Aaron v Shelton

A party who seeks to rely on an opponent’s conduct to reduce liability for costs should raise the matter before the judge making the costs order, where that judge is able to deal with it. If the party fails to do so, it will generally be an abuse of process to raise the same matter before the costs judge under the assessment rules. A consent order should expressly reserve the issue or reflect the proposed limitation. The restriction does not apply where no earlier opportunity to raise the conduct existed. The costs judge may nevertheless examine the reasonableness of particular costs items, such as trial bundles, where that issue remains properly open.

The appellant had brought proceedings against the respondent arising from the respondent’s conduct in earlier property litigation. The action was dismissed by consent during trial, with the appellant agreeing to pay the respondent’s costs on an indemnity basis, subject to detailed assessment.

During the assessment, the appellant sought to rely on matters concerning the respondent’s authority, affidavit and execution of an assignment, as well as the preparation of trial bundles and the costs of the final day of trial. Master Simons refused to reopen the conduct issues and made related rulings concerning the bundles and final-day costs. The appeal concerned when conduct may be raised to reduce costs payable under an existing costs order.

1. Appeal dismissed. The appellant could not rely at detailed assessment on conduct matters which should have been raised before the judge making the costs order.

2. Under CPR 44.3, a party who considers that the opponent’s conduct should affect the costs order should apply to the judge deciding what costs order to make. This is particularly appropriate where that judge heard the relevant evidence or submissions. If the party does not raise the matter, it cannot ordinarily rely on it under CPR 44.5 to reduce costs which the existing order otherwise requires it to pay.

3. Where the order is made by consent, the paying party may protect its position by seeking a provision limiting the costs payable or referring the conduct issue to the costs judge. A party who fails to do so risks being held to have raised before the costs judge an issue which should have been raised earlier. That is an abuse of the court’s process. The reasoning was supported by the wider abuse-of-process principle discussed in Yat Tung Investment v Dao Heng Bank [1975] A.C. 581, and by the approach in Henderson v Henderson (1843) 3 Hare 100.

4. The principle does not apply where the conduct could not previously have been raised. Burrows v Vauxhall Motors Limited [1998] PIQR 48 illustrated such a case: the relevant opportunity arose only at taxation. Here, however, the matters relied on were central to the appellant’s claim and could plainly have been raised before the consent order was made.

5. The ruling concerning trial bundles was upheld. In light of the findings about the inadequacy of the appellant’s bundles, it was reasonable for the respondent’s advisers to prepare their own bundles. The costs judge was entitled to leave open only ordinary questions about the contents and duplication of documents. The objection to the costs of the final trial day was abandoned and, in any event, the order expressly included those costs.

1. High Court (Queen’s Bench Division): appeal from rulings of Master Simons made on 28 October 2003 during detailed assessment. The appeal was dismissed.