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Confidential Opinion
by
Mr Irving's Counsel, Adrian Davies,
a legal expert in the
Chancery Division
Background
1. On 4th March
2002, Deputy Registrar Derrett made a Bankruptcy
Order ("the Bankruptcy Order") against David John Cawdell
Irving ("Mr Irving") on the petition of Penguin Books
Limited ("Penguin").
2. The Bankruptcy Order was founded upon an interim
costs order ("the Interim Order") made on 5th May 2000 by
Gray J. pursuant to CPR Rule 44.3 (8), following Gray J's
dismissal of Mr Irving's libel
action ("the Libel Action") against Penguin. The
Deputy Registrar declined to go behind the Interim
Order.
3. Mr Irving appealed against the Deputy Registrar's
Order of 4th March 2002, contending that the Court
sitting in bankruptcy might go behind the Interim Order,
and look afresh at the evidence that Penguin had been
maintained throughout the Libel Action.
The
Judgment of Peter Smith J.
4. On 21st May 2002 Peter Smith J. upheld
the Bankruptcy Order, albeit on different grounds, for he
was critical of the Deputy Registrar's reasoning, and
took a different view from her on the question whether
the Court might go behind the Interim Order.
Mr
Bays' Witness Statement
5. Under some pressure
from Peter Smith J., Kevin Bays, Penguin's solicitor and
the partner in the firm of Davenport Lyons who had the
conduct of the Libel Action, made a witness
statement the material paragraphs of which read as
follows:--
"2. . . . I can confirm that the liability
for the costs incurred by Penguin is that of Penguin,
that all accounts for fees and disbursements have been
rendered to Penguin, and that in the event of
non-payment, I would hold Penguin liable to account
for such fees."3. In practice, the VAT exclusive sums in relation
to bills was (sic) transferred directly to my firm by
Penguin's insurers, and the VAT element of such bills
was paid by Penguin."
Maintenance
and Damnification
6. Peter Smith J. thought that the words "in the event
of non-payment, I would hold Penguin liable to account
for such fees" were conclusive in Penguin's favour,
because they showed that, in the last resort, Penguin was
liable for costs.
7. On the authorities, that view may well be sound on
the issue of maintenance, though much will turn on the
construction of the retainer in question; see Baillie
v. Neville (1920) 149 IA 300.
8. In my opinion, however, it is at the least highly
arguable that the words "in practice, the VAT exclusive
sums in relation to bills was (sic) transferred directly
to my firm by Penguin's insurers" are conclusive in Mr
Irving's favour, because they show that Penguin has not
suffered any damnification (a word which Gray J. said was
new to him, but simply means "loss" in the context of
costs).
9. On the face of it, Mr Irving therefore has (or had)
good grounds to appeal against Peter Smith J's order.
There are, however, problems, which are not necessarily
insuperable, but which ought equally not to be
underestimated.
Obstacles
in the way of an appeal from Peter Smith
J.
10. The first is that Mr Irving is long out of time
for appealing. It will not be easy to surmount this
obstacle. The delay is now very serious. If, however, Mr
Irving can show by compelling and detailed evidence (in
the form of a witness statement or affidavit) that the
only or at any rate the principal reason for the delay is
that it has taken him six months to raise the funds to
pay for a further appeal, it might be that the Court of
Appeal would be reluctant to refuse him an extension of
time for appealing on the grounds of delay alone.
11. Secondly, as those instructing me will be very
well aware, but Mr Irving may not, second appeals face a
high threshold. As Brooke LJ explained in the leading
case of Tanfern v. Cameron-Macdonald
[2000] 1 W.L.R. 1311 at 1319, permission to
appeal will only be given if the Court of Appeal itself
considers that the appeal would raise an important point
of principle or practice, or that there is some other
compelling reason for it to hear a second appeal.
12. Thirdly, there is the risk that Penguin's insurers
will simply ratify Penguin's actions, and take the
benefit for themselves. This objection is the most
formidable that Mr Irving faces, as it seems to me to
have a solid foundation of merit, unlike the other
objections that I have canvassed, which are based on
technical rules or the shortness of the time limits fixed
for bringing appeals.
| Notes |
1 Section 11 of the Defamation Act,
1952 remains in force, notwithstanding the
repeal of parts of the 1952 Act by the new
Defamation Act of 1996. |
13. The third ground is moreover in some measure
supported by section 11 of the Defamation Act,
1952[1], which provides that:--"An agreement for indemnifying any person
against civil liability for libel in respect of the
publication of any matter shall not be unlawful unless
at the time of the publication that person knows that
the matter is defamatory, and does not reasonably
believe there is a good defence to any action brought
upon it."
