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	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Phillips & Ors v Symes & Ors [2004] EWHC 2329 (Ch) (20 October 2004) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2004/2329.html Cite as: [2004] EWHC 2329 (Ch)

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IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		20th October 2004

Mr Justice Peter Smith :

INTRODUCTION

1. On 30^th July 2004 (reference number [2004] EWHC 1887 (Ch)) I handed down Judgment determining an issue ("the Issue") as to the mental fitness of Mr Symes, the First Defendant in this action, over various periods culminating in a hearing that took place before me on 30^th April 2003.
2. That hearing and the judgment arising from it was the subject matter of an appeal to the Court of Appeal (reference [2003] EWCA Civ 1769 dated 5^th December 2003), when in the main the Court of Appeal substantially dismissed Mr Symes' appeal against the decision I had given.
3. By the judgment of 30^th July 2004, I determined that Mr Symes had full capacity on the various dates identified in the Issue, which was before me in that hearing.
4. The present hearing before me is in relation to the costs of the Issue as heard and determined by me, as between all the parties (including Dr Zamar ("Dr Zamar")). He had been joined as a party by the order I made on 30^th July 2004, pursuant to CPR 48.2, for the purpose of costs only. That was before me for directions and the question of his liability to pay costs will be determined at a separate hearing.
5. The remaining issues as to costs relate to the liability as between the Claimants in the original action (the "Administrators"), Mr Symes and the five firms of solicitors joined in the action arising out of the order for determination of the Issue (the "Solicitor Respondents").

BACKGROUND

6. In order to understand the judgment it is necessary to go into the background in some detail. To set out the full history would be disproportionate and I refer to the earlier judgments and the judgment on the determination of the Issue which sets out the background in more detail.
7. The Issue as to Mr Symes' capacity was first raised in the Court of Appeal (see the section in my judgment of 30^th July 2004 headed "How Did the Issues Arise" and the later section headed "An Apparent Sense of Unease").

PROCEDURAL HISTORY

8. The Administrators were concerned that Mr Symes, through his then solicitors Bracher Rawlins, were asserting, based on Dr Zamar's report, that he lacked capacity, not merely for the entirety of the period covered by these proceedings but in effect since he had a stroke in 1980. The Administrators' advisors were well aware of the potentially serious consequences of that state. If Mr Symes had lacked capacity merely for the currency of the present proceedings, it would have meant that over thirty orders would have had to be set aside, numerous costs orders would have to be set aside, and the Administrators would in effect have to commence the action again with Mr Symes being represented by an appropriately appointed litigation friend. The costs in the action already incurred would be wasted, leading to a potential waste of at least £7 million.
9. Nor did the matter rest there. If Dr Zamar's report (and Dr Green's, who subsequently provided a report which supported Dr Zamar's conclusions) had been accepted it meant that Mr Symes had been incapable because he was a patient and had been such a person within the meaning of CPR 21 since his stroke in 1980. This could have given rise to the conclusion that every transaction in which he had participated during that period was null and void because he lacked capacity to enter into them.
10. Further, Mr Symes had been made bankrupt in 2003 by one of the Solicitor Respondents (Lovells) who had petitioned for and obtained his bankruptcy based on a debt due to them for services rendered. If Mr Symes had been incapable of entering into a contract for their services that too could have been null and void and it is at least arguable that the bankruptcy order would have been set aside and Lovells would be unable to recover their costs. Equally, all the other Solicitor Respondents at various times had represented Mr Symes in these proceedings. Any money that they had received was equally liable potentially to a claw back by Mr Symes if he lacked capacity.
11. Finally, in the overall context the Administrators had indicated (as I shall set out below) that if Mr Symes had lacked such capacity and all the orders were set aside, they would seek to recover their wasted costs from the Solicitor Respondents on the basis that they would be in breach of their warranty of authority in accordance with the Court of Appeal decision in Yonge –v- Toynbee [1910] 1 KB 215.
12. As Mr Steinfeld QC for the Administrators said in the course of his submissions, this was an unusual state of affairs. Mr Symes was in effect asserting his lack of capacity, but no one was taking any steps to bring this to the court for determination. The consequences of such a finding as set out above would have had far reaching effects beyond merely the litigation. It is also true that it would be necessary for the court to investigate Mr Symes' capacity for a number of reasons.
13. First, purely from the Administrators' point of view they could not take any further steps in the action until Mr Symes' mental capacity was determined. This has created a considerable delay. As a result of the Court of Appeal determination, the question of whether or not Mr Symes complied with the undertakings he offered after the hearing of 30^th April 2003 before me and whether or not he has committed other breaches of other substantive orders in the action had been remitted to me for an expeditious consideration. That consideration could not be reinstated until the question of Mr Symes' capacity was determined. That is a very important consideration of the court seized as it was with an outstanding committal application against Mr Symes. Second, public policy considerations require the court to be satisfied that it should take no step or make an order (and most markedly an order for imprisonment) against someone whose mental capacity was in doubt. It would bring the court into disrepute if the parties had proceeded (for example) with the restored application for committal against Mr Symes without determining the serious issue raised as to his mental capacity. Given Mr Symes' failure to draw it to the Court's attention himself, or take any steps to have the matter determined, the Administrators would in my view have been in breach of their obligations to the Court to proceed further in the action without bringing the capacity issue to the Court's attention for determination.
14. That is not to understate however the Administrators' personal interest in having the Issue as to Mr Symes' capacity being determined. First, the prosecution of the action was in effect stayed until that issue could be resolved. That meant that they would not be able to progress the committal application. The committal application is important for two reasons. First, it is necessary for the Court to determine once again whether or not Mr Symes has committed serious contempts of court (and the evidence adduced by the Administrators thus far shows a strong prima facie case). This is potentially very serious for Mr Symes as he has already admitted previous contempts in respect of which he received a suspended sentence of imprisonment. Second, the hope of the Administrators is that in addition to the need for the question of the contempt to be determined by the court, Mr Symes will (in their eyes) come to his senses and cooperate with them in identifying, locating and realising all of the assets of the partnership which they believe to exist outwith the jurisdiction of this court. I stress (lest it be misunderstood), that by that observation I am merely repeating without comment the Administrators' stance. I am not forming any view as to whether or not Mr Symes has definitely committed a contempt nor am I forming a view as to whether or not there are assets as the Administrators believe. Those are for a later hearing. The second pecuniary interest of the Administrators is to seek to have the Issue determined in their favour so that the costs of the action are not wasted and they can proceed in addition to the committal application with the outstanding accounts and enquiries which were ordered as a result of obtaining a judgment in default against Mr Symes in April 2003. Finally, if the Issue is determined against them, the Administrators would seek to cover the costs from the Solicitor Respondents.

