Tatch & Anor v Claughton

In appeals arising from costs applications after a consent order, the court must first determine whether the order, construed as an agreement, permits an extension of a contractual time limit. If the power remains available under the Civil Procedure Rules, an appeal limited to a point of principle may challenge failure to consider the significance of departing from the parties’ bargain, but not merely the weight given to individual factors. An appeal may be struck out for procedural default only where there is a compelling reason under rule 52.9.

Following insolvency proceedings concerning a legal charge, a consent order resolved the substantive disputes but allowed respondents 30 days to seek costs orders against one another. The trustee in bankruptcy applied in time. The bank applied 34 minutes outside the time limit, treated as five days late because of court hours and the Easter break. Patten J, sitting in the Leeds County Court, extended the time and ordered the fourth respondent to pay costs to the trustee and the bank.

The fourth respondent appealed, and separate applications concerned permission, strike-out and jurisdiction. The central issues were whether the County Court could extend the time in the consent order, the scope of the permission to appeal, whether procedural defaults justified striking out the appeal, and whether there were arguable errors of principle in the costs orders.

1. Strike-out. The application to strike out the appeal under Civil Procedure Rules, rule 52.9(1)(a) was refused. The power could be used only where there was a compelling reason. The delays in service and filing caused no realistic prejudice and fell well short of that threshold. The merits could not be used indirectly to challenge permission under rule 52.9(1)(b), particularly where the judge had considered that a point of principle deserved argument.
2. Scope of permission. Permission limited to the principle governing an extension of time allowed challenges to jurisdiction, the true construction of the consent order as a contract, the relevance and effect of the decision of Neuberger J, and whether the approach under rule 3.9 was legally principled. It did not allow a challenge merely to the weight given to the factors considered under rule 3.9. It did allow the appellant to argue that the exercise was flawed because the judge failed to address the significance of departing from the parties’ contractual bargain.
3. Appellate jurisdiction. Under Insolvency Act, section 375, an appeal from a County Court insolvency decision lies to a single High Court judge, with a further appeal from that judge to the Court of Appeal. The Practice Direction Insolvency Proceedings could not alter that statutory allocation. The judge therefore dealt with the relevant applications while sitting as an additional High Court judge under Supreme Court Act 1981, section 9(1).
4. Permission on costs. Permission was granted to appeal the costs orders because the judge arguably proceeded on an inaccurate view that the consent order represented a capitulation or defeat by the fourth respondent. The wider commercial effect of the compromise, including the transfer of the charge and the agreed limitation of the secured amount, could arguably show that the fourth respondent had obtained something of value. The court also recognised the established caution against deciding costs without determination of the underlying merits, especially where the judge lacks detailed knowledge of the proceedings.
5. The strike-out application was refused, application A2/2007/0489/A was refused, and application A2/2007/0490 was granted. The two costs appeals were transferred to the Court of Appeal under rule 52.14.

• Court of Appeal (Civil Division) — [2007] EWCA Civ 559. The court refused the strike-out application, declined to vary the existing limited permission, granted permission to appeal against two costs orders, and transferred those appeals to the Court of Appeal.
• Leeds County Court — Patten J extended the bank’s time to apply for costs and ordered the fourth respondent to pay costs to the trustee in bankruptcy and the bank. The judgment also granted limited permission to appeal on the principle governing extension of time.