INTRODUCTION

In England and Wales, where under the CPR, the Court orders one party (the paying party) to pay the (non-fixed) costs of the other party (the receiving party), the Court can assess those costs[1]:

(a) summarily (immediately, or at a later date); or

(b) by ordering that they be the subject of a detailed assessment.

(unless any rule, practice direction or other enactment provides otherwise; see r.44.6 and Practice Direction 47, paragraph 8[2]).

Where they are ordered to be assessed, the default is for the costs to be the subject of a detailed assessment, unless the Court orders otherwise[3]. 

Where the Court orders that those costs be the subject of a detailed assessment, the receiving party will have an incentive to commence those detail assessment proceedings quickly, in order to get a figure for what costs the paying party must pay the receiving party, and hopefully, swift payment thereafter. While a payment on account of costs order under r.44.2(8)[4] will go some way to dampen this incentive, there will still be the incentive there. There can be however a myrad of reasons why a receiving party might delay/dither, and not start detail assessment proceedings quickly. 

In the first instance, the CPR does specify deadlines for commencing detail assessment proceedings. Which raises the question, what then happens if a CPR specified deadline is missed?[5] What are the consequences for the receiving party and paying party, respectively? what options does the paying party have?

This article will consider this, in light of:

(1) CPR r.47.7 and r.47.8, contained in Chapter II, entitled 'Costs Payable by One Party to Another-Commencement of Detailed Assessment Proceedings', within CPR Part 44, entitled 'Procedure for detailed assessment of costs and default provisions';

(2) Parts of Practice Direction 47 ('PD47');

(3) Botham v Khan (Costs) [2004] EWHC 2602 (QB); [2005] 2 Costs L.R. 259 ('Botham'), High Court (Richards J) on 16.11.04; 

(4) Less v Benedict [2005] EWHC 1643 (Ch); [2005] 4 Costs L.R. 688 ('Less'), High Court (Warren J, sitting with Costs Judge Campbell and Jason Rowley as Assessors) on 25.7.05;

(5) Haji-Ioannou v Frangos [2006] EWHC 279 (Ch); [2006] 2 Costs L.R. 315 ('Haji-Ioannou 279'), High Court (Lindsay J; Master Rogers; David Harris) on 24.2.06 (upheld later by the Court of Appeal);

(6) Haji-Ioannou v Frangos [2006] EWCA Civ 1663; [2008] 1 WLR 144 ('Haji-Ioannou 1663'), Court of Appeal (Sir Andrew Morritt C; Arden LJ; Longmore LJ) on 6.12.06;  

(7) FN v Secretary of State for the Home Department [2015] EWHC 3057 (QB) ('FN'), High Court (Hamblen J) on 10.6.15;

(8) Rattan v Carter-Ruck Solicitors [2019] 5 WLUK 633 ('Rattan'), High Court (Senior Courts Costs Office)(Master Leonard) on 20.5.19; 

(9) Patel v Awan [2024] EWHC 464 (Ch) ('Patel'), High Court (Master Kaye) on 7.3.24 - order for sale on final charging order on payment on account of costs order; 

(10) Awan v Patel [2025] EWHC 3332 (SCCO) ('Awan'), High Court (Senior Courts Costs Office)(Master Brown) on 2.10.25 - r.47.8(1)-(2) application for Court imposed deadline for detailed assessment proceedings commencement[6]

Two points:

(1) An important point made in Rattan (not an inter parties costs order case[7]) is that, in the situation under consideration:

(a) the Court has already awarded the receiving party with an order in the receiving party's favour; and so,

(b) 'The position was broadly comparable to the delayed enforcement of the judgment, rather than the delayed pursuit of a claim.' (Rattan, paragraph 65)

(2) detailed assessment proceedings are commenced, as set out in r.47.6(1)[8], by serving on the paying party:

(a) notice of commencement in the relevant practice form (form N252); together with,

(b) a copy (or copies) of the bill of costs, as required by PD47; and

(c) if required by PD47, a breakdown of the costs claimed for each phase of the proceedings (using Precedent Q)(unless the same information is fully provided in an electronic bill).

We turn to the CPR rules first[9].

CIVIL PROCEDURE RULES

CPR r.47.7

CPR r.47.7 is entitled 'Period for commencing detailed assessment proceedings' and reads:

'The following table shows the period for commencing detailed assessment proceedings.'

There is then a 2 (column) x 3 (row) table. Not all of it is relevant for present purposes[10]. The first column is entitled 'Source of right to detailed assessment' and, the relevant row is row 1, which states:

'Judgement, direction, order, award or other determination.'

The second column is entitled 'Time by which detailed assessment proceedings must be commenced' and for, row 1, it reads:

'3 months after the date of the judgment etc. Where detailed assessment is stayed pending an appeal, 3 months after the date of the order lifting the stay'

Accordingly, where a Court has ordered a detailed assessment of costs, r.47.7 requires that the detailed assessment of costs be commenced within 3 months (unless the order was stayed pending an appeal[11]). 

PD47, paragraph 6 supplements the CPR rules. PD47, paragraph 6 is entitled 'Period for commencing detailed assessment proceedings: rule 47.7' and reads:

'6.1 The time for commencing the detailed assessment proceedings may be extended or shortened either by agreement (rule 2.11) or by the court (rule 3.1(2)(a)). Any application is to the appropriate office.

