England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
(Mr Justice Curtis/Mr Justice Wright)

		Royal Courts of Justice Strand London WC2 Tuesday, 30th April 2002

Tuesday, 30th April 2002

1. LORD JUSTICE LAWS: I will ask Longmore LJ to give the first judgment in both of the matters before the court.
2. LORD JUSTICE LONGMORE: We have before us today two quite separate matters. The first is an appeal in relation to costs in which, as it happens, I myself gave leave to the appellant, Mr Sullivan; and the second is an application by Mr Sullivan in relation to a much later order, an order of Curtis J striking out his claim in respect of which he seeks permission to appeal.
3. I will deal with the costs of the appeal first since chronologically that is the appropriate manner in which to deal with the case as a whole. That is an appeal from an order of Wright J, made now as long ago as 26th January 2001, in relation to the costs of an application before him. It is necessary that I say a little about the facts of the matter both for the purposes of this appeal and the application.
4. A company called Harnchester Ltd have a number of trading names, including the name "the Printing Group and "Olympic Commercial Services", and traded from premises in Thames Ditton, Surrey which were shared with a company called Peerage Print & Design Ltd of which the first and second defendants were at all material times directors. Harnchester went into liquidation, and Mr Sullivan claims as assignee of the book debts of the company. He asserts that over a period of time, both before and after the date of liquidation, the first and second defendants deliberately intercepted and converted to their own use cheques payable to Harnchester Ltd, or to the Printing Group, or any other trading name of Harnchester Ltd for their own benefit and paid those cheques into the Cheam branch of the National Westminster Bank into the account operated there by Peerage. The statement of claim sets out that the conversions complained of were carried out by one of three methods. The first method involved cheques which were made payable, it is suggested, to the Printing Group or one or other of the trading names operated by Harnchester. When such cheques arrived in the lobby of the Thames Ditton premises, they were allegedly intercepted by someone associated with Peerage (therefore either the first and second defendants themselves or someone from whom they were responsible). Those cheques were then paid into the Cheam account. In relation to those cheques the claim was made for damages for conversion against the first and second defendants. The second method was not dissimilar but involved interference with the cheques themselves. What happened is that it is said that cheques were payable to the Printing Group and were intercepted, altered or endorsed so as to appear that the same were payable to Peerage and paid again into the Cheam account of the National Westminster Bank. In both cases there is also a claim against the third defendant, the National Westminster Bank itself. Method 3 was somewhat different. That alleged raising of false invoices by the first and second defendants, which were then sent to Harnchester's customers, indicating a change of trading name or, in some similar way, inducing those customers to draw cheques expressed to be payable to Peerage. In those circumstances the cheques were paid in the ordinary way and regularly into the Peerage account at Cheam. No claim was made against the bank in relation to sums of money alleged to have been obtained by the first and second defendants by that third method.
5. There was then a settlement between Mr Sullivan and the bank, in the form of a consent order of the court of 3rd October 2000, whereby the bank agreed to, and then did, pay £32,000 in full and final settlement of the claim against them. There was then an application made to strike out the claim as against the first and second defendants on the ground that, settlement having been made with National Westminster Bank, the claim against the first and second defendants was thereafter barred. That application came before Wright J. He rejected that application as a matter of the claim being struck out and ordered that the application should go to a full trial. It was eventually determined by Turner J, who dismissed the application that the claim against the first and second defendants was barred. The claim against the first and second defendants thus continued. However, Wright J did order that certain items of the claim - the exact number does not matter but it was about 20 - should be struck out because they related to cheques made out in favour of the Printing Group, and most of them were part of the claim under methods 1 and 2 which I have described. He struck those out on the basis that it was in respect of those items that National Westminster Bank would have been liable by allowing the relevant sums to be credited to Peerage. The overall claim was thus reduced by £32,000.
6. Mr Sullivan, who then appeared in person before Wright J and has appeared in person before us today, accepted at the beginning of his argument to Wright J that, of course, the £32,000 would have to be brought into account and the claim reduced to that extent. In pursuance of that, the judge did strike out the claim in relation to the items that I have mentioned.
7. The question then arose as to the costs of the application; and Wright J gave the second defendant half the costs of the application, having considered that to some extent they had had a favourable result. I granted permission to appeal and said this:

"The reason why I think it right to give Mr Sullivan permission to appeal in this case is that it is not very clear, at any rate to me, how it was that Mr Sullivan, as a litigant in person, should have been aware that he was at risk as to costs if he did not make that concession in a formal sense, by letter or otherwise, before the hearing took place before Wright J. The application before Wright J did not relate to the seeking of an order for the reduction of the claim on the basis of the settlement, but sought an order that the entire claim be struck out on the basis that the first and second defendants had been released."

