England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
ON APPEAL FROM DEPUTY MASTER MARK

		Royal Courts of Justice Strand, London, WC2A 2LL
		31/07/2006

Mr Justice Lightman:

INTRODUCTION

1. This is an application for permission to appeal against the decision of Deputy Master Mark dated the 14^th March 2006 ("the Decision") to grant the Claimant, the firm of solicitors Thomson Snell & Passmore, summary judgment on its claim for unpaid fees of some £19,247.61 and interest and to strike out the Defence and Counterclaim of the Defendants Terence and Jason Armstrong ("the Defendants").
2. The full facts relating to this dispute are set out in the judgment of Evans-Lombe J dated the 29^th July 2005 in the action entitled "Henry Vale v Jason Armstrong and Terence Armstrong Claim No HC03C0770" ("the Vale Action") and the Decision. It is sufficient to say that Henry Vale sued the Defendants seeking an order setting aside the sale on the 12^th October 2001 by Mr Vale to Jason Armstrong at an undervalue of Mr Vale's home, 9 Foord Road, Lenham Mardston, Kent ("the Property") on grounds of undue influence. In 2003 the Defendants retained the Claimant as their solicitors in the action, but on the 22^nd January 2004 the Claimant came off the record (most particularly and relevantly) because the Defendants had failed to pay accounts sent to them. The Defendants proceeded to defend their case acting in person, though in the course of the trial they instructed new solicitors and counsel. The essential issue in the case was the credibility of the evidence of Mr Vale and the Defendants. The judge believed Mr Vale and for good and substantial reasons disbelieved the Defendants. The evidence revealed clearly that several relevant acts of dishonesty by Jason Armstrong which no doubt reinforced the judge's finding that he was not a credible witness. Accordingly Evans-Lombe J gave judgment in favour of Mr Vale on the 21^st May 2004 and since by that date (prompted by Jason Armstrong) mortgagees under mortgages granted by Jason Armstrong had sold the Property, Mr Vale was awarded, as well as substantial costs, compensation for the loss of the Property.
3. The Claimants delivered bills for costs to the Defendants at various dates in 2003 and a final bill in May 2004. Since the sum outstanding remained unpaid, the Claimant commenced these proceedings on the 8^th September 2004. The Defendants' counsel settled a Defence and Counterclaim. In April 2005 the Defendants gave notice that they would be acting in person and on the 27^th April 2005 complained that the Claimant was withholding its files. The Claimant sent copies of their files to the Defendants, but these were returned by the Post Office because the Defendants failed to collect them. Thereupon by letter dated the 21^st July 2005 the Claimant wrote to the Defendants inviting them to collect the files from their office upon notice. The offer remained open at all times thereafter but the Defendants did not avail themselves of it.
4. By application notice dated the 29^th July 2005 the Claimant gave notice of intention to apply for summary judgment of the whole of its claim and for the striking out of the Defence and Counterclaim. The application was supported by a witness statement by Julie Ann Gubbay, a legal executive employed by the Claimant, setting out the full facts and background and to which was exhibited both the bills sued upon and a detailed breakdown showing where and how the fees were said to have been incurred.
5. The date of the hearing of the application was fixed for the 7^th May 2005 with a time estimate of one day. By a further witness statement dated the 6^th October 2005 on behalf of the Claimant a costs draftsman gave evidence that he had examined the Claimant's files, time records and solicitors and client bills and concluded that (subject to relatively minor adjustments) they were correctly charged and that figure of £19,247.61 (produced after making those changes) represented a reasonable total for the work done on the case. That is the figure which the Claimant seeks to recover with interest.
6. On the 2^nd November 2005 the Defendants' current solicitors came on the record and notified the court and the Claimant that they had legal aid for the hearing and for counsel's advice. As a result the hearing fixed for the 7^th November 2005 was adjourned and re-fixed for the 2^nd February 2006.
7. On the 31^st January 2006, the Defendant notified the Claimant that all points taken in the Defence and Counterclaim were abandoned and that new points were taken as pleaded in a draft Amended Defence and Counterclaim which was unsupported by any evidence other than verification of the contents of the draft. The two points taken (which are relied on at the hearing of this appeal) were: (1) (in the Defence) that the Claimant was put to proof that the charges were reasonable; and (2) (in the Counterclaim) that the Claimant had negligently and in breach of duty failed to advise the Defendants on the merits of the action and seriously to consider settlement at a substantial sum in damages above the figure of £10,000 which (as is common ground) the Claimant advised the Defendants to offer.
8. At a hearing on the 14^th March 2006 fixed for this purpose, Master Mark gave the Decision. He refused to give the Defendants permission to amend the Defence and Counterclaim as asked and held that the Claimant was entitled to summary judgment on its claim and that the Counterclaim should be struck out. The Defendants used the occasion for an unsuccessful effort to persuade the Master to reach a different conclusion.
9. As regards the new ground of defence he held as follows:

"In the present case a breakdown of the costs claimed has been provided, and no item has been challenged. The situation is in that respect unlike that in Turner v Palomo and like that in Jones v Winchester and In re Park. Not only is there a breakdown of the costs, there is even unchallenged evidence from a costs draftsman as to their reasonableness. Even when invited by me to point to any item which he wished to contend was unreasonable, the Armstrongs' counsel did not do so, but contended that he was entitled to put TSP to proof of each item. On the evidence before me, I can find no triable issue as to the reasonableness of the reduced amount now claimed, and I see no reason why I should find that amount to be reasonable and give judgment for the whole of the £19,247.61 now claimed."

