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Home > Judgments > 2008 archive

Hallam-Peel & Co v London Borough of Southwark [2008] EWCA Civ 1120

Second appeal against wasted costs orders by firm of solicitors arising in part from proceedings involving a transfer of tenancy under the Family Law Act 1996.

The firm of solicitors were acting in possession proceedings for a man who continued to reside in a council house after the tenant, his former partner, left in 2003. The council had obtained a possession order against her in 1998 which was suspended. In 2004 the local authority applied for a warrant for possession and Hallam Peel were instructed by the remaining occupant to defend the possession and seek a transfer of tenancy under the Family Law Act 1996. One part of their defence was that the warrant had been improperly issued out of time by the authority, though that point was dropped at a first adjourned hearing. At a further hearing counsel for the occupant again requested to see the warrant on the grounds that it was defective: this was a new point which caused a further adjournment and it was the costs arising from that hearing that were the subject of this appeal.

The solicitors, in a first appeal, had originally tried to argue that the adjournment had occurred because Southwark had failed to disclose the warrant: had they done so the second adjournment on the new point would not have occurred. The circuit judge rejected this as they had not made any efforts to obtain disclosure in the period between the two adjourned hearings and had therefore acted unreasonably. In this second appeal, counsel for the solicitors argued on different grounds saying that Hallam Peel's only failure was not to have obtained the warrant and they could not be vicariously liable for the decision of counsel at the hearing to raise a new point based on it. Rimer LJ broadly agreed with this analysis, although commenting on the firm’s error in their first line of defence, and so allowed the appeal.

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Neutral Citation Number: [2008] EWCA Civ 1120
Case No: B5/2007/2079
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM LAMBETH COUNTY COURT
His Honour Judge Welchman
Case No: LB842027
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 21/10/2008
Before :

LORD JUSTICE THORPE
and

LORD JUSTICE RIMER
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Between :

HALLAM-PEEL & CO (Appellant)

 - and - 

THE MAYOR AND BURGESSES OF THE LONDON BOROUGH OF SOUTHWARK (Respondent)

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Mr Robert Marven (instructed by Hallam-Peel & Co) for the Appellant
Mr Donald Broatch (instructed by Director of Legal and Democratic Services, London Borough of Southwark) for the Respondent

Hearing date: 10 July 2008
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Judgment

Lord Justice Rimer:
1. This is an appeal by Hallam-Peel & Co, solicitors, against an order dated 17 August 2007 made by His Honour Judge Welchman in Lambeth Court Court upholding a wasted costs order made against them by District Judge Jacey on 20 January 2006. The appeal is thus a second appeal, for which Jacob LJ gave permission on 16 April 2008; and so we are primarily concerned to consider Judge Jacey’s decision. The delay in the first appeal coming on before Judge Welchman was in part because of a delay in obtaining transcripts of the proceedings before Judge Jacey.

The facts
2. On 25 November 1998 the London Borough of Southwark, claimant in the action and respondent to the appeal (“Southwark”), obtained a possession order in Lambeth County Court against its tenant, Mandy Cooper, the defendant, of premises at 43 Sidmouth House, Commercial Way, London SE15. The order was suspended on terms as to payment of rent arrears and costs.

3. Ms Cooper breached the terms and became a tolerated trespasser. She left the premises in December 2003, but her former partner, Mr Parry Dubois, remained in occupation. In November 2004 Southwark applied for the issue of a warrant for possession based on the 1998 order. It was due to be executed on 9 February 2005. On 2 February 2005 Mr Dubois instructed Hallam-Peel. They went on the record on 7 February 2005 and issued an application to have him joined as second defendant and for the setting aside or suspension of the warrant on various grounds, including that “[Southwark] has not produced any evidence to show that they have applied to the Court for permission to apply for a warrant for possession to be issued based on a possession order dated more than 6 years ago.” Their point was that it followed the warrant had been improperly issued.

