The High Court has recently confirmed that the guidance in Macdonald v Taree Holdings (2000) All ER (D) 2204 still applies when considering the effect of a failure to file a costs schedule 24 hours before a hearing, according to PD 44.9.5(4). In Macdonald, it was said that a default may not be fatal.
The case was on appeal from a decision of Deputy District Judge Brafield sitting in the Kingston County Court dated 9 September 2013. In the original hearing, it was ordered that, the defendant, Mr Kingsley, was to pay the claimant (Miss Orban)’s costs, and that these costs were to be assessed summarily in the sum claimed by Mr Williams acting for the Claimant.
Mr Kingsley was a former solicitor and had provided legal services to Miss Orban. Mr Kingsley claimed that money was due to him for those services and issued a Statutory Demand dated 18 June 2013 in the sum of £6,500 regarding a bill for the supply of legal services. Under the Insolvency Rules, Miss Orban made an Application to set aside the Statutory Demand. Mr Kingsley subsequently wrote to Miss Orban’s solicitor confirming that he would withdraw the Statutory Demand. However, this was received after the Application had already been made. This meant that the costs of the Application was the only issue to be dealt with at the hearing.
On 24 July 2013 Miss Orban’s solicitor made an offer on costs of £500 plus VAT open until 8 August 2013.
Practice Direction 44 at paragraph 9.5(4) provides that a statement of costs, which should follow as closely as possible form N260, has to be prepared by each party that intends to claim costs. It is also required that the statement of costs must be filed at court and copies of it must be served on any party against whom an order for payment of those costs is intended to be sought as soon as possible and in any event (a) for a fast track trial, not less than 2 days before the trial; and (b) for all other hearings, not less than 24 hours before the time fixed for the hearing.
The failure by a party, without reasonable excuse, to comply with paragraph 9.5 will be taken into account by the court in deciding what order to make about the costs of the claim, hearing or application, and about the costs of any further hearing or detailed assessment hearing that may be necessary as a result of that failure.
Miss Orban’s solicitor provided a statement of costs at 2pm on the day of the hearing which was due to start at 2pm.It was not suggested that there was a reasonable excuse for failing to comply with the practice Direction. The solicitor could not remember why he had not served it in time but suspected it was because of pressure at work. As made clear in the Mitchell decision, pressure of work is not in general reasonable excuse for failing to comply with orders, rules and practice directions, and therefore there was a failure by a party without reasonable excuse to comply with paragraph 9.5.
The judge further went to look at what the reaction of the Court should be to such a failure and reviewed guidance given by Neuberger J in MacDonald v Taree Holdings (2000) All ER (D) 2204, which was a case with similar facts but the schedule was provided at 11:15am for a hearing at 3pm. Neuberger J gave quite a lot of guidance on the appropriate reaction of the court, in which he stated that the correct approach was that where there is a failure to comply with the Practice Direction and a schedule of costs is not served more than 24 hours before the hearing, the court should take that into account but its reaction should be proportionate. In Taree, a distinction was made between a mere failure to comply and a case where there is a failure to comply plus some aggravating factor.
Mr Kingsley relied upon two aggravating factors: firstly that by the time the case came on for hearing the parties were aware that the sole issue for determination was costs. Nugee J found that this was not regarded as being an aggravating factor by itself. Secondly, that Mr Kingsley had asked for a breakdown of costs, but that this had not been given. However, Nugee J found that, in all the circumstances of the case, there were no aggravating factors.
Therefore the guidance from Neuberger J was “Where there is a mere failure to comply, and that is a failure to comply without aggravating factors, it seems to me that the first question for the court should be: what, if any, prejudice has that failure to comply caused to the other party? If no prejudice, then the court should go on and assess the costs in the normal way. If satisfied it has caused prejudice, the next question is: how should that prejudice best be dealt with?”
The Guidance goes on to say that there would normally be three answers; the first would be to give the paying party a brief adjournment to consider the schedule and then proceed to assess costs. The second possibility would be for the court to stand over the matter for a detailed assessment. Thirdly, stand over the assessment of costs and to keep the basis on the summary basis.
Nugee J accepted that it would have been preferable for the deputy district judge to have granted Mr Kingsley a short adjournment of 15 minutes or so had he asked for it to consider any points arising on the schedule.
Nugee J concluded that, despite the fact that, it can be seen that the deputy district judge should have given Mr Kingsley the opportunity of taking some time to consider the schedule at the hearing, it would not, in fact, have made a substantive difference and he therefore dismissed the appeal.
It was found that pressure of work did not amount to a “reasonable excuse” for failure to file the schedule of costs. However it was not Mitchell or Denton that was applied by the Court when considering what action to take. The Court applied Taree and considered whether there were any aggravating factors.
This case provides a useful example that Mitchell is not being applied as stringently by Judges in recent months.