HUTTONS (A Firm) v and: [2002] EWCA Civ 282

IN THE SUPREME COURT OF JUDICATURE

CIVIL DIVISION

ON APPEAL FROM THE HIGH COURT

CARDIFF COUNTY COURT

ADMINISTRATIVE COURT LIST

[2002] EWCA Civ 282

Case No B2/2001/1973, B2/2001/1973A & B2/2001/2252

Venue The Civil Justice Centre, Park Street, Cardiff, Thursday 31 January 2002

Between

HUTTONS (A Firm)Claimant/Respondent

and:

(1) JULIAN HARRISDefendant/Applicant

(2) NESTA THOMAS

(3) RICHARD THOMAS

(4) CHRISTINE THOMAS

(5) PAT CRAWFORDDefendants

(6) ANGELIKA WALTRALLT HARRISDefendant/Applicant

Before

Lord Justice Latham

Lady Justice Arden

MR EVEREST (instructed by Newbold & Co, 12 Russell Street, Pontnewydd, Cwmbran) appeared on behalf of the Applicants

The Respondent did not appear and was not represented

Date 31 January 2002

[1]Thursday 31 January 2002 LADY JUSTICE ARDEN: This is an application for permission to appeal against the orders of His Honour Judge Moseley QC dated 11 June 2001 and 23 May 2001. The applicants are two of the defendants in an action brought by Huttons, solicitors, to obtain payment of their bill of costs incurred on behalf of the six defendants in the proceedings. The other four defendants, who are not present on this application, have now reached a compromise with Huttons and we have been shown a letter from Huttons dated 31 January to the Court Manager of the Court of Appeal to that effect.

[2]By the order dated 23 May 2001 the judge refused the applicants permission to amend their defence to replace -- and here I read from the form of the application:

"... accusations of systematic fraud with a newly advised allegation that [Huttons] is in breach of a duty of care to maintain enough funds in their client account to cover any legal costs allowed by a Beddoe Order pursuant to Part 17.1(2)(b) of the Civil Procedure Rules."

[3]In addition, so far as material, the judge ordered that costs of hearings on 11 October 2000, 7 December 2000, 23 March 2001 and 23 May 2001 (all being hearings of the application) be paid by the defendants and that they be summarily assessed at £6,500 including VAT. By his order dated 11 June 2001 the judge gave judgment for the claimant for £22,012.15 plus interest of £5,145, plus costs on the standard basis to be the subject of detailed assessment if not agreed. The applicants apply for permission to appeal against both of these orders and for continuation of a stay pending appeal.

[4]I will deal with the order of 23 May 2001 first. The appeal against that order was made to the High Court but was transferred to the Court of Appeal by an order of Jacobs J. That appeal is out of time and so there is also an application for an extension of time. On that order the applicants wish to appeal against the judge's decision to award costs against the applicants and his decision to assess costs.

[5]The background of the case is this. The defendants were some of the trustees of the Swansea branch of the RSPCA. There was a dispute between them and the main organisation which resulted in the appointment of a receiver by the Charity Commissioners under the Charities Act 1993 on 27 July 1996 to the charity constituted by the Swansea branch. The defendants wished to challenge the appointment of the receiver and they gave Huttons an authority dated July 1996 for this purpose. In addition, early in that month they transferred to Huttons a sum of £150,000. It appears that the defendants wished to run a defence at trial that, since Huttons were in funds and had the letter of authority, they should not have acceded to a demand of the receiver to hand over the deposit to him. They should have retained the deposit and used it to pay the costs now claimed against the defendants personally. In the course of the trial the partner in charge at Huttons, Mr Evans, gave evidence that the letter of authority had been drafted on 17 September 1996. By this date the defendants had been removed as trustees by an order of the court.

[6]Mr Everest, for the applicants, submits that the case management conference which was the subject of the order for costs was conducted on the basis that the claimants had written authority dated July 1996, yet it emerged at trial that the authority was really executed in September 1996. As Mr Everest puts it in his skeleton argument, it also became obvious that the defendants had been "misled by Mr Evans into making unnecessary applications to amend their defence." Accordingly, on Mr Everest's submission, the judge should not have made an order for costs against the defendants.

[7]The court has seen a transcript of the discussion relating to costs on 23 May 2001. The defendants accepted that costs followed the event, namely the failure, in effect, of their application to amend. They did not contend on this application that the judge was wrong to reach the decision he made on amendment. In my judgment there is no prospect of success on this point. In order to appeal the judge's orders as to costs, it would have to be said that the judge reached the wrong decision on the application before him. There is no basis put forward for that contention and accordingly there is no prospect of success on appeal on his order as to costs.

