Dadourian Group International Inc & Ors v Simms & Ors

The Court of Appeal has no general original jurisdiction to declare the true meaning of its own earlier costs order or to direct the issue of a costs certificate. Reciprocal costs may be set off under the Civil Procedure Rules 1998, even where the appellate order contains no express set-off provision. Set-off is discretionary and ordinarily falls to the costs judge. A final certificate may be issued subject to safeguards preserving sums recovered under time-limited security pending determination of the set-off issue.

The claimants obtained costs orders against the third and fourth defendants on an earlier appeal, while the defendants obtained costs orders concerning a strike-out application and an application to adduce fresh evidence. The Court of Appeal’s order made no express provision for set-off. Security for the claimants’ appeal costs was due to expire, but the costs judge had declined to issue a final certificate because reciprocal costs and the allocation of certain work remained unresolved.

The claimants applied to the Court of Appeal for a declaration that its order excluded set-off and for a direction that a final certificate be issued immediately. The central questions were whether this court had jurisdiction to grant that relief and whether the costs judge could address set-off and issue a certificate subject to safeguards.

1. Application dismissed. The Court of Appeal had no original jurisdiction, on the material identified, to grant a declaration concerning the true meaning of its own costs order. The same objection applied to the request for a direction requiring immediate issue of a final costs certificate.
2. In additional observations, the court held that the absence of an express set-off provision in an appellate costs order did not prevent the costs judge from considering set-off. Under CPR 44.3 (9), reciprocal costs could be assessed and set off, with any balance directed for payment, or certification could be delayed until the liability was paid.
3. A similar result could be achieved under CPR 47.16. CPR 47.16 (3) provided for issue of a final certificate when a completed bill was filed, subject to CPR 47.16(4), which allowed issue to be delayed until other costs had been paid. The rules therefore enabled effective set-off through the certification process.
4. The question whether costs should be set off was discretionary: R (O/A Burkett) v Hammersmith and Fulham London Borough Council [2004] EWCA Civ 1317. The costs judge was to decide the issue in the first instance, subject to appeal to the High Court.
5. Given the expiry date of the bank guarantee, the claimants could invite the costs judge to issue a final certificate against an undertaking to make any demand under the guarantee and pay the proceeds into court or another account pending the final decision on set-off. Whether to adopt that course was for the costs judge.

The Court of Appeal declined to give guidance on allocating costs attributable to disclosure, since that was for the costs judge.

• Court of Appeal (Civil Division): On 13 March 2009, the court determined the underlying appeal and made reciprocal costs orders. In the present judgment, it dismissed the subsequent application for declaratory and costs-certificate relief.
• High Court of Justice (Chancery Division): Deputy Master Rogers conducted the detailed assessment but declined to issue a final certificate while the set-off issue and allocation of costs remained unresolved.