England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM LEEDS COUNTY COURT
(MR JUSTICE PATTEN)

		Royal Courts of Justice Strand, London, WC2A 2LL
		17th May 2007

Lord Justice Lloyd:

1. The first application (A2/2007/0489/B) that I have to consider in relation to the appeals or applications that are listed before me today is a striking out application on the part of the respondent, which seeks to strike out an appeal for which permission was granted by the judge below. The appeal notice is sought to be struck out on the grounds of defaults on the part of the appellant of a procedural nature. I need to say something about the case as a whole which may overlap with what I say in relation to the applications yet to come.
2. The appeals are against orders of Patten J sitting, however, as a judge of the Leeds County Court on 13 November 2006. He was dealing with two applications in insolvency proceedings and the applications were made pursuant to a consent order previously made by HHJ Langan QC. That consent order, which I shall have more to say about on the later applications, disposed by agreement of disputes about the enforcement of a legal charge which had originally been executed in favour of Clydesdale Bank, for whom Mr Kramer appears and which was the fifth respondent in the proceedings below, but had been assigned to the applicants, Mr Tatch and Britain Trustees Limited. As I say, the dispute as regards the enforcement of the legal charge which was principally, in effect, between the applicants and Mr Nolan (who was the fourth respondent), whose interest was as a subsequent mortgagee, was compromised by the order of 14 March 2006 but in terms which left a loose end outstanding as regards costs.
3. The consent order provided that the fourth respondent was to pay certain costs of the applicant, namely costs incurred after a date in late 2005 which does not matter for present purposes, and that there was to be no order for costs as between the applicants and the other respondents. But it left it open to any respondent to apply for an order for costs against another respondent so long as that was done within a time limit.
4. The first respondent, Mr Claughton, is the Trustee in Bankruptcy of Mr Devonport (now deceased) who was one of the two original mortgagors, his wife Mrs Devonport being the second respondent and the other mortgagor. Mr Claughton applied for an order for costs against Mr Nolan within the thirty days and Clydesdale Bank also applied for an order for costs against Mr Nolan, but 34 minutes outside the 30 days, that is to say at 4.34 on the thirtieth day but out of court hours, and therefore it counted as received on the next working day, which as it happens was five days later because it was over the Easter break.
5. Those applications came before Patten J, sitting in the Leeds County Court, as I sometimes used to do when I, as his predecessor had, the role of Vice Chancellor of the County Palatine of Lancaster. He had to consider first the question of whether it was possible for him to make an order in favour of the Bank despite the delay. He came to the conclusion that it was, for reasons that he gave. He considered the matter both as a matter of principle, and to the extent that Rule 3.9 of the Civil Procedure Rules was relevant, he considered it in terms of the exercise of discretion under that rule. He ruled in favour of the Bank. He was then asked for permission to appeal, and he granted permission to appeal but limited it to the point of principle. The order that was eventually drawn up on 23 January 2007 to give effect to his decision says in paragraph 1:

"The time for the Fifth Respondent to make an application for an order for costs pursuant to paragraph 6 of the Consent Order … be retrospectively extended until 4 pm 18 April 2006."

Paragraph 3 says:

"The Fourth Respondent is given permission to appeal on the issue of the principle to be applied on the application to extend time in respect of a Consent Order."

The order goes on to transfer the appeal to the Court of Appeal under Rule 52.14.

6. Mr Kramer, who appears for the Bank today to make the application to strike out, has shown me a passage in the transcript of the hearing where the judge dealing with the question of permission says:

"My normal reaction would be to refuse you permission and let you ask the Court of Appeal for permission, but I think in this case I am just going to give you permission to appeal because I think otherwise it is just going to run up additional costs for no real purpose. It is going to be quite a short appeal is it not? Yes, well I will give you permission to appeal but it will be limited to the point of principle. I am not going to give you permission to appeal to challenge my discretion if Rule 3.9 is the test."

So that is what the judge said and that is the order that was drawn up to give effect to it.

