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You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Floods of Queensferry Limited v. Shand Construction Limited, Morrison Shand Limited, Morrison Construction Limited [1997] EWHC QB 373 (13th February, 1997)
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Cite as: [1997] EWHC QB 373

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Floods of Queensferry Limited v. Shand Construction Limited, Morrison Shand Limited, Morrison Construction Limited [1997] EWHC QB 373 (13th February, 1997)

IN THE HIGH COURT OF JUSTICE 1994 ORB 828 

QUEEN'S BENCH DIVISION

OFFICIAL REFEREES' BUSINESS

HIS HONOUR JUDGE HUMPHREY LLOYD QC

 

B E T W E E N:

FLOODS OF QUEENSFERRY LIMITED

Plaintiff

- and -

SHAND CONSTRUCTION LIMITED

MORRISON SHAND LIMITED

MORRISON CONSTRUCTION LIMITED

Defendants

 

 

JUDGMENT

 

 

 

1. Pursuant to the Practice Statement of 9 July 1990 this text records my judgment and no note or further record is to be made.

 

 

 

2. His Honour Judge Humphrey LLoyd QC

13 February 1997

 

 

 

 

3. Mr Andrew Stafford, appeared for the plaintiff and, on the application for joinder, also for Mr D.C. Flood, instructed by Winward Fearon.

 

4. Mr Colin Reese QC and Miss Chantal-Aimée Doerries appeared for the defendant, instructed by Morrison Skirrow.

 

5. Mr D.C. Flood in person for the plaintiff on his applications for rights of audience and to conduct litigation on behalf of the plaintiff.

 

JUDGMENT

 

6. This decision concerns two applications.

7. 1. A summons issued by the plaintiff's solicitors dated 30 December 1996 for an order that Mr David Charles Flood should be joined as a plaintiff in this action. This application was argued by Mr Andrew Stafford on behalf of Mr Flood.

8. 2. A summons dated 27 January 1997 issued by the plaintiff for orders that:

9. "1. ...David Charles Flood have rights of audience on behalf of Floods of Queensferry Ltd; and

10. 2. Mr David Charles Flood have rights to conduct litigation on behalf of Floods of Queensferry Ltd in all remaining proceedings the action to judgment and execution

11. pursuant to the Courts and Legal Services Act 1990 Part II sections 27(2)(c) and 28(2)(c)."

12. I granted leave to Mr Flood to make the second application himself. There was no objection by the defendants. Mr Flood is the managing director and majority shareholder in the plaintiff company.

 

13. The applications were heard together but I shall deal with each separately. This is an action with a number of unusual aspects and these applications are similarly novel. If in setting out the background history I appear to have drawn too heavily on Mr Flood's version of events (to be found in the affidavit sworn in support of his own application) I have not forgotten that Mr Colin Reese QC for the defendants submitted that if the facts were to be explored in detail then the defendants were entitled to a proper opportunity to deal with them, since they had only received Mr Flood's affidavit shortly before the hearing of these applications. Accordingly, my recitation of the facts and my conclusions on certain aspects should not be regarded as intending to deprive the defendants of that opportunity, but for reasons which will become apparent, it is necessary at certain points to understand the basis of and background to Mr Flood's case from his point of view.

 

Background

14. The claims in this action arise out of work done on the A494 Mold bypass. The main contract was dated 8 March 1991 and was made between the first defendant, Shand Construction Ltd and the Secretary of State for Wales. It substantially incorporated the ICE Conditions, 5th edition. In 1990 Shand Construction Ltd invited Floods Plant Hire Ltd to tender for the earthworks. The plaintiff, Floods of Queensferry Ltd, an associated company, in fact submitted a tender in February 1991 and, after discussions and negotiations, a sub-contract was concluded between Floods of Queensferry Ltd and Shand Construction. There is some argument about the date of the formal sub-contract. Work however started in April 1991. It is common ground that the sub-contract was in writing and incorporated the FCEC Conditions (the blue form). The contract value was ,911,000 (subject to remeasurement). In 1991 Shand Construction was acquired by the Morrison Group. There was a reorganisation of its business. The result was that Shand Construction ceased to trade and its business activities were transferred to the second defendant, Morrison Shand Ltd. Later on, in 1993, the assets of that company were transferred to the third defendant, Morrison Construction Ltd.

 

15. In exhibit DCF28 Mr Flood outlines the events which led to this action being commenced in 1994. In essence the progress and completion of the earthworks were delayed and disrupted by various matters which are said to be breaches of the sub-contract. It is therefore said that time became at large and that the plaintiff became entitled to recover damages under clauses 6, 9, 10 and 15 of the FCEC Conditions. The plaintiff's claim is for over ,1 million (,831,000 having been paid against a final account of ,2.13m). The principal claims are made against the first defendant or, in the alternative, the second defendant acting as a principal for the first defendant who contracted as agent. In addition the following claims are made:

16. 1. That Floods of Queensferry were induced to enter into the sub-contract as a result of misrepresentations made by the first defendant. This is a claim made under section 2 of the Misrepresentation Act 1967 (see paragraph 10 of the amended statement of claim).

17. 2. Claims against the second and the third defendants in quasi contract or restitution for money alleged to have been paid to them by the Welsh Office for work performed by Floods of Queensferry Ltd for which the second or third defendants must account to the plaintiff (see paragraphs 9, 12, 22-23 and 25-28 of the amended statement of claim).

 

18. After the writ had been issued in 1994 applications were made under Order 14 and Order 29, as was an application by the first defendant under section 4 of the Arbitration Act 1950. All the applications were dismissed. The summons for directions was then heard before me on 1 March 1995. Directions were given including a trial date in June 1996. The defence and other pleadings were served in the course of 1995. The defence raised a counterclaim for ,500,000. Apparently a notice was also sent by the defendants in July 1995 admitting that ,928,000 would be the total value of the plaintiff's work but for the counterclaim. Of that figure ,831,000 has been paid leaving a sum of ,97,000 admittedly due, subject, of course, to the counterclaim. In the autumn of 1995 the plaintiff was ordered to provide security for costs and the action was stayed until that was done. On 15 November 1995 the defendants served notice of intention to seek an order against Mr Flood pursuant to section 51 of the Supreme Court Act 1981. In consequence on 4 December 1995 Floods of Queensferry Ltd assigned "absolutely all its assets including the causes of action" that it had against the defendants to Mr Flood. Thereafter Mr Flood issued a summons to be substituted as plaintiff instead of Floods of Queensferry Ltd. The defendant applied (a) to strike out the claim and (b) for an order against Mr Flood pursuant to section 51 of the Supreme Court Act 1981. Mr Flood obtained legal aid to make and defend those applications.

