BARNDEAL Ltd and CHERRYWALK PROPERTIES Ltd and London Borough of RICHMOND-UPON-THAMES
| Jurisdiction | England & Wales |
| Judge | Mr Justice NEWMAN |
| Judgment Date | 30 June 2005 |
| Neutral Citation | [2005] EWHC 1377 (QB),[2005] EWHC 391 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case No: HQ02X02888 |
| Date | 30 June 2005 |
[2005] EWHC 1377 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Mr Justice Newman
Case No: HQ02X02888
Mr Evan ASHFIELD (instructed by Petrou Law Partnership) for the Claimants
Mr Karl KING (instructed by Barlow Lyde Gilbert) for the Defendant
Hearing date: 5 th May 2005
Judgment Approved by the Court
for handing down
(subject to editorial corrections)
I have before me an application dated 22 nd March 2005 made in the above proceedings for an order for costs against non-parties to the proceedings. On the 15 th March 2005 I handed down a judgment in this action brought by Barndeal Limited (Barndeal) and Cherrywalk Properties Limited (Cherrywalk) against the London Borough of Richmond upon Thames (RUT) whereby I dismissed the claimants' claim. Further, it was ordered that Barndeal pay the defendant's costs of the action until 29 th October 2003 and that both Cherrywalk and Barndeal pay the defendant's costs of the action from 29 th October 2003. Further, it was ordered that costs were to be paid on an indemnity basis, if not agreed. The proceedings were issued by claim form dated 2 nd September 2002. At that date Cherrywalk had been struck off the register and was not restored until 16 th October 2003.
On the occasion when judgment was given, Mr King, counsel for the defendant, indicated, in the broadest terms, that he wished to apply for an order that costs incurred in defending the proceedings should be paid by non-parties. No notice had been given to anyone, including the court, that such an application was to be made. The skeleton argument which had been served the previous day made no mention of the issue. There is no record of the precise terms in which the application was made or foreshadowed, but the court declined to deal with it. It is agreed that the court suggested that whether or not to make such an application required mature consideration. As a result, provision was made in the order for that event. Paragraph 6 of the order reads:
"The defendant shall by 4.00 pm on 23 rd day of March 2005 notify the claimants' solicitors and the court in writing if it intends to make any application pursuant to Part 48.2 for an issue to be heard upon an application for an order for costs against either the directors of the first and/or second claimants including the names of each director against whom such application is to be made and specifying the grounds upon which such application is to be made."
It is obvious that if the order is taken as a reflection of the nature and content of the application which was foreshadowed by Mr King, notice was not then given that an application would be made against a non-party to the proceedings who had not been a director of either Cherrywalk or Barndeal at any time material to these proceedings.
The notice of application applies for an order against three non-parties, Mr Michael Kay (also known as Michael Angelo), as the manager of Cherrywalk, Mr Elias Demetroudi, a director of Cherrywalk, and Mr Adonakis Orphanou, a director of Barndeal. Mr Demetroudi became a director on 6 th May 1997, but resigned on 17 th October 2003. Mr Orphanou became a director of Barndeal on 30 th April 2002. Mr King, in addressing the objection raised by Mr Ashfield on behalf of the non-parties, was not minded to contend that he had referred to joining any person who was not a director, for example, Mr Kay. Nevertheless, he submitted, that it must have been clear from the judgment which had been delivered that the grounds for the intended application turned upon the conduct of Mr Kay. I agree and thus it seems likely that the explanation is that Mr King erroneously treated Mr Kay as a director of one or other of the claimant companies. I shall have to return to the question whether the terms of the order and the late notice to Mr Kay should be given weight in the issues which I have to decide.
The judgment in the action must be read with this judgment wherever necessary or in order to amplify any summary of the facts, which the court, for convenience, makes in this judgment.
