England and Wales High Court (Technology and Construction Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT

		St. Dunstan's House 133-137 Fetter Lane London EC4A 1HD
		13th July 2007

His Honour Judge Thornton QC:

1. This is an application made by the Claimant for an order under CPR 38.6 to discontinue the claim against the Third Defendant, Mr Dobson. The rule provides that:-

"Unless the court orders otherwise, a claimant who discontinues is liable for the costs which a defendant against whom he discontinues incurred on or before the date on which notice of discontinuance was served on him."

2. The action is a complicated action based on an elaborate conspiracy extending over an appreciable period of time, involving four Defendants (although one of those Defendants is no longer an effective party to the action) of whom Mr Dobson is one. I do not regard it as necessary to set out the details of the claims or of the underlying action. What has occurred is that the Claimant has achieved a settlement with the other two Defendants (who were really the same party because one was the company and the other a leading member of the company), both of whom were involved allegedly in the conspiracy with which the action is concerned. That settlement was a substantial one, and it was accompanied by the payment out under an insurance policy held by the Claimant covering the financial consequences of fraud against it, including the fraud of employees. Taking the two sums together, the Claimant has recovered a substantial sum and it does not regard continuing proceedings against Mr Dobson as either proportionate or economic, particularly as Mr Dobson, who has represented himself throughout the time that he has been a party to the action, appears to have little financial resources of his own.
3. The Claimant does not in any way seek to resile from the allegations it makes against Mr Dobson. Indeed, it sacked Mr Dobson at an early stage of the investigations into the background matters on which the claims are founded. Mr Dobson has instituted claims for wrongful and unfair dismissal in the Employment Tribunal, which have been stayed pending the outcome of this trial.
4. The Claimant says that there has been a substantial change of circumstances as a result of the settlement involving the other two Defendants. The principal change is the realisation that the costs of pursuing any additional claims on top of the recovery it has already made would be wholly disproportionate to the likely recovery from Mr Dobson who is now the only defendant left in the action. It appears from evidence that Mr Dobson has provided that he has very little by way of outstanding assets. It follows that the prospect of recovering anything, save for a tiny amount, from him in the future are minimal even if (as would be necessary) he were bankrupted and whatever equity remained in the matrimonial home was taken since, at best, only a very small dividend would be payable. Thus, it is unrealistic to imagine that Mr Dobson would be able to pay anything approaching the Claimant's outlay in costs let alone anything towards a judgment it had obtained in its favour.
5. Mr Dobson does not object to the discontinuance order but contends that he should recover his costs. He has until now been a litigant in person. He has incurred disbursements, including his representation today, of approximately £17,000, which he would ask me to summarily assess as part of the discontinuance order that, on any view, I am going to make because both parties accept that I should make it. He is not in a position to put forward any quantified claim for what would loosely be called his litigant in person costs, that is to say the maximum hourly rate allowed to litigants in person for their time incurred in conducting their part in litigation. Thus the excellent and clear arguments presented by Mr McGrath on behalf of the Claimant and Ms Mirchandani on behalf of Mr Dobson are, in reality, concerned with whether the discontinuation should be on terms that up to £17,000 should be paid by the Claimant as an adjunct to the discontinuation.
6. I must, nonetheless, apply the normal principles applicable to such applications under the CPR. Both parties have referred me at length to the case of Re Walker [2006] 1 All ER 272. It is a matter of discretion and the burden is on the Claimant to show that the normal order for costs should not be applicable, namely that the discontinuing party should pay the costs of the party against whom the action is being discontinued.
7. However, it seems to me that in this case the Claimant has satisfied me that I should exercise my discretion and direct that the discontinuation of this action against Mr Dobson should not be coupled with an order that it should pay his reasonable costs.
8. The relevant factors that have led me to this conclusion are, in brief summary, that this is a claim against Mr Dobson which on any view it was reasonable for the Claimant to bring. Mr Dobson is alleged to have been a principal participant in a very serious, long running and complicated conspiracy to defraud the Claimant, and any proceedings against other alleged conspirators, had they not also involved Mr Dobson as a party, would have been much more difficult to present. I cannot conceive of it being successfully contended that Mr Dobson was unreasonably brought into the proceedings. I am not concerned with the rights and wrongs of the allegations and clearly could not begin to express any views about them. But, on the face of the pleadings, and from what I have learned of the case during the extensive case management conferences I have held, I am satisfied that the decision to bring Mr Dobson into the proceedings was a reasonable one.
9. The allegations could not be more serious. The allegations, indeed if they were made in a criminal trial, particularly under the recently enacted Fraud Act, would, if leading to conviction, result in a substantial sentence of imprisonment. That is not in any way to be taken as an expression of view that Mr Dobson would be liable to prosecution let alone conviction, but it does indicate the very grave and serious nature of the allegations that are made against him in these proceedings.
10. The costs of continuing with the action against Mr Dobson in the light of the settlement that has been achieved would be enormous. In terms of Mr Dobson's costs, I take into account not only his own time and disbursements in representing himself but the remarkably serious potential impact on his family life, on his health and on his future well-being and indeed on his future finances since such remaining assets as he has are imperilled, even if he were to go to trial and succeed. In view of all that, the changed circumstances that have resulted from the settlement are clearly very substantial and, in terms of proportionality, the advantage and public interest in there being a discontinuation of these proceedings are very substantial.
11. I, therefore, find that in consequence the burden on the Claimant to satisfy me that the usual costs order following a discontinuation should not be made, has been discharged and I direct that this action against Mr Dobson be discontinued with no order as to costs. The order should be drawn up in those terms by the Claimant and it can be submitted to the TTC Registry to be entered after today.

JUDGE THORNTON: Is there anything further, Mr McGrath?

MR McGRATH: I don't believe so, my Lord.

MS MIRCHANDANI: My Lord, may I seek permission to appeal?

JUDGE THORNTON: Do you seek to put forward any grounds?

MS MIRCHANDANI: The one that I would suggest is that undue weight has been given to the possibility of the future effect of continuing the action against Mr Dobson and insufficient weight has been given to the submission put forward, or rather too much weight has been put forward, on the Claimants' claim that their position has changed.

JUDGE THORNTON: Thank you very much, Miss Mirchandani.

Decision as to Mr Dobson's application for permission to appeal:
12. I decline the application for permission to appeal. It suffices to say that I am not satisfied that the appropriate test relating to applications for permission to appeal has been discharged, namely that there are more than minimal prospects of success or that I have exercised my discretion on demonstrably erroneous grounds and that the maximum sum at stake, before any summary assessment of costs had been undertaken, is £17,000 in costs. If an application for permission to appeal is to be made, it will have to be renewed in the Court of Appeal.
13. Since no summary assessment of costs was made, it might be of assistance to any Lord Justice considering the application, if it is renewed, that had I assessed the costs, I would have disallowed a significant proportion of the sum of £17,000 put forward by Mr Dobson.