High Court upholds decision to set aside default costs certificate

17 May 2023

A party had not waived his right to challenge a default costs certificate (DCC) by seeking to set it off against costs owing to him, the High Court has ruled.

His Honour Judge Pelling KC, sitting as a High Court judge, held that there had been no agreement to set off the claim, as the appellant in Michael Wilson & Partners v Emmott [2023] EWHC 1005 (Comm) had asserted.

The appeal by MWP was the latest stage of very long-running litigation, which included an arbitration in which Mr Emmott was ordered to pay some of MWP’s costs in relation to four procedural applications.

In January 2019, MWP issued a notice of commencement of detailed assessment proceedings for these costs, claiming nearly £160,000. Mr Emmott failed to serve points of dispute by the deadline and MWP obtained a DCC.

Mr Emmott then sought to set it aside, an application granted by Master Whalan later that year.

MWP appealed on the basis that the set-aside application had been sought and granted without jurisdiction because, by the time of the hearing before the master, Mr Emmott had elected to set off the costs against those due to him from MWP under the judgment giving effect to the arbitral awards.

Mr Emmott’s position was that, should his application to set aside be unsuccessful, he would then use the set-off.

HHJ Pelling found the costs claimed in the DCC were “plainly in dispute… and had not been discharged by set off because there was no agreement to that effect between the parties nor any judgment (or arbitral award) having that effect”.

The judge rejected as “unarguable” MWP’s position that Mr Emmott had waived his right to challenge the DCC in two witness statements. The statements could possibly have held that meaning if looked at in isolation but not in context.

HHJ Pelling also criticised MWP for issuing a statutory demand for the costs under the DCC eight days after Mr Emmott had applied to set it aside.

He continued: “[This was] obviously inappropriate and can only have had the effect of needlessly vexing Mr Emmott. It is the sort of conduct that has plagued this litigation for years, has led to sustained criticism of MWP’s conduct by almost all courts up to and including Court of Appeal level and has resulted in an extended civil restraint order being made against MWP.”

Stephen Innes (instructed by Michael Wilson & Partners) for the appellant. Mr Emmott appeared in person.

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17 May 2023

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