RESPONDENTS TO AN APPLICATION FOR PERMISSION TO APPEAL: YOU SHOULD HAVE SIMPLY WRITTEN A LETTER AND SAVED YOURSELVES £67,000
In over three decades of writing about civil procedure I cannot recall any cases about costs following a permission to appeal hearing. There are now two cases this week. In Kerseviciene v Quadri & Anor (Costs)  EWHC 1757 (QB) Mr Justice Freedman refused an application for costs of an application for permission to appeal.
“I reject the argument that it was necessary for the respondents to appear at the hearing to correct the position which they say was wrongly created by the appellants. In my judgment, if they felt that it was necessary to correct the position, that could have been done by a short letter from the solicitors for the respondents to the appellants without the need for attendance at the hearing. In my judgment, if that had been done, the correction would have been made, and the expense of £67,095.78 would have been saved. The cost of preparing a letter would have been trivial by comparison. “
The appellant had been granted permission to appeal a decision in relation to the admissibility of a witness statement. Permission was granted on two grounds but refused on another. The appellant made an oral application for permission to appeal to be allowed on the third ground. That application was refused. The respondent, who attended the permission hearing with leading counsel, sought their costs of the application from the appellant’s solicitors. Those costs amounted to £67,095.78. The largest element of this was the costs of leading counsel at £47,500 plus VAT.
THE RESPONDENT’S LETTER
The respondent had written to the appellant stating that they intended to appear, and that it was going to be expensive.
Unusually, the permission to appeal hearing was attended by leading and junior counsel for the respondents and the solicitor for the respondents. By an email dated 23 June 2022, the respondents by Mr Michael Henman had written to the Ms Ersan for the appellants in the following terms, namely:
“I write with reference to the renewed application for leave to appeal listed for 1st July.
I would like to confirm that we have instructions from all our insurer clients to instruct Miss Anya Proops QC to attend and make representations on behalf of the respondents at the permission hearing on 1 July. This is on the basis that the application relates to the GDPR, which, as you are aware, is her specialist area. For the sake of transparency, whilst (sic) her fee for this application is £47,500 plus VAT.
Whilst my clients are fully aware that the general rule for such a hearing is that the respondent is unlikely to recover its costs, in this instance, in these cases we hereby put you on notice that Miss Proops will be instructed to seek our clients’ costs of attending the hearing on the basis that (a) your clients, are advancing arguments as to the GDPR, which, whilst covered in the original skeleton argument from Philip Hackett QC, were very deliberately not pursued by your counsel, Philip Coppel QC, at the hearing before Her Honour Judge Freeland on 5th October. 2021, those arguments having been unequivocally abandoned, through Mr Coppel, prior to the hearing (as is confirmed by the contemporaneous counsel-to-counsel correspondence), (b) your own counsel has inexplicably failed to draw these highly relevant matters to the court’s attention in the context of your clients’ application and indeed has gone so far as to contend (wrongly) that GDPR arguments were advanced before the Court on the witness statement issues and (c) in all the circumstances, Ms Proops’ attendance is required so as to ensure that the defendants have a fair opportunity to address the case being advanced on the GDPR issues and otherwise, so as to ensure that the Court is properly apprised of the relevant factual background to this case.
We make these points without prejudice to our position that these costs would in any event be recoverable against your firm as part of our clients’ extant wasted costs application against your firm.”
THE BASIS OF THE RESPONDENT’S ARGUMENT
The respondent argued that the appellant’s solicitors should pay the costs because of alleged “misconduct”. The additional ground, it was said, was not argued before the judge at first instance.
THE RULES RELATING TO RESPONDENTS ATTENDING PERMISSION HEARINGS
CPR PD 52B at para. 8.1 reads as follows:
“8.1 Attendance at permission hearings: Where a respondent to an appeal or cross-appeal attends the hearing of an application for permission to appeal, costs will not be awarded to the respondent unless–
(a) the court has ordered or requested attendance by the respondent;
(b) the court has ordered that the application for permission to appeal be listed at the same time as the determination of other applications;
(c) the court has ordered that the hearing of the appeal will follow the hearing of the application if permission is granted; or
(d) the court considers it just, in all the circumstances, to award costs to the respondent.