8. And I continued that, in my view, it was arguable that there was a difference between an application that the claim be struck out in its entirety because there was no liability at all by virtue of the settlement which was said to constitute a release, and an argument that certain individual items should be struck out because they had been the subject-matter of a settlement with the bank and that the claim should be reduced accordingly.
9. We have now heard full argument on this appeal, Mr Sullivan, of course, supporting the reasons that had given me cause at the time to wonder whether the decision of Wright J was in fact correct. Mr Lederman, on behalf of the second defendants, submitted that the learned judge's order was correct, or at least within the ambit of his discretion, because the effect of the order was that 23 or so items were struck out and that saved the costs of investigating that number of items for the purposes of the proceedings as a whole. Mr Sullivan not only reiterated that he had at once accepted before the judge that he could make no claim in respect of those items that had been settled with the bank, but also said that he had so indicated when the matter had been before Master Tennant on 12th October 2000. Mr Lederman cannot recall that, but he readily accepts that his recollection may not be entirely reliable. The fact of the matter is that Mr Sullivan did not advance that consideration to Wright J at the time when Wright J was considering the question of costs.
10. Wright J, as I have said, ruled in the following terms:

"I think second defendant should have half the costs of this application. What I propose to do is to round up the figure to £8,000 and order that the claimant should pay £4,000 towards those costs."

11. This appeal is therefore about that £4,000. Mr Sullivan submitted that the right order should have been costs in the case.
12. Now that I, for my part, have had the benefit of argument on the matter, I am persuaded, however, that the way in which Wright J dealt with the matter was well within the bounds of his discretion as a judge dealing with costs. As so often happens on costs applications, a range of possible orders are open to a judge. Wright J did not give all the costs to the second defendants, and that was clearly right since the second defendants had only had a qualified success. But it does not seem to me that his decision in relation to costs, whereby he ordered that the second defendants should recover half their costs, can be said to be outside the proper discretion vested in him. I would therefore dismiss the appeal.
13. I now turn to the application for permission to appeal the order of Curtis J, which was an order that the claim brought by Mr Sullivan now be struck out in its entirety. In order to give a bit of background to that, I should indicate what the defence to the claims is. I can do that best by referring to the judgment given by Bell J on 19th December 2001. He said this:

"The main thrust of the second defendant's case is that the claims are not made in good faith. She submits that they are an extension of unfounded claims made against her by Mr. Wilson in other litigation. [Mr Wilson is allegedly associated with Harnchester, the company that went into liquidation.] She alleges that Mr. Wilson and the claimant are closely connected. She also pleads undue influence by Mr. Wilson, and other defences. Part of her allegation is that Mr. Wilson lost control of the relevant companies and went bankrupt and that the action is a false one to get back at the second defendant by virtue of this action by the claimant who is said to be a friend and associate of Mr. Wilson.

The invoices and supporting documents so far relied upon by the claimant are all, or very largely, copies. It is alleged on the second claimant's behalf that some are not contemporaneous or authentic documents. In addition, the second defendant denies the validity of the alleged assignments of Harnchester book debts to the claimant. She denies conversion. She also contends that the sums now claimed by the claimant as alleged assignee of Harnchester are, and were not, properly due to them. There is evidence of forgery of some of the documents connected with Harnchester, it is said. Most of the alleged Harnchester debtors are believed to be connected in some way or another with Mr Wilson.

So it is said on the second defendant's behalf that proper inspection of the documents in the claimant's possession or control is vital, and it is alleged (and I so find) that it is necessary to have copies of some of the documents as inspection proceeds in order to peruse them carefully, the more intelligently to continue the inspection of the remainder.

The first defendant is less directly involved in the question of the documents. He contends that he was only a director of Peerage for about a month in or about September 1996 when the second defendant was unwell. He says that his function was essentially that of works manager and he had nothing to do with financial affairs or accounting. Nevertheless, he has an identical interest with the second defendant as her co-defendant in respect of proper inspection of documents and obtaining necessary copies."