THE ADMINISTRATORS COME TO COURT

15. On 16^th December 2003 I heard an application issued by the Administrators for further consideration of the progress of this action in the light of the Court of Appeal judgment. On that day I ordered that there be an issue to be tried as to Mr Symes' capacity and made consequential directions for the hearing of that application on the 1^st March 2004 or so soon thereafter as possible, with a time estimate of 3 days.
16. At that stage the Administrators only sought that the Issue was to be determined as between them and Mr Symes.
17. In early January 2004 it was quite clear that the Administrators had formed the view that the determination of the Issue as between them and Mr Symes would not adequately address all the potential consequences of a finding that Mr Symes lacked capacity.
18. Initially they sought the views of some of the Solicitor Respondents as to whether or not Mr Symes had capacity (see for example the letter of 22^nd December 2003 sent by Lane & Partners, the Administrators' solicitors, to Keith Oliver a partner in Peters & Peters). This was followed up by a letter to Peters & Peters of 12^th January 2004 where as a matter of courtesy they were informed that it was almost inevitable that Mr Oliver and another partner in his firm, Mr McCann, would be served with a witness summons to attend to give evidence in relation to their understanding as to Mr Symes' mental capacity during the period they were acting form him. Three days later, on the 15^th January 2004, Lane & Partners intimated a claim against Peters & Peters on the assumption that Mr Symes was found to be mentally incapable in accordance with the Yonge –v- Toynbee principle. The letter indicated that the costs orders during the period when Peters & Peters were acting would be between £1 and £2 million.
19. On 26^th January 2004 Lane & Partners again wrote to Peters & Peters intimating that a hearing of an application as to how the Issue should be considered would shortly take place and "the judge will have to determine as to whether your firm should be joined to litigation for the purposes of determining the Issue as to Mr Symes' capacity". Once again the letter stressed that the Administrators did not believe that there was any foundation for the suggestion that Mr Symes lacked capacity. The next day Lane & Partners wrote informing Peters & Peters that they did not intend to issue any witness summonses either against Mr Oliver and Mr McCann or against various counsel whom they had instructed during the course of their retainer.
20. On the same day Lane & Partners intimated (amongst other things) a Yonge –v- Toynbee claim against Bracher Rawlins. This of course put that firm in a difficulty because it was simultaneously seeking to assert a lack of capacity on behalf of Mr Symes. Paragraph 9 of the letter said, "we will, if you do not do so, seek a direction from the Judge as to whether his former legal advisors and your firm ought formally to be joined to this application". On 2^nd February 2004 Lane & Partners wrote to Peters & Peters indicating that the hearing was to be listed to be heard on 5^th or 6^th February 2004. In that letter they drew attention to the consequences of the wild allegations as to Mr Symes' mental capacity on many of the solicitors who had formerly acted for Mr Symes, including the Solicitor Respondents. The letter concluded "we have asked the court to determine whether Mr Symes' former legal advisors and Bracher Rawlins should be joined as parties to the Issue. It is certainly not our wish to join any further parties to these proceedings". Peters & Peters, on 3^rd February 2004, wrote indicating that they did not agree that it was necessary or appropriate for them to be joined as a party and made various observations in respect of the intimated Yonge –v- Toynbee claim, but invited Lane & Partners to give careful reconsideration to an application to join Peters & Peters as a party. By that time Lovells (another of the Solicitor Respondents) had been brought in and Lane & Partners, on 4^th February 2004, replied to Peters & Peters, and copied it to Bracher Rawlins and Lovells. In that letter they indicated that an application returnable now on the 11^th February 2004 was not an application to join any of the Solicitor Respondents. It was suggested that, as Bracher Rawlins had raised the allegation, Lane & Partners believed it was only right that the court be given the opportunity to consider and determine whether any legal advisor ought to be joined and reiterated that it was not the Claimants' wish to join any further parties to the action and risk consequential further delay in the proceedings or generally to inconvenience professional advisors merely for the sake of it. In paragraph 4 they express the view:-

"It would be for the court to decide whether or not it is appropriate to join any of Mr Symes' former legal advisors (including yourselves) and Bracher Rawlins as parties, as to the Issue of Mr Symes' alleged mental capacity. The court may decide that it is appropriate to join such advisors so that they will be bound by the decision of the court at the substantive hearing. Should the court decide at that stage that Mr Symes is mentally incapable of giving instructions and had been so over the past 3 years, the necessary legal advisors will need to be bound by the order for the purposes of enforcement of any costs order against them under the principle of Yonge –v- Toynbee".