 

19. His application to be substituted was heard by His Honour Judge Anthony Thornton QC who on 23 February 1996 allowed it. In part he considered that proviso to clause 2(3) of the FCEC form of contract did not prevent Floods of Queensferry from validly assigning, as between itself and the first defendant, its causes of action against the first defendant. The defendant appealed against the order substituting Mr Flood for Floods of Queensferry and on 18 December 1996 the Court of Appeal allowed that appeal. The order of the Court of Appeal included the following:

"IT IS ORDERED that:-

20. 1. paragraphs 2 and 3 of the order of His Honour Judge Anthony Thornton QC dated 21st June 1996 be set aside, so that "Floods of Queensferry Limited" remains the Plaintiff and, subject to paragraph 2 below, the action remains stayed pursuant to the order made by Mr Recorder Blunt QC on 9th November 1995 pending provision of the security ordered or further order of the court;

 

21. 2. if Mr David Charles Flood issues a summons seeking leave to be added as an additional plaintiff in this litigation (in respect of those causes of action not already specifically considered by His Honour Judge Anthony Thornton QC and by the Court of Appeal) then if, when that summons comes to be heard, the action remains stayed, the stay of the proceedings shall be lifted for the limited purpose only of allowing the Plaintiff to attend and to be heard at any such application;

 

22. 3. for the avoidance of doubt it is recorded that the Appellant (Defendants) have conceded that Floods of Queensferry Limited should be allowed a reasonable period of time from the 18th December 1996 to put in place the security for costs ordered by Mr Recorder Blunt QC;

 

23. 4. the cost of this appeal and of the hearing before His Honour Judge Thornton QC to be paid by Mr David Charles Flood, such order not to be enforced without leave of the Court;"

24. In reaching its decision the Court of Appeal followed Yeandle v. Wynn Realisations Ltd (1995) 47 Con LR 1 (of which counsel then instructed had been unaware when Mr Flood's application had been argued before Judge Thornton QC).

 

25. The trial date in June 1996 had by then been vacated and new dates of 14 April 1997 and 12 January 1998 were fixed. Further directions were also given. The action has made substantial, if not perfect, progress towards these trial dates. There have been a number of further adjourned summons for directions in order to monitor progress and make appropriate orders. Following the decision of the Court of Appeal acceptable security has been obtained by Floods of Queensferry Ltd (secured in part by a second mortgage on Mr Flood's house) so that the stay may be removed, as envisaged by paragraph 3 of the order of the Court of Appeal. Floods of Queensferry is now in a position to revive the action and to pursue the claims, the assignment of which is barred by clause 2(3). However the assignment of December 1995 still vested in Mr Flood the causes of action which have been called the "extra contractual claims" namely those for misrepresentation and the restitution claims, and in order to pursue these Mr Flood wishes to join (or rejoin) this action as co-plaintiff. In addition since Floods of Queensferry has no money to finance the retention of solicitors and counsel, Mr Flood wishes to be able to present the family company's case on its behalf, and to conduct the litigation on its behalf. These applications are opposed by the defendants. Mr Flood however may continue to be legally aided and represented by solicitors and counsel.

 

Joinder

26. Mr Andrew Stafford submitted that Mr Flood should be joined either under RSC Order 15, rule 4(1) or pursuant to Order 15, rule 6(2)(b)(i) or (ii). He said that the requirements of Order 15, rule 4(1) were satisfied: the claims made involve common questions of fact and the rights arose out of the same transaction, i.e. the making of the sub-contract, in the case of the misrepresentation claim, or out of the history thereafter being the same series of transactions for the purposes of the restitutionary claims.

 

27. The application under Order 15, rule 6(2)(b) was put on a different basis. The defendants had threatened Mr Flood with a wasted costs order and there was clear authority to support such a joinder since, in Symphony Group Plc v. Hodgson [1994] QB 179, Balcombe L.J. expressly envisaged Order 15, rule 6(2)(b) being used for this purpose since he said at page 193C:-

28. "3. Even if the applicant can provide a good reason for not joining the non party against whom he has a valid cause of action, he should warn the non party at the earliest opportunity of the possibility that he may seek to apply for costs against him. At the very least this will give the non party an opportunity to apply to be joined as a party to the action under Order 15, rule 6(2)(b)(i) or (ii).

 

29. Principles (2) and (3) require no further justification on my part; they are an obvious application of the basic principles of natural justice."

 

30. Mr Colin Reese QC for the defendants accepted that for the purposes of Order 15, rule 4(1) there were common issues of fact on the restitutionary claims, e.g. the quantum of those claims would be the same as or similar to the quantum of the principal claim against the first defendant or could or would involve common issues of fact. However he argued that leave should be refused both because the court had a discretion under Order 15, rule 4 and it should not be exercised in favour of Mr Flood but also since he had no valid claims and could not therefore maintain a separate action. First, although the pleaded causes of action might have been validly assigned to Mr Flood by Floods of Queensferry Ltd since they formed part of "all its assets including causes of action", they were not maintainable against the second and third defendants, on a proper construction of clause 2(3) of the FCEC form of sub-contract. That reads:-

31. "The subcontractor shall not assign the whole or any part of the benefit of this sub-contract nor shall he sub-let the whole or any part of the sub-contract works without the previous written consent of the contractor.

32. Provided always that the subcontractor may without such consent assign absolutely or by way of charge any sum which is or may become due and payable to him under this sub-contract."

 

33. Mr Reese accepted that clause 2(3) could be construed narrowly so that the claim for misrepresentation under the Misrepresentation Act by the subcontractor against the contractor and similarly the claims for restitution fell outside the scope of clause 2(3) as they could not be considered to be any part of "the benefit of the sub-contract". Alternatively clause 2(3) could be given a wider meaning, for which the defendants contended, namely these claims did fall within the words "the benefit of the sub-contract" and, as such, required the consent of the first defendant (which had not been given) before they could be brought by Mr Flood.

 

34. Mr Reese contended that the clause 2(3) should be construed sensibly and with a view to its apparent purpose and not in a narrow literal manner. He relied, in part, on the approach of Evans L.J. when considering the appeal from Judge Thornton's judgment on the meaning of clause 2(3). He there said (see page 11-12 of the transcript):

35. "This interpretation of the proviso seems to me to be entirely consistent with the commercial purpose of the clause, and with the practical considerations referred to by Lord Browne-Wilkinson in Linden Gardens and in the judgments in Yeandle, and with the Yeandle decision itself."

36. He also invited me to read the judgment of Hobhouse L.J. in Yeandle as endorsing a similar approach. In Yeandle Hobhouse L.J. had said, amongst other things (at page 11):

37. "The point which the plaintiff seeks to arbitrate is a point relating to the performance of the parties to their respective contracts and their rights in relation to such performance and the remuneration for it. I am, therefore, of the view that this subject matter does not come within the words "any sum which is or may become due and payable to the subcontractor under the subcontract". They relate to matters under the operational contract which are anterior to that stage."

38. Mr Reese's submission was that Hobhouse L.J. is to be taken to be of the view that something which does not come within the words "any sum which is or may become due and payable under the subcontract" but which is capable of assignment would be a "benefit of the subcontract". At least that is how I understood Mr Reese's argument. He therefore submitted that I should construe the subcontract as robustly and purposively as Hobhouse L.J. had apparently done.

 

39. Similarly, Mr Reese relied upon the conclusion of the judgment of Evans L.J. where he said:

40. "I would hold that clause 2(3) of the subcontract renders invalid the assignment by the company plaintiff of any claim which cannot be expressed simply as a present or future claim for a fixed amount due under the subcontract. This precludes the assignment of claims for damages or for sums which fall to be assessed under or in accordance with the subcontract terms, except where the assignment transfers only the future right to recover the amount when it is duly established by agreement or otherwise."

41. Mr Reese submitted that Evans L.J. was certainly not excluding the wider interpretation since in the next paragraph in the judgment he said:

42. "At the conclusion of the argument before us, Mr Powell [leading counsel for Floods of Queensferry] indicated that the respondent would contend that certain of the company's claims are outside clause 2(3) in any event, specifically the alleged misrepresentation damages claim. This seems to me to depend upon the scope of the prohibition in the body of the sub-clause, rather than of the proviso, and it may be important that the claims as pleaded are made apparently under the Misrepresentation Act 1967 as distinct from negligent misrepresentation in tort.