14. It is therefore self-evident, in my judgment, that the documents which are in Mr Sullivan's custody, possession or power are indeed vital for the determination of the dispute between the parties.
15. Unfortunately the history of discovery in this case is little short of lamentable. First, on 4th October 2001 Mitting J, after an adjournment of three previous applications, ordered disclosure in the ordinary way. Then, nothing having happened, on 16th October 2001 the second defendant issued an application to strike out for failure to comply with the order of Mitting J. On 24th October 2001, Poole J made a more precise order for, first, disclosure and inspection of documents in Mr Sullivan's custody or control; and, second, that Mr Sullivan make available originals of the documents which he wished to have in the trial bundle. Otherwise he adjourned the application taken out by the second defendant to strike out the claim.
16. Nothing happened in response to Poole J's first order. The matter returned to him on 8th November on a further application to strike out being restored. At that stage Poole J made two unless orders of importance. His first order was that unless inspection was permitted of originals, such inspection to begin not later than 26th November, the claim was to be struck out. He also ordered that unless disclosure and inspection of other relevant documents, which was to be given at the same time or begun to be given at the same time, likewise the claim was to be struck out.
17. There was no satisfactory compliance with the order of Poole J, at any rate in the view of the second defendant, and the application to strike out was once again restored in December 2001. That application came before Rougier J and was adjourned by him on 11th December, and substantively came before Bell J on 19th December. Bell J pointed out in the course of his judgment that there still remained outstanding failures to comply with the order of Poole J; and he gave Mr Sullivan what really was at that stage a last chance, saying that the case fell just short of requiring to be struck out at that stage. So he made no order on the striking out application, save for adjourning that application, but did make three further specific orders: first, for inspection to start on 7th January 2002; second, that by 7th January 2002 the documents which Mr Sullivan wanted rely to on at trial and put in the trial bundle be identified, for example, by the application of post-it notes; and, third, that as soon as practical thereafter every other disclosable document was to be identified in the same or a similar manner.
18. The second defendant sought permission to appeal against the order of Bell J refusing to strike out the action. On 21st January of this year I dismissed that on a paper application which, of course, the second defendant had a right to renew. The second defendant then asked Mr Sullivan to agree that the operation of the order of Bell J be stayed pending renewal of the application for permission to appeal. Mr Sullivan declined to do that unless the first defendant also agreed, which, in the event, the first defendant did not, as the second defendant's solicitors informed Mr Sullivan by letter of 16th January. As a matter of history, I refused the renewed application to appeal. But, once again, nothing seems to have happened in relation to the order of Bell J, save that Mr Sullivan applied to vary Bell J's order and ask the court to make an order for yet further delay in discovery; and that prompted the second defendant to restore their application to strike out. That application came before Curtis J, who was naturally appalled to find that, save for some steps towards starting to compile a list, there had been no effective compliance with the order of Bell J after that judge had held that the case before him in its then state was only just short of requiring to be struck out. Curtis J formed the view that Mr Sullivan could not be seriously intending to give proper disclosure, and he did then strike the action out.
19. Mr Sullivan now seeks permission to appeal the order of Curtis J. In his submissions to Curtis J he said that he thought the application for permission to appeal operated as a stay, and therefore that he did not need to comply with the order of Bell J. But, as Curtis J said, Mr Sullivan had himself said in a letter of 4th January 2002 (at page 154 of section 7 of the bundle that we have) that he did not agree that the application to seek permission to appeal operated as a stay of the order of Bell J.
20. Before us today, Mr Sullivan has submitted that, as a litigant without legal advice, he had become confused by the situation whereby there was an application for permission to appeal by the second defendant, the second defendant was asking for a stay of the order of Bell J and Mr Sullivan himself had said that he was agreeable to doing so provided the first defendant also agreed. But the truth of the matter is that Mr Sullivan knew that no such agreement had been reached. He complains that Curtis J did not deal in any detail, or indeed at all, with his own application to vary the order of Bell J. But Curtis J, of course, dealt with the application to strike out, because that was the substantive application before him. Once he had formed the view that in the light of the failure to comply not only with the order of Bell J but also with the order of Poole J (which itself had been an unless order) Mr Sullivan was not going to comply with the obligations of discovery that were upon him, he decided that he had no alternative but to strike the case out.
21. This court is a court of review. We can only interfere with the decision of Curtis J if there is some error of law, or he has failed to take into account the right considerations, or he has taken into account the wrong considerations. Curtis J in fact went through in considerable detail the provisions of the Civil Procedure Rules rule 3.9 relating to the considerations which the court has to bear in mind when it is asked to strike a matter out. He rejected Mr Sullivan's explanation of how it was that the orders of the various judges had not been complied with, and he decided, in my view quite correctly, that this really was the end of the road for what is on any view a speculative piece of litigation.
22. I am not persuaded that there is any reasonable prospect of any court saying that the decision to which Curtis J came was wrong, and therefore it is only right that permission to appeal should be refused.
23. LORD JUSTICE LAWS: I agree that the appeal against the order made by Wright J should be dismissed, and the application for permission to appeal against the order of Curtis J should be refused, in each case for the reasons given by my Lord.
Order: Appeal against the order of Wright J dismissed. Application against the order of Curtis J refused. The second respondent shall have her costs of the appeal against Wright J. As a matter of discretion, however, we are not going to make any order in relation to the respondent's costs of the application. Public funding assessment of the second respondent's costs. (Order does not form part of approved judgment)