England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
NEWCASTLE UPON TYNE
DISTRICT REGISTRY

		Royal Courts of Justice Strand, London, WC2A 2LL
		21/12/2010

MR JUSTICE DAVID RICHARDS :

Introduction

1. The claimants in this action apply to discontinue the action with no order as to costs. The general rule under CPR 38.6 is that a claimant who discontinues an action must pay the defendants' costs unless the court orders otherwise. The claimants accept that the burden lies on them to demonstrate why a different order should be made. Permission to discontinue is itself required because an interim injunction was granted at an early stage of the proceedings: CPR 38.2(2) The defendants consent to discontinuance but they, or some of them, submit that it should be on the normal terms that the claimants pay their costs.
2. The action arose out of a dispute within the British National Party (the BNP). The first claimant, Nicholas Griffin, is the national chairman of the BNP, a post he has held for some years. The second claimant, Simon Darby, was the vice-chairman when the proceedings were issued but he has since resigned from that post and as a member of the BNP. They sue on behalf of themselves and the other members of the BNP, which is an unincorporated association.
3. The defendants were all members of the BNP, and held offices or positions within it. The first to fourth defendants were paid remuneration by the BNP, until their dismissal in December 2007, either as employees or, as the BNP asserts, as self-employed persons for the period after December 2006. All the defendants were expelled, or purportedly expelled, as members in or about December 2007. Mr Griffin's explanation of the background in a witness statement made on 23 February 2008 was as follows:

"I have been aware for some time of a dissenting faction within the Party. At first it appeared to involve a clash of personalities but it became apparent that a group which included the Defendants, had been meeting or talking together for the purpose of formulating their plans in respect of the Party and that their objectives were inconsistent with the Constitution. Accordingly I decided to exercise my powers under the Constitution firstly to revoke the appointment to administrative posts of the First, Second and Third Defendants and secondly, so far as I was able, to determine the Defendants' membership of the Party. "

4. In December 2007 and January 2008, two documents attacking Mr Griffin's leadership and calling for the reinstatement of the first to fifth defendants, were distributed to the members of the BNP, by email or by post to their home or other addresses held on the membership list. The claimants suspected that these documents were prepared and distributed by the defendants, in view of photographs of them and references to them in the documents (although in fact there were no references to the sixth defendant), and that they must have retained a copy of the BNP membership list.
5. Legal proceedings were not commenced until 26 February 2008, when, without a letter before action, the claim form was issued. Relief was sought in respect of a number of matters, which may be summarised as follows, taking account of amendments made in April 2008. First, an order was sought against all defendants, except the fifth, for delivery up of chattels listed in a schedule and of all membership lists held by them. Secondly, an order was sought against the first to fourth defendants to delete all membership lists held by them in electronic form. Thirdly, an order was sought that each defendant, except the fifth, deliver an affidavit stating whether they had communicated details of membership of the BNP and, if so, providing particulars, and confirming that they had delivered up or deleted all membership lists, and giving details. Fourthly, an order was sought against the first defendant for repayment of a sum of £4,500 alleged to have been withdrawn from BNP bank accounts, and an inquiry and accounts were sought against the first to fourth defendants as to all cash held by them or accounts operated by them on behalf of the BNP. Fifthly, an injunction was sought against all defendants restraining them from distributing or circulating any communication to any member of the BNP using for that purpose a list of members of the BNP save with its authority. Sixthly, there was a claim for damages against all the defendants.
6. The claimants applied for interim relief. Evidence was filed by each defendant. The first and second defendants, who are domiciled in Scotland, applied to dismiss the claims against them on the grounds that they should be brought in the Scottish Courts in accordance with Art. XIX of the Union with Scotland Act 1706 and, more prosaically but more pertinently, Schedule 4 to the Civil Jurisdiction and Judgments Act 1982.
7. By an order dated 10 April 2008, HHJ Pelling QC dealt with the application for interim relief and the first and second defendants' challenge to the jurisdiction of the English court. He held that the challenge was well-founded as regards the claims for the delivery up of chattels and the recovery of £4,500 which he accordingly dismissed. Agreement was reached for the delivery up of chattels by those defendants who had any in their possession including the first and second defendants. By consent, it was ordered that the first to third defendants swear affidavits dealing with the communication of details of the membership list and confirming delivery up or deletion of all membership lists. The claimants sought no similar order against the fifth and sixth defendants. An interim injunction was made by consent against all the defendants restraining them from using a membership list to communicate with members.
8. The position at that stage was therefore that the claims for delivery up of chattels, the making of affidavits and the repayment of £4,500 had been finally dealt with.
9. On the present hearing, counsel for the claimants accepted that the pleaded claim for damages was never quantified and that no more than nominal damages would ever be recoverable. He accepted also that the purpose of continuing with the action after April 2008 was to obtain a permanent injunction to restrain use of membership lists.
10. In their witness statements, and subsequently in their defences, the second, fifth and sixth defendants denied any involvement in the distribution of the documents circulated to members in December 2007 and January 2008. In his defence, the fourth defendant denied involvement in the preparation and distribution of the documents. In her witness statement, the third defendant admitted and asserted that she was involved in their production and distribution. While all the defendants admitted that the membership list constituted confidential information, they denied that use of the list to distribute documents to the persons named on the list constituted a breach of confidence or of any other legal duty.
11. On 17 September 2008 the fifth defendant was made bankrupt. On 18 November 2008 he published the BNP's membership list on-line. It therefore became publicly available and generated a good deal of media comment. He and his wife, the third defendant, were both charged with offences under data protection legislation. He pleaded guilty to one charge at Nottingham Magistrates Court on 1 September 2009 but no evidence was offered against his wife who was accordingly acquitted.
12. The claimants accept that with the membership list publicly available, they no longer had any prospect of obtaining a permanent injunction against any of the defendants to restrain use of the list. Nonetheless, the claimants continued the proceedings. Each of the defendants served a defence and counterclaim on dates between March and June 2009, for which extensions of time were retrospectively given on 27 October 2009. By the same order, directions were given for the service of replies and defences to counterclaim, disclosure, evidence and other matters leading to trial. The directions hearing had been fixed by the court on its own initiative and in a "Brief Statement of Issues" filed before the hearing, the claimants' solicitors confirmed that "the claimants wish to continue with the case". Further directions were given on 26 January 2010, extending time limits and giving directions for listing. The trial was subsequently listed for five days starting on 29 November 2010.
13. In February 2010 the claimants issued an application to re-amend the particulars of claim, to include a claim for damages against the third and fifth defendants in respect of the publication by the fifth defendant of the membership list. The hearing of the application was adjourned on three occasions at the claimants' request and was overtaken by their application to discontinue. On 19 November 2010 it was dismissed with an order that the claimants pay the defendants' costs of the application.
14. On 15 March 2010 the third defendant was made bankrupt.
15. Following a change of solicitors towards the end of September 2010, the claimants intimated an intention to discontinue the proceedings. The application for permission to discontinue with no order as to costs was issued on 16 November 2010. In a witness statement in support of the application, Mr Griffin stated as follows:

