett J said:
“[63] ……It follows that, to the extent that it is relevant and material, the hearing before Master Cook on 12 July 2017 was a rehearing of the issue whether to grant the extensions of time, not a review of his earlier decisions, and the appeal to me is (unusually) itself a rehearing of the application considered by Master Cook on 12 July 2017, albeit giving Master Cook’s decision due weight….”
    1. Foskett J’s conclusions are to be found at paragraphs [72]-[86]. He explained the reasons for concluding that Master Cook had failed to appreciate that the nature of the hearing before him was a rehearing rather than a review in paragraphs [72]-[73]:
“[72] Nothing has been said to me in the hearing of this appeal to suggest that the Master was reminded of the nature of the hearing before him which was that of a rehearing, not merely a review of his earlier decisions ….. As I have indicated, he approached the task he set himself by simply reviewing the material presented to him when he made the two extension orders. Whilst that is undoubtedly a significant part of the exercise, it is not necessarily the sole part. Whilst I differ from an experienced Master on a matter of this nature with considerable diffidence, I respectfully consider that the decision to refuse an adjournment to enable further evidence to be proffered on behalf of the Claimant to have been an error. I do not think it can simply be characterised as a case management decision with which, in the normal course of events, a Judge on appeal would not interfere: it was something that went to the heart of the exercise he was called on to perform and the decision not to permit further evidence to be given does suggest that the focus of the hearing, with the encouragement of the 1-6 Defendants, became too narrow.”…
In my view, Foskett J was correct to hold that, if and in so far as Master Cook approached the hearing before him as a review rather than a rehearing, Master Cook was in error. Foskett J appropriately cited (at [62]) the following passage from paragraph [33] of Dyson LJ’s judgment in Hashtroodi in which Dyson LJ made it clear that an application under CPR 23.10(1) to set aside an order obtained without notice should involve a rehearing not a mere review.

OTHER AUTHORITIES ON THIS ISSUE

Haley -v- Siddique [2014] EWHC 835 (Ch) Judge Hodge Q.C., sitting as a judge of the High Court made it clear that the “Tibbles” criteria did not apply to an application to set aside an order made without a hearing, or on the court’s own initiative.

 

“Where an order has been made by the court of its own initiative, or without a hearing, the parties are entitled to apply to the court to have that order set aside or varied. On such an application, unlike one to set aside an order made at a hearing which the parties have either attended, or had an opportunity to attend, the restrictions contained within CPR 3.1(7), as laid down by the Court of Appeal in the case of Tibbles –v- SIG plc [2012] EWCA Civ 518[2012] 1 WLR 2591 have no application. Since the parties have not had an opportunity of making representations to the court before an order was made without a hearing, or of the court’s own initiative, the parties are entitled to invite the court to review whether it was appropriate to make the order in the first place.”

 

Mr Justice Pepperall in Berhad v Frazer-Nash Research Ltd & Anor [2018] EWHC 2970 (QB) made similar observations

“In my judgment, the principles enunciated in Tibbles are not engaged in applications under r.23.10, or indeed under the bespoke provision to like effect in r.74.7. The hearing before me was the first opportunity for the Respondents to present their evidence and to make their arguments and accordingly I will consider such evidence and arguments without restriction. Having done so, and if there is no absolute bar to registration under s.9(2), I consider that the discretion at the heart of s.9(1) is for me to exercise afresh.”

THE CASE

The judge was considering an application to set aside an order made for costs when judicial review proceedings were dismissed.  The judge made the order as to costs but there had been no discussion on the issue of costs.

