Medcalf v Mardell (Wasted Costs Order)

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeLORD BINGHAM OF CORNHILL,LORD STEYN,LORD HOFFMANN,LORD HOBHOUSE OF WOODBOROUGH,LORD RODGER OF EARLSFERRY
Judgment Date27 Jun 2002
Neutral Citation[2002] UKHL 27

[2002] UKHL 27

HOUSE OF LORDS

Lord Bingham of Cornhill

Lord Steyn

Lord Hoffmann

Lord Hobhouse of Wood-borough

Lord Rodger of Earlsferry

Medcalf
(Respondent)
and
Weatherill

and Another

(Appellants)
LORD BINGHAM OF CORNHILL

My Lords,

1

In this appeal two barristers (Mr Bernard Weatherill QC and Ms Josephine Hayes) challenge a wasted costs order made against them by the Court of Appeal. They do so on two grounds: first, that the court had no jurisdiction to make the order; and second, that such an order should not have been made when they were precluded by legal professional privilege from answering the complaints made against them. The appeal requires the House, for the first time, to consider the wasted costs order regime introduced by section 4 of the Courts and Legal Services Act 1990 and expressed in section 51(6)(7) and (13) of the Supreme Court Act 1981.

The proceedings

2

The proceedings in which the wasted costs order was made against the barristers concerned a snooker-based television quiz game, originally conceived by Mr Michael Kemp in about 1984 and developed in its early stages in 1987, first by Mr Kemp and Mr Roger Medcalf and then by these two with the addition of Mr Mardell, who had professional experience of developing and exploiting television game shows and was involved both personally and through his company, originally named Createl Ltd and then the Terry Mardell Organisation Ltd ("the TMO"). The plans for this new game show went through various different versions and were the subject of much discussion and refinement. Presentations were made on several occasions to the BBC, which was slow to respond. In the end, however, the BBC did respond. It bought the new game show and programmes were transmitted. They have proved to be a continuing success. But from about the end of 1987 Mr Medcalf was excluded from any part in the development and exploitation of the project, which were handled by Mr Mardell and his company and Mr Kemp.

3

In July 1993 Mr Medcalf issued proceedings against Mr Mardell, Mr Kemp, the BBC (which settled before the action came to trial and played no further part) and the TMO. Mr Medcalf's claim at that stage was based on alleged infringement of copyright and breach of confidence. The action came on for trial before Lightman J in January 1997 but was aborted on the third day of trial to enable Mr Medcalf's advisers to re-plead his case so as to include an additional claim in partnership. A stringent order in costs was made against Mr Medcalf as a condition of the postponement. Mr Medcalf's case was then re-pleaded and a second trial took place before Lloyd J in May 1998. At this trial the judge preferred the evidence of Mr Medcalf to that of Mr Mardell and Mr Kemp. He found that there had been a partnership between the three men to be inferred from their conduct and that there had also been a breach of confidence. The defendants were ordered to provide an account of the profits of the partnership and to make an interim payment of £100,000 into court.

4

Mr Mardell and the TMO (but not Mr Kemp) at once appealed against the judge's decision and there was a second appeal against certain orders made by the judge in a later decision on the taking of the partnership accounts. No satisfactory account was provided in compliance with the judge's order and in July 1999 Mr Medcalf applied to strike out the defendants' third attempt to provide the account ordered. In response the defendants served witness statements making, for the first time, serious allegations of fraud against Mr Medcalf and his solicitors in connection with the conduct of the action before Lloyd J. It was alleged that Mr Medcalf or his solicitors had tampered with the transcripts of evidence given at the trial, that Mr Medcalf's solicitors had attempted to pervert the course of justice during without prejudice discussions with Mr Kemp and that Mr Medcalf's signature on his witness statement had been forged. No transcripts of evidence had been available to the judge when he had given judgment and Mr Medcalf in evidence had vouched the proof of his witness statement, but these points were relied on as impugning the credibility of Mr Medcalf, and the reliability of his evidence had been an important issue at the trial. The master referred the striking out application to Lloyd J, who was to have heard it on 26 November 1999 but who was in the event unable to hear it until 2 December 1999.