 

43. In these circumstances, it seems to me that we should hear further argument if either party so desired as to the appropriate terms of the order to be drawn up reflecting our judgment including the question whether the assignment of Mr Flood may be nevertheless valid in respect of any of the individual claims made by the company in these proceedings. ....."

44. Mr Reese said that in the event the Court of Appeal concluded that it would be better if the point were decided, initially, by an official referee.

 

45. In essence Mr Reese contended that since the claims for misrepresentation or restitution could or would not have been advanced had not the sub-contract been made they were therefore to be regarded as part of the "benefit of the sub-contract" for the purposes of clause 2(3) and were therefore not assignable without the consent of the main contractor.

 

46. In addition Mr Reese submitted that the restitutionary claims, in particular, were advanced on so slender a basis that the court should not permit Mr Flood to be joined to pursue them with the consequence that an impecunious additional party would be joined who intended to conduct the litigation at public expense (because Mr Flood would be legally aided) and against whom the defendants would be unable to enforce a costs order. He recognised however that the decision in Norglen Ltd v. Reeds Rains Prudential Ltd [1996] 1 W.L.R. 864 had or might have decided such a point against the defendants in which case he anticipated that leave to appeal from my decision would be sought if I were to consider that the facts of the present case were in essence indistinguishable from those in Norglen.

 

47. Mr Reese also submitted that Order 15, rule 6(2)(b) was inapplicable. Sub-paragraph (i) did not apply to the present case since there was no question of Mr Flood ever having been a party to this action, he was not and would not be a necessary party because the litigation could effectively be conducted by Floods of Queensferry. As to sub-paragraph (ii) he submitted that the judgment of Balcombe L.J. could not be read in the sense contended for by Mr Stafford and that no such general principle was to be inferred.

 

48. Mr Stafford in reply, submitted first that Order 15, rule 4 did not give the court a discretion where the requirements of rule 4(1)(a) and (b) were both met and referred to a note to that effect at paragraph 15/4/1 of the Supreme Court Practice. Secondly, Mr Stafford argued that the prohibition against assignment could not affect Floods of Queensferry's rights to assign claims against the second and third defendants as they were not parties to the subcontract and the fact that the first defendant had not consented to their assignment to Mr Flood was therefore irrelevant. Thirdly, as a matter of construction of the subcontract a claim for misrepresentation under the 1967 Act had to be made by a party to the contract. The claim for misrepresentation was not a claim for the "benefit of the subcontract" since it was a claim in essence that the subcontract was of less benefit.

 

Decision on Joinder

49. First, I do not consider that I have a discretion under Order 15, rule 4(1) where the requirements of paragraphs (a) and (b) are satisfied. Mr Reese conceded that there were common issues of fact in relation to the claims for restitution of sums held by the second or third defendants (eg as to the sums in question) and in my view there is a slender but sufficient basis for discerning a common issue of fact, namely what were the circumstances in which the subcontract was entered into, to justify the inclusion of the claim for misrepresentation. Subject to the interpretation of clause 2(3) Mr Flood would be entitled to joined under Order 15, rule 4(1).

 

50. Secondly, Mr Flood could clearly be joined under Order 15, rule 6(2)(b). He is the assignee and his presence is necessary in an action between Floods of Queensferry as assignor and the defendants and, but for clause 2(3), he could and should have joined under Order 15, rule 7. Unless it is determined that he cannot pursue the assigned claims he is a necessary party to an action brought by the assignor of those claims. He has also been made the subject of a threatened wasted costs order and he therefore has a clear interest in seeing how the proceedings are conducted if he may himself may be liable for some of the costs brought about by his own manner of conducting the proceedings on behalf of Floods of Queensferry Ltd, even if he is not granted rights of audience or rights to conduct litigation on its behalf.

 

51. However, thirdly, I consider that a claim for misrepresentation under the 1967 Act is to be regarded for the purposes of clause 2(3) as part of the "benefit of the subcontract". It is a right which derives from the making of the subcontract and could not be maintained but for the subcontract having been entered into. Furthermore whilst the claim is one which presents the subcontract as not as beneficial as it ought to have been, and is therefore in essence a claim to put right a lack of benefit, it is thus intended to achieve the full benefit of the subcontract as it might have been made and should be regarded as part of the benefit deriving from the subcontract or an incident of it, albeit one created by statute. It must therefore be regarded as barred by clause 2(3) since it does not fall within the proviso and thus it cannot be maintained against the first defendant by Mr Flood without its consent (which has not been given and is not forthcoming): see the decision of the Court of Appeal on 18 December 1996. Accordingly one of the pre-requisites for joinder under Order 15, rule 4(1) has not been satisfied. Paragraph (a) provides for joinder if "separate actions were brought ..... some common question would arise in all the actions". I cannot construe that paragraph as permitting the joinder of an action which in reality is doomed from the outset to fail and which should therefore be regarded as one which cannot be brought for otherwise there never would be a stage at which the common question would arise. Since the first defendant has an absolute defence to the misrepresentation claim joinder of Mr Flood to pursue that claim is not automatic under rule (1). As in my judgment that claim cannot be brought as a separate action leave will not be granted for Mr Flood to be joined to pursue it.

 

52. Fourthly, are the words in clause 2(3) capable of extending to the restitutionary claim brought against the second and third defendants? I think not. The consent of the main contractor in clause 2(3) is only required because he has or may have an interest in restricting the transfer of a claim against him. His consent to the assignment of a cause of action against another person is therefore irrelevant. Floods of Queensferry may transfer as part of its assets causes of action against the second and third defendants. I do not consider that I can give a meaning to clause 2(3) in the sense contended for by Mr Reese even by applying the process of interpretation enjoined upon me by him. The rights claimed of restitution cannot be regarded as part of the benefit of the subcontract. Although they do of course derive from it and could not be maintained without it, there are not rights to which the other contracting party is subject and in my view if there is no correlative burden there can be no benefit.

 

53. However I find it extremely difficult to discern the basis in law for the restitutionary claims, even if all the facts pleaded were established in favour of Floods of Queensferry. It is not possible to say whether a claim is or is not for the "benefit of the subcontract" until the head of liability can be established. It is not enough in my judgment to say that the relationship between the second and third defendants and Floods of Queensferry is such that the second or third defendants must account to Floods of Queensferry for any money received from the Welsh Office which has not been passed on to Floods of Queensferry and which ought to have been passed on under the terms of the subcontract, e.g. under clause 15, whereby the second and third defendants have been unjustly enriched. In my judgment it is first necessary to point to some recognised head of liability which gives effect to the general principle of "unjust enrichment" and to demonstrate that the facts if established would give rise to such an entitlement under such a head. Floods of Queensferry's task is not made any easier since, as Mr Reese pointed out, if Floods of Queensferry succeed against the first defendant - and there is no reason to think that judgment against the first defendant would not be honoured for, although it may be technically insolvent, it forms part of a large group of companies - it would therefore only be if Floods of Queensferry do not recover all that is properly due to it that it might then be able to demonstrate that the second or third defendants are still holding money which was rightfully the plaintiff's. Nevertheless I do not think that I can at this stage refuse the application on the grounds that no separate action is in law maintainable both because the claim against the second and third defendants appears to be contingent on the outcome of the claim against the first defendant and thus the full facts may not emerge until that claim has been disposed of but also because the law of restitution is not settled. In deciding that the restitutionary claims are capable of being joined under Order 15, rule 4(1) I do not therefore preclude the second and third defendants from contending that on the facts a separate action could be brought or from applying to strike out the claims as disclosing no cause of action.

