Non-Party Costs Order Application Denied Due to Significant and Unexplained Delay

BAILEY & ORS V GLAXOSMITHKLINE UK LIMITED V BRIT UW LIMITED [2025] EWHC 186 (KB)

High Court Denies Non-Party Costs Order Extension Against ATE Insurer Brit UW Limited Due to Significant and Unexplained Delay Following Seroxat Litigation Conclusion.

The Defendant does not appear to have considered the workability of the deadline when the order of 3 July 2020 was made. At no time thereafter did the Defendant appear to appreciate that it would need a substantial extension of the time within which Lambert J had sought to have the residual issues in this litigation dealt with, and it never showed any sense of urgency in pursuing the question, even after it had told Brit that it would be making its applications.

Citations

Murphy v Young & Co.’s Brewery [1997] 1 WLR 1591 An insurer who voluntarily undertakes an obligation to indemnify an insured’s liability for adverse costs may be directly liable for a costs order under certain circumstances. Yesss (A) Electrical Ltd v Warren [2024] EWCA Civ 14 Relief from sanction under CPR 3.9 is not required unless a court order imposes an express or implied sanction for non-compliance; setting a deadline does not inherently imply a sanction if permission can be sought for compliance after the deadline. Viegas v Estate of José Luis Cutrale [2024] EWCA Civ 1122 Deadlines that do not carry implied sanctions must be analysed through the overriding objective to determine whether proceedings should be permitted after expiry. FXF v English Karate Federation Ltd [2024] 1 WLR 1097 Three categories of sanctions exist: express sanctions, implied sanctions requiring court permission to proceed (e.g., appeal deadlines), and consequential steps following non-compliance (e.g., default judgments); implied sanctions are narrowly construed. Sayers v Clarke Walker [2002] EWCA Civ 645 Failure to lodge a notice of appeal on time carries the implied sanction of losing the right to pursue an appeal unless relief is granted. Salford Estates v Altomart [2015] 1 WLR 1825 Failure to lodge a respondent’s notice within the prescribed time implies a sanction, barring the introduction of grounds not raised in the lower court without permission. Talos Capital Ltd & Ors v JCS Investments Holdings XIV Ltd & Ors [2014] EWHC 3977 (Comm) Failure to meet a deadline for filing an acknowledgment of service implies a sanction, meaning jurisdiction challenges may not proceed without relief. Cunico Marketing FZE v Daskalakis [2019] 1 WLR 2881 Non-compliance with acknowledgment of service deadlines requires relief from sanction before further procedural rights, such as jurisdictional challenges, can be exercised. A Khan Design Ltd v Horsley [2014] EWHC 3019 Failure to comply with a court-imposed election deadline for damages or an account of profits may preclude entitlement to the remedies without relief from sanction. Denton v T H White Ltd [2014] 1 WLR 3926 The test for relief from sanctions involves assessing the seriousness or significance of the breach, whether there was a good reason for non-compliance, and all the circumstances of the case. Little Lever Working Mens Club v The Commissioners for His Majesty’s Revenue and Customs [2023] UKFTT 00714 Procedural time limits must be strictly observed, and relief from sanction will not be granted solely because the underlying claim has undeniable merit. Excotek Ltd v City Air Express Ltd (In Liquidation) [2021] EWHC 2615 Relief from sanction may be denied even where non-compliance is not deliberate, following an exacting analysis of the reasons and effects of the breach. Diriye v Bojaj [2020] EWCA Civ 1400 The absence of prejudice caused by delays does not mitigate the need for robust enforcement of procedural rules, especially in sanction-based cases. Caliendo v Mishcon de Reya [2014] EWHC 3414 Applicants for relief from sanctions must act promptly following non-compliance; unjustified delays weigh heavily against granting relief.

Track allocation housing disrepair CPR 46.13 settlement sum costs restriction SCCO

MRO fee markup cap 25% detailed assessment personal injury Senior Courts Costs Office

Security for costs refused CPR 25.27 very high probability success excessive estimate King's Bench

IPEC scale costs transfer Patents Court PD 30 para 9.2 costs caps Court of Appeal

Costs budget variation CPR 3.15A promptness significant development unfair prejudice Chancery Division

Costs budgeting inter partes proportionality high hourly rates AI disclosure Patents Court CPR 3E

Beneficiary personal liability section 71(3) Solicitors Act 1974 indemnity costs VAT self-supply SCCO

Summary assessment indemnity costs unless order payment on account disclosure default Chancery Division

Provisional assessment set aside CPR 3.1(7) points of dispute filing duty PD 47 para 14.3 SCCO

Fixed recoverable costs police claims CPR 26.9(10)(e) intentional tort exemption

Key Points

A deadline imposed by a court for making an application does not inherently carry an implied sanction unless explicitly provided or falling within recognised categories, such as notices of appeal. Any application after such a deadline requires judicial permission rather than relief from sanctions. [12-14, 35-39]
When seeking permission to proceed after a court-ordered deadline, the application should generally be assessed against the overriding objective under CPR 1.1. However, the same considerations found in the Denton test, such as seriousness of the delay and the reasons for it, remain relevant. [24-27, 40-41]
A long extension of time beyond a set deadline demands cogent justification, particularly where the original order was crafted to ensure the expeditious resolution of litigation and residual issues. [21, 42-44]

Even in the absence of an express or implied sanction, the need to enforce compliance with court orders strongly influences the court’s discretion. Failure to act with urgency or to think through the implications of a procedural order may weigh heavily against granting retrospective extensions. [43, 45-54]
A party facing uncertainties, such as whether an insurer will honour liabilities, should consider making a protective application for an extension of time or raising the issue with the court promptly, rather than waiting indefinitely for clarity. Inaction under such circumstances may not be viewed favourably by the court. [46-50, 52-54]

At no time did the Defendant take steps to extend the deadline set by Lambert J despite being aware of the ATE insurer's potential involvement and the possibility of a shortfall in costs recovery. The Defendant's prolonged inaction, including unexplained gaps in correspondence, reflects a lack of urgency and insufficient justification for seeking an extension years after the deadline expired.

