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SKELETON ARGUMENT OF THE CLAIMANT
Background 1. On 5th
May 2000 Gray J. made an interim costs order ("the
Interim Order") in favour of Penguin Books Limited
("Penguin") pursuant to CPR Rule 44.3 (8), following the
dismissal of the claim herein ("the Libel Action"). The Order of Deputy Registrar Derrett 2. On 4th March 2002, Deputy Registrar Derrett made a
Bankruptcy Order ("the Bankruptcy Order") against David
John Cawdell Irving ("Mr Irving") on a petition in
bankruptcy presented by Penguin, and founded upon the
Interim Order. 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. | Notes | 1 see esp. at para. 12 of his
judgment |
4. On 21st May 2002 Peter Smith J. upheld the Bankruptcy
Order, albeit on different grounds, for he was critical
[1] 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's Witness Statement 5. In the course of the hearing, Peter Smith J.
suggested that Mr Kevin Bays, Penguin's solicitor and the
partner in the firm of Davenport Lyons who had the
conduct of the Libel Action, should make a witness
statement dealing with the question of who paid Penguin's
costs. 6. The material paragraphs of Mr Bays's witness
statement 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 7. Maintenance and absence of damnification are
several (though often overlapping) grounds of
objection. 8. On 5th May 2000, Mr Irving's case was put to Gray
J. on the basis that Penguin was being maintained. As to
maintenance, see per Lord Finlay L.C. in
Neville v. London "Express" Newspaper [1919J
A.C. 368 at 378 to 379:- -
- "Maintenance in a court of justice is defined in
Hawkins' Pleas of the Crown as being 'where one
officiously intermeddles in a suit depending in any
such court which no way belongs to him, by assisting
either party with money or otherwise, in the
prosecution or defence of any such suit."'
- 9. Both Gray J. on 5th May 2000 and Peter Smith J. on
21st May 2002
took the view that even if maintenance were proved, that
would not be a sufficient objection in point of law,
since the primary liability for costs fell on Penguin,
and such maintenance was moreover not necessarily
objectionable, if there was a common commercial interest
between the maintainor and the
maintained.
| Notes | 2 It being conceded that it is not
open to the claimant to pursue his arguments on
maintenance further in a court of first
instance. |
10. Taking that view to be
correct[2] as to the effect of
maintenance, it is nevertheless submitted that the words
"in practice, the VAT exclusive sums in relation to bills
was (sic) transferred directly to my firm by Penguin's
insurers" show that Penguin has not suffered any
damnification (i.e. "loss" in the terminology of costs,
which is both arcane and archaic). It would follow that
Penguin ought never to have sought or obtained the
Interim Order. | Notes | 3 Per Bramwell B. in Harold
v. Smith 5 H. & N. 381 at 385, cited
with approval by Sir H. cozens-Hardy M.R. in the
leading case of Gundry v. Sainsbury
[1910] 1 K.B. 645. |
11. It must be borne in mind that:- -
- "Costs as between party and party are given by the
law as an indemnity to the person entitled to them;
they are not imposed as a punishment on the party who
pays them, nor given as a bonus to the party who
receives them. Therefore, if the extent of the
damnification can be found out, the extent to which
costs ought to be allowed is also
ascertained[3]."
- 12. Since Penguin has suffered no damnification, it
is not entitled to a penny for its costs. Its position,
as a party with indemnity insurance, is analogous to the
example given in McGregor on Damages, 16th ed.,
para. 1674 at pp. 1087 to 1088:-
-
- "Where a plaintiff's medical expenses have been
paid for him under a private medical insurance scheme
to which he subscribes . . . the question of whether
he is entitled nevertheless to claim the expenses as
part of his damages is a question which does not arise
because the insurances under these schemes, unlike the
accident policies considered when dealing with loss of
earning capacity, are regarded as indemnity insurances
which entitle the insurers themselves to recover their
outlays directly from the tortfeasor through the
medium of subrogation. Thus the injured party has
no standing to claim the medical expenses; he has been
made whole by his insurers, who in their turn step
into his shoes and make the claim for the moneys
expended by them."
-
| Notes | 4 This article is exhibited at pp. 5
to 6 of Exhibit DJCI7 to Mr Irving's sixth
affidavit sworn herein on 5th May 2000 |
13. The admissions at paragraph 3 of Mr
Bays's witness statement give the lie to the claims made
by Mr Mark Bateman of Davenport Lyons in The
Times of 18th April 2000 (Law, p.
