Court of Appeal confirms need to apply for immediate assessment of costs where successful in interlocutory appeal

The Court of Appeal has confirmed that a party who is awarded its costs of an interlocutory appeal is not entitled to an immediate assessment of those costs unless specifically ordered by the appeal court: Khaira v Shergill [2017] EWCA Civ 1687.

The decision raises a short, practical point: if a party is awarded its costs of an interlocutory appeal and wants to obtain payment of those costs without having to wait until the conclusion of the overall case, it needs to apply to the appeal court for an order for immediate assessment. If the appeal court does not make such an order, it appears that the lower court cannot do so.

The position is different for the costs of interlocutory appeals to the Supreme Court; under the applicable rules, where the Supreme Court makes a costs order, the receiving party is entitled to an immediate assessment of its costs in the Supreme Court without any separate order to that effect.

Background

The underlying dispute relates to the trusteeship and governance of two Sikh Gurdwaras. The defendants applied to stay or strike out the claim on the grounds that the issues raised by the claim were not justiciable. The High Court dismissed the application and ordered the defendants to pay the claimants' costs, which he summarily assessed. The Court of Appeal held that the issues were not justiciable and struck out the claim, but the Supreme Court reversed that decision and reinstated the High Court order, including in relation to costs.

The Supreme Court ordered the defendants to pay the claimants' costs in the Supreme Court and the Court of Appeal, to be assessed if not agreed, and also ordered a payment of £150,000 on account of costs.

The question arose as to whether the claimants were entitled to an immediate assessment of the costs in the Court of Appeal, without a further order, and if not whether the costs judge had jurisdiction to make such an order. The courts below (Master Simons sitting in the Senior Courts Costs Office and, on appeal, Mr Richard Spearman QC sitting as a Deputy Judge of the High Court) answered yes to each of these questions. The defendants appealed.

Decision

The Court of Appeal (Lloyd-Jones, David Richards and Moylan LJJ) allowed the appeal. It noted that relevant provisions of the Supreme Court Rules 2009, which apply to the assessment of costs in the Supreme Court, and the Civil Procedure Rules, which apply to assessment of costs at first instance and in the Court of Appeal, are significantly different.

Rule 48(1) of the Supreme Court Rules provides: “Where the Court has made an order for costs, the claim for costs must be submitted to the Registrar within three months beginning with the date on which the costs order was made.” It was accepted that this meant the defendants were entitled to an immediate assessment of their costs in the Supreme Court without any separate order to that effect.

In contrast, CPR 47.1 provides: “The general rule is that the costs of any proceedings or any part of the proceedings are not to be assessed by the detailed procedure until the conclusion of the proceedings, but the court may order them to be assessed immediately [emphasis added]." The rule refers to Practice Direction 47 for further guidance about when proceedings are concluded for these purposes. PD47 states, in paragraph 1.1, that proceedings are concluded "when the court has finally determined the matters in issue in the claim, whether or not there is an appeal...".

It was common ground between the parties that the term “proceedings” can, depending on context, encompass the entirety of a claim, including appeals, or can refer separately to first instance proceedings and appeals.

In the Court of Appeal's view, paragraph 1.1 of PD47 is the critical provision for the purposes of interpreting the term "proceedings" in CPR 47.1. That led the court to conclude that there is no automatic detailed assessment of the costs of an interlocutory appeal and that an order of the court is required. This was, in the court's view, consistent with authorities that had previously considered this point. Authorities relied on by the defendant, and which may have appeared to point the other way, were not on precisely this issue.

The court acknowledged that there were policy reasons to support a rule in favour of immediate assessment, including that interlocutory appeals usually raise discrete points of principle or practice, the outcome of the appeal will generally determine the incidence of costs, and typically there will not be difficulties in identifying or disentangling the costs of the appeal. However, the court said it must be borne in mind that, to reverse the current default position, the receiving party need only apply for, and obtain, an order for immediate assessment. It flagged, however, that "it may be that the Civil Procedure Rules Committee will feel it appropriate to consider what the default position should be".

The Court of Appeal went on to find that, where that court had not made an order for immediate assessment, the power to do so could not be exercised by the High Court. Even if that was wrong, and the power could be exercised by a High Court judge because it had the conduct of the proceedings generally, the power could not be exercised by a costs judge.