MacKay & Ors v Ashwood Enterprises Ltd & Ors

A court has jurisdiction to order an affected party to pay immediately the costs of a without-notice application. Such an order is exceptionally strong and will be appropriate only very rarely, but it is not invariably impermissible.

The affected party must have an opportunity to seek reconsideration at first instance under the Civil Procedure Rules 1998, rule 23.10, or an express liberty to apply. Where an express liberty has no stated time limit, delay does not extinguish the right automatically. Promptness, any explanation for delay and the strength of the merits remain relevant to the court’s discretion.

Court-appointed receivers obtained extensive relief without notice against a company and individuals alleged to have interfered with receivers’ control of charged property. The order required the defendants jointly and severally to pay the receivers’ application costs immediately after summary assessment.

The first three defendants appealed both the costs provision and Peter Smith J’s subsequent refusal, in [2012] EWHC 3637 (Ch), to set it aside. They argued that the court lacked jurisdiction to make an immediately enforceable costs order without notice or, alternatively, that such an order could not properly be made. They also disputed whether delay could affect an application under an unrestricted liberty to apply.

The central issues were the court’s jurisdiction and discretion to order immediate costs without notice, the scope of the right to seek reconsideration, and the relevance of unexplained delay.

1. Both appeals dismissed. Section 51 of the Senior Courts Act 1981 gives the court a fully general discretion over the costs of proceedings and power to determine by whom and to what extent they are paid. Its breadth did not support a jurisdictional bar against an immediately enforceable costs order made without notice.

2. Rule 44.10(2)(c) of the Civil Procedure Rules 1998 also contemplates a costs order following a without-notice application. Although the deemed order under that rule ordinarily gives the applicant costs in the case rather than an immediate debt, its existence was inconsistent with an absolute absence of jurisdiction.

3. An order requiring immediate payment in those circumstances is most unusual and could be appropriate only very rarely. It is a matter of “hardly ever”, rather than “never”. The protection afforded by rule 23.10, under which a person not served with the application may seek to set aside or vary the resulting order, permits the court in an exceptional case to proceed without requiring the applicant to return automatically on notice.

4. Obiter, rule 23.10 applies to every aspect of a substantive order made without notice, including costs. An affected party must have an opportunity to present at first instance the arguments which could have been advanced at the original hearing. Summary assessment on notice may be challenged by appeal, but it does not remove the separate right to ask the first-instance court to reconsider the underlying liability for costs.

5. An express liberty to apply which states no time limit remains subject to discretionary considerations. Delay does not create an implied limitation period, but the court may consider the applicant’s promptness, any explanation for inaction and the merits. Delay may be decisive where it is unexplained and the merits are weak.

6. The judge was entitled to make and maintain the costs order. The appellants deliberately did not attend the notified hearing at which costs were assessed, waited several months before applying, supplied no satisfactory explanation, and did not support their asserted merits with evidence. Their earlier conduct concerning the property and failure promptly to pursue their challenge to the receivers’ appointment also justified the judge’s critical assessment.

1. Court of Appeal (Civil Division): Dismissed both appeals. It upheld the costs provision in the without-notice order of 29 June 2012 and the refusal to set that provision aside.

2. High Court, Chancery Division: Peter Smith J made the without-notice order on 29 June 2012. On 22 November 2012, in [2012] EWHC 3637 (Ch), he dismissed the defendants’ application to set aside its costs provision.