Full Case Details
This was a decision in the context of an appeal following a Solicitors Act detailed assessment.
On 25 September 2018 Master Gordon-Saker assessed the Respondent’s costs in the sum of £200,706.05.
The Appellant sought and was granted permission to appeal an element of the assessment by Arnold J on 12 November 2018.
The Respondent, Stewarts Law, made two applications, as follows:
- to set aside the order granting the Appellant permission to appeal on grounds that it was out of time pursuant to CPR 52.18(1)(b); and
- if the appeal is allowed to proceed, an order under CPR r.52.18(1)(c) that it be conditional on payment of the full amount ordered by the costs judge
Relevant Chronology
17 October 2017: The Appellant instructs the Respondent concerning a dispute with his former partner.
23 November 2017: The Appellant terminates his retainer with the Respondent and seeks an assessment of costs.
25 September 2018: Master Gordon-Saker assesses the Respondent’s costs in the sum of £200,706.05.
8 November 2018: The Senior Courts Costs Office seals the final costs certificate.
12 November 2018: The Appellant lodges his Appellant’s Notice.
12 November 2018: Arnold J grants permission to appeal on the papers.
3 January 2019: The Respondent issues applications to set aside Arnold J’s order, or make the appeal conditional upon payment of the assessed costs.
Respondent’s Position
The Respondent’s position was that:
- An appeal must be brought within 21 days of the decision being challenged unless time is extended, and the same time limit applies for an application for permission to appeal if that is required.
- Here, the material date was not 8 November 2018, when the final costs certificate was sealed (in effect when the order was drawn up), but 25 September 2018, when the decision was pronounced by the costs judge, so the time for lodging an application expired on 15 October 2018.
The Respondent relied upon the judgments of the Court of Appeal in R (on the application of Hysaj) v Secretary of State for the Home Department [2014] EWCA Civ1633, at para [22], and McDonald v Rose [2019] EWCA Civ 4, at para [21].
- Accordingly, the application here was 28 days late.
- It followed that the Appellant needed an extension of time.
Appellant’s Position
- The Appellant conceded that an extension was needed.
- Although no formal application for an extension had been lodged, his Counsel, Mr Munro, undertook that his client would lodge an application if the extension is granted.
MR JUSTICE ROTH:
9. The approach to be adopted as regards an extension of time was considered by the Court of Appeal in the Hysaj case, to which I referred, and has now further been applied in the McDonald case. In Hysaj, the court considered three cases together in order to give guidance as to the approach. As a result, certain matters are clear: first,
whether or not an application for an extension of time formally constitutes an application for relief from sanctions, the same principles apply, that is to say the strict approach of Mitchell and Denton (see Hysaj at para.36).
The applicable principles derived from Mitchell and Denton are summarised in Hysaj at paras. 37-38. At para.37, Moore-Bick LJ stated the most relevant parts of the Mitchell guidance for these purposes as follows:
“(i) if the failure to comply with the relevant rule, practice direction or court order can properly be regarded as trivial, the court will usually grant relief provided that an application is made promptly;
(ii) if the failure is not trivial, the burden is on the defaulting party to persuade the court to grant relief;
(iii) the court will want to consider why the default occurred. If there is a good reason for it, the court will be likely to decide that relief should be granted, but merely overlooking the deadline is unlikely to constitute a good reason;
(iv) it is necessary to consider all the circumstances of the case before reaching a decision, but particular weight is to be given to the factors specifically mentioned in rule 3.9.”
10. Then as regards Denton, Moore-Bick LJ continued:
“In Denton the court affirmed the guidance given in paras 40-41 of Mitchell, but explained the approach in more detail as follows:
’24. A judge should address an application for relief from sanctions in three stages. The first stage is to identify and assess the seriousness and significance of the ‘failure to comply with any rule, practice direction or court order’ which engages rule 3.9(1). If the breach is neither serious nor significant, the court is unlikely to need to spend much time on the second and third stages. The second stage is to consider why the default occurred. The third stage is to evaluate ‘all the circumstances of the case, so as to enable [the court] to deal justly with the application including [factors (a) and (b)]’.”
11. Next, the court faced with an application for an extension should only exceptionally look at the underlying merits of the appeal. Argument relating to the underlying merits is strongly discouraged (see Hysaj at para.46). Finally, the longer the delay, the less willing ought be the court to extend time (see Hysaj at para.54).
12. Accordingly, the first question is: was the delay serious and significant? Every case is, of course, different, but some assistance can be derived from the first of the three particular cases considered by the Court of Appeal in Hysaj. There the delay was 42 days and the judgment describes that as serious in length but not significant. At para.51, Moore-Bick LJ says:
“It was certainly serious in terms of its length, but I do not think that was significant in the sense of having an effect on the proceedings”.