21. It will be seen that that crucial paragraph addresses two separate matters. First, Lane & Partners express the view absent any positive steps by Mr Symes that the matter has to be brought before the court. Second, (and there is no doubt about this) they can well see that the capacity issue will be relevant to a claim that they might bring under the principle of the Yonge –v- Toynbee. They do not want in effect to have to re-litigate that against the Solicitor Respondents and it is quite clear that the purpose of joinder from the point of view of the Administrators was to have one determination as to Mr Symes' capacity both as against Mr Symes and as against the Solicitor Respondents, to avoid the need to re-litigate the issue. I have already observed that they had sought voluntary evidence from the Solicitor Respondents. The correspondence also showed there were serious issues of privilege affecting what evidence the Solicitor Respondents could give on any hearing as to Mr Symes' capacity.
22. On 4^th February 2004 Lane & Partners wrote to Lovells (and copied the long list of former legal advisers and Mr Symes into the letter). In that letter they reiterated again their reluctance to join the Solicitors and their belief that the Court should be given the opportunity to determine whether or not those firms would be affected by the allegation and therefore should be joined. Once again, Lane & Partners are pursuing this dual track.

HEARING ON 11^TH FEBRUARY 2004

23. At that hearing were counsel representing the Administrators and counsel representing Mr Symes. None of the Solicitor Respondents attended (as they had not yet been joined??).
24. The Amended Application before me raised first under paragraph 4 "that it may be determined whether Peters & Peters and/or any other former or current legal advisor to Mr Symes in these proceedings ought to be joined as a party to the trial of the Issue of Mr Symes' mental capacity". A number of reasons were set out in the application. First, under paragraph 2 it was asserted under CPR 19.2(2) the court might order a person to be added as a party in order to resolve all matters in dispute or connected issues. It also suggested that the Issue of Mr Symes' mental capacity might have serious implications for legal advisors "…the legal advisers should be joined as parties so that they may have an opportunity at being heard at the trial of the Issue and so that they are bound by the decision". This was expanded upon in paragraph 3 and an express reference was made to the possibility of a Yonge –v- Toynbee application and that if the allegations were to be pursued "the legal advisers [ought to] be joined as parties in their own right, so that they may have an opportunity to be heard on this issue and be bound by the decision".
25. Of course that necessity only arises if the Administrators assert a claim which requires that determination. That was not a matter which was considered when I made the order of 16^th December 2003. The question arose as to whether or not the capacity issue ought to be determined as against the Solicitor Respondents. In the context of the Administrators that would only arise if the Administrators made a Yonge –v- Toynbee claim against them. It is a little disingenuous of the Administrators to assert that it is in the interests of the Solicitor Respondents to be heard, when the purpose clearly is for there to be one hearing and the intent on the part of the Administrators is that the Solicitor Respondents would be bound by the decision. The purpose of that is clearly cost saving and the avoidance of inconsistent judgments of the Court on the same issue albeit on the basis of different evidence.
26. That latter point of course would clearly be very significant in this case. In the Issue as between Mr Symes and the Administrators the Solicitor Respondents could be present as witnesses but, absent any waiver of privilege by Mr Symes, they would not be able to give evidence of privileged material which might assist their evidence to the Court. As regards the Administrators' claim against the Solicitor Respondents, it is difficult to see how, as Mr Symes would also be involved in that determination, privilege would not necessarily be waived.
27. If that is wrong, if Mr Symes intimated proceedings against the Solicitor Respondents arising out of his lack of capacity, clearly on that basis privilege would be waived.
28. It is quite conceivable therefore that a court, hearing an issue as between the Administrators and Mr Symes, would not necessarily have all the material before it for a determination. It is possible that the hearing of that issue could lead to a determination that Mr Symes lacked capacity, whereas the subsequent hearing as against the Solicitor Respondents (with more evidence deployed) could lead to an opposite conclusion. Thus there is the potential for bizarre results. As between the Administrators and Mr Symes, he is incapable and all the orders in the proceedings are set aside, but as between the Administrators and the Solicitor Respondents, he was not incapable so their claim for recompense under the Yonge –v- Toynbee principle would fail.
29. In their skeleton argument for the hearing of the 11^th February 2004, the Administrators reiterated their reluctance to join the Solicitor Respondents. However, such reluctance was in my view tempered by a necessary acceptance on their part that the realities necessitated the joinder of the Solicitor Respondents.
30. On the hearing (after the Yonge –v- Toynbee Issue was raised) I asked Mr Steinfeld QC "so what do you propose we do about it" (page 10, line 24). His response was that the only issue is whether they ought to be joined for the purposes of the application so that they can be bound.
31. I then set out how I did not see how they could avoid being joined, because of the inconsistencies of the evidence, which I have already made mention. Later on in the transcript at page 17, I expressed my provisional views as to the joinder and whether or not Bracher Rawlins could continue to act for Mr Symes when they were simultaneously faced with a Yonge –v- Toynbee claim, which would arise if they were successful on behalf of Mr Symes establishing that he lacked capacity. After a short rise, Mr Steinfeld QC (page 27) acknowledged in the light of my observations that they believed that the Solicitors ought to be joined.

11^TH FEBRUARY 2004 ORDER

32. As a result of that acknowledgement I ordered that the trial date provisionally be fixed for 1^st March 2004 be vacated and (pursuant to CPR 19.2) ordered that the Solicitor Respondents be joined (1) so that they may be bound by the outcome of the trial of the Issue, (2) that the court might effectively determine what costs were thrown away as a result of a determination that Mr Symes lacked capacity and (3) that they might be bound by the outcome to the trial in respect of any other consequential orders.
33. A timetable was set, with a hearing fixed for the 5^th July 2004, with an estimate of 3 weeks. The Solicitor Respondents were given liberty to apply in respect of their joinder.