"3.The reasons that we seek to discontinue are that (1) there has been a material change since proceedings were issued in that the Fifth Defendant frustrated the purpose of the litigation by publishing the entire membership list of the BNP online (2) in so far as orders for delivery up of chattels are concerned, the First to Fourth Defendants have since the issue of proceedings effected such delivery up either as a result of being served with proceedings or pursuant to the Order of this honourable Court made on the 10 April 2008.

4.In those circumstances there is no point proceeding with the claim since I am of the view that pursuing claims for damages would be wholly disproportionate to the costs involved. I should say that the Second Claimant has since the issue of these proceedings resigned both from the party and his position with it. I confirm, however, that he consents to the application.

..

7.The claim was brought mainly to restrain use of the Membership List of the BNP. The actions of the Fifth Defendant have rendered the issue academic.

..

8.The result of his publication of the list was that it was copied on to a number of sites other than the one he used, such Wikileaks, and it is still available online at various sites. Clearly, the Court would no longer grant an injunction in respect of the list against any of the Defendants. In any event, the damage has already been done."

16. He referred also to the bankruptcies of the third and fifth defendants.
17. The leading authorities on the approach to be adopted by the court to an application such as the present are two decisions of the Court of Appeal, Re Walker Wingsail Systems plc [2006] 1 WLR 2194 and Messih v McMillan Williams [2010] EWCA Civ 844. The latter decision was in proceedings brought for damages for professional negligence against two firms of solicitors. One firm settled on terms which provided the claimant with full recovery and costs. It was a term of the settlement that he discontinue as against the other firm of solicitors. He did so, and the issue was whether he should pay their costs.
18. The judge at first instance ordered that he need not pay their costs, relying on the settlement offer as a material change of circumstances and on the saving of costs and court time resulting from the early termination of the proceedings. He held that these factors outweighed the desire of the solicitors to defend the claim so as to vindicate their position and protect their professional reputation, as well as to recover their costs.
19. The Court of Appeal allowed the defendant solicitors' appeal and ordered the claimant to pay their costs of the action. Giving the only reasoned judgment, Patten LJ said that the correct approach is for the court to consider all the matters relied on as justifying the making of some alternative order for costs and then to decide whether they are sufficient to support such an order. The avoidance of the costs and time of continued proceedings could not of itself justify a departure from the usual order, as it was the result of any discontinuance. Something more was needed, and Patten LJ said at para 31:

"In this case there was nothing more. As already mentioned, the claimant knew what MW's position was and that it wished to contest its liability for the claim. The claimant made his decision to discontinue notwithstanding this and in the knowledge that the settlement with LMA made no provision for the payment of MW's costs against the claimant as opposed to those of the third party proceedings. By doing so Mr Messih removed the ability of MW to establish its defence and left the court in the position of being unable to determine what the outcome of the trial is likely to have been. The circumstances were therefore the quite usual consequences of a decision to discontinue and I can see nothing in them to justify the order which the Recorder made."

