England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
CIVIL DIVISION
ON APPEAL FROM THE HIGH COURT
CHANCERY DIVISION
(Mr Justice Jacob)

		The Royal Courts of Justice The Strand London Wednesday 17 April 2002

Wednesday 17 April 2002

1. LORD JUSTICE CHADWICK: This is a renewed application for permission to appeal against parts of an order made on 21 January 2002 by Jacob J in proceedings (under reference Ch 1998/0167) brought by South Coast Investments Ltd and others against Mr Raymond Axisa and others in relation to the control of the fourth-named defendant, Morris Merryweather Fire Protection Plc.
2. South Coast Investments was the registered holder of 47,500 of the issued shares in Morris Merryweather. It appears to have been common ground that South West Investments held those shares as a trustee. The principal issue in those proceedings was whether the third claimant, Mr Paul Abbott, or the first defendant, Mr Axisa, was beneficially entitled to 32,500 of those shares; it being common ground (on the pleadings, at least) that of the remaining 15,000 shares registered in the name of South Coast Investments, 12,500 were held in trust for Mr Axisa and 2,500 were held in trust for the second claimant, Mr Michael Slater.
3. On 13 March 1999 Morris Merryweather was ordered to be wound up by the court. On or about 5 May 1999 Mr Axisa applied for the action and two related actions (1998 S 4844 and 1998 A 0429) to be struck out on grounds that they were an abuse of the process of the court. Those applications (and I think a number of other applications) came before Jacob J in Birmingham on 30 June 1999. Mr Axisa was then represented by counsel, Mr Andrew Latimer. The second and third defendants, Mr Le Gassick and Mr Deakin, were represented by a solicitor, Mr Moore. Mr Abbott, the third claimant, appeared in person. The second claimant, Mr Slater, did not appear. Neither did the first claimant, South Coast Investments. Mr Slater was the solicitor on the record for that company. He had written to the court indicating that he wished to discontinue the claims made by him against the first, second and third defendants.
4. Following what may, I think, not unfairly be described as a rather unstructured discussion between the judge, counsel, Mr Moore and Mr Abbott, the judge reached the conclusion that the three actions should be struck out. He said this, at page 34D in the transcript of the proceedings on 30 June 1999:

"... what I propose to do is to strike out all the actions with which I am dealing today and to make a summary order for costs. I have not yet had an opportunity of looking at the amounts".

5. The judge then proceeded to assess costs summarily. The effect of the order which the judge made -- and which, plainly, he intended to make -- is set out in a minute which was prepared by counsel for consideration by the solicitors to the other parties. It may be summarised as follows. In the action S 4844 South Coast Investments was to pay summary costs of £12,000 to Mr Axisa and £5,600 to Mr Deakin; in the action A 429 the plaintiffs were to pay the costs, summarily assessed as £10,000 to Mr Axisa and £3,500 to Mr Deakin; and in the proceedings S O167, South Coast Investments were to pay summary costs, assessed at £12,000, to Mr Axisa, and £5,600 to Mr Le Gassick and Mr Deakin. Mr Abbott and Mr Slater were also to pay costs to Mr Axisa and Mr Le Gassick and Mr Deakin. But there was a cap on the total liability of the costs that were to be paid by each of South Coast Investments, Mr Abbott and Mr Slater. That was set out in paragraph 8 of that order.
6. On consideration of the minute, and before the order was sealed, passed and entered, Mr Axisa and his solicitors, Messrs Stripes, took the view that the judge had been under a mistake when he assessed the costs in the sums that he did. The mistake, it is said, is that the judge had not appreciated that the figures put before him did not cover the whole of the costs of the actions. The point is put in paragraph 13 of a statement signed by Mr Richard Stripe on 7 September 1999:

"In the course of drawing up the Order it became apparent both to myself and to Mr Axisa that whilst His Honour Judge Jacobs [that is, Jacob J] had made an Order for costs and assessed these, that these were only the costs occasioned by the applications on that date and Order had not been made in respect of the costs of the actions as a whole. I can but speculate why I did not appreciate this as I would have prompted Counsel to argue further that Orders should be made in respect of the substantial costs of the actions. I may well have been distracted by Mr Axisa during the hearing. I was informed by Mr Axisa's Counsel that the Judge had expressed that he was not going to make a further Order for assessment of costs. From my discussions with Counsel it would seem that His Honour Judge Jacobs did not wish further costs to be taxed as he wished these actions to be brought to a final end."

7. Mr Stripe goes on to suggest that the costs not covered by the order of 30 November 1998 were extremely substantial and that in effect the order which the judge has made has had the result that his client, Mr Axisa, has not recovered some £30,000 of costs in respect of actions commenced against him but subsequently discontinued.
8. In those circumstances, Mr Axisa applied to Jacob J -- by application notice dated 10 September 1999 -- for the order made on 30 June 1999 (but still not perfected) to be drawn up in a form which included an additional paragraph in these terms:

"The costs of Mr Axisa and Mr Deakin incurred in Actions CH 1998 S No 4844 and 1998 S 429 and in respect of Mr Axisa the costs incurred in Action CH 1998 S No 167 which have not already been awarded to me or ordered against me be paid by the Claimants in those actions."