THE JUDGMENT ON THIS ISSUE

    1. The substantive judicial review hearing was listed to take place on 1 May 2019 before Judge Markus QC. On 26th of April 2019, that is a week before the hearing, the defendant served its form N260 schedule of costs in advance of the substantive hearing. That made it clear that an order for costs would be sought if the claim were dismissed, and indeed I have little doubt that the summary grounds of resistance filed by the defendant had also made it clear that it was seeking an order for costs. That statement of costs was incomplete in that it did not include the costs of counsel for preparation for the hearing on 1 May 2019, or for attendance at that hearing. That was by virtue of a note on p.4 of the schedule left blank but was advertised to be provided later. As stated, the hearing took place on 1 May 2019.
    2. On 14 May 2019 the learned judge distributed her judgment in draft. In the usual way, the template of the draft judgment contained the endorsement at its head that the judgment would be only handed down on 6 May 2019. It invited, in the usual way, counsel to submit any list of typing corrections and other obvious errors to Judge Markus by the following day, 15 May 2019. Although it does not state on its face that the court would consider on that occasion the question of costs, the convention is that costs would usually be considered, certainly if the matter was agreed and a consent order could be made.
    3. No submissions in relation to costs were filed by the claimant and of course the general rule expressed in CPR Part 44, rule 44.2(2)(a) would apply, which is that the general rule is that the unsuccessful party would be ordered to pay the costs of the successful party. That law has been in existence in this country for centuries. My brief researches prior to giving this judgment have revealed to me that that rule first appeared during the reign of Henry VIII in 1531 when Parliament passed a statute entitled: “An Act that the Defendant shall recover costs against the Plaintiff if the Plaintiff be nonsuited or if the verdict passed against him.”
    4. So, the claimant was obviously facing an order for costs, and an order for costs was made in the sum that I have mentioned, the scale of counsel’s fees having been provided on 10 May to the court and to the claimant by a letter of that date. Those fees were stated to be expressed in the sum of £2,150, giving rise to the total figure of £11,614.20, which was duly ordered.
    5. On 23 May 2019, as I have previously mentioned, the claimant made his application to set aside the costs order. On 5 June 2019 Judge Markus gave directions for determination of the application. In her order, which was for directions, which was made inevitably without a hearing, she explained, at para.3 as follows:

“In order to assist the parties I set out the following relevant background to the order which was not made by the court of its own motion. The defendant had made it clear that it sought its costs in the event of the judicial review claim being dismissed. Prior to the substantive hearing, the defendant served its schedule of costs. On 10 May the defendant wrote with an update to the schedule of costs which it confirmed had been served on the claimant. On 14 May the defendant sent the court a draft order which included the proposed costs order and served it on the claimant. No submissions as to costs were made by or on behalf of the claimant. In accordance with the overriding objective, the application can be dealt with on the papers.”,

    1. On 13 June 2019 the defendant filed and served written submissions on the application pursuant to that directions order. On 17 June 2019, however, the claimant applied to set aside the directions order. However, on 20 June 2019 he filed and served written submissions pursuant to that order.
    2. On 27 September 2019 Judge Markus made her order dismissing the application to set aside both the directions order and, more pertinently, the application to set aside the costs order.
    3. It was on 21 October 2019 that the claimant, without having actually made a formal application, requested that Judge Markus’s decision to dismiss the application be reconsidered at an oral hearing, and that was listed before me today. In his application for reconsideration he somewhat stridently, I have to say, demanded that the matter be listed for an oral hearing and that it be listed before a full-time judge of the High Court. It is not for a claimant to stipulate the level of judge who should hear his application, but as it happens I am a full-time judge of the High Court of long-standing, and so an oral hearing has taken place. So, the two particular procedural objectives that were sought by the claimant have been granted to him.
    4. I will come to the learned judge’s decisions in her ruling of 27 September in due course. I will not spend any time examining her reasons for refusing to set aside the directions given on 5 June as they have passed entirely into history and are no longer relevant.
    5. It is clear that the decision in relation to costs was made without hearing. Ms Conlan has sought to argue that there was a hearing at which the question of costs was advocated, but I am completely satisfied that no such hearing took place. There was, of course, a hearing of the substantive matter but it is inconceivable that there was a discussion during the substantive proceedings of what the costs adjudication would be in the event that the claim either succeeded or failed. It is unheard of, in my experience, in this type of proceedings for costs to be dealt with during the substantive proceedings in an anticipatory manner. In any event, the learned judge would not have formulated her ruling using the language that she did had she received oral submissions. The claimant, who was present during the proceedings, is emphatic that there was no oral hearing on the merits of the costs issue. I proceed, therefore on the basis that there was no such hearing.
    6. In such circumstances, it is clear that the learned judge made her costs decision pursuant to CPR rule 23.8(c) which provides that:

“The court may deal with an application without a hearing if – … (c) the court does not consider that a hearing would be appropriate.”