6.2 The detailed assessment proceedings are commenced by service of the documents referred to. Permission to commence assessment proceedings out of time is not required.'

Accordingly,

(1) in light of the wording to:

(a) CPR r.2.11[12];

(b) CPR r.3.1(2)(a))[13]; 

(c) CPR r.47.8(1)(b), 

it is clear that the deadline for commencing detailed assessment proceedings, can be changed by: (a) Court order/direction; or (b) agreement between the parties. 

(2) the commencement itself, of detailed assessment proceedings, outside of time, does not require Court permission[14]. 

CPR r.47.8

CPR r.47.8 is entitled 'Sanction for delay in commencing detailed assessment proceedings' and reads:

'(1) Where the receiving party fails to commence detailed assessment proceedings within the period specified-

(a) in rule 47.7; or

(b) by any direction of the court,

the paying party may apply for an order requiring the receiving party to commence detailed assessment proceedings within such time as the court may specify.

(2) On an application under paragraph (1), the court may direct that, unless the receiving party commences detailed assessment proceedings within the time specified by the court, all or part of the costs to which the receiving party would otherwise be entitled will be disallowed.

(3) If-

(a) the paying party has not made an application in accordance with paragraph (1); and

(b) the receiving party commences the proceedings later than the period specified in rule 47.7,

the court may disallow all or part of the interest otherwise payable to the receiving party under-

(i) section 17 of the Judgments Act 1838; or

(ii) section 74 of the County Courts Act 1984,

but will not impose any other sanction except in accordance with rule 44.11 (powers in relation to misconduct).

(4) Where the costs to be assessed in a detailed assessment are payable out of the Community Legal Service Fund, this rule applies as if the receiving party were the solicitor to whom the costs are payable and the paying party were the Legal Services Commission.

(5) Where the costs to be assessed in a detailed assessment are payable by the Lord Chancellor under Part 1 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, this rule applies as if the receiving party were the solicitor to whom the costs are payable and the paying party were the Lord Chancellor.'

As will be apparent, the sanction for delaying the commencement detailed assessment proceedings, beyond the 3 months stipulated, is that:

(1) the paying party (who may be, in the circumstances specified in r.47.7(4) or (5), be the Legal Services Commission or Lord Chancellor, respectively) may apply for an order requiring the receiving party to commence detailed assessment proceedings within such time as the court may specify ('Application for court imposed detailed assessment commencement deadline' or 'r.47.8(1)-(2) Application'). On such an application, the Court may direct that, unless the receiving party commences detailed assessment proceedings within the time specified by the court, all or part of the costs to which the receiving party would otherwise be entitled will be disallowed.

As stated by Master Brown in Awan, 'Applications such as this are reasonably common and often agreed or take little time to determine...' (paragraph 4). Typically a 30 minute listing might be given.

(2) where:

(a) the receiving party commences the proceedings later than the period specified in rule 47.7; and there was,

(b) no Application for court imposed detailed assessment commencement deadline, made by the paying party, 

the Court may still impose 2 sanctions:

(1) one of disallowing interest, otherwise payable to the receiving party, whether in whole or in part, under either of 2 statutes (as applicable); 

(2) one of imposing a r.44.11 sanction (a misconduct sanction)

PD47, paragraph 7 supplements the CPR rules. PD47, paragraph 7 is entitled 'Sanction for delay in commencing detailed assessment proceedings: rule 47.8' and reads:

'An application for an order under rule 47.8 must be made in writing and be issued in the appropriate office. The application notice must be served at least 7 days before the hearing.'

TYPES OF IMPOSABLE SANCTIONS 

Before considering r.47.8(1)-(2) Application (i.e. an application for court imposed detailed assessment commencement deadline) in detail, it is convenient to consider the 3 'types' of sanction which may be imposed in this area of law. Which can be imposed, will depend on the circumstances before the Court:

(1) 2 are 'disallowances' - these are imposable only on the receiving party; and the other is,

(2) a r.47.11 misconduct sanction - these may be imposed on either party.

Looking at the 2 'disallowances', these are:

(1) disallowance of costs - available only as a sanction for non-compliance with a Court imposed deadline for detailed assessment proceedings commencement;

(2) disallowance of interest - available only as a sanction where no r.47.8(1)-(2) Application is made, and the receiving party commences the proceedings outside the 3 months permitted.

The sanction imposable under r.44.11 is this disallowance of costs (r.44.11(2)).

ISSUED R.47.8(1)-(2) APPLICATION - APPLICATION FOR COURT IMPOSED DETAILED ASSESSMENT COMMENCEMENT DEADLINE 

Where the CPR prescribed detailed assessment commencement deadline is missed by the receiving party, the paying party can apply under r.47.8(1)-(2) for a Court imposed detailed assessment commencement deadline. The purpose of giving the paying party this option/provision, is in order to enable the paying party to be able to obtain an order (an unless order) from the Court, requirng the receiving party to serve a notice of commencement by a certain, Court imposed, date, on pain of a sanction (disallowance, under r.47.8(2), of costs) for non-compliance. This gives, in the paying party's hand, a way to prevent (or at least, disincentivise) further delay/'drift', in getting to a final determination on the quantum of costs, under the costs order, the paying party has to pay the receiving party. As to this, Lindsay J in Haji-Ioannou 279 made 2 observations: 

(1) '...if the receiving party does dally then the paying party has a remedy in its own hands, one that, by way of an “Unless” Order, may carry with it a very powerful sanction.' (paragraph 9). Later, Lindsay J described this as '...a convenient and inexpensive mechanism (47.8(1)) by which to counter delay....'