7. I am told there is a question, and I can see that there may be, as to the scope of the permission granted, but that is not something that affects Mr Kramer's application and if Mr Kramer's application were successful the question would not arise because there will be nothing left of the appeal.
8. As I say, the judgment was given on 13 November. There was some debate, as I understand it, between the parties or counsel as to the correct terms of the order. It was not agreed until 21 December 2006 and it was not drawn up, as I have mentioned, until 23 January 2007; drawn up in the sense of sealed by the court. It is actually incorrectly sealed because it is sealed as a High Court order but it is in fact a County Court order, but nothing turns on that.
9. An appellant's notice was prepared and was lodged with the court towards the end of November 2006 on the part of Mr Nolan (the fourth respondent) pursuant to the permission already granted. The court would not issue the appellant's notice at that stage and would not do so until after the order had been drawn up. What is said -- this is not, I think, in dispute as a matter of fact -- is that the Bank's solicitors were not told until a letter of 15 January 2007 that Mr Nolan was intending to appeal, whereas normally the appellant's notice should have been served on the respondents long before that.
10. The order was drawn up, as I say, on 23 January. It appears to have been received by the Bank and served on Mr Nolan's solicitors on 30 January. The appellant's notice was ultimately issued on 5 March and it was served on 16 March, whereas it should have been served by 12 March. The appellant's skeleton argument was served on the Bank's solicitors on 21 March which was two days late and the appeal bundle was served on 23 March which was one day late. There is also a timetable letter sent by the Court of Appeal Civil Appeals Office to the fourth respondent's solicitors which was passed on to the fifth respondent rather later than it should have been.
11. Rule 52.9(1)(a) provides that the appeal court may strike out the whole or part of an appeal notice. It also says in (b) that the appeal court may set aside permission to appeal in whole or in part. Sub-paragraph (2) of the rule says the court will only exercise its powers under paragraph (1) where there is a compelling reason for doing so, and paragraph (3) says that if a party was present at a hearing at which permission was given he may not apply for an order under (1)(b) because in effect that would amount to an appeal against the grant of permission to appeal.
12. In Mr Kramer's skeleton argument he makes some reference to what he said were the weak merits or, indeed, non-existent merits of the appeal on the point as regards the extension of time. I take the view that that is irrelevant because if it was considered as a substantive matter it would amount to seeking by a side wind that which cannot be achieved under 52.9(1)(b) because of paragraph (3). Mr Kramer deftly submitted that he was not really saying that that was the point, but that it was something relevant to be considered in relation to the striking out application on its other merits. But the judge having given permission to appeal took the view, and I am not going to disagree with him, that there was a point which deserved to be argued.
13. So Mr Kramer then focussed on the points as regards default. Really the substance of his point is not so much that the delays are serious and certainly not that they have caused any prejudice, because there really is not any prejudice worth the name, but that the appeal itself is all about a very short extension of time. To overcome a delay of less than one hour, the appellant ought to be whiter than white, so as Mr Kramer put it, in compliance with the procedural rules and directions in relation to the appeal. It seems to me that, especially given that there is no prejudice that can realistically be identified, this is a case which is some very considerable distance away from there being a compelling reason for the exercise of the power under 52.9(1)(a).
14. There has been delay; some of it can be the subject of greater criticism than other aspects of the delay, but in my judgment there is nothing in the delay, despite the nature of the issue arising on the appeal, to show that there is any good reason, let alone a compelling reason, for striking out the appellant's notice. Accordingly I propose to dismiss the fifth respondent's striking out application.
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15. The second application (A2/2007/0489/A) is an application for permission to appeal from the order of Patten J on 13 November 2006 made in the Leeds County Court, and I must deal first of all with a jurisdictional point which arises of a slightly unusual nature.
16. The judge was hearing insolvency proceedings in the County Court. He was hearing them because no doubt he, rather than HHJ Langan, HHJ Behrens or HHJ Kaye was available to hear them. If he had been hearing proceedings in the High Court the appeal would have lain to the Court of Appeal.
17. Since the proceedings were in the County Court that is not the case. He did grant permission to appeal on a particular point and immediately transferred the appeal under rule 52.14 to the Court of Appeal; that he had power to do. He granted only limited permission in respect of paragraph 1 of his order and he refused permission in respect of paragraphs 4 and 5 of his order, but said that any appeal in respect of those parts of the order should be transferred to the Court of Appeal as well.
18. Unfortunately it was overlooked that an order under 52.14 can only be made in respect of an appeal for which permission is either not required or has been granted. It cannot be made in respect of an application for permission to appeal. The Practice Direction Insolvency Proceedings, section 17, which deals with appeals in insolvency proceedings imposed, as of 2 October 2006, a requirement for permission in respect of a first appeal. This text appears to give some support for the proposition that an appeal from a decision of a High Court judge sitting in a County Court, which is of course a very rare event, might lie to the Court of Appeal. That is a possible reading if you take paragraph 17.2(1), 17.2(3) and 17.3(2) together. However, those paragraphs give effect to a provision in section 375 of the Insolvency Act, which being primary legislation governs the matter decisively. That section says:

"An appeal from a decision made in the exercise of jurisdiction for the purposes of those Parts [that is to say the parts in the Bankruptcy group] by a County Court or by a registrar in Bankruptcy of the High Court lies to a single judge of the High Court; and an appeal from the decision of that judge on such an appeal lies…to the Court of Appeal."

