Wagstaff v Colls

This truly is, as Mr Nicholas Davidson Q.C. describes it, a bleak and gloomy case. It concerns a couple who married late in life. It was an acrimonious marriage. They acquired in their joint names a plot of land on which they conducted a caravan park business, trading as equal partners. They were divorced. They were reconciled but that was short lived. The wife gradually involved a resident of the caravan park in the business. She then sold her interest in the land and assigned her share of the business to that resident – or purported to do so. He took over running the business. There was great acrimony between the husband and his wife and the assignee. The business collapsed. The husband commenced proceedings for dissolution of the partnership. It was bitterly disputed. Eventually there was a compromise and the claim was stayed on the terms contained in the schedule to the Tomlin order. It was a disaster for all concerned. The husband’s costs swallowed up the equity in his home. Then he learned facts which led him to believe that the transfer was a sham and that the assignee should never have been on the land as a co-owner. The facts had been withheld from him by the wife’s solicitors. So he brought these proceedings against them for wasted costs. At first the judge said he had no jurisdiction to deal with it because there were no proceedings extant in which the application could be made. The husband then applied to set aside the stay. The judge held that the wasted costs procedures were not appropriate and so refused to lift the stay. He granted permission to appeal both orders. Once again a wasted costs application has taken up an inordinate amount of court time at no doubt huge expense. This appeal will not see the end of it. Small wonder that despair is the inevitable response.

That said, some points of interest arise and the issues may be broken down to five questions:-

To add flesh to the bare bones, the story is this. Mr and Mrs Wagstaff married in 1985. They were not so young then and they are now well into their seventies. In 1987 they purchased as beneficial joint tenants two acres of land called Beachside. They lived in the cottage on the land and they obtained planning permission to operate a small caravan park on the site. They traded as equal partners, but without any written partnership agreement. It is part of her case that he was violent and aggressive towards her and that she was in fear of him. The husband cannot deny all of it. They separated in 1988 when the wife left the matrimonial home. They were divorced in 1989 but there were no ancillary relief proceedings. The wife resumed her maiden name and was known as Mrs Colls. Later in 1989 Mrs Colls returned and began to live again with Mr Wagstaff in the cottage and they continued to run the caravan site as partners. Their relationship was no happier.

In about 1992 Mr Brian Brewer and his wife became residents in a mobile home at Beachside. At first there was a good relationship between the owners and their residents but later Mr Wagstaff’s relationship with Mr Brewer cooled considerably. Perhaps as the relationship between Mr Wagstaff and Mrs Colls again began to deteriorate, so she began to involve Mr Brewer in assisting her running the site. He gradually took over more and more of the conduct of the business with the encouragement of Mrs Colls, until by about September 1994 Mr Wagstaff was virtually completely excluded from any participation in the running of that business. At that time Mrs Colls moved out of the former matrimonial home into a mobile home on the site taking all business records with her.

She retained local solicitors, whom I shall call “the respondents” to act for her. They served a notice of severance of the joint tenancy. Mr Wagstaff then instructed his solicitors and there was correspondence to resolve the difficulties because, as the respondents put it, “the partnership between them is simply not working”. They put forward three options: one buys the other out, or the site and the assets of the partnership be divided which was thought to be practically possible, or the site and the business be sold. Mr Wagstaff was interested in trying to raise the money to buy out Mrs Colls but needed time. By January 1995 the respondents were becoming impatient and threatening that unless there was a firm offer Mrs Colls would sell her interest to a third party. The “long drawn out negotiations” were said to be affecting her health.

On 2^nd February 1995 the respondents wrote a letter which has assumed significance in the present application. They wrote:-

“As a matter of courtesy we write to advise you that [Mrs Colls] has now sold her one half share in the Beachside Caravan Park and has assigned her one half share in the business and fixtures and fittings to Mr Brian Brewer. … We are sure Mr Brewer will consider any reasonable proposals your client would put forward as to the guidelines to agree for the future maintenance and running of the site.”

Following a request from Mr Wagstaff’s solicitors for copies of the assignment documentation, the respondents wrote on 3^rd March 1995 enclosing “a copy of the conveyance and assignment”. It is necessary to see what those deeds were.

Both were dated 1^st February 1995. The conveyance from Mrs Colls to Mr Brewer provided:-

“That in consideration of the said sum of £30,000 paid by the purchaser to the vendor (the receipt whereof the vendor hereby acknowledges) the vendor as beneficial owner hereby assigns unto the purchaser all that her one half share of the net proceeds of sale and of the net rents and profits until sale and all other (if any) her share and interest of and in [the land].”

