Mainwaring v Goldtech Investments Ltd (No 2)

A failure to serve a bill of costs on a party entitled to be heard is an irregularity, but it may justify disallowance where the default is serious. The power to make such order as the taxing officer thinks fit does not itself extinguish a party’s liability or create a separate taxation. Where parties are jointly and severally liable and there is one bill of costs, complete disallowance against one paying party cannot be combined with continued liability of the other. The rules do not permit a half-way outcome preserving liability for a whole or reduced sum. The taxing officer must consider all the circumstances, and total disallowance will ordinarily be reserved for an extreme case.

Ms Mainwaring appealed from an order of Robert Walker J in the Chancery Division concerning taxation of costs awarded against her and Mr Lisle jointly and severally. The respondents’ solicitors had failed for several years to serve Mr Lisle with the bill of costs, although he was entitled to be heard. The judge set aside the taxation proceedings and certificates against Mr Lisle alone, while reissuing certificates naming Ms Mainwaring as the only paying party. The litigation history included an earlier judgment reported at [1997] 4 All ER 467, but the issues decided there were not before the Court. The central issue was whether Order 62 permitted liability to be preserved against one joint debtor after costs had been wholly disallowed against the other.

1. Appeal allowed unanimously. The taxing certificates were ordered to be reissued showing nil costs on both bills. Costs were awarded here and below, and leave to appeal to the House of Lords was refused.
2. Pill LJ held that Order 62 rule 30(5) had to be read with the words requiring the taxing officer to exercise powers under the Order. It did not itself extinguish a party’s liability or permanently prevent further taxation. Mummery LJ and Gibson LJ agreed that setting aside proceedings alone could leave a further taxation possible.
3. The failure to serve the bill on Mr Lisle was a failure to conduct taxation in accordance with Order 62 and justified the exercise of the disallowance power in rule 28(4). The power operated on a single bill of costs. Once the whole bill was disallowed against one jointly liable paying party, the other party could not remain liable for the whole or a reduced amount. The rules provided no half-way solution.
4. Pill LJ relied additionally on the common-law rule that discharge of one joint debtor ordinarily releases the other, subject to an agreement reserving rights against the remaining debtor. No such agreement had been made. His analysis was that, where costs were ordered to be taxed if not agreed, nil taxation meant that the joint costs debt ceased to exist. Gibson LJ emphasised the resulting uncertainty and potential injustice concerning contribution; Mummery LJ reached the same operative conclusion from the single-bill scheme.
5. Pill LJ observed that complete disallowance would be appropriate only in an extreme case. In multi-party litigation, the obligation to serve every party entitled to be heard remained, but the taxing officer had to consider all the circumstances and would usually adopt a less drastic course.

1. Court of Appeal (Civil Division): On 30 October 1998, the court allowed the appeal and ordered the certificates to be reissued showing nil costs on both bills: [1998] EWCA Civ 1653.
2. Chancery Division: Robert Walker J, following judgments on 26 March and 9 May 1997, set aside the taxation proceedings and certificates against Mr Lisle alone and reissued the certificates leaving Ms Mainwaring as the only paying party.