Michael Steven Vaughan v 1. Ellen Mary Jones 2. Mark Adrian Fowler 3. Jane Anne Fowler
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE DAVID RICHARDS,Mr Justice David Richards |
| Judgment Date | 11 August 2006 |
| Neutral Citation | [2006] EWHC 2123 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC05C00147 |
| Date | 11 August 2006 |
[2006] EWHC 2123 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Mr Justice David Richards
Case No: HC05C00147
Michael Waterworth (instructed by Horsey Lightly Fynn) for the Applicant
John Critchley (instructed by Hodkin & Co) for the Respondents
Hearing date: 11 July 2006
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.
The Honourable
This is an application under s 51(3) of the Supreme Court Act 1981 for a third party costs order. The application is made by Michael Vaughan against Mark Fowler and his wife Jane Fowler and it relates to the costs of proceedings between Mr Vaughan and Ellen Mary Jones.
Mr Vaughan, Miss Jones and Mr and Mrs Fowler own or occupy neighbouring properties at East Park Farm, near Lingfield in Surrey. The properties comprise a farmhouse, a bungalow and farm land and buildings and were for many years owned by Miss Jones. She lived there with her partner Harold Vaughan, who died in 1996. She is now 78 years old. In 1983 Miss Jones sold the farmhouse to Mr and Mrs Fowler. In 2002 she sold the farm land and buildings (the farm) to Michael Vaughan, her late partner's nephew. In December 2005 she sold the bungalow to Mr and Mrs Fowler, but she continues to live there.
There is a history of antagonism and litigation between these parties. The view of Mr and Mrs Fowler, as expressed in their evidence on this application, is that after a short period of good relations following their purchase of the Farmhouse in 1983, relations between them and Miss Jones soured and they became the subject of a prolonged period of harassment by her. This culminated in litigation in the Haywards Heath County Court and a judgment dated 10 June 2002 for damages of £10,200 and injunctions against Miss Jones. She was also ordered to pay two thirds of the costs of Mr and Mrs Fowler, subsequently assessed at over £33,000.
In order to raise funds to pay her own costs and these awards of damages and costs, Miss Jones sold the farm to Mr Vaughan for £110,000. Completion took place in October 2002. It was a condition of the purchase that Mr Vaughan would grant Miss Jones a lease of the farm at a rent of £1 per year for a period of five years from the date of completion, renewable on the same terms at Miss Jones' request. The lease was in due course granted, and it reserved to Mr Vaughan a power of re-entry in the event of the bankruptcy of Miss Jones.
In April 2003 Miss Jones was adjudicated bankrupt, for non-payment of arrears of £2,500 of council tax. Mr Vaughan exercised his right of re-entry and thus forfeited the lease.
In the meantime there was further litigation between Mr and Mrs Fowler and Miss Jones, this time also involving an application by Mr and Mrs Fowler against Mr Vaughan. In addition, Mr and Mrs Fowler commenced a new action against Mr Vaughan for harassment, which was compromised on the terms set out in an order of the Haywards Heath County Court made on 2 August 2004.
Miss Jones' bankruptcy was annulled in October 2004, upon her solicitor' undertaking to pay outstanding debts and bankruptcy costs totalling over £61,000. I will come back later to the source of those funds.
Following correspondence, Miss Jones commenced proceedings against Mr Vaughan in the Chancery Division on 24 January 2005, seeking to avoid the sale of the farm to him on grounds of misrepresentation and undue influence. Mr Vaughan counterclaimed for a declaration that the lease was forfeit and various monetary claims. Mr Vaughan applied for an order to strike out Miss Jones' statement of case or for summary judgment on grounds that she had no realistic prospect of success in her claim. The application was heard in July 2005 by Mr Bernard Livesey QC, sitting as a deputy judge of the High Court. He gave summary judgment, dismissing the claim. Miss Jones was ordered to pay the costs of the application. These costs have yet to be assessed, but Mr Vaughan claims a little over £48,500. Miss Jones applied to the Court of Appeal for permission to appeal. Her application was listed for an oral hearing, with the appeal to follow immediately if permission were granted. The application was heard on 21 November 2005, when permission to appeal was refused with costs. A default costs certificate has been issued in the sum of £13,836.17.
On 28 and 29 November 2005 Hart J heard Mr Vaughan's counterclaim and gave judgment in favour of Mr Vaughan. Shortly before the hearing it was conceded by Miss Jones that her bankruptcy had entitled Mr Vaughan to forfeit the lease and that he had duly exercised that right. An order declaring his entitlement to possession was resisted but was made by Hart J. The main part of the hearing was concerned with Mr Vaughan's monetary claims, on which Hart J gave judgment for £9,718.22 in respect of part of the claims. A reading of the judgment of Hart J shows that there were serious arguments of principle and quantum raised on behalf of Miss Jones. She was ordered to pay the costs of the counterclaim. A sum of £30,240.01 is payable pursuant to a default costs certificate.
