Counsel Adrian Davies, a legal expert in the Chancery Division, advises Mr Irving's lawyers to go the final mile to the Court of Appeal, stating that there are good grounds | ||
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a separate window click Background 1. On 14th January 2003 Gray J. dismissed Mr Irving's application to discharge or stay the interim costs order ("the Interim Order") which he had made on 5th May 2000 in favour of Penguin Books Limited ("Penguin") pursuant to CPR Part 44.3 (8), following the dismissal of Mr Irving's libel action against Penguin ("the Libel Action").
The Judgment of Gray J 2. Gray J. agreed with the submission of Penguin's counsel firstly that:- "This application if it is to be made at all is required to be made in the bankruptcy proceedings." 3. Secondly, and more importantly, Gray J. also agreed with the submission of Penguin's counsel that:- "The only issue for the Court is who was liable to pay the costs." 4. Gray J. did not however accept the third submission for Penguin, namely that the right to move the application was "property comprised in the bankrupt's estate" within the meaning of ss. 306 and 436, Insolvency Act, 1986. 5. At the end of the hearing Penguin's counsel attempted to move an application for a wasted costs order, which Gray J. declined to deal with on that occasion, though Penguin was given leave to make the application at a later date if so advised.
The merits of an appeal 6. In these circumstances, I am asked to advise whether a further appeal would have merit. 7. I will deal briefly with the first and third submissions made on behalf of Penguin.
Venue 8. The first submission was founded on CPR Part 23.2 (2), which provides that:- "If claim has been transferred to another court since it was started, an application must be made to the court to which the claim has been transferred." 9. Penguin's counsel contended, and Gray J. accepted, that the Interim Order has in some sense been transferred to the Bankruptcy Court. 10. In my opinion this proposition is glaringly wrong. CPR Part 23.2 (2) contemplates transfers of proceedings of the kind provided for under CPR Part 30, for example, transfer from the County Court to the High Court for enforcement purposes. 11. In no sense have the Libel Action or the Interim Order been transferred to the Bankruptcy Court. Bankruptcy is not a form of execution for the benefit of an individual judgment creditor, akin to a Writ of Fit Fa., a garnishee or third party debt order, an attachment of earnings order etc. 12. As the Cork Committee said at para. 232 of their Report on Insolvency Law and Practice. [Cmnd. 8558] "Insolvency proceedings are inherently of a collective nature; their prime beneficiary is the general body of the insolvent's creditors, each of whom is affected, though clearly by no means necessarily to the same extent, by the common disaster. " 13. Gray J. dismissed the Cork Report as 'no authority," whereas it is the theoretical underpinning of the 1986 Act. See moreover per Harman J. in Re Western Welsh International System Buildings Ltd: [(1985) 1 BCC 296]. ..... a winding up is not a lis inter partes. The presentation of a petition is not a matter between the company and the petitioner alone. " 14. While Western Welsh was a winding up case, in this regard no sensible distinction can be drawn between personal bankruptcy and the winding up of a company.
Section 306, Insolvency Act, 1986 15. Although it would theoretically be open to Penguin to raise the s. 306 point by way of Respondent's Notice, I see no merit in it, nor evidently did Gray J., and nor perhaps did Penguin's counsel, for she relegated it to a footnote to paragraph 16.1 of her skeleton argument. 16. The crucial question is however the correctness or otherwise of Penguin's second submission that it does not matter who pays a solicitor's bill, if his client is theoretically liable so to do.
Payment or liability? 17. I remain of the view that Penguin, whose costs have been met in full by its libel insurers, ought not on a strict view of the indemnity principle to recover costs from Mr Irving, at any rate, unless its claim is expressly brought on behalf of and at the instance of its insurers . 18. In my opinion no sensible distinction can be drawn between the rule in costs and the principle laid down in the case of damages in McGregor on Damages, 16th ed., para. 1674 at pp. 1087 to 1088. Penguin are entitled to an indemnity for their costs, which they have had from their insurers. Further recovery from Mr Irving would lead to Penguin's unjust enrichment.
Mr Irving's position 19. As against that, two matters fall to be considered, the first particular, the second general. So far there is no evidence at all to suggest that Penguin is claiming on behalf of its insurers. 20. Mr Irving is a controversial figure. Judges who do not care for Mr Irving's (perceived) opinions may (consciously or subconsciously) prove unreceptive to any argument advanced on his behalf, regardless of its objective merits.
The indemnity principle 21. The second consideration has nothing to do with Mr Irving at all. It is that the indemnity principle has itself fallen out of favour with the Court of Appeal (by way of a very recent example, see the approach of Lord Phillips M.R. in Burstein v. Times Newspapers Ltd [2002] EWCA Civ. 1739), citing with approval (albeit o biter) the view of Lloyd J. (as he then was) in R. v. Miller [1983] 1 WLR 1056, an authority which (while in my view distinguishable, and not binding in any event on the Court of Appeal) is anything but helpful to Mr Irving. 22. Although it is generally accepted that the indemnity principle is too deeply entrenched in the common law to be rooted out by judicial decision rather than primary legislation, satellite litigation (especially at the instance of the paying party) based on the recondite technicalities of the indemnity principle is discountenanced by the courts. 23. I nevertheless abide by and reiterate my view that a further appeal would raise points that are at the least properly arguable. Since the costs of making a paper application for permission to appeal will be small, and even the costs of renewing it in open court on the usual ex parte basis would not be great, I advise that such an application should be made. I have settled and attach draft grounds of appeal.
Wasted costs 24. In my view Penguin's threat to seek a wasted costs order was intended to intimidate my instructing solicitors and myself from representing Mr Irving further, and should be treated with disdain. 25. In order to allay my instructing solicitors' concerns about the threatened wasted costs application, I would say firstly that they are entitled to rely on my advice, for which I accept full responsibility, secondly, that Penguin are most unlikely to pursue those instructing me as well as myself, and so expose themselves to the risk (and I would hope the likelihood) of having to pay two sets of costs on a failed application, and thirdly that no inter partes costs will in any event be incurred on a paper application for permission to appeal, nor on a renewed application in open court, if it is made on the usual exparte basis. 26. If permission is eventually given, a contested inter partes appeal is most unlikely to attract a wasted costs order (since ex hypothesi a judge of the Court of Appeal will have taken the view that the contentions advanced are indeed fairly arguable), so that the only risk of a wasted costs order being made on appeal would lie if the permission application were refused on the papers, but directed to be renewed in open court inter partes. If such a direction is given, the matter can be considered further at that stage. 27. Needless to say, I shall be happy to discuss any aspect of this advice with those instructing me. ADRIAN DAVIES
23rd January 2003
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