Days Healthcare UK Ltd v Pihsiang Machinery Manufacturing Co Ltd & Ors

A court may use its inherent jurisdiction to control its own processes, together with the broad case-management powers in the Civil Procedure Rules 1998, to make participation in a detailed costs assessment conditional on payment of an ordered interim sum.

Where a party is in contempt for disobeying an order directly related to the assessment and seeks to use the process without intending to abide by its result, debarring further participation may be justified. The court should nevertheless consider properly served points of dispute and require a genuine assessment, rather than automatically issue a costs certificate for the amount claimed. Security in foreign enforcement proceedings does not remove the English court’s power to sanction defiance of its orders.

The claimant, Days Healthcare UK Ltd, had obtained judgment for damages and costs against the defendants following a claim concerning repudiation of a distribution agreement. An interim payment of £2 million was ordered on account of costs, but the defendants refused to pay and were found in contempt in related enforcement proceedings.

Costs Judge Wright refused permission to appeal from a decision concerning the detailed assessment, treating it as case management and expressing doubt about the jurisdiction to bar the defendants from participating. The claimant sought to adduce further evidence and permission to appeal. The central issue was whether the court could impose a conditional debarring sanction while preserving a proper assessment of the costs.

1. The application to adduce further evidence was allowed. The evidence concerning enforcement proceedings in Taiwan was materially relevant, largely incontrovertible, and had been answered by the defendants.

2. Under Civil Procedure Rules 1998 rule 52.11, the appeal was ordinarily a review. The Costs Judge’s decision was wrong because it proceeded on an erroneous view of jurisdiction and placed undue emphasis on enforcement in Taiwan. The decision could not properly be insulated as a case-management decision given the consequences at stake.

3. The court had inherent jurisdiction to control its own processes. That jurisdiction was expressly preserved by CPR Part 3.1(1). The general case-management power in Part 3.1(3)(a) was sufficiently broad to permit an order subject to a condition requiring payment of money. It was not confined to conditions attached to a direction then being sought.

4. The defendants’ contempt, arising from failure to comply with an order directly connected with the costs assessment, provided a further proper basis for debarring them from participation. The circumstances were distinguishable from those considered in Motorola Credit Corporation v Uzan [2003] EWCA Civ 752, but the general power to prevent a contemnor from being heard was applicable. The approach in Hammond Suddard Solicitors v Agrichem International Holdings Limited [2001] EWCA Civ 2065 supported a resolute approach to parties able to pay but refusing to obey costs orders.

5. The court declined simply to issue a final costs certificate for the sum claimed. The properly served points of dispute had to be taken into account and there had to be an assessment. The defendants were therefore barred from further participation unless they paid the interim costs payment and accrued interest, agreed at £2.373 million, by noon on 27 June 2006. If payment was made, their time for serving evidence was extended to 4 pm on 30 June 2006.

1. High Court (Queen’s Bench Division): Langley J granted permission to appeal and allowed the appeal, making participation in the detailed assessment conditional on payment of £2.373 million.
2. Supreme Court Costs Office: Costs Judge Wright refused permission to appeal on 23 March 2006, treating the decision as case management and finding no real prospect of success.