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You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> MA Lloyd & Son Ltd v PPC International Ld (t/a Professional Powercraft) [2016] EWHC 2162 (QB) (22 August 2016) URL: https://www.bailii.org/ew/cases/EWHC/QB/2016/2162.html Cite as: [2016] EWHC 2162 (QB) |
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QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
(sitting as a Judge of the High Court)
____________________
M A LLOYD & SON LTD (IN ADMINISTRATION) |
Claimant |
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- and - | ||
PPC INTERNATIONAL LIMITED (T/A PROFESSIONAL POWERCRAFT) |
Defendant/Applicant |
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- and - |
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MR RODERICK McCARTHY |
Third Party/ Respondent |
____________________
Mr Simon Butler (directly instructed) for the Respondent
Hearing date: 25th July 2016
____________________
Crown Copyright ©
HHJ Seys-Llewellyn QC
(i) whether Mr McCarthy has been shown to be a solicitor "conducting the litigation" or "issued proceedings or performed any of the ancillary functions such us entering an appearance associated with the conduct of litigation on behalf of a client" (within the meaning of s.119(1) of the Courts and Legal Services Act 1990) either generally, or for certain periods of time, or in respect of particular steps taken in the proceedings;
(ii) whether the relevant steps, of which PCC complains, were improper and unreasonable by Mr McCarthy, and/or "solicitor-led" as described in the authorities as being appropriate for an Order for wasted costs, as opposed to acting on the instructions of the client;
(iii) whether it has been shown that the waste of costs of which PCC complains were "caused" by the acts of Mr McCarthy, as opposed to acting on the instructions of the client, or may have been incurred instead because of the stance overall or wishes of the client.
"Throughout all this game playing, an issue arose – and continues to arise – in relation to the nature of those representing NHL. Charles Henry are on the record as solicitors, and indeed that is confirmed in a witness statement dated 18 January 2013 signed by Keith Gregory, who describes himself as a trainee legal executive at Charles Henry.
However it appears that Charles Henry are not an authorised body recognised by the Solicitors' Regulation Authority for the purpose of carrying out litigation, and, at the contested hearing in front of Judge Davies on 21 January 2013, that was expressly confirmed by NHL's Counsel, Mr Shrimpton who described Charles Henry as 'not a firm and not able to conduct litigation'…..
Even for the purposes of this appeal, the issue as to who is acting for NHL as their solicitor is wholly muddled. In his skeleton argument, at paragraph 22, Mr Butler said that it was common ground that Dr Eiland was the solicitor conducting the litigation on behalf of NHL. I have seen nothing to confirm that Dr Eiland is or was NHL's solicitor. Orally, I was told that this was wrong and that NHL's solicitor is Mr Rory McCarthy, but again I have seen nothing to suggest that he is acting on the record as NHL's solicitor.
There is, therefore, an unacceptable muddle as to who – if anyone – could be said to be the solicitor acting on behalf of NHL. That muddle lies at the heart of what happened next. At the hearing of 21 January 2013, before Judge Davies, NHL were represented by Mr Shrimpton of counsel. Mr Gregory and Mr McCarthy sat behind him. Dr Eiland was not in Court……"
(Coulson J at paragraphs 7 – 10).
"(1) Has the legal representative of whom complaint is made acted improperly, unreasonably or negligently?
(2) If so did such conduct cause the Applicant to incur unnecessary costs?
(3) If so, is it in all the circumstances just to order the legal representative to compensate the applicant for the whole or any part of the relevant costs?".
Mr Wright cited the following passages:
" "Improper" means what it has been understood to mean in this context for at least half a century. The adjective covers, but is not confined to, conduct which would ordinarily be held to justify disbarment, striking off, suspension from practice or other serious professional penalty. It covers any significant breach of a substantial duty imposed by relevant code of professional conduct.But it is not in our judgment limited to that which will be regarded as improper according to the consensus of professional (including judicial) opinion can be fairly stigmatised as such whether or not it violates the letter of a professional code.
"Unreasonable" also means what it has been understood to mean in this context for at least half a century. The expression aptly describes conduct which is vexatious, designed to harass the other side rather that advance the resolution of the case, and it makes no difference that the conduct is the product of excessive zeal and not improper motive. But conduct can not be described as unreasonable simply because it leads in the event to an unsuccessful result or because other more cautious legal representatives would have acted differently. The acid test is whether the conduct permits of a reasonable explanation. If so, the course adopted may be regarded as optimistic and as reflecting on a practitioner's judgment, but it is not unreasonable.