[8]I now turn to the question of summary assessment. The defendants did not consent to this but drew the judge's attention to the fact that the hearing had been more than one day. However, the Civil Procedure Rules do not prevent a judge from making a summary assessment of costs which relate to a hearing that lasts more than one day. Practice direction paragraph 13.2 to Civil Procedure Rule 44 merely states that the general rule is that where the hearing is less than one day the judge will make a summary assessment of costs. The judge held that the defendants had had sufficient notice of the content of the schedule of costs. In three cases they had had two months' notice and in the fourth case they had 48 hours' notice, which is in excess of that required by the Civil Procedure Rules. There is no basis for saying that the judge's conclusion that sufficient notice had been given in this case was wrong, nor is any basis put forward for saying that, even if the authority in the Civil Procedure Rules existed, the judge was still wrong to make a summary assessment of costs as opposed to making an order for detailed assessment. Accordingly, in my judgment there is no prospect of success on this point either and I would therefore refuse permission to appeal against this order and the application for an extension of time for making the application.

[9]I now turn to the application to appeal against the judge's order dated 11 June 2001. The applicants' case at trial was that Huttons had acted unreasonably and their case on this application is that the judge was wrong to conclude otherwise. There are also many other grounds put forward for challenging this order in the skeleton argument. In his submissions Mr Everest has concentrated on one particular point, but I consider that I must deal with all his points.

[10]First, though, I must say something about the background in more detail. I will do so by summarising the judge's conclusions. He refers to the fact that the Charity Commissioners had appointed a receiver and that Huttons were instructed to appeal against that decision. The judge held that the defendants did not require the permission of the Charity Commissioners for that purpose. However, relief had been required urgently and when Huttons drafted the originating summons they had named in it both the defendants and the Attorney General. In due course the Treasury Solicitor pointed out that the participation of the Charity Commissioners was unnecessary. Huttons consulted counsel, Mr Colin Braham, and on the advice of counsel Huttons decided that an application would be made at a hearing before Master Barrett in the High Court Chancery Division on 13 December 1996 to amend the originating summons to exclude certain factual assertions and also to withdraw the claim as against the Charity Commissioners. The proceedings were to continue against the Attorney General. Master Barrett made an order for costs against the trustees and acceded to the applications for amendment. The costs of the defendants were about £300 but it is not known what the costs of the Attorney General and the Charity Commissioners were.

[11]After this hearing disciplinary proceedings were brought by the RSPCA in London and the defendants were removed as trustees. Because the trustees no longer had any standing to challenge the Commissioners' decision to appoint a receiver they decided to apply for a judicial review of the decision to have a disciplinary hearing. Mr Braham of counsel came to the conclusion, after considering the matter, that the consent of the Charity Commissioners was not required for the purposes of that application. However, when the matter came before Ognall J on 7 November 1997 he held, on the authority of a case which had then only recently been decided by Robert Walker J, who reached his decision on 16 July 1997, that such consent was necessary and he dismissed the application.

[12]The defendants did not pursue the dismissal of their application for judicial review, nor does it appear that they applied for the consent of the Charity Commissioners or applied for any extension of the time for bringing fresh judicial review proceedings. In due course the proceedings in the Chancery Division were struck out for that reason.

[13]At the trial the defendants' case was that the costs of the judicial review proceedings (of about £9,000) were incurred by reason of Huttons' negligence in pursuing the claim without applying for permission from the Charity Commissioners. The judge held that there were two issues. The first issue was whether or not the application to Master Barrett on 13 December 1996 was made negligently. The judge held that Huttons were not negligent. The appeal against the decision of the Charity Commissioners by originating summons was highly unusual. Mr Evans acted as a reasonable solicitor. It was reasonable for him to rely on the advice of counsel. The dropping of the Charity Commissioners as a party made no difference at all to the defendants' rights in respect of the matter at issue in the litigation and, accordingly, what Mr Evans did was not negligent. In the judge's judgment the second issue also failed. Mr Evans relied on the advice of counsel that the consent of the Charity Commissioners was not necessary before starting judicial review proceedings, and it was reasonable for him to rely on counsel's advice. Accordingly the judge gave judgment for Huttons.

