Jackson v Thakrar
| Jurisdiction | England & Wales |
| Judge | His Honour Judge Peter Coulson QC |
| Judgment Date | 22 March 2007 |
| Neutral Citation | [2007] EWHC 626 (TCC) |
| Docket Number | Claim No: HT 06 189 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 22 March 2007 |
[2007] EWHC 626 (TCC)
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
His Honour Judge Peter Coulson QC
Claim No: HT 06 189
Mrs Jane Giret QC (instructed by Balsara & Co, EC4) for Party 1
Mr Robin Howard (instructed by Jefferies, Westcliff) for Party 20
Hearing date: 14 March 2007
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
HIS HONOUR JUDGE PETER COULSON Q.C.
Introduction
On 20 February 2007 I handed down my judgment on the compromise issue.1 I concluded that, for a variety of reasons, the Defending/Applicant Parties could not demonstrate that there had been a binding compromise of this complex litigation. I therefore rejected their application for a declaration to that effect. At the subsequent costs hearing I ruled that the Defending/Applicant Parties had to pay the Claiming Parties' costs of the compromise issue on an indemnity basis. Party 1, the Trustee in Bankruptcy of Subhash Thakrar (“Subhash”), now seeks an order, pursuant to Section 51 of the Supreme Court Act 1981, that Mrs Kiran Thakrar (“Kiran”), Subhash's wife who provided funds for his representation, be joined into the proceedings for costs purposes, so that she can be made liable for all or some of the Trustee's costs of the compromise issue.
Section 51(1) provides that “the costs of and incidental to all proceedings in … the High Court … shall be in the discretion of the court.” Section 51(3) makes plain that the court “shall have full power to determine by whom and to what extent the costs are to be paid”. Ever since the House of Lords decision in Aiden Shipping Co Ltd v Interbulk Ltd [1986] AC 965, it has been clear that Section 51 permits a court to award costs against a person who was not a party to the proceedings. There have been numerous cases on the extent and limits of this jurisdiction, some of which are analysed below.
There are broadly four issues between the parties. They are:
i) Whether there is sufficient causal connection between Kiran's funding and the costs of the compromise issue and, if not, whether as a matter of principle that is determinative of this application;
ii) Whether Kiran can be classified as a 'pure' funder and, if so, whether on the facts there is any reason why the general presumption that a Section 51 order will not be made in such a case has been displaced ;
iii) Whether Kiran's role as a director and shareholder of SK Thakrar & Co Ltd (Party 16) can or should make any difference to the outcome of the Section 51 application;
iv) Whether, in all the circumstances of this case, the court should exercise its discretion in favour of the Section 51 application.
I set out at paragraphs 5, 6, and 7 below the relevant factual background. I then go on to address each of the four issues noted above.
Factual Background
Following an exchange of correspondence in late October/early November 2006, the Defending Parties claimed that they had achieved a binding compromise of the litigation in the sum of £20.1 million. When the Claiming Parties disputed that assertion, Glen International Ltd (Party 14), who are the only one of the Defending Parties with any substantial assets, issued an application for a declaration that the litigation had indeed been compromised. They were joined in that application by Mr Harjivan, Party 18, the apparent owner of the shares in Glen. However, in the event, he took no part at all in the preparation for and hearing of the application for a declaration that the litigation had been compromised.
That hearing took place before me on 22–24 January 2007. Although Subhash was represented at the hearing by Mr Howard, and although Mr Sen acted for a number of the other Thakrar family members, and the limited company (Party 16), I have no hesitation in finding that the burden of the application for a declaration fell on Glen. Thus, at the three day hearing, it was Mr Jones QC, on behalf of Glen, who made the vast majority of the running on behalf of the Defending Parties. He made most of the oral submissions to me, and undertook most of the cross-examination. Mr Howard and Mr Sen made oral submissions for about 20 minutes each, and their cross-examination was minimal.
Although Mr Howard had been involved for Subhash in the run-up to the hearing, his participation at the hearing itself depended on the payment of a brief fee. It is common ground that that fee was funded, in large part at least, by Kiran. In the week before the hearing, Kiran took £10,000 out of her building society account and sent it to Nathans, Mr Howard's instructing solicitors. The bulk of that money was then paid to Mr Howard by way of a brief fee. In consequence, Mr Howard attended the three day hearing before me on 22–24 January.
Issue 1: Causation
Mr Howard's first submission was that causation was a necessary pre-condition of any order under Section 51. He submitted that, if I concluded that the hearing in January 2007 would have taken place in any event, with or without the assistance of the funding provided to Subhash by Kiran, the non-party, then there was no room for an order to be made. He said that, in the present case, the three day hearing on the compromise issue would have taken place anyway, whether or not Subhash was represented at that hearing. He maintained that it was principally Glen who was pursuing the compromise issue (because they had the most to gain from it) and it was Glen, on the Defending Parties' side, who constituted the lead party at that hearing. Effectively, he said, the key question was whether the funding of Subhash caused the Trustee (Party 1) to incur costs which she otherwise not have done. It was his case that the answer was No, because the Trustee would have incurred precisely the same costs anyway.
In response, Mrs Giret QC suggested that this was a novel argument, which relied on the fact that there were other parties in the litigation, not just the Section 51 applicant and the funded party, and that such a situation had not been considered by the courts before. She said that the reported cases were solely concerned with the relationship between the funding party and the funder, and that the existence of any other parties was irrelevant to the proper operation of Section 51. It was her case that the relevant question was whether, but for the funds provided by the non-party, the funded party would have taken part in the hearing. She said that the answer to this question was No, because Subhash needed Kiran's £10,000 to pay for his representation at the January hearing.
I was referred to four cases on the question of causation. The first of those was Fulton Motors Ltd v Toyota (GB) Ltd (CA, 23.7.99). In that case, Fulton had gone into administrative receivership. The receiver funded the litigation prior to April 1999, when the directors took over the funding of the appeal. The appeal was dismissed in July 1999. The Court of Appeal concluded that it was not an appeal which, on any realistic objective assessment, could be said to have had good prospects of success. They therefore made a Section 51 order against the directors personally, but limited to the period between April and July 1999. I am bound to say that I consider that this case was unremarkable on its facts, and was not of any particular assistance on the causation issue with which I have to deal. In Fulton, there plainly would have been no appeal from April 1999 onwards but for the funding provided by the directors.
Of much greater relevance to the causation issue before me were the judgments of the Court of Appeal in Hamilton v Al Fayed (No.2) [2002] EWCA Civ 665; [2002] 3 All ER 641. There the Court of Appeal reviewed numerous authorities under Section 51, and it will be necessary for me to refer later to the judgments of Simon Brown and Hale LJJ on some of the subsequent issues that arise in this case. For present purposes, however, it is necessary to refer only to paragraphs 52–57 of the judgment of Simon Brown LJ (as he then was). There he dealt with a causation argument put forward by Lord Portsmouth, one of the funders of the bankrupt former MP, Neil Hamilton, against whom Mohammed Al Fayed was seeking a costs order pursuant to Section 51. Lord Portsmouth's £100,000 contribution was made on 26 October 1999, which was after Mr Hamilton's solicitors had taken the decision to proceed with the case, irrespective of whether any further...
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