M A Lloyd & Son Ltd ((in Administration)) v PPC International Ltd (T/A Professional Powercraft) (Defendant/Applicant) Mr Roderick McCarthy (Third Party/Respondent)
| Jurisdiction | England & Wales |
| Judge | HHJ Seys-Llewellyn,QC |
| Judgment Date | 22 August 2016 |
| Neutral Citation | [2016] EWHC 2162 (QB) |
| Docket Number | Case No: HQ12X02165/HQ14X02001 |
| Court | Queen's Bench Division |
| Date | 22 August 2016 |
[2016] EWHC 2162 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
His Honour Judge Seys-Llewellyn QC
(sitting as a Judge of the High Court)
Case No: HQ12X02165/HQ14X02001
and
Mr Caley Wright (instructed by Smithfield Partners Solicitors) for the Applicant
Mr Simon Butler (directly instructed) for the Respondent
Hearing date: 25 th July 2016
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.
HHJ Seys-Llewellyn QC
This is the written judgment upon an application by PPC International Limited (t/a Professional Powercraft) ("PPC") for a wasted costs order against Mr Roderick McCarthy ("Mr McCarthy") in three related actions brought by MA Lloyd & Son Ltd ("MAL") against PPC.
The applicable law. The jurisdiction to make a wasted costs order is defined by s.51(6) of the Senior Courts Act 1981 which states, "in any proceedings mentioned in sub section (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 the rules of Court". This provision is supplemented by provisions of the CPR. I deal below with guidance in the reported cases.
PPC allege that Mr McCarthy acted as legal representative for MAL; that the conduct of the proceedings by him was improper or unreasonable; and further that it was "solicitor-led" by him, within the meaning given in the reported cases upon the wasted costs jurisdiction.
The issues in the present case are:
(i) whether Mr McCarthy has been shown to be a solicitor "conducting the litigation" or "issued proceedings or performed any of the ancillary functions such us entering an appearance associated with the conduct of litigation on behalf of a client" (within the meaning of s.119(1) of the Courts and Legal Services Act 1990) either generally, or for certain periods of time, or in respect of particular steps taken in the proceedings;
(ii) whether the relevant steps, of which PCC complains, were improper and unreasonable by Mr McCarthy, and/or "solicitor-led" as described in the authorities as being appropriate for an Order for wasted costs, as opposed to acting on the instructions of the client;
(iii) whether it has been shown that the waste of costs of which PCC complains were "caused" by the acts of Mr McCarthy, as opposed to acting on the instructions of the client, or may have been incurred instead because of the stance overall or wishes of the client.
The history of the failed proceedings. In barest outline, in 2011 MAL brought proceedings against PPC for alleged breach of a confidentiality agreement and passing off. PPC is incorporated in Brunei. These, the First Proceedings, were by action Claim No. HQ11X02186 ("HQ11X") issued on 14 June 2011. MAL purported to serve the Claim Form on PPC out of the jurisdiction without permission. On 23 May 2012 MAL applied for permission to serve outside the jurisdiction, itself an application for retrospective permission to serve out of the jurisdiction; but the application was dismissed on 30 May 2012 by Master Kay QC who also struck out the First Proceedings and ordered that MAL pay PPC's costs summarily assessed at £1,250 within 21 days.
The Second Proceedings, by claim form in action HQ12X02165 ("HQ12X"), were issued on the same day that the First Proceedings were struck out namely 30 May 2012. The Claim Form and Particulars of Claim were identical to those in the First Proceedings. Put very shortly indeed, judgment in default was entered against PPC and was set aside on 30 May 2013 by Master Kay QC who, in the same order, stayed the Second Proceedings pending determination of an appeal outstanding in the First Proceedings or the payment by MAL of the costs ordered on 30 May 2012; and MAL was further ordered to pay PPC's costs for a given time period.
Case management proceeded fitfully, despite the efforts of judges to progress proceedings. The delay included dealing with an allegation by MAL that PPC no longer had legal personality or was entitled to litigate in the UK. This came to an end when Turner J dismissed an application by MAL, stating that he found MAL's conduct to be "yet another example of a litigant treating an Order of the Court as if compliance were an optional indulgence". He debarred MAL from raising the issue at trial (Bundle 3/24/214, 219).