4. On 8 February 2005 Hallam-Peel obtained from District Judge Wakem a stay of execution of the warrant until after the inter partes hearing on 11 February 2005 of Mr Dubois’s application. On that day they also wrote to Southwark explaining the grounds for the application, of which the first was that “we have seen no evidence of an application for permission to issue the warrant for possession as required for possession orders over 6 years old.” They outlined three other grounds, including that (i) the possession order, made on the ground of rent arrears, was suspended on terms and the rent account had since been in credit on a number of occasions; (ii) Mr Dubois proposed to apply for an order for the transfer of the tenancy to him under Part IV of the Family Law Act 1996; and (iii) the then level of rent arrears was £319.75 and it was within the court’s discretion to give Mr Dubois a further opportunity to clear them. Hallam-Peel also wrote a second letter to Southwark on 8 February 2005, saying that they understood that the application for the warrant had been made on 22 November 2004 and asking for the provision of “evidence confirming that the application was made within 6 years of the date of the possession order.” They also asked for evidence of the outstanding costs under the possession order.

5. Mr Dubois’s application came before District Judge Worthington on 11 February 2005. Both parties were represented by counsel (not Mr Marven or Mr Broatch). The time estimate was such that the judge had insufficient time to deal with the application and so he adjourned it to a three-hour appointment, giving Mr Dubois permission to amend his application also to raise a defence under Article 8 of the Convention for the Protection of Human Rights and Fundamental Freedoms. During the discussion, reference was made to the point that the warrant either had or may have been issued more than six years after the date of the possession order. The judge said he had looked at the court record and told counsel that the possession order was made on 25th November 1998 and that the warrant was issued on 23rd November 1998, two days within the six-year period. The response from counsel for Mr Dubois was “I am grateful”, and it marked the end of the point that the request for the warrant had been made after the six-year period. There is an unresolved factual dispute as to whether the judge actually showed counsel the request for the warrant. This court cannot make any assumption either way on that.

6. At that hearing counsel for Mr Dubois also made an unheralded request for an order for specific disclosure by Southwark, for the purpose of the disposal of the outstanding issues raised by Mr Dubois’s application. The judge declined to make a disclosure order. He did, however, say that if Hallam-Peel made a reasonable request for a relevant document that Southwark refused to provide, and its refusal were to lead to an adjournment on a further occasion, it was likely that a costs discretion would be exercised against Southwark.

7. On 15 February 2005 Southwark provided Hallam-Peel with a bundle of the documents they proposed to rely on at the adjourned hearing. The documents did not include a copy of the request for the issue of the warrant. In response to Hallam-Peel’s earlier inquiry about the outstanding costs, Southwark said that £200 was still outstanding.

8. Mr Dubois’s application was amended on 18 February 2005. It no longer included any challenge to the validity of the request for the issue of the warrant. The only grounds relied on were: (i) the Article 8 point, (ii) that all payments due under the possession order had been made and so the order was no longer enforceable, and (iii) the proposed application under Part IV of the Family Law Act 1996. Hallam-Peel served the amended application on Southwark on the same day, with a witness statement from Mr Dubois. They also asked Southwark to provide them with any documents it had relating to a particular attendance by Ms Cooper and Mr Dubois at the rent payment office in May 2003 and to the subsequent payment of the then outstanding debt. On 9 March 2005 they chased Southwark for confirmation as to what Ms Cooper and Mr Dubois were told about the legal costs in May 2003 and when they cleared the debt under the possession order. They made no other disclosure request. In particular, they did not ask for the production of the request for the issue of the possession warrant. The information asked for on 9 March 2005 was answered by Southwark’s letter of 6 July 2005.

9. The adjourned hearing of Mr Dubois’s application was listed for 14 July 2005, with a time estimate of three hours. On that day the application came on for hearing before Deputy District Judge Eastman. Before the hearing, counsel instructed by Hallam-Peel for Mr Dubois (who had also represented him on 11 February) asked counsel for Southwark (not Mr Broatch) to see either (i) Southwark’s request for the issue of the warrant, or perhaps (the position is unclear) (ii) Southwark’s file. Either way he was shown the request for the issue of the warrant. He noted that it included the wrong figure for the amount claimed to be outstanding under the original possession order, as Southwark admitted (it asserted that the balance due was £200 plus an issue fee of £90, whereas Southwark’s case was that £335.95 was then owing). Counsel then told the judge that he wished to raise the additional point that, as the request for the warrant had been incorrectly completed, the warrant was defective. That was a new point. Whether it was good or bad was in dispute, but it was common ground between both counsel and the judge that it could not be dealt with fairly there and then and that the application would have to be further adjourned. There were authorities on the point at circuit judge level going both ways but at the beginning of the hearing counsel for Mr Dubois told the judge that “I did not bring any with me because it had not occurred to me that this might be a point in the case.” He had not, therefore, prepared the case with any prescient thought that a sight of the request might open up a new line or argument.

