Peter Willers v Elena Joyce

JurisdictionEngland & Wales
JudgeLady Justice Rose
Judgment Date08 August 2019
Neutral Citation[2019] EWHC 2183 (Ch)
CourtChancery Division
Docket NumberCase No: HC-2014-1272
Date08 August 2019

[2019] EWHC 2183 (Ch)

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND

AND WALES

BUSINESS LIST (ChD)

Rolls Building

Fetter Lane,

London, EC4A 1NL

Before:

Lady Justice Rose DBE

Case No: HC-2014-1272

Between:
Peter Willers
Claimant
and
(1) Elena Joyce
(2) John Nugent (in substitution for and in their capacity as Executors of the Will of Albert Gubay, deceased)
Defendants
(1) De Cruz Solicitors (A Firm)
(2) De Cruz Solicitors Limited
(3) Hugo Page QC
(4) Adam Chichester-Clark
Defendants for the purposes of costs/Costs Respondents

Mr P. Mitchell QC and Mr T. Shepherd (instructed by Laytons LLP) appeared on behalf of the Costs Applicants.

Mr J. Carpenter (instructed by Reynolds Porter Chamberlain LLP) appeared on behalf of the First and Second Costs Respondents.

Mr P. Lawrence QC (instructed by Kennedys Law LLP) appeared on behalf of the Third and Fourth Costs Respondents.

Hearing dates: 9 and 10 July 2019

Approved Judgment: Non-Party Costs

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.

Lady Justice Rose Lady Justice Rose

Background

1

I handed down the judgment dismissing Mr Willers' claim for malicious prosecution and abuse of process on 13 December 2018 after a trial lasting 16 days (‘the Malicious Prosecution Claim’). That judgment is reported at [2018] EWHC 3424 (Ch) and sets out in detail the background to this claim (‘the Judgment’). I adopt the same abbreviations in this ruling as I used in the Judgment.

2

On 14 December 2018 the Executors, Mr Nugent and Ms Joyce, issued an application for four parties to be added as defendants for the purposes of costs only in accordance with CPR r 46.2(1)(a). Those parties (‘the Costs Respondents’) were:

i) De Cruz Solicitors, a firm of three partners who had acted for Mr Willers under a conditional fee agreement entered into on 9 July 2010 and had the conduct on his behalf of the Langstone Action (as described in paragraphs 147 onwards of the Judgment). I shall refer to the firm De Cruz Solicitors as “the Firm”.

ii) De Cruz Solicitors Ltd, a company which was incorporated on 23 August 2013. It took over the practice of the Firm on 10 December 2013 and had the conduct of the Malicious Prosecution Claim on behalf of Mr Willers. I shall refer to De Cruz Solicitors Ltd as “the Company” and I shall refer to the Firm and the Company together as “De Cruz”;

iii) Hugo Page QC a barrister at Blackstone Chambers who had been leading counsel acting for Mr Willers in both the Langstone Action and the Malicious Prosecution Claim.

iv) Adam Chichester-Clark a barrister at 3 Stone Buildings who had been junior counsel acting for Mr Willers in both the Langstone Action and the Malicious Prosecution Claim. I shall refer to Mr Page and Mr Chichester-Clark together as “the Barristers”.

3

At a hearing on 20 December 2018 to deal with the consequential matters arising from the Judgment, I made an order joining the Cost Respondents to the proceedings and giving directions for the filing and service of evidence in answer to the application. In a separate order also dated 20 December 2018 I dismissed the Malicious Prosecution Claim and ordered Mr Willers to pay the Executors' costs of that claim on the standard basis, such costs to be the subject of detailed assessment unless agreed. I ordered Mr Willers to make an interim payment on account of those costs of £1 million by 4 pm on 31 January 2019. That extended period for him to make the interim payment reflected the fact that I refused permission to appeal and refused an application for a stay of execution but allowed Mr Willers time to pursue a further application for permission to appeal to the Court of Appeal if so advised. Permission to appeal against the Judgment was refused by order of Lewison LJ dated 19 February 2019. Lewison LJ also refused a further stay of execution.