[As to "negligent", which is not prominent in the application before me, the courts said, "We "are clear that "negligent" should be understood in an un-technical way to denote failure to act with a competence reasonably to be expected of ordinary members of the profession".]
In adopting an un-technical approach to the meaning of negligence in this context, we would however wish firmly to discountenance any suggestion that an applicant for a wasted costs order under this head need prove anything less than he would have to prove in an action for negligence: "Advice, acts or omissions in the course of their professional work which no member of the profession who is reasonably well-informed and competent would have given or done or omitted to do"; an error "such as no reasonable well-informed and competent member of that profession could have made"…..
We were invited to give the three adjectives (proper, unreasonable and negligent) specific self contained meanings, so as to avoid overlap between the three. We do not read these very familiar expressions in that way. Conduct which is unreasonable may also be improper, and conduct which is negligent will very frequently be (if it is not by definition) unreasonable. We do not think any sharp differentiation between these expressions is useful or necessary or intended" (at 232D – 233E).
I add that counsel for Mr McCarthy would wish me to note the further observation that,
"A legal representative is not to be held to have acted improperly, unreasonably or negligently simply because he acts for a party who pursues a claim or a defence which is plainly doomed to fail……" (page 233F-G).
"Legal representatives will, of course, whether barristers or solicitors, advise clients of the perceived weakness of their case and of the risk of failure. But clients are free to reject their advice and insist that cases be litigated. It is rarely if ever safe for a court to assume that a hopeless case is being litigated on the advice of the lawyers involved…
It is, however, one thing for a legal representative to present, on instructions, a case which he regards as bound to fail; it is quite another to lend his assistance to proceedings which are in abuse of the process of the Court…. It is not entirely easy to distinguish by definition between the hopeless case and the case which amounts to an abuse of the process, but in practice it is not hard to say which it is and if there is doubt the legal representative is entitled to the benefit of it".
"The fact that there is some small prospect of success in proceedings or on an appeal does not preclude a finding that the proceedings are abusive and this is most particularly the case where the solicitor knows that his client "cannot or will not pay" [citing Fletamentos].
"Normally, an Applicant for an Order under s.51 is not entitled to have a full trial with pleadings, disclosure, cross examination of witnesses on every matter of fact which is potentially material to the outcome of the s.51 Application. Normally, the Court attempts to do justice by having regard to the material before it, having regard to the documents which have been made available, and having regard to witness statements which in some cases will be in conflict. The Court does the best it can in an attempt to be fair to both parties and achieve a just result."
"9. On 24 May 2016 Mr Roderick McCarthy was to file evidence in response to the claim but unable to raise funds to properly instruct direct access counsel to look through the two ring binders served with the claim and draft a detailed statement in response without PPC International Ltd voluntarily placing monies into court or the court making an order for security of costs".
This is an application signed by Mr McCarthy, and on its face prepared by Mr McCarthy himself. It was by 3 May 2016 that he was required by Court Order to file the evidence, not 24 May 2016. It may not have been possible for him to raise funds to instruct Counsel to represent him but he was a qualified solicitor, he had been employed by Charles Henry from a date in 2012, and on any showing by his own acknowledgment had conduct of the litigation between MAL and PPC for some period. If there was factual inaccuracy in the witness statement of Mr Key in relation to Mr McCarthy himself, he would have knowledge of it; and if that of which Mr Key complained was done by, or was the responsibility of, others than Mr McCarthy within Charles Henry and for which he personally was not responsible he had knowledge of that too. In answer to my direct question why Mr McCarthy, a qualified solicitor, would not have been able himself to produce a witness statement as to what he did or did not do, Mr Butler was unable to assist me with an explanation.
(i) On 30 June 2016 Master Kay QC handed down judgment on Mr McCarthy's application for security of costs in the wasted costs proceedings. Mr Butler had been instructed as counsel, under direct access. The judgment states,
"On instructions it was stated Mr McCarthy was the qualified solicitor in charge of the claim for the purposes of the litigation on behalf of the Claimant….." (paragraph 9(a)); and
"It has to be borne in mind that Mr McCarthy has acknowledged that at least from a date in 2012 onwards, he was the supervising solicitor in circumstances where one Mr Gregory, himself unqualified as a lawyer, appears to have had much of the day to day conduct of the cases" (paragraph 13(d))
Bundle 1/7 at pages 7 and 11).