The assignment provided:-

“In consideration of the sum of £1.00 paid by the buyer to the seller (the receipt whereof the seller hereby acknowledges) the seller as beneficial owner assigns unto the buyer firstly all that her one half share in the goodwill of the seller of and in the business of Beachside Caravan Park … and secondly all that stock and assets in the said business … to hold the same unto the buyer absolutely.”

Unbeknown to Mr Wagstaff then and for a long time, two other deeds were executed on that day by Mrs Colls and Mr Brewer. The effect of these four deeds is now a matter of hot controversy. The first of the undisclosed deeds was a legal charge whereby:-

“in consideration of the sum of £30,000 now paid by the Lender [Mrs Colls] to the Borrower (the receipt of which the Borrower acknowledges) the Borrower as mortgagor and as beneficial owner as to one half share charges by way of legal mortgage all that half share in [the land] with the payment to the Lender on 30^th April 1995 of the principal sum of £30,000 …”

The second deed was a “declaration” whereby:-

“1.

Party A [Mrs Colls] hereby covenants and indemnifies Party B [Mr Brewer] as follows:-

(a)

That Party A will discharge all legal fees in connection with the transfer of the land, reconveyance of the land if applicable and all other legal documents.

(b)

That Party A will discharge all capital gains tax, income tax and other taxes.

(c)

That Party A will pay all interest if any on the loan.

(d)

That Party A will pay all business and trading accounts which are applicable to her such as there may be.

(e)

That Party A will pay for all repairs to the caravans or property if applicable.

(f)

That Party A will pay and discharge all rates and community charges.

Faced with the documents he did receive, Mr Wagstaff had no option but in fact to treat Mr Brewer as the co-owner of the land and as his partner who was by then effectively running the business. The atmosphere of hostility between the three parties was pervasive.

In the result Mr Wagstaff issued proceedings in the County Court in May 1995 claiming against Mrs Colls as first defendant an order that the partnership had been dissolved, all proper accounts and enquiries and an order that a receiver of the assets be appointed. He claimed against Mr Brewer as second defendant an injunction restraining him from interfering in the management and/or administration of the partnership affairs, also an order for all proper accounts and enquiries and a declaration that monies received in the course of the business be held on trust for Mr Wagstaff. He sought an order against both that the site and the stock and assets of the business be partitioned between him and the second defendant. In the particulars of claim he referred to the “assignment or purported assignment” of the half share in the stock and assets and the “conveyance or purported conveyance” of the land. He alleged that since February 1995 the second defendant had “managed or purported to manage the site without reference to the plaintiff and … collected rents and … sold caravans and carried out alterations to the site without reference to the plaintiff”.

The respondents acted for both defendants and by their defence it was alleged that the partnership terminated by notice given in December 1994. The defence pleaded the conveyance by Mrs Colls of her share in the goodwill and assets of the business to Mr Brewer and also the conveyance of her half share. They admitted the need for proper accounts and enquiries to be carried out but denied the claimant’s entitlement to any other relief.

By his reply Mr Wagstaff contended that the assignment operated as an equitable assignment but:-

“in accordance with s.31 of the Partnership Act 1890, the said assignment gave the second defendant no right to interfere in the management and administration of the said partnership business and affairs. Wrongfully, the second defendant has interfered …”

He also referred to the document by which Mrs Colls “purportedly transferred her beneficial half interest in the Beachside Caravan Park to the second defendant, purportedly for £30,000”. By an amendment made in June 1996 he denied that Mr Brewer had in fact paid Mrs Colls the £30,000 or any such sum. He went on to allege in paragraph 7:-

“In the premises it is denied that the first defendant has in fact transferred anything of substance to the second defendant, the said “conveyance” and “assignments” being sham transactions designed to attempt to clothe the second defendant with the status of a partner in order that he could manage the caravan park for the first defendant to the wrongful exclusion of the plaintiff.”

Matters did not improve on the site and attempts to settle the dispute came to naught. In August 1995 Mr Wagstaff applied for an injunction against Mr Brewer to restrain him:-

“from interfering in the management and/or administration of the business …”

The application was dismissed. In the course of giving judgment on 18^th August 1995 His Hon. Judge Heath said, according to the note taken at the time:-

“In February 1995 two documents were executed. I hesitate to say what those documents in fact did. The purport and effect of those documents are one of the matters in issue in this case.”

He summarised the plaintiff’s “two fundamental points” to be:-

“The first is s.31(1) of the Partnership Act 1890. He says that if there was a valid assignment by the first defendant to the second defendant of her interest in the partnership business, this did not make the second defendant a partner, so that he is simply not entitled to do what he is doing. He goes further and says that the second defendant is a trespasser.”