9. After a long delay -- which the judge rightly described as "appalling" -- the application made by notice on 10 September 1999 came before Jacob J on 21 January 2002. The judge acceded to the application. He ordered that, before sealing, the draft order (in the form of the minute to which I have referred) be amended by including the additional paragraph dealing with costs which were not already specifically provided for. He also ordered, at paragraphs 3 and 4 of that order, that those costs be subject to detailed assessment in default of agreement and that the claimant pay two thirds of the costs of Mr Axisa and Mr Deakin of and occasioned by the applications to vary the judgment under the notice of 10 September 1999.
10. It is against that order, made on 21 January 2002, that Mr Slater and Mr Abbott wish to appeal. The basis upon which the judge made the order which he did on 21 January 2002 appears from a short judgment which he gave on that day. After referring to the transcript of the hearing on 30 June 1999, the judge said this:

"I indicated early on in the transcript of the hearing, which has now been obtained, that the normal consequence of [dis]continuance is that the discontinuing party has to pay the costs. That of course means the whole costs. In the course of the discussions Mr Moore produced on behalf of his clients a schedule of costs. The impression given by him was that this schedule effectively was the schedule for his side's costs of the entire matter. But there was an unfortunate misapprehension on behalf of Mr Axisa. It appeared that when the schedules were being dealt with as the costs schedules for the other defendants entire costs, his solicitor indicates that perhaps his attention was diverted at the vital moment with the result that Mr Axisa's schedules were also [taken] as the entire costs of his side. In fact there are substantial other costs. I have no doubt whatever that if I had known that they were not in the schedule and it was known that they should have been I would have ordered a detailed assessment."

11. The judge then explained the circumstances in which the matter was not dealt with straight away. He went on in a subsequent paragraph to say this:

"I look at it this way. If the matter had come back to me on the same day, on the same afternoon or the next morning, I would have had no difficulty whatever in saying that the obviously just result, namely, that the costs of all the matters concluded against the plaintiffs should be paid. (I call them 'plaintiffs' because these actions started I think before the new rules.) The matter that concerns me most is the very considerable delay in bringing it back before the court."

12. He then reached the conclusion that the delay was not such as to deprive the applicants before him of the relief to which they would otherwise have obtained if the matter had been dealt with promptly.
13. If this could be viewed simply as an exercise of discretion by the judge in deciding to revisit an unperfected order made some two and a half years earlier, I would take the view that there would be no real prospect that this court would interfere. But it has been urged strongly on behalf of Mr Axisa that a proper examination of the transcript of 30 June 1999 indicates two matters. First, that the judge plainly intended that there should be no further assessment or taxation of costs beyond those in the schedules before him because he was anxious that this litigation should come to an end; and in reaching that conclusion, he did appreciate that there were other costs in issue, but chose to leave them out of account. Second, that the judge was wrong, in January 2002, to take the view that, if the matter had come back to him in June 1999, he would necessarily have decided that the whole of those other costs should fall on the claimants. There are passages in the transcript of proceedings on 30 June 1999, to which Mr Anthony Mann QC has drawn attention, which suggest that the judge had not concluded in June 1999 that the plaintiffs should be required to pay the whole of the costs occasioned by discontinuance; although, as the judge said, he had little doubt that "by and large they should pay quite a lot of them".
14. The reason why the judge did not think it necessary, in June 1999, to go into a detailed examination of which costs the discontinuing plaintiffs should pay, and which costs they should not pay, seems to me to be plain enough. He thought that the costs not provided for by his order were relatively small; so that the effect of the order would be to do substantial justice. There would be some unrecovered costs but they would be relatively small in the context of the whole.
15. What the judge was not told, it is said, was that the defendants were asserting that the true amount of the unrecovered costs was large in relation to the costs as a whole. If he had been told that, he would have had to consider whether the need to bring these proceedings to an end without further litigation justified disallowing the whole of the costs which were not included in the schedules. Had he considered that question, it is impossible to reach the conclusion that he would have held either that the whole of those costs should be allowed or that the whole of those costs should be disallowed. By the time the matter came back to him in January 2002, he had lost sight of that point. That is not surprising, having regard to the delay.
16. In those circumstances, it seems to me that there is a real prospect of success on an appeal against the order made on 21 January 2002. An order which has the effect either that the whole of the costs not provided for in the minute of June 1999 are to be paid by the claimants, or that the whole of those costs are not to be recovered by the defendants, is an order which may well be unjust. More to the point, it is an order which should not be made without proper consideration. The danger is that, because of the lengthy delay, that question has not received proper consideration in this case. In my view, this court should have an opportunity of examining the matter.
17. In those circumstances, I propose to give permission to appeal not only against paragraphs 2, 3 and 4 of the order of 21 January, but also against paragraph 1; because, as the order is drawn, to set aside paragraphs 2, 3 and 4 without setting aside paragraph 1 would achieve nothing. I do so with very considerable misgiving in the circumstances that this is litigation which has gone on far too long already; and in the hope, but without any great expectation, that the parties may find it possible to resolve the matter without further hearings.
ORDER: Application allowed, with a time estimate of half a day. Case assigned to the short warned list to be heard before a two-judge court. Costs of the application to be costs in the appeal. (Order not part of approved judgment)