Case No. B2/2005/2926
Neutral Citation Number: [2006] EWCA Civ 1366 
IN THE SUPREME COURT OF JUDICATURE 
IN THE COURT OF APPEAL (CIVIL DIVISION) 
ON APPEAL FROM BOW COUNTY COURT 
Royal Courts of Justice 
Strand 
London, WC2 

Date: Thursday, 6 July 2006
 
B E F O R E:

CHANCELLOR OF THE HIGH COURT
(Sir Andrew Morritt)
 
LORD JUSTICE CARNWATH 
 
LORD JUSTICE MOSES 
 
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LONDON BOROUGH OF TOWER HAMLETS
Defendant/Appellant 
 -v -
 
FRANK GREGORY (PERSONAL REPRESENTATIVE OF THE ESTATE OF PETER TERRANCE TERRY, deceased)
Respondent/Respondent 
-  -  -  -  -  -  - 
(Computer -Aided Transcript of the Stenograph Notes of
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-  -  -  -  -  -  - 
MR KELVIN RUTLEDGE appeared on behalf of the Appellant
MR KEVIN GREGORY (instructed by Legal Action) appeared on behalf of the Respondent

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J U D G M E N T 

1.	LORD JUSTICE MOSES:  No one can say that the London Borough of Tower Hamlets is not anxious to deploy every means it can, including the weapon of a sledge hammer, to seek to save council taxpayers money.  
2.	The history of this most unfortunate matter started when Mr Peter Terry, now sadly deceased, aged 85, with war service  behind him, sought to exercise his right to buy the premises in respect of which he was a tenant, of which the London Borough of Tower Hamlets was the landlord.  He sought to exercise his right to buy pursuant to the Housing Act 1985.  An issue arose as to when he sent his notice asserting that right; he said it was before 10 March 2003; the council said that it was after that period.  That was of importance because, if Mr Terry was right, he was entitled to a discount of £22,000.  If the council was right he was only entitled to a discount of £16,000.  Thus this whole sorry affair started with the London borough seeking to save £6,000. 
3.	Unfortunately it appears that Mr Terry was unable to obtain any clear response from the borough as to whether they were accepting he had sent his assertion of a right to buy on 16 March 2003 or not.  So difficult was it to obtain any answer, that he launched judicial review proceedings on 23 January 2004.  The judicial review proceedings identified the decision which it was sought to challenge as the decision of the borough that the RTV 1 application form had been received only on 10 June 2003 even though posted on 16 March 2003.  The application form said that a letter of 14 January 2004 contained the relief sought.  In the reasons advanced it was said as follows:
"As can be read in the letter of 14 January 2004 from Legal Action to Ms Lynn Fletcher, Housing Directorate for the London Borough of Tower Hamlets, our client is a pensioner of 85 years and a war veteran whom we are acting for on a pro bono basis.  The problem we have encountered throughout dealing with the council since 8 March 2003 is it seems [an] element of maladministration are prevalent and documentation has either been lost altogether or is never forthcoming."
4.	There then followed a statement of grounds relying upon propositions in support of the contention that the notice had been posted on 6 March 2003 and that that was good service  under Part V of the Housing Act 1985, read with Section 7 of the Interpretation Act 1978.  There was no response from the London Borough of Tower Hamlets.  Accordingly Mr Justice Charles gave permission on the basis that the claim form raised an arguable case on 27 April 2004.  He noted that the borough had not lodged an acknowledgement of service and expressed the hope that it would deal with this claim promptly and at an appropriate level.  That hope was never fulfilled.  The approach of the London Borough of Tower Hamlets in failing to serve an acknowledgement of service was echoed in its reaction to this litigation.  It did absolutely nothing.  
5.	Accordingly Mr Terry sought judgment by way of default.  This application was heard by Mr Justice Munby who gave a judgment in relation to it on 6 October 2004.  He described the borough's actions as disgraceful and noted  -
"The claim is under the right to buy legislation by one of its own tenants who is an elderly man aged 86 and in bad health.  He has endured several months of litigation believing that the claim was not going to be defended: the consequence of which, as seen by him, would be that he would be entitled to buy his council house at a very substantial discount."
The judge ruled however that it would not be appropriate to give judgment in default.   He made an order that the proceedings be continued in the County Court and that a defence be served by 21 October.  After making that ruling, there was then a discussion as to how quickly the case would be heard in the appropriate County Court, identified as Bow.  It emerged that, as it was thought then, it would be quicker for the hearing to proceed in the Queen's Bench Division.  Accordingly the judge made an order pursuant to  Civil Procedure Rule 54.20.  This provides  -
"The court may  -
 (a) order a claim to continue as if it had not been started under this section, and 
 (b) where it does so, give directions about the future management of the claim."
6.	Having made that order and having ordered that the  application continue as if it had been started under Part VII of the Civil Procedure Rules, the case then continued.  The pace hardly quickened however and there was no hearing in relation to the question of when in fact the right to buy was asserted and notice was served until 2005.  That was heard by a deputy judge, Mr Supperstone QC, in October 2005.  He gave a decision on costs on 15 December 2005.  He ordered  - having decided that Mr Terry was correct and the notice had been served on 6 March 2003  - indemnity costs against the London Borough of Tower Hamlets.  
7.	It then sought to appeal on two grounds, first, in relation to service which is not pursued, but also on the basis that the court had no jurisdiction to order that the borough pay costs other than costs which it conceded had been thrown away following the decision of Mr Justice Charles to grant permission.  This court granted permission to appeal on that point in March 2006, but it should be noted that in giving permission Lord Justice Dyson described the argument which I now have to consider as deeply unattractive.  