10. In discussing an adjournment, counsel for Southwark raised the point that, if the matter were to be adjourned, Hallam-Peel should attend the adjourned hearing to show cause why they should not personally pay any costs thrown away. He said that “whilst I do not rely upon the fact that [Mr Dubois] has public funding and hence any order for costs against him is unlikely to be of much effect, therefore if a costs order is to be made which is effective it is only going to be effective if it is a wasted costs order.” Contrary to counsel’s disclaimer, it is obvious that Mr Dubois’s status as a publicly funded litigant was the reason for his suggestion. Judge Eastman was sympathetic and said that his initial reactions were that, if counsel wanted an adjournment in order to argue the new point, he wanted to know why Hallam-Peel should not pay the costs of the adjournment. He suggested that counsel should obtain instructions as to whether to pursue the point. That raised a potential conflict of interest between Hallam-Peel and Mr Dubois, to which the judge may not have been fully sensitive. Counsel took instructions, following which he sought permission to re-amend the application to raise the point and asked for an adjournment.

11. The judge was of the view that the new point “fundamentally affects these proceedings” and he further adjourned them, making an order adding Mr Dubois as a defendant and giving him permission to re-amend the application notice to raise the new point and to assert that the rent account was more than £200 in credit in February 2004. The origin of the present appeal is that, as asked by counsel for Southwark, the judge also made an order requiring Hallam-Peel to attend the adjourned hearing “ready to show cause why they should not pay costs of and occasioned by this adjournment.” No order was sought or made that Mr Dubois should pay those costs, although as a publicly funded litigant he would have had the benefit of the usual protection. The inter partes costs order was “costs of today plus adjournment reserved.”

12. Mr Dubois’s application was duly re-amended on 21 July 2005. The further hearing was fixed for 7 October 2005. On 5 October 2005, Mr Miles, a solicitor with Hallam-Peel, made a witness statement by way of his firm’s showing of cause. It was not, if I may respectfully say so, very cleverly drawn. The essential thrust of it was that he had expected Southwark to have disclosed the request for the warrant in response to his firm’s two letters of 8 February 2005, although it had not. Nor was it included in the documents that Southwark disclosed on 15 February 2005 on which Southwark proposed to rely. He did not suggest (and later, before Judge Jacey, he disclaimed) that Hallam-Peel ever made a specific request for production of the request for the warrant, nor had they. In paragraph 19 he said that at court on 14 July 2005, before the hearing, “Counsel for [Mr Dubois] was shown a copy of the application for the warrant for the first time.” He did not explain that that was only done in response to counsel’s request to see either Southwark’s file or that particular document, the first time any such request had been made. He explained how that led to counsel’s wish to advance the argument that the warrant was defective. His conclusion was:

“30. In this case, evidence regarding the application for the warrant was requested on 8th February 2005. It was produced at Court before the hearing on 14th July 2005. At the first hearing on 11th February 2005, the District Judge declined to make an Order for disclosure on the grounds that [Southwark] knew full well which documents should be disclosed.

31. There are no grounds for [Southwark’s] application for a wasted costs order. The adjournment on 14th July 2005 resulted from [Southwark] producing documents at Court which had previously been requested but not disclosed.”

13. With respect, I regard that account as disingenuous. The only point made in relation to the request for the warrant in Hallam-Peel’s two letters of 8 February 2005 was that there was a question as to whether it had been made within six years of the possession order. The first letter impliedly asserted that it had been made after the six-year period; the second letter sought evidence that it was made before its expiry. Neither letter suggested that Hallam-Peel wanted to inspect the request in order to consider whether it was otherwise in valid form. The production of a copy of it would no doubt have answered the particular point that Hallam-Peel were then investigating. But it was not produced and I have explained how, on 11 February 2005, counsel for Mr Dubois was satisfied that the request had been made within the six-year period, whereupon the timing point was dropped.