(ii) In an email on 26 April 2014 from Charles Henry to counsel Mr Shrimpton, authored by Mr Gregory, he wrote "as per paragraph 10 of the attached Order we have permission to make an application to amend the Reply to the Defence to Counterclaim by 20 February 2014 before 4.00 which is the day and time we filed and served the N161 signed by John [Mr Key]. We must therefore include the pleadings for deceit and conspiracy and claim for £72,327.00, plus for this. I believe it is best not to expose our office or yourself is that the application is made in John's name and the pleadings also have only John's name on it and we come off the record when they are filed" (emphasis supplied, Bundle 2/23/128). I interpolate that this was wholly improper, as Mr Butler readily acknowledged, saying however that it was not authored by Mr McCarthy.
(iii) In his witness statement for the present application Mr Leigh Ellis solicitor for PPC states that Mr McCarthy was the solicitor 'at all material times throughout the HQ12X Proceedings'. There has been no witness evidence filed to the contrary by Mr McCarthy.
(iv) It is true that only some documents are signed by Mr McCarthy himself, but a number of documents were signed without individual name, simply by or for "Charles Henry"; and Mr Key states that he never met Dr Murray Eiland, whose name appears on some of the documents (Mr Key statement paragraph 43, Bundle 1/15/10).
(v) There was direct evidence of Mr McCarthy attending Court in the statement of Mr Leigh Ellis dated 23 December 2013; namely that on 4 December 2013 he had appeared before Mr Justice Lindblom and was informed that Mr McCarthy had attended, seeking to withdraw the application, but although the judge decided to keep the matter in the list had left the precincts of the Court and not returned (Bundle 1/17 at 3-4 paragraph 11).
(vi) In a witness statement by Mr Key dated 25 October 2013 Mr Key had asked on behalf of the Claimant for an Order that included that "the Defendant solicitor Mr Leigh Ellis of Drukker LLP within 7 days of this Order received do supply the Claimant's solicitor Mr Rory McCarthy of Charles Henry the following…" (emphasis supplied, Bundle 1/18 Statement at paragraph 10).
(vii) An email dated 31 January 2014, from Mr Shrimpton counsel then instructed by MAL wrote as to change of counsel for MAL "It is a matter entirely for M A Lloyd and Rory but changes of counsel rarely help"; "I absolutely agree with Rory and John [Key] [as to a step outside the litigation]; and by email of 03 February 2014 wrote to Charles Henry as to whether he should continue to be retained by MAL, "this is a matter entirely for Rory and MA Lloyd…. What I am clear about is that MA Lloyd and Rory need to be in agreement about any decision to change Counsel" (emphasis supplied, Bundle 2/23/122 at 123, 124, 125 and 126).
For myself, I consider it significant also that in the email of 3 February 2014 Mr Shrimpton stated, "I very much wish that I had seen this morning's application. I thought with respect that we had started to work as a team, e.g. at the telephone conference on Monday. There was nothing to stop Kevin or Rory setting up a further telephone conference to ensure that a major tactical decision is taken in a structured way. Instead we had a series of phone calls over the weekend, leading to an application this morning, without my involvement. I was unaware of the application until Mr Graham sent me a copy" (emphasis supplied).
(viii) An email dated 11 October 2013 from the clerk to Mr Justice Walker stated, "Mr Justice Walker asks me to advise you of the following directions: 1. Rory McCarthy as the solicitor instructed by the Claimant Appellants in both cases, is hereby ordered to attend at Court 37, Royal Courts of Justice, at 2.00pm today….. Reasons: These two linked cases [HQ11X and HQ12X] have become bogged down in a procedural quagmire. I intend making an Order at 2.00pm today to resolve the quagmire, and I require the assistance of both sides to comment on that Order before I make it. Mr McCarthy seeks to excuse attendance by saying he needs to "establish who will be liable for our clients costs if the appeals are successful". However he accepts that he is the instructed solicitor….." (emphasis supplied, Bundle 2/23/116).
"Charles Henry did not always ask us before taking steps in the litigation such as making applications or launching appeals. They did not always advise us when things happened in the litigation and they did not always give us advice when asking whether we wanted to take a particular step" (paragraph 47);
that (contrary to what the Court was told in respect of one hearing in the proceedings) he never instructed Charles Henry not to attend a hearing (paragraph 48);
that he had been informed that Holroyde J gave a judgment on 24 January 2013, saying that Charles Henry the Appellants solicitors "for their part have done what they could on the Appellant's behalf, without funds and instruction and were therefore unable to progress the matter as it should of (sic) been progressed", and that in this the judge had been outrageously misled (paragraph 66).
(Bundle 1/14/11 and 15 respectively).