 

54. I deal below with the question of whether Mr Flood as co-plaintiff should be separately represented.

 

55. Accordingly leave will be granted for the joinder of Mr Flood in the action as second plaintiff (a) subject to the reservations set out above, to carry on against the second and third defendants as assignee of the plaintiff the claims for restitution in paragraphs 9,12, 22-23 and 25-28 of the amended statement of claim and (b), in any event, to enable the question of any liability to pay the whole or any part of the defendants' costs pursuant to s.51 of the Supreme Court Act 1981 to be determined as sought by the defendants' summons of 19 January 1996.

 

 

 

 

Mr Flood's Application

56. Mr Flood's submissions were made with admirable clarity (and commendable brevity) and were essentially based upon a decision of His Honour Judge Anthony Thornton QC in Europa Holdings Ltd v. Circle Industries, unreported 2 June 1995. The facts were not dissimilar to those of the present case.

 

57. Europa was a sub-subcontractor to Circle and had been engaged to supply and erect fibrous plaster in the FC2 building at Canary Wharf. Europa had been formed in 1982 by Mr Roger Keepax and was continued to be owned and run by him. As a result of his dispute with Europa he had spent all his capital in financing the litigation and had been unable to take on any new business. He had sold his house and realised every available investment. His marriage had broken up and he had had to live with his father. He was on income support. His company could no longer afford to retain solicitor and counsel and he therefore applied to represent Europa. Judge Thornton QC held, first, that as a result of the Courts and Legal Services Act (CLSA) any question as to whether or not a person had a right of audience in the Supreme Court (or a right to conduct litigation there) was now to be decided solely in accordance with the provisions of that Act. Any prior law by which the Supreme Court regulated rights of audience had been altered by the Act. At page 21-22 of the transcript he stated

58. "The practice before the CLSA came into force is succinctly stated by Lord Denning M.R. in Engineers' & Managers' Association v. Advisory Conciliation & Arbitration Service (No.1) [1979] 2 All E.R. 223 at 224-225 as follows:

 

59. "If the trade union had been a body corporate then under RSC Ord.5, r.6(2) and RSC Ord.12, r.1, it could not appear or carry on proceedings except through a solicitor. But as it is not a body corporate it does not come within that prohibition ..

 

60. It is well settled that every court of justice has the power of regulating its own proceedings; and, in doing so, to say whom it will hear as an advocate or representative of a party before it. As Parke J. said in Collier v. Hicks [1831] 2 B & Ad 663 at 672:

 

61. "'No person has the right to act as an advocate without the leave of the Court, which must of necessity have the power regulating its own proceedings in all cases where they are not already regulated by ancient usage'.

 

62. The general rule in the High Court and the Court of Appeal is that we only hear members of the Bar. But we do allow exceptions when the circumstances make it desirable. Take litigants in person. Sometimes we have heard a husband speaking for his wife: or a son speaking for his mother: and so forth. So also it seems to me that with this new thing, a trade union which is a legal entity but not a body corporate, we can ourselves decide whom we shall allow to speak on its behalf."

 

63. The significant change made by the CLSA is that rights of audience and the rights defined in the Act as rights to conduct litigation, rights previously not readily defined, are solely regulated by the CLSA. This is made clear by sections 27(1) and 28(1) of the CLSA."

 

64. It has been well settled that a company director was only allowed to represent the company in exceptional circumstances. In Radford v. Samuel [1994] 1 BCLC 445 the Court of Appeal dismissed an appeal from Forbes J who had dismissed an appeal against the Master's refusal to allow a director to represent his company. Sir Thomas Bingham M.R. (with whom Leggatt and Roch LJJ agreed) said:-

65. "A limited company, by virtue of the limitation of the liabilities of those who own it, is in a very privileged position because those who are owed money by it, or obtain orders against it, must go empty away if the corporate cupboard is bare. The assets of the directors and shareholders are not at risk. That is an enormous benefit to a limited company but it is a benefit bought at a price. Part of the price is that in certain circumstances security for costs can be obtained against a limited company in cases where it could not be obtained against an individual, and another part of the price is the rule that I have already referred to that a corporation cannot act without legal advisers. The sense of these rules plainly is that limited companies, which may not be able to compensate parties who litigate with them, should be subject to certain constraints in the interests of their potential creditors.

....

66. These are all points to which the court has paid attention but, speaking for myself I find it quite impossible to dissent from the learned judge's view that there is nothing exceptional about them. It is indeed standard in these cases that the corporate defendant pleads that it has no means to seek legal advice. It is often said that there is a good defence in whether there is or not is something upon which one can reach no opinion. It is an inevitable effect of the rule that, where it applies, a corporation that is not legally represented cannot be heard. Whether the plaintiff's behaviour is subject to legitimate criticism or not one is again in no position at this stage to decide, and also it is no doubt true that judgment against the company may be damaging to Mr Corry's personal and business reputation. That again is something that will very frequently be so and is in a way exceptional.

 

67. In my judgment the rule which is ordinarily applied and which is rarely waived has solid basis in fairness and common sense and I agree with the judge that there were no exceptional circumstances which justify departing from it in this case."

68. The Court of Appeal referred with approval to the judgment of Scott J. in Arbuthnot Leasing International Ltd v. Havelet Leasing & Ors [1991] 1 All ER 591 in which he had decided that the High Court had an inherent power to permit any advocate to appear for a litigant but only if the exceptional circumstances of the case so warranted.

 

Radford v Samuel was decided after the CLSA came into effect. Judge Thornton however distinguished Radford v. Samuel and felt that he was free not to follow the principle and the practice expressed in it on the grounds that only one side had been represented before the Court of Appeal (namely the applicant director), that the CLSA had introduced an entirely new regime, and that the CLSA had not been cited to the court. He derived some support from the decision of the Divisional Court in R. v. Southwark Crown Court ex p. Tawfick unreported (except briefly in The Times), 14 November 1994 in which Glidewell L.J. said that there was:-

69. "A wealth of authority for the proposition that, either as a matter of law or as a matter of invariable practice, before that Act came into force there was no right for an individual to conduct a private prosecution in the Crown Court."

 

He continued:

 

70. "Mr Nicholls (counsel for the respondent Crown Court) submits that under section 27(2)(c) a private prosecutor could have rights of audience granted by the Crown Court in relation to a trial on indictment. It must be taken that the law was altered so as to give any court the power in its discretion to grant any person a right of audience in relation to particular proceedings. For my part I believe that submission to correct. We have not heard argument about it and therefore it is not conclusive."

71. Judge Thornton therefore reached the following conclusion:-

"3.5 The CLSA Principles Summarised.

 

72. A close analysis of Part II of the CLSA reveals four governing principles. These are, as I see it, as follows.

 

73. 1. So far as possible, rights of audience and rights to conduct litigation shall be extended to individuals on behalf of companies (the statutory objective).

 

74. 2. The proper and efficient administration of justice must be maintained (the statutory objective). In ensuring this is maintained, attention is to be paid to the functions to be performed, the type of proceedings in question and the policy underlying the previous very restrictive approach to granting individual rights of audience on behalf of companies, as well as to the terms of O.15, r.6(2), r.1(2).