The
strengths and weaknesses of the parties'
positions
14. In the last analysis, Mr Irving will have to take
a view on this objection. If Penguin's insurers support
its hard line against Mr Irving, it seems to me that in
the long run they will prevail, even if they have to
begin again at the beginning.
15. On the other hand, it is at least possible that
they will grow weary of throwing good money after bad,
and either abandon their efforts to recover money from Mr
Irving, or (more plausibly) become more amenable to a
composition or other negotiated solution than
hitherto.
16. It will also be difficult for Penguin to justify
the continuation of the Interim Order, if the Court
accepts that it was obtained on a mendacious basis. While
this consideration is perhaps the strongest card in Mr
Irving's hand, it does not really relate to an appeal
against the judgment of Peter Smith J., so I will
consider it at paragraphs 19 et seq. below, in the
context of a possible application to Gray J.
17. A further serious problem for Penguin is that
ratification by the insurers would not necessarily be an
answer to a claim for damages for malicious presentation
of the petition in bankruptcy. In my opinion the time for
determining the question whether there was reasonable and
probable cause for presenting the petition is at the
latest the date of service of the petition (but probably
the date on which it is issued), and Penguin could not
rely on events occurring after that date (such as ex
post facto ratification by its insurers).
18. In view of the matters that I have set out at
paragraphs 10 to 13 above, there are formidable obstacles
in the way of a further appeal from Peter Smith J. My
considered view is that an appeal would not at present be
likely to succeed. There is however another course open
to Mr Irving, which he might pursue with far greater
prospects of success.
Discharging
or staying the Interim Order
| Notes |
2 see para.
[ ] below 3 Time having been extended
by the Court of Appeal on [ ] July
2001 |
19. It seems to me that there are grounds for going back
to Gray J. by way of a further application in the Libel
Action, to seek the following relief:--1. That the Interim Order be discharged, on
the ground that it was obtained by what was called
(before Lord Woolf purported to ban Latin from our
Courts) suppressio veri et suggestio falsi;2. Alternatively, if Gray J. does not have
jurisdiction to discharge the Interim
Order,[2] a stay on the Interim
Order, with permission to appeal against it out of
time;
3. In either case, an Unless Order pursuant to CPR
Rules 47.8 (1) (b)[3] and 47.8 (2),
requiring Penguin to lodge its bill for detailed
assessment, or have all or some part of its costs
disallowed.
| Notes |
4 25.8 (1) Where a defendant has been
ordered to make an interim payment, or has in
fact made an interim payment (whether
voluntarily or under an order) the court may
make an order to adjust the interim payment. 25.8 (2) The court may in
particular -- (a) order all or part of the
interim payment to be repaid; (b) vary or discharge the order
for the interim payment. |
20. The following considerations arise. While the point
is not without difficulty, in my opinion the right to
make such an application is not "property" which vests in
the trustee on bankruptcy under section 306 of the
Insolvency Act, 1986.21. Less helpfully, it must be said that there is no
direct equivalent to CPR Rules 25.8 (1) and 25.8 (2) (a)
and (b)[4] under CPR Rule 44.3
(8).
22. Absent an express power to discharge an interim
costs order, it may be arguable that the High Court has
an inherent jurisdiction so to do; see per Brooke LJ in
Seray-Wurlo v. Hackney L.B.C. (2002) Times
4th July, holding that:--
" . . . the High Court . . . possessed an
inherent jurisdiction to do what it had to in order to
maintain its character as a court of justice."
23. If I am wrong about the existence of an inherent
jurisdiction to discharge the Interim Order, the court
has an unfettered discretion to grant a stay. Factors
militating in favour of a stay include firstly the
matters raised at paragraph 16 above, and secondly, the
inordinate delay in lodging Penguin's bill for detailed
assessment.
