Thew (R & T) Ltd v Reeves
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE DUNN,LORD JUSTICE O'CONNOR |
| Judgment Date | 06 May 1981 |
| Judgment citation (vLex) | [1981] EWCA Civ J0506-1 |
| Docket Number | 81/0186 |
| Court | Court of Appeal (Civil Division) |
| Date | 06 May 1981 |
[1981] EWCA Civ J0506-1
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
OLDHAM DISTRICT REGISTRY
(HIS HONOUR JUDGE CURTIS)
Royal Courts of Justice.
The Master of the Rolls
(Lord Denning)
Lord Justice Dunn and
Lord Justice O'Connors
81/0186
1977 R. No. 32
and
MR. D. MATHESON (instructed by the Solicitor for the Law Society) appeared on behalf of the appellant Law Society.
MR. CHARLES BLOOM (instructed by Messrs. Kirk Jackson & Co.) appeared on behalf of the respondents (R. & T. Thew Ltd. and Robert Thew).
Much of the litigation today is dominated by legal aid. The State subsidises one side by giving him unlimited financial assistance. It pays his lawyers' fees almost in full. It leaves the other side—who is often of very moderate means—entirely unassisted. He has to bear his own costs with no recourse against the other side even when he wins. This is a grave injustice to the unassisted party. Parliament has done something to remedy it but the remedy is far from adequate. This case will show up the defects in the statute and in the regulations. It looks very much as if a hard-working husband and wife will be ruined by the fact that the other side was granted legal aid.
The case will, I hope, also bring home to the profession the responsibilities which they owe—not only to their own client for whom they get legal aid—but also to the other side who is unassisted. Unless carefully watched, legal aid may be used unfairly to harass the other side who is not assisted.
R. & T. THEW LTD.
Like many other young men coming back from the war, Robert Thew in 1947 set up in business. That was 34 years ago. It was in the photographic business. At Middleton in the Manchester area. Robert Thew and his wife made it into quite a good business. They formed a small private company. They called it R. & T. Thew Ltd. Robert Thew and his wife were the sole shareholders. Their sons grew up and joined them in it. In turn they made it into two separate businesses in adjoining premises. Both were owned by the company R. & T. Thew Ltd.
(i) The photographic business
One business undertook the usual activities of photographers in a commercial town. They took photographs of weddings, works presentations, and local functions of all kinds. I will call it the "photographic business".
(ii) The processing business
The other business developed films and processed them, made prints, both in colour and in black and white, and so forth. They did this work, not only for their own photographic business, but also for other professional photographers to whom they charged commercial rates. I will call it the "processing business ".
(iii) Sale of the photographic business
In 1975 R. & T. Thew Ltd. decided to sell the photographic business but to keep the processing business. A local photographer called Alan Reeves was keen to buy. He was aged 35 and knew all about the businesses becaused he lived in the place. On the 9th November, 1975 the parties entered into an agreement for sale. R. & T. Thew Ltd. sold the photographic business to Mr. Reeves for £14,000 of which £5,500 was payable almost at once: and the balance of £8,500 by 60 equal monthly instalments of £141.66 commencing in November 1976. Mr. Reeves paid the £5,500 but, as I will relate, he never paid any of the monthly instalments.
After the sale Mr. Reeves took possession of the photographic business. R. & T. Thew Ltd. continued the processing business. Mr. Reeves sent his films to the processing business to be developed and processed. But unfortunately Mr. Reeves turned out not to be a good payer. He fell into arrear with his payments to the processing business. By November 1976 he owed R. & T. Thew Ltd. £845.04 for this processing work.
