26 May 2022

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High Court upholds costs judge’s decision to refuse points of dispute addition

Mrs Justice Foster agrees with Master Campbell that paying party was “simply too late” as it had notice of issue a year earlier

The decision of a costs judge to refuse a paying party permission to amend its points of dispute (PoDs) because it had known about the issue it wanted to raise for more than a year has been upheld by the High Court.

Mrs Justice Foster, sitting with Master Whalan as assessor, said it was a “simple” case where the advisers to the paying party had “overlooked the striking detail” about the conditional fee agreement (CFA) the receiving party’s solicitors were working under.

Celtic Bioenergy Ltd v Knowles Ltd [2022] EWHC 1223 (QB) concerned a long-running construction dispute in which the claimant was successful and, in 2017, awarded costs of £168,000.

In January 2019, as part of an ultimately unsuccessful application for indemnity costs, the claimant’s solicitors outlined certain details of their retainer, including that it was a discounted CFA. They explained that it provided for 'success' in the event that “the client receives from the opposing party the sum of or a sum in excess of £250,000 in payment in aggregate of the costs incurred or to be incurred by the client”.

In July 2019, the claimant served a (late) notice of commencement and a bill of costs. The bill narrative referred to the fact of the CFA but did not repeat the detail that had been revealed in January.

On 6 September, the defendant filed “holding” PoDs, to which the claimant replied on 25 September. Two days later, the defendant served “detailed” PoDs, which made no mention of any point arising under the CFA. In October, the claimant requested a detailed assessment hearing, which was set down for February 2020.

A month before the hearing, the defendant served a further document entitled ‘supplementary points of dispute’, which raised a new point centred on the CFA. It queried whether the indemnity principle had been complied with, questioning what the defendant said was the apparent circularity of the definition of success in the CFA.

At the detailed assessment before Master Campbell, the claimant submitted that the operative PoDs were the first to be served and objected to the second and third iterations. The master ruled that the second PoDs, but not the third, should be admitted.

He said: “The points which weigh with me are that as long ago as January 2019 the defendant was put on enquiry as to the nature of the funding arrangement between the receiving party and its solicitors, but it took a whole year for that to gravitate into a supplemental point of dispute. There was then a second bite of the cherry when that point could have been taken which was when the bill was served, which states plainly in terms that there was a conditional fee agreement.”

It was, Master Campbell concluded, “simply too late”. He went on: “The point was there for the taking months ago. To raise it within a few weeks or less than a month of the hearing, with no application being made before today when it was clear that the claimant was objecting, and giving, in my view, the receiving party inadequate notice of it, inevitably will require today's hearing to be adjourned. That is not in my view a just outcome. Therefore for those reasons the application fails.”

Foster J found no reason to overturn the decision. The master considered all the arguments raised “and his decision evinces no error of principle nor mistake that could found a successful appeal”.

She said: “I do not accept, as was sought to be said at one point by the paying party that there is a presumption under the rules that documents will be accepted, no matter how late nor how many new points they raise. The rules, understandably, give a wide discretion to the costs judge to decide, in all the circumstances of the case, whether it is in furtherance of the overriding objective, namely, to decide cases justly, that the particular document ought to be received.

“It cannot be gainsaid that there will come a time when it is using the words of the master, ‘just too late’. It cannot be characterised as perverse or otherwise unlawful for the master to have come to that conclusion in this case for the reasons he gave in his judgment.”

Foster J concluded that the case was “in essence a simple one”. She said: “The advisers to the paying party overlooked the striking detail contained in the January 2019 communication – which itself referred to costs. It had been presented in a long-running dispute between the parties, many strands of which were concerned with the payment of costs, and it cannot possibly be said the material was in some way obscurely presented, concealed or unavailable.

“It is nothing to the point that the narrative information did not descend to detail many months later. As the exchanges with the master reveal, it was put to the paying party that it was always open to them to raise a point on it if they wished, since the CFA was mentioned in the narrative.”

The judge acknowledged that the possible circularity of the CFA might be a point of “some depth and interest”, but this was only one element in the balance – it did not “compel an adjournment and mandate the opportunity to argue the point on another day”.

Foster J said Master Whalan agreed with her reasoning and conclusion.

Andrew Lyons (instructed by DAC Beachcroft) for the claimant. Dr Mark Friston (instructed by Isca Legal) for the defendant