Costs News

19 August 2020
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Claimant debarred from detailed assessment over failure to pay costs on account

The courts have shown they will not tolerate breaches of orders and unreasonable delays relating to costs assessment, costs firm A&M Bacon has said following a case it acted on in the SCCO.

Master Nagalingam rejected an application for relief from sanction in Bhandal v The Commissioners for HMRC from a claimant who failed to comply with the terms of a consent order – agreed in lieu of an application for an unless order – which required him to pay £150,000 on account of costs that had been owing since 2015 by a specified date or be debarred from the detailed assessment proceedings. A&M Bacon acted for the defendant.

Master Nagalingam noted that, had HMRC’s application come before him, he “would have had no hesitation in allowing the claimant no more than 14 days to make the outstanding payments”.

As well as relief, the claimant sought a variation or stay of the consent order on the basis that there was an intended private prosecution against a former HMRC officer which, if successful, would mean it was inappropriate and disproportionate for the assessment to take place beforehand.

The claimant sought to rely on Riordan v Moon Beaver [2018] EWHC 1452 (QB), and argued that the intended private prosecution was a material change that meant relief should be granted and the assessment proceedings stayed.

The master found for the defendant, noting that “the claimant seeks relief on terms that he be permitted to continue to effectively ignore the orders requiring costs payments to be made to the defendant and regardless of whether the detailed assessment proceedings are stayed or not”.

He distinguished Riordan on several grounds, such as the application there being made before any breach occurred, while there was also permission to apply in that case as the sanction for non-payment meant an end to the assessment proceedings. 

Here, seeking to debar the claimant – rather than strike out the points of dispute or otherwise lock the claimant out of the detailed assessment process altogether – was “a measured sanction”. The claimant had put in points of dispute and the court would take these into account.

The breach was serious and significant – “the claimant has for several years wilfully ignored orders requiring him to make costs payments” – and the application for a stay did not excuse the breach of the consent order.

There was, by the claimant’s own admission, no good reason for the breach and, having considered all the circumstances, Master Nagalingam was satisfied relief should not be granted.

The stay application was refused for various reasons, with the judge noting that the defendant has already been deprived of its monies for over five years. There was also no risk of the claimant not being able to recover from HMRC were he to secure a successful private prosecution followed by a successful compensation claim or second appeal.

The judge also held that the court would not “second guess” the outcome of any private prosecution without sight of convincing evidence, while there was no material change in circumstances.

“The judgment showing the courts will not tolerate breaches of orders and unreasonable delays upon assessment – being crucial for a receiving party’s cash flow,” said A&M Bacon.

Withers acted for the claimant.

 

Picture credit: jam_90s (cropped, Attribution 2.0 Generic (CC BY 2.0))

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