 

75. 3. In considering the appropriateness of the individual who is the subject of an one-off application, attention should be paid to the experience and training of the individual and his or her ability to ensure the proper and efficient administration of justice (the general principle).

 

76. 4. Equally, attention should be paid to whether the individual is likely to be constrained by relevant rules of procedure, orders and directions of the court and is likely to be subject to an appropriate restraining sanction for non-compliance (the general principle).

 

77. I have deliberately paraphrased the requirements of the general principle. If these requirements are taken literally, an individual who is not a member of an authorised body could not be granted one-off rights since that person would not be a member of a professional or other body and would not be subject to formal rules of conduct. Thus, sections 27(2)(c) and 28(2)(c) would be rendered largely inapplicable. The inter-relationship of the statutory objective, which is the governing requirement, to the general principle, which is the qualifying requirement, is such that the court is to lean in favour of granting rights of audience and rights to conduct litigation, so long as the performance of the individual will have sufficient quality and will be subject to sufficient controls that the administration of justice by the court in question is properly and efficiently maintained."

78. Judge Thornton QC then applied these principles and decided that in the circumstances of that case there were no good grounds for exercising the general principle so as to refuse Europa's applications so Mr Keepax was given rights to conduct litigation and rights of audience for all purposes in that action.

 

79. It is desirable to set out the relevant provisions of the CLSA:-

 

"17 The statutory objective and the general principle

 

80. (1) The general objective of this Part is the development of legal services in England and Wales (and in particular the development of advocacy, litigation, conveyancing and probate services) by making provision for new or better ways of providing such services and a wider choice of persons providing them, while maintaining the proper and efficient administration of justice.

 

(2) In this Act that objective is referred to as "the statutory objective".

 

81. (3) As a general principle the question whether a person should be granted a right of audience, or be granted a right to conduct litigation in relation to any court or proceedings, should be determined only by reference to-

82. (a) whether he is qualified in accordance with the educational and training requirements appropriate to the court or proceedings;

83. (b) whether he is a member of a professional or other body which-

84. (i) has rules of conduct (however described) governing the conduct of its members;

85. (ii) has an effective mechanism for enforcing the rules of conduct; and

86. (iii) is likely to enforce them;

87. (c) whether, in the case of a body whose members are or will be providing advocacy services, the rules of conduct make satisfactory provision in relation to the court or proceedings in question requiring any such member not to withhold those services-

88. (i) on the ground that the nature of the case is objectionable to him or to any section of the public;

89. (ii) on the ground that the conduct, opinions or beliefs of the prospective client are unacceptable to him or to any section of the public;

90. (iii) on any ground relating to the source of any financial support which may properly be given to the prospective client for the proceedings in question (for example, on the ground that such support will be available under the Legal Aid Act 1988); and

91. (d) whether the rules of conduct are, in relation to the court or proceedings, appropriate in the interests of the proper and efficient administration of justice.

(e) where-

92. (i) he is employed (whether wholly or in part), or is otherwise engaged, to assist in the conduct of litigation and is doing so under instructions given (either generally or in relation to the proceedings) by a qualified litigator; and

93. (ii) the proceedings are being heard in chambers in the High Court or a county court and are not reserved family proceedings.

94. (3) No person shall have a right of audience as a barrister by virtue of subsection (2)(a) above unless he has been called to the Bar by one of the Inns of Court and has not been disbarred or temporarily suspended from practice by order of an Inn of Court.

 

95. (4) Nothing in this section affects the power of any court in any proceedings to refuse to hear a person (for reasons which apply to him as an individual) who would otherwise have a right of audience before the court in relation to those proceedings.

 

96. (5) Where a court refuses to hear a person as mentioned in subsection (4) it shall give its reasons for refusing.

 

97. (6) Nothing in this section affects any provision made by or under any enactment which prevents a person from exercising a right of audience which he would otherwise be entitled to exercise.

 

98. (7) Where, immediately before the commencement of this section, no restriction was placed on the persons entitled to exercise any right of audience in relation to any particular court or in relation to particular proceedings, nothing in this section shall be taken to place any such restriction on any person."

 

"18 The statutory duty

 

99. (1) Where any person is called upon to exercise any functions which are conferred by this Part with respect to-

100. (a) the granting of rights of audience;

101. (b) the granting of rights to conduct litigation;

102. (c) the approval of qualification regulations or rules of conduct; or

103. (d) the giving of advice with respect to any matter mentioned in paragraphs (a) to (c),

104. it shall be the duty of that person to exercise those functions as soon as is reasonably practicable and consistent with the provisions of this Part.

 

105. (2) A person exercising any such functions shall act in accordance with the general principle and, subject to that, shall-

106. (a) so far as it is possible to do so in the circumstances of the case, act to further the statutory objective; and

107. (b) not act in any way which would be incompatible with the statutory objective."

.....

 

108. "27.-(1) The question whether a person has a right of audience before a court, or in relation to any proceedings, shall be determined solely in accordance with the provisions of this Part.

 

109. (2) A person shall have a right of audience before a court in relation to any proceedings only in the following cases-

(a) where-

110. (i) he has a right of audience before that court in relation to those proceedings granted by the appropriate authorised body: and

111. (ii) that body's qualification regulations and rules of conduct have been approved for the purposes of this section, in relation to the granting of that right;

112. (b) where paragraph (a) does not apply but he has a right of audience before that court in relation to those proceedings granted by or under any enactment;

113. (c) where paragraph (a) does not apply but he has a right of audience granted by that court in relation to those proceedings;

114. (d) where he is a party to those proceedings and would have had a right of audience, in his capacity as such a party, if this Act had not been passed; or

(e) where-

115. (i) he is employed (whether wholly or in part), or is otherwise engaged, to assist in the conduct of litigation and is doing so under instructions given (either generally or in relation to the proceedings) by a qualified litigator; and

116. (ii) the proceedings are being heard in chambers in the High Court or a county court and are not reserved family proceedings.

 

117. (3) No person shall have a right of audience as a barrister by virtue of subsection (2)(a) above unless he has been called to the Bar by one of the Inns of Court and has not been disbarred or temporarily suspended from practice by order of an Inn of Court.

 

118. (4) Nothing in this section affects the power of any court in any proceedings to refuse to hear a person (for reasons which apply to him as an individual) who would otherwise have a right of audience before the court in relation to those proceedings.

 

119. (5) Where a court refuses to hear a person as mentioned in subsection (4) it shall give its reasons for refusing.

 

120. (6) Nothing in this section affects any provision made by or under any enactment which prevents a person from exercising a right of audience which he would otherwise be entitled to exercise.

 

121. (7) Where, immediately before the commencement of this section, no restriction was placed on the person entitled to exercise any right of audience in relation to any particular court or in relation to particular proceedings, nothing in this section shall be taken to place any such restriction on any person.

 

(8) Where-

122. (a) immediately before the commencement of this section; or

123. (b) by virtue of any provision made by or under an enactment passed subsequently,

124. a court does not permit the appearance of advocates, or permits the appearance of advocates only with leave, no person shall have a right of audience before that court, in relation to any proceedings, solely by virtue of the provisions of this section.

 

125. (9) In this section-

126. "advocate", in relation to any proceedings, means any person exercising a right of audience as a representative of, or on behalf of, any party to the proceedings;...".