[14]In his skeleton argument Mr Everest submits that the judge was wrong to find that the claimants had acted reasonably. He relies on the fact, as explained above, that it only emerged in the course of trial that the letter of authority had been given in September 1996. He also relies on Mr Evans' admission that he had not disclosed to his own clients correspondence from the Treasury Solicitor dated 30 September 1996, criticising them for the inclusion of the Charity Commissioners in the originating summons. He also submits that Mr Evans had to withdraw his original contention that the defendants had not incurred any costs at the hearing when it was shown that the court had ordered costs against the defendants. He had also to admit, contrary to his original evidence, that he had had a letter from the Treasury Solicitor on behalf of the Attorney General dated 30 September 1996 and that it was after that letter that he had in February 1997 repaid the balance of the deposit to the RSPCA. He also admitted that he had billed the Swansea branch for counsel's fees incurred before counsel was instructed. He also admitted that he had not advised his clients that counsel had advised that permission of the Charity Commissioners was not required before bringing judicial review proceedings.

[15]In addition, Mr Everest challenges the judge's conclusion that Mr Braham acted reasonably. He points out that Mr Braham's own chambers did not regard him as a specialist in charity law. Mr Braham's name was not one of three apparently appearing in a chambers brochure as being a specialist in charity law. Mr Braham did not put his opinion on this point into writing. Mr Everest also submits that Mr Braham should not have been called as a witness because his witness statement was not served until four days before the trial. Moreover, his evidence consisted of expert evidence, which contravened an order of the court dated 4 October 1999 and, in addition, his evidence sought "to subvert the rectitude of the Order made by Ognall J ... on 7 November 1997." Furthermore, he was known professionally to the judge. In the discussion after judgment on 11 June 2001 the judge found that the defendants were informed of the hearing on 13 December 1996. He also found that they were not informed of the advice of counsel to bring judicial review proceedings without the consent of the Charity Commissioners but he found that the decision was not negligent.

[16]I now turn to my conclusions and in so doing will deal with a point which Mr Everest has made in his skeleton but enlarged before us in his helpful oral submissions. Mr Everest submits that the judge was wrong to refuse the defendants permission at trial to call the sixth defendant, Mrs Angelika Harris, to give evidence in response to the evidence of Mr Evans and Mr Braham. Mr Everest wishes on appeal to apply for an order for retrial of the action on the basis that her evidence was excluded and that it would have an effect on the outcome of a new trial.

[17]We have been shown a witness statement dated November 2000 by Mrs Harris. It is not clear to me whether this had been served before the trial but certainly this is the most that the judge could have seen at the trial. Unfortunately, we do not have a transcript of his ruling on the application to lead Mrs Harris' evidence, but since an application had to be made I am assuming that the witness statement was not served. Looking at the witness statement, the relevant paragraph is at the end of page 1. Mrs Harris says this:

"A letter dated 30 September 1996, from the Treasury Solicitor, to Huttons, threatened to have the Originating Summons struck out on the grounds that the Charity Commission should not have been included as a Defendant. This letter was never shown to us at the time! It was revealed in a thick bundle 10 minutes before a Court Hearing in Neath Port Talbot County Court on 2 March 2000. If the Charity Commission could not be brought to Court there would have been no point in carrying on with the case. The Attorney General had nothing to do with it."

[18]The concluding two sentences of that paragraph are a misconception because the Attorney General would remain in the proceedings to protect the interests of the charity. So, looking at the paragraph as a whole, it does not seem to me that Mrs Harris' witness statement suggests that Mrs Harris would have said that she would not have authorised the continuation of the proceedings if she had known of the order in December 1996. So that statement of itself would not be enough and accordingly, as I see it, there would be no prospect of success on appeal in showing that that would have been her evidence at the trial. Mr Everest also refers us to the evidence of Mr Harris. He says in his statement (page 103 of the bundle) that he would not have consented to an amendment of the originating summons if he had been told about it, but he does not go so far as to say, as Mr Everest would require him to say, that he would have withdrawn instructions from Huttons had he known about the amendment. Accordingly, as I see it, the judge was entitled to take the course that he did, in all the circumstances, of refusing to accede to the application that Mrs Harris be called as a witness and there is no prospect of success on appeal on this point.

[19]I now turn to the other points on which Mr Everest has relied. First he refers to the fact that it was only discovered at trial that the letter of authority was in fact executed in September; or, rather, the way he puts it is that Mr Evans only made it clear that that was his evidence when cross-examined at trial. But the applicants themselves should, one would have thought, have known the date on which that document was executed and no explanation has been proffered as to why they did not. Mr Everest tells us that Mr Thomas and Mr Harris, two of the defendants, did not realise that it had not been executed in July 1996, but it has not been explained to the court why that is so. Mr Everest says that the applicants were advised, it appears by an accountant, that liability for Huttons costs would rest with the charity if indeed they had executed the document in July 1996. We have not been referred to any authority on this point. It seems to me to be a legal point and, speaking for myself, I have considerable doubts about the proposition. If the receivers were entitled to collect and get in the assets of the charity and preserve them, then it was possible for them to withdraw instructions from Huttons and recover the deposit or, alternatively, apply to the court for that purpose. So it seems to me that excessive importance is being placed on the question whether the letter of authority was executed in September or in July. As it seems to me, it would not afford any ground of success on appeal to show that Mr Evans' evidence was, in his witness statement, that the document was dated July 1996 (which was strictly true) and that in cross-examination it became clear that it had actually been drafted and signed in September 1996.