4

Mr Willers did not make and has not made the interim payment I ordered. As at the date of the hearing of this application, nothing had been paid towards the Executors' costs and no steps have been taken to have those costs assessed. I am told that the total costs of the Executors for the Malicious Prosecution Claim are about £1.9 million. It is assumed for the purposes of this application that Mr Willers' assets comprise only a house which he jointly owns with his wife in the Isle of Man. The house is currently on the market with an asking price of £2.65 million but not all of Mr Willers' share of the proceeds would be available to pay the Executors' costs, not least because on 19 February 2018 Mr Willers executed a charge over his 50% beneficial interest in favour of the Company in order to secure all of his outstanding liabilities to the Company. It is likely therefore that unless the Executors can obtain an order for costs against the Costs Respondents, they will recover almost nothing from Mr Willers in respect of the costs of their successful defence of the Malicious Prosecution Claim.

5

At base the Executors' application that the Costs Respondents pay the Executors' costs of the failed Malicious Prosecution Claim is based on the assertion that the Costs Respondents were the real parties to the claim because the principal purpose of the claim was to recover as damages for the tort of malicious prosecution an amount equal to the unpaid fees owed by Mr Willers to the Costs Respondents for the legal services they provided to him in the Langstone Action. Those unpaid fees are the costs which were disallowed when Mr Willers' costs of the Langstone Action, which Langstone had been ordered to pay him, were subject to detailed assessment by the costs judge. The Executors assert that the direct, personal financial interest that the Costs Respondents had in the Malicious Prosecution Claim means that that claim having failed, they as well as Mr Willers should be liable to pay the Executors' costs. Their interest went further in a significant way than the interest that any lawyer has in a successful outcome if he is providing services under a conditional fee agreement. The claim on which they were working was itself a claim for their unpaid fees in the earlier proceedings. The Executors also ask for the non-party costs order against the Costs Respondents to direct that the costs be assessed as against them on the indemnity basis even though the costs order made against Mr Willers when the Malicious Prosecution Claim was dismissed was an order that the costs be paid on the standard basis. Evidence in support of the application was filed primarily by Mr Thomas, the partner in the firm Laytons LLP who had conduct of the Malicious Prosecution Claim on behalf of the Executors.

6

The Costs Respondents say that the interest of De Cruz and the Barristers in the Malicious Prosecution Claim is no different in kind from the interest which a lawyer has who is either working under a conditional fee arrangement or who is working on a conventional fee arrangement in the knowledge that, realistically, he is unlikely to be paid for his services unless his client wins. The fact that success in the Malicious Prosecution Claim might result in them being paid not only for their services in the Malicious Prosecution Claim itself but also the unpaid fees in respect of their services in the earlier Langstone Action does not, they say, make any difference. That additional factor did not make any difference to the way in which the Malicious Prosecution Claim was conducted from start to finish and it should not make any difference to the analysis as to whether this is one of the rare situations in which legal advisers should be made subject to a non-party costs order. As an ancillary matter, De Cruz argue that any non-party costs order should be made against the Company only and not against the Firm. The Barristers take an additional point that they were led to believe at an earlier stage of the litigation that they would not be the subject of a non-party costs application. They rely on that as additional reason why it would be unjust to make them subject to such an order now.

The costs of the Langstone Action

7

I need set out only some of the background to explain why the Executors have taken the unusual step of pursuing Mr Willers' solicitors and counsel for their unpaid costs of the Malicious Prosecution Claim. In that claim, Mr Willers alleged that Mr Gubay had maliciously brought the Langstone Action against him. As I describe in section V of the Judgment (paragraphs 147 onwards), the Langstone Action was commenced by Langstone against Mr Willers on 26 May 2010 claiming £1.95 million. On 28 March 2013 Langstone served notice of discontinuance of all its claims against Mr Willers. The Langstone Action was brought to an end by order of Newey J on 16 April 2013. Newey J ordered that:

i) Langstone pay Mr Willers' costs of the action, such costs to include both his costs of defending the action and of his Part 20 claim against Mr Gubay;

ii) Langstone pay Mr Gubay's costs of defending the Part 20 proceedings;

iii) Langstone make an interim payment on account in the sum of £1 million to Mr Willers' solicitors. This was paid out of security for costs that had been paid into court by Langstone at an earlier stage;

iv) Mr Willers' application that Mr Gubay be jointly and severally liable with Langstone for the payment of his costs was dismissed;

v) The application that Langstone pay Mr Willers' costs on the indemnity basis was also dismissed.

8

Following the order of Newey J there was a protracted and highly contentious assessment of the costs conducted before Master O'Hare. De Cruz commenced the costs assessment by filing its bill of costs on 23 August 2013 claiming a total of £3,461,483.31. This included a success fee under a conditional fee agreement entered into by...

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