On 23 March 2006 Miss Jones was ordered to pay £46,000 to Mr Vaughan on account of the three costs orders to which I have referred. The detailed assessment was stayed by the costs judge pending the outcome of the present application. On 16 May 2006 Miss Jones was adjudicated bankrupt on the petition of Mr Vaughan.
The facts directly relevant to the present application are as follows. These became known to Mr Vaughan during and after the hearing before Hart J. Mr and Mrs Fowler provided to Miss Jones or her solicitors the funds necessary to annul her bankruptcy in 2004. The sum required was £61,243.93. This was paid by Mr and Mrs Fowler as the price for the grant of an option to them to purchase the bungalow for £1, exercisable following her death or earlier if she ceased to reside at the bungalow. Mrs Fowler explains in her evidence that as part of this transaction Miss Jones also required them to lend her £30,000 to fund her claim against Mr Vaughan.
Mrs Fowler sets out in her evidence what Mr and Mrs Fowler were told by Miss Jones as to the basis of her claim. Miss Jones approached them with her account of how, as she saw it, she had been induced by Mr Vaughan to enter into the sale and leaseback of the farm. Mrs Fowler states, as might be expected, that she and her husband did not have a great deal of sympathy for Miss Jones in view of the long history of antagonism between them. However, Mr and Mrs Fowler had long had an ambition to acquire the bungalow and the farm, if they could afford to do so. They saw Miss Jones' approach as an opportunity to acquire the bungalow and they offered to purchase it outright. Miss Jones was not, however, willing to sell the bungalow at that time but was prepared to enter into the option agreement on the basis described above, including the loan of £30,000. For Mr and Mrs Fowler this was not ideal but it was "the starting point to secure ownership of the bungalow". Mrs Fowler goes on to say:
"… [Miss Jones] obviously had a sufficient asset in her bungalow to get herself out of the bankruptcy, and fund an action against the Applicant, but had she done so using others we felt this clearly could have been to our disadvantage, whereas securing the bungalow for ourselves was clearly to our advantage. We therefore agreed to this."
Further loans were made by Mr and Mrs Fowler to Miss Jones for the purposes of the litigation with Mr Vaughan from September 2005. On 7 September 2005 Miss Jones executed a legal charge over her interest in the bungalow in favour of Mr and Mrs Fowler. It secured "the present advance" of £30,000 and "the further advances" defined to mean:
"…any sums not exceeding in the aggregate (exclusive of the Present Advance) £70,000.00 (or such other sum as may be agreed between the parties hereto) that may be advanced by the Lenders under clause 3 below;"
Clause 3.1 provided:
"Subject to the provisions of clause 3.2 the Lenders covenant with the Borrower to make the Further Advances to the Borrower or to such persons as the Borrower shall direct from time to time at the request of the Borrower for the purpose of paying the Borrower's legal costs in connection with proceedings against Michael Vaughan under claim number HC05C00147."
The legal charge was executed two days before service of Miss Jones' application for permission to appeal against the order of Mr Bernard Livesey QC. It is common ground that further advances totalling about £50,000 were made by Mr and Mrs Fowler, presumably covering Miss Jones' costs of the application to the Court of Appeal and the trial before Hart J of Mr Vaughan's counterclaim.
It would appear that the original loan of £30,000 was unsecured. There is no evidence that interest was payable on any of the loans. Clause 2.1 provides for repayment of the loan on the death of Mrs Jones or on specified earlier events, including failure to comply with any judgment or order against her within 14 days, her property becoming subject to execution or other process or the presentation of a bankruptcy petition against her.
By way of explanation of the agreement to make further advances, Mrs Fowler states:
"Subsequently, when [Miss Jones] needed further funds to continue her claim against [Mr Vaughan] we saw the opportunity of securing the bungalow still further, and agreed to lend [Miss Jones] up to £70,000 (the further advance as referred to in the legal...
To continue reading
Request your trial
-
Equitas Ltd and Another v Horace Holman and Company Ltd and Another
... ... Horace Holman served a report of Mr. Michael Butler of Moore Stephens. In view of their ... allegations of fact” relied on: see Vaughan v Jones [2008] EWHC 2123 (Ch.) ... However, the ... ...
-
Montpelier Business Reorganisation Ltd v Armitage Jones LLP and Others
...allowing the company to retain funds sufficient to enable it to conduct litigation was tantamount to funding. In Vaughan v Jones [2006] EWHC 2123 (Ch) David Richards J (as he then was) had to consider whether to make a non-party costs order and in that context he too considered the questio......
-
The Creative Foundation v Dreamland Leisure Ltd and Others
...interest in the litigation does not have to be a direct financial benefit from the fruits of the litigation (see Vaughan v Jones [2006] EWHC 2123 (Ch) at [26] (David Richards J)). The interest may be reputational (see Re North West Holdings plc [2001] EWCA Civ 68, [2001] BCLC 468 at [21], [......