A FINAL COSTS CERTIFICATE IS ESSENTIAL FOR COSTS TO BECOME DUE: THE BILL SHOULD HAVE BEEN SIGNED OFF…

In  Johnston -v-  Wackett [2022] EWHC 129 (Ch) Deputy Master Brightwell considered the question of whether costs become payable when a final costs certificate is not obtained.

 

“Even though most paying parties may in practice pay without the need for a final costs certificate to be obtained, I do not consider that the paying party comes under an obligation to pay the receiving party the sum assessed as payable by a costs judge at a detailed assessment until both a final costs certificate has been issued and the time and date for payment stipulated in the certificate has passed.”

 

THE CASE

In earlier proceedings the claimant had obtained an order under the Inheritance (Provision for Family and Dependants) Act 1975 that the estate pay him £125,000.   The defendant asserted that an award of unsatisfied costs from 1998 between the claimant and the defendant should be set off against the sum ordered.   The question of whether the costs had ever become due was of key importance.  The Deputy Master held that no sums had become due because a final costs certificate had never been issued.

THE JUDGMENT ON THIS ISSUE

The Deputy Master found that the final costs certificate had never been obtained. As a result the costs never became payable, and could not be set off against the award that had been made.

    1. I find, in light of these facts, that no final costs certificate was obtained.
i)                   I have no doubt that Natalie has left no stone unturned in her attempt to find the final costs certificate.
ii)                 If a final costs certificate had been obtained, it would have been a key document, and would likely have been kept with at least one set of the other documents relevant to the costs of the 1992 Proceedings. I consider it to be more likely not that if it had been retained, it would have survived with the other papers which survived and would have been found.
iii)               Colin’s own lack of recollection is not as weighty a factor but, as Mr Tager reminds me, if a final costs certificate had been issued, it would have been served on Colin by the court.
iv)               A final costs certificate is not issued until all relevant court fees have been paid. The 2 July 2002 letter does not indicate whether further fees were payable. Mr Selwyn’s letter also suggested that further costs needed to be spent in order to prepare bills for other parts of the 1992 Proceedings. His advice to proceed with such other bills had already not been pursued. The evidence thus suggests that a reluctance on the part of the defendants to spend further money on this issue had already been evinced.
    1. Set against these factors is the possibility that what Mr Tager calls the simple step of filing the corrected bill of costs would have been taken after the defendants had incurred the costs of preparing a bill of costs and attending a 2-day assessment hearing. I agree that it should have been a straightforward step, but the points I have set out in the paragraph above seem to me to carry greater weight. I find in the light of the documentation that has been produced that it is more likely than not that Sidney’s decision that the costs order would not be enforced was made by no later than the time of Gary’s receipt of the 2 July 2002 letter, such that Mr Selwyn never applied for a final costs certificate, or took any other steps to procure an assessment of the other costs to which the defendants to the 1992 Proceedings were entitled.
    1. The next question to be determined is whether, despite the absence of a final costs certificate, there is in any event an existing monetary obligation (whether or not presently enforceable) to pay the sum assessed by Costs Judge Campbell. The relevant provision in force in 2002 was CPR Part 47.16 (now replicated in rule 47.17).  This provides:
“(1)   In this rule a completed bill means a bill calculated to show the amount due following the detailed assessment of the costs.
(2)     The period for filing the completed bill is 14 days after the end of the detailed assessment hearing.
(3)     When a completed bill is filed the court will issue a final costs certificate and serve it on the parties to the detailed assessment proceedings.
(4)     Paragraph (3) is subject to any order made by the court that a certificate is not to be issued until other costs have been paid.
(5)     A final costs certificate will include an order to pay the costs to which it relates, unless the court orders otherwise.”
    1. The notes in the White Book (2002 edn) indicate at 47.16.1 that “the time for payment, in accordance with r.44.8, is within 14 days of the date of the certificate”. The court may, however, when issuing a final costs certificate specify a different time for payment, under rule 44.8. (The relevant rule is now rule 44.7.) Former rule 47.16(5) also provided in terms (as does now the current rule 47.17(5)) that the court had a discretion when making a final costs certificate not to include an order to pay the costs.
