Failure to validly serve a bill of costs invalidated a default costs certificate

In a decision that should operate as a salutary warning to disputes lawyers, Costs Judge Leonard has dismissed a claimant’s attempts to rectify the position where avoidable errors were made in service of a bill of costs. The judge commented that the rules regarding service should be familiar to all litigation practitioners, that the errors had been avoidable and that the CPR does not operate to validate service that does not comply with the rules, nor to retrospectively validate service upon the wrong person by the wrong means.

Background

In the recent case of Gregor Fisken Ltd v Carl [2021] EWHC B9 (Costs) the claimant was successful in proceedings against the defendant for a breach of contract claim relating to a purchase agreement for a Ferrari car delivered without its original gearbox. The claimant purported to serve its bill of costs by email on the defendant personally, by posting to solicitors who were not yet on the record for the defendant and to a business address for the defendant, but not one nominated for service. As no response was received from the defendant, a default costs certificate was obtained. The defendant, who was seeking to appeal the original decision, applied to set the default costs certificate aside on the basis of defective service and for the costs proceedings to be stayed.

The claimant argued that the court should use its discretion on costs to determine that service had been properly effected.

The defendant submitted that the claimant had made a series of errors on service and that the default costs certificate should be set aside:

1. Attempting to serve the bill on the defendant personally instead of his original solicitors who remained on the record to accept service of court proceedings on their client’s behalf.
2. Attempting to serve the bill by email without obtaining prior permission to do so.
3. Attempting to serve the bill at an address for the defendant but which was not a valid address for service.

Decision

The court found that the defendant had not deliberately tried to obstruct the proper service of the bill and that the claimant had not undertaken proper checks which would have made the position clear as to the correct address for service. The court further found that the claimant had not taken reasonable steps to effect proper service of proceedings on the defendant. Whilst the court does hold a discretion to approve service retrospectively, Costs Judge Leonard was unwilling to use it here given the claimant’s failure to undertake proper checks concerning the correct address for service. Furthermore there was clearly a set of errors which were both attempting service on the wrong person and, to compound the issue, at the wrong address.

As the bill had not been properly served, the court agreed that the default costs certificate should be set aside and a fresh timetable ordered for service of the bill. Time for service by the defendant of points of dispute to the bill of costs would run from when service was properly effected.

Comment

Effective service of proceedings is a common issue for consideration to those involved in litigation and is not just applicable to costs proceedings. Careful attention should be given to the correct address for service and whether the parties have instructed lawyers to accept service of court documents. Parties should periodically review this information and update any changes, if a party changes their lawyer at any point and if there is a costs lawyer instructed at the conclusion of the main case. Unless a formal notice of change is filed, the solicitors acting for a party will remain on the record for service and not their costs lawyers who often act as solicitors’ agents. With service of proceedings electronically being common during the COVID-19 pandemic, this case is a salutary lesson in ensuring permission is obtained regardless. The key take away is to take reasonable steps to ensure that the service is likely to be properly effected.

The authors would like to acknowledge the assistance of Jason Furtado, paralegal at CMS Sheffield, in preparing this article.