MR. JUSTICE MORGAN :
- On 5th July 2007 I handed down judgment in these applications brought by the defendants to strike out the claims against them, alternatively for summary judgment in their favour. In paragraph 274 of that judgment I identified twelve matters that needed attention following the handing down of judgment. Because of the number of matters outstanding a separate hearing was fixed for the purpose of considering them. The issues have now been argued over two days and I now give judgment on all matters arising. To make the present judgment intelligible I will refer to some of the matters dealt with in my earlier judgment. I will not attempt a comprehensive summary of that judgment but will simply refer to matters that are now relevant for the discussion which appears in this second judgment.
- At paragraph 154 of the earlier judgment I referred to the pleadings in the actions that I was considering. I pointed out that they were very far from being a model of a good pleading. They did not comply with CPR rule 16.4(1)(a) in that they did include a concise statement of the facts on which the claimants relied. I then made further comments as to the deficiencies in the pleadings which had been issued by the claimants.
- At paragraph 155 of the earlier judgment I set out eight issues which, with some difficulty, one could detect were included or intended to be included in the earlier claims. In relation to six of those eight matters, which I will identify in a moment, I held that the claimants had no pleaded or any cause of action and that it will be appropriate to strike out the pleadings in relation to those matters. The two matters, which were ones where I took a different view, were items (6) and (7) of the list of eight, the other six of the eight were the ones where I held there was no cause of action. Numbers (6) and (7) were described in paragraph 155 of the earlier judgment in these terms "inclusion of the Protected Fittings in the sale" and "inclusion of other chattels belonging to Professor Haydon-Baillie in the sale".
- In relation to those two matters, as to protected fittings and other chattels, I held that if one had regard to the underlying facts, as appeared from the documents which were put before the court, the first claimant, Professor Haydon-Baillie, potentially had an arguable cause of action but one which needed to be properly pleaded as it had not previously been properly pleaded. I held that the second claimants, who were trustees, did not have any claim in relation to those matters.
- Because it is material to something I will decide today I ought to refer to an earlier passage in the judgment dealing with an earlier pleading that had been issued in draft in relation to the claim to contents or alleged chattels. At paragraphs 120 to 126 of the judgment I referred to a time when the claimants or some of them sought an interlocutory injunction in relation to the contents in the property. I go to that history because it discloses that at that time the claimants or some of them had available to them a pleading settled by counsel which was in a relatively concise form and essentially made a proprietary claim for the recovery of contents and also claimed damages for the conversion of the contents. That pleading, which may have been an entirely satisfactory pleading, was radically different from the pleadings generated by the claimants in the three actions which came before me and on which I gave judgment in July.
- Staying with the first judgment I ought also to refer to paragraphs 162 to 163. In those places I commented upon certain events that happened at the hearing and, in particular, the way in which the claimants' case was conducted by Professor Haydon-Baillie on behalf of himself and also acting as advocate on behalf of the claimant trustees.
- I ought also to refer to the part of the judgment beginning with paragraph 210. In that part of the judgment I recorded the submissions by Mr. Fulton on behalf of Bank Julius Baer. He had submitted that quite apart from the conclusions I had reached as to there being no cause of action in relation to six out of the eight claims, all of the eight claims should be regarded as abuse of the process of the court. He identified eleven circumstances which he urged me to take into account and to reach that result. I did take those circumstances into account and I commented upon them in later paragraphs of the judgment to which I will refer in a moment.
- Being going to those comments which I made I should also refer to submissions made by Mr. Denehan on behalf of various defendants who have become known as the Newbold defendants. He drew the court's attention to the decision of the Court of Appeal in Wallis v. Valentine [2002] EWCA Civ 1034 and he made a number of submissions which were highly critical of the claimants' conduct and, in particular, Professor Haydon-Baillie's conduct. Again I gave my reaction to those submissions later in the judgment.
- Beginning at paragraph 217 I dealt with Mr. Fulton's eleven submissions. I indicated at paragraph 202 that the claimants were open to criticism in that they had not sought to plead their case along the lines of the draft pleading which had been in play at the time of the interlocutory applications which I have referred to. I said that the pleadings they had generated were prolix and obscure.
- At paragraph 223, by way of meeting a point put by Mr. Fulton, I indicated that it was open to the court to require the claimants to put in a pleading which was appropriate in substitution for what the claimants had themselves prepared.
- At paragraph 226 I described the then existing pleadings as "worse than useless". That was not intended to be an insult to the claimants; it was meant to be wholly descriptive. The pleadings were useless because they did not serve the function of pleadings. They were worse than useless because they contained a number of very serious allegations for which there was no proper foundation. Also in paragraph 226 I referred to other features of the way in which the claimants had conducted this litigation.
- My conclusion in response to those submissions was given at paragraph 227 where I was not prepared to hold that a properly pleaded claim brought by the right claimant against the right defendant would be an abuse of the process of the court and I gave further reasons for reaching that conclusion.
- I say that by way of background to the discussion in the present judgment of the matters that now need attention. The first matter I ought to consider is what should happen to the existing claim forms and the particulars of claim. I will go to the first action and indicate my decision. So far as the claimants are concerned it is consistent with my earlier judgment that the only proper claimant going forward is the first claimant, Professor Haydon-Baillie. Accordingly, I strike out the claim by the second claimant, the various trustees from time to time of what was called the Succession Trust. Having struck out the claim by the second claimant against all the defendants I give judgment for all defendants in relation to claims by the second claimant.
- As to Professor Haydon-Baillie's claims against the defendants, the convenient thing to do is to strike out Professor Haydon-Baillie's claims against all defendants with one exception. The one exception is Bank Julius Baer who will remain a potentially relevant defendant for the purposes of a claim going forward in relation to contents. The order made today of course cannot say that all claims against all defendants except the first are struck out because many of the defendants have already fallen by the wayside as being inappropriate defendants for the claimants to have proceeded against. The real effect of the order is that Professor Haydon-Baillie's claim against Gouldens is struck out and I give judgment for Gouldens as against the first claimant.
- The position in relation to the second claim so far as the parties are concerned follows a similar pattern. The only proper claimant going forward is Professor Haydon-Baillie. I strike out the second claimants as parties going forward. I dismiss the second claimant's claim against all defendants and, again, some of the defendants have already been released from the second claim, but in so far as they have not the trustees' claim against those defendants will now be dismissed.
- So far as Professor Haydon-Baillie's claim is concerned it potentially can go forward, but against some defendants only. The defendants who fall in that category are the third, fourth, fifth and sixth and I will name them to avoid misunderstanding. They are Paul Newbold, Giles Newbold, Marcus Newbold and Macaw Properties Limited. I am striking out the claim against all other defendants. In so far as one of the St. Ledger companies has a mortgage of freehold of Wentworth Woodhouse there has not been demonstrated a proper basis for the mortgagee remaining in the claim. Nothing has been put before me to indicate that the mortgage has committed any act of conversion. The mortgagee accepts that I will be bound by any decision given on the proprietary claim bought by Professor Haydon-Baillie against the mortgagor or the existing freeholder.
- In relation to the second action I have indicated who can be the claimant going forward, that is Professor Haydon-Baillie; who can be the defendants going forward, that is the third, fourth, fifth and sixth defendants and where I strike out a claim I give judgment for the party who benefits from the striking out order.
- I turn then to the third claim. Starting again with the claimants, the only proper claimant going forward is Professor Haydon-Baillie. I strike out the claim brought by the trustees. I give judgment for all the defendants against the trustees in relation to the trustee's claims. So far as Professor Haydon-Baillie's claim going forward is concerned, the only defendants who will remain defendants are the second, third, fourth, fifth and tenth defendants. To avoid confusion I will give their names, they are Paul Newbold, Giles Newbold, Marcus Newbold, Macaw Properties Limited and SW1 Nominees.
- At the hearing before me Professor Haydon-Baillie submitted that the directors of SW1 Nominees should remain parties to his proprietary claim and his conversion claim. I see no basis for them being defendants to the proprietary claim. They do not claim and never have claimed any ownership or title of their own to the alleged chattels. Equally, there is no basis so far identified, nor one that one could foresee could be identified, for saying that the directors of SW1 Nominees are liable personally for the tort of conversion. Professor Haydon-Baillie suggested that it is conceivable that there might be a claim for fraudulent trading under the Companies Act 1985 but he accepted in response to an answer from me that that claim had not been identified at the earlier hearing this year and as far as one can see has not been identified in the lengthy claim form which does identify many, many sections of the Companies Act but not the now suggested relevant section.
- In so far as claims are struck out I give judgment for the relevant defendant who benefits from the order striking out the claim.
