Defendants would have been wise to instruct a Costs Lawyer

In National Bank of Kazakhstan & Anor v The Bank of New Your Mellon SA/NV, London Branch & Ors [2021] EWHC B7 (Costs), the Defendants failed to have a default costs certificate set aside and were ordered to pay US$3million in costs.

Following service of a notice of commencement upon them on 15 December 2020, the Defendants failed to serve points of dispute and a default costs certificate in the sum of US$3million was lodged.

The Defendants lodged an application to have the default costs certificate set aside, however, it is normally a requirement that such an application is supported by evidence.  The Defendants failed to attach points of dispute to the application.

Whilst the Court is permitted to set aside the default costs certificate if there is good reason to do so (CPR 47.12(2)) and the application is filed promptly, it is expected that, in order for the application to succeed, the applicant must file with it a copy of the bill of costs, the default costs certificate and the draft points of dispute it intends to serve in the event that the application succeeds.

In applying the three-stage Denton test, Costs Judge Rowley refused the Defendants’ application, saying the following:

i)"There is no doubt in my mind that the failure to comply with the time limit for serving points of dispute is a serious breach of the rules and it clearly has a significant consequence on the paying party who is, absent relief, prevented from taking any further steps to challenge the receiving party’s bill" (Denton stage 1).

ii)"There is no good explanation for the breach. There was simply an oversight which cannot be a good reason" (Denton stage 2).

At paragraph 31 of his judgment, he went onto say:

“Having received a default costs certificate, I would have expected the speed of instruction of costs lawyers to have increased rather than decreased.”

and at 32:

“Moreover, I would have expected any litigation firm to have links with external costs lawyers so that instructions could be sent immediately. In these days of costs budgets and Costs and Case Management Hearings, the interplay between cost lawyers and instructing solicitors goes far beyond the traditional instruction of a cost draftsman to prepare a bill (or points of dispute) at the end of a case when the substantive proceedings have concluded.”

In going onto consider all the circumstances of the case, as required by the third stage of the Denton criteria in order to allow the court to deal with the application fairly, Costs Officer Rowley dismissed the Defendants’ application on the basis that they had failed to act promptly in “providing material on which the court’s discretion may be based”.

Costs Officer Rowley’s advice is clear: instruct a Costs Lawyer early on and develop links with them so that they can be called upon in an emergency, if needs be.  Contact BarnsChapel at info@barnschapel.co.uk or 01244 256865 to discuss your costs needs.

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