(2) '...parties are, under CPR 1.3, required to help the court to further the overriding objective of, inter alia, ensuring that a case is dealt with expeditiously. A paying party who sits on his hands whilst the receiving party dallies is thus not himself wholly free of blame.' (Less, paragraph 9)

A third obversation can be added, from Warren J in Less:

(3) because a paying party can make a r.47.8(1)-(2) Application, delay by the receiving party, in commencing the detailed assessment proceedings, is not a violation of the paying party's art.6 rights;

Is commencing the detailed assessment proceedings, within the CPR prescribed 3 month window, optional?

In Awan, Master Brown addressed the question: 'whether under the provision CPR 47 there is in effect an optional scheme whereby parties may not commence detailed assessment if a costs order is made in conventional terms.' (paragraph 30. 

As to this, Master Brown in Awan concluded that the obligation under 47.7, to serve a notice to commence a detailed assessment, within the CPR prescribed 3 months, was not optional; it was obligatory. He said, at paragraphs 31, 33 to 40: 

'In my judgment, the rules are clear. A party in whose favour an order for costs is made - an order which provides for detailed assessment, must commence detailed assessment within three months. The word 'must', in the provisions of 47.7. is of importance and plainly, to my mind, is inconsistent with this step being optional.

...

Quite apart from the use of the word 'must' there are quite a number of other matters which support the conclusion that there is an obligation to commence detailed assessment and that is it not optional.

47.8 provides:

"where the receiving party fails to commence detailed assessment proceedings within the period specified in rule 47".

The word 'fails' connotes to my mind an obligation to commence. There must be an obligation to do so because it is only if there is obligation to do so could there be a 'failure'. At least that to my mind is the correct reading of the rules in the context of the other provisions.

Further, there are comments of Court of Appeal in [Haji-Ioannou 1663]. In that case a party failed to commence detailed assessment proceedings within the relevant period. The Court were principally concerned with the provisions of CPR 44.14, as they were, which set out powers in relation to misconduct in detailed assessment proceedings and whether there had been any misconduct. Longmore LJ said this at [9], dealing with delay:

"The judge then proceeded, rightly, to hold that there is no inconsistency between part 44.14 and 47.8. It may, however, be said that there is a certain tension between them. A failure to commence detailed assessment proceedings within the three months required by Part 47.7 may fairly be described as a failure to comply with a rule and, therefore, at least be included in the general term 'fails to comply with a rule' within the words in 44.14(1)(a). Yet it can scarcely be supposed that, when 47.8 provides the court 'must not impose any' sanction other than the disallowance of interest 'except in accordance with rule 44.14 (powers in relation to misconduct)', every failure to commence detailed assessment proceedings should be regarded as misconduct and permit the disallowance of costs as well as interest."

And then at [17]:

"Of course delay is to be deprecated but where the relevant rule not only gives to the party at the receiving end of the delay the option of preventing further delay by himself taking the initiative but also spells out the normal sanction for penalising such delay … it seems to me that the court should be hesitant to exercise further powers to impose further penalties by way of reducing otherwise allowable costs."

... it is clear from these passages that the court took CPR 47.7 to be a rule that imposes an obligation to serve detailed assessment proceedings within three months and that failure to comply with that rule is a breach of that rule. As Longmore LJ makes clear, not every time this happens will it amount to misconduct. But the absence of misconduct does not mean there has not been a failure to comply with a rule.

There may be indeed be good reasons why a party is unable to serve a bill within three months. It can be an unrealistic period of time to prepare a bill in the high value cases that we sometime deal with. In such cases the parties can agree extensions of time. It is perhaps surprising to me, and perhaps to others, how infrequently parties apply for an extension of time for service of bills. But parties do, sometimes I think, agree extensions of time. There is moreover no doubt, that the practice of parties is generally to agree that judgment rate interest does not run in a period of delay - as a reflection of a failure to commence within time. So, at least as I see it, the notion that the commencement is optional is not accordance with general practice and the way parties generally interpret the rules.

There are perhaps other things to be said about this but for all the reasons I have given in my view the obligation under 47.7 is not optional. It does not become optional there having been a failure to commence proceedings in the three months. The receiving party is still in breach after the three month period - as 7.8(2) might suggest. Accordingly, I reject the [r.47.8(1)-(2) Respondent's] case on this point. They should have served a Bill and Notice of Commencement within 3 months of the costs order an [SIC] are in breach of the rules.

That takes me to the second point of construction which arises on this application.' [words underlined are in italics in original; bold added]

Does 47.8(1) give the Court any discretion, when considering an paying party's application for an order, that the receiving party do commence detailed assessment proceedings?