14. Once it was dropped, the request for the issue of the warrant became irrelevant to the remaining grounds on which Mr Dubois wished to pursue his application. His application, as amended on 18 February 2005, did not include any assertion that the form of the request was irregular or defective. By then Hallam-Peel knew that Southwark had not produced the request and was not itself proposing to rely on it; and at no point before 14 July 2005 did Hallam-Peel ask for its production. By inference that was because they did not regard it as relevant to the issues to be argued on 14 July 2005. The only reason why the request was produced on that day was because – in circumstances unexplained by the evidence – counsel for Mr Dubois asked to see it. Mr Miles’s attempt to shift the blame for the consequential adjournment on to Southwark was unfounded.

15. In the event the hearing on 7 October 2005 was adjourned to 20 January 2006 because one of Southwark’s witnesses was ill. The wasted costs application was also adjourned. By 20 January 2006, the day of the adjourned hearing, the substantive application between Southwark and Mr Dubois had been settled. Mr Dubois submitted to a consent order by which he withdrew his application and agreed to give up possession by 28 February 2006. There was no order as to costs as between Southwark and Mr Dubois. The wasted costs application against Hallam-Peel was not settled and came on for hearing on the same day before Judge Jacey.

The hearing before Judge Jacey
16. Southwark was represented by counsel, Mr Mullee. Mr Miles represented Hallam-Peel. Judge Jacey explained in his judgment that the date of the request for the issue for the warrant was relevant before and at the hearing of 11 February 2005, but that when Judge Worthington made it plain at that hearing that the request was made within the six-year period the relevance of the request disappeared. Mr Dubois did not thereafter ask Southwark to produce it until the morning of 14 July 2005, when counsel did so and, following its production, raised the new irregularity point. Mr Miles expressly disclaimed before Judge Jacey that it was part of his case that a sight of the request had been sought before then. The case made by Southwark was that Hallam-Peel acted unreasonably in not raising the new point until 14 July 2005 because it had led to the further adjournment. Judge Jacey said that Mr Miles could not explain why his firm had not asked earlier for a sight of the request nor why counsel asked for it on 14 July 2005. During the argument, Judge Jacey referred to counsel as having had “a sudden brainwave” but there is no evidence as to what prompted counsel to ask for the document.

17. Judge Jacey concluded that Hallam-Peel had acted unreasonably. He said:

“8. … Firstly, has the legal representative of whom complaint was made acted improperly, unreasonably or negligently? In my view, and I say this with great respect to the solicitor concerned, I find that he has acted unreasonably. This issue of information, the details of the rent and costs outstanding, the details of which were put on the request for the warrant for possession, should have been taken up at a very early stage and not left, as it was, to counsel to spot the point just prior to the hearing of 14th July. It was perfectly open to the solicitor for [Mr Dubois] to write to the court manager and ask for a copy of the request and it would have been given to him. To wait all that time for the claimant’s law office to supply the copy, and in fact not even having made a specific request for a copy of this document, in my view was unreasonable. And to then be a party to the amendment of the application, that in my view is unreasonable too. It is, with great respect to the solicitor, a breach of duty to the court [not] to ensure that all matters are properly raised before the court and in good time so that everybody can deal with the matter and the court itself has sufficient time to deal with them. This was simply not done. It was all left to the last moment. I quite understand the position counsel was put in, because he had a duty to the client and he had to discharge that duty, which he did. So I say that the conduct was unreasonable.

10. [sic]  On the second leg: did the conduct cause the applicant to incur unnecessary costs? I find again, yes it did. ….

11. Finally, part three of the test: is it in all the circumstances just for the legal representative to compensate the applicant for the whole or part of the relevant costs? My finding, for the reasons which I have already given, is that it is reasonable to so find and order.”

18. Judge Jacey ordered Hallam-Peel to pay the wasted costs of the hearing of 14 July 2005, which he assessed at £750, and also the costs of the wasted costs application, assessed at £1,292. He refused permission to appeal.