He decided there was a triable issue. The plaintiff was being deprived of running his business by a stranger intermeddling in his affairs, but there was no criticism by the plaintiff of the second defendant’s conduct of the business. Damages would therefore be an adequate remedy and the balance of convenience was in favour of the second defendant.

The documents disclosed by the defendants having produced nothing to confirm payment of the £30,000 consideration for the transfer, Mr Wagstaff’s suspicions were aroused, the reply was amended as I have indicated and in September 1996 an application for specific discovery of the conveyancing file was sought. It was resisted by the defendants who claimed privilege. The application was refused by the district judge on the basis that whether or not transfer of the interest in the property was a sham was irrelevant to the remedies being claimed. Counsel later confirmed that they were not required to give that disclosure. In April 1997 there was a very late application to appeal out of time against that refusal of specific discovery but the judge refused to extend time and the application was dismissed.

The proceedings rumbled on rather aimlessly. The business was not prospering. There were planning difficulties as the planning authority served an enforcement notice requiring the removal of all the caravans and mobile homes from the site. An appeal was refused and so the caravans and mobile homes had to be sold in December 1997. The business had collapsed.

Eventually on 6^th November 1998 the proceedings were compromised. By consent it was ordered that the claim against both defendants be stayed on the terms contained in the schedule annexed to the consent order. It was also ordered that there be no order for costs save legal aid taxation of all parties’ costs. There was to be “liberty to apply as to the implementation of the terms of this order and the schedule annexed hereto”. That schedule set out the terms of the agreement which included terms that Mrs Colls transfer to Mr Wagstaff all her share in the legal estate in the property, that Mr Brewer transfer to Mr Wagstaff all his half interest in the beneficial title and the ownership of the business assets to Mr Wagstaff. Monies in a bank account were to be divided equally between Mr Wagstaff and Mrs Colls but he was to pay his half share of those monies to Mr Brewer. Mr Brewer was to vacate the property.

The implementation of that compromise required certain conveyancing which resulted in Mr Wagstaff’s solicitors being sent an executed transfer and assignment but also all the relevant title deeds. Included among those documents were the two deeds, the charge and the declaration, the terms of which I have set out at paragraphs 10 and 11. These documents came as a considerable surprise to Mr Wagstaff’s solicitors. In a long letter dated 28^th April 1999 they informed the respondents that Mr Wagstaff was considering a claim against them for wasted costs arising from their improper and unreasonable conduct of the litigation in withholding those two deeds.

So this present round of satellite litigation began. On 5^th August 1999 application was made for a wasted costs order against the respondents. No grounds were set out in the application itself as to the basis upon which the application was being made, although it is fair to say that Mr Wagstaff’s case was fairly set out in the letter of 28^th April 1999. The application relied on the evidence of Mr Wagstaff in support of his application. It would have been better had the application complied with CPR 48 PD 53.8 which provides:

“On an application for a wasted costs order under Part 23 the application notice and any evidence in support must identify –

(i)

What the legal representative is alleged to have done or failed to do;

(ii)

The costs that he may be ordered to pay or which are sought against him.”

The evidence grew. For the first round of the battle, evidence was put in by Mr Wagstaff and his solicitor on his behalf and by two partners and counsel on the respondents’ behalf. Just before the second hearing the respondents put in another statement from their partner, another from counsel, one from Mrs Colls and another from Mr Brewer. In the bundles now placed before us, these statements with their exhibits and the correspondence run to over 1,300 pages – all that for a procedure an overriding requirement of which is that “it must be as simple and summary as fairness permits” – per Sir Thomas Bingham M.R. in Ridehalgh v Horsefield [1994] Ch. 205, 238G.

In outline the claimant’s case, as summarised by counsel who appeared for him in the court below in his skeleton argument was that:-

“(a)

[The respondents] had behaved improperly and/or unreasonably in:-

(i)

misrepresenting to the claimant, his advisers and ultimately the court the true nature of the transaction of 1 February 1995 between the D1 and D2;

(ii)

failing to correct their misrepresentations at any stage during the action;

(iii)

allowing the whole action to be conducted on a false basis;

(b)

By that conduct of [the respondents] C and his advisers:-

(i)

were misled into believing that D2 was the beneficial co-owner with C of Beachside;

(ii)

were misled into pleading and presenting the case on an incorrect basis;

(iii)

were prevented from making an effective challenge to D2’s apparent status as beneficial co-owner;

(iv)

were prevented from making an effective application to remove D2 from Beachside;

(v)

were prevented from putting before the court the true facts of the transaction of 1^st February 1995;

(vi)

were prevented from conducting and disposing of the action in an expeditious and inexpensive manner as would have happened for example if they had been able to remove D2 from occupation of Beachside;

(vii)

in the premises were made to incur unnecessary costs;

(c)

It is just in all the circumstances to order [the respondents] to compensate C for the whole or part of those costs.”