11)[4]:- -
- "Despite Irving's assertions to the contrary, it
was Penguin that paid the fees of the experts, leading
counsel, junior counsel and my firm. In fact Penguin
could have saved itself almost £2,000,000 had it
accepted Irving's offer
to settle for £500 payable to charity and a
letter of apology. Many publishers would have taken
this opportunity gleefully, but the lawyers and
management at Penguin believed that there was more
than money at stake."
| Notes | 5 It is not suggested that Miss
Rogers was in any way personally at fault. No
doubt she was misled by Mr Bateman's
instructions, which were consistent with his
statement to the Times newspaper |
14. Penguin obtained the Interim Order by
falsely asserting that it was out of pocket; see for
example the suggestion by its counsel, Miss Rogers
[5] at page 3 of the transcript of the
hearing before Gray J. on 5th May 2000 that it had paid
all the costs of its legal team and its expert
witnesses:--
- "What your Lordship has [is] a bundle of
invoices and a schedule, which sets out what Penguin
has paid."
- 15. Penguin is guilty of further misleading the Court
by what was once called suppressio veri et suggestio
falsi, for at no point in the course of Penguin's
argument at pp. 66 to 70 of the transcript
was any indication whatsoever given to Gray J. that in
fact Penguin's insurers had paid all its costs, except
the VAT, which it is to be inferred that Penguin could
recover, else it would not have paid it, but asked its
insurers to pay.
Lodgment of Penguin's bill of costs for detailed
assessment 16. Just before Christmas of 2000, Sedley LJ refused
Mr Irving permission to appeal on the papers, so Mr
Irving renewed his application in open court. 17. On 20th July 2001, the Court of Appeal (Pill,
Mantell and Buxton LJJ.) refused Mr Irving permission to
appeal against the dismissal of the Libel Action after
hearing his renewed application inter partes over three
days. | Notes | 6 Transcript, paras 18 to 20 |
18. In the course of the post-judgment
discussion[6], leading counsel for
Penguin, Mr Rampton QC, asked the Court of Appeal to
grant a six month extension for the commencement of
detailed assessment proceedings, which (understandably)
had been left in abeyance pending the hearing of the
application for permission to appeal.19. Pill LJ evidently felt some surprise at the length
of the extension sought: see para. 19 of the
Transcript. 20. In the event, Penguin, having obtained the six
month extension sought by consent, has still not lodged
its bill for detailed assessment long after the time for
lodgement (as extended by consent) has expired. 21. Mr Irving does not believe that Penguin ever
seriously intended to lodge its bill, or that it sought
the six month extension in good faith. The relief sought by Mr Irving 22. The Court is accordingly asked to
grant the following relief, namely an order:- -
- (i) that the Interim Order be discharged;
(ii) alternatively, if it is held that there is no
jurisdiction for a Court of first instance to
discharge the Interim Order[7], a
stay on the Interim Order, with permission to appeal
against it out of time; (iii) in either case, an unless order
pursuant to CPR Rules 47.8 (1) (b) and 47.8 (2),
requiring Penguin to lodge its bill for detailed
assessment, or have all or some part of its costs
disallowed.
| Notes | 7 see paras. 25 to 28 below |
23. The following additional questions of law
arise. Firstly, it is submitted that the right to make
the application presently before the Court is plainly not
"property" which vests in the trustee in bankruptcy under
section 306 of the Insolvency Act, 1986.| Notes | 8 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. |
24. It is conceded that under CPR Rule 44.3
(8) (interim orders for costs) there is no direct
equivalent to CPR Rules 25.8 (1) and 25.8 (2) (a) and
(b)[8] (interim orders generally).25. Absent an express power to discharge
an interim costs order, it is submitted that the High
Court has an inherent jurisdiction so to do. The Claimant
derives this proposition from principle and
authority. 26. As a matter of principle free from
binding authority, it is submitted that the Court must
have the power to discharge an interim costs order, else
there would be no difference between an interim order and
a final order, which cannot be right. 27. It is further submitted that support
can be derived for this proposition from the observations
of Brooke LJ in Seray-Wurlo v. Hackney L.B.C.
[2002] 3 All E.R. 448 at 453, 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."
- 28. If the Claimant is wrong about the existence of
an inherent jurisdiction to discharge the Interim Order,
the Court has an unfettered discretion to grant a stay.
29. Factors militating in favour of a stay include
firstly the matters raised at paragraphs 11 to 15 above,
secondly, the inordinate delay in lodging Penguin's bill
for detailed assessment, and thirdly Penguin's attempts
to persuade Mr Irving's trustee in bankruptcy to allow it
to prove for £2,600,000 in his bankruptcy without
justifying this exorbitant figure. 30. If the Court were to take a restrictive view of
its jurisdiction to discharge an interim costs order, the
Claimant would seek permission to appeal against it, and
the necessary extension of time for appealing. ADRIAN DAVIES - 3 Dr. Johnson's Buildings
- Temple
- London
- EC4Y 7BA
- tel. 020-7353-4854
2nd December 2002
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