None of paras. (a), (b) or (c) applied. As regards (d), a part of the commentary in the White Book at para. 52.5.2 read as follows:
“Where a respondent attends a permission hearing the general rule is that they will not be awarded costs except in the circumstances specified in Practice Direction 52B para.8.1. Where costs are sought under Practice Direction 52B para.8.1(b) [it appears that this was an error and ought to read 8.1(d)] Mount Cook Land Ltd v Westminster City Council  EWCA Civ 1346;  CP Rep 12, CA, para.76 provides guidance on the question whether it would be just in all the circumstances to depart from the general rule. Relevant factors that could justify an award of costs are: the hopelessness of the claim; persistence in pursuit of the claim despite the appellant being aware of the facts and/or law demonstrating its hopelessness; and whether the respondent’s attendance provides the court with the benefit of an early substantive hearing of the issues at the oral renewal hearing: see Robert v Woodall  EWHC 436 (Ch).”
THE JUDGE’S CONCERNS
The judge had some concerns about the way in which the respondent’s application was made.
I have procedural concerns about the course of action which the respondents have sought to adopt. I shall return to them, but they concern the following factors, namely:
(1) allegations of professional misconduct made against the legal advisers for the appellants coupled with the making of a wasted costs application before the resolution of the case as a whole;
(2) the submission that the first stage of the wasted costs procedure should be dealt with by an oral application without a written application;
(3) the submission that it would be improper for Mr Coppel QC to respond in that he appeared for the appellants, and it would be inconsistent with that for him to respond for Ersan and Co. (In fact, Mr Coppel QC did respond no doubt satisfied that there was no conflict in his making the submissions which he did.)
I shall first however consider whether or not these procedural points necessarily arise for determination. In my judgment, there is a simple answer to this application which does not make it strictly necessary to rule upon the concerns above. I reject the argument that it was necessary for the respondents to appear at the hearing to correct the position which they say was wrongly created by the appellants. In my judgment, if they felt that it was necessary to correct the position, that could have been done by a short letter from the solicitors for the respondents to the appellants without the need for attendance at the hearing. In my judgment, if that had been done, the correction would have been made, and the expense of £67,095.78 would have been saved. The cost of preparing a letter would have been trivial by comparison.
It is to be noted that:
(1) there appears to have been no response to the renewal at the time of the renewal document in February 2022. If there was, the Court has not been shown a document;
(2) the first response appears to have been the short email dated 23 June 2022 which has been quoted above. The last paragraph of that email is oblique: it appears to be said that the costs might be captured by the “extant wasted costs application”, but it does not say expressly that there is to be a wasted costs application against Ersan and Co. The rest of the email in any event is making criticisms of professional misconduct against Counsel, Mr Coppel QC. That was not cleared up in the subsequent correspondence in response to Mr Coppel QC’s email of 24 June 2022.
(3) there was no letter or written submission to the Court identifying the complaint of the respondents.
In my judgment, even if there was misconduct of the kind that would otherwise have attracted an order to show cause, this type of written response would have sufficed.
There are other reasons why it is not just or appropriate to make an order to show cause as follows:
(1) even without a note to that effect and any attendance by the respondents, the Court was able to glean the appropriate order without assistance from the respondents. After Mr Coppel QC finished his submission, the Court used the attendance of Counsel for the respondents to ask certain short and discrete points and did not wish to have a speech in reply. It was not even necessary to ask these questions, and the Court would have been able to proceed without answers to these points. From the pre-hearing reading and the oral submissions of Mr Coppel QC, it was apparent that (a) the additional ground had not been relied upon below, (b) it was not appropriate to allow the new ground to be run, and (c) the ground did not in any event have a real prospect of success. The Court had the benefit of the order of Sir Stephen Stewart refusing permission and the references to the respondents’ skeleton and the judgment, albeit that they were in the context of the CPR 32.12 application.
(2) a letter to the Court would have been an adequate way of registering these points, and an appearance was a matter for the respondents, but it was unnecessary for the resolution of the permission application.
(3) the consequence of permission being granted was not severe, contrary to the submissions for the respondents. There is fixed for Monday 11 July 2022 the hearing of the appeal. In the unlikely event that a letter did not have the effect of permission being refused, the same arguments would have been available on the hearing of the appeal. This would have been far more proportionate than incurring £67,095.78 on the oral renewal application.
(4) The order of wasted costs should not generally be used to obviate the general rule that the respondents’ costs of attending on an oral permission application are not awarded. There were no circumstances in the exercise of my discretion that point to a different result in this case.
The gravamen of the argument of the appellants is that the Court ought to have taken into account in granting permission that there was a vast array of sensitive confidential and private information which would amount to a breach of GDPR. As refined in the skeleton argument dated 30 June 2022 on the renewal application, the argument was that the confidentiality and privacy issues without more should have prevented the Court from allowing the witness statement to be adduced. The Court rejected that argument. It may have been over-optimistic to seek to reframe the Part 32.12 argument into an argument in support of a debarring order bearing in mind that (a) the argument had not been run below and (b) the argument had in effect been abandoned. There was a nuanced change referred to in the renewal skeleton, but not in the renewal notice. It is difficult to obtain permission to run an argument not relied on below, and there was a substantial answer to the argument.
