Court “must order” immediate assessment of interlocutory appeal costs

A party awarded the costs of an interlocutory appeal is only entitled to an immediate assessment of those costs if the court so orders, the Court of Appeal has ruled in a case it described as raising “technical but important issues”.

Further, it said, if the appellate court has not made an order for an immediate assessment, a costs judge does not have jurisdiction to make it.

In doing so, the court overturned the rulings of Master Simons in the Senior Courts Costs Office and, on appeal, Mr Richard Spearman QC sitting in the Chancery Division as a deputy judge of the High Court.

The underlying dispute in Khaira and Ors v Shergill and Ors [2017] EWCA Civ 1687 related to the trusteeship and governance of two Sikh Gurdwaras.

The defendants applied to stay or strike out the claim on the grounds that the issues raised by the claim were not justiciable. In September 2011, HH Judge Cooke dismissed the application and ordered the costs, which he summarily assessed, to be paid by the defendants. The Court of Appeal then held that the issues were not justiciable and struck out the claim.

On a further appeal, the Supreme Court reversed that decision and reinstated Judge Cooke’s order, including his summary assessment of the claimants’ costs and his order that they be paid by the defendants.

The Supreme Court also ordered that the respondents pay the appellants’ costs in that court and the Court of Appeal, to be assessed on the standard basis if not agreed, with £150,000 to be paid on account.

Giving the ruling of the court, Lord Justice David Richards focused on CPR 47.1, which provides: “The general rule is that the costs of any proceedings or any part of the proceedings are not to be assessed by the detailed procedure until the conclusion of the proceedings, but the court may order them to be assessed immediately. (Practice Direction 47 gives further guidance about when proceedings are concluded for the purpose of this rule).”

Paragraph 1 of PD 47 says: “For the purposes of rule 47.1, proceedings are concluded when the court has finally determined the matters in issue in the claim, whether or not there is an appeal, or made an award of provisional damages under part 41.”

Richards LJ said the case law stressed that the meaning of “proceedings” depended on “the terms, context and purpose of the provision in which it appears”.

He continued: “The issue of whether there is an automatic immediate assessment of costs depends on its meaning and effect. Unless CPR 47.1 has no application at all to appeals, the effect of paragraph 1.1 of 47PD is, in my judgment, that there is no automatic detailed assessment of the costs of an interlocutory appeal and that an order of the court is required, consistently with the views of the judges in this court and in the High Court who have previously considered this point.

“I acknowledge the force of the policy reasons advanced by Mr Mallalieu [for the respondents] to justify a reading of CPR 47.1 that would mean that the costs of interlocutory appeals were immediately assessed unless the court ordered otherwise. But it must be borne in mind that there will be an immediate assessment if the court so orders. All that need happen is for the receiving party to apply for an immediate assessment.

“Having said that, it may be that the Civil Procedure Rules Committee will feel it appropriate to consider what the default position should be.”

In looking at whether the costs judge had jurisdiction, Richard LJ said that where the Court of Appeal has not made an order for immediate assessment, the High Court could not exercise that power.

Further, paragraph 1.3, as relied on by the respondents, was not a general jurisdiction, “but arises (if at all) only where a paying party served with a notice of commencement applies to the costs judge to determine whether the other party is entitled to commence detailed assessment proceedings”.

He continued: “The wording of paragraph 1.3 makes clear that the entitlement should pre-date the commencement of the assessment proceedings and that the costs judge’s function is to determine whether the entitlement exists. The second sentence does not, in my judgment, envisage that the costs judge has a discretion to order an assessment where none exists but is, as Patten J said of the predecessor provision in Crystal at [78] ‘consequential and contingent upon the power for the costs judge to decide whether the party serving a notice of commencement is entitled to do so’.

“If the costs judge holds that the receiving party was entitled to commence an assessment, he or she may make an order allowing it to continue. Alternatively, the costs judge could stay the proceedings until a more appropriate time in the future.” 

The court also found that the deputy judge was wrong to say that the effect of the Supreme Court’s order was that there was to be an immediate assessment of the costs in the Court of Appeal.

“There is nothing to suggest that the Supreme Court ever turned its mind to the assessment of the costs in the Court of Appeal… An immediate assessment of the costs in the Court of Appeal can be read into the order only if it is necessary to give effect to its express terms. In this respect, reliance is placed on, first, the order in paragraph one that the costs in both the Court of Appeal and the Supreme Court be assessed on the standard basis and, secondly, the order in paragraph two that the defendants pay £150,000 on account of their costs in both courts.

“However, an immediate assessment is not necessary to give effect to these orders. Paragraph one does no more than state the basis of assessment, as any order for costs will do, and the payment of a sum on account of costs is effective without an order for an immediate assessment.”

 PJ Kirby QC and Rupert Cohen, instructed by Kain Knight for Sahota Solicitors, acted for the appellants, with Roger Mallalieu, instructed by Addlestone Keene, for the respondents.


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Costs News
Published date
02 Nov 2017

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