8.	I turn to the argument which is the subject matter of the appeal.  By Section 181 (1)  -
"A county court has jurisdiction  -
 (a) to entertain any proceedings brought under this Part [Part V], and 
 (b) to determine any question arising under this Part ..... "
Sub -section (2) provides:
(2) The jurisdiction conferred by this section includes jurisdiction to entertain proceedings on any such question as is mentioned in sub -section (1) (b) notwithstanding that no other relief is sought than a declaration."
Sub -section (3) provides  -
"If a person takes proceedings in the High Court which, by virtue of this section, he could have taken in the County Court, he is not entitled to recover any costs."
9.	The issue in this case therefore is whether Mr Terry could have taken proceedings in the County Court by virtue of Section 181.  It was argued on behalf of the London Borough of Tower Hamlets that he could have done so since the issues related, first, to his claim to the exercise of right to buy, pursuant to Section 132 (1) of the 1985 Act and, under Section 176 (3), to service.  He contended that once Mr Justice Munby had made an order under CPR 54.20 then the proceedings were to be deemed as if started under Part VII and it was plain that those proceedings could have been brought under the County Court.  
10.	I should stress that the mere fact that someone seeking to exercise his right to buy has launched judicial review proceedings under Part 54 does not oust consideration of the propriety of so doing.  If those proceedings ought properly to have been launched in the County Court because they were proceedings under Part V or requiring the determination of any question arising under Part V, then the court must consider whether they could have been brought in the County Court, not merely whether they should have been.  If they could have been brought in the County Court, then the claimant would not be entitled to recover any costs.  The question however in the instant appeal is whether they could have been brought in the County Court.  
11.	I, for my part, reject the submission that the mere fact that an order is made under CPR 54.20 necessarily leads to the conclusion that the proceedings could have been brought in the County Court.  CPR 54.20 does not require the court to deem the proceedings to have been brought under Part VII or in the County Court.  It merely requires the proceedings to continue as if they had not been started under CPR 54.20.  Thus those proceedings continue as if they had been brought under CPR Part VII.  In my judgment, what is required is analysis to discover whether the proceedings, when they were launched, could have been brought in the County Court.  As I have said, in so far as those proceedings raised questions as to the date of service and whether the service was sufficient, they clearly could have been brought in the County Court under Part V.  
12.	That is not the whole of the story.  It is necessary to analyse what happened as long ago as January 2004.  In the proceedings for judicial review, in respect of which, be it noted, Mr Justice Charles gave permission, it appears that reference was made to a letter of 14 January 2004 impugning the administration of the London Borough of Tower Hamlets, and the relief sought was that referred to in the letter of 14 January 2004.  The London Borough of Tower Hamlets no longer, apparently, has that letter.  It definitely has not produced it in support of its contentions today.  It is unable to help us as to precisely what remedy was sought at that time.  That is not surprising since it failed to file any acknowledgement of service.  That is important because, in failing to provide any acknowledgement of service, it deprived itself of the opportunity of striking out the proceedings on the basis that they should have been launched in the County Court and could have been launched in the County Court (see CPR 54.13).  It did nothing.  When it was finally allowed to defend, through the mercy of Mr Justice Munby, it filed a defence making no reference to the propriety of judicial review proceedings.  
13.	The most that the London Borough of Tower Hamlets can now advance is that despite the order of Mr Justice Munby, that, to save time, the proceedings should continue in the High Court, Mr Terry should have sought to persuade the judge to have the matter transferred to the County Court so that there was jurisdiction to order costs.  It is that approach, no doubt, that Lord Justice Dyson found deeply unattractive.  If, in reality, the proceedings, when they were launched in January 2004, could have been brought in the County Court, then, however unattractive that argument, the court would not have had jurisdiction to order costs.  
14.	In my judgment there is insufficient material to say that these proceedings were solely under Part V and could have been brought in the County Court.  So far as one can tell from the proceedings the proceedings were properly brought as judicial review proceedings, challenging the consequences of the maladministration of the London Borough of Tower Hamlets, maladministration which has been exemplified in its whole attitude to this litigation, ever since those proceedings were launched.  
15.	In those circumstances I cannot see that these were proceedings in January 2004 which could have been brought in the County Court by virtue of Section 181 (1); they raise issues which were not merely brought under Part V but much more generally challenge the responses and the administration of the London Borough of Tower Hamlets in relation to Mr Terry's assertion of his right to buy and the date when he served his notice.  
16.	Thus, I reject the contention that the court had no jurisdiction to make an order for costs, and I reach that conclusion with some satisfaction since it amply reflects the merits of the London Borough of Tower Hamlets' attempt to save itself further money in relation to costs. 
17.	LORD JUSTICE CARNWATH:  I agree.  I would emphasise, like my Lord, this conclusion turns on the very unfortunate history of this case and certainly is not to be taken as providing any guidance as to how the system would operate in a case where the local authority acted improperly.
18.	CHANCELLOR OF THE HIGH COURT:  I agree with both judgments and I have nothing further to add.  The appeal is dismissed. 
Appeal dismissed with costs subject to detailed assessment. 
Order: Appeal dismissed