(iv) A cock-and-bull story
On the 31st January, 1977 R. & T. Thew Ltd. issued a writ for £849.04 for the work done. There was no possible defence to this claim. But Mr. Reeves went to his solicitors and told them a cock-and-bull story. At least we now know that it was a cock-and-bull story. He put it up in order to avoid paying his just debts. He alleged that he had been induced to buy the photographic business by fraud. Robert Thew, he said, had made false representations about the takings and profits of the photographic business. Mr. Reeves' solicitors accepted this cock-and-bull story at its face value. Mr. Reeves was their client and they had to accept his word. They put it before counsel and asked whether they should start a separate cross-action or put in a counterclaim in the existing action. Counsel advised that a counterclaim be made, and that Robert Thew personally should be made a defendant to the counterclaim. So on the 28th March, 1977 the solicitors for Mr. Reeves delivered a defence and counterclaim, joining Robert Thew as a defendant to the counterclaim. In it they admitted the £849.04 was owing for the processing and developing: but they said Mr. Reeves had a counterclaim for fraud on the photographic purchase. Notice that this was pure counterclaim. It was not available as equitable set off because it arose out of an entirely separate transaction on the photographic business. It had nothing to do with the £849.04 owing to the processing business. It ought not to have been made by counterclaim but only by cross-action, see section 39(1)(b) of the Judicature Act 1925 and Padmore v. Scott (1876) 2 Chancery Division 736. But, as no objection was taken to it being made by counterclaim, we must let it pass as a point of procedure only.
(v) The disturbing counterclaim
This counterclaim was most disturbing to R. & T. Thew Ltd. and Mr. Robert Thew. Here they were—simple creditors seeking to recover the sum due to them—and they were faced with a counterclaim for fraud. They were good honest folk who had never been treated like that before. They went to their solicitors and took their advice. They were not eligible for legal aid. A limited company is not allowed legal aid. So they had to bear all their own solicitors' costs themselves.
(vi) The amendment of the writ
On the advice of their solicitors, on the 8th August, 1977, R. & T. Thew Ltd. amended their writ. It was done in order to meet the counterclaim for fraud. Mr. Reeves had defaulted on all the instalments on the sale of the photographic business. He had paid none of them. Ten instalments were due of £141.66 a month. This default was so grave that the whole of the balance had become due. So R. & T. Thew Ltd. claimed the balance of £8,500 payable under the sale of the photographic business. Although framed as an amendment to the writ, it was in truth a response to the counterclaim. It was in law just the same as if Mr. Reeves had brought—as he should have done—a cross-action for fraud on the sale of the photographic business against R. & T. Thew Ltd. and Robert Thew: and as if, in reply, R. & T. Thew Ltd. had claimed the balance due on the sale.
(vii) The application for legal aid
It was at this stage that Mr. Reeves sought legal aid. He could not pay any legal costs. So if his counterclaim for fraud was to be pursued, it had to be done on legal aid. His solicitors decided to apply for legal aid on his behalf. They entrusted it to a young articled clerk. He had passed the examination but had not yet been admitted as a solicitor. He had no experience of applying for legal aid. He had never applied for it before. So he went to the Law Society in Manchester where they deal with legal aid. He saw a young lady. She produced the forms. She explained them to him and told him how to fill them in. He asked her questions, such as, "What do I put in here?", and she told him. She told him that solicitors usually put in "To defend" and so forth.
I am afraid that, between the two of them, these two young people bungled the whole thing. They made a complete botch of the application form. For instance, the application referred to two writs (one copy writ of 31. 1.1977 and one amended writ of 8.8.77): whereas there was only one writ of 31. 1.1977 which was amended on 8.8.77. And they put in that legal aid was sought "to defend" whereas it was obviously sought for the counterclaim for fraud: for that was the only matter in dispute.
In the most important space, the young articled clerk filled in this as the application:
"To defend in court proceedings commenced already by the below mentioned writs of 31.1.1977 & 8.8.1977".
But fortunately he did append all the papers. These would show the legal aid authorities what the case was all about. These were:
"1. Copy writ of 31.1.1977.
2. Copy Defence and Counterclaim. (This included Robert Thew as defendant to the counterclaim as well as R. & T. Thew Ltd.)
3. Copy amended writ of 8.8.77.
4. Copy Instructions to Counsel referred to writ of 31.1.77. N.B. The papers referred to in the above-mentioned Instructions to Counsel are available if required from my below-mentioned solicitor".
The application form had to be signed, of course, by the client Mr. Reeves. So the articled clerk got Mr. Reeves to sign it. Mr. Reeves, no doubt, thought that it covered all the proceedings thenceforward in the action. It was dated 16.8.77.
(viii) The Synopsis
One of the clerks in the Law Society then prepared a synopsis for submission to the Legal Aid Committee. It shows that he understood full well that the sole dispute was on the...
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