Times Newspapers Ltd v Chohan
| Jurisdiction | England & Wales |
| Judge | ALDOUS LJ,ROBERT WALKER LJ,JONATHAN PARKER LJ |
| Judgment Date | 22 June 2001 |
| Neutral Citation | [2001] EWCA Civ 964 |
| Docket Number | Case No: B2/2000/3486 |
| Court | Court of Appeal (Civil Division) |
| Date | 22 June 2001 |
[2001] EWCA Civ 964
Lord Justice Aldous
Lord Justice Robert Walker and
Lord Justice Jonathan Parker
Case No: B2/2000/3486
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CHANCERY DIVISION
MR ANTHONY MANN QC (SITTING AS A
DEPUTY JUDGE OF THE CHANCERY DIVISION)
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr I. Lamacraft (instructed by Johnson Sillett Bloom for the Appellants)
Mr J. Morgan (instructed by Theodore Goddard for the Respondent)
With permission of this Court, Dr Chohan appeals against the order of Mr Anthony Mann QC, sitting as a Deputy Judge of the Chancery Division. That order dismissed the appellant's appeal against an order of Mr Registrar Baister of 22nd June 2000 which granted a bankruptcy order against the appellant on a petition presented by Times Newspapers Ltd (TNL), the respondents to this appeal.
The background has been set out in a number of judgments, and I will curtail my account to the essential facts needed to decide the appeal.
In 1986 Dr Chohan sued TNL for defamation. The action was settled on TNL's agreement to pay £12,000 and Dr Chohan's costs to be taxed if not agreed. In November 1992 the solicitors, then acting for Dr Chohan, filed a bill of costs claiming £1.05 million. There followed a chain of litigation to resolve the actual sum to be paid. That resulted in three orders for costs in favour of TNL. The first was an order of Master Rogers dated 19th April 1993. The second was an order of Morland J of 30th June 1993 and the third was another order of Master Rogers, this time dated 20th December 1993. Those orders ordered that the costs be paid, such costs to be taxed if not agreed. After a taxation, the relevant certificate was first issued on 8th November 1994. It was subsequently amended. The result was that Dr Chohan owed with interest just over £37,000 to TNL. TNL served a statutory demand on 11th January 2000 and on 18th February 2000 they issued the petition. That resulted in the bankruptcy order to which I have referred.
The sole issue that was pressed at the hearing before us was the submission that the petition could not be sustained as it was statute barred pursuant to section 24 of the Limitation Act 1980. That provides:
"24.(1) An action shall not be brought upon any judgment after the expiration of 6 years from the date on which the judgment became enforceable.
(2) No arrears of interest in respect of any judgment debt shall be recovered after the expiration of 6 years from the date on which the interest became due."
TNL concede that if the relevant date is the date when the costs orders were pronounced (1993), then the petition is statute barred. They contend and the judge held that the relevant date when the judgments for costs "became enforceable" was the date of the certification (1994). If that be right, Dr Chohan concedes that the petition is not statute barred. It is also accepted that the petition is "an action … brought upon any judgment …" having regard to the definition of action in section 38 of the 1980 Act. Thus the question for determination is – were the orders for costs to be taxed that were made in 1993 enforceable on the date when they were made or did they only become enforceable when the amount had been certified?
Mr Lamacraft who appeared for Dr Chohan submitted that the orders for costs became enforceable when they were made. The form of the orders gave rise to an immediate right to payment of the costs albeit that the sum due was unascertained. That right could be enforced by action. The process of taxation was part of the enforcement process and the requirement for taxation did not mean that the orders when made were not enforceable at the date when they were made in 1993. His submissions were based upon a number of cases to which I shall have to refer.
