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 OF JUSTICE
CHANCERY DIVISION
(MR JUSTICE PETER SMITH)

		Royal Courts of Justice Strand London, WC2
		19th January 2006

1. LORD JUSTICE LLOYD: I have before me two applications by Mr Davinder Singh Virdee for permission to appeal against orders of Peter Smith J made on 5th October 2005. Mr Virdee has the misfortune to be tied up in lengthy and, from what I can see, bitter and expensive litigation with relations of his, including his brother as I understand it. There are two actions, and there may be others, but there are two actions in which orders were made which are sought to be appealed. In the first Mr Davinder Singh Virdee is the claimant and there are four individual defendants. That is HC03C00078, and the appeal number relating to that is 2005/2327. In the other Mr Davinder Singh Virdee is the first of two defendants. That is claim number HC03C03169 and the appeal number is 2005/2362.
2. The litigation relates, among other things, to properties in Southall in relation to which there are all sorts of disputes as to, I dare say, who owns them and certainly how they should be managed and dealt with. Mr Davinder Singh Virdee brought an application to the court which was returnable in the interim applications list on 5th October 2005. I have seen some evidence in relation to this application, including a witness statement of Mr Virdee himself of 3rd October in reply to a witness statement of Parminder Mattoo, who represented the parties on the other side. The application notice was dated 8th September 2005 and was no doubt supported by evidence either in the application notice itself or separately.
3. The parties were represented by counsel before the learned judge. Very sensibly, I think a matter of a day or so before the matter came on, agreement was reached between counsel as to how the substantive application should be dealt with. That was set out in the form of a Tomlin order as to what should happen to the properties, and the judge made an order in those terms. The order is made in the claim in which Mr Virdee is the claimant, and the similar application in the other claim was disposed of on similar terms.
4. The parties did not agree what was to happen about the costs of the application. Mr Virdee's position was that he should have his costs in any event, but the other parties were not willing to agree to that and so the judge had to deal with it. The judge's decision was that Mr Davinder Singh Virdee should have his costs in the case. The effect of that is that he will receive his costs of the application if he wins the case and not if he does not, but he will not in any event have to pay the other side's costs.
5. Mr Virdee says that he should have had his costs in any event and that they should have been immediately payable. He submits that he was forced to come to court; that the defendants, the other side, agreed only at the last minute to his reasonable proposal; that it is an injustice if he is not given his costs because he is out-of-pocket, at least for the time being; and in a rather graphic phrase, and entirely apt phrase I can see from his point of view, as he put it to me this morning, he is financing the other side's litigation against him, because the costs which he has had to bear and which he considers they ought to pay (and which in a sense the judge considered that they ought to pay, though not unconditionally) he says constitute a loan from him to them with which they can litigate. He has to pay his own costs. He is a solicitor, but he has to pay counsel's costs, and no doubt out-of-pocket expenses, which have amounted to a substantial bill. He submits that it is an injustice, that it will hamper him significantly in his prosecution of the case, which is still continuing, and altogether the judge's decision was one that was simply wrong.
6. It is of course a considerable task for a litigant to upset a costs order, since costs are very much a matter of the discretion of the court. The judge was no doubt coping at the beginning of the October term with a full applications list. It was on Wednesday 5th October, so I suspect that it was a very full list, and the judge had to deal with many cases. Understandably, he had not read the substance of the bundle before him. As I shall show, he had not even seen the application notice. What he said, after paragraph 1 identifying what he had to decide, was as follows:

"2. To say that this litigation is hostile and that neither side trusts any step taken by the other is to seriously understate the position. I can understand why the Defendants were just as suspicious of any proposal put forward by the Claimants as the Claimants are just as suspicious of any action taken by the Defendants. These suspicions will probably never disappear, and even the resolution of the litigation will probably not put an end to the feelings of distrust that there are.

3. Nevertheless, the property had been empty, and, indeed, one of the concerns of the Defendants was that the Claimant was collecting rents, not accounting for them, and was in breach of an order.

4. The proposal for the introduction of a rent of a tenant seems to me to be self-evidently sensible given the fact that these properties were unoccupied and had apparently been unoccupied for a long time, and had lost income. It seems to me that instead of refusing to consider the Claimants' proposal, the Defendants should have responded to it. The Claimants therefore, in my view, had to come to court. But, although I have not seen the application, I suspect that what was sought bears little relation to what has been finally agreed. But, that, too, regularly occurs. It seems to me that the Defendants are at fault in failing to respond positively.

5. The fault, however, is not sufficient in my view, given the background between the parties, for me to make an order against them as regards the costs of the application. I am really not inclined to give anybody any victories which will encourage them in their desire to prosecute this litigation.

6. Giving due notice to the fact that I think the Defendants failed properly to respond, my view is that the application should be the Claimants' costs in the case. That is the order I will make."

7. Therefore that is the basis on which the judge, having formed a dim view of the defendants' failure to respond positively to the claimant's proposals, but not an unqualified view in the claimant's favour, decided against making an immediate costs order and made an order in favour of the claimant, but only to the limited and conditional extent that he will not have to pay the defendants' costs in any event and he will receive his costs, but only if he wins at the end of the day. As the judge indicated, that was no doubt in a desire to encourage all parties to come to a sensible settlement, although he recognised that that might be difficult given the level of distrust between the parties.
8. In the grounds of appeal scheduled in the appellant's notice the matter was put in this way:

"1. While costs are in the discretion of the judge who makes an interlocutory order, nevertheless, it is a discretion to be exercised on settled lines, upon consideration of all relevant matters, and excluding all irrelevant considerations.

