This post looks at the power the courts have to make costs orders when making an order of its own motion or without notice to one party. A party attempting to challenge or vary such an order must act promptly.
The court’s power to make orders without notice
CPR 3.3 gives the Court the power to make orders of its initiative. CPR 3.1(5) states that, when this is done:
- A party affected by the order may apply to have it set aside (CPR 3.1(5)(a))
- The order must contain a statement of the right to make such an application. (CPR 3.1. (5) (B)).
The rules state that any application to set aside must be made:
- Within the period specified by the court (CPR 3.1(6) (a)).
- Within 7 days of the service of the order (if the court has not specified a period) (CPR 3.1(6) (b)).
Similarly CPR 23.10 states that where a court has made an order where the application was heard without notice a person not served with the notice can apply to have it set aside or varied. That application must be made within 7 days of service of the order on the person making the application.
Mackay –v- Ashwood Enterprises Ltd
In Mackay –v- Ashwood Enterprises Ltd  EWCA Civ 959 the Court of Appeal considered the issue of whether a court has power to make an order for costs in a without notice hearing. Equally important the judgment stressed the importance of an affected party making a prompt application for a variation
THE WITHOUT NOTICE HEARINGS
During the course of litigation the judge made a without notice order when it appointed receivers: That order included an order for costs:
“The Defendants are jointly and severally liable for and must pay the
Claimants’ costs of and occasioned by the Application, to be
summarily assessed on paper by Peter Smith J”
28. The Application was defined as the application by the court-appointed receivers. The order concluded with the statement that any party to the application has the right pursuant to rule 23.10 to apply to the judge to set aside or vary the order. Despite the reference in the course of discussion before the judge on 29 June to a return date, no return date was specified in this order, as it was in the Receivership Order”
The order also gave the parties liberty to apply generally.
The power under CPR 23.10 applies to an application to vary the costs of the order made
Lord Justice Lloyd held that the power to apply to vary under CPR 23.10 applies as much to a costs order made as to the substantive order.
“70. Mr Justice Peter Smith said at paragraph 27 that the affected party in such a situation “has an absolute unfettered right … at least once to come back to court to challenge the making of the order”. I agree that there is and must be such a right. In general, it seems to me, that right is conferred by, and confined to, rule 23.10. In a case in which the party affected can fairly say that seven days from being given notice of the order is too short, it is likely to be possible to obtain an extension of the time, so long as the party has acted reasonably promptly. I am not sure that I would recognise the existence of a free-standing right to apply, outside the scope of the rule 23.10 or whatever express provision is made in the original order by way of liberty to apply. I do, however, agree with the underlying point, that a party affected by an order made without notice must have a right to apply back to the first instance court, and not merely a right to appeal. That applies to the order for costs, as it does to other aspects of the order made without notice.”
Delay in making an application to vary an order is relevant factor
The Defendants in McKay could not make an application under the CPR. They were months beyond the seven day period. They attempted to rely upon the general “liberty to apply” provisions made in the order.
Both the judge and the Court of Appeal held that these applications were made too late.
“The liberty to apply: timing”
71. The right to apply under rule 23.10 is exercisable within 7 days after first having notice of the order, subject to the possibility of obtaining an extension of that period. The general liberty to apply inserted by the order made on 5 July was not time-limited in terms. Nevertheless, I agree with the judge that discretionary factors arise when such an application is made, and one of the factors that is plainly relevant is that of delay or, on the other hand, diligence and promptness in making the application. Mr Page argued that the applicant’s position under such a right is not affected by the lapse of time. I do not accept that. In a case where the party affected has known of the order in question for some time, has not taken steps to have it set aside or varied despite that knowledge over an extended period, and does not offer a convincing explanation for its failure to act sooner, then it seems to me that the court is well entitled to take the unexplained delay into account in considering how to deal with the application. It may not be conclusive, if the merits are very strong in favour of allowing the application, but it is at least relevant and, often, the delay may suggest that the merits are far from strong, since otherwise the applicant would have made its application much sooner.” (emphasis added).
TIME IS OF THE ESSENCE
The 7 day period to vary an order is missed in a surprising number of cases. In several cases I have seen the Court does give a date for compliance and that date has passed before the Order has been drawn up and sent to the parties.
THE ESSENTIAL PRACTICAL POINTS
- When a court makes a without notice order it can make an order as to costs.
- Any application to vary the order must, normally, be made within 7 days.
- Even if there is general liberty to apply to vary an order any application to vary must be made promptly.