THE HEARING OF 3^RD MARCH 2004

34. This hearing arose because the Solicitor Respondents (for the most part) sought to set aside the joinder order. Not everybody took the same stance and the stance of some changed during the course of the hearing. A number of various proposals were deployed during the course of submissions. For example, it was suggested by Mr Barker, who appeared on behalf of Lovells, that there might be a split hearing as to different times when Mr Symes' capacity was to be determined. That seemed to me to be obviously unacceptable. The difficulty was that the medical evidence addressed not merely capacity during the course of the litigation, (initially arising out of the hearing in April 2003), but also express views which affected his mental capacity as far back as 1980. The ramifications therefore went beyond the mere dispute between Mr Symes and the Administrators arising out of the hearing of April 2003. It would be readily appreciated that unlike normal adversarial litigation this could hardly be resolved by consent. It is an enquiry as to Mr Symes' capacity.
35. During his submissions Mr Steinfeld QC before me on this hearing suggested that the enquiry would have led to a determination that would operate in rem. I do not agree with that, but it was plainly in the interests of justice and seeing that justice is done fairly and sensibly that the court determines the Issue as to Mr Symes' capacity in one hearing alone. To suggest that it would be appropriate for the court to visit Mr Symes' capacity in a number of independently binding hearings between different parties with different evidence would be absurd. It would bring the administration of justice into disrepute, especially as there was a possibility that differing decisions could have been arrived at.
36. A similar (albeit shorter debate) took place between Mr Mansfield QC and myself on 3^rd March 2004, as a result of the exchanges that took place between Mr Barker and myself. At page 84 he submitted "we submit that it is essential that if they are joined, that is deemed joinder, deemed under Part 20. There is no other proper way in which it can be done and the Claimants and Mr Symes for that purposes should be deemed Claimants because they each have contingent benefits which they stand to gain". Later (page 85) he again reiterated that they were plainly seeking to obtain a benefit and therefore they must be at risk as to costs. This reflected Mr Steinfeld QC acknowledging (page 72 and 73) that the Administrators might be at risk as to costs depending on the outcome of the determination of the Issue. Ultimately on page 97 the following exchange took place between Mr Steinfeld QC and myself:-

"Mr Justice Peter Smith: What about Mr Mansfield's point about you being in a position of having brought them in under a Part 20 claim?

Mr Steinfeld QC: In one sense that is right, but we were inevitably be joined (in fact I took your Lordships words) they must be inevitably be joined. We were inevitably driven to that position because of the allegations that Mr Symes through his expert evidence that has been adduced on his behalf, is making. He is in fact making an allegation that he ahs been incapacitated throughout these proceedings. If it is untrue and if your Lordship were to find that it is untrue then the joinder of these solicitors is entirely attributable to him

Mr Justice Peter Smith: Yes, but the normal consequence of that is that they would get their costs from you and you would have to recover them from Mr Symes. (In the event that the allegations are untrue)

Mr Steinfeld QC: That is not always the inevitable consequence.

Mr Justice Peter Smith: No, I said normal.

Mr Steinfeld QC: I am not asking your Lordship to make any decision on costs now.

Mr Justice Peter Smith: All I want is an acknowledgement on your part that our clients accept that there is a possibility that if Mr Symes fails to establish the case that the court might make an order for costs against them in favour of the solicitor.

Mr Steinfeld QC: I think I earlier this afternoon accepted that, that we are to that extent at risk. It is also in the discretion of the court when the court comes to exercise its discretion will have to do so having heard all the evidence in relation to the issue, the basis of the findings that the court makes and the basis of the court's findings as to the responsibility of each party for the costs that have been incurred; and who ought, in equity, to bear those costs."

37. Mr Mansfield QC's desire to have it made clear that the application is to be treated as if it were a Part 20 application, is to protect the costs position. Normally (and this is accepted by Mr Steinfeld QC) where a Defendant is faced with a claim by an impecunious Claimant and brings in another party to a Part 20 claim, if the Defendant successfully defends the Claim against the impecunious Claimant nevertheless he is obliged to pay the costs of the Part 20 proceedings and not evade responsibility by suggesting that the Part 20 Defendant recover its costs from the unsuccessful Claimant.
38. That is to be contrasted with the normal rule that where parties are co-Defendants and the Claimant is insolvent the unsuccessful Defendant usually bears the responsibility of the successful Defendant's costs directly ("a cut through order").
39. Equally, the Claimants were anxious to indicate that they were reluctant to join the Solicitor Respondents (see above). Thus, they framed their application as a Part 19 Application so that they would be able to assert (as indeed Mr Steinfeld QC did) that the decision to join the Solicitor Respondents was not their decision, but a decision of the court, with which they agreed.
40. I do not think that this is a matter of substance. It seems to me plain that the question as to the costs consequences of a joinder, whether under CPR 19 or CPR 20 is a matter for the Court's discretion. It is true that (assuming an application is made within the requisite time limits) a Part 20 Application is made by a Defendant as of right, whereas a joinder issue under Part 19 involves asking the court to consider the matter and exercise its discretion to add a party. Nevertheless, it is of course open to a party to argue that there should be no joinder. That was open to Mr Steinfeld QC on the 11^th February 2004. Whilst he initially sought to argue joinder was not necessary (as per his skeleton) he did not seek to argue against my suggestion that joinder was inevitable. In fairness, that was a stance which he fully supported before me in this hearing also. He accepted the reason that I put forward as leading to an inevitable conclusion that the Solicitor Respondents had to be joined.
41. Now of course there is a benefit to the Administrators in this, in that they have the Solicitor Respondents bound into one action with Mr Symes to determine his capacity. Thus they no longer have to prove the Issue twice.
42. There is a second advantage for them. Once the Solicitor Respondents are brought in, as I have said, it is inevitable that Mr Symes would have to waive privilege expressly or by implication in those proceedings. Indeed directions were made on the 3^rd March 2004, leading to that matter being resolved. In the events that happened, as I will set out in this judgment, no such disclosure occurred. Nevertheless, had the matter proceeded on the basis envisaged, as a result of the joinder of the Solicitor Respondents on 3^rd March 2004, the Administrators would have the benefit of a full deployment of evidence by the Solicitor Respondents. It is extremely unlikely that any such deployment would harm the Administrators in their case against Mr Symes. The prospects of the Solicitor Respondents from their own privileged discussions revealing evidence, which showed that they believed Mr Symes lacked capacity, was remote. In that context it is important to recall that the Administrators had secured access to Mr Symes' solicitors' files for transactions before the action and had deployed that in evidence as an exhibit to the eighteenth affidavit of Mrs Eyre.
43. Nevertheless, the need for the Administrators to address this issue arises out of the disinterested approach Mr Symes took to issues concerning his own mental capacity. It is important to recall that apart from the representation in a limited respect on 11^th February by Bracher Rawlins and Mr Purle QC, Mr Symes showed no interest in participating in these proceedings, nor in the events that happened in the hearings of the Issue which took place in July. His case was, in effect, assisted by the Official Solicitor (funded by the Administrators) deploying the evidence of Dr Zamar and Dr Green in order to assist the court. All of this of course put the Administrators in a very difficult position for the reasons that I have already set out in this judgment.
44. I also observe that pursuant to the order of 11^th February 2004, and as directed by that order, the Administrators had served a Points of Claim on the Solicitor Respondents in seeking recompense for costs thrown away in the event that it was determined that Mr Symes lacked capacity.