2. Mr Justice Peter Smith was (very rightly, it is submitted) critical of the [Defendants'] refusal to respond to the [Claimant's] moderate and reasonable proposals to let certain properties, as to the beneficial interests in which the parties are in dispute.

3. The [Claimant] had suggested that the properties should be let, and the nett rents paid into an escrow account pending settlement or trial.

4. That, in effect, was the order which Mr Justice Peter Smith made ... but he declined to order that the [Defendants] should immediately pay the costs occasioned by their obdurate refusal to co-operate.

5. The reason that Mr Justice Peter Smith gave was that he was not inclined to give the [Claimant] a victory which would encourage him in his desire to prosecute this litigation.

6. That is not a proper consideration. The [Claimant] has a right of access to the Courts. While compromise is to be encouraged, the Court ought not to coerce a party to settle by refusing him costs when, on the learned judge's own reasoning, a costs forthwith order might have been expected, especially given the policy of the [Civil Procedure Rules] to visit the costs consequences of unreasonable conduct on the party at fault at an interlocutory stage.

7. In the circumstances, the learned judge erred in principle, so that the Court of Appeal is entitled to exercise a fresh discretion."

9. That is how the matter was put. The application was, as usual, referred for consideration on paper and came, as it happens, before me.
10. There was not at that stage a separate skeleton argument, which was a matter of surprise to me. I caused an enquiry to be made as to whether reliance was to be placed on a separate skeleton argument, and I was told that the answer was that it was not. Mr Virdee has told me that when that enquiry was made, he referred to counsel and he was told that he should rely at that stage on the grounds in the appellant's notice, and that if a hearing was necessary then it would be possible to use a skeleton argument.
11. It is no reflection on Mr Virdee, but that approach on the part of counsel was fundamentally wrong. The fact is that when an application for permission to appeal is considered by the Court of Appeal and considered first on paper, that is the stage at which the court ought to be provided with all the material on which the appellant wishes to rely, including as full a statement as the appellant wishes of the grounds of the appeal and the arguments relied on in support of the appeal. I refused the application on paper, considering that the order for costs was within the judge's discretion.
12. Mr Virdee exercised the right, which every appellant has in these circumstances, to renew the application at an oral hearing, which he has conducted himself, and very clearly, ably and forcefully. He has, in advance of the hearing, put together a skeleton argument in which he puts a good deal more material before the court.
13. A hearing such as this is a reconsideration of the matter. The rules do prescribe that on a renewal at an oral hearing the appellant has to focus on the issues that really are in dispute, in the light of the reasons given for refusal on paper. As it happens, in this case the question is so, as it were, short and straightforward and self-contained that there would in any event have been no need to further refine the point for the purposes of the renewal hearing. But, as I say, I do not intend it in any way as a criticism of Mr Virdee, but counsel was wrong to think that a skeleton argument was not appropriate at the earlier stage, and it would have been better to have had the skeleton argument at the earlier stage.
14. Nevertheless, here we are. I have the benefit of Mr Virdee's skeleton argument, and I have been able to see that and read some of the bundle of papers and, of course, hear his helpful arguments this morning. Looking at the bundle, I have seen the application notice of 8th September that was before the judge. The judge said that he had not seen it, and I have no doubt that the reason he had not seen it was that it was in the bundle before him, but having been told that except as to costs the matter had settled the judge understandably did less rather than more reading, given the pressure of other cases he had to deal with.
15. In the skeleton argument Mr Virdee explains a good deal of the background and history of the litigation, and explains more than the judge would have known about the intransigence and unreasonable conduct of the defendants. Indeed he talks about non-compliance on their part with their obligations even since the judge's order. Those of course are matters that necessarily the judge could not have taken into account, and are therefore irrelevant to the question of whether he exercised his discretion properly and on the right principles on the material that was before him.
16. The judge, as appears from his short judgment, had a clear view, admitted on limited material, of the merits of the application in the context of the litigation as a whole. On that basis he did feel able to make an order for costs, even though the substantive application was dealt with by consent. Nevertheless, in such circumstances where the substantive application has been settled and unavoidably the court cannot go into the full merits of the case, or even the full merits of the application, to decide whether the claimant, if the matter had been fought to the end, so to speak, would have obtained an unqualified immediate order for costs, the court has to proceed on a broader approach than if the case had been fought fully. That is a matter that is recognised in the authorities, most recently in a case called Brawley v Marczynski [2002] EWCA Civ 756, [2003] 1 WLR 813.
17. It seems to me that while I can perfectly understand Mr Virdee's feeling of injustice at the position that he was brought into and the position that he is in, there is really no prospect of his being able to persuade this court on a full appeal that the judge was not acting within the scope of his discretion as to costs by making an order for costs in his favour, but holding back from making an order that would result in an unqualified and immediate order for costs and instead left his entitlement to costs contingent on his winning the litigation. As I say, I have no doubt that in this difficult situation Mr Virdee does feel aggrieved, and I can understand why. But I do not believe that the judge can fairly be criticised, on the limited material that he had and in the circumstances of that case, for not making an immediate forthwith order for costs.
18. So, having considered the matter with the benefit of Mr Virdee's submissions this morning, I remain of my view that an appeal would not succeed and has no prospect of succeeding. Accordingly, I dismiss the applications for permission to appeal.

ORDER: Applications for permission to appeal refused.

(Order not part of approved judgment) ______________________________