In Awan, Master Brown consider this question, and concluded that the court does have some discretion as to whether to accede to a r.47.8(1)-(2) Application, but that discretion must be exercised with provisions' purpose in mind, which is to bring the costs claim to a conclusion within a reasonable time. At paragraphs 42 to 46, Master Brown in Awan said:

'It is correct that the provision is permissive in one sense because it makes clear that the paying party may apply for an order requiring the receiving party to commence detailed assessment proceedings within such time as the court may specify. The first use of the word 'may' is however directed to the act of applying, giving the paying party power to stop delay and thus bring about detailed assessment. The court also clearly has a discretion to order an unless order under subrule (2). But the terms of subrule (1) allow the paying party to apply "for an order requiring the receiving party to commence" proceedings and do not expressly give the court a discretion to refuse the application.

I agree that the fact that rules provided for an application to a judge rather than a court officer point to the court having some discretion. If it were otherwise, the rules would provide for the matter to be dealt with by a court officer. Further the rules do not say that the court must order the commencement of detailed assessment proceedings. I can thus see the force of the point that it must be implicit in the rule that the court has a discretion not to make such an order. Again, if were otherwise the rule would have said so. Albeit the rule is perhaps not quite as clear as it might be I am prepared to agree with Mr Lipson's analysis on this point to the extent of accepting that the court is not required to make an order for detailed assessment and there must some discretion.

That said, I do not think that there is a general discretion to be exercised in the way that [counsel for the r.47.8(1)-(2) Respondents'] was urging me to do. It seems that at the very least there must be a good reason why the Court should not make an order for the commencement of detailed assessment proceedings if an application is made,

There may, as I have recognised, be a good reason not to commence in accordance with the time limit in the rules. The three month time limit can be unrealistic in some cases. It seems to me perhaps obviously, that the court might not be obliged to make an order in those circumstances. Or at least it is perhaps conceivable there are circumstances where no order would be made. I have to say I find it difficult to imagine that in the ordinary case a court would not make some order for detailed assessment because the Court, even if it does not make an unless order, is going to want to ensure that there is some time limit applicable to the service of detailed assessment proceedings. In general the Court should not, in accordance with the overriding objective permit substantial delay. But I do accept that it is conceivable that there may be circumstances where it may not appropriate to compel a party by order the commencement of detailed assessment proceedings.

Certainly, however as Mr Lipson's research revealed, a number of judges - Master Kaye in Ineos Upstream v Persons Unknown [2023] EWHC 214 (Ch) in [114], and in Michael Wilson & Partners Ltd v Emmott [2025] EWHC 747 (Comm), HHJ Pelling KC, sitting as a judge of the High Court, appear to accept the provision exists in order to compel a party who has not served detailed assessment proceedings in time within, to compel them to do so, to enforce an obligation to do so. That, it seems to me, clearly is the purpose that underlies that provision. Whilst I am prepared to accept, as I say, that [counsel for the r.47.8(1)-(2) Respondents'] is right that the provision does not itself require that the Court make such an order, and if not obliged to do so, there must be some discretion, undoubtedly that discretion has to be exercised with its purpose in mind, which is to bring the costs claim to a conclusion within a reasonable time.' [words underlined are in italics in original (save for the last paragraph); bold added]

The reference to 'as I have recognised', was a reference back to what Master Brown had said, in Awan, in paragraph 38:

'There may be indeed be good reasons why a party is unable to serve a bill within three months. It can be an unrealistic period of time to prepare a bill in the high value cases that we sometime deal with.' In such cases the parties can agree extensions of time. It is perhaps surprising to me, and perhaps to others, how infrequently parties apply for an extension of time for service of bills. But parties do, sometimes I think, agree extensions of time. There is moreover no doubt, that the practice of parties is generally to agree that judgment rate interest does not run in a period of delay - as a reflection of a failure to commence within time. So, at least as I see it, the notion that the commencement is optional is not accordance with general practice and the way parties generally interpret the rules.'

Seemingly though: (a) the discretion is not a 'general discretion' (at least, not commonly interpreted as such); (b) the discretion is generally exercised in favour of granting the r.47.8(1)-(2) Application. Master Brown in Awan, said, at paragraph 51:

'For what it is worth, as I understand it, the provision is not commonly interpreted as giving rise to a general discretion. If an application is made it for commencement as I understand it will at least generally be made.'

Master Brown identified:

(1) a problem with refusing such a r.47.8(1)-(2) Application[15]. It would leave the interim order, the interim payment on account of costs order, enforceable, permanently in the sense of never being replaced by a final detailed assessment of costs order (in the absence of agreement between the parties on the quantum of the detailed assessment sum). It would, in practical terms, to refuse a r.47.8(1)-(2) Application, would convert the interim order, into a final order. Interim orders are not 'designed' to be final orders. Interim orders meet a different purpose[16]. 

(2) an alternative, in effect, to making a r.47.8(1)-(2) order. Varying the original order for costs, such as to provide for a summary assessment of costs. Variation being permissible on the basis of a material change of circumstances (Tibbles v SIG [2012] 1 WLR 2591 (Court of Appeal))(see Awan, paragraph 52; also, paragraph 53[17])

On the facts in Awan, Master Brown make the r.47.8(1)-(2) order (paragraph 55). He identified 3 factors[18], namely, the receiving party's prospective:

(1) costs associated with serving a Notice of commencement and a bill of costs;

(2) fees for request for detailed assessment (if there is a Points of Dispute - noting that, if the receiving party limited itself to the interim order sum, his might reduce the scope for disputes);

(3) concerned about the difficulties with enforcement against the paying party;

but even then, reasoned that he was 'not satisfied' that counsel for the r.47.8(1)-(2) Respondents had provided any good reason not to have a detailed assessment (paragraph 60). 

