England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
APPLICATION FOR PERMISSION TO APPEAL

		Royal Courts of Justice Strand London WC2 Wednesday, 14th August 2002

1. LORD JUSTICE SEDLEY: Mr Anthony George and his wife Jean George are engaged in acrimonious divorce proceedings which are coming, but have not yet come, to a conclusion.
2. Meanwhile the two of them have found themselves sued as first and second defendants, Mr George being the second defendant, by a claimant, Mr Treuhand, who sued as a trustee of the Argento Trust. The Argento Trust is in law the assignee of a company, Morgan Samuel Ltd, which in 1993 agreed to purchase and supply goods and materials for building work at what was then the Georges' matrimonial home. The arrangement was that the payment, with interest, should be deferred on terms which protected Morgan Samuel Ltd. It should be said in parenthesis that Morgan Samuel Limited was a company in which, historically at least, Mr George had an involvement which Mrs Justice Black at the trial of this action considered in some detail. I mention that for this reason: that by her defence Mrs George denied that she was a party to any agreement upon which Morgan Samuel Limited or therefore Mr Treuhand, on behalf of Argento Trust, was entitled to sue. Moreover she refused in her pleadings and in her case before Mrs Justice Black to admit that the debt existed, both because she knew nothing about it and because she was suspicious that the entire arrangement upon which the trust was now suing might be a device to frustrate her ancillary relief claims in the matrimonial proceedings. She also contended that if the debt did exist it had been paid. Mr George for his part admitted the existence of the debt, admitted its non-payment but contended that there had been a waiver of the cause of action. In the alternative he sought an equal apportionment of liability with Mrs George. All of this and much more can be found in the very careful judgment of Mrs Justice Black delivered on 3rd March 2002 in the Queen's Bench Division.
3. In the result, judgment was given by the judge for the claimant against Mr George alone. Both the claimant's and Mr George's claims against Mrs George were dismissed. Thereafter - having invited further argument although Mr George tells me he was not really in a position to do more than make a rudimentary submission on fairness - the judge delivered a further reasoned judgment on costs. It resulted in an order that the claimant was to pay in full Mrs George's costs of defending the claim, with recovery over against Mr George. On the Part 20 claim between the husband and wife the judge ordered Mr George to pay Mr George's costs. She then ordered Mr George to pay the claimant's costs of the claim. In other words, Mr George, as the loser on the merits and the law, was made to pay all the costs of everyone in the action.
4. In the course of her judgment Mrs Justice Black had made careful findings, including findings on credibility, which led her to prefer Mrs George's to Mr George's account of things. She found as facts that Mrs George had no involvement in the agreement upon which the action was brought and did not know of it until well after it was made. She also found that Mrs George had been under the impression that Morgan Samuel Limited was being repaid in good time by her husband. The judge did, however, find the contract and the assignment to be genuine arm's-length arrangements which were not designed to disguise some collusive set-up or to defeat her matrimonial claim.
5. Mr George seeks permission to appeal to this court because he submits that Mrs Justice Black did not merely debatably exercise her discretion but erred in principle in ordering him to pay his wife's costs in full. His contention is that on no fair view could he have been ordered to pay more than about a third of them. The reason, which he has very helpfully spelt out in a short skeleton argument, which would do any member of the Bar credit, is that on his analysis of the materials a very high proportion of the case was devoted to the elements of the wife's defence and Part 20 case which failed. Of her written defence, he asserts, some four-fifths were devoted to the question whether there was a debt at all and whether, if there were, it had been repaid. He calculates that a little over half the content of her defence to the Part 20 claim covered the same ground. He calculates that about two-thirds of his wife's first witness statement went to these issues and over four-fifths of her second witness statement. In her skeleton argument he identifies about a third going to these issues on which she ultimately failed. After analysing in detail -which I do not propose to rehearse - the course of examination and cross-examination he submits that almost half of the evidence went to the issues on which the wife failed and over two-thirds of the closing written submissions; and that an even higher proportion of the closing oral submissions covered the same ground. For his part Mr George stresses that he admitted the debt to be a genuine debt and an unpaid one, as Mrs Justice Black found to be the case. So he contends that the majority of costs in the action went to issues raised no tby him but by his wife, and on which she failed. The difference, he submits, is a substantial one both in precentage terms and in cash terms.
6. Mrs Justice Black, even though Mr George had not argued it, did take this question seriously. I have before me the uncorrected shorthand writer's draft of her judgment on costs. Going through it, in her absence on vacation, it is clear to me that it is a transcript of high quality and high accuracy and unlikely, apart from three obvious typographical errors to need substantial correction in due course. On that footing, I have had it released for the purpose of this application to Mr George and we have proceeded on the basis of it. What Mrs Justice Black has done in her judgment is reason out all the potential issues affecting her exercise of discretion to allocate costs. I will not read it out in full. I will quote simply the paragraph which appears on pages 8 to 9 of the present draft of the transcript:

"I cannot, in my view, separate out the costs even on a proportion basis, for example, splitting off the costs of the issue of whether the debt had been paid which the wife lost, and even if I could I would not consider it appropriate to do so because the evidence, which the wife was forced, in my view, to examine, emanated from the husband in the first place, and her view of the means of supply of the goods and payment for them derived from his attitude at the time and the things that he said."

7. The judge went on to reject an application that the costs should be paid on an indemnity basis because, although she had found against Mr George, she had not been driven to condemn the way in which he conducted the litigation, simply to reject his claim.
8. The important thing in the passage I have read out is that Mrs Justice Black had directed her mind to the precise issue Mr George has now raised in this court. Although she did not quanitfy the use of time and documents with the precision Mr George has done, she was clearly sharply aware of it. Her reasoning is, as I understand it, that accepting that an apportionment was possible she did not consider this a proper case in which to undertake it because the wife's conduct of the proceedings in questioning the existence of the debt (in other words putting the husband and claimant to proof of it since she had known nothing of it) was not an unreasonable or improper course for her to take. The husband and the claimant having established the genuineness of the debt, the wife was then exonerated from any legal liability to meet it.
9. While I do not doubt that another judge might have agreed to apportion the wife's costs and to make the husband pay only a proportion of them, the question I have to ask myself is whether such a course was arguably the only fair course to take; if, arguably, it was then Mr George woudl be entitled to permission to appeal. If the course taken by the judge - however unwelcome to him and however open to argument - was still one which on the particular findings she had made in the case she was entitled to take, then this would not be an appeal with any real prospect of success.
10. In my judgment, the case comes into the latter class. Mr George will think that a very hard judgment at which to arrive because it is his genuine belief that much of this case was brought about by the pursuit of issues on which his wife failed. But the judge'sview was a legitimate one; it was that the whole of the case was brought about by the failure to pay the debt for which the claimant trustee therefore had to sue and that Mrs George's involvement was entirely Mr George's doing. In those circumstances it was open to the judge to take the view that Mrs George, even though she had explored issues on which her suspicions were ultimately dispelled, was entitled to be protected by an order for costs against the consequences of having been brought into litigation with which, on the judge's finding, she had nothing to do. That is enough to rob an appeal of any realistic hope of success. It does not mean that Mr George's argument is a bad one. It simply means it was an argument which did not succeed because it was faced with an equal and opposite argumetn that the judge preferred.
11. On those grounds I refuse Mr George permission to appeal. He at least has the consolation that, if my view is right, he has been saved from the massive expense of going to appeal before a full court and losing. The advantage of this procedure is that it does cut the stakes by winnowing out cases which are likely to succeed from those that are not.
12. With expression of gratitude to Mr George for the clarity of his presentation, I would therefore refuse this application.
Order: Application refused