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When can detailed assessment proceedings be commenced?

View profile for Janina Muromceva
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Lord Justice David Richards in Khaira and others v Shergill and others [2017] EWCA Civ 1687 was tasked with making a ruling on whether a party who was awarded costs of an interlocutory appeal could seek an immediate assessment of those costs without Court specifically making an order that costs would be assessed ‘forthwith’.

By way of introduction the underlying dispute related to the trusteeship and governance of two Sikh Gurdwaras. The claimants (the respondents in this appeal) issued Court proceedings in 2008. The defendants made an application seeking an order to stay or strike out the claim on the basis that the issues raised by the claimants were not justiciable.

The defendants’ application was heard in September 2011 by HH Judge Cooke sitting in the Chancery Division where it was dismissed. The defendants were ordered to pay the claimants' costs, which he summarily assessed. Subsequently an appeal was lodged with the Court of Appeal where the decision from the Chancery Division was overturned and the claimants’ claim was struck out. On a further appeal, the Supreme Court reversed the decision made by the Court of Appeal and reinstated the decision from the Chancery Division. The Supreme Court also dealt with an issue of costs arising from the appeals in the Court of Appeal and the Supreme Court; the defendants were ordered to pay the claimants’ costs incurred in relation to both of the appeals.

In August 2015 the claimants served a notice of commencement in relation to their costs incurred in the Court of Appeal. This resulted in the defendants making an application for an order setting aside the claimants' notice of commencement. The defendants argued that the claimants were not entitled to commence detailed assessment proceedings (for costs incurred in relation to the interlocutory appeal in the Court of Appeal) given that proceedings were not concluded and the order for costs made by the Court of Appeal (and by the Supreme Court) did not contain the provision for costs to be assessed "forthwith". The defendants' application was dismissed on the basis that the appeal heard by the Court of Appeal constituted separate proceedings and that it had ‘concluded’ with the order of the Supreme Court.

The matter came before Lord Justice David Richards sitting in the Court of Appeal. The main issue to be considered related to the meaning of "proceedings" as the claimant’s entitlement to commence detailed assessment was dependant on whether or not “proceedings had been concluded” pursuant to CPR 47.1 and accompanying Practice Direction.

To start with it was noted that relevant provisions of the Supreme Court Rules 2009 did not apply to the costs incurred in the Court of Appeal and therefore the main focus was on the Civil Procedure Rules and Practice Directions that provided the following:

“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”

and

“<…> proceedings are concluded when the court has finally determined the matters in issue in the claim, whether or not there is an appeal.” 

In light of the above and the authorities drawn to LJ Richards’ attention (Hawksford; Pelvin and Masson Templier & Co) it was concluded that the claimants were not automatically entitled to commence detailed assessment of costs of an interlocutory appeal and that an order of the Court for an immediate assessment was required. As a result an order setting aside the claimants’ notice of commencement was made in favour of the defendant.

In addition it was decided that if the appellate Court had not made a forthwith order, then a costs judge did not have the jurisdiction to make one.

Here at Paragon, we have recently been asked to advise on whether a detailed assessment process in order to recover a third party’s costs incurred on an application could be commenced, where the order for costs did not have express provision for costs to be assessed “forthwith” and the main action was not yet concluded. Although the above case relates to costs incurred on an appeal, it does demonstrate how this decision may apply more broadly and could be used by a paying party seeking an order to set aside a notice of commencement served in relation to the costs of an application. In my view it would be extremely difficult for the receiving party to argue that an application did not form part of proceedings that have not yet concluded.  The solution to the problem is pre-emptive; a receiving party needs to ask the Court to order for costs to be assessed immediately or forthwith at the time of the making of the order if this is what they desire.

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