PR Records Ltd Apellant v 1) Vinyl 2000 Ltd 2) Susan Agnes Owlett - and - Adrian Owlett
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE MORGAN,Mr Justice Morgan,J |
| Judgment Date | 15 January 2008 |
| Neutral Citation | [2008] EWHC 192 (Ch),[2007] EWHC 1721 (Ch) |
| Docket Number | Case No: CH/2006/PTA/0706,1HC 494/07 |
| Court | Chancery Division |
| Date | 15 January 2008 |
[2007] EWHC 1721 (Ch)
Mr Justice Morgan
Case No: CH/2006/PTA/0706
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
[ Non-party proposed to be added pursuant to CPR 48.2]
Mr Robert Deacon (instructed under the Direct Access scheme) for the Appellant/Claimant
Mr Edward Francis (instructed by the Bar Pro Bono Unit) appeared on behalf of Adrian Owlett
Hearing dates: 21 st & 25 th June 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.
Introduction
This is an appeal from the decision of Master Teverson dated 13 th September 2006, whereby the Master dismissed an application dated 12 th April 2006 made by PR Records Limited (“PR”) against Mr Adrian Owlett. By that application, PR sought, first, an order that Mr Owlett be added as a party to this action pursuant to CPR 48.2(1)(a) and, secondly, an order that Mr Owlett be ordered to pay the costs incurred by PR in relation to the earlier stages of these proceedings at a time when Mr Owlett was not a party to them (“a non-party costs order”). The application for Mr Owlett to be made the subject of a non-party costs order was made under Section 51 (3) of the Supreme Court Act 1981 and CPR 48.2.
One of the issues raised on this appeal relates to the nature of the inquiry which a court should be asked to undertake on an application by a party to proceedings to join someone who was previously not a party to those proceedings, for the purpose of seeking a non-party costs order. In particular, should the reaction of a court to an application to join a non-party for this purpose be that such joinder is normally appropriate (in the absence of material showing that the joinder would be an abuse of process) or should the court be expected to examine the merits of the substantive application for a non-party costs order, so that only sufficiently strong claims for such an order should be allowed to proceed to the second stage?
For the purposes of explaining the course of PR's application to join Mr Owlett as a party and the reasons given by the Master for dismissing that application, it is necessary to say something about the proceedings in which this application is made.
The Proceedings
The proceedings arose out of an agreement made in April 1999 between PR and Vinyl 2000 Limited (“V2K”). Mr and Mrs Owlett owned both of the 2 issued shares in V2K. The agreement was that Mr and Mrs Owlett would transfer 50% of the shareholding in V2K to a Mr Bulmer, who was a Director of PR. PR and V2K also made detailed arrangements as to a future trading relationship between them. Mr Owlett provided a personal guarantee in relation to any monies due from V2K to PR pursuant to that trading relationship.
Some months after Mr Owlett entered into the guarantee in relation to V2K, he claimed that he was not bound by the guarantee. On 5 th January 2000, Mrs Owlett stepped in and gave her guarantee in respect of the liability of V2K to PR in substitution for the guarantee of Mr Owlett.
Later still, the relationship between PR and Mr Bulmer on the one hand, and V2K and the Owletts on the other hand, broke down. This led to two sets of court proceedings. The first action, called “the share action”, was brought by Mr Bulmer against Mr and Mrs Owlett. Mr Bulmer sought to enforce the agreement that 50% of the shares in V2K should be transferred to Mr Bulmer. The present action was the second action, called “the PR action”, which related to sums of money which PR said were owed to it by V2K. In relation to those claims, PR sued Mrs Owlett on her guarantee in relation to V2K. V2K defended the claims brought by PR and counterclaimed for substantial sums which exceeded the claims put forward by PR. Mrs Owlett contended that the guarantee she had signed was not binding on her on account of alleged duress. She also relied upon the defences and set-offs put forward by V2K.
I was told that when PR issued its proceedings it was the subject of a Company Voluntary Arrangement and one of the principal purposes of the CVA was to enable PR to pursue its claim against V2K and Mrs Owlett.
The position as regards the parties in the two actions referred to above was, therefore, that Mr and Mrs Owlett were defendants in the share action and V2K and Mrs Owlett (but not Mr Owlett) were defendants in the PR action.