(i) The retainer signed by Mr Key was not with Mr McCarthy but with "Charles Henry". It stated, "… your claim will be handled throughout by Mr Kevin Gregory who is the Legal Advisor". It referred to hourly rates but naming two other persons, "the hourly rate for Mr Kevin Gregory, the Legal Advisor, who will handle the matter for you, is £90.00. The hourly rate for Ms Rosamond John-Phillip, the Solicitor, who will advise on the matter for you, is £180.00…". Also "27. We aim to provide you with a satisfactory service and Kevin Gregory as the Legal Advisor engaged would seek to ensure this is so." The retainer was signed on 3 June 2011 by Mr Key (Bundle 2/23/61 at 61, 63, 67).
(ii) In each of the three actions, the Claim Form and the Particulars of Claim ("P/C") were signed by Mr Key. These were respectively issued on 14 June 2011 (P/C 21 June 2011); 30 May 2012 (P/C 21 June 2011 (emphasis supplied, see further below); and 14 May 2014 (P/C 12 May 2014); respectively at Bundle 1/9, 10 and 11.
(iii) There was one notice of application for permission to appeal signed by Mr McCarthy himself, on 7 February 2014 (Bundle 1/13/11 at 16); but other notices of appeal bore a Statement of Truth signed by others, in particular that filed on 13 August 2012, by Dr Murray Eiland (Bundle 1/12/1 at 6); that filed on 3 March 2013, by Dr Murray Eiland (1/13 1 at 6); that filed on 24 June 2013, by Dr Murray Eiland (1/12/11 at 13, 16); and that filed on 7 January 2015 this time signed by Mr Key himself (1/12/35 at 40).
(iv) Of the various application notices in evidence, it is true that there is one under the name of Mr McCarthy, filed on 28 March 2013 (3/24/54); but others were signed by Dr Eiland on 19 August 2013 and 7 November 2013 (3/24/126 and 193) or indeed by Mr Key himself on 21 November 2013 (3/24/196).
(v) In the correspondence, none of the documents was signed by or in the name of Mr McCarthy. In more detail, see e.g. letter 14 June 2011 to the Defendant (2/23/72); and that while one can identify a considerable number of emails from Keith Gregory and on one occasion from a Sophie Watson, it is noteworthy that the bundles contain no email from Mr McCarthy himself (illustrations: 3 August 2011, 8 September 2011, 10 October 2012, 18 October 2012, 5 November 2012, 20 December 2012, 9 January 2013 all save one from Mr Gregory (2/23/81, 82, 100, 103, 107, 108, 109).
(vi) Mr Key states in his witness statement that he believes that he first came across Roderick McCarthy's name in November 2012, but "the first time I met him was at the hearing before Mr Justice Hamblen on 30 January 2014", and there is no, or virtually no, reference to Mr McCarthy in his witness statement thereafter.
(vii) It is conventional and required, says Mr Butler, that a solicitor must give notice of acting to go on the record if he or she is to act, and the applicant had produced no evidence of Mr McCarthy ever filing a notice of acting.
On 27 June 2013 Mr McCarthy signed the Statement of Truth to the Reply and Defence to Defence and Counterclaim (1/10/12).
On 28 October 2013 Mr Key signed his Second Statement for the Claimant MAL, a statement plainly drafted by solicitors, which asked that the Court order the Defendants solicitor within 7 days to "supply the Claimant's solicitor Mr Rory McCarthy of Charles Henry the following copy documents…." (1/18 paragraph 10 at page 3).
On 4 December 2013 Mr McCarthy attended Court on the occasion to which I refer above when he sought to vacate the hearing, and did not return to it albeit the Judge had declined to take the matter out of the applications list (1/17/3 - 4 at witness statement paragraph 11).
On 30 January 2014 Mr McCarthy was present behind Mr Shrimpton of counsel at the hearing before Hamblen J, the first hearing which Mr Key attended.
On 31 January 2014 and 3 February 2014 Mr Shrimpton as counsel was writing his emails observing that decision was "entirely a matter for the Claimant and Rory".
On 1 February 2014, not noticed by Counsel on either side during the hearing before me, (or at least not mentioned by either counsel), Mr Key addressed a letter directly to Mr McCarthy arising from the hearing on 30 January 2014, expressing his concern that he did not agree with the concessions made on the outstanding appeal notices and that counsel was not instructed by himself to withdraw applications "nor did he seek my approval to do so. I constantly reserved my right to withdraw what I understand are also called a concession". This is a letter which makes representations and complaint in terms which could only be addressed to the solicitor with conduct of his litigation (2/20 at pages 1 – 4).