The appellants ought to have identified expressly in the written renewal application that they were changing the approach, as they did to a greater extent in the appellants’ renewal skeleton served on 30 June 2022. They ought not to have referred to the skeleton argument of previous Counsel without identifying the change in tack for the appeal, and the nature of the nuanced change which would be identified in the argument of 30 June 2022.
It does not follow that these shortcomings in the renewal application amounted to misconduct. The renewal application and the evidence and other materials were not of such a nature that, unless answered by the appellants, it was likely that a wasted costs order would be made based on misconduct. Without more, it could be construed as a failure of exposition on the part of the appellants and a mistaken attempt to rely on the skeleton argument of previous Counsel rather than improper or unreasonable conduct, let alone dishonest. It did draw attention to the reasoning of Sir Stephen Stewart refusing permission on the additional ground which in turn referred to paragraphs of the respondents’ argument, and that argument referred to the agreed position before the hearing before the Judge.
It stood to be seen in the context of how the renewal application would be presented. The nuanced approach of the 30 June 2022 renewal skeleton and the presentation of the application to the Court on 1 July 2022 did not amount to misconduct. In my judgment, seen by itself and in context of what followed, the renewal application was not evidence or other material, which was likely unless answered, to amount to unreasonable or improper conduct such as would have given rise to a wasted costs order.
Even if that were wrong, I do not accept that there was evidence or other material which, if unanswered, would be likely to lead to a wasted costs order against Ersan and Co. As noted above, the email of Mr Henman refers to Counsel and not the solicitors. I do not accept that if the decision had been that of Leading Counsel that it would be likely to amount to misconduct if not answered to follow Leading Counsel’s advice. There are circumstances where it has not absolved a solicitor to follow Counsel’s advice, but it is usually the case that a solicitor following advice from especially specialist counsel properly instructed will not be liable for a wasted costs order.
In all the circumstances, it has not been shown that unless answered, the evidence and other materials were likely to have led to a wasted costs order.
There are a number of further points which should be made. First, if the respondents wish to incur costs at the permission stage because they perceive this as worthwhile, and if they are prepared to pay an amount, even a very high amount, for specialist and highly regarded Counsel, that is a matter between the lawyers and their clients. To the extent that the respondents are insurers, they are well able to look after themselves. This does not militate in favour of a different approach to the incidence of costs as between the parties or in the wasted costs jurisdiction.
Second, as regards CPR PD 46 at para. 5.7(a)(ii), at the first stage, the Court should also consider whether the wasted costs proceedings are justified notwithstanding the likely costs involved. The respondents’ argument is that the costs are £67,095.78 and therefore the costs are sufficiently substantial to justify wasted costs order. In my judgment, this is not a good argument because the costs could have been contained to the costs of a letter or written submission. In that event, the costs would have been relatively small, and the costs proceedings would not have been justified.
Third, I return to matters of concern about the timing of the application. The relevant law was expressed in Ridehalgh v Horsefield  Ch 205 at 237-238, in which it is set out that wasted costs orders should generally be sought only after trial. Among the dangers of an earlier application are to distract the lawyers from pursuing their clients’ interests and instead defending themselves. An exception might be where the interlocutory battle resolves the dispute between the parties, which is not this case.
I am not satisfied that there is a good reason to have this matter dealt with at this stage, even notwithstanding the order made by the Judge after the judgment which she gave in October 2021 for a show cause order as to why there should be a wasted costs order as against Ersan and Co. As of now, that order has been stayed by Sir Stephen Stewart who also found that the arguments based on expert evidence and unreliability (Grounds 1(a) and 1(b)) had real prospects of success on appeal and for which he gave permission to appeal.
I do not accept that it was necessary for the Court dealing with the appeal to deal with the wasted costs application. If that were the case, the logic would be that the appellate judge would have to deal with the second stage of the application, and for obvious logistical reasons that would rarely happen. It would be more usual for the second stage to be dealt with by a different judge and remitted to a first instance, in this case to the County Court Judge. The difficulty about a having a hearing about wasted costs at the early stage is that such an application is capable of driving a coach and horses between legal representative and client. I would have adjourned the application until a later stage, but for the reasons set out above, since there is a summary answer to the application, the Court has been able to deal with it now.
It follows that the Court dismisses the respondents’ application for an order against Ersan and Co to show cause why the respondents’ costs of the permission application should not be paid by Ersan and Co.