Francis Kendall reports on a case that highlights the importance of applying for time extensions
In Masten v London Britannia Hotel Ltd [2020] EWHC B31 (Costs) the claimant had settled his personal injury claim on 2 August 2019 for $450,000 (around £332,000) with provision for the defendant to pay costs and £100,000 ordered as a payment on account.
The claimant served a notice of commencement and a bill of costs on 3 January 2020, just over two months outside the period provided for by CPR 47.7. On 16 January 2020, the parties agreed a 21-day extension of time for service of points of dispute to 14 February 2020. This reflects a pragmatic, but unwritten, rule in detailed assessment that any extensions on the timelines are arguably reasonable if they are in proportion (with the bill and the disputes to be served at approximately twice the prescribed period).
Thereafter there were admitted “failures” on the part of the defendant paying party and, although a further extension was agreed to the end of February 2020, the claimant applied for a Default Costs Certificate (“DCC”) in early March 2020 when points of dispute were not served. It took over three months for the DCC to be processed and it was issued, in the sum of the full costs claim at £364,000, on 16 June 2020.
An application to set aside the DCC was issued electronically (after significant difficulties with filing, that were judged not to be the paying party’s fault). It was finally filed on 26 August (nearly six weeks after first trying).
That application was heard by Master Leonard, and dismissed, with some stark warnings contained in his judgment. Master Leonard said this was a case where “the consequences of negligence must be borne by the negligent party”. The evidence in support (from the paying party) covered pretty much the nap hand of all you would expect in this exceptional period to include: working from home with children at home; an overworked small practice; and COVID restrictions on access to the office/papers.
Although not an application for relief from sanctions Master Leonard used the Denton criteria as they provided “essential guidance” on the application of the key provisions in the overriding objective.
The killer blow was that “between mid-February and mid-March 2020 when lockdown started, it was allowed to drift into default without any effective action being taken either to avoid default or to remedy it at the earliest possible time.”
Any application for a further extension, made in advance of obtaining the DCC, would most likely have only been heard by the summer at the earliest (with the “rubber stamping” of a DCC taking until mid-June 2020) allowing significantly more time to prepare the points of dispute regardless.
Such an application would probably have been successful, the master said. “More to the point, it would have put the matter in the hands of the court, rather than accepting default, and in consequence the likely issue of a DCC, as a fait accompli.”
Master Leonard said his decision would almost certainly result in the claimant recovering more than would have been the case had there been a detailed assessment, but that was not necessarily a decisive factor.
So, we have a recovery for the claimant in costs of £364,000 when that was likely to be reduced by somewhere between £50,000 and £100,000 on any line-by-line assessment (possibly more, particularly if proportionality was to be considered). The defendant, or more likely their insurers, are on the hook for that difference and that is something that can, quite justifiably, be levied against their legal representatives and, again, more likely their insurers.
Ironically, the points of dispute prepared by the negligent party will be used in justification of the level of vindication to which the defendant is entitled as a result of that negligence. Based on the facts relied upon I very much doubt the legal representatives can defend such a claim in principle and the quantum (the difference between the amount of the DCC and a likely recovery on any detailed assessment) is evidenced by their own work!
The lesson is simple with Master Leonard being clear – never let yourself get into a procedurally vulnerable situation where there is at least one clear alternative. He suggested a simple application for an extension of time which, if evidenced to the lengths the defendant’s costs lawyer had to prepare to seek to set aside the DCC, would most likely have succeeded. Such an approach would also have (most likely) bought a significant amount of time to prepare points of dispute.
Two further solutions exist in my opinion. When it comes to issuing such an application it is usually simpler to get the points of dispute prepared in the first place. I, or someone like me, would have happily taken the instruction on a short timeframe as a consultant if the instructed firm are unable to service within any deadline due to circumstances.
Finally, the making of a reasonable offer can similarly buy time in the assessment process. Showing a real willingness to settle at a reasonable level is likely to inspire the opponent into agreeing any extension whilst it is properly considered (to include considering the risk of the receiving party having to pay reasonable costs of the preparation of the points of dispute if the offer proves to be effective and that work is undertaken thereafter).
Francis Kendall is vice-chair of the Association of Costs Lawyers and director and Costs Lawyer at Kain Knight (City)
This article appeared in Ligitation Funding – April 2021