HT-2024-000285 - [2025] EWHC 2213 (TCC)

An appeal will be allowed if the decision below was “unjust because of a serious procedural or other irregularity in the proceedings in the lower court” (CPR Rule 52.21(3)(b)). The Appellant contends that ground arises here because it is said that the judge failed to take into account the written submissions which the Appellant had made on costs and VAT even though those submissions had been invited and were received before the handing down of the judgment. It is to be noted that although Mr Khalid by no means abandoned this ground before me he accepted that it was supplementary and his main focus was on ground 1.

In respect of costs the judge had invited submissions by 4.00pm on Friday 26^th July 2024. The Appellant’s solicitors sent such submissions in due time but they were not before the judge until 12.45pm on Friday 2^nd August 2024. The judge had by then prepared the final version of his judgment which was to be handed down on Monday 5^th August 2024. In that judgment he had recorded that he had received no submissions on costs; he noted the proposal which the Respondent had made for further directions; and set out directions for a 1 day hearing to determine costs.

On receiving the Appellant’s submissions the judge contacted the parties explaining why he remained of the view that a separate costs hearing remained appropriate. The Appellant’s solicitors responded with submissions contending that costs should be deal with on paper. The judge replied indicating that he remained of the same view and the order made provided for a separate costs hearing.

If the Appellant’s costs submissions had not been supplied to the judge before he made his decision or if he had taken no account of them there would have been a serious procedural irregularity and that would have been a sound basis for setting aside the relevant part of the order. That would have been because it would have been a serious irregularity for the decision to be made without reference to submissions which were potentially relevant and which had been filed in time. Not only would such a course have been irregular, it would have been unjust. However, that is not what happened. Instead, the submissions were put before the judge in advance of the handing down of his judgment. He considered them and explained why he still remained of the view that there should be a separate costs hearing. There was no injustice in that course.

As it was developed before me the Appellant’s argument was that the judge should have acceded to his solicitors’ proposal for a written determination of the costs as set out in their email of 4.00pm on 2^nd August 2024. This was in reality an argument that the conclusion reached was wrong rather than that it was unjust but even when it is considered on that basis it does not amount to a sound ground of appeal.

In their 2^nd August 2024 email the Appellant’s solicitors contended that it would be unfair for there to be a hearing because the Respondent would have had the Appellant’s submissions “for many months in advance of any hearing”. There is no substance in that point. First, the judge’s directions provided for the hearing to be listed on the first open date on or after 1^st September 2024 and it is clear that he was aiming to ensure that the matter was heard by the end of 2024 at the latest. Any delay would, therefore, be rather less than the “many months” to which the solicitors referred. Second, the advance knowledge would be of legal submissions as to costs rather than factual evidence. There will not have been any material prejudice to the Appellant in the Respondent having those submissions in advance of the hearing.

Before me the point was made that there was a disadvantage to the Appellant in the fact that he would be put to the expense and inconvenience of a one day hearing by way of contrast to awaiting the outcome of a paper determination. I note that the Respondent is balance sheet insolvent but even when account is taken of that there is nothing in this point. The judge considered the matter. He took the view that a determination on paper would occupy at least a day of judicial time; he noted that there might be further costs issues; he explained that the costs of the costs hearing would be “in play”; and in short, he came to the conclusion that a hearing would be the fairest and most efficient way of determining the costs issues. That was a course entirely open to him and it cannot be said that either he was wrong to reject the proposal of a paper determination nor that the decision to do so was unjust.

The judge’s final reply in the exchange of emails of 2^nd August 2024 was sent at 4.32pm and was in short terms. However, it had to be read in light of the detailed explanation given in his email of 2.46pm. When that it is done the exchanges made it sufficiently clear that it was the judge’s view that the course being adopted was fair and proportionate and also explained why he took that view. The Appellant had all that material and so there can be no question that he had not been informed of the reasons for the judge’s decision.

The judge did not revise the judgment which was to be handed down to reflect the fact that submissions had been received from the Appellant nor to explain why he was nonetheless ordering a costs hearing. It follows that paragraph 59 of the judgment as handed down incorrectly stated that no costs submissions had been received. It would have been better if the judge had revised the judgment to record the correct position. The failure to do so was an oversight. It was an entirely understandable one given that the judge had clearly been engaged on the afternoon of 2^nd August 2024 in considering the costs submissions; compiling the email to be sent to the parties; and then considering and responding to the email from the Appellant’s solicitors doubtless in addition having to deal with other matters. That oversight did not cause the decision to be unjust.

It follows that the challenge to the judge’s order for a costs hearing and the directions relating thereto fails.

The position in respect of the VAT submissions can be addressed rather more shortly. The draft judgment set out, at [53], the judge’s calculation of the sum recoverable in respect of VAT but also his reasoning for saying that VAT was recoverable saying “VAT is recoverable … because…”. The reasoning was expressed shortly but clearly. The draft judgment made it clear at [10] and [58] that the judge was inviting further submissions on four matters: editorial corrections (in the sense of typing errors and the like); arithmetical corrections of his calculations; contractual interest; and costs. The judge was not inviting submissions as to the recoverability of VAT.

The Appellant’s submissions at paragraph 19 were as to the recoverability of VAT and advanced an argument as to why the judge was wrong to say that VAT was recoverable. That was clearly not a submission as to calculation. It went beyond the submissions which the judge had invited and was an attempt to argue entitlement. Submissions to that effect are only permissible “on rare occasions and in exceptional circumstances” (R (Mohamed) v Secretary of State for Foreign and Commonwealth Affairs [2010] EWCA Civ158. [2011] QB 218 at [4] per Lord Judge CJ). This was not such an occasion and nor were the exceptional circumstances which would warrant such a course present.

The judge would have been entitled simply to disregard those submissions. Instead, he considered them and explained in his 4.32pm email why he remained of the view that VAT was recoverable. Again his reasons were short but entirely adequate for the reasoning to be clear. There is simply no substance in the contention that the earlier failure to refer the submissions to the judge led to any injustice in respect of the VAT position.

It is understandable that the Appellant feels aggrieved at the failure of the court administration to place promptly before the judge the submissions which his solicitors had filed timeously and at the fact that the judgment as handed down was not revised to remove the erroneous reference to an absence of submissions. Those oversights were regrettable but they do not form any proper basis on which it can be said that the decision was unjust.

This ground also fails and the appeal is to be dismissed.