- Having identified the parties that can properly go forward it can be seen that there is a relevant defendant in each of the three actions. One could strike out two of the actions leaving one and then provide for a party in the two struck out actions to be joined as a party in the surviving action. It seems to me that an easier and more convenient cause is to consolidate them, in that way the Bank who is a party to the first action will be a party to the consolidated action. The Newbolds and Macaw Properties, who are parties to the second action, will be parties to the consolidated action. The Newbolds and Macaw Properties and SW1 Nominees, who is only a party in the third action, would also be a party to the consolidated action.
- That also produces a convenient result so far as the pleadings are concerned. It will be remembered from the judgment that the claim which has been identified as potentially arguable, which I am permitting to go forward, is a proprietary claim in relation to the contents and a claim for damages for conversion. If one studies the claim form and the particulars of claim in the first and second actions one cannot easily find pleadings, even applying a blue pencil to the existing pleadings, that can be regarded as a sensible expression of such claims. It is perhaps an irony that I am allowing Professor Haydon-Baillie to go forward to claim conversion when that was a claim which he himself amended away both in the claim forms and the particulars of claim in both of the first and second action.
- However, when one turns to the prayer for relief in the claim form in the third action there is something that one can use as a peg for the claim going forward. What I am therefore going to do is I am going to strike out the entire wording of the claim form and particulars of claim in the first action and the second action. I am going to strike out the claim form in the third action bar the following. In paragraph 76, the opening line, which is that the claimants seek orders from the court for each of the following, I am now listing that which remains, paragraph 76.4, with the deletion of the words "and/or the Succession Trust". Paragraph 76.6 and the paragraph which is listed as 77.8 but is intended to be 76.8, the only thing I need to add is that in relation to paragraph 76.6, which is a claim to damages, consistent with the judgment I have given the damages are to be confined to damages for conversion of the contents which have been identified in paragraph 76.4. That means that the three actions being consolidated and there being a very slender rump of the claim form in the third action, that is the peg on which further pleadings can be hung, subject to what I am about to deal with.
- I can now deal with the pleading which is to be served if the consolidated action is to continue. I will need to return to the timing of the pleading after I consider other matters and in particular the question whether these proceedings should be stayed, pending payment of certain costs.
- I am going to take what is perhaps a slightly unusual course in relation to the pleading which is to be served. In one sense it is for a claimant to take advice, draft a pleading, put it forward and leave it to the opposition to raise objections to it. That is not a safe course in this case. Professor Haydon-Baillie has issued three actions already. In those three I have struck out nearly everything on three claim forms and I have struck out the entirety of two particulars of claim. Professor Haydon-Baillie tells me, and I of course accept it from him, that he fully intends to have legal advice of the highest quality from solicitors and leading counsel. In one sense one can trust those advisers to understand and observe the rules of court as to proper pleading, but I am not going to extract an undertaking from Professor Haydon-Baillie as to who he instructs and I will not predict what might happen if the matter is left uncontrolled.
- In those circumstances I am going to be prescriptive as to the form of pleading going forward. I am going to base my following remarks on the draft order that was prepared on behalf of the defendants but I will amend some of the language of the draft order. I am not embracing every suggestion in the draft order. Starting with option 2 in paragraph 9 of the draft order, the order, when finalized today, will say that the first claimant in its personal capacity may make an application for permission to file and serve new particulars of claim in the consolidated action, attaching to the application notice a draft particulars of claim which satisfies the requirements set out below. If the draft particulars of claim satisfy those requirements then at the hearing of the application the court can make directions for the further conduct of the consolidated action. If the draft particulars of claim do not satisfy those requirements then the consolidated action will be struck out.
- Continuing with the order as to pleadings. The particulars of claim referred to above may contain only:
"(a) proprietary claims against the third, fourth, fifth and sixth defendants in the second action and in respect of:
(i) the protected fittings as defined, and as this is drafted already I will not read it into the judgment but it is defined as per the draft order, and.
(ii) the items specified in the first list which are not protected fittings and that is defined as the non-protected fittings and, finally,
(iii) the items numbered (4) (6) and (7) of the listed personal chattels dated 26th May 1999, a copy of which is attached to this order and marked the second list, which is the historic artefacts;
(b) claims for damages for conversion against the Newbold defendants (I will return to who they are) SW1 Nominees and Bank Julius Baer & Co. Limited in respect of the protected fittings, the non-protected fittings and historic artefacts."
- In that reference to the Newbold defendants, what is meant is the three Newbolds, whom I have named, and Macaw Properties Limited and, of course, the order provides for SW1 Nominees and the Bank to be included, outwith the reference to Newbold defendants.
- I will go further and indicate what standard of pleading is to be achieved by the intended particulars of claim. The particulars of claim must include a concise statement of facts in accordance with rule 16.4(1)(a), must identify by lists the specific items to which the claim relates and must refer to any point of law on which the claims are based. I do not give a direction that the pleading names witnesses but I continue that the pleading must have attached to it any documents which the claimant considers necessary to the claim and, finally, the pleading must specify the remedy sought.
- With a view to being helpful to all concerned I also direct that, without prejudice to the generality of what I have stated, the particulars of claim must in particular: (a) state concisely the ingredients of the causes of action upon which the first claimant relies; (b) identify concisely the facts, including all acts and omissions on the part of each of the defendants relied upon to establish those ingredients and (c) identify concisely the consequences of any breach of an obligation on a defendant owed to the first claimant and, in particular, identify any loss and damage which it is said arises from the breaches of obligation and the specific remedy sought. That is what I say about the pleadings if the matter goes forward. As I have indicated I have not intended to state when this pleading is to be served because that is going to be affected by matters to which I have yet to come.
- I now turn to the question of who should pay the costs. In one sense I could confine myself to the costs of the applications before me but in view of the fact that I am effectively sweeping away all of the claim forms and particulars of claim that have been issued, it seems to me appropriate to deal with the costs of the action to date. I am not here dealing with the costs of two days of argument last week; that issue can be raised and decided following my judgment today when the full range of matters has been dealt with. Beyond the two days last week, I do intend to give all costs of the action and when I refer to a party paying the costs I mean the costs of the action.
- I start with something which I regard as fairly plain sailing. It will be remembered that all of the defendants who were defending claims brought by the trustees have the trustees claims dismissed in their entirety, it seems to me to follow that all of the defendants should have their costs of the action against the trustees. I will deal with the position of Dr. Layton and Mr. Barratt in a moment. Before I turn to those individuals I should explain that I have asked myself whether an order for costs against the trustees should only be for part of the costs or all of the costs. In particular I have asked myself: is there any reason having regard to what the defendants have done, what the defendants argued on the last occasion before the judgment in July which would mean that they should be deprived of a percentage or a part of their costs?
- The only candidates that need to be considered in that context are the arguments about abuse of process over and above the arguments on no cause of action and the arguments based on Wallis v. Valentine. My decision on that point is that it is not appropriate to deprive the defendants of any part of their costs by reason of raising those arguments. It is common enough when a defendant resists claims brought against a defendant, that the defendant relies on alternative or fallback arguments. Sometimes the alternative arguments take time and they turn out not to be necessary or not to be appropriate because the defendant succeeds on other grounds. It is also common enough that the court gives such a defendant the entirety of the defendant's costs unless the defendant's conduct of the argument has been unreasonable. I categorically state that I do not regard the arguments as to abuse of process in Wallis v. Valentine as having been unreasonably considered or put forward. They were proper arguments which I have dealt with. That means that my order for costs against the trustees is 100% of the defendants' costs. I am not referring to the basis of assessment to which I will return in a moment.
- I need to say one or two further things about the order for costs against the trustees. One of the trustees is Dr. Layton. When the possibility of an order for costs against Dr. Layton was raised Professor Haydon-Baillie submitted to me that the order against Dr. Layton should be restricted to the assets of the trust. I have very little information about the value of the assets of the trust but in principle I do not regard such limitation as appropriate. My understanding is that Dr. Layton is a litigant and if an order for costs is made against him he is personally liable to the full extent of the costs that come within the order. No one has drawn my attention to any rule or authority which would justify Dr. Layton having a limitation on his liability. That would also incidentally apply to Professor Haydon-Baillie in his capacity as trustee.
- The position of Mr. Barratt requires further consideration. Mr. Barratt sadly died after commencement of the actions and no order was made as regards the proceedings being carried on by the personal representatives of Mr. Barratt. Certainly the personal representatives did not apply to be joined and the defendants did not apply to join them on the basis that they might conceivably be relevant at a time such as today when an order for costs is being sought against Mr. Barratt for his estate. It was not necessary after his death to have Mr. Barratt as a party because the claim being put forward by the trustees was put forward by the continuing or surviving or replacement trustee, whatever the position was.
- The choice for the court today appears to be as follows. The first alternative is one contended for by the defendants. They request, in effect, an order nisi, that I make an order against the estate of Mr. Barratt and I give a period of time within which the estate can come to the court to put forward a case for the variation or setting aside of the order nisi. The alternative is that I give the defendants liberty to apply and I need not put a time limit on that because they may want to see how they get on with enforcing orders for costs against other parties before it becomes necessary for them to move the court to join representatives of Mr. Barratt's estate and seek an order against them.