Master Brown:

(1) acknowledged that the order sought would oblige the r.47.8(1)-(2) Respondents to undertake further steps, with costs implications. But, he said that he was '...not satisfied that they are as substantial or difficult or should weigh heavily against making of any order for commencement for detailed assessment.' (paragraph 60)

(2) said 'Many of the factors which are relied for not proceeding to assessment could be raised by any receiving party.' (paragraph 60);  

(3) considered the delay between 20.10.17 detailed assessment order (20.1.18 - 3 month CPR prescribed detailed assessment commencement deadline) and 2.10.25 (the date of the hearing), a gap of c.8 years. But said '...even accepting that the passage of time is substantial in this case it is not to my mind a good or sufficient reason it [SIC] to make the order sought and to deprive the [r.47.8(1)-(2) Applicant] of the ordinary entitlement to the service of a bill and assessment.' (paragraph 60)

(4) considered the contention that the r.47.8(1)-(2) Applicant's pursuit of the r.47.8(1)-(2) Application, was:

(a) an abuse, because of the r.47.8(1)-(2) Applicant's: (i) very substantial delay; and (ii) conduct (paragraphs 64 and 65). 

(b) considered the contention that r.47.8(1)-(2) Applicant had an ulterior motive for pursuiting the r.47.8(1)-(2) Application;

Master Brown concluded that:

(1) the objections to a r.47.8(1)-(2) order, put forward by the r.47.8(1)-(2) Respondents, were '...insufficient to outweigh the factors in favour of a detailed assessment.' (paragraphs 61). 'If the discretion were to be exercised having regard to the need to bring about finality it would certainly to my mind, would have to be exercised in the Applicant's favour.' (paragraph 61); and that

(2) as to point (4) above, about abuse, he '...was not persuaded that these considerations make any difference.' (paragraph 65). He said:

'As I read [Haji-Ioannou 1663], considerations of abuse now have little part to play in dealing with the delay in commencing detailed assessment proceedings. The case appears to indicate that there the provisions are a self contained scheme dealing with delay, with prescribed sanctions.' Delay, in the author's view, means: (a) the paying party faces the prospect of paying judgment rate interest; conversely, (b) the receiving party faces negative consequences, such as the the deprivation of interest (see paragraph 66).

On receiving party detailed assessment commencement delay, Master Brown did say he accepted that '...there must come a point, when the delay is so long that it would not be appropriate for detailed assessment to go ahead.' (paragraph 67). However, later, Master Brown said, at paragraph 82:

'There would be real difficulty, if [counsel for r.47.8(1)-(2) Respondent] were right if the court had the wide discretion [counsel for r.47.8(1)-(2) Respondent] argued that it did, in determining at what point the delay were such that a court was required to say that was long enough, the interim on account order should stand, and the order for detail assessment is be left lying - as it were - on the record. How would the discretion be exercised? What are the criteria by which it would be exercised? I do not see how the new rules in the CPR, which were intended to overcome problems under the RSC and reduce uncertainty and satellite litigation, could be interpreted do as to give rise to such a general discretion. That seems to be another reason why I should reject the [r.47.8(1)-(2) Respondent] argument.'

On the facts, before him (a c.8 year delay case) however, Master Brown said that '...that point has not been reached in this case, notwithstanding there has been substantial delay. It would not be unfair for this matter to proceed to detailed assessment nor is there any other reason why this matter could proceed to an assessment even now some years after the relevant work was done.'[19].

(3) the ulterior motive challenge was not sustainable. Master Brown said that 'It is not normally appropriate to consider an underlying motive for an application where an application, as it is here, is objectively justifiable.' (paragraph 79) and that 'the court generally does not have the means to for a view about this.' (paragraph 79) Acknowledging that there was, at the very least, a reasonable suspicion that the r.47.8(1)-(2) Applicant making the r.47.8(1)-(2) Application, as a way to defer enforcement of the interim order, Master Brown took the view that, '...[n]evertheless a paying party is normally entitled to see a Bill of costs before agreeing costs and in an appropriate case, to a detailed assessment.' (paragraph 79; see also paragraph 83)

(4) said that r.47.8 contained '...a self contained code for dealing with delay which puts the obligation on the receiving party to commence detailed assessment proceedings, and gives the paying party merely the option to enforce that.' (paragraph 80) and that 'It seems that under CR 47.7 there are difficulties with the paying party complaining about the delay, as it has the ability to bring it to an end. As the Court of Appeal indicated in [Haji-Ioannou 1663], the scheme worked very well.' (paragraph 81)

(5) an unless order was made (paragraph 87).

NO ISSUED R.47.8(1)-(2) APPLICATION - APPLICATION FOR COURT IMPOSED DETAILED ASSESSMENT COMMENCEMENT DEADLINE 

CPR rules

Where:

(a) the paying party has not made an application in accordance with r.47.8(1)-(2); and

(b) the receiving party commences the proceedings later than the period specified in rule 47.7,

the court may disallow all or part of the interest otherwise payable to the receiving party under-

(i) section 17 of the Judgments Act 1838; or

(ii) section 74 of the County Courts Act 1984,

but will not impose any other sanction except in accordance with rule 44.11 (powers in relation to misconduct).