19. That is more specific and clearer than the Practice Direction Insolvency Proceedings and makes it clear that the appeal from Patten J's decision in the County Court, except insofar as he himself granted permission and transferred it to the Court of Appeal, lies to the High Court. When that was realised it presented the parties with a bit of a conundrum, and I need not go for present purposes into how that was sought to be addressed. In the end it has been addressed by the matter coming before me in the Court of Appeal, as the appellant's notices were issued in the Court of Appeal before the point had been spotted, and as I have had to deal with at least one application which is properly in the Court of Appeal in relation to the appeal for which the judge granted permission, but by request of the Chancellor pursuant to section 9(1) of the Supreme Court Act 1981 I am able to sit for these purposes as an additional judge of the Chancery Division of the High Court. Accordingly, I can deal with the applications that Mr Freedman makes on behalf of the appellant, which are properly High Court matters.
20. There is one procedural point that had to be dealt with, which is that although there are, as I have said, appellants' notices in the Court of Appeal, there is no originating process in the High Court. For the sake of ensuring that there is such a process in relation to each of the appeals with which I am concerned, Mr Freedman's instructing solicitors have undertaken to issue, in what may well be a fairly short form, appellants' notices, both as regards the first respondent and the fifth respondent, against the relevant orders of Patten J in the County Court so that sitting in the High Court I will have notionally, and by the time the order is drawn up really, an originating process on which the order can be made. That is a slightly long preamble, but it applies not only to the application on which I now give judgment but also to two further applications which will follow.
21. The first point which arises is this. As I mentioned in the first judgment that I gave today, what was before the judge was applications by two respondents (the first and the fifth) for orders for costs against the fourth respondent pursuant to a consent order dated 14 March 2006 which disposed of the proceedings, but leaving this loose end as regards costs that any respondent had thirty days in which to apply for an order for costs against any other respondent. The parties had evidently not managed to nail that down as a term of the compromise. The first respondent applied in time, the fifth respondent applied but in literal terms 34 minutes out of time which meant in court terms five days out of time because of bank holidays and the weekend that followed.
22. The first question that the judge had to consider was whether he could, and if so whether he should, extend time for that application. He decided that he could and should and he made an order which is expressed in paragraph 1: the time for the fifth respondent to make an application for an order for costs pursuant to paragraph 6 of the consent order be extended to 4 pm 18 April 2006. As regards that he gave permission to appeal but in these terms at paragraph 3 of the order:

"The fourth respondent is given permission to appeal on the issue of the principle to be applied on the application to extend time in respect of the consent order."

Then that was transferred.

23. Now that gave effect to text which appears from the transcript and which I have read in the course of my first judgment, and the important point for present purposes is that he said:

"I will give you permission to appeal, but it will be limited to the point of principle. I am not going to give you permission to appeal to challenge my discretion if rule 3.9 is the test."

24. Now going to the judge's judgment he recites the facts, both with regard to the underlying facts and as regards the proceedings and the consent order and then he comes, on page 65 of the composite transcript, to the question of jurisdiction. He considers the exercise of jurisdiction in relation to consent orders where, as here, the consent order is not just an order which the opposing party basically submits to but a concluded contract. He refers to the rules, he refers to a number of authorities and he asked himself at page 67 whether the terms of the order were sufficiently clear as to exclude the possibility of the court extending the 30-day period. He addresses those and comes to the conclusion at page 68 that as a matter of construction the terms do not exclude the possibility of an application for an extension.
25. He then refers to a then recent decision of Neuberger J which suggested that even if the contract did exclude an extension, the Civil Procedure Rules would in unusual circumstances allow the possibility of an extension. He did not approach the case on that basis although he referred to it and he said at page 69, lines 7-11 this:

"I made it clear during the course of argument that I do not consider this case to be a case where there are any exceptional or unusual circumstances so as to bring that jurisdiction into play if it exists. I base my decision on what I consider to be the true construction of the order which is that the provisions of CPR Part 3 have not been excluded and therefore the task which I face in these circumstances is simply to exercise those powers."

