The appeal of Smith v Kirkegaard [2024] EWCA Civ 698 involved a contempt application and consideration of whether non-compliance with an order for costs amounted to a contempt of court punishable by committal to prison.
Case Background
In 2018, Respondent – Mr Kirkegaard, discontinued his original claim for libel against Appellant – Mr Smith, because four allegedly defamatory blogs, published by Mr Smith, were deemed to be ‘expressions of opinion’ at a preliminary hearing in 2019. This meant that a claim for libel was likely to fail. Mr Kirkegaard was ordered to pay half of Mr Smith’s costs, which were summarily assessed in the sum of £13,500 and payable within 14 days of the order. But this was not paid.
Following discontinuance of the claim in May 2020, Mr Smith was thereby entitled to his costs of the action. A final costs certificate was issued by the SCCO in September 2021 in the sum of £26,668.43 to be paid by Mr Kirkegaard; this was endorsed with a penal notice. This was also not paid.
Mr Kirkegaard failed to make any payments under the costs orders despite several attempts by Mr Smith to enforce them, including initiating enforcement proceedings in Denmark and Germany, investigating public records, and filing an application to be questioned about assets. Mr Smith alleged that Mr Kirkegaard evaded service by hiding his location generally.
Application to commit for contempt.
In July 2023 Mr Smith proceeded to file a contempt application, alleging that Mr Kirkegaard had made a false statement regarding his named address and had failed to pay two costs orders. This was dismissed by the judge for a range of issues. Permission to appeal this decision was however granted by Warby LJ in March 2024.
Was the failure to pay costs enforceable in contempt proceedings?
It was determined that a failure to pay a costs order could not be pursued by contempt proceedings.
Mr Smith relied on Australian case law (PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission [2020] FCA 685) to argue that the court could treat a deliberate failure to pay a judgment debt as contempt if they had the means to pay. This argument was based on the fact that in March 2020, Mr Kirkegaard had proffered to have an annual income of £72,000 and could make £500 monthly instalments.
The Appeal Decision
Lord Justice Dingemans dismissed Mr Smith’s line of argument on the basis there is a different procedural and statutory regime relating to non-payment of judgment debts in England and Wales.
Although CPR 81.4 provides for enforcement by an order for committal for disobedience of a judgement or order, the Debtors Acts 1869, effectively abolished committal to prison for non-payment of judgment debts, apart from some exceptions in sections 4 and 5.
LJ Dingemans suggested that the section 4 exceptions and Section 5 as a whole, did not apply in this case. The default remains a contempt in these circumstances, but not punishable by committal.
Conclusion
LJ Dingemans, LJ Bean and LJ Asplin all agreed that the non-payment of the costs order was a contempt of court, but it could not be enforced by imprisonment for contempt.
The courts have developed other remedies, such as the freezing order, to help creditors enforce judgment debts. The courts may also exercise a discretion not to permit a defaulting party to participate in further proceedings – but that did not arise in this case.
Clarion’s Costs and Litigation Funding team can be contacted at civilandcommercialcosts@clarionsolicitors.com