- That being the choice before the court I fear I will disappoint the defendants. I will not make an order nisi. It seems to me that it will be inappropriate to make an order against the estate of Mr. Barratt when no steps have been taken by the defendants to bring the estate of Mr. Barratt before the court and, so far as one knows, they know nothing about this. They may have regarded this claim as of historical interest only for a considerable period of time now and I think it unfair to them to impose a time limit upon them to react to an order that has been made without any advance warning and without them being aware of the possibility it could have happened. That is all I need to say in relation to the defendants' costs payable by the trustees in the three actions.
- I then turn to the application by the defendants for costs against Professor Haydon-Baillie as first claimant, that is otherwise as trustee. I can divide the defendants into two camps for the purpose of this point. There are some defendants who, by reason of the orders I have made, will now cease to be parties to the consolidated action going forward. In relation to those defendants I see no reason why they should not have their costs against Professor Haydon-Baillie. I repeat the point I made earlier about alternative arguments as to abuse of process and Wallis v. Valentine. That is not, to my mind, a reason to disallow any part of those defendants' costs against Professor Haydon-Baillie.
- The position of the defendants who remain defendants to the consolidated action requires further consideration. Those defendants say that they have succeeded. They point to the fact that in earlier orders I have referred to I have struck out the three claim forms bar a few words and only so as to provide a convenient peg for the future and I have struck out in their entirety the two particulars of claim. They say that that is essentially something which justified everything the defendants did and they should have all of their costs.
- Professor Haydon-Baillie forcefully submits to the contrary. He points to the fact that, subject to compliance with appropriate forms of pleading and any other condition I impose, he is able to go forward with the claim in relation to the contents. He tells me, although this is not in evidence, that the contents are very valuable. The figure he has given is £20 million. He says that what the defendants did was to try to get rid of a claim for £20 million worth of contents and the claimants have simply failed, Professor Haydon-Baillie has succeeded and in those circumstances it is wrong to give those defendants who remain in the action their costs against Professor Haydon-Baillie.
- There is an element of truth in both sides' stances. However, what weighs with me is that when this matter was before Sullivan J some years ago Professor Haydon-Baillie had counsel who prepared a compact pleading containing a proprietary claim in relation to the contents and a claim to damages for conversion. What I am doing today is essentially rolling back the history of the last few years and placing Professor Haydon-Baillie back where he could have been all those years ago in relation to the contents claim.
- I regret that I have to say that everything that has been done since that stage in the dispute between the parties has proved to be of no value whatever to Professor Haydon-Baillie. More significantly for present purposes, it has been a colossal waste of costs for all of the defendants who had to deal with the pleadings which have now been so very comprehensively struck out as I have described. My reaction to that litigation history is that the appropriate order is that the defendants should have all of their costs against Professor Haydon-Baillie of that state of affairs and I so order. I have now made orders for costs against Professor Haydon-Baillie and the trustees. I should say for the avoidance of doubt that there will be joint and several liability for these costs.
- Having dealt with the incidence of costs, the next matter I need to deal with is whether the costs should be on the standard basis or the indemnity basis. My task in relation to that question is made very much easier by the helpful summary of factors to be taken into account which appeared in the judgment of Tomlinson J in Three Rivers District Council v. Bank of England [2006] EWHC 816 (Comm). As it happens that judgment is a very lengthy one. Tomlinson J's statement of the principles is put before me where it is quoted by Sir Anthony Colman in National Westminster Bank v Rabobank Nederland [2007] EWHC 1742 (Comm). I will not read into this present judgment the lengthy passage quoted from the Three Rivers case in paragraph 26 of the Rabobank case. I will work through the factors and matters which are identified in the quoted passage.
- Before I do that, essentially my finding is that each of the factors that points in favour of indemnity costs is present in the present case, save that one factor in the Three Rivers case was the courting of publicity by the unsuccessful party and it cannot be said that that applies here. I also do not make the mistake of comparing the facts of Three Rivers with the facts of the present case. Three Rivers was a wholly remarkable case. The present case is remarkable but for its own particular reasons, not because it shares the same remarkable features as the Three Rivers case. When I quote from Tomlinson J's judgment I am looking to see the character of the matter which is said to be indicative of the right answer rather than any comparison of facts and detail.
- Tomlinson J indicates that the court should have regard to all the circumstances and the discretion to order indemnity costs is extremely wide. He then refers to the court forming an assessment of whether the circumstances of the case take the case out of the norm. Pausing there, I have no hesitation in saying that these proceedings are out of the norm. They are out of the norm in the range of allegations against the number of defendants which shared, by and large, one feature and that was the lack of foundation for the allegation made. Other features of the allegations will be material when I look at other matters identified by Tomlinson J.
- Tomlinson J continues by saying that the test does not involve moral condemnation by the court of a litigant but rather the court identifying that the conduct of proceedings has been unreasonable. I conclude in this case that the claimants' claims, having regard to their breadth, having regard to the lack of foundation save for the contents claim, having regard to the breach of the very basic rules of pleading (one must not make allegations of fraud or dishonesty unless there is a prima facie case justifying that allegation being put on paper) these proceedings were unreasonable.
- The next matter I look at is the conduct of the unsuccessful party both before and during the hearing which took place before me, whether it was reasonable for the claimant to raise and pursue particular allegations and the manner in which the case was pursued. I have essentially commented on the allegations more than once in the last few passages. I have also referred in my earlier judgment to the way in which Professor Haydon-Baillie conducted the case. I think there is unreasonableness in both respects. That is another factor pointing towards an order for indemnity costs.
- The next factor which is identified is whether the claim is speculative, weak, opportunistic or thin. Whether this claim was speculative or opportunistic I do not know. Those words suggest that the pleader is conscious he does not have a case but he wonders if something might turn up. Certainly Professor Haydon-Baillie in his earlier submissions to me this year very much looked forward to a time when something might turn up and that is a time which now will not occur.
- As to the case being weak or thin, it was at least that. In fact it was worse than that as often the allegations had no basis in law or in fact in the first place. Tomlinson J warned in the Three Rivers case that if you put forward a case which is weak or thin you run a very high risk and can expect indemnity costs if you fail.
- The learned judge then turned to the question of allegations of dishonesty and aggressive pursuit of those allegations. There were allegations of dishonesty in this case. There were allegations against professional people. They should never have been made and that type of case on its own, without other considerations, in my experience and my judgment, is the type of case where indemnity costs are an appropriate response. As to whether the allegations were pursued aggressively, because the allegations were aggressive to merely state them was a form of aggressively pursuing them. This case did not go to trial so there was not cross-examination so that part of the factors does not apply here.
- I have already indicated that the next factor dealing with publicity does not apply here.
- Then the learned judge, Tomlinson J, goes through a number of circumstances which, to an extent, repeat his more general remarks. I need not work my way through each and every one of those. He may have had in mind very much the facts of the Three Rivers case and I have indicated that one does not decide a point of this kind by comparing one set of facts with another set of facts.
- I should perhaps refer to the last matter which Tomlinson J refers to. He refers to the pursuit of expensive litigation to exert commercial pressure on a party. He also refers to the case constantly changing and to there being a resounding defeat. There was some inconclusive discussion in my earlier judgment as to Professor Haydon-Baillie's motives for bringing these proceedings. My own reaction, although this does not in the end determine things, is that Professor Haydon-Baillie did sue as many people as he did in the hope that he would get settlements from some of them giving him something, so the wider he cast his net the more fishes he would catch in it which would turn out to be worth something to him. If that was his attitude then it is deeply to be regretted and that type of approach to litigation is not to be encouraged, but is strongly to be discouraged.
- As to Professor Haydon-Baillie's case constantly changing that probably is not descriptive of what happened here. He had painted with such a broad brush making such a range of allegations that he did not have to bring in new ones, although he did, on the fifth day of the hearing before me, jettison many of the allegations he had previously seen fit to make. Having done that exercise, so many of the pointers point towards an award of indemnity costs in this case that, in my judgment, the result is absolutely inevitable that the costs should be assessed on the indemnity basis.
- Professor Haydon-Baillie submits that the attitude of the court should not be to penalize or punish claimants for conducting litigation in the way they have done. He is correct in that submission; the court does not punish or penalize. The court does, however, award indemnity costs rather than standard basis costs. The difference between the two bases is well-known. The bottom line, if I can put it that way, with indemnity costs is that the defendant recovers reasonable costs reasonably incurred. The order is essentially compensatory to the defendant but is more generous than the standard basis. That should not be regarded as any form of punishment. In one sense the defendants have been punished by having to incur costs wholly inappropriately and now is the compensatory stage at which they are in a position to recover reasonable costs reasonably incurred.
