Articles
WHO PAYS? - DEFAULT COSTS CERTIFICATE AND RELIEF FROM SANCTIONS
Wednesday 6th July 2022
Daniel Jones
Utilising the Relief from Sanctions procedure, set out at CPR 3.9, can be a useful tool for practitioners when slippage of directions occurs or deadlines are missed during the course of litigation, however a conundrum is sometimes presented, to a Respondent, as to whether they should acquiesce to any Application or elect to take a more robust stance and risk costs penalties.
The recent decision in SWIVEL v TECNOLUMEN [2022] EWHC 825 provides further guidance on this.
The case concerned an appeal against a Relief from Sanctions Costs Order made by Master Whalan, wherein the Master set aside a Default Costs Certificate against the Paying Party/Appellant (SWIVEL), granted an interim payment to be made to Receiving Party/Respondent (TECNOLUMEN) and, finally, ordered that the Paying Party do pay the Receiving Party's costs "of said applications".
The origin of the Relief from Sanctions Application, was that the Paying Party had failed to serve Points of Dispute by the requisite date and, accordingly, the Receiving Party had applied for and was granted a Default Costs Certificate.
It should be noted that the Paying Party, due to a close family bereavement, had requested a 14-day extension for service of their Points of Dispute. The Receiving Party Solicitors had acknowledged receipt of the request, and had advised that instructions would be sought. No confirmation was forthcoming, despite the Paying Party seeking clarification, and a Default Costs Certificate was, thereafter, applied for without any further recourse.
An Application to set aside the Default Costs Certificate was filed by the Paying Party, and the Master was of the view that as the Application was a case of Relief from Sanctions, the appropriate test he had to apply was the well-established Denton test. The Application was opposed by the Receiving Party.
Ultimately the Default Costs Certificate was set aside, however the question of who should pay the costs of the Application remained a contentious issue and formed the basis of the Appeal.
The Appeal was placed before Mr Justice Marcus Smith, who noted that his task would be to determine whether Master Whalan had erred in the making of his costs order. The Paying Party was of the opinion that the Receiving Party had acted wholly unreasonably in failing to accede to the extension request and further averred that the DCC had been obtained under very particular circumstances which rendered opposition to the Application unreasonable.
Upon consideration of the matter and following submissions, Master Whalan's decision in respect of costs was upheld. Marcus Smith J was of the view that the decision was entirely in line with what one would expect. The Application for Relief from Sanctions was not unreasonably opposed and the Master had not erred in his costs decision.
Mr Justice Marcus Smith's comments at paragraphs 13, 14 & 15 are of particular note:-
_"13. ...........as a matter of general principle a party that must apply to court for relief from sanction, including where a judgment in default or order in default has been obtained, is the party who ought to bear his or her own costs of that application.
14. It may be that the rule in many cases goes further than that, so that in addition to bearing his or her own costs, the party applying for relief from sanction needs also to bear the costs of the party resisting that application, even where relief from sanction is granted. (The point is clear if the application for relief from sanction fails.)
15. 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."_
The Judgement should hopefully assist Litigators when deciding whether to acquiesce to an opponent's Relief from Sanctions Application and should also lessen their concerns relating to the risk of potential costs sanctions.
Smart Legal Costs are extremely experienced in dealing with all types of costs issues. For more information on how we can help, please find out more please feel free to contact me or use the chat box. We have a range of service, such as preparing Bills of Costs and Costs Budgets .