Michael Wilson & Partners Ltd v Sinclair & Anor

Relief from sanctions may be granted where a serious procedural default has no good reason, but the consequences of shutting out a substantial and potentially meritorious costs challenge outweigh the need to enforce compliance. The court must consider all the circumstances, including efficient and proportionate litigation and compliance with procedural rules.

An appellate court should interfere with a discretionary or multi-factorial decision only for a material error of approach. A costs judge may depart from the general rule concerning default costs certificates where the size and complexity of the bill justify further time. A communication is not privileged merely because it refers to an earlier without-prejudice letter; its purpose must be a genuine attempt to compromise the dispute.

This was an appeal from an order of Master Gordon-Saker, the Senior Costs Judge, setting aside a default costs certificate and permitting detailed assessment to proceed, subject to the respondents filing points of dispute.

The appellant challenged the decision on several grounds, including the application of the relief-from-sanctions principles, the failure to file points of dispute, reliance on an email said to be without prejudice, reference to observations made in separate litigation, and reliance on the costs judge’s recollection of an earlier assessment. The central issues were whether the Senior Costs Judge had made a material error of approach and whether the certificate should have been set aside conditionally.

1. Relief from sanctions. The appeal was dismissed insofar as it challenged the decision in principle to allow detailed assessment to proceed. The Senior Costs Judge had considered the seriousness of the default, the absence of a good reason, and the competing need to enforce compliance with procedural rules. His balancing of the respondents’ default against the risk of shutting them out from disputing a potentially reducible liability of about £500,000 disclosed no material error.
2. The specific factors in CPR r. 3.9(1) need not be recited again at every stage if they have been addressed in substance. A decision to refuse relief which deprived a party of the opportunity to contest a potentially contestable bill could itself be inconsistent with proportionate litigation.
3. The failure to discharge costs certificates from earlier stages was not directly relevant to whether detailed assessment should continue. It might justify making continuation conditional, but could not ordinarily justify refusing relief altogether.
4. The general rule in CPR 47PD para. 11.2(3) did not prevent departure in this case. The bill was exceptionally long and substantial, and a prospective request for an extension would have been reasonable.
5. The January email was not protected by without-prejudice privilege. Its purpose was to publicise the default certificate and exert pressure, rather than to negotiate or compromise the costs dispute. The absence of a without-prejudice heading was significant, though not conclusive: Best Buy Co. Inc. v Worldwide Sales Corp Espana SL [2011] EWCA Civ 618.
6. General observations made in separate litigation could be considered as background. They did not create issue estoppels, and any error in relying on them was immaterial. A costs judge could also rely on an accurate recollection of an earlier assessment.
7. Further written submissions were directed on whether the order should be conditional on payment of sums certified in previous assessments. The outstanding matters were reserved for determination in writing.

• High Court (Queen's Bench Division): appeal from the Senior Costs Judge's order of 12 March 2019. The challenge to setting aside the default costs certificate in principle was dismissed; remaining issues concerning conditions were reserved.
• Permission to appeal: initially refused by Stewart J and subsequently granted by Murray J on 18 October 2019.