CPR r.44.11 (formerly numbered r.44.14), is entitled 'Court’s powers in relation to misconduct' and reads, so far as relevant:

'(1) The court may make an order under this rule where-

(a) a party or that party’s legal representative, in connection with a summary or detailed assessment, fails to comply with a rule, practice direction or court order; or

(b) it appears to the court that the conduct of a party or that party’s legal representative, before or during the proceedings or in the assessment proceedings, was unreasonable or improper.

(2) Where paragraph (1) applies, the court may-

(a) disallow all or part of the costs which are being assessed; or

(b) order the party at fault or that party’s legal representative to pay costs which that party or legal representative has caused any other party to incur.'

Rule 47.8(3) disallowance of interest and r.44.11 sanctions

In Less, Warren J at paragraph 71 said:

'It is true that if D did not in fact serve his Notice of Commencement on all Cs within the time-limit under CPR 47.7 he was in breach of the rules. However, the consequence is not automatic that costs must be disallowed either in whole or in part. The primary sanction is disallowance of interest and, indeed, any other sanction is prohibited save by the application of CPR 44.14.' [bold added]

The exact interrelationship between r.47.8(3) disallowance of interest and r.44.11 (formerly r.44.14) sanctions has proved problematic, and in need of clarification. 

On this, first, the decision of Lindsay J in Haji-Ioannou 279 will be considered (and, we shall see, an appeal against Haji-Ioannou 279, to the Court of Appeal, was dismissed). 

Haji-Ioannou 279 - the facts 

In Haji-Ioannou 279, on 31.3.99, the defendant (the receiving party) received a costs order, subject to a detailed assessment if not agreed, in its favour against the claimant (the paying party). So the receiving party ought to have issued a notice of commencement, by 30.6.99 (Haji-Ioannou 1663, paragraph 5). In fact, the notice of commencement was not served until 1.7.04 (5 years later[20]). On 9.9.05, the paying party applied for relief, by way of: (a) a disallowance of interest; and (b) disallowance of a proportion of the receiving party's costs. On 26.9.05, at first instance, Costs Judge Seager Berry dismissed the paying party's application. The paying party appealed, and this appeal can before Lindsay J (the first appeal).

Haji-Ioannou 279 - first appeal 

In Haji-Ioannou 279, Lindsay J said, at paragraph 10:

'It is convenient to speak of those last words of 47.8(3) - “but must not impose” onwards - as “the Proviso”...Before we go on to look at the CPR 44.14 referred to, it is as well to pause to consider the terms of 47.8. The power to disallow which it confers is exclusively as to one or other of the two kinds of interest to which it refers; it does not permit any disallowance of costs. But the sanctions available under 44.14 to which the Proviso refers relate (as we shall come on to) exclusively to costs and not to interest. The Proviso thus does not operate as a true proviso; it does not operate to exclude some sanction which, but for the Proviso, would have been capable of application under the body of the rule. Instead it serves to emphasise to the court the boundary - the disallowance of interest only - of the sanction available under 47.8(3). There cannot, in such a case, for example, be anything deducted from the amount of any sum of principal awarded to the receiving party in any judgment in his favour nor, say, can there be some qualifying of the terms of any declaration or other relief which he had obtained. It cannot sensibly be said where the pre-conditions of 47.8(3)(a) or (b) are met and there is a disallowance of interest, that no other sanction can then ever be imposed as that would be to stop at the words “but must not impose any other sanction” without paying regard to the remaining words “except in accordance with rule 44.14” (our emphasis)' [words underlined as in italic in original]

Lindsay J in Haji-Ioannou 279 continued, at paragraph 11:

'Section 18 of the 1838 Act makes an order for costs a judgment debt within the meaning of s 17 of the same Act – see Powell v Herefordshire HA [2003] 3 All ER 253 at 255 para 8. In the case at hand the Court of Appeal, had it paused until the CPR came into effect, could have provided for interest on costs to have run from some date other than the date of their award – see CPR 40.8 and 44.3(6)(g) – but as at 31 March 1999 no such power existed and the 1999 Order thus could not make any such special provision as to interest on costs. Accordingly interest on costs runs from the date of the 1999 Order. It runs from that date and not from either the beginning or the end of the assessment process. By delaying his commencement, the receiving party, at any rate where the paying party does not intervene under 47.8(1), thus, in the absence of a disallowance or concession as to interest, prolongs the period in respect of which the paying party would be required to pay interest. But the paying party has the remedy of 47.8(1) in his hands and could, of course, further or alternatively reduce his liability as to interest by making a payment on account. Where the receiving party suffers a disallowance of interest or makes a concession to the same effect there is a corresponding benefit to the paying party who, in any event, by reason of the receiving party's delay, has the benefit of having still in his hands such principal monies as, had the receiving party acted more promptly, would have had to be paid over to that receiving party. Delay on a receiving party's part can in such circumstances thus represent a self-inflicted wound on the receiving party and something of a gratuitous windfall to the paying party.

Lindsay J in Haji-Ioannou 279, then turned to the sanctions that may be imposed in accordance with r.44.14 (misconduct). After quoting r.44.14 (now r.44.11), Lindsay J in Haji-Ioannou 279 said, at paragraphs 12 and 13:

'Little is to be made of the word “misconduct” in the heading. It does not appear in the body of the rule. Moreover, it is very easy to imagine circumstances falling within 44.14(1)(a) where nothing fairly describable as “misconduct” has occurred. One would hardly describe as involving “misconduct” the case of, say, a litigant in person whose failure to comply with a rule is demonstrated to have been wholly referable to serious illness or serious accident and injury.