The claimant’s costs were eventually taxed. With the view to making it easier for the court to deal with causation, the claimant’s solicitors prepared the bill of costs in 19 separate parts, each representing a period or stage or section of the proceedings. It was hoped to simplify this application by presenting arguments that costs incurred in each of those parts were either wholly or partially wasted as a result of the respondents’ conduct. The costs incurred by the claimant were finally assessed in the sum of £46,504.38. Since the claimant was legally aided throughout, the Legal Aid Fund has a charge over Beachside for this sum (plus interest) which effectively deprives him of all monetary value in his home.

The application was listed for hearing over two days on 22^nd and 23^rd February 2001, the day before the hearing having been set aside for the judge to read the papers. It was an agreed time estimate. No application had been made to allow oral evidence to be taken.

At the hearing on 22^nd February 2001, counsel for the respondents took the point that the court had no jurisdiction to hear the wasted costs application because there were no proceedings still existing within which an order could be made. After a good deal of argument the judge, His Hon. Judge Brunning, eventually decided to adjourn the hearing in order to consider the jurisdiction issue. He did, however, fix a date for the resumed hearing on 3^rd May. He allowed seven hours to dispose of the matter.

On 27^th February 2001 Mr Wagstaff issued an application to lift the stay and re-open the proceedings should the judge find that they were no longer in existence. The return date of 3^rd May was vacated by the court and refixed for 27^th June 2001.

On 25^th June 2001 the judge released to the parties his judgment on the jurisdiction issue. In the result, by order made on 27^th June 2001 it was declared that:-

“(a)

There are no proceedings extant in which an application for a wasted costs order can be made; and

(b)

The court has no jurisdiction to hear such an application or to make a wasted costs order unless the stay imposed by the consent order made in the action dated 6^th November 1998 is lifted.”

At the hearing on 27^th June the court heard argument on Mr Wagstaff’s application to lift the stay and on whether or not the wasted costs procedure was appropriate for use in the present case. The respondents sought to introduce their new evidence, an application which was resisted. The judge read the statements de bene esse but refused to admit them. The respondents were submitting that because a very serious attack was being made on their professional integrity oral evidence was necessary to enable them properly to answer the allegations and that the summary wasted costs procedure was not appropriate for this case. Judgment was reserved. It was handed down on 20^th July when the court ordered that Mr Wagstaff’s application to lift the stay imposed by the consent order of 6^th November be refused and that his application for a wasted costs order be dismissed. There was to be no order for costs. The judge refused to permit the further evidence to be adduced. He did, however, give Mr Wagstaff permission to appeal against both orders. He gave the respondents permission to appeal against his refusal to allow the further evidence and he granted both parties permission to appeal against the order for costs.

The respondents have pursued their appeal against the refusal to allow further evidence to be placed before the court. Mr Wagstaff sensibly recognises that after this passage of time there is no longer any point in taking objection and it is agreed, subject to our approval, that that cross appeal be allowed. In the events which have happened that is obviously the sensible course and I would allow that cross appeal. It is of peripheral importance to the main matters which confront us arising out of Mr Wagstaff’s appeals against the orders of 27^th June and 20^th July 2001.

The judge recited from s.51 of the Supreme Court Act 1991. Relevant for present purposes are the following sub-sections as amended:-

“(1)

Subject to the provisions of this or any other enactment and to rules of court, the costs of and incidental to all proceedings in - …

(c)

any County Court, shall be in the discretion of the court …

(6)

In any proceedings mentioned in ss. (1) the court may disallow, or (as the case may be) order the legal or other representative concerned to meet, the whole of any wasted costs or such part of them as may be determined in accordance with rules of court.

(7)

In ss. (6), “wasted costs” means any costs incurred by a party –

(a)

As a result of any improper, unreasonable or negligent act or omission on the part of any legal or other representative or any employee of such a representative …

(13)

In this section “legal or other representative”, in relation to a party to proceedings, means any person exercising a right of audience or right to conduct litigation on his behalf.”

Dealing with the “short point which was taken that there are no proceedings extant in which this present application can be made”, the judge noted that he had not been referred to any authority directly on the point. He said:-

“15.

I have found the point to be a difficult one. The facts which give rise to it are unusual and may well be exceptional. But I am persuaded, notwithstanding the strong prima facie merit of the claimant’s complaint, that the proceedings came to an end with the making of the Tomlin order in November 1998. With it ended the court’s power to deal with the matter of costs. The words of s.51(6) are clear and unambiguous. Until the Tomlin order, or part of it, is set aside, I am of the view that this court cannot act.”

