Sandra Bailey & Ors v Glaxosmithkline UK Limited

A deadline for making a non-party costs application does not necessarily carry an implied sanction merely because permission would be required after expiry. Implied sanctions are confined to narrow categories. Where no sanction is imposed, the application is governed by the overriding objective, although the seriousness of delay, its reasons and the other circumstances remain relevant. Particular weight must be given to compliance with court orders and the need to avoid delay. A very lengthy extension requires cogent justification. An omission to consider the implications of a deadline, followed by prolonged inactivity, may justify refusing an extension even where the proposed costs claim is substantial and arguable.

The defendant had successfully defended long-running group litigation concerning Seroxat and obtained substantial costs orders. An order made on 3 July 2020 required any application for a third-party costs order to be made by 4pm on 31 July 2020. The defendant later settled its costs claim against the litigation funder, but pursued enquiries concerning an after-the-event insurer and eventually issued an application in August 2023 seeking an extension of the deadline, or relief from sanction, to pursue a non-party costs order against the insurer.

The central issues were whether the deadline carried an implied sanction engaging Civil Procedure Rules 1998, rule 3.9, and, if not, whether an extension should be granted under the overriding objective.

1. Nature of the deadline. The relevant order imposed no express sanction. Applying Yesss (A) Electrical Ltd v Martin Warren, FXF v English Karate Federation Ltd & Anor and Viegas and others v Estate of José Luis Cutrale, the categories of implied sanction are very narrow. The mere fact that permission would be needed to proceed after a deadline did not itself create an implied sanction. Rule 3.9 was therefore not engaged.
2. Applicable approach. The application fell to be determined under the overriding objective in rule 1.1. The matters reflected in the Denton three-stage test remained relevant, but there was no starting presumption that the consequence of missing the deadline was correct. Compliance with orders and avoidance of delay received particular weight, and a long extension required cogent justification.
3. Application. The deadline was clear and applied to any future non-party costs application, not merely one against the litigation funder. The possibility of an insurer-related costs application was foreseeable when the order was made. The defendant should have sought protective directions or an extension before the deadline expired. Its failure was characterised as an omission to think through the order’s implications rather than deliberate disobedience, but it then acted very slowly, including a lengthy unexplained gap in communications and a further twelve-week delay after the insurer’s position became clear.
4. Outcome. Although the proposed claim was properly arguable, involved £750,000 plus interest and would not cause substantial additional prejudice to the insurer, fairness and proportionality were outweighed by the need for expedition and enforcement of court orders. The application for an extension and/or relief from sanction was dismissed.