 

127. "28.-(1) The question whether a person has a right to conduct litigation, or any category of litigation, shall be determined solely in accordance with the provisions of this Part.

 

128. (2) A person shall have a right to conduct litigation in relation to any proceedings only in the following cases-

(a) where-

129. (i) he has a right to conduct litigation in relation to those proceedings granted by the appropriate authorised body; and

130. (ii) that body's qualification regulations and rules of conduct have been approved for the purposes of this section, in relation to the granting of that right;

131. (b) where paragraph (a) does not apply but he has a right to conduct litigation in relation to those proceedings granted by or under any enactment;

132. (c) where paragraph (a) does not apply but he has a right to conduct litigation granted by that court in relation to those proceedings;

133. (d) where he is a party to those proceedings and would have had a right to conduct the litigation, in his capacity as such a party, if this Act had not been passed.

 

134. (3) Nothing in this section affects any provision made by or under any enactment which prevents a person from exercising a right to conduct litigation which he would otherwise be entitled to exercise.

 

135. (4) Where, immediately before the commencement of this section, no restriction was placed on the persons entitled to exercise any right to conduct litigation in relation to a particular court, or in relation to particular proceedings, nothing in this section shall be taken to place any such restriction on any person."

 

 

 

136. Mr Flood submitted that his application fell within the principles listed by Judge Thornton QC. First, the company had applied its resources to the progress of this litigation, and had exhausted them. The claims were good ones and were supported by the two expert witnesses both of whom were prepared to continue. It would therefore suffer severe hardship if it were prevented from pursuing its genuine claims. He himself had sunk all its personal resources into the case and stood to lose a great deal if the action could not be tried. The Mold bypass had prevented the plaintiff from continuing to trade and the plant companies were in liquidation. The court should take into account the amounts admitted subject to counterclaim. The counterclaim was itself a sham and a device to keep the company out of its money, and was completely inconsistent with the allegations made by Morrison Construction Limited in its arbitration against the Secretary of State for Wales. The points of claim incorporated, as claim 15, a claim for further losses of damage in respect of the plaintiff company's operations, and part of the case against the Welsh Office included the plaintiff company's claim that it was unable to enter into further contracts owing to the substantial losses which had been incurred during the prolongation of the earthworks operation, and the need to dispose of plant assets so that its ability to enter into and execute further earthworks contracts had been lost. Morrison Construction had even claimed that the income envisaged for the Plaintiff company "should be uplifted for growth, equivalent to the growth of the Morrison Construction Group, in the period from April 1991 onwards." Accordingly a claim for ,652,715 was made for loss of contracting income and a further claim of ,333,333 was made for the cost of return to former trading position. In addition, in claim 16, Morrison Construction claimed from the Welsh Office ,115,491 for costs and fees and interest incurred by the plaintiff company in relation to its claims in this action (excluding cost in relating to the measurement of the sub-contract works). These claims were made in addition to the other claims made for prolongation of costs, non productive costs etc. Indeed, according to Mr Flood's affidavit, the points of claim against the Welsh Office revealed that the third defendants were claiming substantial figures in respect of the plaintiff's work in excess of the costs claimed by the plaintiff. There could therefore be no doubt that the plaintiff's claim was valid, and would succeed.

 

137. Secondly, although Mr Flood recognised that his lack of formal legal and advocacy training was a drawback, it was balanced by his own extensive knowledge of the Mold Contract and of the issues in the case, which would enable him to conduct the case with insights not normally available to a professional advocate, and which if the customary procedures of reducing evidence were followed it would enable him to question witnesses effectively, in so far as the issues were not ones which needed to be resolved solely by experts. As a result of his constant involvement in the case he had read the law and could turn to others for advice. He was supported by two experts who have undertaken to see the matter through to a conclusion so that there was no doubt that the plaintiff's case would be properly supported. His application recognised that, as Mr Stafford had mentioned in the course of his submissions, that there might be a need to be a deviation from the principle that co-plaintiffs should be represented only by the same firm of solicitors and counsel: Lewis -v- Daily Telegraph Ltd (No.2) [1964] 2 QB 601. However here the case of the company was not inconsistent with his own case since they both derived from the same source namely, the company's claims and therefore separate representation should be permitted.

 

138. Thirdly, he would be as liable to the sanctions of the Court as any other person. The defendants would not be prejudiced by the course he proposed and would in any event have recourse granted under a wasted costs order, under section 51 of the Supreme Court Act 1981, as amended by Section 4(1) of the CSLA 1990.

 

139. Mr Reese submitted that the CSLA had not affected the power of the Supreme Court to determine who should have rights of audience before it. As he later made clear in his submissions he did not accept that the CSLA had altered the practice of the courts or had affected in any way Order 5, rule 6(2) which states:

140. "Except as expressly provided by or under any enactment, a body corporate may not begin or carry on such proceedings otherwise than by solicitor."

 

 

141. The limited exception provided for in Order 12, rule 1(2) was there reinforced:

 

142. "The defendant to [an action begun by writ] who is a body corporate they acknowledge service of the writ and give notice of intention to defend the action either by a solicitor or by a person duly authorised to act on the defendant's behalf but, except as a foresaid and accept as expressly provided by any enactment, such a defendant may not take any step in the action otherwise than by a solicitor."

 

 

143. The normal rule was reiterated and repeated in the cases to which I have previously referred (e.g. Arbuthnot Leasing International Limited -v- Havelet Leasing Limited; Radford v- Samuels).

 

144. Secondly, the references in Orders 5 and 12 to "expressly provided by any enactment" did not encompass an enactment such as the CSLA since those two orders only cease to have effect where it was expressly provided in another enactment. There had there to be some other enactment which would say, in terms, that a body corporate or company might be represented otherwise than by a solicitor. The CSLA did not say so and therefore was not such an enactment.

 

145. Thirdly, and in any event, the CSLA was not to be read in the manner construed by Judge Thornton QC and did not provide the foundation for the principles set out in the judge's judgment. The applicable principles in the Supreme Court were those set out in Radford v Samuel. The position in the County Court was and remained quite different. Mr Reese developed his arguments as follows. First, the concept of Part II of the CLSA was that there should or might be a wider range of people who would be recognised by authorised bodies as qualified and entitled to provide legal services. There would thus be "a wider choice of person providing them", as set out in Section 17(1). Those words alone made it clear that the general objective was not to affect the rules and practice of the Supreme Court in restricting representation of bodies corporate to solicitors and counsel: rather, it would enable the public to secure representatives from a wider range of people but they had to be qualified to provide legal services, such as advocacy. It did not envisage advocacy or other legal services being provided by people who were not so qualified. Furthermore, Section 17(1) concluded with the words "while maintaining the proper and efficient administration of justice". That therefore was a major consideration and, when related to other parts of the Act was a consideration in which would normally only be achieved by a qualified person. Thus, in argument, Mr Reese accepted that a company might in the future be represented by its company secretary but only if that person had otherwise satisfied the requirements envisaged by the Act e.g. by passing examinations or otherwise demonstrating an acceptable level and ability to maintain the proper and efficient administration of justice in the provision of the relevant legal service.

