England and Wales Court of Appeal (Civil Division) Decisions

A3/2000/2118


Neutral Citation Number: [2000] EWCA Civ 361
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CHANCERY DIVISION
(Mr Kim Lewison QC,
sitting as a Deputy Judge of the High Court)


The Royal Courts of Justice
The Strand
London WC2A

Monday 18 December 2000



Before:

LORD JUSTICE JONATHAN PARKER

- - - - - - - -
Between:
THE SECRETARY OF STATE FOR THE ENVIRONMENT,
TRANSPORT AND THE REGIONS
Claimant/Respondent

and:
BAYLIS (GLOUCESTER) LIMITED
Defendant
BENNETT CONSTRUCTION (UK) LIMITED
Defendant
TEWKESBURY BOROUGH COUNCIL
Defendant/Applicant
- - - - - - - -
Computer Aided Transcript of the Stenograph Notes of
Smith Bernal Reporting Limited
190 Fleet Street, London EC4A 2HD
Tel: 020 7421 4040
Official Shorthandwriters to the Court
- - - - - - - -
MR A HILL-SMITH (instructed by Wansboroughs, Northgate House, Devizes, Wiltshire) appeared on behalf of the Applicant
The Respondent did not appear and was not represented
- - - - - - - -
JUDGMENT



 


Monday 18 December 2000

1. LORD JUSTICE JONATHAN PARKER: This is a renewed application by Tewkesbury Borough Council for permission to appeal against that part of an order made by Mr Kim Lewison QC, sitting as a Deputy Judge of the High Court on 14 April 2000, whereby he directed the joinder of Tewkesbury as third defendant in the action and ordered it to pay the costs of the claimant in the action, the Secretary of State for the Environment. I refused permission to appeal on the papers on 6 November 2000.
2. Tewkesbury appears on this application by Mr Alexander Hill-Smith of counsel, who also appeared for Tewkesbury before the judge.
3. The background to the application is briefly as follows. In November 1998 Baylis (Gloucester) Ltd ("Baylis") brought an action against Bennett Construction UK Ltd ("Bennett"), claiming that Bennett was in breach of its covenants for title in relation to certain land which Bennett had sold to Baylis in 1964, in that part of the land sold formed part of the public highway. I will refer to that action as "the Baylis action". In due course, Bennett joined Tewkesbury as third party or, as now, part 20 defendant, in the Baylis action, Tewkesbury being the local authority for the area in which the land in question is situated. Bennett claimed an indemnity against Tewkesbury, on the footing that Tewkesbury had given inaccurate answers to local authority inquiries on the occasion of the sale.
4. In July 1999 Master Burton directed a preliminary issue in the Baylis action as to whether the land in question was or was not part of the public highway. In relation to that preliminary issue, Bennett and Tewkesbury were in the same interest. It was in their interest to contend that the land was not part of the highway, since on that basis Baylis' claim against Bennett, and Bennett's claim over against Tewkesbury, would both fall away.
5. The hearing of the preliminary issue was in due course fixed to take place on 29 and 30 March 2000. On 14 February 2000 the Secretary of State, through the Treasury Solicitor, wrote letters before action to Baylis, Bennett and Tewkesbury, contending that the land in question was part of the public highway. On 15 March 2000 the Treasury Solicitor gave notice of his intention to issue proceedings on behalf of the Secretary of State, saying that he would apply for the two sets of proceedings to be heard together. On the following day, 16 March, the Secretary of State issued proceedings against Baylis and Bennett. The issue in the proceedings was whether the land was part of the public highway, that is to say the same issue as that which was the subject of the preliminary issue in the Baylis action.
6. Given that the issues in the two actions were the same, Master Bowles directed that the Secretary of State's action be heard at the same time as the preliminary issue in the Baylis action, and he also fixed a directions hearing for 21 March. Tewkesbury attended the directions hearing with counsel, Mr Hill-Smith. Tewkesbury did not object to the Secretary of State's action and the preliminary issue in the Baylis action being heard at the same time, and the Master granted permission to Tewkesbury to cross-examine the Secretary of State's witnesses. At that hearing, Mr Bennett sought and obtained what appears to have been a substantial disclosure order against the Secretary of State.
7. The hearing of the Secretary of State's action and of the preliminary issue in the Baylis action took place before Mr Lewison QC on 14 April 2000. Tewkesbury attended, represented once again by Mr Hill-Smith, and made submissions to the court in opposition to the contentions of the Secretary of State. That is to say, Tewkesbury submitted, as did Bennett, that the land in question did not form part of the public highway. In the event, Mr Hill-Smith did not find it necessary to cross-examine any of the Secretary of State's witnesses.
8. The judge found in favour of the Secretary of State that the land did indeed form part of the highway. Counsel for the Secretary of State then asked for an order for costs against both the opposing parties, that is to say, both Bennett and Tewkesbury. Mr Hill-Smith opposed an order for costs against Tewkesbury. He submitted, firstly, that under the Civil Procedure Rules Part 48.2, there must be a two-stage process, in that the non-party against whom an order for costs is sought must be given a reasonable opportunity to attend a hearing at which the court will consider the matter further. He referred in this connection to the provisions of rule 48.2(b). I need not refer to the terms of this rule, since Mr Hill-Smith does not pursue this argument in support of his application for permission to appeal.
9. Further or alternatively, addressing the substance of the matter, Mr Hill-Smith referred the judge to the decision of this court in Symphony Group v Hodgson [1994] QB 179 and to the principles there enunciated by Balcombe J in relation to orders for costs against a non-party. He pointed out to the judge that it was the Secretary of State who wished to come in on the hearing of the preliminary issue in the Baylis action and that it was the Secretary of State who had elected to take part on those proceedings. Accordingly, he submitted Tewkesbury had not caused the Secretary of State any additional costs and, in consequence, no order for costs should be made against it. He further submitted that, since Tewkesbury had not applied for disclosure and had received no benefit in consequence of it, Tewkesbury should not in any event be required to pay any part of the Secretary of State's costs of giving that disclosure.
10. The judge did not consider it necessary in the circumstances to adjourn the question of costs as against Tewkesbury to another hearing. He said this:

"In my judgment, rule 48.2 does not invariably require an application notice to be served where the person against whom the costs order is being sought is before the court, although technically not a party to the particular application. I consider that, in all the circumstances [Tewkesbury] Borough Council has had a reasonable opportunity to attend a hearing, at which the matter is considered. In my judgment, as a matter of discretion I will allow Mr Karas' [counsel for the Secretary of State's] application to join Tewkesbury Borough Council as a party to the Secretary of State's action and I will order the Tewkesbury Borough Council to pay the Secretary of State's costs of that action on the standard basis to be the subject of a detailed assessment if not agreed."

11. The judge went on to decline to exclude from that costs order the Secretary of State's costs of giving the disclosure sought and obtained by Bennett.
12. In support of his application for permission to appeal Mr Hill-Smith effectively repeated the substantive, as opposed to the procedural, arguments which he addressed to the judge. He has referred me to the decision of this court in the case of Globe Equities Ltd v Globe Legal Services Ltd (unreported, I think). He has referred me in particular to paragraph 18 subparagraph (3) in the judgment of Morritt LJ, where he said:

"Even if the applicant can provide a good reason for not joining the non-party against whom he has a valid cause of action, he should warn the non-party at the earliest opportunity of the possibility that he may seek to apply for costs against him. At the very least this will give the non-party an opportunity to apply to be joined as a party to the action. . ."

13. Mr Hill-Smith submits that in the instant case it was incumbent on the Secretary of State, if he was intending to seek an order of costs against Tewkesbury, to make this clear at the hearing before the Master at which directions were given for the hearing together of the Secretary of State's action and the preliminary issue in the Baylis action.
14. I cannot for my part accept that submission. It seems to me in the circumstances to be artificial to treat Tewkesbury as if it were a non-party when, in the event, as the matter came before the judge, Tewkesbury was one of two opposing parties, was (perfectly properly) separately represented and made submissions through counsel in opposition to the relief sought by the Secretary of State. In my judgment, the die was effectively cast when the Master gave these directions, and from that stage on Tewkesbury was at risk of an order for costs, at least if it elected to participate on its own account in the hearing of the issue. It was at all stages, of course, open to Tewkesbury and Bennett, if so advised, to agree to joint representation.
15. Mr Hill-Smith has also referred me to a passage later in Morritt LJ's judgment, within paragraph 21:

"Ultimately the test is whether in all the circumstances it is just to exercise the power conferred by subsections (1) and (3) of s 51 Supreme Court Act 1981 to make a non-party pay the costs of the proceedings. Plainly in the ordinary run of cases where the party is pursuing or defending the claim for his own benefit through solicitors acting as such there is not usually any justification for making someone else pay the costs."

16. Mr Hill-Smith submits that this case falls within the ordinary run of cases for this purpose.
17. Once again, I cannot accept Mr Hill-Smith's submission, which seems to me to fly in the face of reality. As I said, the judge was faced with an opposed application, where two parties were opposing. It seems to me to be unrealistic to treat Tewkesbury as being on all fours with a non-party who takes no part in the hearing before the court.
18. Thirdly, Mr Hill-Smith has referred me to paragraph 28 in Morritt LJ's judgment in the Globe Equity case, where he deals with causation. Mr Hill Smith submits that in the instant case only part of the Secretary of State's costs can have been incurred by reason of the participation of Tewkesbury; in other words, only part of its costs were incurred as a result of Tewkesbury's presence and its opposition to the application. Once again, however, in my judgment that submission does not seem to me to have substance, bearing in mind the way in which the application was presented and the fact that Tewkesbury on its own account elected to oppose the relief sought by the Secretary of State.
19. When I refused permission to appeal on paper I dealt with the matter in this way:

"As to the substantive argument that the judge should not have ordered Tewkesbury to pay the Secretary of State's costs, it seems to me that Master Bowles' order that both sets of proceedings be heard together (an order which was not opposed by Tewksbury) inevitably exposed Tewkesbury to the risk that such an order might be made. Nor does the Globe Equities case seem to me to assist Tewkesbury. [Then I referred to the passage in relation to causation to which I which I have just referred.] In the instant case it is undeniable that part of the Secretary of State's costs were caused by Tewkesbury. On that basis, it was within the judge's discretion to make the costs order he made. Accordingly, I do not consider that the proposed appeal has any real prospect of success."

20. Despite Mr Hill-Smith's able oral submissions, that remains my view. In my judgment it was fully within the discretion of the judge to make the order which he made and to exclude from the costs order the costs of disclosure ordered against the Secretary of State, and I can for my part see no real chance of the judge's exercise of his discretion in relation to costs against Tewkesbury being successfully impugned on appeal. I accordingly remain of the view that the proposed appeal has no real chance of success.
21. I accordingly dismiss the application.

ORDER: Application dismissed