And he continues:

"I accept the submission made to me that the starting point for the exercise of the discretion has to be the terms of the order itself and it is for the applicant to make out a case for my granting the extension of time. I believe that the proper course is for me to have regard to the provisions of 3.9 and the criteria which are there set out."

He then in the remaining part of the judgment (which is page 69 line 15 through to the end of page 70) addresses in terms the various heads that have to be considered under CPR Rule 3.9 and concludes at the end of the day:

"In my judgment having regard to the very, very slight delay, the fact that it was accidental and the fact that it has had no additional adverse consequences beyond the mere fact that it has been made, I think the just order, subject to any questions of costs should be that I should extend time until 18^th April so as to make this an application that was made in time, and that is the order which I propose to make."

26. Now the question is what is the scope of the permission to appeal which the judge granted in relation to that, and the point is this as put to me by Mr Freedman. There is an overlap between points of principle and the exercise of discretion. Of course there is material before one gets to halfway through page 69 which is open to challenge as a matter of principle. Is it a Nupak case, is there jurisdiction to override? Is the contract embodied in the consent order to be construed as allowing the court to grant an extension at all? All of those points are open under the terms of the permission already granted. What it seems clear that the judge intended not to be open to challenge was the exercise that he went through in the last page and a half of the judgment under Rule 3.9. Mr Freedman submits that even having got as far as an exercise under 3.9, the judge ought to have considered and put into the balance the fact that the time limit was a contractual time limit and he should have reconsidered the importance of not departing from the parties' bargain, and he should have said whether or not he considered in relation to 3.9 that special circumstances were relevant.
27. It seems to me that the judge, perhaps somewhat off the cuff, made exactly the right distinction that ought to be made for present purposes. I take it from the judge's grant of permission that it is right -- I do not question this -- for the fourth respondent to be able to appeal on the issue of principle to be applied on the application to extend time. Now the issue of principle includes whether it was open to the judge to extend time at all; what the true effect of the consent order, i.e. the contract, between the parties was; whether Neuberger J's decision was pertinent and, if so, what its effect was and what approach the judge should take. What the judge was not allowing to be investigated is the balance of the consideration of the factors that he took into account under Rule 3.9. But Mr Freedman's submission is that the judge went wrong in principle by not at least expressly addressing under 3.9 the fact that it was a contractual time limit, or the fact that it was important not to allow parties over-readily to depart from their bargain, is a point of principle. It is a point of principle on the exercise under 3.9.
28. It seems to me that that is a point which the fourth respondent does have permission to appeal on pursuant to the judge's order. What he does not have permission to appeal on is the particular weight given to the factors that the judge did take into account or did consider in the last page and a half of his judgment under 3.9. But it seems to me that if Mr Freedman wishes to submit that, even if you get to an exercise under 3.9, the judge's approach is vitiated in principle because he said nothing about it being significant that there was a departure from the contract, that is a point of principle as opposed merely to point of discretion, because it is a point of principle which plainly the judge did not bear in mind, to go from the text of his judgment.
29. I therefore consider that the judge was right to draw the distinction that he did and to impose the limitation that he did. In my judgment it is not as limiting as Mr Freedman suggests that it might be seen as. It is fair to say that he did not accept that it necessarily was, but he fears that it might be so read. In my judgment, on the appeal for which permission has already been granted, Mr Freedman is able to make the submission that the judge was wrong even if he was right to get as far as Rule 3.9. And even though all the factors that he did take into account were properly considered and properly balanced, which Mr Freedman is not entitled to challenge, in my judgment he is entitled to say that this whole exercise was flawed by the omission at that stage to say "but of course I have to consider that parties should not over-readily be allowed to depart from their bargain". Accordingly, because in my judgment that is open to the appellant, I see no need and no reason to alter the terms of the judge's order in respect of permission to appeal so far as already granted.
30. So that order stands, and that order is in the Court of Appeal, but I suppose my order refusing to vary the limitation is an order in the High Court.
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31. I have now to deliver judgment in relation to two applications for permission to appeal against orders of Patten J sitting in the Leeds County Court on 13 November last year. For reasons explained in the second judgment, today I am sitting in this instance as an additional judge of the High Court Chancery Division to hear the application for permission to appeal from the County Court decision.
32. I have said a good deal about the background and the underlying situation in my earlier judgments of today but to recapitulate for present purposes: by a consent order made on 14 March 2006 by HHJ Langan QC, a legal charge held by the applicants Mr Tatch and Britain Trustees Limited was declared to be valid, extant and enforceable and the applicants were given permission, or stated to have permission, to exercise all rights under the charge, including the exercise of the power of sale. Possession of the property was granted forthwith with priority over any previous possession order granted to the first respondent, who is the Trustee in Bankruptcy of Mr Devonport, now deceased, one of the two mortgagors. Mr Nolan, the fourth respondent, was ordered to pay the applicant's costs in the proceedings from 18 November 2005 to date to be assessed if not agreed; no order as to costs arising between those parties in respect of the prior period, the proceedings having been commenced on 16 August 2005. There was no order as to costs as between the applicants and each of the first, second, third and fifth respondents, and then there was this paragraph:

"Any respondent who wishes to apply for an order for costs against any other co-respondent has permission to do so within thirty days of the date of this order. Failing such an application then as between the respondents there be no order as to costs."

33. Both the first respondent and the fifth respondent applied for an order for costs against the fourth respondent. As I have previously mentioned, the fifth respondent did so very slightly outside the 30-day time limit. That is the subject of the separate judgment and the separate paragraph in the order of the judge below in respect of which he granted permission to appeal, and an appeal is pending in the Court of Appeal.
34. The first respondent's application for costs was on the basis that only the fourth respondent had opposed the application by the claimant, and by doing so had caused the first respondent to incur costs which it was said that the fourth respondent should pay. The fifth respondent, who had been the original mortgagee under the charge held by the applicants, was joined at the request of the fourth respondent for the purposes of giving disclosure because the fourth respondent had taken a number of points on the charge, both as to validity and as to the amount secured. The fourth respondent is a subsequent chargee of the property; he is therefore possibly affected by the subsistence of any prior charge and if there is a prior charge by the amount secured by it.
35. The fifth respondent said that it had incurred costs by reason of the fourth respondent's attitude in the proceedings and said that the fourth respondent had ultimately conceded the position, and that accordingly the fourth respondent should pay the fifth respondent's costs.
36. The judge, having held that it was open to him to extend time for the fifth respondent, then went on to deal with the substance of the two applications before him. He did so in two separate short judgments.
37. In relation to the first respondent the judgment is on pages 98 to 100 of the composite transcript and the judge summarises very briefly the background and the events. He says he records that the submission had been made on behalf of the fourth respondent that the trustee as a necessary party should have his costs borne by the applicant, if by anyone, and that because it had been agreed that there should be no orders between the applicants and the first respondent there was no case for the fourth respondent to have to pick up that aspect of the bill.
38. I should say that in terms of the history of the proceedings the proceedings were issued on 16 August. The first hearing before a District Judge was on 21 September and the judge's eventual order for costs was in relation to costs incurred after that date. The fourth respondent at that point was taking a number of points as regards the validity of the charge and as regards the amount thereby secured. At a later hearing, I think I am right in saying on 20 December 2005, a District Judge ordered that the fifth respondent, the Bank, be joined and that of course led to the Bank incurring costs. The judge records in very brief summary the events and he says in his judgment concerning the first respondent this at page 99:

"Much of that [he is referring to Mr Nolan's opposition] is concerned with the amount of the mortgage debt, but in my judgment it is not entirely clear quite what relevance that had to the order for sale. Mr Nolan would only have been able to defeat the order for sale if he was able to show that there was absolutely no money due and owing under the 1991 charge at that time."

Then a few lines later he accepted the proposition that:

"The greater part of the costs following the hearing on 21^st September were down to the opposition by Mr Nolan which in the end did not succeed. Although there has been no determination of this it is quite clear from the consent order that Mr Nolan was in the end forced to accept that the trustees' claim was well founded and that the charge was valid extant and enforceable according to its terms."

He therefore came to the conclusion that Mr Nolan, having lost, should pay the trustee in bankruptcy's costs, subject to a limitation of time and obviously subject to quantum which would be for assessment.