He goes on to explain:
“… there is no reason to think that it significantly affected the progress of the appeal in the longer term and the respondent was well aware that the judge’s decision would be challenged. I do not think that the delay in this rather unusual case was significant and since there are no other factors militating against the grant of relief, I would allow the application and extend time on this ground alone.”
13. In McDonald, 40 days’ delay was described as serious, and there also the court regarded it as significant, as the defendants (the respondents to the appeal) were individuals who had been through what the court described as “the emotionally draining experience” of the proceedings below and had been entitled to consider that they were over.
14.
Here, the delay is 28 days. As I have said, it seems to me that is on the borderline of being serious, and perhaps should be so regarded, but I do not think that it was significant. This was an appeal against a costs assessment brought against a well-established firm of solicitors. There is nothing remotely emotional about those proceedings and the substantive appeal itself is going to be very short: the hearing estimate is just one hour. There is no possible prejudice even in determining the question of an extension two weeks before the substantive appeal is due to be heard.
15. However, if the failure is not trivial, I proceed to the second and third considerations. What is the explanation? Here that is to be found in two witness statements: the first from Mr Poole, who, as I said, was the costs draftsman who represented Mr Ainsworth at the costs assessment. He says in his witness statement at para.7 [and there is to be incorporated in this judgment the text of paras.7-11 of Mr Poole’s witness statement which, to summarise, says that he did attempt to lodge a notice of appeal without the final costs certificate on 15 October, which was the last day of the 21-day period, and was told that it would be rejected without that costs certificate and that he should wait for the certificate and then file a late appeal with an application for an extension.] Of course, a representative, including a costs draftsman, should not take instructions on procedure from the court staff. But Mr Poole was told in terms that if he lodged the notice of appeal without the costs certificate, it would be rejected.
When the costs certificate was received, the time for appealing had already expired. That therefore is the application for the failure to lodge in time.
16. The next question is whether Mr Ainsworth, through his representatives, should have applied for the extension when they lodged the notice of appeal. That is addressed in the witness statement of Mr Barnes of his solicitors, who deals with what happened on 9 November after getting the costs certificate. He explains at paras. 9-10 of his witness statement that he attempted to file the appeal online but by mistake omitted the final costs certificate. He then sought to lodge the appeal with the costs certificate and an application to extend the time for appealing, but that also was rejected by the court staff on the basis that as the correct date of the costs certificate was now 8 November, no application for an extension was required. Accordingly, the application was then filed without seeking an extension.
17. The matter does not, however, end there, because Mr Ainsworth’s solicitors were informed of the correct position promptly by letter from Stewarts Law on 16 November and invited to withdraw their appeal. Clearly, they should then have sought an extension, whereas they continued to assert that the appeal was in time and it was only in counsel’s skeleton argument for this hearing that it was conceded that an extension might be needed. The question is whether that in itself is a reason to deny the grant of an extension when otherwise, in my judgment, there is a very good explanation in this case for the failure that occurred.
18. In some circumstances, I can see that such a delay might be a reason to deny the extension. However, here
I consider that there is no prejudice whatever from that particular delay in this case to Stewarts Law when the appeal hearing is still two weeks away, when they were well aware that an extension might be requested, indeed they themselves pointed out the need for it, and when the appeal hearing itself is just a one-hour appeal.
I have regard to the factors set out in rule 3.9 and I think that the evidence to which I have referred from Mr Poole and Mr Barnes is clearly sufficient to satisfy the requirement of that rule. Having regard to the need for efficiency and proportionate conduct of litigation, and the way in which Mr Ainsworth’s representatives sought to engage with the court in dealing with the appeal, I consider that it is clearly appropriate to grant the extension. I will therefore give an extension of time for the lodging of the appeal to 12 November 2018, upon the undertaking of Mr Ainsworth by his counsel to issue an application for an extension of time.
19. I turn, therefore, to the second head of the application. This requests that there be imposed on the permission to appeal ordered by Arnold J a condition, i.e. that Mr Ainsworth pay the full balance owing of some £100,000 to Stewarts Law within seven days. The application, as I have said, is made under rule 52.18, which states, in material part,
“(1) The appeal court may …..
(c) impose or vary conditions upon which an appeal may be brought.
(2) The court will only exercise its powers under paragraph (1) where there is a compelling reason for doing so.”