    1. Further provision was made in the Costs Practice Direction, as in force in 2002, at section 42:
“42.1 At the detailed assessment hearing the court will indicate any disallowance or reduction in the sums claimed in the bill of costs by making an appropriate note on the bill.
42.2  The receiving party must, in order to complete the bill after the detailed assessment hearing make clear the correct figures agreed or allowed in respect of each item and must re-calculate the summary of the bill appropriately.
42.3 The completed bill of costs must be filed with the court no later than 14 days after the detailed assessment hearing.
42.4 At the same time as filing the completed bill of costs, the party whose bill it is must also produce receipted fee notes and receipted accounts in respect of all disbursements except those covered by a certificate in Precedent F(5) in the Schedule of Costs Precedents annexed to this Practice Direction.
42.5  No final costs certificate will be issued until all relevant court fees payable on the assessment of costs have been paid.
42.6 If the receiving party fails to file a completed bill in accordance with rule 47.16 the paying party may make an application under Part 23 (General Rules about Applications for Court Orders) seeking an appropriate order under rule 3.1 (The court’s general powers of management).
42.7 A final costs certificate will show:
(a)     the amount of any costs which have been agreed between the parties or which have been allowed on detailed assessment;
(b)     where applicable the amount agreed or allowed in respect of VAT on the costs agreed or allowed.
This provision is subject to any contrary provision made by the statutory provisions relating to costs payable out of the Community Legal Service Fund.
42.8 A final costs certificate will include disbursements in respect of the fees of counsel only if receipted fee notes or accounts in respect of those disbursements have been produced to the court and only to the extent indicated by those receipts.”
    1. Cook on Costs (2021 edn) says at 28.75 that, in many cases, once the figure payable as determined at a detailed assessment hearing has been agreed between the parties it is paid by one to the other and no further step is required. The text then indicates, at 28.76, that most receiving parties do not obtain a final costs certificate after a detailed assessment. It also says (at 28.75) that, “if the receiving party wishes to be in a position to enforce the costs as assessed, he needs a final costs certificate which is the quantified order for costs”.
    1. Even though most paying parties may in practice pay without the need for a final costs certificate to be obtained, I do not consider that the paying party comes under an obligation to pay the receiving party the sum assessed as payable by a costs judge at a detailed assessment until both a final costs certificate has been issued and the time and date for payment stipulated in the certificate has passed. CPR Part 47.16(5) (as in force in 2002) made plain that when a request for a final costs certificate is made, the court has a discretion not to make an order for payment. Furthermore, the court has discretion when to order payment. The default date is 14 days from the date of the certificate, but the court can specify another date: in 2002, see CPR Part 44.8(1) (now rule 44.7(1)). Whilst a judgment takes effect as soon as it is pronounced in court, where a detailed assessment of costs is concerned that judgment does not itself comprise an order for payment of those costs. The position is thus not the same as where an order for payment of a money sum is made in court but, by oversight, is not sealed; there the date for payment will already have been determined, the default date in CPR Part 44.7 applying only to orders for the payment of costs.
  1. One has only to look to the facts of the present case for the sort of circumstances where the court may when issuing a final costs certificate order a different date for payment, or may decline to make an immediate order for payment at all. It is to be remembered that Master Moncaster had on 19 November 1998 ordered that Colin’s costs of the counterclaim in the 1992 Proceedings be set-off against the defendants’ costs of the action. There would have been a good reason not to issue a final costs certificate in relation to one bill of costs until the amount of that set-off could be established. It is unclear whether Costs Judge Campbell did or did not assess Colin’s own bill in June 2002, but the correspondence from the time suggests that he may well have done so. This correspondence post-dated the decision that Colin had no protection as a publicly funded party and no reason was suggested to me as to why that decision will have affected the set-off directed by Master Moncaster (and I do not see why only the Legal Services Commission could have benefited). It is tolerably clear that the calculations in the 2 July 2002 letter do not give credit for this set-off.