England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CENTRAL LONDON CIVIL JUSTICE CENTRE
QUEEN'S BENCH DIVISION
(HIS HONOUR JUDGE KNIGHT QC)

		Royal Courts of Justice Strand, London, WC2A 2LL
		15th August 2012

Lord Justice Hughes:

1. The claimant in this case had an appeal pending against the decision of HHJ Knight QC in the Central London County Court under which the judge dismissed his claim against the college. It was a claim for damages arising out of his failure to obtain, or to be awarded, a Master of Science degree. The claimant had permission to bring that appeal. Permission was granted with an attached explicit warning as to its prospects and as to the fact that any victory, should it be achieved, might easily by Pyrrhic. But that warning and that fact, if it be so, is barely relevant to the issue which we have to decide. What we are dealing with here is an application by the defendant college, which is of course respondents to the appeal, for an order requiring a third party to give security for costs. The college believes, with good reason, that the claimant himself is impecunious. He is no longer in receipt of legal aid. He is however married, and as it turns out his wife has received both a lump sum just short of £300,000, arising from injuries suffered by her at work, and also continues to draw by way of employment-related disability pension, about £3,000 a month for the same reason. The college having raised the question, it is accepted by both the claimant and his wife that she had in fact contributed substantially to his costs since legal aid was withdrawn; moreover, it is apparent that the legal aid was withdrawn because she as his spouse came into possession of the lump sum.
2. The order which the defendant college now seeks is that the wife be joined to the appeal as a party for the purpose of making against her an order that she give security for costs. The point is taken against the college's application in the written submissions lodged on behalf of both the claimant and his wife that this court has no power to make such an order at this stage.
3. For my part, I am prepared to assume without deciding that the court does have that power, and that it derives from CPR 25.14, and in particular from subparagraph 2(b). The assumption that I am prepared to make for the sake of argument is that where the words "the court" appear in CPR 25.14, they include this court where an appeal is pending to it. We have not heard full argument on that question, and that is why I say that we do not formally decide the point. But taking the view that I do about the application, it is unnecessary to decide it. It is unnecessary to decide it for this reason: assuming that CPR 25.14(2)(b) applies, there is a statutory precondition to the making of the kind of security for costs order against the third party which the college defendant is here seeking. The statutory precondition is that the third party "has contributed or agreed to contribute to the claimant's costs in return for a share of any money or property which the claimant may recover in the proceedings".
4. The application has been presented with moderation and appropriate tenacity on behalf of the college by Mr Tolley, to whom I am grateful for his carefully made submissions. He has, as it seems to me, made bricks with very little straw. He accepts, correctly in my view, that the statutory condition is not met simply because the contributing spouse may expect or hope that if a substantial sum of damages is recovered by her husband, the family as a whole will enjoy a better lifestyle; that would not amount to a contribution in return for a share of any money recovered. Mr Tolley neatly formulated the import of those words when he submitted that what must be shown is that the contributor must expect some payment out of the money recovered. He further submitted that there need not necessarily be a legally binding agreement; I agree that, particularly as between spouses, such an agreement might in some circumstances exist without any intention on their part to create legal relations, and thus that there may not necessarily have to be a legally binding contract. Thus far, but very little further, I go with Mr Tolley's submission.
5. He next submitted that a contribution made by a funder without any agreement to receive in return a share of money recovered might meet the statutory condition if subsequently there were a promise by the recipient claimant to make such a payment. That, as it seems to me, does violence to the language of the statutory condition. The statutory condition requires a contribution, or agreement to contribute, as the case may be, to be made or agreed in return for a share. Of course, it may well be that a court would infer from a subsequent promise an antecedent agreement to share the proceeds.
6. That said, the nub of Mr Tolley's careful submissions can be stated in two parts. First, he says that an agreement to share the proceeds, or any proceeds, of this claim is the natural inference to be drawn from the fact that the wife has made the contribution that she has. In effect, he says it is an unrealistic proposition that she should have agreed to contribute without a promise of a share in return. Secondly, he says that is supported and demonstrated by the several references which both the claimant and his wife have made in their witness statements and documents, to the effect that their matrimonial resources, several though they may be formally, are treated by each of them in many respects as available in common. There are references to the "family income" in the statements of both the claimant and his wife.