He dealt with the alternative argument advanced on behalf of the respondents that because proceedings relating to wasted costs are intended to be summary in nature and not to become a form of satellite litigation, hearings should be measured in hours not days and the court should accordingly decline to deal with the matter. He said as to that:-

“17.

Having spent a day reading the case I am of the view that if I am in law empowered to deal with the application, there will need to be an enquiry which will take several days and involve consideration of matters of privilege and sundry points of law. Such enquiry may lead to the conclusion that all the costs were as a matter of law caused by the defendant’s conduct in 1995. But that is not clear yet, and in one reading of the facts and law any liability ceased in 1996 or March 1997 at the latest; in which case the costs which could be the subject of a wasted costs order may well be significantly less than the costs (or ensuing) [sic]. I shall require persuasion that this case does come within the boundaries of what may properly be investigated in such a procedure as contemplated; but that is dependant upon the ruling of the Court of Appeal that any assessment of the court’s power is wrong.”

In dealing with the application to lift the stay he said:-

“3.

Mr Holtum, who represented the defendants, accepted that there was such a jurisdiction and that it could be exercised without the necessity for a new action to be commenced but he argued and in my judgment correctly that good reason must be shown why a consent order should be set aside.”

He then considered the argument directed to the question whether the wasted costs procedure was one which in any event should be permitted in this case. He referred to a number of the authorities on that question and said:-

“13.

With those guiding principles in mind I turn to consider the circumstances of the present case. There is no doubt that the solicitor whose conduct is impugned sent only two of the four deeds which were drawn up by him for the defendants. The picture which was thus presented to the claimant at that stage in early 1995 was an incomplete and misleading one.”

He considered the procedural difficulties, observing:-

“15.

There will also of necessity be a requirement that the nature and effect of counsel’s advice, given in 1997 upon the question of discovery, should be examined. The nature of client privilege attaching at this time is also a matter which will require investigation. …

16.

During the course of argument I raised with counsel whether the question of [the respondents’] conduct in early 1995 could not be dealt with by way of written statements and submissions. Having reflected upon the matter, I am satisfied that justice could not be done without permitting [the partner] to give evidence and to be cross-examined. Likewise, [the claimant’s solicitor], on the claimant’s behalf, would have to give evidence and be cross-examined.”

He came to this conclusion:-

“19.

There are thus three areas of difficulty. The first is that the conduct complained of is not obviously a misrepresentation clearly within either of the two categories which would have to be established in order to give the court jurisdiction to make the order in any event. Secondly there are large areas of evidential dispute which would have to be raked over, even with careful case management restricting the nature of the enquiry to the bare minimum. Thirdly there is a substantial ground for argument upon the crucial question of causation. …

21.

I have found this matter to be very difficult and finely balanced. It is, however, the nature, complexity and length of any enquiry which inevitably must be carried out which leads me to conclude, with reluctance, that the Wasted Costs procedures are not here appropriate, and that, accordingly, the claimant has not satisfied me that this case is of such an exceptional nature that I should lift the stay which was imposed by agreement in November 1998.”

Cooper v Williams [1963] 2 Q.B. 567 could have provided the answer. There Lord Denning M.R. said at p. 580:-

“… I am of the opinion that the effect of a stay is that it is not equivalent to a discontinuance, or to a judgment for the plaintiff or the defendant. It is a stay which can be and may be removed if proper grounds are shown.”

The answer is conclusively provided by Rofa Sport Management A.G. v DHL International (U.K.) Ltd. [1989] 1 W.L.R. 902. There F.I.F.A. granted Rofa the exclusive right to appoint certain companies as official suppliers/sponsors for the 1986 World Cup. Rofa appointed DHL as its exclusive marketing agent but then sought to restrain it from describing itself in a certain way. The parties agreed terms of settlement and a consent order was made in the following terms:-

“Upon the parties agreeing terms and by consent it is ordered that all further proceedings in this action be stayed, the parties having agreed terms of settlement, and it is further ordered that there be no order as to costs.”