It is plain from its terms and it is common ground before us that 44.14 includes no provision for disallowance of either of the two classes of interest disallowable under 47.8; 44.14, so far as concerns disallowance under 44.14(2)(a), provides only for disallowance of costs.'

Lindsay J in Haji-Ioannou 279 went on to reject a number of argument put forward, Lindsay J rejected the argument that:

(1) there may be an inconsistency, or conflict, between r.47.8 and r.44.14 (now r.44.11). Lindsay J said '...one relates to disallowance of interest and the other to disallowance of costs but the former makes it clear that the possibility or fact of disallowance of interest does not of itself preclude the disallowance of costs.' (paragraph 14)

(2) '...before there could be a disallowance by reason of the receiving parties having failed, within 44.14(1)(a), to comply with a rule, practice or Court Order, it would have to be shown that such failure had caused some identifiable tranche of costs to the paying party and that it was only that tranche which then could be disallowed.' (paragraph 14). Lindsay J said, at least a reason was, '...there is no express reference to any causative connection being required in 44.14(2)(a), that there is...no necessity to imply any such requirement, that the draftsman shows, from the nature of the provisions he makes in 44.14(2)(b), that when he intends a causative link he knows how to provide one and that the expressio unius canon of construction therefore suggests that no causative link was intended under 44.14(2)(a).' (paragraph 14)

(3) '...where the only rule which the receiving party has failed to comply with is the three-month time limit of 44.7 then the only possible sanction is a disallowance of interest under 47.8 and not any disallowance of costs under 44.14.' (paragraph 15). Lindsay J observed that, '...had that been intended the Proviso would have stopped at the words “but not impose any other sanction” whereas, as we have already noted, they do not stop there but rather go on to refer to 44.14 sanctions being available. The concluding words of the Proviso would hardly have referred to 44.14 sanctions were they to be unavailable in all circumstances' (paragraph 15)

(4) where a Court imposes a r.47.8 disallowance of interest, as a matter of jurisdiction, the Court cannot go on to impose a r.44.14 (now r.44.11) disallowance of costs, save in exceptional circumstances (paragraph 16). Lindsay J reasoned that '...[h]ad that been intended one could reasonably have expected to see the Proviso concluding with words such as “… save, and only in exceptional circumstances, in accordance with rule 44.14” and to find some proviso in 44.14(1)(a) excluding its applicability, save in exceptional circumstances, where interest had been already or was to be disallowed by order of the court under 47.8. Nothing such is to be found expressed in either rule and, as we find no inconsistency between the two rules, we see no need to make any implications in order to avoid it.' (paragraph 16)[21]

A factor in whether to impose a sanction, under r.47.8(3), on the receiving party, is the fact the paying party did not deploy the option, always available to it after the 3 months has expired, to make a r.44.8(1)-(2) Application, and counter the receiving party's delay.

Haji-Ioannou 1663

As stated, Haji-Ioannou 279 was appealed to the Court of Appeal. In the Court of Appeal, in Haji-Ioannou 1663, Longmore LJ (with whom Arden LJ and Sir Andrew Morritt C agreed):

(1) said that the Court of Appeal intended to '...give some guidance as to how the discretion vested in the costs judge by CPR r 44.14(2)(a) should be exercised.' (paragraph 1; now r.44.11(2)(a)). 

(2) said, 'It is the inter-relationship between rule 44.14 and rule 47.8 that lies at the heart of this appeal.' (paragraph 2);

(3) noted the basic breach by the receiving party. That the notice of commencement was not served until 1.7.04 (paragraph 6);

(4) recorded that 2 arguments, deployed by the paying party in Haji-Ioannou 279, were no longer pressed by the paying party, that:

(a) '...in the event of delay in the commencement of assessment proceedings, the only possible penalty was the disallowance of interest;' (paragraph 8)

(b) '...there was some sort of jurisdictional condition precedent to the exercise of the power to disallow costs under CPR r 44.14 to the effect that there had to be exceptional circumstances of some kind in the case.' (paragraph 8)

Longmore LJ remarked that, neither argument was pressed before the Court of Appeal, '...no doubt for the excellent reasons set out in the judgment of Lindsay J.' (paragraph 8)

(5) recorded that the paying party did maintain that, '...before any disallowance of costs could be made pursuant to rule 44.14(2)(a), it had to be shown that the failure to commence the detailed assessment in time had caused the costs (which were to be disallowed) to be incurred or had caused at any rate some costs to be incurred.' (paragraph 8)

As to this, Longmore LJ:

(a) noted that Lindsay J had rejected this argument, for 3 separate reasons plus a '...conceptual difficulty of understanding how delay in assessing costs already incurred can have caused such costs to have been incurred' (paragraph 8). On the point, Longmore LJ used somewhat ambigous language, but did agreed, it seems with Lindsay J's reasoning, but upheld the decision: '...in any event, for the simple reason that, whereas rule 44.14(2)(b) does in terms require a causative link when it is shown that a party is at fault (in the sense of being guilty of unreasonable or improper conduct) and an order is sought that that party or his legal representative pay costs, rule 44.14(2)(a) does not. It is only rule 44.14(2)(a) on which the [paying party] in this case relies.' (paragraph 8)