Key Findings In The Case

The Defendant failed to pursue any NPCO application or seek an extension of time before the 31 July 2020 deadline, despite the ATE insurance policy being a central factor in prior security for costs decisions, and instead proceeded slowly in investigating whether such an application might be necessary. This delay constituted an omission to consider the implications of Lambert J’s procedural order. [44-45, 51]
The Defendant’s inaction after learning on 13 November 2020 that the Claimants had filed an insurance claim, and subsequent prolonged delays in contacting Brit until 6 August 2021, demonstrated a lack of diligence in dealing with the matter, particularly as no protective application for an extension of time was made. [28-30, 52]
Subsequent delays in communication between 12 January 2022 and 20 April 2023, during which the Defendant allowed the matter to go dormant, showed a failure by the Defendant to act in a timely or urgent manner to resolve growing uncertainties about the insurance claim and its ability to seek a NPCO. [31, 53-54]

The Court found that, while Brit’s lack of substantive response for an extended period was unhelpful, it did not absolve the Defendant of its responsibility to act proactively and expeditiously, especially as it bore the onus to address the consequences of an expired deadline for making a NPCO application. [32, 54]
The delay of more than three years between the court-ordered application deadline and the Defendant’s eventual request for an extension, compounded by the insufficient justification for this delay, led the Court to conclude that granting an extension would not align with the overriding objective or the need to enforce compliance with court orders. [42-44, 56]

The Defendant was very slow both to realise that the application might be needed and to act on that realisation. The risk that the insurer might not pay out was recognised in Foskett J’s judgment of December 2017... On that date [29 July 2020] (or earlier), it would have been reasonable for them to ask themselves what the consequence of Lambert J’s order would be if there was no insurance recovery in the usual way.

Background

The legal proceedings stem from a complex and lengthy pharmaceutical litigation involving several hundred claimants against GlaxoSmithKline UK Limited concerning its anti-depressant medication Seroxat. The claim, originally commenced on 30 April 2004, represented a substantial group litigation alleging the medication was defective and had caused harm to the claimants.

The litigation’s procedural history reveals significant challenges and transformations. Initially publicly funded, the claim underwent dramatic changes when the Legal Services Commission discharged the public funding certificate in November 2010, following counsel’s advice questioning the claim’s merits. This decision precipitated a significant reduction in claimant numbers, with 369 discontinuing their claims while 124 challenged the decision.

By January 2015, a review panel had conclusively rejected the claimants’ challenge, effectively terminating their public funding. The litigation’s landscape shifted dramatically when Fortitude Law entered as legal representatives for 102 claimants in July 2015, signalling new funding arrangements involving discussions with external funders and insurers.

A pivotal moment occurred on 19 November 2015 when Brit UW Limited issued an after-the-event (ATE) legal expenses policy to the claimants. This policy, providing potential cost protection up to £750,000, became a critical factor in the court’s deliberations about whether the proceedings could continue.

The trial, which commenced on 29 April 2019 before Lambert J, was effectively concluded within three days when a fundamental issue regarding the claimants’ case on defect was decided in the defendant’s favour. By 7 May 2020, the claimants submitted to judgment, with only costs arguments remaining unresolved.

Lambert J’s order on 3 July 2020 was particularly significant, ordering the claimants to pay costs on an indemnity basis and setting a crucial deadline of 31 July 2020 for any non-party costs order (NPCO) applications. This deadline became the focal point of the current legal dispute.

Costs Issues Before the Court

The primary costs issue centred on the defendant’s application for an extension of time to pursue a non-party costs order (NPCO) against Brit UW Limited, the ATE insurer. The critical questions were whether the original order carried an implied sanction for non-compliance and, if not, whether the court should exercise its discretion to grant a substantial time extension.

The Parties’ Positions

The defendant argued that no implied sanction existed in Lambert J’s original order, and therefore the application should be assessed under the overriding objective rather than the stringent Denton test. They contended that until Brit’s communication on 25 May 2023, there was no apparent need for an NPCO application.

Conversely, Brit argued that the order carried an implied sanction, necessitating the application of the Denton test. They emphasized the defendant’s significant delay, lack of urgency, and failure to proactively manage the potential NPCO application within the originally prescribed timeframe.

The Court’s Decision

The court comprehensively rejected the defendant’s application, finding that while no strict implied sanction existed, the defendant had failed to demonstrate a justifiable reason for the extensive delay. The judgment highlighted the defendant’s slow progression, missed opportunities to seek timely extensions, and lack of urgency in pursuing the potential NPCO.

Crucially, the court emphasized that the original order was designed to expeditiously resolve residual litigation matters. The defendant’s failure to promptly consider and address the potential NPCO application, despite known complexities surrounding the ATE insurance, was a significant factor in the court’s decision to refuse the time extension.

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