24. I have not overlooked the recent, and as yet (to
my knowledge) unreported, decision of Laddie J in
Allason v. Random House UK Ltd 27th February 2002
(of which I enclose a transcript).
25. No doubt there is force in the words of Laddie J.
at para. 12, specifically:--" . . . What the court should
not be doing is forcing the receiving party to engage on
a detailed assessment before receiving any money at all
because that will just simply be an expenditure of
further money on a process which will give no
returns."
| Notes |
5 While I am confident
that Mr Irving can prove what he has to prove,
he should be under no illusions that it is for
him to lead evidence on this issue: mere
assertions (however plausible) will not be
sufficient. I have already suggested how he
should write both to his trustee in bankruptcy,
and to the mortgagee in possession of 81 Duke
Street. 6 Time having been
extended by the Court of Appeal on
[ ]July 2001.
NB: The necessary letters have been
written. -- David Irving, Saturday, November
23, 2002 |
26. If (as seems likely) Mr Irving can
show[5] that his assets very largely
exceed the amount in which the Interim Order was made (by
way, for example, of a witness statement exhibiting a
completion statement in respect of his flat at 81 Duke
Street) then the position would be different from that in
Allason v. Random House UK Ltd.27. Penguin will also be in pronounced difficulties in
justifying the line taken by Mr Rampton Q.C. in the Court
of Appeal on the instructions of Davenport Lyons, when
seeking an extension of time for lodging Penguin's bill
in the Supreme Court Costs Office. It must be open to
doubt whether Davenport Lyons ever seriously intended to
lodge the bill.
28. There are no time limits for making an application
under CPR Rules 47.8 (1) (b)[6] and
47.8 (2), nor is there any time limit for applying to
stay or discharge an interim order, which, by its very
nature, is provisional.
29. If successful, such an application would pave the
way for a further appeal to the Court of Appeal against
the Bankruptcy Order, based on a material change of
circumstances, or else (perhaps more appropriately, more
cheaply and more straightforwardly) an application to a
Registrar in Bankruptcy under section 282 (1) (a) of the
Insolvency Act 1986 to annul Mr Irving's bankruptcy.
30. My advice is that there is little to be lost and
much to be gained by making an application to Gray J. In
order to prepare for such an application, I shall have to
complete the revision of the
transcript of the argument before Gray J. on 5th May
2002.
31. I am grateful to my instructing solicitors for
making the appropriate enquiries with the clerk to Gray
J. and of the official shorthand writers, Smith Bernal
Reporting Ltd. Would my instructing solicitors kindly
arrange for me to have access to the tape as soon as
possible.
32. For his part, Mr Irving should pursue the matters
canvassed at paragraph 26 above, and also urgently take
steps to collate the worst examples of Penguin's apparent
mendacity on the funding
issue.
| Notes |
The Times article was headlined
PENGUIN MAY BE £2 MILLION DOWN BUT THERE
WAS AN IMPORTANT PRINCIPLE INVOLVED, SAYS MARK
BATEMAN. [Full
text] |
I already have Mr Irving's helpful extracts
from Mr Rampton QC's more touching submissions to Gray J
about the expense to which Penguin was being put. I have
also seen the claim
by Mr Mark Bateman of Davenport Lyons in the Times of
18th April 2000 (Law, p. 11) that:--"Despite Irving's assertions to the contrary,
it was Penguin that paid the fees of the experts,
leading counsel, junior counsel and my firm."
Any further striking examples should be collated.
35. It follows that my advice is not to seek
permission to appeal against the order of Peter Smith J.
(at least for the present), but rather to direct all our
energies to progressing an application to Gray J. on the
lines that I have suggested.
36. Needless to say, I shall be pleased to discuss
this advice in conference or on the telephone, as those
instructing me prefer.