    1. In such circumstances Practice Direction 23A para. 11.2 applies. This states:

“Where rule 23.8(c) applies the court will treat the application as if it were proposing to make an order on its own initiative.”

    1. This takes the court to rule 3.3(4) which provides:

“(4)The court may make an order of its own initiative without hearing the parties or giving them an opportunity to make representations.”

    1. Para (5) provides:

“(5) Where the court has made an order under para.(4) –

(a) a party affected by the order may apply to have it set aside, varied or stayed; and

(b) the order must contain a statement of the right to make such an application.”

    1. In fact, the order of 16 May does not contain the statement referred to in paragraph (5)(b), but that does not, in my judgment, affect its validity.
    2. What are the principles that the court applies when considering an application to set aside or vary or stay an order made pursuant to rule 3.3(4)? Does the court apply the same principle and legal test that would apply if it were hearing an application to set aside a procedural order made following a hearing pursuant to rule 3.1(7)? This provides that –

“(7) A power of the court under these Rules to make an order includes a power to vary or revoke the order”.

    1. It has been argued by Mr Burkitt that it would be wrong for a direct analogy to be drawn because an application under rule 3.1(7) would inevitably be dealt with at a hearing at which the court would have the benefit of oral advocacy. He also makes the point that if the test was the same, then there would be no need for there to be a separate rule 3.3(5). It would, if the test was the same, be entirely otiose.
    2. The test that is applied on application to set aside or vary a procedural order under 3.1(7) is well known. It originates in the decision of the Court of Appeal in Tibbles v SIG PLC [2012] 1 WLR 2591, reiterated in a number of cases but perhaps most succinctly summarised in Mitchell v News Group Newspapers [2014] 1 WLR 795 [44] where Lord Dyson MR said:

“44. The court held that considerations of finality, the undesirability of allowing litigants to have two bites at the cherry and the need to avoid undermining the concept of appeal all required a principled curtailment of an otherwise openly apparent discretion. The discretion might be appropriately exercised normally only (i) where there has been a material change of circumstances since the order was made; (ii) where the facts on which the original decision was made had been misstated; or (iii) where there has been a manifest mistake on the part of the judge in formulating the order.”

  1. Is that the test that should be applied to an application to set aside or vary under rule 3.3(5)? It is surprising that there is absolutely no authority on the point, notwithstanding that this rule has been in existence since 26 April 1999. Twenty years have passed and there has been no decision as to what legal standard the court should apply in considering an application to set aside an order made without a hearing and on the papers.
  2. I agree with Mr Burkitt that the test cannot be so high as that which applies on an application to set aside under rule 3.1(7). I agree with him that if one aligned the test, then rule 3.3(4) becomes entirely otiose. So, the test must be lower. Is the test that the court should be satisfied that the decision was wrong, that is to say appealably wrong? Again, Mr Burkitt says that would be to set the standard much too high. If it is appealably wrong, then there is no point in having the rule because you would of course inevitably be able to succeed on an appeal. So, I agree that one has set the test a little lower. Having considered the matter carefully, I have drawn some inspiration from the well-known decision given long ago by the President of the Family Division, Sir Jocelyn Simon, in Samson v Samson [1966] P52 when he identified the standard that was needed for an appeal to succeed from a decision of a registrar to a judge. He emphasised that the decision was primarily that of the judge, but the judge should give due weight to the decision of the registrar. He should be slow to disturb a decision on a mere question of quantum and he concluded by saying that the court should be able to identify a reason for disagreeing with the order of the registrar.
  3. In my judgment, I would formulate the test as follows, that the court should give due weight to the decision of the judge who dealt with the matter without a hearing and should be able to identify a good reason for disagreeing with his or her decision. That is the standard I shall apply in judging this application.