DEFAULT COST CERTIFICATE PREVAILS

A COSTS HEARING IS NOT AN APPEAL

The Managing Director of an alleged construction company challenged a Default Cost Certificate issued against him after he was added into proceedings pursuant to a Non-Party Costs Order and thereafter, failed to challenge the successful Defendant's Bill of Costs. The case should be of interest to directors as to the extent of their liabilities in litigation and the important distinction between their company's legal personality and their own.

I-Design Construction Ltd, Mr Paul Archer (3), Mr James Hooker (4) & Mrs Clare Archer (5) - v - Mr David Renwick (Plymouth CC 23rd December 2022) (Costs)

We acted for the successful Defendant whom had been issued with a Default Cost Certificate (DCC) for £176'638.92 in his favor. This followed a successful counterclaim where he was awarded £95'635.04 damages after being left in a home at risk of structural collapse. The directors of the construction company had been made joint and severally liable for the litigation costs following a successful Non-Party Costs Order.

BACKGROUND

The 1st Claimant, I-Design Construction Ltd (now in liquidation) was an alleged construction company operating in south Devon. The 3rd & 4th Parties were the company's joint-owners and sole directors.

The Defendant was an elderly homeowner who had hired IDC to undertake a loft conversion at his only home. However, rather than undertake the contractual works, the Claimants took his life savings before abandoning site in winter leaving him in a home with a broken central heating and hot water system. The 3rd Party then subjected the Defendant and his family to a campaign of harassment before issuing proceedings in his company's name after the Defendant refused to pay a string of steadily increasing sums for work the Claimants had not done.

Liability for the Defendant was determined April 2022, Damages Assessed July 2022, Non-Party Costs Ordered August 2022, the Bill served October 2022 and the DCC issued November 2022. The DCC was challenged by the 3rd Party Mr Archer. No other party made a challenge.

THE FACTS

The Applicant argued that the DCC had been issued incorrectly and accordingly should be set aside so detailed assessment could take place. In support of this argument he relied upon a 2 page document served in the name of the Claimant company which repeated the key points of the Claimant's case during the litigation and had been served prior to the Defendant's Bill. It added on a simple request that costs be assessed but did not challenge a single item on the Bill.

The successful Defendant (unsurprisingly) opposed the DCC being set aside:

1. The first issue the court needed to determine was the whether the DCC had been issued correctly? That is to say, whether Points of Dispute (PODs) had been served prior to the DCC being issued against the party challenging it. In this instance, the only party whom had served anything in advance was an insolvent entity which was not challenging the DCC. Neither of IDC's directors had served anything and so the DCC had been issued correctly.

2. Consequently, the test in CPR r.47.12 applied as to whether or not the DCC should be set aside. This was to determine whether there was a 'Good Reason' as to why the matter should proceed to Detailed Assessment?

3. CPR r.47.12 and the accompanying Practice Direction had not been complied with. Precedent G had not been used, no draft PODs had been submitted in advance of the hearing nor even a copy of the Bill which was being challenged.

4. The authorities of Kazakhstan -v- Bank of America & Ainsworth -v- Stewarts Law made it clear that the 'trite point' costs may be reduced at Detailed Assessment could not be considered 'a Good Reason'. Solicitors deserved to know what was being challenged and why? The purpose of PODs is to prevent this work being done off the hoof.

5. The Overriding Objective: The fact that the Paying Parties had not paid 8 outstanding Court Orders for interim-costs amounting to an additional c.£10'000 nor paid the Costs on Account of £60'000 would make any leniency manifestly unjust. Particularly as in advance of the DCC we had to attend a hearing in the insolvency courts that arose due to Mr Archer providing false information to the court bailiffs in a bid to put further financial pressure on his victims (which we won).

THE JUDGEMENT

The District Judge having considered all the parties submissions and the background to the case ruled as follows:

1. The DCC had been correctly issued. Reviewing the papers, the DJ noted that the Defendant had specifically not requested a DCC against the Claimant company which was the only party that had submitted anything. Nothing had been received from any other party and so the DCC had been issued correctly.

2. While not ruling on whether Mr Archer's document could be considered a POD, it was recorded that the document had already been before the court, specifically HHJ Mitchell on 2 occasions. Judgement on those occasions had been entered and no appeal submitted nor made. Cost Hearings are Not an Appeal.

3. Further, there was no 'Good Reason' why Precedent G mandated in the CPR had not been used. As pleaded by the Defendant, the fact that the Applicant was a litigant in person could not be an excuse but in any event, no reason had been provided nor had there been any effort to correct the error after the Defendant had pointed it out over 1 month in advance of the Hearing.

4. Considering the test for relief from sanctions contained in Denton -v- White, the failure to comply with all previous court orders was terminal. It is of vital ....

"A ROGUE SOLICITOR!!!"

At this point in the Judgement the unsuccessful 3rd Party became abusive to the DJ. He kicked tables and furniture berating the entire English Justice system and shouted that the Defendant's Solicitor-Advocate as "a rogue solicitor" as he made for the courtroom exit with his entourage in tow. Court security attended the DJ whom ordered the courtroom sealed and the Paying Parties to be escorted out.

Nevertheless, the hearing continued and having taken account the conduct of the parties, costs for the day were assessed at £3000.

COMMENT:

A solicitor-advocate is a solicitor granted higher rights of audience following a rigorous examination process. An SRA-Authorised Freelancer is a solicitor (or solicitor-advocate) authorised to represent and act for clients directly as opposed to through a law firm or other limited liability company.

We are not rogue lawyers which is a corner of the market dominated by our learned friends in chambers.