Khaira & Ors v Shergill & Ors

Under CPR 47.1, read with paragraph 1.1 of Practice Direction 47, the general rule is that detailed assessment of costs is deferred until the court has finally determined the matters in issue at first instance, whether or not there is an appeal. This applies to the costs of an interlocutory appeal. Immediate assessment requires an order of the court that made the costs order; it is not automatic. A costs judge determining whether a notice of commencement may proceed cannot create an entitlement that CPR 47.1 does not otherwise confer. Nor does a combined Supreme Court order for costs in the Supreme Court and Court of Appeal necessarily order immediate assessment of the Court of Appeal costs. The appeal was allowed.

The underlying proceedings concerned the trusteeship and governance of two Sikh Gurdwaras. The claimants’ claim was initially upheld against a non-justiciability challenge, but this court later struck it out. The Supreme Court reversed that decision and reinstated the first-instance order, including its summary assessment of costs.

The Supreme Court subsequently ordered the defendants to pay the claimants’ costs in both the Supreme Court and Court of Appeal, assessed on the standard basis, and made a payment on account. Before the underlying claim had concluded, the claimants served notice to commence detailed assessment of their Court of Appeal costs. Master Simons and the High Court Deputy Judge permitted the assessment to proceed. The appeal concerned whether immediate assessment was automatic, whether a costs judge had jurisdiction to order it, and whether the Supreme Court’s combined costs order had that effect.

Appeal allowed. David Richards LJ gave the leading judgment. Moylan LJ and Lloyd-Jones LJ agreed.

1. Meaning of proceedings. The word proceedings is not a term of art. Its meaning depends on the terms, context and purpose of the provision in which it appears. Hawksford Trustees Jersey Ltd v Stella Global UK Ltd [2012] EWCA Civ 987 and Plevin v Paragon Personal Finance Ltd [2017] UKSC 23 provided general guidance from different statutory contexts. They did not establish a general rule that every interlocutory appeal is a separate proceeding for the purposes of CPR 47.1.
2. Immediate assessment. CPR 47.1, read with paragraph 1.1 of Practice Direction 47, defers detailed assessment until the court has finally determined the matters in issue in the claim, whether or not there is an appeal. The matters in issue are not finally determined until the first-instance court has finally ruled on them. The conclusion of an interlocutory appeal therefore does not automatically trigger assessment of its costs. An express order for immediate assessment by the relevant court is required. Morris v Bank of America National Trust [2001] 1 All ER 954, Hicks v Russell Jones & Walker [2001] CP Rep 25, Crystal Decisions (UK) Ltd v Vedatech Corporation [2007] EWHC 1062 (Ch) and GB Gas Holdings Ltd v Accenture (UK) Ltd [2010] EWHC 2928 (Comm) supported that conclusion.
3. Costs judge’s jurisdiction. The court contemplated by CPR 47.1 is the court that made the relevant costs order. CPR 2.4(a) permits acts in relation to proceedings in the High Court, but the appeal proceedings were in the Court of Appeal. A costs judge therefore had no power to create an immediate-assessment entitlement. Paragraph 1.3 of Practice Direction 47 permits determination of whether an existing entitlement to commence assessment exists, and may permit the proceedings to continue or set aside the notice. It does not confer a general power to order immediate assessment. Paragraph 1.4 supplies only a limited power where there is no realistic prospect of the claim continuing.
4. Supreme Court order. The Supreme Court’s order that costs in both courts be assessed on the standard basis, together with payment of £150,000 on account, did not require immediate assessment of the Court of Appeal costs. The order did not address assessment, and immediate assessment was not necessary to give effect to its terms. The Deputy Judge’s decision was accordingly set aside.

• Court of Appeal (Civil Division): In [2017] EWCA Civ 1687, the appeal was allowed.
• High Court of Justice, Chancery Division: Mr Richard Spearman QC, sitting as a Deputy Judge, affirmed Master Simons’ refusal to set aside the notice of commencement and held that immediate assessment could proceed.
• Senior Courts Costs Office: Master Simons refused the defendants’ application to set aside the notice to commence detailed assessment of the Court of Appeal costs.