At the conclusion of a number of procedural excursions by or on behalf of MAL, on 1 May 2014 Master Kay QC made an Order confirming several previous costs orders, ordered payment into Court of £30,000 (on account of the summary assessment of costs pending an assessment as ordered by Hamblen J), and ordered that failure to pay those sums would result in the Second Proceedings being dismissed. MAL failed to pay that sum into Court as required. On 7 July 2014, in a judgment which includes matters of importance, Master Kay QC confirmed that the Second Proceedings were dismissed by reason of failure to pay that sum (Bundle 3/24/266–267).
Thirteen days later, on or about 14 May 2014 MAL issued the Third Proceedings, by Claim Form and Particulars of Claim in Action HQ14X02001, which broadly repeated the allegations in the First and Second Proceedings and added further claims in fraud and conspiracy and certain further parties.
On 8 July 2014 Master Kay QC summarily assessed, in the sum of £70,293, costs which, on 30 January 2014 Hamblen J had ordered to be assessed and paid by MAL; and he made further orders in respect of hearings which had taken place since 30 January 2014, totalling some £22,825, to be paid by MAL (see Order at Bundle 3/24/268 at 269). On 28 November 2014, upon an application made by PPC on 17 October 2014, Master Kay QC stayed the Third Proceedings until payment of the costs ordered in the previous proceedings, and also ordered MAL to pay costs to PPC and to another Defendant each in the sum of £3,250. After a further excursion by MAL, and an unsuccessful application for permission to appeal the Order of 28 November 2014 which stayed their Third Proceedings – when MAL applied out of time, and permission was refused on 20 January 2015 – MAL went into administration on 29 January 2015. Those representing PPC regard the prospects of recovering the costs ordered in favour of PPC against MAL, by now totalling some £120,000, as nil or minimal.
The parties. MAL is a company in which Mr John Ernest Key was a director. He describes it as a diverse engineering business, in a witness statement dated 3 May 2016. He first had a beneficial interest in the shareholding in 1991; from 1999 onwards he and his wife were the beneficial owners of that company, save for 20% of the shares in MAL sold in August 2011.
Mr McCarthy is a qualified solicitor. From a date at some time during 2012, he was employed by "Charles Henry" which is not a firm of solicitors or limited legal partnership, but which Mr Leigh Ellis the solicitor for PPC (in his Thirteenth Statement dated 1 February 2016) 'understands to be a company limited by guarantee and a charity, which describes itself as 'providing legal support to members of the public' and which states on its formal notepaper that it "retains solicitors and other lawyers as consultants and enjoys direct access to the Bar"'.
The legislation in this field provides that only certain persons or bodies are licensed or authorised to carry out "reserved legal activities" (including advocacy and the conduct of litigation). Charles Henry was registered with the SRA (Solicitors Regulatory Authority) and Leigh Ellis in that witness statement states his understanding that it was not at any time licensed or authorised to carry out reserved legal activities. By comparison a qualified solicitor, doubtless subject to maintaining his practising certificate, would be authorised to carry out those activities. Mr McCarthy was a qualified solicitor. It is not suggested that he was not authorised or licensed to carry out the relevant activities.
I find the role of Charles Henry in this litigation, as a body not authorised or licensed to carry out reserved legal activities, at least opaque. In this, I am in good company. In proceedings between Norseman Holding Limited v Warwick Court (Harold Hill) Management Company Limited [2013] EWHC 3868 (QB) Coulson J, stated that 'certain aspects of NHL's conduct of the litigation generally, and this appeal in particular, can only be described as extraordinary':
"Throughout all this game playing, an issue arose – and continues to arise – in relation to the nature of those representing NHL. Charles Henry are on the record as solicitors, and indeed that is confirmed in a witness statement dated 18 January 2013 signed by Keith Gregory, who describes himself as a trainee legal executive at Charles Henry.
However it appears that Charles Henry are not an authorised body recognised by the Solicitors' Regulation Authority for the purpose of carrying out litigation, and, at the contested hearing in front of Judge Davies on 21 January 2013, that was expressly confirmed by NHL's Counsel, Mr Shrimpton who described Charles Henry as 'not a firm and not able to conduct litigation'…..
Even for the purposes of this appeal, the issue as to who is acting for NHL as their solicitor is wholly muddled. In his skeleton argument, at paragraph 22, Mr Butler said that it was common ground that Dr Eiland was the solicitor conducting the litigation on behalf of NHL. I have seen nothing to...
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