Sport Billy Productions then applied under R.S.C. Ord. 15, r.6(2)(b) to be joined as a second defendant. The rule provided that “at any stage of the proceedings in any cause or matter the court may … order …”. The question for determination was, therefore, whether there were any proceedings in existence when the Master made the order to join Sport Billy, from which there were successive appeals. It was not in dispute that if the action had been dismissed by consent and the order had been drawn up, then the court would have had no jurisdiction. It was also not in dispute that if the action had been discontinued no order could have been made. It was plain that in some cases, for example an order to stay proceedings pending the provision of security, the action undoubtedly remained alive. Neill L.J., giving the judgment with which Ralph Gibson and May L.JJ agreed, held at p. 911:-

“In my judgment, for the sake of clarity and certainty the word “stay” in an order should not be treated as a possible equivalent of a dismissal or a discontinuance. There may well, of course, be cases, however, where the person who wishes to have the stay removed will face great difficulties. An action which has been stayed by consent following a compromise provides an obvious example. But, as it seems to me, the action following a stay remains technically in being. The action cannot proceed or resume its active life without an order of the court, but I do not consider that it can properly be regarded as dead in the same way as an action which has been dismissed or discontinued by order.”

Just as the question in Rofa was whether there were any proceedings in existence to bring the application within the terms of the rule allowing an order to be made “at any stage of the proceedings”, so too the question here is whether there were any proceedings in existence for the purposes of invoking the jurisdiction conferred by s. 51 of the Supreme Court Act 1981. An argument was advanced that upon the proper construction of s. 51(6) and the words “In any proceedings mentioned in ss. (1) the court … may order [a wasted costs order]”, that order can only be made “in” the proceedings, in the sense of it having to be made during the currency of those proceedings. There are two reasons to reject that argument. The first is, as Mr Ter Haar Q.C. submits, that the more natural meaning of “in” is “in connection with” or “in relation to” those proceedings. The second is that by referring back to “proceedings mentioned in ss. (1)”, the purpose served by s. 51(6) is to limit the application to those proceedings mentioned in ss. (1), namely proceedings “(a) in the Civil Division of the Court of Appeal; (b) the High Court; (c) any County Court”. The section does not, therefore, apply, for example, to proceedings in the Court of Appeal Criminal Division. The language of s. 51(6) is, I agree, clear and unambiguous, but it does not support the judge’s conclusion that the court had no power to make the order.

Since the issue is compellingly answered by the authorities, the appeal against the judge’s order declaring that there were no proceedings extant in which the application could be made must be allowed. At the first hearing the judge was not referred to these, or any authorities and it is perhaps a pity the point was taken without adequate research having been done. Days of time may have been wasted as a result. Let me stress, however, that this criticism must not be treated as any justification for the launch of yet more wasted costs proceedings. Let me also add that the relevant authorities were before the judge for the second hearing.

Before arriving at that answer, there are some preliminary questions to consider. The first is what in general is the effect of a stay? The glossary to CPR, which does not give the expressions any meaning in the rules which they do not otherwise have in law, describes the effect of a stay in these terms:-

“A stay imposes a halt on proceedings, apart from taking any steps allowed by the rules or the terms of the stay. Proceedings can be continued if a stay is lifted.”

One notes that the halt is to the proceedings in which the stay is made and the result of lifting the stay is that those proceedings can be continued. This is entirely in line with established law. Several passages can be cited to establish that. For example in Lambert v Mainland Market Deliveries Ltd. [1977] 1 W.L.R. 823, 834, Lawton L.J. said:-

“When an action is “stayed”, it does not come to an end. No judgment is given. Such an order takes away from the action its inherent ability to go forward. It becomes static. In the sense that it cannot move any further. But any action which is stayed can be started up again by an order of the court. It may well be that generally, once the court has decided that an action shall be stayed, it is very reluctant indeed to allow it to start up again. But that does not mean that it cannot be started up again.”

In Minister of Foreign Affairs, Trade and Industry v Vehicles and Supplies Ltd. [1991] 1 W.L.R. 550, 556 Lord Oliver of Aylmerton expressing the opinion of the Privy Council said:-

“A stay of proceedings is an order which puts a stop to the further conduct of the proceedings in court or before a tribunal at the stage which they have reached, the object being to avoid the hearing or trial taking place. … It simply means that the relevant court or tribunal cannot whilst the stay endures, effectively entertain any further proceedings except for the purpose of lifting the stay …”

The next question is what is the extent of the stay imposed in these proceedings. The approach should be that adopted by Fox L.J. in Hollingsworth v Humphrey, Court of Appeal, 10 December 1987, where he said:-

“The first question, it seems to me, is the meaning of the agreement reached between the parties. That agreement, I think, consists not only of the schedule terms of the compromise but includes the provision for a stay itself which is an integral part of the compromise. The wording of the order is that “all further proceedings in this action except for the purpose of carrying the said terms into effect be stayed”. As between the parties, therefore, it seems to me that, while the action is not continued or dismissed, the bargain was that the action would not be resorted to thereafter save for the purpose of enforcing the terms. That is the plain meaning of the language used. Moreover, it seems to me that there is no reason why the parties should have intended anything else.”