20. I was taken to the Court of Appeal decision of Hammond Suddard v Agrichem [2001] EWCA Civ 2065. There, Clarke LJ (as he then was) set out at para. [40] the two questions that must be considered under what was then CPR 52.9, corresponding to what is now r.52.18:
“The first is whether there is in the instant case a compelling reason for making the continued prosecution of the appellant’s appeal conditional upon the payment into court [that being the application in that case] of the judgment debt and costs … and the second is whether the court should exercise its discretion to make the order.”
21. More recently, the authorities on what constitutes a compelling reason were considered by Christopher Clarke LJ, sitting as a single Lord Justice in the Merchant International case [2016] EWCA Civ 710, as referred to in the note at 52.18.4 of the White Book. In that case, what was sought was security for a costs order in the very substantial sum of US$24.7 million, being the unpaid judgment debt and interest and unpaid costs, and the estimated cost of the appeal. Christopher Clarke LJ said, having reviewed the authorities, that five matters were clear and expressed the opinion that a sixth could be added to them:
“(a) The essential question is whether or not there is a compelling reason to make payment (of what was there ordered) a condition for further pursuit of the appeal;
(b) whether there is a compelling reason, is a value judgment to be made on the particular facts of the case under consideration;
(c) the fact that a judgment has been entered against the appellant and no stay has been sought or granted does not mean that, as a matter of course, compliance with the judgment should be made a condition of appeal nor does it, alone, afford a compelling reason for a security payment order;
(d) on the contrary, the power of rule 52.18 was not designed to be no more than an alternative means of securing enforcement and is only to be exercised with caution;
(e) whilst every case depends on its particular facts the court is likely to find there to be a compelling reason to make a security payment order which has that effect if the judgment debtor has in the past … or is likely in the future … to take steps to denude itself of assets or to put its assets beyond the reach of normal enforcement processes;
(f) there may be a compelling reason to make a security payment order even if it is not established the appellant has acted as in (e). This may be the case if there are considerable practical difficulties in effecting execution”.
22. It is clear that the court should not make such an order if it would stifle the appeal. That particular aspect received detailed consideration by the Supreme Court in Goldtrail Travel Ltd v Onur Air [2017] UKSC 57, where the approach set out by Clarke LJ in the Hammond Suddard case was approved. At para.15 of the majority judgment, Lord Wilson said:
“There is no doubt – indeed it is agreed – that, if the proposed condition is otherwise appropriate, the objection that it would stifle the continuation of the appeal represents a contention which needs to be established by the appellant and indeed, although it is hypothetical, to be established on the balance of probabilities: for the respondent to the appeal can hardly be expected to establish matters relating to the reality of the appellant’s financial situation of which he probably knows little.”
He then continued:
“16. But, for all practical purposes, courts can proceed on the basis that, were it to be established that it would probably stifle the appeal, the condition should not be imposed.
17. It is clear that, even when the appellant appears to have no realisable assets of its own with which to satisfy it, a condition for payment will not stifle its appeal if it can raise the required sum. As Brandon LJ said in the Court of Appeal in the Yorke Motors case, cited with approval by Lord Diplock:
“The fact that the man has no capital of his own does not mean that he cannot raise any capital; he may have friends, he may have business associates, he may have relatives, all of whom can help him in his hour of need.””
23. The first question, therefore, is whether there is a compelling reason here. The relevant factors, as it seems to me, are, first, that a stay was applied for by Mr Ainsworth but refused. That counts somewhat in favour of the application although, as Christopher Clarke LJ pointed out, it is not a powerful factor. Secondly, that payment of half the total sum assessed was made prior to the assessment. I do not place much weight on the first £49,000, which was paid while Stewarts Law were acting for Mr Ainsworth, but I do regard it notable that a further £50,000 was paid before the actual assessment took place without Stewarts Law having to proceed to obtain an order to that effect. Thirdly, Mr Ainsworth is not resident in the UK (I am told that he is Australian) and in family proceedings, to which I have been referred and which are indeed the proceedings in which Stewarts Law were at one time acting for Mr Ainsworth, he was found to have been dishonest and evasive regarding his assets. That inevitably counts strongly against him but, at the same time, there is no evidence that he would deliberately seek to put his assets out of the way of enforcement of the debt created by his liability for costs.
24. Next, he says, through his solicitors, that he does not have the funds immediately to make this payment. It is relevant to see exactly how that is expressed in the witness statement of Mr Barnes at para.14,
“I am advised by the claimant that he is not in the position to pay the balance owed under the final costs certificate until after the date of the appeal, as he does not have available funds to make such a payment”.
Mr Dunne comments on behalf of Stewarts Law, with some force, that this is a very weak assertion, wholly unsupported, given that Mr Ainsworth is, on the clear evidence of the family proceedings, a very wealthy individual.
