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 HIGH COURT
CENTRAL LONDON COUNTY COURT
(HIS HONOUR JUDGE REYNOLDS)

		B2/05/0102 Royal Courts of Justice Strand London, WC2
		17 March 2005

1. LORD JUSTICE LONGMORE: I have decided that I will grant permission to appeal in this case. I will just say very shortly why, and especially why I do not grant it in its entirety as asked.
2. This is a claim by Mr Taefi against his erstwhile solicitors, Messrs Jeffrey Green Russell, in respect of their conduct, to put it broadly, of his defence to a claim brought by a company called Pegasi Management Company Ltd for arrears of rent, interest and costs. On 1st December 1999, after he had had notice of this claim, Mr Taefi consulted Jeffrey Green Russell, who advised that the sum claimed should be paid. That did not, however, happen, and Pegasi obtained judgment in default. Mr Taefi then instructed Jeffrey Green Russell to set aside that judgment. In due course it was indeed set aside on the basis that it was arguable that Pegasi Management Company Ltd had contracted not with Mr Taefi but with some different man entirely. It has now emerged that that was a false defence because, in the course of the proceedings against the solicitors, Mr Taefi accepted that he was indeed liable to pay the rent. He says that when the claim form was served he was willing to pay the principal sum but he objected to paying any interest or any costs; the essence of the claim against the solicitors is that, since no acknowledgment of service was filed, a judgment in default was entered and, secondly, that once that judgment had been entered it became clear that Pegasi would be prepared to vacate that judgment provided that they were paid the principal sum, but that because Jeffrey Green Russell, by the person dealing with the matter, Mr Robert Webster, had insisted on demanding that their costs should be paid by Pegasi, that prevented any settlement being reached on terms that it is said were clearly available.
3. The two allegations of negligence were joined by a third of less consequence: that Mr Taefi should have been informed of the risk of having to pay costs even if he succeeded in setting aside the judgment in default.
4. The curiosity of the case is that in relation to the second allegation of negligence there was a substantial dispute between Mr Taefi and Mr Webster as to who was responsible for the demand of costs which it is said made the proceedings unsettlable. There is an attendance note of Mr Webster, which reads as follows, inter alia:

"Mr Taefi wanted the County Court judgment removed not only against him but also against his wife and father-in-law. I said I thought that was pushing it a bit but he was clear that those were his instructions. I said the problem with the judgment against his wife and father-in-law was that they were perfectly entitled to it.

I said my costs were a few hundred pounds so why didn't we just throw those in."

5. It is said that that shows that it was Mr Webster who suggested that costs be claimed and that either it was negligent to do so at the time or, once it became apparent that the proceedings could be settled for payment of the principal sum, negligent to have continued to insist upon it. When I said to Mr Soole QC, who is appearing for Mr Taefi today that that latter point did not seem to be addressed by the judge, he took me to the pleadings and showed me that that was part of the pleaded case: that once it was realised that costs were the sticking point Mr Webster should have advised that that requirement (asks payment of his firm's costs) be abandoned.
6. The proposed appeal is full of difficulties but on the facts I have outlined, I cannot at this stage say that there is no prospect of success. The three allegations of negligence are somewhat interlinked. i therefore consider it to be appropriate to grant leave to appeal on grounds 1 to 7.
7. Ground 8 is causation. I do think that it is at any rate arguable that the judge may have been wrong to regard the fact that the defence was a false defence as meaning that if there was negligence no loss was caused. The judge said in terms that he did not think it appropriate to apply the maxim ex turpi causa oritur non actio, but the way he expressed himself rather indicates that may have been the consequence of his findings of causation. So I will give leave to appeal on grounds 8 and, also, 9.
8. I refuse leave on grounds 10 and 11 as currently formulated because it does not seem to me that it would be appropriate for Mr Taefi to be able to reopen the findings of fact in relation to the original underlease. No finding was made as to whether or not he was a party to the subsequent lease. But I give leave for a ground to be formulated to replace grounds 10 and 11 to make it clear - and this is all that Mr Soole wishes to make clear that the claim form as a document relied on the lease as constituting the cause of action for the rent, whereas Mr Taefi's case was that, although he accepted that he was liable to pay the rent, he was not a party to the lease as such and that therefore a defence could have been constructed for the purposes of serving an acknowledgment of service in the relevant box in form N9B, referred to in the judgment. So it is a condition of the leave that I grant that paragraphs 10 and 11 of the notice of appeal should be replaced by a paragraph which makes that confined point.
9. I will not refuse leave on paragraph 12 in the light of Polanksi v Condé Nast Publications [2005] 1 WLR 437, but can scarcely believe that any decision on that will be decisive.
10. I record that Mr Soole's skeleton argument when it comes to remedy says "it is submitted that there should be a rehearing of the action". Although I grant permission to appeal for the reasons that I have indicated, the consequences of any appeal being allowed do appear to be that there would have to be a retrial, and obviously the parties will want to think very seriously about whether that is conceivably the right way forward.
11. But for those reasons I will grant qualified leave on this application.
12. MR SOOLE: Does your Lordship wish for there to be a period stipulated for supplying the amended grounds?
13. LORD JUSTICE LONGMORE: Yes, that would be a good idea. Seven days. Because no doubt the defendants will be served also quite soon with it, and I think it should go with whatever is served. So within 7 days maximum.
14. Estimate of length?
15. MR SOOLE: One-and-a-half days, my Lord. Perhaps that is cautious. One question is how much we have to have -- because we have not had transcripts so far and the trial was 7 days. One hopes it is possible to isolate parts of the transcript, but I suspect once one part goes in other parts will then go in in the usual way.
16. LORD JUSTICE LONGMORE: It is always difficult, is it not, but surely it should be possible to confine it to those parts of the transcript dealing with the evidence about the attendance note?
17. MR SOOLE: Yes, indeed.
18. LORD JUSTICE LONGMORE: Yes.
19. MR SOOLE: Perhaps two days is safe.
20. LORD JUSTICE LONGMORE: I will say a day-and-a-half; it seems to me it should be possible to deal with it in a day-and-a-half. I think we will say three Lord Justices. It does not seem to me that this is a case where one needs any particular expertise, does it?
21. MR SOOLE: My Lord, no.
22. LORD JUSTICE LONGMORE: Very well, thank you for your assistance.
ORDER: Leave granted.