20. Likewise, in Re Walker Wingsail Systems plc, the defendant wished to have the claims for misfeasance and fraudulent trading made against him decided and was prepared to continue to defend the claim against him. It was the applicant liquidator who wished to discontinue having come to realise what should always have been apparent to him, that the claims lacked commercial purpose.
21. I turn therefore to the grounds on which the claimants in this case rely for a departure from the usual requirement that they pay the defendants' costs. I have earlier set out the grounds relied on by Mr Griffin, as expressed in his witness statement.
22. The principal ground is that by publishing the membership list on the internet, the fifth defendant frustrated the purpose of the litigation, making it impossible for the claimants to obtain the injunction which they sought. This was a wrongful act by the fifth defendant, as his conviction shows, and it did frustrate the purpose of the action. But leaving aside the position of the fifth defendant, it cannot in my judgment justify a departure from the usual consequence in costs. First, the publication occurred in November 2008, but the action was continued for a further two years, with a view to a trial fixed to start on 29 November 2010. Secondly, it is not suggested that the first, second, fourth or sixth defendants were in any way involved in that publication and, while the claimants' proposed re-amendment to the particulars of claim would have alleged the involvement of the third defendant, the Crown offered no evidence against her in the criminal proceedings and her involvement has not been established in other proceedings. Thirdly, the defendants had pleaded defences to the claim for an injunction based on the facts and/or legal principles, which they were entitled to advance. With the exception of the third and fifth defendants, they were prepared to proceed to trial to establish their defences and to obtain orders for costs in their favour.
23. The second ground put forward is that, as regards the claim for delivery up of chattels, the first to fourth defendants delivered them up either as a result of being served with the proceedings or in accordance with the agreement scheduled to the order made on 10 April 2008. This too provides no cogent basis for an order relieving the claimants of liability for costs. First, it could not do so in respect of costs incurred after 10 April 2008. Secondly, the proceedings were issued and the application for interim relief was made without any warning to the defendants. The speed with which delivery up occurred shows that, if a letter before action had been sent, there would most probably have been no need for proceedings as regards this head of claim.
24. Mr Griffin fails to explain in his witness statement why the action was continued for two years after the publication of the membership list, and fails to explain why the proceedings are now being discontinued.
25. No grounds are advanced by the claimants which in my judgment could justify a departure from the usual consequence in costs of discontinuance, as regards the costs of the first, second, fourth and sixth defendants.
26. There are different considerations as regards the third and fifth defendants. The fifth defendant's unlawful publication of the membership list has frustrated the action and in addition he was bankrupt for a year from September 2008. The third defendant was declared bankrupt in March 2010 and therefore remains an undischarged bankrupt. Her right to costs under CPR 38.6 vests in the Official Receiver. He has taken no part in the proceedings. He has moreover provided the court with a letter from the third defendant stating that she and the fifth defendant "no longer wish to be a part of the civil case and neither of us want to pursue any part of our Counterclaim or defence. We would like the matter to be completely discontinued."
27. In these circumstances, I consider it appropriate to make an order that the claimants do not pay the costs of the third and fifth defendants, insofar as they may be additional to those incurred on behalf of the other defendants. For the avoidance of doubt, I shall order that the claimants pay the costs of the other defendants, to be assessed on the standard basis if not agreed.
28. There is a final and separate point to deal with. By his order dated 19 November 2010, HHJ Langan QC directed that the claimants' solicitors should show cause at the hearing of the present application why a wasted costs order should not be made against them in respect of the costs thrown away by the adjournment of the pre-trial review on 17 November 2010 as a result of their failure to arrange a telephone case management conference, prepare a case summary, prepare a draft order or prepare a bundle for the pre-trial review in accordance with an order dated 9 November 2010.
29. A witness statement has been made by Jane Stanley Phillips, whose firm replaced the claimants' previous solicitors towards the end of September 2010 and who acts as a consultant to Charles Henry & Co who went on the record on or around 19 October 2010. She explains that the first notice of the pre-trial review fixed for 17 November 2010 received by her or Charles Henry & Co was an email from the defendants' solicitors, Frank & Co, sent at 5.17 pm on 15 November but not seen until the following morning. Notice of the hearing from the court was dated 9 November but not received until the morning of 16 November 2010. From enquiries made by Ms Phillips with the court in Leeds, it appears that Frank & Co requested a listing of a PTR, first by telephone on 29 October and then in writing a day or so later. Frank & Co did not inform Charles Henry & Co or Ms Phillips of these steps.
30. On 16 November 2010 Charles Henry & Co issued the application for permission to discontinue, which had been intimated at an earlier stage, and in the course of that day a consent order was agreed with Frank & Co. HHJ Langan QC required the hearing to go ahead, because the proposed consent order provided for him to hear the application to discontinue in Leeds on 29 November 2010, which was not possible. The terms of the order made was the same as the consent order, save for the venue and identity of judge and the provision as regards wasted costs.
31. There was fault on the part of the claimants or their solicitors in not either issuing the discontinuance application at an earlier stage or fixing and preparing for a pre-trial review as required by an order made on 27 January 2010. However, I am satisfied from Ms Phillips' witness statement that the circumstances do not indicate either that Charles Henry & Co acted improperly, unreasonably or (save as just indicated) negligently or that it would be just to make a wasted costs order against them.