HEARING 19^TH MARCH 2004

45. When the parties came to try to implement the order, it was found to be a difficult task. Accordingly, (before the order was drawn up and agreed) the parties returned to me on the 19^th March. At that stage the attitude of the Solicitor Respondents was not uniform. The question was access to privileged material. Some of the Solicitor Respondents were willing to provide evidence in respect of the Issue as between the Administrators and Mr Symes without having recourse to privilege material. Others were not prepared to provide any evidence at all and others were not prepared to provide evidence unless they could deploy their evidence fully at that stage. The concern was that evidence might not be as full and accurate and might be disbelieved at that stage and lead to adverse criticism of Solicitor Respondents of their evidence when witnesses had been deprived of deploying fully material which was privileged, but which would have led their evidence to be dealt with differently.
46. The parties between them came up with what I can say is an ingenious solution to the conundrum and this reflected the order that was made on 25^th March 2004. What was proposed was that there would be one trial of the determination of Mr Symes' capacity, but it would be a two-stage trial. The first stage would involve the Administrators and Mr Symes. In that part the Solicitor Respondents would be able to provide evidence if they wished on the basis that if there was a determination that Mr Symes lacked capacity the determination would be a provisional one and would be revisited in the event that the Administrators sought a Yonge –v- Toynbee order against the Solicitor Respondents. At that stage the Solicitor Respondents would be entitled to deploy their privileged material and as the judgment arising out of the First Part of the Issue was a provisional one only, there would be no issue estoppel and no binding decision, which would possibly cause the court to have difficulty in revisiting the Issue in the light of fresh evidence.
47. On the 19^th March 2004, an extensive exchange took place between Mr Steinfeld QC and myself in relation to the cost consequences that would arise. I refer to pages 17 to 23 of the transcript. The key part is as follows:-

"MR JUSTICE PETER SMITH: It seems to me, Mr Steinfeld, that what you are really boxing around is trying to avoid being exposed to a liability for costs against the solicitors.

MR STEINFELD: There is a certain element, of course there is. Could I say something in relation to those costs. At the last hearing your Lordship put to me, do I accept that we are at risk as to costs, and I said, "Yes, we are at risk because costs at the end of the day are in the discretion of the court." Certainly we are not seeking a pre-emptive costs order, although Mr Mansfield's skeleton argument almost seems to suggest that he is seeking some form of pre-emptive costs order. Could I make our position on costs quite clear. Whilst I accept that we are at risk as to costs if, on the hearing of the capacity issue, it is determined that Mr Symes does not lack capacity, we do not accept that in that situation it would be for us to pay the costs of the solicitors. I say that for this reason. The capacity has been raised by Mr Symes. Its impact is far reaching and it impacts upon the authority of his solicitors to represent him in the proceedings. We are not saying that Mr Symes is incapacitated in any way. We believe, as indeed we understand so do the solicitors, that it is a bogus allegation but that remains to be determined. If it is determined in that way then the joinder of the solicitors has been necessitated because of the potential repercussions of Mr Symes's allegations in so far as he is putting in issue the authority of his solicitors to have acted for him in the proceedings and accordingly the question of costs, which is again a discretion, would then arise. We will be submitting in that situation that whilst all parties would clearly, for what it is worth, be entitled to an order for costs against Mr Symes, it would be quite wrong and unjust to make us pay the costs of Mr Symes having effectively raised an allegation against his own solicitors, because that is all it would have come to- had wrongly raised an allegation that his solicitors lacked authority to act for him at the material time. So although we accept- and I am not asking your Lordship to rule on this –

MR JUSTICE PETER SMITH: No, I will not, or even give any indication.

MR STEINFELD: -- Or even give an indication, but I think it is absolutely right that I make my position clear because floating underneath some of the skeleton arguments your Lordship may have seen, perhaps more expressly Mr Mansfield's skeleton argument, there appears to be an assumption that these solicitors can incur huge amounts of costs in this issue safe in the knowledge that in the most likely circumstance (which is that Mr Symes is held to have capacity) we are going to be liable to pay their costs.

MR JUSTICE PETER SMITH: That is a natural consequence of the way it is structured though, is it not, because it is your decision to bring them in and you bring them in on a fall- back position. That would be the natural consequence of any Part 20 claim. I am just saying that because costs are in the round, but is not the easy way to address this to go back to where we were, therefore what you do is you have your private fight with Mr Symes and if you want you get evidence from the solicitors to assist you in that which does not deploy privileged material, and I have no doubt that it would be in their interests to assist you in that regard. The problem only arises if you lose that issue. If you lose that issue you will have those wasted costs but in the sense what you could do then is you would be seeking those costs back from the solicitors on that finding, so you would be in a much better position because then you would be pursuing a positive case with evidence in your favour and a decision in your favour, which is not binding on the solicitors. But on your analysis of the situation you think it is most unlikely that that is a scenario that is going to run because you do not believe this is anything other than a bogus claim. Why not then just do what I said and that is stop the proceedings against the solicitors, have that quick determination, because this idea of this hybrid thing and a preliminary ruling and so on is a nightmare, I think, and I think you should either do it all or only do the separate thing. What you should not do is try and roll things up in some kind of intervening period.