 

146. Secondly, the general principle was stated in section 17(3). Judge Thornton had himself recognised that he had abbreviated or paraphrased it in his judgment. When section 17(3) was read in full it was clear that "the question whether a person should be granted a right of audience or be granted a right to conduct litigation in relation to any court or proceedings, should be determined only by reference to..." (Mr Reese emphasised the word "only") four main provisions namely whether the person had the appropriate qualifications and was a member of a suitable professional body; whether that body had satisfactory rules of conduct and whether the rules of conduct were appropriate "in interests of the proper efficient administration of justice." Accordingly Mr Reese submitted that a person could not be granted a right of audience or a right to conduct litigation under the CSLA unless that person satisfied the considerations set out in (a) to (b) of Section 17(3). From paragraph (c) and in particular (1) and (2) a key criterion was the independence of the person to provide legal services even though, for example, "the nature of the case might be or is objectionable to him or to any section of the public" or "the conduct, opinions or belief of the prospective client are unacceptable to him or any section of the public". This indicated that the Act was concerned with the creation of new groups or bodies of people to provide legal services rather than individuals and the grant of rights to such groups or bodies and not to individuals. In section 27(2) (a) the right of audience would depend on whether such a right had been granted "by the appropriate authorised body"; the court therefore had to consider any person's qualification by such a body rather than his or her innate ability.

 

147. Even if this approach were incorrect section 27(2)(c) did not of itself allow a right of audience. Both that paragraph and section 28(2)(c) required that the person already had been granted a right of audience or to conduct litigation. There was nothing in the Act to suggest that the Court did not retain its inherent part to determine who might appear before it in any individual case, and it was not to be supposed that the Court of Appeal in Radford v Samuel could have been unaware of the CLSA. There were no exceptional circumstances to justify the court granted either right to Mr Flood. Guidance as to what was not an exceptional circumstance was to be obtained from the latter part of the judgment of Sir Thomas Bingham MR (which I have already set out).

 

148. Finally, since co-plaintiffs had to be represented jointly no useful purpose would be served by authorising separate representation.

 

149. In reply, Mr Flood emphasised and developed some of the points which he had originally made, e.g. that the company could not continue to incur credit, that would be wrong for it to do so, and that it would be wrong for a solicitor therefore to work on a contingency basis. As a result the company could not provide itself with any representation other than through the present application. He therefore said that there were exceptional circumstances. He also drew attention to the defendant companies' reorganisations which he described as very odd, and he submitted that the plaintiff's case should be heard.

 

Decision on Representation

150. First, it is not clear to me that sections 27 and 28 of the CLSA are really concerned with what a court is or is not to do on an application of this kind. They seem to be largely directed to what other bodies will have to do before deciding whether to grants rights of audience or litigation to people who meet the criteria set out in the respective sections. The wording of section 18(1) in requiring the duty to be exercised "as soon as is reasonably practicable and consistent with the provisions of this Part" does not fit easily with the proposition that these sections define the duties of a court. The bodies will include the authorised bodies referred to in sections 27 and 28, eg the General Council of the Bar, the Law Society etc. If, contrary to that view, every court must now apply sections 17 and 18 before deciding whether a person has or should have a right of audience or litigation pursuant to sections 27 or 28, then in my judgment it may be even more difficult for Mr Flood to obtain a right of audience if the High Court no longer has its inherent power to grant rights of audience exceptionally and in appropriate cases: see Radford v Samuel and the cases then referred to. I very much doubt whether the Act is to be read as in such a restrictive manner for it would, amongst other things, prevent the High Court permitting one spouse to represent the other, or a child to speak for a parent, to adapt Lord Denning's examples, without first going through the steps required by the CLSA. I would prefer to read section 27(2)(d), (6) and (7) (and section 28(3)and (4)) as recognising or preserving the court's inherent right to decide who shall appear before it. It follows that I do not accept that the Act is concerned with the grant of rights of audience in specific cases such as that raised by the present application. That does not mean that the High Court should not take fully into account the statutory objective and general principle when considering whether to accede to an application such as Mr Flood's.

 

151. Secondly, if the High Court were no longer to have has its inherent power to decide who (and who should not) appear before it, then I do not consider that the principles to be observed are all as stated by Judge Thornton in his analysis of the Act, in particular in his re-statement of the statutory principle. Judge Thornton did not in his judgment set out Section 17(3) and in his summary of the general principle acknowledged that he had "deliberately para-phrased the requirements of the general principle" since "if these requirements are taken literally an individual who is not a member of an authorised body could not be granted one-off rights since that person would not be a member of a professional other body and would not be subject to formal rules of conduct". I do not consider that Section 17(3) can or indeed should be so paraphrased, as it must be treated as having been carefully and deliberately drafted. The general principle in Section 17(3) is closely tied to the statutory objective namely, that there should be new or better ways of providing legal services consistent with "the proper and an efficient administration of justice". This indicates that it is primarily about setting guidelines for the determination of general issues and not of particular applications, except in the context of general issues. The criterion of "the proper and efficient administration of justice" will be more likely to be achieved if, for example, a person has been qualified, and is a member of a professional body whose rules of conduct will, amongst other things, by the preservation of independence lead to the proper and efficient administration of justice. It should borne in mind that the proper administration of justice connotes duties not merely to a client but to the Court and to the public interest: hence the references in Section 17(3). On this reading of the Act Mr Flood's applications fail since he clearly does not meet the criteria comprising the general principle, ie as to qualifications or membership.

 

152. Thirdly, do the applications fall within sections 27(2)(c) or 28(2)(c)? I cannot read these provisions as empowering the grant of a right simply where paragraph (a) does not apply (but where the statutory objective and general principle have been met). I accept Mr Reese's argument that section 27(2)(c) deals only with the situation where a person already "has a right of audience granted by that court in relation to those proceedings" (i.e. is there a previous decision by a court? and does not give a court a more general power. The words of paragraph (c) are to be contrasted with those of paragraph (d) which allows a right of audience to some one "where he is a party to those proceedings and would have had a right of audience, in his capacity as such a party, if this Act had not been passed". This therefore deals with the litigant in person (but not the spouse or child of the party). It would have been easy for paragraph (c) to be: "where paragraph (a) does not apply but he would have had a right of audience granted by that court in relation to those proceedings if this Act had been passed". The Act does however not say so and I do not think that it can be so interpreted, without doing violence to the plain and natural meaning of the text. Section 28(2)(c) should be similarly read.

 

153. Fourthly, if I am wrong in that conclusion then how are section 27(2)(c) and 28(2)(c) to be applied? If paragraph (a) does not apply then it seems to follow that the application may be entertained even though it would fail by the application of the statutory objective and general principle. Should therefore Mr Flood be granted a right of audience?

 

154. I do not consider that the rule precluding separate representation of co-plaintiffs applies where, as here, the co-plaintiffs have a completely common cause. In Lewis -v- Daily Telegraph Pearson LJ at page 619 said that the rule had been clearly stated in Wedderburn -v- Wedderburn (1853) 17 Beav. 158 to 159 by Sir John Romilly MR where he had said "I cannot allow one of several plaintiffs to act separately from and inconsistently with the others." Pearson LJ went on to say (at page 620)

155. "I am not saying that it would be impossible ever in any case to have separate representation, wholly or partially, in a consolidated action. It is not very easy to envisage such cases; but they can arise, and an illustration is given by Healey -v- A. Waddington & Son Limited [1954] 1 WLR 688. In that case eight actions were consolidated as to the issue of liability but separate representation was allowed as to issue of damages. That is an interesting case, and it shows the possibility of at any rate partial separate representation in consolidated actions. But it is, in my view, not a good guide or a good precedent for the present case, because there the trials were going to be by judge alone and were in respect of an accident, whereas here we are faced with an action or actions for libel to be tried by judge and jury."