The appeal to Judge Welchman
19. On 25 May 2007 His Honour Judge Gibson gave Hallam-Peel permission to appeal against that order and the appeal came before Judge Welchman on 17 August 2007. The main thrust of the case made by Hallam-Peel (foreshadowed in its notice of appeal) was again that the late raising of the new point was Southwark’s fault because it had not disclosed the request for the warrant at any stage before 14 July 2005. Hallam-Peel could not, it was said, be criticised because they had asked Southwark as early as 8 February 2005 to produce the request but it had not been produced (in fact they had not asked for its production); and even if they had not thereafter pressed for its production with energy, that omission was not the sort of shortcoming that deserved a wasted costs order being imposed on them. For reasons I have given, I regard the attempt to put the blame on Southwark as mistaken, and Judge Welchman disagreed with Hallam-Peel’s defence of their position. His approach was that Judge Jacey had found that they had acted unreasonably in failing to ask, or at any rate to press, for the production of the request before 14 July 2005, when they could have done so; and that provided Judge Jacey’s decision had fallen “within reasonable and appropriate ambits, and he has directed himself appropriately and there is no error of law, then it is not for this court to interfere ….” Judge Welchman therefore dismissed the appeal, basically on the ground that in his view Judge Jacey had been entitled to find that Hallam-Peel had acted unreasonably. He ordered Hallam-Peel to pay Southwark’s costs of the appeal, which he assessed at £2,895.38. The omission, until 14 July 2005, to raise the point based on Southwark’s mistake in the request for the warrant has, therefore, so far cost Hallam-Peel £4,937.38 in costs orders in favour of Southwark, to which must be added its own costs of the relevant hearings and the pursuit of the matter to this court.

The appeal to this court
20. The wasted costs application and order was made under the jurisdiction conferred by section 51 of the Supreme Court Act 1981, of which the relevant provisions read:

“(1) Subject to the provisions of this or any other enactment and to rules of court, the costs of and incidental proceedings in –
(a) the civil division of the Court of Appeal;
(b) the High Court; and
(c) any county court,
shall be in the discretion of the court. …
(2) In any proceedings mentioned in subsection (1), the court may disallow, or (as the case may be) order the legal or other representative concerned to meet, the whole of any wasted costs or such part of them as may be determined in accordance with rules of court.
(7) In subsection (6), ‘wasted costs’ means any costs incurred by a party –
(a) as a result of any improper, unreasonable or negligent act or omission on the part of any legal or other representative or any employee of such a representative; or
(b) which, in the light of any such act or omission occurring after they were incurred, the court considers it is unreasonable to expect that party to pay.”

21. The only basis on which Southwark has suggested that Hallam-Peel deserved to be visited with a wasted costs order is that it is said that they had acted “unreasonably”. Counsel agreed that it was not necessary to show that the alleged unreasonable conduct amounted to an abuse of the process of the court but that it was necessary to show that it involved a breach of duty to the court. 

22. Mr Marven’s submission to us in support of the appeal was that there was no factual justification for the “show cause” order made by Judge Eastman, let alone for the substantive wasted costs order made by Judge Jacey and upheld by Judge Welchman. The only charge against Hallam-Peel was that they could and should have asked for the production of the request for the warrant earlier than 14 July 2005 but had failed to do so. The answer is that they did not ask for it before then because they had no reason to do so. It is not suggested that there was anything in the material they had seen to suggest that the request was irregular. They therefore had no reason to assume or even suspect that it was or might have been. The request was not regarded by either side as relevant to the only case that Mr Dubois was making by his application as amended on 18 February 2005. There was therefore strictly no basis upon which Hallam-Peel could properly have sought its production; or at least it could not be said that it was unreasonable for them not to have done so. In unexplained circumstances – and the evidence suggests that not even Hallam-Peel know them – counsel for Mr Dubois asked at the hearing of 14 July 2005 for the production of either the request or Southwark’s file. Having seen the request, he then raised the new point based on the irregularity in it, which resulted in the adjournment. No-one has suggested that counsel acted unreasonably by doing what he did. The sole villains of the piece are Hallam-Peel, who have been held vicariously liable for its costs consequences. They have been punished for not anticipating counsel’s thought process. Since, for reasons submitted, there was strictly no basis on which they might reasonably have earlier pressed for the production of the request, there was no basis for a charge of unreasonableness sufficient to sustain a wasted costs order.