MR STEINFELD: Yes. Could I just mention two matters. First of all, although it was our application to raise the issue of the joinder of the solicitors- and we raised it quite properly- it was in fact your Lordship who said, and we accept that, as I think your Lordship put it, it is inevitable that they have to be joined.

MR JUSTICE PETER SMITH: Only as a result of your application. I am not going to get involved in the apportionment of blame.

MR STEINFELD: We did not apply to join them, we asked the court to determine whether they ought to be joined if we put forward the application and your Lordship said yes, they ought to be joined. It is not a question of blame because what I am saying to you is that your Lordship thought it inevitable that they should be joined because what your Lordship foresaw was an unholy mess if they were not, and the unholy mess would be that the court determines on limited material without the solicitors being joined that Mr Symes is incapacitated and then sets aside orders in proceedings and then when the Yonge v. Toynbee claim is raised against the solicitors, the solicitors then say, "Well, we are not bound by the finding of capacity and we want to put that in issue again." They put that in issue again and they deploy material which was not in court when the court determined the incapacity. The court then on that material finds that he was not after all incapacitated and you have irreconcilable judgments of the court.

MR JUSTICE PETER SMITH: I agree with you and logically that is impeccable. The disadvantage from your clients' point of view is that it exposes them to potential claims, a large amount of costs in respect of something which they do not have any credibility about. That is the conundrum.

MR STEINFELD: That is the conundrum. That is actually what we were seeking to do with our two stage process, to try and find a way out of that conundrum so that you do not get irreconcilable judgments in relation to incapacity whilst at the same time –

MR JUSTICE PETER SMITH: Could I suggest that what we do is we have my suggested stage 1 and we can actually revisit this at the end of stage 1 because at the end of stage 1 you can actually deploy these arguments again to seek an order that stage 2 arises and how you participate in that stage.

MR STEINFELD: I am more than happy to do that.

MR JUSTICE PETER SMITH: Is that not the best way to deal with it?

MR STEINFELD: I am quite happy with that, yes.

MR JUSTICE PETER SMITH: That then addressed your hybrid situation. It means that the solicitors at the moment are not going to be faced with having to spend a vast amount of money defending the case and from their point of view I can well understand why they have great concerns about it because they do not want to have a position whereby they have to spend a lot of money dealing with a claim which I have no doubt they believe to be unmeritorious and it is the only recourse they can have for costs against Mr Symes. It is just as invidious for them as it is for you- more invidious for them in many ways because they have been out of this litigation for some little time and it is professionally very difficult for them".

48. It seems to me impossible for the Administrators in view of that exchange to argue otherwise than the fact that they accepted that the joinder of the Solicitor Respondents was anything other than a deemed Part 20 basis. Further given the service of the Points of Claim, after the order of 11^th February 2004, any other such conclusion seems to me to be impossible. However, in my opinion, it does not actually matter whether that was as a result of an order made by the court after a fought argument or a suggestion from the bench, which was acceded to without demur by the Administrators. Mr Mansfield QC's analysis on the 3^rd and 19^th March that it should be treated as a Part 20 Claim was never seriously disputed.
49. Equally, it is clear that Mr Steinfeld QC reserved the right to argue that the costs issue consequences would remain alive and there was no suggestion that the Administrators by acknowledging that the procedure would be deemed to be a Part 20 procedure necessarily acknowledged that they would be liable for costs of joining the Solicitor Respondents in the event that the determination of the Issue was in the Administrators' favour.
50. As a result of the hearing on the 19^th March 2004 the Issue was altered as set out earlier in this judgment, the hearing was reduced to five days and a revised timetable was set. In addition the Yonge –v- Toynbee claim brought against the Solicitor Respondents was stayed (paragraph 5) and all costs as between the Administrators and the Solicitor Respondents were reserved.

SUBSEQUENT EVENTS

51. After various exchanges in correspondence, ultimately some of the Solicitor Respondents provided statements in short form which were relied upon by the Administrators, Mr Slade gave evidence in effect on behalf of Mr Symes and a witness statement provided by Mr Huntley of Lovells was not used by anybody.

DETERMINATION OF THE ISSUE

52. I determined the Issue as set out in my judgment to which I have made reference. I determined that at no time in respect of any of the time frames referred to in the Issue did Mr Symes lack capacity.
53. I directed the present hearing to be convened to address the costs consequences arising out of that determination.

LIABILITY OF MR SYMES

54. Mr Symes was not present before me (continuing his policy of non-attendance of proceedings despite the importance of them to him). Nevertheless, the claim was brought forward as a result of medical evidence adduced on his behalf and applications made to the Court of Appeal. At all times it has been open to him to resile from the conclusions put forward by that evidence. He never did so. He has caused the proceedings in respect of the Issue. Accordingly, I order Mr Symes to pay the Administrators' costs of the Issue, such costs to be the subject matter of a detailed assessment on a standard basis if not agreed.

