Thames Chambers Solicitors v Azad Miah
| Jurisdiction | England & Wales |
| Judge | The Honourable Mr Justice Tugendhat,Mr Justice Tugendhat |
| Judgment Date | 16 May 2013 |
| Neutral Citation | [2013] EWHC 1245 (QB) |
| Docket Number | Case No: QB/2013/0032 |
| Court | Queen's Bench Division |
| Date | 16 May 2013 |
[2013] EWHC 1245 (QB)
The Honourable Mr Justice Tugendhat
Case No: QB/2013/0032
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr L Power (instructed by Thames Chambers Solicitors) for the Appellant
Mr Al Mustakim (instructed by Capital Solicitors LLP) for the Respondent
Hearing dates: 9 May 2013
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 Mr Justice Tugendhat Mr Justice Tugendhat Thames Chambers Solicitors ("the Solicitors") appeal by leave of Leggatt J from an order by HHJ Collender QC dated 14 December 2012. He ordered that the Solicitors:
"do pay the wasted costs of the Defendant in the action in the period between 14 March 2011 and 14 December 2012, such costs to be subject to a detailed assessment on the indemnity basis if not agreed, and for the avoidance of doubt, and in accordance with the order of the court made on 30 November and sealed on 10 December 2012, such order includes the cost of the hearing on 14 December 2012."
The wasted costs order was made in proceedings in which a Mr Rajesh Singh was the Claimant. The Claimant was formerly a solicitor. On 1 June 2010 he issued a claim form claiming some £23,000 in debt. On 29 June 2010 he was declared bankrupt under the name Rajesh Pathania.
On 4 February 2011 he was struck off the Roll of Solicitors. On 23 February 2011 a default judgment which he had obtained earlier was set aside. On 14 March he instructed the Solicitors. They represented him thereafter. On 28 June 2011 he was discharged from his bankruptcy (that did not mean that his debts had been paid: they had not).
There then followed numerous steps in the proceedings. Solicitors for the Defendant state that on 24 February 2012 they made the search as a result of which they learnt that the Claimant was bankrupt.
On 2 March 2012 the Defendant's solicitors wrote to the Solicitors enquiring about his bankruptcy. The Solicitors replied in a letter dated 5 March saying:
"We … [were] quite surprised to see the request you made so late and close to the hearing date. We do not understand as to why you require a consent letter from our client's trustee in bankruptcy. Please note we have arranged to attend a meeting with our client's trustee and the documents will be forwarded to you in due course".
On 6 March 2012 the Defendant applied to strike out the claim on the grounds that the claimant had been made bankrupt. The judge adjourned a hearing which had been due to take place on 8 March. On 9 March the Claimant met his Trustee.
On 13 March 2012 the Trustee provided a witness statement confirming that he had not consented to the prosecution of the action and stating that he would consider what course to adopt. He said that he had only been made aware of the proceedings on 8 March.
On 16 March 2012 Mr Recorder Thompson made an order which included the following:
"1. Subject to the other provisions of this order, the claim (including the Defendant's application to strike out the claim, for security costs, wasted costs and contempt of court) be stayed until 16 June 2012.
2. The trustee notify the court and the defendant as to whether he will consent to the continuation of the case by 16 June 2012.
3. The case be struck out if the trustee does not consent to its continuation by 16 June 2012…
6. Subject to paragraph 7 of this order, the Claimant to pay the Defendant's costs in the case on an indemnity basis to date from 29 June 2010.
7. The Claimant's Solicitors to provide a witness statement by 30 April 2012 addressing the following points:
(a) The current financial standing of the Claimant and whether there is any reason why he should not be made subject to a costs order in these proceedings;
(b) As to their state of knowledge and that of their counsel as to the financial standing of the Claimant since the commencement of these proceedings and whether there are grounds why they or their counsel should not be liable for wasted costs in these proceedings from 29 June 2010;
(c) Whether there are specific items of costs that should be excluded from the scope of point 6 of this Order.
8. The matter be listed before a circuit judge at the first available date after 16 June 2012… "
On 23 March 2012 the Trustee entered into a Deed of Assignment whereby he assigned the cause of action to the Claimant for a consideration of £2300. The Trustee thereafter had no interest in the claim, and so did not give consent to the continuation of the proceedings. The possibility that the Claimant might re-acquire title to the cause of action by assignment was not one that had been provided for in the Order of 16 March 2012.