- I turn from that to the question of the making of an interim payment on account of costs. The jurisdiction to make an order for interim payment is in rule 44.3(8) and, subject to one point to which I will go, it seems to me that I should in this case do what is done in a typical case and that is make an order for a substantial interim payment so that the defendants, who are to be the receiving party for costs, receive those costs before the time when there is a final costs certificate, which might be some time in the future.
- A matter that has concerned me is whether it is proper to make an order for an interim payment of costs when Professor Haydon-Baillie's action is not necessarily over. It might continue and in the action that might continue is a claim for damages against some of the defendants. Obviously what I am about to say only applies to those defendants who remain in the consolidated action. It has no application to those defendants who are now finished with these proceedings, nor, indeed, has it any application to the trustees who do not remain in the consolidated action. In relation to those defendants who do, I consider whether Professor Haydon-Baillie, if he had been represented, could have put forward a claim to a set off of his damages claim against the orders for costs that have been made earlier in this judgment.
- As is well-known, in the case of Lockley v. National Blood Transfusion Service [1992] 1 WLR 492 the Court of Appeal discussed the possibility of setting off one set of costs against another sets of costs. That is frequently done where in particular one party has the benefit of legal aid and that was the case in the Lockley case itself. What is perhaps not quite so well-known about Lockley is that there was a discussion in that case of setting off damages against costs or costs against damages. That appears in the judgment of Scott LJ, in his summary of principles at pages 496 F to 497 C.
- Pausing at that point, one of the questions I asked myself was whether Professor Haydon-Baillie's claim for damages is the sort of claim that would justify an equitable set off against the liability for costs which he now has? It seems to me that applying the usual test as to equitable set off, whether the cross claim impeaches the entitlement, this is not a case where there would be an equitable set off. Indeed, in the Lockley case the Court of Appeal considered the matter of discretion at the level of equitable set off or no equitable set off.
- However, matters have moved on. The subject has been revisited by the Court of Appeal in R (Burkett) v. Hammersmith and Fulham London Borough Council [2004] EWCA (Civ) 1317. In that case the Court of Appeal looked into the subject as a matter of principle. They considered the Lockley case. They held that the court's discretion in relation to costs was not confined to considering whether there did or did not exist an equitable set off, rather the court should ask what was the fair thing to do in the circumstances of the case. I therefore thought it right, even though the point was not originally raised by Professor Haydon-Baillie, to consider whether a set off should be allowed here. This is also material to a matter I am going to turn to in a moment whether there should be a stay of the consolidated action going forward pending payment of costs.
- In considering whether there should be a set off as part of an exercise of discretion I note the following. Professor Haydon-Baillie says his cross claim is worth £20 million. He says the alleged chattels are worth £20 million. He, I suppose it will be said, will recover £20 million and that £20 million will, many times over, top the amount of costs which are to be paid either on the final assessment and certainly on the interim basis.
- However, there is absolutely no material before the court which could possibly justify me in making a finding that the figure of £20 million is a realistic figure. The figures that were used at the time of the completion of the contract of sale by the Bank were very much less than that figure, but even those figures are not in a reliable form that I could base a judgment upon. Moreover, Professor Haydon-Baillie's claim is not for £20 million; it is for the return of the goods. If the goods are made the subject of an order for their return there will not be judgment for £20 million or any figure representing their value, so there will not be a set off available at any stage. It seems to me that if one is to explore this question of set off one should put on one side the alleged value of the goods and instead concentrate upon a figure that might be awarded by way of a notional rental payable to the owner of the goods by the users of the goods. This, of course, begs many questions and they have all to be resolved if the matter proceeds to judgment in due course.
- However, do I have any material on which I could assess a notional rental to set it against the orders for costs that are otherwise imposed upon Professor Haydon-Baillie? Again, there is no material of any kind before the court. There is one important matter that might adversely affect Professor Haydon-Baillie recovering any worthwhile compensation by way of notional rental. Professor Haydon-Baillie has covenanted not to remove the goods from the real property so that de facto the goods are to remain there. The negotiation on a notional rental, it seems to me, would have to take into account that circumstance. I am not in any sense concluding this matter, but I draw attention to the point to indicate that whether Professor Haydon-Baillie will recover substantial damages by way of notional rental is a problematical question.
- I have also, in preparing this judgment, given some thought to the type of figure that a court might feel is right to award by way of notional rental. I am handicapped because I have really no material on which to base it. However, repeatedly I came up with a number of modest figures rather than substantial figures and that is, in the end, my conclusion, that the possibility of there being a substantial claim to a rental payment against the user of the alleged chattels is too fraught with uncertainty and unlikely, judged at today's standpoint, to produce a figure of any real substance. Reminding myself that this is material, says the Court of Appeal in Burkett, to the exercise of discretion as to what should be done, my decision is that it is not appropriate to cut off any part of the defendants' entitlement by way of a kind of set off to reflect the possibility of monies being payable to Professor Haydon-Baillie in due course. I determine that there should be an interim payment and in assessing the amount of the interim payment I do not take into account what might happen hereafter as to awarding damages by way of notional rental for the use of the individual items.
- That leads me to the question of what percentage of the schedules of costs which have been provided to me I should award by way of an interim payment. I have not received individual submissions as to individual items in the schedules so I am going to take the figures in the schedules at face value but, of course, I am going to discount them quite heavily by way of protection to the paying party, Professor Haydon-Baillie and the trustees. If I had awarded costs on the standard basis I would have allowed 50% of the schedules. As I have awarded costs on the indemnity basis I will award 60% of the schedules. I have not done the figures. At the end of this judgment is the appropriate time for the calculation to be done. As is typical I will round up or down the answer so that it is a round figure rather than a figure to decimal places.
- The last point in relation to an interim payment is to fix a period of time within which these costs are to be paid. I have not added up the, I think, five schedules which have been provided, but in the course of the argument I did look at the scale of the figures. They certainly total more than £500,000. None the less, Professor Haydon-Baillie and his fellow trustees have known since 5th July that they have heavily lost these proceedings. I indicated in the judgment in July that the question of an interim payment was going to be a topic raised when this matter came back. It has taken a long time to come back. That has given or should have given the claimants time for reflection on where they were. In the circumstances I am going to order the interim payment to be made within 42 days.
- I then go to a new topic and that is whether the consolidated action can go forward with proper pleadings forthwith or whether I should order a stay in relation to the consolidated action going forward until someone pays costs to someone. I am putting it deliberately wide for the moment. There seem to be alternative orders that might be made in this context. I will identify those first and then go to the jurisdiction to make orders of such a kind.
- The first type of order would be to identify an individual defendant who remains a defendant in the consolidated action and to require that defendant's costs to be paid by or on behalf of Professor Haydon-Baillie before Professor Haydon-Baillie takes further action against that defendant. In other words, taking Bank Julius Baer as an example, Professor Haydon-Baillie, it might be said, should only be allowed to proceed against Bank Julius Baer if he pays the costs order in favour of Bank Julius Baer. Similarly, Professor Haydon-Baillie, it might be suggested, should only be allowed to proceed against the Newbold defendants if he pays the costs incurred by the Newbold defendants which Professor Haydon-Baillie had been ordered to pay; and so on with any other defendant.
- The other sort of order that has been identified in the course of the argument is that Professor Haydon-Baillie should only be allowed to go on against a continuing defendant if Professor Haydon-Baillie pays all the costs of all the defendants so that Bank Julius Baer would be free from further proceedings unless and until Professor Haydon-Baillie had paid the Bank's costs, Gouldens' costs, Gordon Dadds' costs and all the other defendants who are now leaving this action. Those are the two orders that have been identified.
- Of course, there is the third possibility that I make no such order. That requires me to examine the jurisdiction of the court to act in any such way. I start with rule 3.4(4) which provides:
"(4) Where –
(a) the court has struck out a claimant's statement of case;
(b) the claimant has been ordered to pay costs to the defendant; and
(c) before the claimant pays those costs, he starts another claim against the same defendant, arising out of facts which are the same or substantially the same as those relating to the claim in which the statement of case was struck out,
the court may, on the application of the defendant, stay that other claim until the costs of the first claim have been paid."
- Before I turn to any authorities I should also refer to one or two other rules that have been relied upon. If one goes to rule 3.1(2)(f) it is provided that the court may "stay the whole or part of any proceedings or judgment either generally or until a specified date or event" and under rule 3.1(3):
"When the court makes an order, it may –
(a) make it subject to conditions, including a condition to pay a sum of money into court; and
(b) specify the consequence of failure to comply with the order or a condition."
- So, apart from any other rule or any other inherent jurisdiction those appear to me to be the appropriate starting points to consider this matter.