(6) agreed that there was '...no inconsistency between rules 44.14 and 47.8' (paragraph 9), but did find that was a 'certain tension between them' (paragraph 9). Longmore LJ:

(a) opined that 'A failure to commence detailed assessment within the three months required by rule 47.7 may fairly be described as a failure to comply with a rule and, therefore, at least be included in the general term “fails to comply with a rule” within the words in rule 44.14(1)(a).' (paragraph 9);

(b) resolved the tension by holding that, the correct interpretation must be that, not '...every failure to commence detailed assessment proceedings should be regarded as misconduct and permit the disallowance of costs as well as interest.' (paragraph 9). That the heading to r.44.11 (then r.44.14) gave a clue - using the word 'misconduct' in it. That this pointed '...to the nature of the court's discretion.' (paragraph 9). On this distinction, and when the discretion to make a r.44.11 (then r.44.14) order disallowing costs, should be exercised, Longmore LJ said:

'Some breaches of the rules can be more readily described as misconduct than others and the rules trust the costs judges, in the course of exercising their discretion, to recognise such misconduct when it occurs. It is difficult to be more helpful than to say that a “bad” breach of a rule viz (for present purposes) the rule requiring detailed assessment proceedings to be commenced within three months will enable a costs judge to exercise the power to disallow some or all of the costs which he is assessing. In other words there will usually have to be a breach of the rule which can properly be categorised as “misconduct”. An inordinate and inexcusable delay which has prejudiced the paying party may well come within this category; excusable, although inordinate, delay may not, especially if it has caused no prejudice. The important point is that, while a non-compliance with a rule, practice direction or court order is the only jurisdictional requirement for the exercise of the power contained in rule 44.14, it will usually be appropriate as a matter of discretion to consider the extent of any misconduct which has occurred in the course of such non-compliance. I deliberately refrain from saying anything further about the circumstances in which it may be appropriate for the powers under rule 44.14 to be exercised.' (paragraph 9)

(c) considered some authorities, namely: (i) In re Homes Assured Corpn plc [2002] 1 Costs LR 71[22]; (ii) Botham[23], and (ii) Less. In relation to Less, he:

(I) summarised it as: 'Warren J thought that “mere delay” would not be enough to justify the exercise of the power to disallow costs unless there were “exceptional circumstances”. Inordinate and inexcusable delay causing prejudice to the paying party might well constitute “exceptional circumstances”' (paragraph 11); and

(II) said 'I would not therefore disagree with what Warren J said, while preferring to say that it will only be in the event of a breach of the rule which can properly be categorised as misconduct that it will usually be appropriate to use the power to disallow costs.' (paragraph 11)

(7) returned to when, and how frequently, the Court should be imposing r.44.11(2)(a) (then r.44.14(2)(a)) disallowance of costs. Longmore LJ

(a) recorded the rival submissions from the parties on this, and said he preferred the submissions of the receiving party (set out in a footnote[24]);

(b) said that 'Of course delay is to be deprecated but where the relevant rule not only gives to the party at the receiving end of the delay the option of preventing further delay by himself taking the initiative but also spells out the normal sanction for penalising such delay (as rule 47.8 does), it seems to me that the court should be hesitant to exercise further powers to impose further penalties by way of reducing otherwise allowable costs.' [bold added] (paragraph 17). In essence, normalising disallowance of costs as a further sanction, would lead to '...a real danger of encouraging satellite litigation.' (paragraph 18)[25]

(8) on the facts in Haji-Ioannou 1663, Longmore LJ, referred to the 'good sense of the decision of Lindsay J' (paragraph 20) and that he could '...see no error in the exercise of his discretion by the judge' (paragraph 13). He agreed that there were no sufficient reasons for disallowing costs as well as interest (paragraph 13), stating that:

(a) two particular features in the case had to be borne in mind, when the discretion to impose a r.44.11(2)(a) (then 44.14(2)(a) disallowance of costs, was being considered.

(i) first - the paying party had always accepted that the delay has caused him no prejudice (paragraph 12);

(ii) secondly, '...even though the delay is inordinate, it is not inexcusable, since it was clear that no money to pay any assessed costs would be available until the claimant's Greek proceedings had come to some conclusion which has not yet happened.' (paragraph 12)

(b) Lindsay J had been correct that:

(i) the receiving party's delay was not such as to be wilful, deliberate or contumelious;

(ii) claimant as not being a model of cooperative expedition (which Longmore LJ said was a 'distinct understatement' (paragraph 13) and that that fact underlined Lindsay J's view that further sanction would be disproportionate and unnecessary.

The appeal in Haji-Ioannou 1663 was dismissed. 

Costs 

As to costs of a r.47.8(1)-(2) Application, see FN, wherein, Hamblen J said 

'...the general position in relation to applications under CPR 47.8 is that the party who has not commenced detailed assessment within the requisite three months is ordinarily be [SIC] required to meet the costs of the application. This is pointed out in Cook on Costs at paragraph 28.19 which states as follows:

“Furthermore, the receiving party almost always ends up paying the costs of the application since there are few cases where the receiving party could not feasibly have a bill drawn and served notice within three months of the right to do so having arisen.”'[26]

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