10. As regards the new ground raised in the Counterclaim after a detailed consideration of the material before him he held that it was insufficient to justify permission to amend and accordingly a refusal on his part to strike out the Counterclaim. He said:

"I have come to the conclusion that I ought to strike out the Armstrongs' Counterclaim in these proceedings for the following reasons:

(1) As presently pleaded it is unsustainable [unamended] as counsel for the Armstrongs concedes.

(2) There is no evidence to support the bare allegation that TSP failed to advise the Armstrongs as to the merits of the action – indeed it is plain that some advice was given and the only possible issue could be as to its adequacy. It is plain that the Armstrongs were advised that their case had serious weaknesses.

(3) Despite having had full access to TSB's files and having had a three month adjournment to enable advice on merits to be obtained, no effort has been made to check precisely what advice was given.

(4) It is plain from the evidence that I have referred to that the Armstrongs were intent on pursuing their own course whatever advice they got and I regard as fanciful the suggestion that any more detailed advice headlining the serious risk of losing would have changed their approach to settlement.

(5) Insofar as it is suggested that the duty to advise continued after disclosure, I consider that TSP did all they needed to do at that stage by inviting the Armstrongs to attend a meeting for a discussion, bearing in mind that they were by that time owed in excess of £15,000 which needed to be discussed with the Armstrongs. Proper advice in all the circumstances may well have been needed from counsel if it had not already been given, but I do not consider that TSP can reasonably be expected to have incurred a further liability to counsel for fees when it was already so much out of pocket with very doubtful prospects of recovery.

(6) Even if they had been more amendable to a cash settlement, the Armstrongs were not in a financial position to make a cash offer, even out of the proceeds of sale of the property, that there was any chance of Mr Vale accepting bearing in mind his costs.

(7) I do not consider that it would be in accordance with the overriding objective to deal justly with this case to grant yet another adjournment to give the Armstrongs more time to hunt for evidence to enable them to attempt again to amend their Counterclaim."

11. Drafts of the Decision were circulated to counsel in mid February 2006. The Master gave notice that he would hand down judgment on the 14^th March 2006. At a hearing on that date the Defendants, having read and (obviously) disagreed with the Decision, tried to reopen the arguments, file (in respect of the Defence) a Points of Dispute challenging aspects of the Claimant's bills and (in respect of the Counterclaim) evidence in support of the Counterclaim. The Master declined to be deflected from making the Decision in the terms in which it had been prepared and circulated. The Master refused permission to appeal.
12. The application for permission to appeal was renewed before me. Both the Claimant and the Defendants were represented by counsel. In the course of the hearing in the light of detailed argument whether the Claimant had given advice on the merits, entirely without prejudice to any question as to the relevance or weight of this evidence, (in anticipation that the order might lead to conclusive evidence on the issue being unveiled) I directed the parties to adduce evidence on this issue and they did so. This evidence was inconclusive.

DECISION

13. As a preliminary matter I should make it clear that it was not open to the Defendants after receipt of the Decision to try to deflect the Master from making the Decision he did by reopening arguments serving fresh evidence or taking other steps. The moment that a judge has circulated his judgment is not the opportunity or occasion to try to change his mind, most particularly when there is no reason why whatever is sought to be said or done could not have been said or done previously.
14. The Master was clearly correct on the issue of the reasonableness of the costs claimed by the Claimant. There was ample evidence before the Master to establish their reasonableness: and indeed there was no evidence to the contrary effect. Reliance by the Defendants on the Points of Dispute was not open to them on the 14^th March 2006. It was at all times open to the Defendants to do so at the hearing on the 2^nd February 2006. They cannot be allowed a second bite of the cherry. I accordingly refuse permission to appeal on that issue.
15. I have been seriously troubled whether I should grant permission to appeal in respect of the new issue raised in the Counterclaim. After anxious consideration of the detailed and helpful submissions of counsel I have decided that I should give permission to appeal conditional upon payment into court by the Defendants within 28 days from today of £20,000 to the credit of this action. The Defendants have offered to pay this sum into court as a condition of obtaining permission, having regard to the costs incurred by the Claimant "thrown away" by the late proposed amendment of their Defence and Counterclaim and I accept that offer. I grant permission because with great hesitation I have concluded that justice requires that permission be granted on this condition. I do not think that I should further elaborate, for to do so may only embarrass the judge who hears the appeal.