- I am going to deal first with the jurisdiction which is now expressly provided by rule 3.4(4). Although this appears in the form of an express rule of court the court has had power to make an order of that kind for a very considerable period of time. A modern example of such an order being made is in the decision of the Court of Appeal in Investment Invoice Financing Limited v. Limehouse Board Mills Limited [2006] 1 WLR 985. In that case there was citation of a number of earlier cases, including a number of cases from the 19th Century. One of those was the case of Martin v. Earl Beauchamp (1883) 25 Ch 12 and in his judgment in that case Cotton LJ said:
"The rule is established that where a plaintiff having failed in one action commences a second action for the same matter the second action must be stayed until the costs of the first action have been paid ..."
- This statement of practice was repeated by Lord Herschell in the House of Lords in M'Cabe v. Bank of Ireland (1889) 14 App. Cas. 413. He quoted Cotton LJ and applied the practice as so described in that case.
- The same principle was applied by the Court of Appeal in Hines v. Birkbeck College No. 2 [1992] Ch 33 and again applied by the Court of Appeal in Sinclair v. British Telecom Communications Plc. In that case Ferris J, sitting in the Court of Appeal, said:
"It is an inherent jurisdiction which in essence enables the court to prevent the plaintiff subjecting a defendant to a second substantially similar action without satisfying his obligations in respect of the first action. In my judgment, it is a jurisdiction which is fully wide enough to enable the court to make an order against the plaintiff in the second action who is the successor in title of the plaintiff in the first action."
- In the Investment Financing case itself, Moore-Bick LJ drew the strands together in paragraph 34 of his judgment. He contrasted the jurisdiction being exercised with the jurisdiction to order security for costs and in relation to the jurisdiction with which I am currently concerned he said:
"… the latter is concerned with preventing an abuse of the court's process."
Later in the same paragraph having referred to the authorities he states:
"Those cases all make it clear that the purpose of making such an order is to do substantial justice between the parties."
- Before turning to the cases in which the court grants a stay in a continuing single action until costs of an earlier stage in that single action are paid, I should explain why I go to these cases about a second action. First of all the facts of the present case before me are a hair's breadth only away from a case of a first action and a second action. I have explained that I have left three actions in existence in a consolidated form but with the slenderest possible rump of the very extensive pleadings that had originally been served by the claimants.
- I could in my judgment quite easily have said that all the three actions should be struck out and if Professor Haydon-Baillie wanted to continue he would have to start again. Essentially what I have done is to save Professor Haydon-Baillie a fee on issuing further proceedings and I have also preserved for him any points which might be relevant as to limitation of actions because he has the benefit of the issue dates of the three original actions, but those are matters which are far more of form than of substance. If there is an established practice arising from the inherent jurisdiction of the court to prevent an abuse of process from the second action, to my mind I could proceed easily by analogy and apply that practice here.
- The matter does not stop there. There is a line of authority which deals with what I have already described, that is a claimant continuing with a single action when that claimant has had an adverse order for costs arising from an earlier stage in the single action. The courts have on a number of occasions identified a jurisdiction to make an order staying the continuation of the action until the earlier order for costs is complied with. In Hines v. Birkbeck College (No. 2) Nourse LJ referred to two cases from the 19th Century dealing with such stays being ordered. The matter was considered again in the Chancery Division in Thames Investment & Security Limited v. Benjamin [1984] 1 WLR 1381.
- In more recent years there has been considerable activity in this respect. I can refer to the two decisions of the Court of Appeal Hammond Suddard v. Agrichem International Holdings [2001] EWCA Civ 2065 and CIBC Melon Trust Co. v. Mora Hotel Corp [2003] 1 All E R 564 to which I would add the decision of Langley J in Days Healthcare UK Ltd. v. Pihsiang Machinery Manufacturing Co. Ltd. [2006] 4 All E R 233. Accordingly, I do not have to find that the facts amount to a second action or something close to it. I am able to regard this as a case of a single action continuing, but I am being asked to order a stay of the single action continuing until the adverse order for costs in the past has been complied with.
- Professor Haydon-Baillie submitted to me that I should not reach that conclusion, that I should conclude that if his case is not within the letter of rule 3.4(4) that is the end of the matter. Having reviewed the authorities in the way I have done it will be clear that I am not persuaded that is the correct understanding of the law. It is contrary to the settled practice of the court as revealed by the cases.
- The other lesson one draws from these cases is that the reason the court has power to act in this way is to prevent an abuse of process. It is not, again, a punishment or a penalty. It is simply that it is regarded as abusive of the process of court for a claimant either in the second action or in the same action to continue against a defendant when that defendant has obtained an order for costs in its favour which the claimant has not honoured. That is generally regarded as abusive of the process of the court. I do not say that an order must be made but the jurisdiction exists to do what is just to avoid an abuse of the process the court.
- I asked Professor Haydon-Baillie in the course of his submissions to me whether he wanted to make a submission that on the facts of this case it would be unjust to make that order against him. He did not put forward any reason as to why it would be unjust on the facts of this case. At one time before I heard his submissions I had considered whether I might receive a submission that the burden of this stay, this condition would be very onerous because of impecuniosity on the part of Professor Haydon-Baillie. I contemplated that something of that kind might be referred to not least because in Ford. v. Labrador [2003] 1 WLR 2083, the Privy Council was persuaded that impecuniosity on the part of a litigant might be a reason for not imposing such a stay.
- Let me deal with the facts first and then the matter of principle which arises. On the material before me, on the submissions made to me, there is no case put forward of impecuniosity, no case put forward that the condition would stifle a proper claim, so on the facts the point does arise. The parties will know that the established rule is that if a party wants to say that impecuniosity would stifle the claim going forward it behoves that party to adduce specific detailed and cogent evidence in support of that averment.
- Beyond that I should not be taken as holding that impecuniosity would be an answer to the stay that is requested in this case. It seems to me that there is at least a question to be addressed as to whether the established approach to stifling litigation which is applied in the security for costs context also applies in this context. After all, the stay does not relate to paying up costs to be incurred in the future, but rather paying costs that have already been incurred by the defendant in the past.
- I simply note that in the Sinclair case, which I referred to, Ferris J in the Court of Appeal similarly left open the question whether impecuniosity and stifling were material to be considered when one was not dealing with security for costs but was rather dealing with a stay of the present character -- the relevant passage is at page 47. However, I need not go to that interesting point because, as I say, on the material before me there is no case put forward of that character.
- That means that I have a clear jurisdiction to make an order of the first type I have described which for clarity I repeat, an order whereby Professor Haydon-Baillie would not be able to proceed against, say, the Bank until he paid the costs of the Bank. Should I go further? The defendants say that what I ought to do here is to impose upon Professor Haydon-Baillie a stay until he pays all the costs of all of those who have been defendants in the applications before me and who are represented before me at this stage. In my judgment it would not be a proper use of the power which I have to impose such a condition.
- This can, I believe, be revealed by considering an example. Take a case of A suing B and C (as defendants). A's claim is struck out on the application of B and C. A is ordered to pay the costs of B and C. A does not pay. At that stage there is a failure by A to comply with the court order but there is not an abuse of the process of the court by A. Non-compliance with court orders is not automatically to be equated with abuse of process of the court. Let us assume that A, not having paid the costs of B and C, starts a second action. He sues B alone. In order to avoid an abuse of process he pays B's costs. So the second action is one between A and B where B's former costs have been paid. What A has not done is he has not paid C's costs. Is that an abuse of the process of the court? Is the commencement of the second action against B when C's costs have not been paid abusive? In my judgment it is not. What has happened is that A has simply not complied with the order of the court concerning C. He has complied with the order of the court concerning B.
- Because the foundation of this jurisdiction is abuse of process of the court, it seems to me it would be quite wrong to give the defendants the wider order that they seek. I should explain that all of the defendants want the wider order. The defendants who are continuing want the wider order because it will be more difficult for Professor Haydon-Baillie to comply with it and that may assist the defendants in the future. The defendants who are not continuing want the wider order because they feel that it may provide, conceivably, some form of incentive to Professor Haydon-Baillie to pay their costs. Whatever the defendants' reasons and however understandable they might be, in my judgment it is not a proper exercise of this jurisdiction to make a wider order.
- Having identified my jurisdiction and the reasons for it I have no hesitation at all in making the narrower form of order which I have described. It seems in accordance with really every authority that discusses this point that it is a plain abuse of process for Professor Haydon-Baillie if he were minded to do so to go on with an action against the defendant without paying that defendant's costs already ordered to be paid.
- There are a number of detailed points that I need now to make. I have already ordered that interim payments be made within 42 days. I am going to allow a longer period as a condition of the stay, that is I am going to allow Professor Haydon-Baillie 56 days to make the interim payment that he has been ordered to make in the case of the defendants who continue. If he does not pay in 56 days then the action will be dismissed against any defendant who has not received payment.
