Haji-Ioannou & Ors v Frangos & Ors

Failure by a receiving party to commence detailed assessment within the period in CPR 47.7 may attract both disallowance of interest under CPR 47.8 and disallowance of costs under CPR 44.14. The latter jurisdiction is not confined to exceptional cases, nor does it require proof that the delay caused an identifiable tranche of costs. The discretion must be exercised judicially and proportionately. Relevant considerations include prejudice, responsibility for delay, the paying party’s failure to use the remedy in CPR 47.8(1), and any substantial interest concession or disallowance already suffered by the receiving party. A substantial self-inflicted interest sanction, combined with absence of prejudice and delay by both parties, may make any further costs sanction disproportionate.

The Receiving Parties obtained a costs order from the Court of Appeal on 31 March 1999. They were required to commence detailed assessment within three months, but served their Notice of Commencement on 1 July 2004. The Paying Parties applied under CPR 47.8 and CPR 44.14 for a proportion of the costs, and for interest, to be disallowed.

The Costs Judge dismissed the application. He regarded the parties as having tacitly agreed to an extension of time and accepted that a sanction under CPR 44.14 was subject to the approach stated in Less v Benedict. The Paying Parties appealed, contending that the delay justified a further costs sanction and challenging the finding of tacit agreement.

1. The appeal was dismissed. The Costs Judge’s finding of a tacit agreement to extend time was unsupported by the evidence and had to be rejected. His exercise of discretion was therefore flawed, although his conclusion that no further sanction was required was one which a properly directed Costs Judge could reasonably reach.
2. CPR 47.8 and CPR 44.14 address different sanctions. CPR 47.8 permits disallowance of interest where detailed assessment is commenced late. CPR 44.14 permits disallowance of costs where a party or legal representative fails to comply with a rule, practice direction or order. The proviso in CPR 47.8(3) preserves the availability of a sanction under CPR 44.14.
3. CPR 44.14(2)(a) contains no requirement for a causative link between the breach and an identifiable tranche of costs. The different wording of CPR 44.14(2)(b), which expressly refers to costs caused to another party, supports that conclusion. Nor is the jurisdiction confined to cases involving exceptional circumstances or conduct amounting to misconduct.
4. The discretion under CPR 44.14 must nevertheless be exercised judicially. Relevant matters included the Paying Parties’ lack of prejudice, their failure to invoke CPR 47.8(1), their own delay, their continued use of the money, and the Receiving Parties’ substantial concession of interest. The delay was prolonged and warranted clear disapproval, but the concession represented a substantial sanction and further disallowance of costs would be disproportionate.
5. The court accordingly exercised the discretion afresh and imposed no further sanction under CPR 44.14. The Costs Judge’s order was effectively upheld and the Paying Parties’ appeal was dismissed.

• High Court (Chancery Division): appeal from the decision of Master Seager Berry, Costs Judge, dismissing the application for disallowance of costs and interest. The appeal was dismissed.