ADRIAN DAVIES
- 3 Dr. Johnson's Buildings
- Temple
- London
- EC4Y 7BA
- tel. 020-7353-4854
22nd November 2002
Next
related file on this website:
Having perfected passages
of the key transcript, Mr Davies reports on Nov 29,
2002 to Mr Irving's lawyers recommending they proceed
to an Application to dismiss the Order
The Times, July 4, 2002
Law Report Power to
re-open decision
- COURT OF APPEAL
- Published July 4, 2002
- Seray-Wurle v Hackney London Borough Council
- Before Lord Justice Simon Brown, Lord Justice
Brooke and Lord Justice Dyson
- Judgment June 25, 2002
The High court, like the court of Appeal, had
jurisdiction to re-open proceedings which had concluded
before it, if it was necessary to do so to avoid
injustice. The court of Appeal so held on a reference by
Mr Justice Lloyd upholding his dismissal of an
application by the claimant, Adu Aezick Seray-Wurie,
acting on behalf of himself and other trustees of the
Hackney African Organisation, a registered charity, for
permission to re-open an application refused by Mr
Justice Gibbs for permission to appeal against an order
setting aside a default costs certificate made against
the defendant, Hackney London Borough council.
The claimant in person; Hackney did not appear and was
not represented.
LORD JUSTICE BROOKE said that the charity occupied
premises in Hackney under a ten-year lease granted by the
council. In 1992 the council issued proceedings whereby
it forfeited the lease on the ground, inter alia, of
arrears of rent.
The charity made a counterclaim based on the
contention that the council owed it money in relation to
contracts which more than extinguished the claim for
arrears of rent.
In the event, the council repossessed the premises
under powers granted to it by a compulsory purchase
order, and a long-running litigation which came to a head
at an eight-day county court trial before Judge Thornton,
QC culminated in an order made by him on October 31, 2000
granting the charity nearly £300,000 on its
counterclaim. The judge decided that interest and costs
should be dealt with at a subsequent hearing.
On September 10,2001 the claimant filed and served his
bill of costs accompanied by a notice which stated that
points in dispute had to be served by October 1,2001. On
October 2 he obtained a default costs certificate in the
sum of £280,063.
On October 5 the council applied under rule 47.12 of
the civil Procedure Rules for an order that the
certificate be set aside. The council maintained that the
points of dispute had been sent by Royal Mail special
delivery and that the guaranteed delivery date was
October 1.
It appeared that the documentation came into the
claimant's possession on October 6. Deputy Gosts Judge
Jefferson set aside the default costs certificate.
The claimant sought permission to appeal against the
order. Mr Justice Gibbs, in a carefully reasoned
judgment, refused permission to appeal.
That would ordinarily be the end of the matter because
the court of Appeal had no jurisdiction to entertain an
appeal from a judge in a lower court who had himself
refused permission to appeal.
The claimant, however, relying on Taylor v Lawrence
(The Times February 8, 2002; [20021 2 All ER
353), applied for an order that the case be re-opened for
a hearing.
When Mr Justice Lloyd originally dealt with the
application on paper he made the assumption that the High
Court had the same power to re-open its own decisions as
the Court of Appeal. But he said that the grounds on
which the claimant relied were not sufficient for
reopening the decision.
The question which Mr Justice Lloyd referred to the
Court of Appeal for its consideration was whether the
High Court, when sitting as an appeal court, possessed a
jurisdiction to re-open its decisions in exceptional
circumstances in order to avoid real injustice.
It appeared to his Lordship that the same logic which
had driven the Court of Appeal in Taylor to hold
that the Court of Appeal possessed such a power drove
their Lordships to hold that the High Court, which also
possessed an inherent jurisdiction to do what it had to
in order to maintain its character as a court of justice,
possessed a similar power.
In Taylor the Lord Chief Justice said: "It
should be clearly established that a significant
injustice has probably occurred and that there is no
alternative effective remedy."
The present case, as Mr Justice Lloyd correctly
observed, got nowhere near satisfying that extremely
tough requirement and the judge was right when he
disposed of the application on paper in the way that he
did.
On any future occasion an application of that kind
should be handled in the High Court on paper along the
lines described by the Lord Chief Justice in Taylor.
Whether such an application should be referred to a High
Court judge or High Court master would be a matter for
the Civil Procedure Rules Committee to consider.
Nothing in the present judgment should be interpreted
as having any effect in relation to the re-opening of
decisions made by circuit judges sitting as an appeal
court in the county court.
For the avoidance of doubt, the present judgment was
free from the restrictions on citation contained in
paragraph 6.1 of Practice Direction (Citation of
Authorities) (The Times May 1, 2001; [2001] 1
WLR 1001, 1002).
Lord Justice Dyson and Lord Justice Simon Brown
agreed.
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