25. Next, the appeal is due to be heard in just two weeks from now. I am told that the maximum amount at stake in the appeal is £62,000, or thereabouts, and there is very likely to be some element of that sum that may be found owing if the constituent elements are reassessed as Mr Ainsworth seeks. If Mr Ainsworth is unsuccessful in the appeal, then Stewarts Law will be left seeking to recover the costs of the appeal. But Mr Munro relies on a further factor: he points out that there is clear authority that an application to impose conditions under rule 52.18 should be made promptly. I have been referred to the decision of the Court of Appeal in what for brevity has been referred to as the Okta case [2003] EWCA Civ 617. There, Clarke LJ (as he then was), gave the main judgment and set out the approach by reference to the submissions by counsel for the appellant at paras. 7-9,
“7. Mr Lightman submits that it is incumbent on a respondent to an appeal seeking an order under CPR Part 52.9 to do so as soon as practicable. He draws attention to the strict time limits for the prosecution of appeals. An appellant, if not granted permission to appeal by the court below, must ordinarily file an appellant’s notice within 14 days [that then being the time limit].
8. There are a number of other time limits in connection with the appeal process. It is, however, right to say that CPR Part 52.9 does not lay down any specific timetable for a respondent to make an application under that rule. Mr Lightman submits, however, that a respondent should do so as soon as practicable and within a short period of time commensurate with the timetable laid down by Part 52. He submits that a reasonable time should not exceed 14 days and that any application made more than 14 days after the respondent has been served with the appellant’s notice should only be entertained if the court is satisfied that the respondent has provided a cogent explanation for the lateness of the application and the delay has caused the appellant no prejudice.
9. Finally, Mr Lightman made these submissions: (1) an application under CPR Part 52.9 should only be made if properly formulated and thought out at the time the application is issued; (2) a respondent should not be permitted to file and serve a pro forma application under Part 52.9 and subsequently to seek to maintain the application on a different or contradictory basis; (3) an application intended to shut out an appeal ought to proceed with urgency, in particular, where the appellant is likely to proceed on the basis that the appeal would proceed in the interim. An appellant should not be put in a position where he proceeds in the preparation of an appeal on the footing that permission to appeal has been granted unconditionally by the Lord Justice but is subsequently made subject to onerous conditions on the basis of an application made in a dilatory manner or reformulated after the application is made”.
Clarke J continued:
“10. For my part, subject to one overriding consideration, I would accept those submissions. It is to my mind of considerable importance that in the rare cases in which it is appropriate to make an application, an application to set aside the grant of permission to appeal, or to impose conditions on the grant of permission, should be made promptly, otherwise there may be significant costs, all to no avail. Once permission to appeal has been granted, the court does its best to provide hearing dates for appeal. It tries to conduct its business fairly to the benefit of litigants generally. That business is likely to be interrupted if applications to set aside or to impose conditions on the permission granted are not made promptly.
11. The overriding consideration to which I have referred is the overriding objective of the CPR, namely that applications should be disposed of justly or fairly. There may be considerations of justice which lead to a different approach on the facts of a particular case. Such circumstances are to my mind however likely to be rare”.
26. Here, Stewarts Law wrote to Mr Ainsworth’s solicitors as part of the correspondence concerning the filing of the notice of appeal on 16 November and then again on 22 and 30 November, and in their letter of 30 November, they stated:
“We are now preparing an application to the court for an appropriate order relating to your client’s failure to pay the sums owed to this firm. You will be served in due course”.
27. However, it was not until 3 January 2019 that the application was in fact issued. A whole month, therefore, had gone by.
In my judgment, particularly coming from experienced litigation solicitors who were, for their part, complaining about late conduct by the other party, that is clearly not an application that could be described as being made promptly. Moreover, it has had the effect that the appeal is now listed to be heard in 13 or 14 days’ time, meaning that the court is left considering the proposition of making an order for payment of what, even for a wealthy individual, is a substantial sum of money within seven days. Any later period would effectively be futile, yet normally an order of this kind would allow the party subject to the order 14 days to pay.
28. While I do not find the evidence filed on behalf of Mr Ainsworth very powerful, it is quite reasonable to say that it would be onerous for an individual to have to raise that sum of money within such a short time. I do not go as far as to say that making an order would necessarily stifle the appeal but having regard to the history that I have described, the likely costs of the short appeal itself and any adverse effect that may be suffered by Stewarts Law at this stage if such an order was not made, I am not persuaded that there is a compelling reason in this case for imposing such a condition. Accordingly, the application by Stewarts Law is dismissed.
Toby Moreton
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