[20]Next Mr Everest relied on Mr Evans' admission that he had not disclosed to his own clients correspondence from the Treasury Solicitor, and I can take with that point the fact that Mr Evans had had to withdraw his contention that the defendants had not incurred any costs at the December hearing and also the point that he not advised that counsel considered that permission of the Charity Commissioners was not required for bringing the judicial review proceedings.

[21]The issue, it must be remembered, is whether or not Huttons had acted reasonably in relation to seeking the deletion of the name of the Charity Commissioners as a party at the December hearing and that involved a question whether or not they were right to include the Charity Commissioners in the first place. They had done so in the circumstances explained by the judge in his judgment and no ground is shown by those points for saying that that decision was wrong. These points seem to me not to be relevant to that issue before the court.

[22]The next point which Mr Everest makes is that Mr Evans had had to admit that he had had a letter from the Treasury Solicitor and it was after that letter that he had repaid the balance of the deposit to the RSPCA. This is connected with the point that I have already mentioned about the powers of the receiver after his appointment and accordingly it seems to me not to be one which holds out any prospect of success in this case on appeal.

[23]The next point was that the Swansea charity was billed with counsel's fees of £1,000 before counsel was instructed. What appears to have happened here is that a provision was made for counsel's fees in that sum. The judge states in his judgment that he was satisfied that there was no duplication of counsel's fees so far as the defendants were concerned and I am not concerned with the position as regards Huttons and the receiver with respect to that sum.

[24]There are further points made in relation to Mr Braham. I should stress that the issue here with which the judge had to deal was whether or not it was reasonable for a solicitor to rely on counsel in this point. As I see it, Mr Everest puts the matter much too high when he says that a solicitor himself is responsible to ensure that counsel's advice is right, even if he instructs counsel, and that he loses his right to recover his fees if in fact the advice is wrong. That submission, it seems to me, is not borne out by authorities and we have not been taken to any authorities to support it. In my judgment the judge formulated the issue correctly. The question was whether it was reasonable for a solicitor to rely on Mr Braham.

[25]With regard to the point that Mr Braham's chambers did not regarded him as a specialist in charities, the fact remained that Mr Braham was a barrister practising within the relevant area of law in general Chancery chambers and therefore was an appropriate counsel to select. To my mind it cannot be a point which holds out any prospect of success on appeal that Mr Braham's advice on this point was not put into writing.

[26]I next turn to the point that Mr Braham should not have been called as a witness. It has not been shown to us or indicated to us that there was prejudice as a result of Mr Braham giving evidence and moreover his witness statement was served on the defendants so that they had an opportunity of considering it in advance of the trial. I understand from Mr Everest's submissions that Mr Everest objected to Mr Braham being called but the judge overruled his objections. The transcript dealing with that application is not before us and it is not said that the basis on which the judge made that ruling was incorrect. What is said is that his evidence was expert evidence and the court had previously excluded expert evidence. But having read the transcript of his evidence it seems to me that his evidence was really factual and it cannot properly be said, as Mr Everest has submitted in his skeleton argument, that it subverted the rectitude of Ognall J's order. Moreover the fact that he was known professionally to the judge would not in my judgment be any reason for upsetting the judge's decision in this case. A judge is likely to know many barristers professionally and it is not shown that the decision of the judge was in any way improperly influenced by that fact.

[27]It has been suggested that it was too late for the applicants to apply for the permission of the Charity Commissioners after the order of Ognall J was made but there is no evidence about this and there was no evidence before the judge. As I see it it is not a point which could be run on an appeal with any prospect of success. It was also suggested in submissions that the originating summons should not have required amendment for any purpose in December 1996. It will be recalled that the amendment to exclude the name of the Charity Commissioners as a party was but a small part of a much larger amendment. That allegation too was not one which was run at the trial and in my judgment it would be too late to run it on an appeal.

[28]For all those reasons in my judgment there is no prospect of success on appeal on the points which Mr Everest has made in writing or orally and accordingly I would dismiss the application.

HUTTONS (A Firm) v and: [2002] EWCA Civ 282

LORD JUSTICE LATHAM: I agree.

ORDER

Cited in 1 later judgment