5

Neither of the appellant barristers had up to then represented Mr Mardell or the TMO. Ms Hayes was instructed shortly before 24 November. On 25 November she informed leading counsel for Mr Medcalf (Mr Romie Tager QC) of an application she intended to make (and shortly thereafter did make) to the judge, that he should direct the police to investigate the allegations made concerning the transcripts and the perversion of the course of justice and that Mr Medcalf's application to strike out the account should meanwhile be stayed. Mr Medcalf's solicitors intimated an intention to apply for a wasted costs order against the defendants' solicitors, although this was not pursued. In her skeleton argument for the hearing before Lloyd J on 2 December Ms Hayes included the allegations of misconduct already mentioned but with the addition of certain serious allegations of a similar character. An amended notice of appeal was drafted, although not formally served, including these and additional allegations of impropriety.

6

On 6 December 1999 Lloyd J rejected the defendants' application and refused permission to appeal. He went on to hear Mr Medcalf's application to strike out the defendants' third partnership account. Mr Weatherill, appeared before the judge with Ms Hayes on 8 December 1999 (having been instructed on that date or shortly before) when application was made that the judge should defer giving judgment on the striking out application pending receipt of evidence from the United States Department of Justice which might substantiate one of the allegations of fraud made against Mr Medcalf. This application was refused. On Mr Medcalf's application to strike out the judge refused to make the order sought, but held that the third account which the defendants had given did not comply with his order and that they should have a last opportunity to comply.

7

There was intense interlocutory activity on the part of Mr Medcalf and the defendants over the next two months. Relevantly for present purposes, the defendants' appeal against the judge's substantive decision in favour of Mr Medcalf, coupled with an application by the defendants to amend their notice of appeal so as to include the allegations of impropriety against Mr Medcalf already referred to, were due to be heard by the Court of Appeal on 14 February 2000. At a hearing on 28 January 2000 Clarke LJ gave directions to ensure that that date would be effective: among other things he ordered that evidence in the defendants' possession relevant to matters raised in the draft amended notice of appeal be served that day, with an indication in writing of any further evidence the defendants might wish to put before the court, and that the defendants should by 4 February 2000 issue and serve an application to amend their notice of appeal and to introduce fresh evidence, serve and file a bundle comprising all witness statements and evidence intended to be relied on, and serve and file a draft amended notice of appeal and supporting skeleton arguments covering those of the existing grounds of appeal still advanced and identifying any which were abandoned.

8

In response to that order of Clarke LJ, the defendants served certain reports and listed evidence which was not in their possession but which they hoped would follow. A draft amended notice of appeal dated 3 February 2000, bearing the names of both barristers, was served on the following day. Skeleton arguments dated 4 February 2000, including a supplementary skeleton argument in support of the application to amend the notice of appeal signed by both the barristers, were also served on 4 February. The supplementary skeleton argument advanced submissions in support of each of the new allegations of fraud, forgery and other impropriety. Two additional bundles of evidence were served on Mr Medcalf. In the course of Friday 4 February 2000, for reasons which have not been disclosed, instructions were withdrawn from the defendants' solicitors. The barristers ceased to be instructed and the solicitors came off the record on Monday 7 February. During the following week Mr Medcalf's advisers prepared and filed evidence to rebut the allegations of fraud and impropriety raised in the draft amended notice of appeal. This evidence was not served on the barristers, who were no longer acting, but they were again instructed at about midday on Friday 11 February and the evidence was then made available to them.

9

At the hearing before the Court of Appeal (Peter Gibson and Schiemann LJJ and Wilson J) on Monday 14 February, Mr Weatherill and Ms Hayes, acting (as it is accepted that they did throughout) on instructions, opened the defendants' application to amend the notice of appeal and to adduce new evidence. The application to amend failed in respect of the allegations of impropriety. In the course of argument Mr Weatherill abandoned some of the allegations in the face of judicial hostility. In relation to the remaining allegations, the Court of Appeal rejected the application to amend (although other parts of the application to amend were conceded or were successful). This application occupied about one and a half days of court time, although no oral answer on behalf of Mr Medcalf was called for. A further two and a half days were devoted to argument on the substantive appeal. On 2 March 2000 the Court of Appeal...

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