7. Confronting those twin submissions, my conclusions are these. First, I do not remotely agree that it is the natural inference to be drawn from the contributions made to costs that there has been a promise to share the proceeds. The natural inference is, to my mind, precisely the opposite. The natural inference is that the contribution has been made by the wife because she is devoted to her husband and wishes to support him in something which rightly or wrongly he thinks is very important to him. In other words, the contributions have been made out of what the law rather pompously calls "natural love and affection".
8. That can be tested simply enough by this. One of the remedies which Dr Chilab seeks in this case is a declaration that he is entitled to the degree which he was not awarded. It is true there is also a very sizable claim for damages, which may or may not have anything in it. But the inference that I would draw is that Dr Chilab, for good reason or for bad, is so determined to pursue his claim against the college that he would pursue this if it was only a claim for a declaration; and certainly the inference that I draw from the facts as we know them is that his wife would support him by contributing to his costs if the claim were only a claim for a declaration.
9. The statutory condition makes it absolutely clear that for an order for security for costs against a third party to be justified there must be something quite different from the natural love and affection which appears to be motivator in the present case. Here there is literally nothing. The references to the spouses treating their several assets as family assets do not come within a country mile of establishing an expectation of payment of part of any damages. It is really just the same thing as saying that the wife makes such resources as she has available to her husband precisely because he is her husband; in other words, out of natural love and affection.
10. This litigation -- good, bad or indifferent as it may turn out to be -- is the husband's fight. He may have become unduly wedded to it, but it is his fight, not hers, and she is supporting him because she is his wife. That is not a basis for an order for security for costs. That is enough to dispose of the present application. I understand the college's anxiety as a publicly-funded institution at the prospect of a fairly expensive appeal being brought by a claimant who may well have very limited prospects of success except in a Pyrrhic form, and who will not be good for the costs if he loses. But the remedy which is presently applied for is simply misconceived.
11. Mr Tolley helpfully pointed us to a number of indicators in the wife's witness statement, from which he invited us to draw the inference that her assertion that there was no agreement to share the proceedings could not be relied upon. First, he says that her statement does not sufficiently demonstrate where the balance of £89,000 from her lump sum, left over after no less than £200,000 has apparently been contributed to the costs of this action, has gone. It is true that there is no particularisation of the rather general proposition that it has gone on family debts and expenses, but since the lump sum was paid in part in respect of arrears of lost income over a period of 12 years, it would scarcely be surprising if there were substantial debts to be paid.
12. Mr Tolley has pointed next to the fact that there is not exhibited what must be a second bank account into which some state benefits are paid; that is effectively conceded. The documents ought to have been there, but neither they nor their absence from the statement begin to justify the inference which we are invited to draw.
13. Mr Tolley points, thirdly, to a loan which the wife has taken out for £10,000, which has not only gone into her bank account but has gone out; but the obvious inference from that, confirmed on instructions by Mr Newton QC, is that it was paid to the husband's solicitors on account of costs. Lastly, he points to payments of £250 a month to those husband's solicitors by the wife, and suggests that that, because it is a formal monthly payment, must indicate an agreement to share future receipts if any. It does nothing of the kind; what it demonstrates is that the solicitors are not prepared to go on working for nothing.
14. We were taken additionally to the decision in Thompson v Berkhamsted Collegiate School [2009] 6 CLR 859, [2009] EWHC 2376 QB. That was a post-trial claim for costs pursuant to section 51 of the Senior Courts Act 1981. The statutory precondition which applies to security for costs in anticipation does not and did not apply. For my part, I am grateful for the reminder of the general principles as to the recovery of costs from third parties, which are set out in the judgment of Blake J, but it does not help on the issue which we have to decide.
15. The short answer to this application is, I am afraid, that there is not and never has been any evidence from which it is possible to infer an agreement by the contributing wife under which she is to be entitled to a share of the proceeds. That being so, the application for security for costs is bound to fail, and must be refused. We never get to the question of whether if the statutory condition were met, it might be just to make it. If we did, we might well have to investigate something of the prospects of the appeal; but we do not, and from Dr Chilab's point of view, that may be just as well.
16. I would for those reasons refuse the application.

Lord Justice Tomlinson:

17. I agree. For the reasons given by my Lord, Lord Justice Hughes, the invitation extended by the college to the court to draw what is said to be the obvious inference that Dr Sewan has contributed to her husband's costs in return for a share of any money which he may recover is an invitation to the court to embrace a somewhat jaundiced view of human nature.
18. Like my Lord, Lord Justice Hughes, I would refuse the application.

Order: Application refused.