The two actions were tried before Mr Berry QC, sitting in the Chancery Division, as a Judge of the High Court. The trial took some 11 days. I understand that the trial began in December 2002 and continued in July 2003. Mr Berry provided a draft of his proposed judgment to the parties in August 2003. I understand that the parties made written submissions to the Judge in relation to the draft judgment and that judgment was finally handed down on 2 nd December 2003.
In the share action, Mr Bulmer succeeded in his claim against Mr and Mrs Owlett. Mr and Mrs Owlett were ordered to pay Mr Bulmer's costs on the standard basis and to pay a sum on account of those costs.
At the trial of the PR action, there were many issues arising on the claim and the counterclaim. I will not rehearse all of the detail of those various claims. Essentially, PR succeeded and V2K and Mrs Owlett lost the PR action. PR was held to be entitled to recover most if not all of the sums it had claimed. Mrs Owlett was held liable on her guarantee.
In view of some of the submissions made to me in relation to the involvement of Mr Owlett in the PR action, I should refer briefly to certain matters which appear from the judgment of Mr Berry. At paragraph 32 of his judgment, he stated that he preferred the evidence of Mr Bulmer to the evidence of Mr and Mrs Owlett. He stated that Mr and Mrs Owlett were seeking to find ways of avoiding the difficulties in which they had found themselves as a result of the guarantee and the ending of the trading relationship with PR. He thought some of their evidence was unparticularised and unconvincing. At paragraph 57, he referred to a suggestion made by PR that V2K had deliberately overcharged PR; the Judge rejected the suggestion that there was deliberate overcharging. At paragraphs 61 to 70 the Judge dealt with an invoice raised by V2K relating to an alleged liability of PR to pay for services said to have been provided by Mr Owlett. At paragraph 69, the Judge said that it was significant that the invoice for Mr Owlett's services was not raised until it became apparent that there was a very real dispute between the parties which could involve litigation. The Judge rejected V2K's claim for payment for these services. At paragraphs 72 to 75, the Judge dealt with a further invoice from V2K to PR relating to certain metalwork provided to PR. The claim by V2K was rejected on the grounds that the metalwork in question did not belong to V2K, but belonged to Mr Owlett. At paragraph 76, the Judge referred to a submission made on behalf of PR as to certain features of V2K's invoices which were said to call for an explanation. In the end, at paragraph 77, the Judge decided that he did not need to make findings in relation to those submissions as he had already held (for other reasons) that there was no liability under the invoices.
On 2 nd December 2003, after handing down judgment in both actions, the Judge was asked to deal with the costs of both actions. I have already stated that he made an order for costs in the share action against Mr and Mrs Owlett. In the PR action he made an order for costs against the only defendants in that action, namely, V2K and Mrs Owlett. He ordered those defendants to make a payment on account of costs. I was shown a note of the submissions made to the Judge on the 2 nd December 2003 on the subject of costs. Counsel for Mr Bulmer and PR appears to have applied for an order that the costs of both actions be paid by the defendants to both actions. The Judge pointed out that Mr Owlett was only responsible for the costs in the share action as that was the only action in which he was a party. Counsel for Mr Bulmer and PR agreed with the Judge's comment. In the end, the Judge made separate orders in the two actions and because Mr Owlett was not a party to the PR action, the order for costs in that action was not expressed to be as against him. It would not be right to say that the Judge considered and rejected an application for a non-party costs order against Mr Owlett in the PR action. The true position was that there was simply nothing that could be regarded as an application for a non-party costs order against Mr Owlett when judgment was handed down on the 2 nd December 2003.
Following the giving of judgment on the 2 nd December 2003, there have been a number of applications to the Court. In May 2004, Mr Bulmer obtained a charging order against Mr and Mrs Owlett's beneficial interest in their matrimonial home; this order was in respect of the interim costs order in the share action. In January 2005, PR obtained a charging order against Mrs Owlett's beneficial interest in the matrimonial home in respect of interim payment orders (including an interim costs order) in the PR action. In August 2005, Mr Bulmer and PR jointly issued a claim for an order for sale of the matrimonial home. An order for sale was made without opposition by Deputy Master Rhys on 8 th December 2005. I understand that this led to investigation as to the details of the beneficial interests of Mr and of Mrs Owlett and of the different sums due by way of costs in the two actions. In January 2006, Mr Bulmer and PR obtained a...
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