DLA Piper UK LLP v BDO LLP

JurisdictionEngland & Wales
JudgeLord Justice Moses,Mr Justice Foskett
Judgment Date13 December 2013
Neutral Citation[2013] EWHC 3970 (Admin)
Docket NumberCase No: CO/6222/2013
CourtQueen's Bench Division (Administrative Court)
Date13 December 2013

[2013] EWHC 3970 (Admin)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

ADMINISTRATIVE COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Lord Justice Moses

Mr Justice Foskett

Case No: CO/6222/2013

Between:
DLA Piper UK LLP
Claimant
and
BDO LLP
Defendant

Mr Hugo Keith QC (instructed by DLA Piper UK Llp) for the Claimant

Mr Andrew Radcliffe QC (instructed by Irwin Mitchell) for the Defendant

Lord Justice Moses
1

At about 4.30 p.m. on Friday 11 January 2013 Her Honour Judge Mowat was faced with an application by leading counsel for the respondent BDO LLP for costs against DLA Piper LLP, the appellant. She had just refused an application for a witness summons against the respondents. The appellants, DLA Piper, are solicitors who were acting for a defendant, Mark Woodbridge; he was alleged to have committed offences of false accounting and conspiracy to defraud in relation to his employer, Torex Retail PLC. The respondent, BDO LLP, the well-known United Kingdom accountancy firm, had been Torex's auditors.

2

HHJ Mowat rejected the statutory basis on which BDO sought its costs. But she took the view that she had an inherent power to make an order of costs against DLA Piper and she did so. DLA Piper now appeal by way of Case Stated.

3

BDO no longer advances the statutory basis on which it had relied before the judge. It contends, nonetheless, that the judge did have an inherent power to make an order for costs. If that is wrong, it requests this court to remit to the judge an application for wasted costs. In any event, BDO contends that this court has no jurisdiction to hear an appeal by DLA Piper against the judge's order for costs. DLA Piper responds that, if this court has no jurisdiction, it should reconstitute itself as a Divisional Court and treat the appeal as an application for judicial review, permission for which should be granted, and that this court should quash the judge's order for costs.

4

DLA's application for a witness summons was made under s.2 of the Criminal Procedure (Attendance of Witnesses) Act 1965. A witness summons requiring a person to give evidence or produce a document under s.2(2) may only be issued on an application (s.2(3)). The application must be made in accordance with Crown Court rules (s.2(7)). Those Crown Court rules may require an application to be made by a party to the case (s.2(8)(a)).

5

Where the application is for a witness summons requiring a proposed witness to produce in evidence a document, Rule 28.5 of the Criminal Procedure Rules 2012 applies. By Rule 28.5(4):-

"The court must not issue a witness summons where this Rule applies unless —

(a) everyone served with the application has had at least 14 days in which to make representations, including representations about whether there should be a hearing of the application before the summons is issued…"

6

It was pursuant to that rule that BDO was served with the application for a witness summons on 27 December 2012 and attended court on 11 January 2013 to resist the summons. But once it did so successfully, did the court have power to order costs? Mr Andrew Radcliffe QC accepted, on behalf of BDO, with his customary fairness, that the court had no power under the Criminal Procedure (Attendance of Witnesses) Act 1965 to order costs. He accepts, therefore, that the primary basis of his application on 11 January 2013 was, as the judge appreciated, erroneous. The 1965 Act does make provision for costs but only in circumstances where a person applies to the Crown Court to set aside the summons. The Act does not confer any power on the Crown Court to make an order for costs where a person attends to resist a summons. This is a bizarre omission because the Criminal Procedure Rules envisage the attendance of` the person on whom a witness summons has been served and the 1965 Act only permits an application to be set aside where a person has not been served.

7

By s.2C of the 1965 Act:-

"(1) If a witness summons shall be issued under s.2 above is directed to a person who —

a) applies to the Crown Court

b) satisfies the Court that he was not served with the application to issue the summons and that he was neither present nor represented at the hearing of the application, and

c) satisfies the Court that he cannot give any evidence likely to be material evidence or, as the case may be, produce any document or thing likely to be material evidence, the Court may direct that the summons shall be of no effect."

"(8) Where a direction is made under this section if a witness shall be of no effect, the person on whose application the summons was issued may be ordered to pay the whole or any part of the costs of the application under this section."

