Costs Lawyers warn Court of Appeal decision has introduced uncertainty
The Court of Appeal decision to restore a ruling not to strike out a non-compliant point of dispute (PoD) should not be seen as a green light to serving incomplete PoDs more generally, costs experts have warned.
The judgment in Ward v Rai earlier this month has generated a significant amount of commentary, with high-profile Costs Lawyer Nick McDonnell slating it for the uncertainty it has caused.
“It tells practitioners that compliance is mandatory whilst permitting admitted non-compliance to succeed,” he said.
In Ward, Deputy Costs Judge (DCJ) Friston decided not to strike out a PoD that was challenged for being too vague and to allow reliance on a more detailed schedule that was only served two days before the detailed assessment.
Last year, Mrs Justice Hill, sitting with Costs Judge Leonard as assessor, held that DCJ Friston failed to give sufficient weight to the requirements of paragraph 8.2(b) of PD 47 and the Court of Appeal ruling in Ainsworth.
But the Court of Appeal said she was wrong to interfere with DCJ Friston’s case management decision. At the same time, it stressed that paying parties “should be under no illusion” that paragraph 8.2 “requires an Ainsworth compliant approach”.
Mr McDonnell, a director of Kain Knight in Manchester, wrote on its website that at one level, the judgment was “entirely orthodox” in applying “the well-established principles governing appeals of discretionary case management decisions”.
However, he continued: “In striving to preserve the breadth of a costs judge’s discretion, the court seems to have undermined something equally fundamental to modern civil litigation: procedural certainty.
“The result is a judgment that tells practitioners one thing whilst demonstrating another. It emphatically reaffirms the importance of compliance with practice direction 47 and Ainsworth v Stewarts Law LLP, yet ultimately permits perhaps one of the clearest examples of non-compliance that practitioners are likely to encounter.
“In doing so, the court has left costs lawyers asking an uncomfortable question: If these points of dispute survive, what will it take for them not to?”
Mr McDonnell predicted that the decision “is likely to become the starting point for a new generation of arguments about where the boundaries of judicial discretion truly lie”; every future dispute concerning defective PoDs was now likely to involve submissions like ‘Our case is more serious than Ward’, ‘Our default is less serious than Ward’, ‘The prejudice here is greater’, ‘The prejudice there was smaller’, ‘The judge should exercise discretion differently’.
He concluded: “For practitioners conducting detailed assessments every day, that is unlikely to be regarded as progress. It is more likely to be seen as an invitation to further procedural disputes, greater expense and increased uncertainty; precisely the outcomes that modern civil procedure has spent the last decade trying to avoid.”
Erica Bedford of Hailsham Chambers, who represented the respondent, wrote on LinkedIn that “no longer can one conclude that non-compliance will immediately lead to strike out. A more nuanced approach is now required”.
As a result, the ruling was an evolution of Ainsworth, she explained. “Ainsworth focused on interpreting the PD rather than the consequential question of what to do about it. Ward now makes clear that when exercising those case management powers, that strike out and or dismissal of the PODs is not the only option available to the assessing judge.”
In its briefing on the case, Lancashire firm SPH Costs warned paying parties not to assume “that a lenient approach will be taken if they adopt a similar course”.
It said: “Non-compliance risks strike out or costs sanctions. That warning [from the Court of Appeal] matters. The defendant succeeded in this appeal because the issue was within the scope of the costs judge’s discretion. It does not mean the defendant’s approach was good practice. It was not.”
Where an annotated schedule was required, it told paying parties, it should be served with the PoDs or as soon as possible thereafter. “Leaving it until shortly before the hearing creates unnecessary risk.”
It added: “Receiving parties should also take care. If points of dispute refer to a missing schedule or appear insufficiently particularised, the receiving party should consider raising the issue promptly rather than waiting until the hearing.
“In Ward v Rai, the costs judge considered that both parties had some responsibility because the missing schedule had not been chased earlier.
“That does not remove the paying party’s obligation to serve proper points of dispute. But it does show that the court may consider the conduct of both parties when deciding what case management order is appropriate.”
Essex costs firm Goodwin Malatesta agreed that Ward should not be viewed as authority for the proposition that defective PoD can safely be corrected shortly before a hearing.
“Rather, it demonstrates that the consequences of non-compliance are fact-sensitive and will depend on judicial discretion.
“The safest approach remains unchanged. Paying parties should serve fully particularised, Ainsworth-compliant points of dispute from the outset and avoid relying on the possibility that a court may later permit clarification or supplementation. “Equally, receiving parties should not assume that non-compliance will inevitably lead to strike out