Costs: High Court critical of ‘multiple errors’ in service of Notice of Commencement

The Senior Courts Cost Office recently handed down judgment in the matter of Gregor Fisken v Carl on a number of applications dealing with several issues including defective service and setting aside of a Default Costs Certificate.

Gregor Fisken Ltd v Carl [2021] EWHC B9 (Costs)

Handing down judgment, Costs Judge Leonard stated in the strongest possible terms that the identified errors in service could have been avoided with “a little diligence”.  Furthermore, he highlighted that the “provisions of the CPR for service upon a solicitor, for service by email and for service to the right postal address should be familiar to every solicitor who conducts litigation”.

In conclusion, it was held that “CPR 3.10 does not operate to validate service that does not comply with the rules. Nor would it be right, in all the circumstances, to make an order under CPR 6.27 retrospectively validating service upon the wrong person by the wrong means”.

Background

The dispute relates to an alleged breach of contract arising from a purchase agreement for the purchase of a 1962 Ferrari 250 GTO. The Claimant sought an order for delivery up of a missing gearbox not provided with the vehicle.  The Defendant issued a counterclaim for the cost of the gearbox.  At trial in December 2019, judgment was given for the Claimant by HHJ Pearce. The Defendant was ordered to pay costs on the standard basis until January 2019, with subsequent costs to be assessed, if not agreed, on an indemnity basis.

There is an ongoing appeal in respect of the trial judgment of HHJ Pearce, the application of which was made in August 2020 and heard in the Court of Appeal in May 2021.  During the initial proceedings, the Defendant had been represented by Davis Woolfe. In August 2020, Davis Woolfe corresponded with the Claimant’s solicitor to confirm that they were no longer instructed and provided the Defendant’s direct email address. Davis Woolfe were not removed from the Court record. Nonetheless, correspondence did pass back and forth between the Claimant’s representative and Defendant following this email.

In October 2020, the Claimant issued a Notice of Commencement and Bill of Costs to the Defendant’s email address and a property owned by the Defendant, which did not qualify as an address for service.

In the absence of Points of Dispute being filed, a Default Costs Certificate (“DCC”) was obtained by the Claimant on 27 November 2020. Charles Russell Speechly (“CRS”) had confirmed their instruction by the Defendant and addition to the Court record on 25 November, seeking any relevant documents and issuing a proposal to stay the detailed assessment proceedings pending the ongoing appeal.

The Claimant’s representative served the DCC on CRS, who argued the DCC was not properly obtained and sought to set it aside. In the absence of an agreement, CRS stated an application would be made pursuant to CPR 47.12(1). During subsequent exchanges, the Claimant’s representative stated they “were prepared to set aside the Default Costs Certificate expressly on the basis that points of dispute would be served by 23 December, but CRS had not specifically agreed to that.”

In the absence of any agreement, various applications were made to the Senior Courts Costs Office (“SCCO”) namely:

• Defendant application for a general extension to serve the Points of Dispute.
• Defendant application to aside the DCC.
• Claimant application seeking that the Court remedy any error of service regarding the Bill of Costs and retrospectively validate service if necessary.
• Defendant application to stay the detailed assessment proceedings pending determination of the appeal.

Submissions

The Defendant submitted that the Claimant made three errors in serving the Notice of Commencement. Firstly, the correct course of action was to serve upon Davis Woolfe, who were still on the Court record having not complied with CPR 42.2. Secondly, in serving the Defendant personally by email, the necessary enquiries required by PD6A 4.1 and 4.2 had not been completed.  Finally, the service by post was defective, as the address was not valid.

On this basis, the Claimant’s application seeking an order remedying these failures was “a collateral attack upon the mandatory provisions of CPR 47.12(1),” and the result “would be a serious subversion of the [Civil Procedure] Rules.”

In response, the Claimant submitted that “Davis Woolfe indicated that the Defendant would accept service by electronic means and so satisfied the requirements of CPR 6.23(6) and of paragraph 4.1 of Practice Direction 6A.” Furthermore, the Defendant had not asserted the email had not come to his attention. Therefore, it should be treated as valid service, as CPR 3.10 could be “construed as of wide effect so as to be available to be used beneficially wherever the defect has had no prejudicial effect on the other party.”

In the alternative, the Claimant sought an order pursuant to CPR 6.15 that sending the Bill of Costs to the Defendant by email was good service. This was sought on the basis that in sending the Bill of Costs via email, “that the Defendant learned of the existence and contents of the Bill” and that “that the Defendant learned of the existence and contents of the Bill” and that “the method of sending the documents was the one which the Defendant had in fact requested through Davis Woolfe”.

Outcome

Costs Judge Leonard concluded that the Notice of Commencement was not validly served.

All three of the criticisms identified by the Defendant were “justified”, and the “errors could have been avoided.” Regarding the application of CPR 3.10, it was held that this “does not operate to validate service that does not comply with the rules,” nor that it would be appropriate to make an order under CPR 6.27 validating the inadequate service.  The application for retrospective validation was refused.

Costs Judge Leonard referred to the submissions of Defendant’s Counsel that “an order under CPR 6.27, retrospectively authorising service on the facts of this case, would offer an indication that even for a solicitor, compliance with the rules is optional.”

Given the above finding, there was no entitlement to the DCC. It was therefore set aside pursuant to CPR 47.12(1).

A timetable setting out a reasonable period for the preparation and service of Points of Dispute was to be set “unless the parties agree that there should be a stay pending the outcome of the appeal.” It was held that any application for the general extension for Points of Dispute or stay pending the appeal should have been issued when the application for permission to appeal was filed in August 2020.

What can we learn?

• The continued take away from these types of claim is the importance of knowing and understanding the rules of service. Had the Claimant’s representatives shown, in the words of Costs Judge Leonard, “a little diligence”, service could have been effected correctly saving a significant amount of time and costs.
• In considering the representations of the Claimants regarding in respect of setting aside the DCC, it was highlighted that that the “setting aside wording of CPR 13 is materially different from that of CPR 47.12(1).” The provisions of 47.12(1) are wider than that of CPR 13, with a wider test allowing a DCC will be set aside “where the receiving party was not entitled to [the DCC], whatever the reason for that may be.” By contrast, the test under CPR 13.3 requires consideration of the two-stage test.
• By way of comparison to this decision, Costs Judge Leonard also considered the recent decision of Serbian Orthodox Church - Serbian Patriarchy v Kesar & Co. In this instance, an application had been made to set aside a DCC. In summary, “the notice of commencement and supporting documents had been sent to an email address which the solicitor had used, and which was set up not to notify senders that the email was no longer in use or to direct them to a different email address, but automatically to forward the documents to the right address”.  Mr Justice Foxton had found that that was good reason to order that service be retrospectively validated, even though service was not initially effected correctly.