23. Mr Broatch, for Southwark, did not seek to meet that submission head on. The thrust of his submissions was rather that the case now made by Mr Marven to this court involved a fundamental – and, before this court, impermissible -- departure from the case made by Hallam-Peel in Mr Miles’s witness statement in answer to the wasted costs application and also in the grounds of appeal to Judge Welchman. That case had been to the effect that it was Southwark’s fault that the request had not been produced earlier. It was no part of it that the answer to the wasted costs application was that, for reasons outlined by Mr Marven, it could not be said to have been “unreasonable” for Hallam-Peel not to have asked for a sight of the request earlier. This court ought not now to listen to an appeal based on a quite different approach.

24. I have much sympathy with that submission since there is in my view no doubt that the thrust of the case that Hallam-Peel have now made is markedly different from that made in the courts below. They there took a false point in their defence and, by doing so, dug themselves into a bigger hole. But even so I consider that each of Judges Eastman, Jacey and Welchman was in error. Judge Eastman did not consider the basis on which a charge of unreasonableness against Hallam-Peel might have been sustained: he did not ask himself why it was arguable that they should have sought production of the request earlier. It is, however, fair to note that (i) counsel made no submissions to him against the making of a “show cause” order; and (ii) the order he made was only a “show cause” order, and it was open to Hallam-Peel to do just that, which they could easily have done but did not.

25. Following the making of his order, Hallam-Peel sought to “show cause”. That things then got worse for them can in part be laid at their own door. Instead of taking the good point that their omission to ask for a copy of the request between 11 February and 14 July 2005 could not be regarded as unreasonable because there was no obvious reason why they should have asked for it, they made the bad point that the fault lay with Southwark for failing to produce the request in response to a demand for it which they had not made. That stance did not help them and although before Judge Jacey Mr Miles was no longer making quite that case, he still failed to advance the obvious defence. He did not therefore do all he could to steer Judge Jacey away from error and Judge Jacey fell into it. He found (in paragraph 8 of his judgment) that it was unreasonable for Hallam-Peel not to have asked earlier for a copy of the request was unreasonable: but he nowhere explained why that was unreasonable, and Mr Marven’s submissions satisfied me that it was not. Judge Jacey even criticised Hallam-Peel for being “a party to the amendment to the application,” which he also castigated as unreasonable. What can he have meant? Was he suggesting that Hallam-Peel should have refused to ask for the amendment and so deprive their client of the opportunity of arguing a point that might have won the case for him?  

26. I make clear that I am not suggesting that, in the circumstances prevailing immediately after the hearing of 11 February 2005, asking for the production of the request for the issue of the warrant is something that no solicitor might reasonably have done. It is trite that different lawyers will look at the same case in different ways and have thoughts and ideas about them that others will or may not have. The same lawyer may also see it differently six months on and consider investigating an angle that had not occurred to him before. The point about the present case is that it does not appear to have occurred to Hallam-Peel that a sight of the request might open up a new avenue of argument. Even if that is to be regarded as a shortcoming on their part, and I do not decide that it was, I refuse to accept that such a shortcoming can or should fairly be castigated as “unreasonable” conduct on their part, involving a breach of duty to the court, such as to justify a wasted costs order against them. 

27. I need say little about Judge Welchman’s judgment upholding Judge Jacey’s. His view was, in short, that Judge Jacey had considered the matter correctly and had been entitled to find that Hallam-Peel had acted unreasonably. He too failed to consider why it was said that they had unreasonably.

28. In my judgment each of Judges Eastman, Jacey and Welchman was in error in their respective responses to Southwark’s claim that Hallam-Peel should be answerable for the costs thrown away by reason of the adjournment on 14 July 2005. No such order should have been sought or made. I would allow Hallam-Peel’s appeal and set aside paragraph 1 of Judge Jacey’s order and the dismissal of the appeal against it by Judge Welchman’s order of 17 August 2007. I would wish to have further written submissions from both sides as to what orders (if any) we should make in place of the costs orders made by Judges Jacey and Welchman and as to the costs of this appeal.

Lord Justice Thorpe :
29. I agree.