- If Professor Haydon-Baillie does make the interim payment within the 56 days I have allowed, then the stay will continue because, of course, the detailed assessment is unlikely to have happened at that point. The stay will continue until the result of the detailed assessment and at that stage I will give Professor Haydon-Baillie 42 days after the amount of the detailed assessment is known to pay the full amount of the assessment. If he does not pay the action will be dismissed. Of course, if he pays both the interim payment within the 56 days and the final costs within the 42 days then the stay will be lifted and he may proceed against the defendant whose costs he has paid.
- I need then to bring in a time limit for serving the pleading to which I referred earlier. That time limit should be 28 days of the lifting of the stay.
- The next matter to which I need to refer is in relation to the many unilateral notices which the claimants have registered against the legal title of Wentworth Woodhouse. Fortunately I can deal with this very briefly indeed. The unilateral notices are on the basis that the claimants, including Professor Haydon-Baillie, are claiming an interest in the land. In fact now that I have disposed of the dispute about the sale of the building itself, the surviving claim by Professor Haydon-Baillie is directly the opposite of a claim to an interest in the land. If the items in dispute are land then Professor Haydon-Baillie has no claim. He only has a claim if they are not land. If they are not land then he has no business registering a notice under the Land Registration Act 2002 to protect an interest in the land. In that way Professor Haydon-Baillie and the other claimant's unilateral notices must be removed and I will make the order as drafted in that respect.
- The next point I am asked to consider is whether I should record that all or part of the actions which I have dealt with were "totally without merit". That phrase is, so far as material, used in rule 3.4(6) which reads:
"If the court strikes out a claimant's statement of case and it considers that the claim is totally without merit –
(a) the court's order must record that fact; and
(b) the court must at the same time consider whether it is appropriate to make a civil restraint order."
- I have to ask myself do I consider that the claim is totally without merit? I think I would have understood that to mean a claim or a part of it, but in fact rule 3.4(1) expressly states that a reference to a statement of case includes reference to a part of a statement of case.
- Again I am going to divide the matters in dispute into two camps. The first matter in dispute is the claim which potentially can go forward relating to contents and the second is everything else. So far as everything else is concerned I have no hesitation in saying that the claims brought by the claimants were totally without merit. Indeed, I said harsher things about them than that in my original judgment and in this current judgment. So I do record that finding in relation to the rest of the claims.
- So far as the claim to the contents is concerned, there is perhaps an issue of interpretation which I need to address. It arises for this reason. The claims which are going forward in relation to the contents are such that the underlying claim is not totally without merit. If it were totally without merit it could not go forward yet I am, for detailed reasons already given, permitting it to go forward. I cannot record that that claim is totally without merit unless I am persuaded that I am able to say that although the underlying claim has merit, the way in which it was presented, in other words the way in which it was pleaded, was totally without merit. I have criticized the pleading but it seems to me that that is not what the rule is dealing with. The rule is dealing with the underlying claim rather than the form of presentation or the quality of the pleadings. On the facts of this case I do not record that the contents claim is totally without merit but the remainder was.
- Having considered that a very large part of the claims made to date are totally without merit I am now required by rule 3.4(6) to consider whether it is appropriate to make a civil restraint order. I need to refer to another rule and the relevant practice direction. The other rule is rule 3.11 which provides:
"A practice direction may set out –
(a) the circumstances in which the court has the power to make a civil restraint order against a party to proceedings;
(b) the procedure where a party applies for a civil restraint order against another party; and
(c) the consequences of the court making a civil restraint order."
- The practice direction is in support of Part 3. It is practice direction C and it refers to three kinds of civil restraint orders, a limited one, an extended one and a general one. It is not suggested that this is a case for a limited civil restraint order. Indeed, the preconditions of making that order are not satisfied on the facts of this case. It is also not suggested that this is a case for a general civil restraint order and in particular it could not so be suggested because one can only make a general civil restraint order where one holds that an extended civil restraint order would not be sufficient or appropriate. So I am concerned here with an extended civil restraint order. That is dealt with in the third paragraph of practice direction C. The greater part of the paragraph goes into considerable detail about the procedure for an extended civil restraint order and the effect of one. I need only read paragraph 3.1 as follows:
"An extended civil restraint order may be made by ... (2) a judge of the High Court ... where a party has persistently issued claims or made applications which are totally without merit."
- I have held that the claims which have been issued in this case, apart from the underlying claims relating to the contents, were totally without merit. So the two things I have to apply my mind to are whether Professor Haydon-Baillie has persistently issued claims which are totally without merit and whether this is a proper case on which I should exercise the discretion to make an extended civil restraint order.
- Before turning to the authorities I record my own untutored reaction to the words. Professor Haydon-Baillie has issued three actions. The first and second were issued at the same time. They were issued against different groups of defendants. Perhaps they could have been made one action rather than two, but I do not regard that as any very grievous fault. It may be that if one is doing a numerical exercise one would say that those were not two actions or two claims but many more claims in that a claim against, say, the Bank is a different claim from a claim against, say, Gouldens or, say, Gordon Dadds. I do not close my mind to the possibility that one looks rather more to the substance rather than counting the number of claim forms. I think one really reacts to the facts and bears both the number of claim forms and the number of individual claims in mind. However, even without the assistance of authority I question whether this is a case where Professor Haydon-Baillie has persistently issued claims. The claims issued in the first and second action might have been extensive and unfounded but those are the criticisms one would make of them rather than the fact of persistence.
- The third action did not cover the same territory as the first and second, although curiously the prayer for relief was a more relevant prayer for relief for the first and second action rather than for the third action itself. It might be said that the third action shows a degree of persistence because having issued the first and second Professor Haydon-Baillie then had another go, admittedly redirecting his fire, using different grounds and different materials, but I am not comfortable about the language "persistently issued claims" even in relation to the third claim.
- Happily, I am not required to reach a decision without the assistance of some authority. There are two cases to which my attention has been drawn. One is the decision of the Court of Appeal in Bhamjee v. Forsdick [2004] 1 WLR 88 decided before the new rules came into force. The second case is R (Kumar) v. The Secretary of State for Constitutional Affairs, Practice Note [2007] 1 WLR 536. I think in fairness to the arguments that have been addressed to me I do need to refer to some part of the reasoning and, perhaps more relevantly, the description of the background which appears from these cases.
- In paragraph 4 of the Bhamjee decision, the judgment of the Court of Appeal refers in general terms to the cases of litigants in person, such as the litigants in person who feel hard done by, but do not have a point of legal merit. Having described that general class, the Court of Appeal then states:
"But in a tiny minority of cases he will not take 'no' for an answer. He may start collateral litigation about the same subject matter. He may sue the judge. He may sue the lawyers on the other side. He may bombard the court in the same case with further applications and appeals. He may sue the Lord Chancellor, or the Home Secretary, or some other public authority whom he thinks may be legally liable for his misfortune. ... It is with this very small category of litigants that this judgment is concerned."
- At paragraph 22 the court cited the judgment of Lord Bingham of Cornhill as Lord Chief Justice in Attorney-General v. Barker [2000] 1 FLR 759 at 764 were Lord Bingham had described, for the purposes of section 42 of the Supreme Court Act 1981, the meaning of the phrase "habitually and persistently". Certainly in that place, perhaps influenced by the word "habitual", Lord Bingham had talked about the repetitive nature of pointless litigation.
- At paragraph 28 the court in Bhamjee cited Lord Woolf MR's judgment in Ebert v. Venvil [2000] Ch 484 at 496 to 497. This was in relation to a jurisdiction which mutated into the extended civil restraint order. Lord Woolf, when referring to the possibility of an extended civil restraint order, instead of a limited civil restraint order had used this phrase:
"We can see no reason in principle why it should not also, in accord with the general approach to the granting of quia timet injunctions, exercise that power to prevent the serious loss that anticipated but unidentified proceedings could cause the defendants to those proceedings."
- At paragraph 39 in Bhamjee the Court of Appeal said this:
"A civil restraint order is likely to be appropriate when the litigant's conduct has the hallmark of one who is content to indulge in a course of conduct which evidences an obsessive resort to litigation and a disregard of the need to have reasonable grounds for making an application to the court."
- At paragraph 42 the Court of Appeal indicated that at the time of making a civil restraint order the litigant will have demonstrated the hallmarks of vexatiousness and indeed of persistent vexatiousness, but the word habitual was no longer a material word in the context.
- Finally at paragraph 53(5) the Court of Appeal summarized the guidance given in the Bhamjee case:
"If a litigant exhibits the hallmarks of persistently vexatious behaviour, a judge of the Court of Appeal or the High Court or a designated civil judge (or his appointed deputy) in the county court should consider whether to make an extended civil restraint order against him."