COSTS AS BETWEEN ADMINISTRATORS AND SOLICITOR RESPONDENTS

55. The competing arguments are as follows. The Solicitor Respondents point to the exchanges that took place at the hearings of the 3^rd and 19^th March. They submit that it was envisaged that their participation was on the clear basis that they were Part 20 Defendants to a Part 20 Claim brought by the Administrators. In that eventuality where a Defendant of means successfully defeats a claim by an insolvent Claimant, but has brought a Part 20 Claim against a Part 20 Defendant, which is dismissed because the Claimant's action was dismissed, the justice as between the Defendant/Part 20 Claimant and the Part 20 Defendant is that the Part 20 Defendant should not be required to seek to recover his costs from the insolvent Claimant, but can obtain direct from the Defendant who has to bear the cost consequences of that. The Defendant will then obtain an order for costs against the Claimant, including the costs of the Part 20 proceedings. The risk of insolvency on the part of the Claimant thus falls on the Defendant. This appears from a number of cases, ultimately Johnson –v- Ribbins [1977] 1 WLR 158. This and the interplay of the CPR were considered by Colman J in Arkin –v- Borchard Lines Limited & others (No. 3) [2004] Lloyd's Law Reports vol. 1 636.
56. Colman J, after setting out the Johnson and other cases (see paragraphs 20 to 31 of his judgment) summarised the law as he saw it as follows:-

"32. There is no doubt, in my judgment, that third party proceedings, as much under the CPR, as under the former RSC, are treated as separate proceedings from the main action. It follows that if the impecuniosity of the claimant in the main action is to carry weight in the discretionary disposition as to costs, that would be to introduce into the third party proceedings consideration of an extraneous circumstance affecting a party who played no part in the third party proceedings. Although it is true that both sets of proceedings may be tried together, that is a matter of good case management and does not detract from the essentially separate nature of the two proceedings. The fact that it is the policy of the law to give effect to access to justice permitting an impecunious claimant to sue and so to expose an ultimately successful defendant to shoulder the burden of his own costs see Hamilton v. Al Fayed (No. 2), [2002] 3 All ER 641, per Lord Justice Simon Brown at 658- 659, raises the question whether, if that defendant, with knowledge of the claimant's lack of resources, then chooses to protect his position by joining a third party Part 20 defendant, it is in the interests of justice that the third party should be placed in a similar position as to the recovery of his costs, if successful, to that of the defendant who has chosen to join him. It is indeed hard to see why the apparent injustice to the defendant by reason of his inability to recover his costs from the impecunious claimant should ordinarily be spread to the third party who has been sued involuntarily by a sufficiently resourced defendant. If, as it is ultimately decided, he has been wrongly sued and is under no liability to the defendant, to expose him by a costs order to the impecuniosity of the claimant would normally not only be unnecessary to do justice to the defendant but would do serious injustice to the third party. This, as I see it, represents a quite different position from that which arises where there are co-defendants both of whom have been sued by the same impecunious claimant. In such a case there is often a far stronger character of injustice if the successful defendant is deprived of his costs which can in appropriate cases be cured by a cut-through or Sanderson order causing them to be paid by the unsuccessful defendant. The reference by Lord Justice Goff to the decision of Mr. Justice Diplock in L.E. Cattan Ltd. v. A Michaelides & Co., [1958] 1 W.L.R. 717 at 720 in relation to the arbitration of 645 chain contract disputes suggests that the maintenance of the essential separability of third party proceedings carried fundamental weight in the decision in Johnson v. Ribbins, [1977] 1 W.L.R. 1458.


33. I therefore approach the exercise of my discretion on the basis that it will only be in exceptional cases that the separability principle will justifiably be departed from. Although in Taylor v. UKF Fertilisers, sup., Lord Justice O'Connor clearly envisaged that in "certain circumstances" a cut-through order effectively depriving a successful third party of his costs might be justifiable, it is also clear from the judgment of Lord Justice Taylor that neither the insolvency of the claimant nor the mere common interest of the third party and defendant in the outcome of the main action and their virtually identical position in challenging the claimant's case are, when taken alone, amongst the special circumstances that render the case exceptional.


34. Further, in the present case, the Part 20 proceedings were not such as would necessarily be conclusively determined by the result of the main action. I can see that in cases where, if the defendant lost to the claimant, it would inevitably follow that the third party must be liable to the defendant, to impose on the defendant the burden of the Part 20 defendant's costs as well as his own might amount to an injustice so great as to justify making an order that the Part 20 defendant should recover his costs direct from the impecunious claimant. However, where, as in this case, there were likely to be discrete Part 20 issues arising out of the Conference Agreements and the conduct of Zim in relation to conference members, the Part 20 issues do no more than overlap on the issues in the main action. They are not co-extensive.


35. Additionally, this is not a case where Borchard and the third party Part 20 defendants made common cause as to joinder. Quite the contrary. Borchard did not send letters before action or invite conditional acceptance of liability before commencing the Part 20 proceedings. Instead it pursued an arms length approach to the Part 20 defendants which was consistent with the maintenance of the separate nature of the Part 20 proceedings. Further, Borchard has derived from the joinder of Zim the benefit of both factual and expert evidence, while adducing no expert evidence itself. It may well be that even if Zim had not been joined, the factual evidence would still have been available. However, the expert evidence would not".