39. As regards the fifth respondent, the Bank, the judge gave a short judgment at pages 111 and 112 of the transcript referring to the fact that the Bank was joined primarily, if not exclusively, to give disclosure, but it had given disclosure not by lists but by a witness statement which exhibited a number of documents, and in the course of the judge's judgment he says this:

"The difficulty I have got is that the view I can take of what the parties did and the reasonableness of what they did is necessarily to some extent partial, [I interpose, in the sense of incomplete] not having tried the action or been involved in the interlocutory stage. It seems to me that as a matter of principle, the bank having been joined not at its own request but at the request of Mr Nolan for disclosure purposes, should be entitled to recover the costs occurring at that disclosure process."

On that basis he made the equivalent order in favour of the fifth respondent to that which he had made in favour of the first respondent.

40. Mr Freedman points out that, perhaps because of the circumstances in which the matter came before the judge, he was not assisted by citation of authority such as there is and already was, by the time of his hearing, on the question of the approach of the court where it is invited to make an order for costs following a consent order which has settled all aspects of the case except costs. That is a point which can arise in a number of different circumstances and I have been referred to in particular to four cases in the Court of Appeal over the last four years or so which have touched on the point. One, the first in time, is Brawley v Marczynski (No.1) [2002] EWCA Civ 756. The second is BCT Software Solutions Ltd v C. Brewer & Sons Ltd [2003] EWCA Civ 939. The third is Venture Finance PLC v Mead [2005] EWCA Civ 325, and the most recent is Promar International Ltd v Clarke [2006] EWCA Civ 332. Those cases illustrate something of the variety of situations in which such an issue can come before the court and they all, to a greater or lesser extent, suggest that the court should be somewhat hesitant to make any substantive order for costs in a situation in which something may depend on a potentially detailed knowledge of the issues and the course of the proceedings which the judge trying the issue of costs has not got. At one end of the scale there may be a case where two parties come to trial and possibly during the course of the trial, as in BCT Software, they come to an agreement except on costs and they ask the judge to decide the question of costs.
41. Another situation may be where, in effect, the consent order is virtually a capitulation, which was perhaps over simplifying the position in Venture Finance v Mead. A third situation is rather neatly illustrated in Promar International v Clarke, where the proceedings were in some way similar to BCT Software, because a case came to trial and the defendant offered an undertaking in lieu of an injunction which the claimant accepted and then abandoned the claim for damages. The judge was asked to decide the question of costs, which he did in the absence of any citation of authority. Although the judge asked if there was any authority he was not shown any perhaps because the point had arisen without notice. He gave a judgment ordering the defendant to pay 75 percent of the claimant's costs, but immediately afterwards the defendant's counsel discovered the BCT Software case and supplied it to the judge. The order not having been drawn up yet, the judge withdrew the order and directed a further hearing which took place eight days after the first hearing. He heard further argument from counsel in the light of that authority and he then came to different conclusion, namely that there should be no order to costs. The claimant finding the favourable order that he had got, or thought he had got, first time was dashed from his lips by the later hearing appealed, and said that the judge should not have changed his mind. The Court of Appeal disagreed and went into some detail as to the relevant considerations reviewing the previous authorities.
42. In the present case, of course, the dispute involved more than two parties and one might have supposed that, on the face of it, if orders for costs were to going to be made they would be made either way as between the applicants and one or more of the respondents. But clearly it is a more complicated situation than that, because there could be, and no doubt were, issues or potential issues between the respondents. The first respondent as trustee in bankruptcy had an interest in anything that was preserved from the security of the charge and from any other security. The second respondent, Mrs Devonport, really took no part in the proceedings. The third respondent, which was a prior mortgagee, took no part. The fourth respondent as a subsequent mortgagee clearly had an interest in limiting the position under prior security. And the fifth respondent, which had been mortgagee under the charge but later transferred to the applicants, was also an unsecured creditor of the bankrupt.
43. It is not surprising from a reading of the consent order that the judge should have formed the view that Mr Nolan lost and that the consent order was in effect more or less a capitulation on his part, subject only to a limitation of the costs that he was to pay to the applicants. Mr Freedman submits that that was a very incomplete and thoroughly misleading view of the substance of the compromise. Mr Nolan had from the first taken two different kinds of points about the applicant's charge. One was that it was not valid at all, and if it was not then he was subject only to the third respondent's charge. But the other was to question the amount claimed to be secured. The applicants had first of all said that the amount secured was of the order of £130,000 or so and later corrected that to £150,000 or so, which Mr Nolan challenged.
