RESERVED JUDGMENTS: IF YOU DON’T APPLY FOR THE COSTS IN TIME THEN YOU DON’T GET THEM: HIGH COURT DECISION

In Preston v Beaumont [2022] EWHC 440 (Ch) Richard Farnhill, sitting as a Deputy Judge of the Chancery Division, found that a successful respondent to an appeal could not recover costs. There had been a failure to comply with the terms of PD 40E and there was no application for relief from sanctions.

“Paragraph 4.4 is not framed in terms of what parties “should” do; it addresses what they “must” do. It is mandatory. No specific sanction is set out in PD 40E, but given the mandatory language coupled with a clear time limit it seems to me clear that the effect of paragraph 4.4 is that no application can be made after that time.”

THE CASE

The judge was considering certain matters arising out a judgment handed down on the 8th February 2022. The first respondent to the appeal sought its costs of the appeal.  However that respondent had not complied with PD 40E.

“PD 40E 4.4

Where a party wishes to apply for an order consequential on the judgment the application must be made by filing written submissions with the clerk to the judge or Presiding Judge by 12 noon on the working day before handing down”

THE JUDGMENT ON COSTS

No submissions had been lodged under PD 40E 4.4. No application for relief from sanctions had been made.  The judge had that the words “must” makes the filing of submissions a mandatory obligation.  No order for costs was made.

“Costs

1. 1. The Appellant’s position is that no application for costs was made ahead of the handing down on 8 February 2022 and, under the terms of PD 40E, it is too late to do so now. The First Respondent relies on three linked arguments in response:

i) On the basis of the Re Barrell Enterprises [1973] 1 WLR 19 line of cases, a judge remains seised of a case until the order disposing of it is drawn up and sealed, and so continues to have the power to make orders on consequential matters.

ii) When the court asked whether a hearing was required to address consequential matters, no time frame was specified for a response.

iii) The First Respondent acknowledges that “an application for a consequential order should be made by 12 noon the day before judgment is to be handed down“. However, because the court retains jurisdiction, the First Respondent’s failure to comply with the time limits in paragraph 4.4 of PD 40E in making his application for costs is not fatal and the court can still deal with that application.

1. 1. The insurmountable difficulty with that approach is that it is entirely inconsistent with the terms of paragraph 4.4 of PD 40E. This provides:

“Where a party wishes to apply for an order consequential on the judgment the application must be made by filing written submissions with the clerk to the judge or Presiding Judge by 12 noon on the working day before handing down.” (my emphasis)

1. 1. This goes to the First Respondent’s third point. Paragraph 4.4 is not framed in terms of what parties “should” do; it addresses what they “must” do. It is mandatory. No specific sanction is set out in PD 40E, but given the mandatory language coupled with a clear time limit it seems to me clear that the effect of paragraph 4.4 is that no application can be made after that time.

1. 1. I therefore agree with the Appellant that this is properly a question of relief from sanctions. No application has been made for relief under CPR 3.9 and the requisite evidence explaining the noncompliance has not been provided. In the circumstances, I am not in a position to consider granting relief from sanctions. Even had such an application been made it would have faced significant obstacles. This was an obvious failure to comply with a clear rule in circumstances where compliance would have been straightforward. The argument that the First Respondent’s lawyers did not make an application while they were seeking to agree the terms of the order goes nowhere. That should happen in every case but applications for costs by the successful party are so common as to be almost uniform. In any event the making of an application for costs would in no way have precluded the parties from continuing discussions.

1. 1. The second point, that no time frame was specified for a hearing on consequential matters, does not advance the First Respondent’s position. Paragraph 4.4 of PD 40E is by reference to the time of the handing down, which did not require a hearing on consequential matters and has now happened.

1. 1. Equally, this is not a case to which Re Barrell Enterprises applies. The fact that I may retain jurisdiction over some matters until the order is sealed does not create jurisdiction where none exists under the CPR in the first place. Paragraph 4.4 is clear: any application for costs had to be made before the First Judgment was handed down; no such application was made and there has been no application for relief from sanctions. Re Barrell Enterprises does not change any of that.

1. 1. The position might have been different if I had exercised the jurisdiction from the Re Barrell Enterprises line of cases and in some way altered my judgment. To the extent that changed the identity of the successful party, that party would have strong arguments for saying that it ought to be allowed to pursue an application for its costs. Paragraph 4.4 allows for that, however, because the reference to “the judgment” would then have been to the revised judgment, effectively resetting the clock. In any event, that is not this case; the First Respondent has not sought to alter the substance of the First Judgment in any way.

1. 1. The First Respondent references the fact that the Schedule of Costs was served before the appeal hearing. I do not understand that to be an argument that serving the Schedule amounts, in itself, to the making of an application. Such a submission would be at odds with the acknowledgment made by the First Respondent that there has been a failure to comply with the requirements of PD 40E. It is also clear from paragraphs 9.5 and 9.6 of PD 44 that the statement of costs is an element of the application for costs but not the application itself.

1. Ultimately, the position is a straightforward one. The CPR makes limited provision for deemed costs orders, none of which apply here. To the contrary, the default position under CPR 44.10(1)(a) is that in the absence of specific provision there is no order as to costs. It was therefore incumbent on the First Respondent if he wanted to seek his costs to make an application within the time permitted. He did not do so. If he wanted relief from sanctions he needed to explain that failure. Again, he has not done so. In the circumstances, costs were not sought in accordance with the relevant rules and it is too late to do so now. There will be no order as to costs in the appeal”