57. The Solicitor Respondents therefore simply say shortly that the resistance to the order for costs, which should not normally occur by the Administrators arises simply out of the fact that Mr Symes cannot pay and they seek to shift responsibility for the Solicitor Respondents costs on him, rather than them.
58. There is thus they say nothing to distinguish the earlier decisions, and no justification for the court in the exercise of its undoubted discretion under CPR 44 to depart from the normal rule, that a successful party is entitled to recover its costs. They say they are successful because as a result of the determination of the first stage of the Issue, the proceedings brought against them have been dismissed by my order of 30^th July 2004. In conclusion therefore they say that there ought to be an order that the Administrators pay their costs and that the Administrators should seek to recover those costs from Mr Symes. They seek an order of the costs in respect of their joinder. I will hear further submissions if necessary as to the ambit of those costs, but it seems to me that there can be no costs capable of being recovered after the order of 25^th March 2004, because the proceedings against them were stayed pursuant to paragraph 5 of that order. I do not see how they can incur any costs after that date, but I will hear submissions on that when the judgment is handed down if necessary.
59. Mr Steinfeld QC submits first, as I have said, that this was not a Part 20 Issue; it was a Part 19 Issue, which the Administrators had to bring to court. The joinder decision was made by the court and they went to court to seek the directions with a preference that the Solicitor Respondents should not be joined. He submits therefore that it is different to a Part 20 Claim where a defendant chooses of its own volition to bring in a Part 20 defendant with the usual natural consequences, that the Part 20 proceedings have a separate status and the liability for costs is generally governed as between the Part 20 claimant and the Part 20 defendant and extraneous factors such as insolvency of the claimant are irrelevant to the determination.
60. The response of the Solicitor Respondents to that is that that is clever but disingenuous in effect. They point to the application for joinder issued on 29^th January 2004 and the reasons stated therein (which reflected the antecedent correspondence intimating the Yonge –v- Toynbee claim) and the service of the Points of Claim pursuant to the order of 11^th February 2004. In essence they say that the only need for them to be joined was the self evident desire on the part of the Administrators to have them bound for their own purposes, namely a fall back Yonge –v- Toynbee issue against the Solicitor Respondents in the event that Mr Symes lacked capacity. This is the risk they say that any defendant faced with a claim by an impecunious claimant takes when it makes a decision to bring in a Part 20 defendant.
61. The normal rules, as I have said, under CPR 44 are that the costs should follow the event. I have already observed that I do not see anything of substance in Mr Steinfeld QC's subtle attempt to categorise the joinder of the Solicitor Respondents under Part 19 as opposed to Part 20. Whether or not this was an initiative created by the court does not mean that a party cannot bear the cost consequences of that decision making process.
62. If the sole reason for raising the Issue was the joinder of the Solicitor Respondents for the purposes of a Yonge –v- Toynbee claim I would accept that there are no special circumstances to depart from the normal rule that the Administrators should pay the Solicitor Respondents' costs.
63. In this case, however, the facts are in my judgment almost unique. First, Mr Symes raises his lack of capacity, but then does absolutely nothing about it. The Claimants find the progress of their action thereby stymied because they cannot take any effective steps (including an urgent hearing in respect of the outstanding committal application) until that issue is resolved. It is plain to my mind that the role of the previous solicitors would inevitably be drawn into that issue, whether as witnesses or respondents to a Yonge –v- Toynbee claim. Whilst it is true that the order of 16^th December 2003 did not address that issue, it does not mean that point should not have been considered as it was on 11^th February 2004. I accept Mr Steinfeld QC's submission that they had little or no choice but to bring this matter to the Court's attention. I also accept that they do so reluctantly because they could well understand what would happen in cost terms. The lawyers representing the Administrators are experienced and will have been alive to the potential Part 20 type consequences in the event that Mr Symes' claim was found to be spurious, but they had joined the Solicitor Respondents. I suspect that they tried to avoid that by the carefully framed application under Part 19, but that proved to be unsuccessful for the reasons that I have set out in this judgment. I accept equally that they had a direct interest in bringing the Solicitor Respondents in, because of the Yonge –v- Toynbee claim. Nevertheless, because of the consequences of a finding that Mr Symes lacked capacity of having a far more wide ranging impact beyond the ambit of the orders in the action it was inevitable that the Administrators would have to bring this issue to the court. When that issue was brought to the court it was inevitable that the court would have to conclude that all areas where this capacity issue might impact would have to be determined so as to avoid the same issue having a multiplicity of hearings and differing conclusions based on different evidence. It cannot be right that Mr Symes' mental capacity should be the subject matter of such diffuse hearings and evidence. To allow that to happen would have been to have brought the system of justice into disrepute. The determination of the issue is in the nature of an enquiry involving the mental status of Mr Symes. It cannot, in my judgment, be treated purely as a quasi Part 20 Claim. The Administrators had no choice but to bring the matter to the court's attention, whether or not they would have contemplated a Yonge –v- Toynbee claim. It is likely that the court of its own initiative would have taken steps to ensure that there was one finite hearing on Mr Symes' capacity. Thus the Administrators are merely bringing to the Court's attention the need to address the Issue fully with all persons potentially affected by it.
64. The Administrators are innocent of this matter, as they had no confidence in the Claim. The Solicitor Respondents are equally innocent of this matter and have in the events been vindicated, but nevertheless, the Issue raised a matter which seriously affected their professional reputation. They too would have wished to have had that ventilated in order that they could be vindicated. That has happened and it has happened in a way which has been expeditious and a lot less time consuming than was originally contemplated.
65. The reality is that Mr Symes ought to have initiated the procedure. He would not have sought a Yonge –v- Toynbee order, but he might well have sought recovery of payments from the Solicitor Respondents. He has not done that, no doubt content to let others fight his case for him and seek the fruits of that fight at a later stage if he was successful, i.e. it was determined that he lacked capacity.
66. When one analyses the complexities of this case in that light it is not right in my view to categorise the determination of the Issue as being like a normal Part 20 Claim. Given the circumstances set out above those are in my judgment exceptional circumstances, which justify a departure from the normal rule.
67. I accept that will be perceived to be unfair to the Solicitor Respondents, but an order in their favour as against the Administrators, given the above circumstances would be even more unfair. It must be born in mind that the Administrators have defeated the Issue at not inconsiderable cost. Although there is no question of it being said that the Solicitor Respondents participated in that exercise as a joint attack, nevertheless the Solicitor Respondents have achieved a benefit of a determination which is in their favour and has been achieved at some, but (in the context of this litigation) relatively modest cost.
68. I therefore determine that the costs of the Solicitor Respondents should not be paid by the Administrators, but should be paid by Mr Symes to be the subject matter of a detailed assessment if not agreed.