44. By the end of September 2005 it appears that the applicants were claiming that what was secured was £40,000 and interest on that, bringing it to a total of just under £80,000. Mr Freedman further submits that the reality of the compromise, although one cannot tell it from the order, was that Mr Nolan was able to obtain an agreement with the applicants to take a transfer from them of the mortgage in consideration of a payment of £70,000, plus the agreement to pay what was then agreed at £5,000 in respect of the costs since 18 November. That was of value to Mr Nolan in two ways. One, it limited the amount that he had to pay, which was therefore in effect treated as the amount secured by the prior charge, and two, he got the prior charge into his own hands so that he was able to exercise the rights under, and moreover he had got it with the benefit of the declaration in the consent order that it was valid, extant and enforceable. So whereas paragraph 1 of the order might seem to be a defeat for Mr Nolan, in fact in the wider context it was a victory, or if not a victory it was at least something achieved of value to him.
45. Mr Freedman submits that the judge, without realising it, had altogether an inaccurate view of the commercial effect of the consent order and was therefore wrong insofar as his order proceeded on the basis that Mr Nolan had lost by accepting the consent order.
46. Furthermore, Mr Freedman submits that even with the benefit of the Court of Appeal decisions that I have mentioned, even before getting to the stage of going into the merits the judge ought to have considered first of all whether it was right even to go into the question or whether as a matter of caution he should consider simply whether to decline the invitation. In that respect he distinguished this case from a case such as, for example, Promar v Clarke, where two parties locked in litigation had agreed everything except costs. They asked the judge to decide the question of costs. In the present case, costs had been dealt with by agreement as between the principal contending parties, namely the applicants and the fourth respondent, and there was no necessary reason why any other question of costs should be raised and, indeed, if the applications had not been made by the two other respondents the order itself would by its default provision have been no order for costs as between the several respondents.
47. So Mr Freedman said that the first question that the judge should have considered was whether he was in a position to embark on the question of costs at all, not having been involved in a trial which had not taken place or even been started nor having had any prior involvement in the case.
48. Secondly, he submitted that if it was right to embark on it at all, if the judge felt any difficulty in assessing the position he should have said that the right order was no order for costs and, as I say, thirdly, he submitted that even if one got into the merits the judge's order was not right for several reasons. It was vitiated by the misconception that Mr Nolan had lost, by the error in thinking that the amount secured by the prior charge was irrelevant and perhaps by, among other things, an inadequate grasp of the detail of the respective conduct of the various respondents since 21 September. He also pointed out the fact it was odd that the applicants should get their costs only from 18 November by agreement, but that the respondents (to whom orders were granted) should get their costs from an earlier date.
49. It is fair to say that the court is not well disposed to being asked to decide a question of costs in the absence of a determination of the merits of the underlying litigation, but that is, of course, partially the point to which Mr Freedman has recourse. It is also perhaps fair to say that there is a real risk that the costs of these appeals may become disproportionate to the amount of costs at issue under the judge's orders. Those costs have been perhaps contributed to by a number of procedural and jurisdictional issues that have arisen, to some of which I have alluded in my earlier judgments.
50. Bearing all that in mind, and considering the fact that the judge was proceeding without assistance in terms of the decided cases -- and I make no criticism of the advocates in that respect, no doubt in circumstances that were not favourable to that being done -- and that the judge had had much to read at very short notice -- he had only seen the skeleton arguments, I think, before he got to Leeds for the hearing and he dealt with the matter fairly and expeditiously in the circumstances -- but it seems to me that Mr Freedman has sufficiently made the point that there is scope for saying, even against a high test that an order made in these circumstances must be manifestly unjust if an appeal is to succeed.
51. I think Mr Freedman has made sufficiently the point to persuade me that, while it may to some extent be an uphill task, there are errors of principle arguably to be found in the judge's judgments on these two applications, and that it would therefore be appropriate to grant permission to appeal against the two orders which are, in the case of the first respondent, paragraph 1 of the order on the first respondent's application and in the case of the fifth respondent, paragraph 4 of the order on the fifth respondent's application. There are consequential issues as to the costs of those applications but those are merely consequential and so they do not require separate reference at this stage.
52. I will therefore grant permission to appeal against those two paragraphs of those two orders, and following the precedent rightly set by the judge in respect of the order against which he did grant permission to appeal, I will transfer those appeals from the High Court where they are now, to the Court of Appeal pursuant to Rule 52.14.


Order: Application A2/2007/0489/B - Application for strike out refused.

Application A2/2007/0489/A - refused.

Application A2/2007/0490 - granted.