Mr Morgan supported the conclusion and reasoning of the judge. The judge said:
"12. ……. At the date of an order for taxation of costs there is an order for the payment of costs which, for some purposes, will take effect as at the date it is pronounced. For example, that date will be the starting date for the computation of time limits for the ensuing taxation (RSC Ord 62 r 29, in the case of the old rules). However, that does not mean that the judgment is enforceable as at that date for the purposes of section 24 of the 1980 Act. I think that the order becomes enforceable for those purposes only when the costs are quantified and certified by the process of taxation. The order is, in effect (and sometimes, in my experience, in its actual wording) an order for the payment of such costs as are found
proper and due on taxation. If there were a money judgment which provided for payment of £x in, say, 14 days time, I do not consider that an action on the judgment could be commenced before the expiry of that period of 14 days. The normal costs order has a similar effect, albeit without an express reference to actual payment at a future date. The situation is analogous to a contract for the sale of property at a price to be determined by a third party. Until the third party has certified the amount there is no contractual obligation to pay that price, and no action could be brought on the contract to claim that price. Mr Lamacraft agreed that that was the case whilst denying the analogy was apt. I think that it is apt. While the costs order gives rise to rights, it does not give rise to an obligation to pay any sum until the costs are certified. It is only at that point that the obligation becomes enforceable for the purposes of section 24 in any meaningful sense. In the course of argument I asked Mr Lamacraft what the prayer in the Particulars of Claim would look like if an action were brought on a costs order before quantification. He said that it would contain a claim for the payment of costs to be quantified. I do not consider that any Particulars like that would disclose a cause of action. The beneficiary of a costs order has a right to have the costs taxed in the action in which the order is made; there is no meaningful relief that could be granted in an action on the bare costs order, any more than there would be any meaningful claim that could be brought on a claim to pay a sum to be determined by valuation before that valuation was completed (absent some claim for breach)."
I shall come to the detailed submission of the parties, but before doing so I will deal with two cases decided in the House of Lords on when interest becomes payable. They are Hunt v R.M. Douglas (Roofing) Ltd [1990] 1 AC 398 and Thomas v Bunn [1991] 1 AC 362.
In Hunt the plaintiff's action had been settled on 1st November 1984 with an agreed order which provided that the plaintiff's costs should be paid by the defendants to be taxed if not agreed. The costs were taxed on 4th June 1986 at just over £17,000. The dispute between the parties concerned the payment of interest. Should the requirement to pay interest run from 1st November 1984, the date of the order, or from 4th June, the date when the amount of costs was certified. That depended upon section 17 of the Judgments Act 1838 which stated:
"17. …. Every judgment shall carry interest at the rate of 4% per annum from the time of entering up the judgment … until the same shall be satisfied, and such interest may be levied under a writ of execution on such judgment."
The House of Lords held that the order for payment of costs to be taxed was a judgment debt within the meaning of those words in section 17 of the 1838 Act and therefore interest ran from the date of the order. Lord Ackner who gave the leading speech said at page 415:
"I respectfully agree with the observations of the Court of Appeal that a satisfactory result cannot be achieved in every case, but in my judgment the balance of justice favours the incipitur rule for following reasons. 1. It is the unsuccessful party to the litigation who ex hypothesi, has caused the costs unnecessarily to be incurred. Hence the order made against him. Since interest is not awarded on costs incurred and paid by the successful party before judgment, why should he suffer the added lost of interest on costs incurred and paid after judgment but before the taxing master gives his certificate? 2. Since as the Court of Appeal rightly said in the Erven Warnink case [1982] 3 All ER 312 payments of costs are likely nowadays to be made to lawyers prior to taxation, then the application of the allocatur rule would generally speaking do greater injustice than the operation of the incipitur rule. Moreover the incipitur rule provides a further necessary stimulus for payments to be made on account of costs and disbursements prior to taxation, for costs to be more readily agreed and for taxation when necessary, to be expedited, all of which are desirable developments. Barristers, solicitors and expert witnesses should not be expected to finance their clients' litigation until it is completed and the taxing master's certificate obtained."
He went on at page 416:
"For the sake of completeness I should add that Mr Goldblatt strongly argued that an order for payment of costs to be taxed cannot be a judgment debt within section 17 of the Act of 1838 because until taxation has been completed, there is no sum for which execution can be levied. This point appears to have been raised in the Erven Warnink case and disposed of at the end of the judgment on the basis that the courts have accepted since its enactment, that section 17 does apply to such a judgment and accordingly the law has gone too far for that...
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