The stay imposed here is very similar in effect. That effect is to put a halt to the “plaintiff’s action against both defendants”. There was to be liberty to apply “as to the implementation of the terms of this order and the schedule annexed hereto”. The terms have been implemented and there is nothing more to do as between Mr Wagstaff and Mrs Colls and Mr Brewer. The compromise is complete and there is no point, as between these parties, in re-opening this litigation.

The third question is whether the proposed application for a wasted costs order will have any effect on the stay or even on the proceedings if a stay is lifted. The answer is that the wasted costs application has nothing to do with the defendants. Their rights are not affected in any way. The partnership difficulties which led to this litigation have been resolved. If the defendants are to play any part in the wasted costs proceedings, they play their part as witnesses not as parties.

What then is the answer to this second issue. In my judgment there is no need to lift the stay? I can see no purpose for doing so. To lift the stay is to undo the agreement. The agreement has been perfected. Nobody wants the agreement undone. What is to happen to the action between Mr Wagstaff and Mrs Colls and Mr Brewer if the stay is lifted? Does it really come alive again? Or is to be lifted only for so long as it takes the court to decide whether or not to grant permission for the wasted costs application to be launched? If so, what is the point bothering with lifting the stay at all when the real issue affects only the appropriateness of the application for wasted costs? It seems to me, therefore, to be totally unnecessary to require the stay to be lifted for the purposes of bringing a wholly different claim which may be connected with the stayed proceedings but where the connection is wholly tangential.

There are two further reasons which support this conclusion. There is nothing to prevent an application for a wasted costs being made and entertained after a final order has been made and perfected entering judgment for or against the claimant. That serves to emphasise the free standing nature of the application for wasted costs. There is no reason for proceedings concluded by compromise to be treated differently. Secondly, it is noticeable that in Rofa a party was added to the action which had been stayed without any need for the stay to be lifted. Again I cannot see why it should be any different here.

So I would answer the second issue by saying that it is not necessary first to lift the stay in order to pursue the wasted costs application.

In view of my conclusion on the second issue, this point does not strictly arise but if I am wrong about there being no need to lift the stay, and in deference to the sustained arguments presented to us, I venture these thoughts.

The test is established by Cooper v Williams [1963] 2 Q.B. 567. I have already cited Lord Denning’s judgment that the stay can be removed “if proper grounds are shown”. Danckwerts L.J. said at p. 582:-

“I am quite satisfied that a stay of this kind is not equivalent to the position when a judgment has been given; but it is a process which can be removed for good cause. In my experience stays have often been removed when the facts required that step to be taken, and I would point out that it is also possible to set aside a consent order in proper conditions.”

Perhaps it goes without saying, but, as Fox L.J. held in Hollingsworth v Humphrey,

“In deciding whether “proper grounds are shown” (or “good cause” is shown) for lifting the stay it is necessary to consider all the circumstances of the case.”

Thus the stay was lifted in Cooper v Williams to allow the widow to intervene in fatal accident proceedings which had dealt only with the child’s claim. The stay was not lifted in Hollingsworth v Humphrey. The circumstances were again very different in Lambert v Mainland Market Deliveries Ltd. where a claim for damages following a road accident was stayed on a payment into court being accepted. Unless lifted the insurers would not be able to pursue their proper claim. The County Court judge refused to allow the stay to be lifted. The Court of Appeal allowed an appeal against that order, Megaw L.J. saying at p. 833:-

“In my judgment, relying particularly on the passage which I have cited from the judgment of Sir Wilfred Greene M.R. in Derrick v Williams, 55 T.L.R. 676, 678, and I think also as a matter of principle, where there has been a stay of proceedings as a result of a payment into court and the operation of Order 11 of the County Court Rules 1936, it is open to the court – the court has jurisdiction – to set aside that stay in a proper case. I would, however, say this also: that it is a jurisdiction which ought to be exercised with very great care and it may be that the cases in which it falls to be exercised should only be rare. It is desirable that litigation, once apparently finished – including litigation finished by means of a payment into court which is either of the full amount claimed or an amount accepted deliberately by a plaintiff – ought not lightly to be allowed to be re-opened.”

It is not a surprise that the court will be slow to allow litigation, ostensibly between the same parties, to be re-opened but that is not the case before us.

What then would be “good cause” or “a proper case” for lifting a stay to make a wasted costs application? The first point to make is that the stay should present no high hurdle if an application for wasted costs can be made in an action concluded by final order. The test should, therefore, be no different from that set out at stage 1 of the practice direction dealing with these applications. Although the judge was referred to the practice direction, it is not at all clear whether he was directed to the relevant part and he certainly made no reference to the practice direction in his judgment. The practice direction provides as follows:-

“48 PD.4, section 53, personal liability of legal representative for costs – wasted costs orders: rule 48.7.”