Summary
Mr Michael Kay was the principal witness for the claimants in this action. At all material times concerning the events covered by the claim he acted as manager for Cherrywalk. He was very largely responsible for Cherrywalk's business in connection with the provision of accommodation to RUT. He was at pains to avoid acknowledging the extent of his responsibility and the capacity in which he was acting (see judgment paragraph 41). He was directly involved in the negotiation of the contract dated 14 th May 1999 which was the subject of the action. He fabricated a letter dated 4 th May 1999 which falsely claimed that Mr Nayak had agreed that a detailed inventory would not be required (see judgment paragraph 42). He lied to the court about notes which he maintained he had made about the condition of the properties (see judgment paragraph 56). He fabricated letters purporting to be from property owners about the alleged malicious damage (see judgment at paragraphs 63 and 64). The overall conclusion of the court was that, whatever seeds there may have been for a valid claim, the claim, as presented, had been fabricated.
The proceedings were issued on 2 nd September 2002 by Barndeal relying upon an assignment dated 14 th July 2002 of what was alleged to be a debt due to Cherrywalk from RUT. RUT launched an application to strike out the action and, in the alternative, to obtain security for costs. The basis of the application to strike out, as it appears from a witness statement of Christopher Warner dated 5 th November 2002, was that, since the agreement between Cherrywalk and RUT came to an end on 14 th May 2000, there could not have been any existing rights capable of being assigned at the date of the assignment. In effect, it was submitted that Cherrywalk had purported to assign "rights or interests" that it did not have during the currency of the agreement.
It has been suggested in argument on this application that a material factor in not pursuing the application to strike out was the disclosure of the letter dated 4 th May 1999 relating to the waiver of the need for an inventory (see judgment paragraph 42 and paragraph 6 above). I am not persuaded that the existence of that letter can have had a significant bearing upon the course which was taken at the hearing to strike out when the application was not pursued, but the application for security for costs was successfully made. Security was ordered in the sum of £20,000 and it was subsequently paid. Reliance has been placed upon the presence of Mr Kay at that hearing and an assertion that he was able to give instructions to Cherrywalk's solicitors. It has been submitted that the court should treat this evidence as establishing or going to establish his control of the proceedings.
In a letter dated 16 th October 2001, being a letter before action, and at a date prior to the assignment dated 14 th July 2002, Cherrywalk gave notice of the claim for damages, loss of income and interest and particularised the claim by reference to the various invoices which the court concluded had been fabricated for the purpose of the proceedings. It is clear that Mr Kay must have fabricated the documents prior to the dispatch of this letter and it has been submitted that this conclusion points to Mr Kay being the person who controlled the action from the outset.
After the assignment, in August 2002 Cherrywalk was struck off the register and was not restored until shortly before it was joined in the action as a claimant. That did not take place until 29 th October 2003. As I have already observed, it is for that reason that costs up to 29 th October 2003 were ordered to be paid by Barndeal and thereafter were ordered to be paid jointly and severally by Barndeal and Cherrywalk. The need to join Cherrywalk arose solely because of the pleaded case that the assignment was invalid. The plea was not abandoned and Buckley J. ordered that Cherrywalk should be joined.
Cherrywalk was incorporated on 6 th May 1997 and Mr Demetroudi was appointed a director on 13 th June 1997, but he resigned as a director on 17 th October 2003 before Cherrywalk was joined in the action. It seems plain that Cherrywalk was restored to the Register for no other purpose other than being joined in the action and has not carried on business otherwise. He was, therefore, a director at the date of the events the subject matter of the claim, but "did not participate in the day-to-day running of the Cherrywalk companies" (see judgment paragraph 67). He was a director at the date of the letter before action and at the date of the assignment, but his status as a director of Cherrywalk cannot, in itself, avail RUT in pursing this application against him.
Barndeal was incorporated on 30 th April 2002 for the principal purpose of taking the benefit of an assignment from Cherrywalk and Mr Orphanou has, at all material times since 15 th June 2002, been the only director of Barndeal. It follows that the decision by Barndeal to commence the action against RUT must have been taken by him acting in his capacity as a director of the company.
It will be necessary for me to refer to the law governing applications for costs to be paid by non-parties. It is not disputed that it is an exceptional jurisdiction. The fundamental submission which has been advanced is that the court should regard the case as falling within an exceptional category by reason of the following circumstances:
(1) That the nature and extent of the fabricated evidence is extraordinary and amounts to a deliberate attempt to...
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