22 April 2022


High Court upholds order to pay respondents’ costs after relief application

Master’s ruling was the “usual” one in such circumstances, says judge

A High Court judge has rejected an appeal against a costs judge’s decision that a party which successfully applied to set aside a default costs certificate should have to pay the other side’s costs of the application.

Mr Justice Marcus Smith made clear that the usual costs order in such cases was that the applicant should pay the respondent’s costs.

The respondents in Swivel UK Ltd v Tecnolumen GmbH & Anor [2022] EWHC 825 (Ch) (the claimants in the underlying proceedings) obtained a default costs certificate for £90,000 after the appellant failed to meet the deadline for filing points of dispute – this was due to its solicitor suffering a close family bereavement.

Master Whalan granted relief from sanction, setting the certificate aside and moving towards a detailed assessment. He ordered the appellant to pay the respondents costs of £10,000 for the application.

Both this and the respondents’ application for an interim costs payment (which was granted in the sum of £40,000) were resisted.

Marcus Smith J said: “In a matter so discretionary as costs, there can be no hard and fast general rule, but it seems to me that that is the approach that should inform a judge in hearing such applications. Rules exist for a reason, and the relief from sanctions jurisdiction exists both to buttress those rules and to ensure that overall justice is done in those cases where the rules are breached.

“A party is perfectly entitled to oppose an application for relief from sanctions – and the court will often be assisted by such opposition, where it is considered, proportionate and not opportunistic. In such cases, in general terms, the costs so incurred by the respondent ought, in the usual case, be paid for by the party seeking relief, even if relief is granted in the face of the respondent's resistance.”

That is what the master did here and Marcus Smith J rejected the contention that the decision was so wrong that it must be set aside. The appellant argued that in the particular circumstances of the case, the respondents acted unreasonably in failing to accede to the application for relief.

The judge acknowledged that the Court of Appeal in Denton had warned against inappropriate resistance to applications for relief. But he continued that, while the court expected parties to cooperate in the due administration of justice "to an extent", there was “a self-evident limit to this proposition, in that the system by which courts in this jurisdiction do justice is fundamentally adversarial”.

“To that extent, cooperation has got to be limited by what each advocate needs to do in order to advance, but advance properly, the case of the client instructing him or her. So there is, inevitably, a tension between the need to apply for relief from sanctions, because the rules of court matter, and the circumstances in which that application will be granted and the usual costs regime varied.

“It seems to me clear and important that I underline that there is no immediate and inextricable correlation between succeeding in an application for relief from sanction and the party so applying getting his or her costs from the opposing side.

“The usual rule is quite the opposite: there must be something particular to vary the usual rule as to incidence of costs and to bring the case within [41] of Denton. That should occur where the opposition to the application for relief from sanction is sufficiently unreasonable that it needs to be marked by an order for costs going in the opposite to the usual direction.”

Marcus Smith J recorded that the master had considered the default to be serious and found “no impropriety at all” in the respondents’ conduct.

“The master took the view that although the bereavement was unfortunate, and although the conduct of the respondents' solicitors may have been ‘hardball’, these were not matters that took this case into the ‘no-brainer’ category [not to oppose the application]. It seems to me that the master took a balanced and appropriate view to the questions before him and reached conclusions on those facts that he was entitled to reach.”

The judge added that it was “unsurprising” that, in an ex tempore ruling, the master had not given detailed reasons for making what was the “usual” order.

Andrew Lyons appeared for the appellant, Rupert Cohen for the respondents.