- Those passages from the Bhamjee case I bear in mind. After the Bhamjee decision the rules were amended to bring in the current rules as to the various civil restraint orders and some attention was given to those rules in the Kumar decision to which I have referred. The judgment in Kumar was the judgment of the Court of Appeal. At paragraph 62, the Court of Appeal dealt with the inherent jurisdiction of the court before discussing in a relevant way the rule-based system. The Court of Appeal said this:
"The court's inherent jurisdiction to protect this process from abuse, however, has always existed and has been preserved side by side with the powers conferred on it by the rules but it will be a very rare case in which a judge could rely on the inherent jurisdiction in an area which appeared to have been comprehensively covered in the rules."
- Paragraphs 68 and 69 were emphasized in argument before me. Paragraph 68 contains a reference back to the Bhamjee case at paragraph 42. Then at paragraph 69 the Court of Appeal said this:
"The new rule based regime, however, is sufficient that the previous claims or applications were totally without merit, and that the litigant persisted in making them. The requirement for 'vexatiousness' or its modern equivalent has gone."
- That is the guidance I have to rely upon and apply in this case.
- My overall conclusion is that I should not make an extended civil restraint order in this case. It is easy, and right, to criticise the claimants and Professor Haydon-Baillie for the form of this litigation and the conduct of this litigation in the past. Professor Haydon-Baillie is being permitted to continue with a properly pleaded claim in relation to the contents providing he pays off the costs of the defendants against whom he proceeds. If he does that then he cannot be criticized for bringing those proceedings. They will succeed or fail on their inherent merits and not for other procedural reasons.
- If having received what I hope is a comprehensive judgment in July 2007 from me Professor Haydon-Baillie were to start other proceedings, a fourth action, in relation to which it could be said that he "did not take no for an answer" then, first of all, those proceedings would be stayed if he did not pay all of the costs of the previous actions of the defendants he was proceeding against and, secondly, he would by that further step have exposed himself, in a very vulnerable way, to the making of an extended civil restraint order against him. That is because in the description I have used he has not taken no for an answer based upon the judgment in July.
- Short of that, my conclusion is that we have not yet gone far enough to make this case one where, using the language of the Practice Direction, Professor Haydon-Baillie has already persistently issued claims which are totally without merit. It might be said, based on what Lord Woolf had said in the Ebert case, that I should act quia timet and I should, in effect, place a filter on Professor Haydon-Baillie's conduct in relation to a new action. There is something to be said for the court having that kind of quia timet power but it is going too far to say that the court has a general power of that kind and can disregard the more detailed facts of this case which, in my assessment, do not yet meet the test laid down in the Practice Direction.
- If I am wrong about persistently issuing claims and if it were to be the case that the test is already satisfied, then in the exercise of my discretion I regard it as premature to make this order. I do not make the mistake of saying that these orders can only be made in very, very bad cases which are typified by the facts in Bhamjee and Kumar. That would be to go too far, but in this case I feel that the facts do not go far enough to justify my intervention in this way. It may be that what I am doing is permitting the possibility that Professor Haydon-Baillie may issue an inappropriate action in future which will either be stayed or struck out and then a civil restraint order might be appropriate in relation to him.
- For the sake of completeness I mention, to show I have not disregarded it, the letter which was attached to Mr. Fulton's skeleton in which threats of litigation against other defendants were made. I also mention some of the submissions made by Professor Haydon-Baillie in his skeleton argument and his oral submissions in which there appeared to be an unfortunate inclination to continue with unfounded allegations against other parties.
- I also bear in mind, although I give it little weight, what Professor Haydon-Baillie said to me in the course of his submissions and I read from my notebook:
"I can assure your Lordship that there is no intention on behalf of the claimants to issue further unjustified claims against any of the defendants and we cannot see any circumstances where we would issue claims against any of the defendants who have been struck out."
- In so far as Professor Haydon-Baillie says he does not see circumstances in which he would issue any claim against the defendants that is a welcome statement. In so far as he uses more guarded language and says he will not issue further unjustified claims I cannot pay much attention to that. Professor Haydon-Baillie's opinion of what is justified may differ from an objective opinion that a court might form. I read that statement into my judgment because if there are further claims that statement will be material. If another judge holds that those claims were not justified Professor Haydon-Baillie will have made himself even more vulnerable to an extended civil restraint order by reason of the statement he made. Beyond that I am not persuaded that this is a case in which I should make the order at this stage.
- I hope that I have dealt with all matters arising. There are two points that need attention after I conclude. I have not dealt with the costs of the two-day hearing and this morning, this judgment; they will have to be the subject of separate mention. Nor have I dealt with the possibility of anyone seeking and obtaining permission to appeal either the judgment in July or the judgment this morning.
- I will now hear submissions on those and any other matters that the parties wish to raise. That is the end of the judgment. Who wants to say anything?
THE FIRST CLAIMANT: My Lord, I would like to ask the court's permission to appeal.
MR. JUSTICE MORGAN: Right. Let me make a note of where we are. Do you want to identify specific matters you wish to appeal or generally?
THE FIRST CLAIMANT: There are so many different issues we might address and I need to get the transcripts of this hearing and consider them very carefully, my Lord, so I did think about that. I did identify a list but rather than (unclear) to identify them, I think it much better to have a general permission to appeal.
MR. JUSTICE MORGAN: Right. Before I give a ruling, does anyone else want to seek permission to appeal so I understand the range and I can then deal with everything comprehensively?
MR. DENEHAN: My Lord, the Newbold defendants, as I said in the skeleton argument, do not wish to appeal.
MR. JUSTICE MORGAN: And nothing this morning has ----
MR. DENEHAN: Nothing this morning triggered anything.
MR. JUSTICE MORGAN: ---- triggered any such application.
Professor Haydon-Baillie, I will refuse you permission to appeal. I can only grant you permission to appeal if there is a realistic prospect of your success on an appeal or there is some other special circumstance justifying an appeal. I do not know of any special circumstance justifying an appeal.
As to your prospects of success, in one sense it is an odd thing, I have to judge my own judgment to say whether you have a reasonable prospect of challenging it, but something of that kind has to be done. I do not believe that there is any matter in what I said in July or today where you have a sufficient prospect to take to the Court of Appeal. You will know that you are free to challenge that approach by going to the Court of Appeal on paper in the first instance and the single Lord Justice will give his or her view.
THE FIRST CLAIMANT: Indeed, my Lord, thank you very much.
MR. JUSTICE MORGAN: Right. What about the costs of Thursday and Friday and this morning?
MR. AYLIFFE: My Lord, I would apply for the twelfth defendant, for Gouldens' costs of the hearings including this morning. I would make three points. First, these hearings all flow from the fact that we have been brought to court by Professor Haydon-Baillie. They have been made necessary by Professor Haydon-Baillie's proceedings and the other claimants' proceedings. We have had no option. The hearings have really been a disentangling of the situation as has been created by Professor Haydon-Baillie and we have had to come along and participate in that. That is the main point.
Secondly, I would also say, so far as it is relevant we have effectively been successful in these proceedings. We ask for costs on an indemnity basis and an interim payment order which were resisted by Professor Haydon-Baillie and we succeeded on those.
The two points on which we have not succeeded are (1) a civil restraint order and, secondly, a stay point in relation to our costs. Both of those really we were piggybacking on applications brought by Mr. Denehan. The civil restraint order is a matter your Lordship has to consider in any event by virtue of provisions of the rules and we have assisted you as we can.
The third point I make is simply saying we have had really a minimal role in this. I think I have made perhaps 20 minutes of submissions, if that, during the course of the hearing and really we have not added to the costs in any way. I would ask for our costs of the hearing.
MR. JUSTICE MORGAN: Right.
MISS SINCLAIR: My Lord, I ask for Gordon Dadds' costs. Gordon Dadds are in almost exactly the same position as Gouldens so I adopt Mr. Ayliffe's submissions.
MR. JUSTICE MORGAN: Right, yes, Mr. Greenbourne?
MR. GREENBOURNE: I adopt what my two learned friends have said and have nothing to add.
MR. JUSTICE MORGAN: Right.
MR. DENEHAN: My Lord, I make an application on behalf of the Newbold defendants, that includes SW1 Nominees and all the parties, Pemberton Greenish so on and so forth. In the usual way the application, so far as there needs to be one for a judgment and an order to be sorted out, is parasitic on the substantive litigation and it is my submission that the substantive litigation was decided wholly in favour of the found defendants, notwithstanding that there are certain elements continuing. I pray in aid of that your Lordship's judgment and how the question of costs has been dealt with, both in terms of the principle, namely that Professor Haydon-Baillie and other claimants pay the Newbold defendants costs, and the fact those costs have been paid on an indemnity basis.
MR. JUSTICE MORGAN: Yes.
MR. DENEHAN: The issues that arose on these last two days and this morning, the twelve items listed in your Lordship's judgment, arose out of Professor Haydon-Baillie's defeat. The position taken by the claimants in respect of all of those items, as I understand it and can recall, was to object to all the applications that all the defendants made.