The Order of 16 March 2012 was correctly made (as is not in dispute), for the reasons given by Gibson LJ said in Nelson v Nelson [1997] 1 All ER 979 at p973g:
"… s.306 of the Insolvency Act 1986 … vested in the trust in bankruptcy property such as the bankrupt's claimed interest in [the subject matter of that claim] on the bankruptcy…. the question to be answered is whether the bankrupt had capacity to retain a solicitor to commence the proceedings which he did commence. These proceedings are not a nullity such as would have been the case if the plaintiff did not exist. But they were liable to be stayed or struck out because the bankrupt did not have any interest in the property, such interest as he did have prior to the bankruptcy order having vested in the trustee in bankruptcy. They might be stayed pending the decision of the trustee in bankruptcy to take over the proceedings. Alternatively, if the trustee did not wish to do so, a defendant could apply to strike out the action".
Once the Claimant had re-acquired title to the cause of action on 23 March, it might have been open to him to apply to vary the Order of 16 March, because once he had title to the cause of action, he no longer needed the consent of the Trustee to proceed. I cannot speculate as to what would have happened if he had made such an application. The Claimant might have faced a strong argument for the Defendant that his abuse of process should not be rewarded: see Pickthall v Hill Dickinson LLP [2009] EWCA Civ 543 at para [27] and para 39 below.
However, the Claimant argued that the action had not been struck out. He submitted that the effect of the Assignment was that the condition in the Order of 16 March 2012 had been fulfilled (that is to say that it was to be treated as consent given by the Trustee).
By an order dated 6 July 2012 HHJ Collender QC adjourned the proceedings and made other directions. At p9ff of the transcript of the hearing of 6 July 2012 there are recorded lengthy exchanges between counsel and the court on the subject of wasted costs.
Mr Mustakim asked that the Solicitors should pay the costs. He stated that that had been canvassed before Mr Recorder Thompson. He referred the court to CPR r.48.7 and para 53 of the Costs Practice Direction, and to the Solicitors' letter of 5 March. He submitted that the Solicitors had shown their error of law in not understanding the requirement for the consent of the Trustee. The case had been litigated for two and half years without the cause of action being vested in the Claimant.
Mr Power responded, stating that there should be formal directions. HHJ Collender QC noted that the allegation that the Solicitors had continued with litigation that was unauthorised was a straightforward one.
On 13 September 2012 HHJ Collender QC made an order that a hearing listed for 13 September be relisted on 30 November and that:
"Both parties are to file and serve by 19 September 2012 further evidence upon which they seek to rely in support of their respective cases, including for the avoidance of doubt evidence relied upon by the Claimant or his advisers in respect of the applications for wasted costs orders made and in respect of the Defendant's submissions."
On 19 September 2012 Mrs Ramasamy of the Solicitors made a witness statement. It included the following:
"7. I confirm that our firm was only instructed in March 2011 however the proceedings were already commenced by the Claimant in June 2010. The Claimant at that time had instructed a public access barrister to conduct his case.
8. I also confirm that before instructing our firm the Claimant had explained to the firm that he is bankrupt, however, he disclosed to us a list of IVA file which included a list of cases including the case against the Defendant…[A copy is exhibited].
9. The Claimant also confirmed to us that he had provided amongst others the same lists to the then Official Receiver. The Official Receiver after receiving all documents and including the IVA discharged the Claimant from public examination. I enclose herewith the copy of the e-mail correspondence with the Official Receiver…
10. I have also been shown a letter from his Insolvency Advisor who had prepared and submitted the IVA on behalf of the Claimant which included the lists of cases. I enclose herewith the copy with the nominees report from Ashcrofts …
11. The Claimant explained in his instructions that when his IVA was rejected the Official Receiver valued the litigation at nil and the Official Receiver had expressed no interest in the cases which the Claimant was pursuing or may pursue in future.
12. As the firm was of the belief that the Claimant had demonstrated that all information was known to the Official Receiver and as such we were able to represent the Claimant. Counsel was instructed that the Claimant had been told by the Official Receiver that he could pursue the cases.
13. As such we...
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