8

It is, accordingly, plain that a person may only apply to the Crown Court to set aside a summons if he was not served with a Notice of Application and was neither present nor represented. If he satisfies those conditions and succeeds then he may be awarded costs.

9

Contrast the situation where he attends to resist a summons as he is required to do pursuant to Rule 28.5(4) of the 2012 Rules. In those circumstances, although he may succeed in resisting the summons, neither the 1965 Act nor the Rules confer any power on the Court to order costs. As the judge remarked, there is a glaring lacuna within the statute and the Rules and the appeal raises the question whether the judge, as she believed, could fill that gap.

10

Mr Radcliffe QC contended that the gap could be filled if the Crown Court invoked its inherent jurisdiction to order that a solicitor personally pays the costs thrown away. No one suggested that that inherent jurisdiction did not exist, stemming, as it does, from the power of the court to control its own officers. Authority for this inherent jurisdiction was, so Mr Radcliffe contended, to be found in Practice Direction (Criminal Proceedings: Costs (Senior Courts)) [2010] 1 WLR 2351):-

"1.2.3 The Senior Courts also have the power under their inherent jurisdiction over officers of the court to order a solicitor personally to pay costs thrown away. The inherent jurisdiction of the court should be invoked only to avoid a clear injustice: Symbol Park Lane Ltd v Steggles Palmer [1985] 1 WLR 668. Where the legislature has stepped in with particular legislation in a particular area (eg, the wasted costs provisions) then, within that particular area, the existing inherent jurisdiction will be ousted or curtailed, at any rate in so far as the particular legislation is negative in character: Shiloh Spinners Ltd v Harding [1973] AC 691; Harrison v Tew [1990] 2 AC 523. Given the present provisions relating to costs, the exercise of the inherent jurisdiction will occur only in the rarest of circumstances.

4.6 Awards of costs against solicitors under the court's inherent jurisdiction.

4.6.1 In addition to the power under regulation 3 of the General Regulations to order that costs improperly incurred be paid by a party to the proceedings and the power to make Wasted Costs Orders under section 19A of the Act, the Senior Courts (which includes the Crown Court) may, in the *2363 exercise of its inherent jurisdiction over officers of the court, order a solicitor personally to pay costs thrown away by reason of a serious breach on the part of the solicitor of his duty to the court.

4.6.2 No such order may be made unless reasonable notice has been given to the solicitor of the matter alleged against him and he is given a reasonable opportunity of being heard in reply.

4.6.3 This power should be used only in exceptional circumstances not covered by the statutory powers: see para 1.2.3."

11

As the Practice Direction foresees, it is difficult, if not impossible, to envisage circumstances in which costs could be ordered against a solicitor personally in the exercise of the inherent jurisdiction of the court in circumstances where statutory provisions in relation to Wasted Costs Orders could not be deployed.

12

There seems to me a fatal flaw in the attempt to invoke the inherent jurisdiction of the Court. The application for the witness summons was made on behalf of the defendant, Mr Woodbridge. BDO argued that the applicant for the summons was DLA Piper itself. The judge adopted that argument and seems to have believed that the applicant was DLA Piper (see transcript pages 10H-11A). The applicant for the summons was not DLA Piper but, as s.2(8)(a) of the 1965 Act envisages and as the Criminal Procedure Rules 2012 provide (28.3(1)), it is a "party" who makes the application. The party was the defendant, Mr Woodbridge. The mistake seems to have arisen because of the form of the application for a witness summons. This form is the form set out in the Practice Direction to which Rule 28.4(1) of the 2012 Rules refers. The form gives the name of the defendant, Mark Woodbridge, and under part A, "information about the applicant" there is written "I represent the defendant" and the name of a solicitor and the address of DLA Piper UK LLP. That makes it plain that the party to the application is Mr Woodbridge and his representative, the solicitor named. There was no warrant for treating DLA Piper as the applicant.

13

In those circumstances, the only basis for ordering costs against the solicitor would be the basis for which statute provides, namely, a Wasted Costs Order under s.19A of the Prosecution of Offenders Act 1985. By s.19A the court has power to order legal representatives to pay the whole or any part of wasted costs as defined in s.19A(3):-

"'Wasted costs' means any costs incurred by a party —

(a) as a result of any improper, unreasonable or negligent act...

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