MR. JUSTICE MORGAN: Yes.
MR. DENEHAN: It was only this morning, for example, for the first time we have heard that Professor Haydon-Baillie wants to appeal.
MR. JUSTICE MORGAN: Yes.
MR. DENEHAN: He was not prepared to assist your Lordship with how much time he would need to pay and so on and so forth. Basically, what I am saying is that as in the substantive hearing, in the last two and a half days or so the claimants have shown themselves to be consistently obstructive.
In respect of the two elements that failed, I use that word perhaps a little advisedly, the civil restraint order of course was the most serious matter but, as my learned friend Mr. Ayliffe says, the court had to consider that in any event. That was what the rules provide and, to use a vernacular, the defendants pitched in to the extent that they did. In our submission that added some but not a great deal of time to the forensic course over the last two days and, as I say, your Lordship had to consider that in any event.
As to the stay on the costs if I can use the piggyback analogy the other way around, that certainly the Newbold defendants were jumping on the back of the solicitor defendants in that regard. In one sense I did not care to a whole degree whether there was a general stay or not, albeit I do acknowledge that perhaps this would make it more burdensome for the claimants, but that was a small item that added nothing, in my submission, to the duration or complexity of the issues that your Lordship had to decide in a full and complete judgment this morning. In my submission, the Newbold defendants should have their costs.
MR. JUSTICE MORGAN: Mr. Fulton?
MR. FULTON: My Lord, I adopt all of those submissions and just add that as from the handing down of your judgment in July the writing was very much on the wall for the claimants.
MR. JUSTICE MORGAN: Yes.
MR. FULTON: And no proposal had been made in respect of those matters identified in your judgment and clearly in respect of some of those matters there were very sensible proposals which could have been forthcoming from the claimant, for instance as to the future conduct of the action and certainly concessions as to costs and the basis of assessment of those costs. There was no such reasonable conduct or concession on their part and so we were forced to come here and deal with all this on a contested basis.
In terms of the conduct of these hearings, the professor was on his feet for the best part of a day, in my submission that did not add anything to the ease with which these issues could be disentangled. In fact we had to rake over the third action looking for all sorts of points there and Companies Act points being taken and, again, that was just a further waste of time and dealing with this matter which was inefficient and wasteful. So, in my submission, the costs of this application should follow the event in the same way as with substantive proceedings and the Bank should have their costs.
MR. JUSTICE MORGAN: Right. Professor Haydon-Baillie?
THE FIRST CLAIMANT: Yes, I do not quite understand what the actual issue before the court is. Is it whether costs of these hearings are allowed in the normal way to get a detailed assessment?
MR. JUSTICE MORGAN: Yes, whether I should deal with Thursday, Friday and today, costs of two and a half days, in accordance with the orders that have been made.
THE FIRST CLAIMANT: But not on a summary basis.
MR. JUSTICE MORGAN: No, no one is asking yet for a summary assessment. It is a question of who should pay and whether it should be all of the costs and whether it should be on an indemnity basis.
THE FIRST CLAIMANT: I understand, my Lord. That being said I must say I take grave exception to the statements of counsel here that I was consistently obstructive. Having followed your Lordship's judgment with due humility and spent considerable time analysing your Lordship's submissions in that judgment it is quite clear that the skeleton I produced, which again I was asked to produce, the skeleton I produced addressed some critical important issues. The first one, it created an immediate accord between the claimants and the defendant as to who the appropriate claimant should be and who the appropriate defendant should be, thus saving any further time of court from having to debate that issue.
MR. JUSTICE MORGAN: Perhaps I can shorten this. I am not going to decide the costs of Thursday and Friday and today on the basis that you have been obstructive; I am not.
THE FIRST CLAIMANT: I want to say further, my Lord, on the contrary, we were extraordinarily constructive by preparing a full and thorough skeleton and putting it before your Lordship and all the defendants and in that providing as much of an accord to go forward to save the court time and costs as we possibly could which was dealing with the principal issues of the claims and the defendants, the principal ones, furthermore in fact saying to your Lordship we totally concurred with your view about consolidating the claims, proceeding with them in that manner and so on.
I believe it is fair to say, my Lord, that our attitude during this hearing was totally constructive at all times and, indeed, we were only concerned with the issue of whether making certain orders was just or not, which we are entitled to debate, and the defendants counsel spent a considerable amount of time on the authorities, we did not add to that time. We did not complicate matters by querying or questioning those authorities or dredging up other ones. We allowed the defendants' counsels coverage of those authorities and your Lordship's very helpful analysis in front of us as claimants to, if I may say, carry the day with regard to those claims, we did not question your Lordship's assertion or authority to jurisdiction to deal with the matter. In that sense I can only say, my Lord, that our time is well spent.
Furthermore, your Lordship complimented me at one point on how well I was getting on with the skeleton and we did not take up more time than the defendants' counsel in the total. When we are taking five separate groups I cannot see that our use of time can be criticized either, my Lord. Those are my views about the costs.
MR. JUSTICE MORGAN: Right.
THE FIRST CLAIMANT: Thank you very much.
MR. JUSTICE MORGAN: What I propose to do is to say that the costs of Thursday, Friday and this morning will be paid by the claimants to the defendants but they will be on the standard basis, not the indemnity basis. First of all, these two and a half days of hearing have been an essential adjunct to the applications that have gone before because, as I have indicated, I left for further argument twelve points that have now, I hope, all been comprehensively dealt with. It was necessary for everyone to come back and deal with those. It should be relevant that the defendants succeeded overall and so that should carry into the twelve matters that were left unfinished.
So far as the civil restraint order goes, the application for the civil restraint order has failed but I am persuaded that that was a matter which the court had the burden of dealing with in any event as I had to consider whether to make such an order. It is perhaps only natural that the defendants would seek to persuade me to make the order but in the course of their doing that they did help with citation of authority and argument of the principle, which I was then able to take fully into account in reaching my conclusion.
So far as the stay on the continuation of the matter is concerned I did not go as far as the defendants wanted but I have done something which was resisted by Professor Haydon-Baillie. I think, in the circumstances, it will be wrong to say that the defendants should have 90% or 95% of their costs; this a case where they should have all of their costs. Conversely, looking at this two-and-a-half-day-period on its own, I see no basis for the costs to be on the indemnity basis but they should therefore be on the standard basis and that is what I will order.
As to housekeeping, I have plainly a large amount of paper, I do not wish to retain it. I wonder if I can leave it in court and it can all be taken away. It may be, Mr. Ayliffe, that it is your side that so helpfully prepared it and the gratitude I show is requiring you to remove it all. Thank you all for your assistance.
MR. GREENBOURNE: I have one small point to clarify, all of us know what the calculation should be, it is in relation to the interim payment on account of costs. Taking my case, for example, 60% of the figure in our costs statement comes to £48,733 odd.
MR. JUSTICE MORGAN: I did say that I would do the mathematics. I am looking for my file with all the skeleton arguments in them. I think I have managed to leave all the schedules elsewhere. Can each of you give me the figure and the 60% and then I will do the rounding, because someone has to compose the rounding.
MR. GREENBOURNE: Whoever is going to be drawing up the order needs to ----
MR. JUSTICE MORGAN: You need to have the figure, you cannot not know. Starting you with Mr. Greenbourne since you have begun the exercise, what is the figure in your bill, in your schedule?
MR. GREENBOURNE: £81,221.93 and 60% of that is £48,733.16.
MR. JUSTICE MORGAN: I am going to make that £49,000. Does anyone else have a figure?
MR. FULTON: I have calculated whilst your Lordship was giving judgment, I have two bills, the first and second action bill and the third action bill. The first and second action bill, 60% of £119,000 odd is £71,538.46. I would invite your Lordship to round it down to £71,000.
MR. JUSTICE MORGAN: Right, I will.
MR. FULTON: In respect of the third action the bill is £2,402.30, 60% of that is £1,384.62, I would invite your Lordship to say £1,300.
MR. JUSTICE MORGAN: Right, I will.
MR. FULTON: I am grateful.
MISS SINCLAIR: My Lord, in my case the total bill is £75,109.63, of which 60% is £45,065.78 and I ask your Lordship to round that up to £45,066.
MR. JUSTICE MORGAN: I will round it down to £45,000.
MR. AYLIFFE: My Lord, Gouldens' total bill is £205,758.80; 60% of that is £123,454.84. I do not know what your Lordship would like to do with our costs.
MR. JUSTICE MORGAN: Say £123,000.
MR. AYLIFFE: I am grateful, my Lord.
MR. DENEHAN: My Lord, the total bill for the Bank is £143,876.96; 60% is £86,326. Adopting a similar approach I would invite your Lordship to round it down to £86,000.
MR. JUSTICE MORGAN: Yes, I will. Thank you all very much. I will leave all the paperwork.
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