 

 

156. He then went on to explain how the difficulties might arise which include the plaintiffs having more than one opening speech and each plaintiff being allowed to cross examine other plaintiff's witnesses. Russell LJ in his judgment (at pages 622 to 623) did however say:

157. "In a proper case, a order may be made authorising severance in point of representation, but this must be, I think, rare and should only be done to avoid injustice."

 

158. So too Sellers LJ (at page 624) envisaged that "it may well be that a method can be found for applying for an order of the Court to have separate representation".

 

159. So in my judgment it is clear that there is no absolute bar against an order for separate representation of co-plaintiffs and one may exceptionally be made. I infer that such an order is more likely where the trial is before a judge alone: in Lewis the trial was to be before jury and there different considerations apply. I also conclude that a key factor will be whether the case of each co-plaintiff may be inconsistent with each other - it is plainly undesirable if one plaintiff were to be able to cross-examine a witness called by another plaintiff, especially if the object is not to advance that plaintiff's case alone but, for example, to repair damage to the joint case. In my judgment the circumstances of this case would warrant separate representation just as they warrant the joinder of Mr Flood as a co-plaintiff. I can at present see no reason why there should be any inconsistencies between Mr Flood's case and that of the company's. Mr Flood will only be pursuing in his own name the company's own causes of action which have been assigned to him. In addition, the position of the defendants can be satisfactorily protected if in granting an order for separate representation provision is made in it limiting the possibility of any repetition or overlap by way of opening speeches and precluding the cross examination by one plaintiff of any witness called by the other plaintiff; and by restricting the cross examination of the defendants' witnesses so that they are not cross examined twice on the same subject matter by each of the plaintiffs in turn. If these and other necessary conditions are attached and such policy is then followed through by the trial judge I can see no prejudice to the defendants nor can I see how the trial would be in any way complicated or materially prolonged.

 

160. However I consider that there are other and more considerable difficulties affecting the applications under sections 27 and 28. First, a company is in law a separate entity. It is not to be treated as the alter ego of its principal shareholder. Those who wish to trade with limited liability have to do so in accordance with certain legal limitations. They include those in Order 5, rule 6(2) and Order 12, rule 1(2). The CLSA may now allow a person who is not a solicitor to conduct litigation on behalf of a limited company but in this case the litigation is a claim for over ,1m of considerable complexity. The resources required for its further conduct will be substantial. Litigation of this size is difficult enough and if it is to be conducted properly, efficiently and, above all, justly, it usually requires a high degree of trust and co-operation between the parties' solicitors, eg copying of documents is generally undertaken on the basis of reciprocal undertakings. Litigation of this nature is not for amateurs, even though they may be talented and able. Secondly, I have also to take into account not just the interests of the plaintiff but those of the defendant and others, as well as the proper and efficient administration of justice. In this context the reasons given by Sir Thomas Bingham MR in Radford v Samuel remain valid, namely:

161. "The sense of these rules plainly is that limited companies, which may not be able to compensate parties who litigate with them, should be subject to certain constraints in the interests of their potential creditors."

 

162. I do not consider that the present restrictions on a company conducting litigation other than by a solicitor should be relaxed in this case. Furthermore I do not consider that the CLSA is to be regarded as making express provision for the purposes of Order 5, rule 6(2) or Order 12, rule 1(2) There must therefore be a solicitor on the record representing the company. In any event I do not consider that it would be a correct exercise of any power which the court may have, whether under section 28(2)(c) or otherwise, to accord a person in the position of Mr Flood the right to conduct litigation on behalf of his company.

 

163. I therefore dismiss Mr Flood's application under section 28(2)(c).

 

164. That decision may in practical terms dispose of the application under section 27(2)(c) which I shall now consider. I have had the advantage of hearing Mr Flood and on that short acquaintance I was favourably impressed by his presentation of this application. I also accept that his knowledge of the facts might materially contribute to the efficient conduct of the trial, but I think that he may have under-estimated the task of an advocate. His interests and those of the defendants have previously been thought to warrant the retention of leading and junior counsel - on his side on the authority of Legal Aid and presumably not sanctioned lightly. This is not the hearing of a simple application but a full scale trial estimated to last six weeks in the first instance. I really cannot conclude that Mr Flood's knowledge and qualities coupled with self-denying ordinances as to length of cross-examination etc will necessarily ensure that the trial will take no longer. Experience of litigants in person suggests otherwise. I do not think that the sanction of wasted costs order is sufficient, where, as here, Mr Flood is now without significant means.

 

165. Whilst obviously there would be no material prejudice to the company, I do not think that I can find that the defendants' interests might not be prejudiced if the company were represented by Mr Flood. I am here concerned only that a party to a claim of this sort by a limited company has certain legitimate expectations that that party will be represented by solicitors and counsel and that accordingly it is likely that the plaintiff's case will presented professionally. It is an aspect of the administration of justice. I am not concerned about the merits or demerits of the defendants' case. Mr Flood's submissions effectively invited me to reach a provisional conclusion on the bona fides if not validity of the defences of the first and second defendants (where they coincide). I do not consider that it is either necessary or desirable for me to do so. I do not, for example, necessarily accept that the fact that, the third defendant, Morrison Construction Limited had advanced and developed the Plaintiff company's claim in the arbitration proceedings against the Welsh Office signifies an effective admission of liability towards the plaintiff company on the part of the Morrison Group. There are many reasons why a company may put forward a case towards one party whilst denying its validity vis a vis another party. It may well seem strange and indeed odd but it can be fully justifiable in the interests of the party which is placed on the horns of a dilemma, namely, that if it were to admit the claim it might be unable to recover it from the other party. On the other hand, the fact that earthworks claim is being advanced against the Welsh Office in this way is not to be ignored.

 

166. In my judgment the dominant consideration is: do the interests of justice require Mr Flood to represent the company? Sir Thomas Bingham in Radford v Samuel said that "...the rule which is ordinarily applied and which is rarely waived has solid basis in fairness and common sense ...". It seems to me that if the answer in Radford v Samuel was: No, then I cannot see how the answer could be otherwise here. Apart from Mr Flood's own abilities and resourcefulness the circumstances are no more exceptional than they were in Radford. If the question were to have turned solely on Mr Flood's capabilities and if his brief submissions, which occupied a small part of an afternoon, had proved over a longer and more taxing period to be typical, then on balance, but still with some hesitation, I might not have refused him a right of audience under section 27(2)(c) particularly since he accepts that its exercise would be limited and might be strictly controlled. But as I understand the present law and practice those factors would not have been sufficient. The injustice that the company will suffer if it were at this stage to have to abandon a claim which it has maintained and prepared for trial simply because it has run out of the funds necessary to employ solicitors and counsel is one which is the consequence of being incorporated with limited liability. It is one of the disadvantages of incorporation. Companies are not the same as litigants. It may seem unfair for a party which genuinely believes it that it has a good claim which is not manifestly lacking in bona fides (and which is supported by expert opinion) to be prevented from coming to the courts and from asking for a decision on it but on my understanding of the present law and practice that is a circumstance of that party's own making.

 

167. I therefore dismiss the application under section 27(2)(c). Since the tests to be applied if the application were for the exercise of the court's inherent power would be no lower than those which in my view are applicable under section 27(2)(c) the reasons and the result would be the same.

Index of Judgments


© 1997 Crown Copyright


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