On 7 February 2014 Mr McCarthy was signing the notice of appeal and the Statement of Truth in it (1/13/11 at 13 and 16).
On 11 October 2015 the email from the clerk to Walker J recorded that Mr McCarthy as the solicitor instructed by the Claimant Appellants in both cases was ordered to attend, sought to excuse attendance that day, however accepted "that he is the instructed solicitor" (2/23/116).
"Mr Butler explained that Charles Henry was a charity which was a licensed business entitled to carry on litigation through an unqualified litigator under the direction of a qualified solicitor. On instructions it was stated that Mr McCarthy was the qualified solicitor in charge of the claim for the purposes of the litigation on behalf of the Claimant…." (judgment paragraph 9(a), Bundle 1/7/7).
"The main applications is brought for wasted costs and although Mr Butler has submitted that there is a high threshold in such cases nonetheless it has to be borne in mind that Mr McCarthy has acknowledged that, at least from a date in 2012 onwards, he was the supervising solicitor in circumstances where one Mr Gregory, himself unqualified as a lawyer, appears to have had much of the day to day conduct of the cases" (emphasis supplied, judgment paragraph 13(d), Bundle 1/7/11).
This was an acceptance made on instruction in the present proceedings against Mr McCarthy for a wasted costs order.
(i) "Charles Henry did not always ask us before taking steps in the litigation such as making applications or launching appeals. They did not always advise us when things happened in the litigation and they did not always give us advice when asking us whether we wanted to take a particular step." (paragraph 47).
(ii) "When somebody from Charles Henry contacted me or asked me for instructions, I always responded….. I never instructed Charles Henry not to attend a hearing." (paragraph 48).
(iii) Mr Key says, as recited above, that he was unaware of the difficulty of serving out of the jurisdiction without permission, or that there had been a hearing on 30 May 2012 (that which refused permission to serve out of the jurisdiction and dismissed the First Proceedings) (paragraph 56) and "I should make clear that MAL could have paid the costs order and would have done so if I had been advised by Charles Henry that it was appropriate. Charles Henry led me to believe that it was appropriate to try to avoid having to pay it." (paragraph 57).
"At around this time [October 2013] the existence of PPCI and whether it could litigate became a key issue. This is really driven by MAL's lawyers. Charles Henry were convinced that Mr Kidd's witness statement meant that PPCI did not exist and that this was a "silver bullet" for the litigation. What concerned me most, following receipt of Mr Kidd's witness statement of March 2013, was that PPCI was just a shell. I was also interested in who was funding PPCI's legal fees, but I basically was led by the lawyers and followed their advice".
This is layman's wording which might readily be translated, in the wasted costs jurisdiction, to allegation that the point was 'wholly solicitor-led'.
"Mr Kidd signed a Statement as a 'day facto director' and we have no knowledge at to his authority to represent PPC, or any of the other trading names used; it seems on what we know now PPC has been nothing but a shell in this whole charade…. The thrust of our case on 30 January was to elevate this issue particularly in respect of how a company with no assets can litigate and obtain costs against our company…. How can it be possible for wholly disproportionate and seemingly unconstrained legal costs to be allowed to be presented to the Court on behalf of the client with no assets?.... on this basis we do not approve of the Draft Order….we are now withdrawing the concession made by Mr Simon Butler for the judgment to be set aside on 30 May 2013… it is clear to me the directors and the staff of M A Lloyd and Sons Ltd that there is a serious sham being perpetrated against us to extort money by persons unknown and we want the appeals to move this case forward. I would like this letter to go to the Mr Justice Hamblen so he will know our deep concerns" (2/20).
"At the outset of the litigation, MAL could have afforded to pay adverse costs. We had borrowed £75,000.00 in July 2011, so we had liquid assets. It was on Charles Henry's advice that the costs orders were not in fact paid. Litigation only became unaffordable in the second half of 2014, because of the number of costs orders in PPCI's favour. I believe that those costs orders were not the result of any improper conduct by me but rather the failings of Charles Henry".
"At around that time, Mr Gregory told me that it would be better if MAL acted in person, because (a) Charles Henry had some difficulties with the Law Society (b) PPCI's solicitor was using criticism of Charles Henry to muddy the case and (c) The personal antagonism between PPCI's solicitor and Mr Gregory was a distraction from the real issues. However I was reassured that the same people would continue to advise MAL behind the scenes and that a new organisation, Thomas Moore, would come back on the record for us in due course." (witness statement paragraph 91/1/15/20).
,
Handed down 22 August 2016
His Honour Judge Seys Llewellyn QC sitting as a Deputy Judge of the High Court