53.1

Rule 48.7 deals with wasted costs orders against legal representatives. Such orders can be made at any stage in the proceedings up to and including the proceedings relating to the detailed assessment of costs. In general, applications for wasted costs are best left until after the end of the trial …

53.4: It is appropriate for the court to make a wasted costs order against a legal representative, only if:–

(1)

the legal representative has acted improperly, unreasonably or negligently;

(2)

his conduct has caused a party to incur unnecessary costs, and

(3)

it is just in all the circumstances to order him to compensate that party for the whole or part of those costs.

53.5: The court will give directions about the procedure that will be followed in each case in order to ensure that the issues are dealt with in a way which is fair and as simple and summary as the circumstances permit.

53.6

As a general rule the court will consider whether to make a wasted costs order in two stages –

(1)

In the first stage, the court must be satisfied –

(a)

that it has before it evidence or other material which, if unanswered, would be likely to lead to a wasted costs order being made; and

(b)

the wasted costs proceedings are justified notwithstanding the likely costs involved.

(2)

At the second stage (even if the court is satisfied under paragraph (1)) the court will consider, after giving the legal representative an opportunity to give reasons why the court should not make a wasted costs order, whether it is appropriate to make a wasted costs order in accordance with paragraph 53.4 above.

53.7

On an application for a wasted costs order under Part 23 the court may proceed to the second stage described in paragraph 53.6 without adjourning the hearing if it is satisfied that the legal representative has already had a reasonable opportunity to give reasons why the court should not make a wasted costs order. In other cases the court will adjourn the hearing before proceeding to the second stage …”

Mr Davidson submits that it is not enough for the minimum threshold set at stage 1 to be satisfied. He submits that the stay should not be lifted unless the court is also satisfied that the case is so strong and exceptional that the court regards it as appropriate that there should be further litigation. In his skeleton argument he submits that “settling a case should normally be regarded as the end of proceedings and as not providing a platform for a wasted costs application against the opposing party’s representatives”.

Of course there is a public interest that there should be some end to litigation. But that principle applies as between the parties to the litigation whereas a wasted costs exercise is satellite litigation involving different parties. Moreover, and importantly, it cannot be right that a party applying in proceedings subject to a Tomlin order should be worse off than a party applying in proceedings that had been terminated by judgment. In my judgment, the test that should be applied is the stage 1 test. So I reject Mr Davidson’s submission that the case has to be exceptional.

The judge fell into the same error. He correctly addressed the test in Cooper v Williams and he was entitled to have regard to Megaw L.J.’s judgment in Lambert v Mainland Market Ltd. He erred, however, in failing to understand why a higher test was applied in Lambert, why it was an exceptional case and why that approach did not apply here. He applied the wrong test when coming to his conclusion that:-

“The claimant has not satisfied me that this case is of such an exceptional nature that I should lift the stay which was imposed by agreement in November 1988.”

That error is another reason to set aside his order.

Although the judge erred in principle, he had earlier in his judgment correctly addressed “those guiding principles” which the court should bear in mind when considering a wasted costs application. Thus he started with Ridehalgh v Horsfield where Sir Thomas Bingham M.R. said at p. 238G:-

“The procedure to be followed in determining applications for wasted costs must be laid down by courts so as to meet the requirements of the individual case before them. The overriding requirements are that any procedure must be fair and that it must be as simple and summary as fairness permits. Fairness requires that any respondent lawyer should be very clearly told what he is said to have done wrong and what is claimed. But the requirement of simplicity and summariness means that elaborate pleadings should in general be avoided. No formal process of discovery will be appropriate. We cannot imagine circumstances in which the applicant should be permitted to interrogate the respondent lawyer, or vice versa. Hearings should be measured in hours, not in days or weeks. Judges must not reject a weapon which Parliament has intended to be used for the protection of those injured by unjustifiable conduct of the other side’s lawyers, but they must be astute to control what threatens to become a new and costly form of satellite litigation.”

That approach was approved by the House of Lords in Medcalf v Mardell [2002] 3 W.L.R. 172.

The judge bore in mind Peter Gibson L.J.’s footnote in Medcalf v Mardell [2001] LL.R. (PN) 146, 159 which in my view remains good guidance even though his conclusion on the merits was reversed by their Lordships:-

“We are uncomfortably aware that this ancillary litigation has occupied the court for a full day at the final stage, that the material put before us has been voluminous and that this judgment is a lengthy one. All this might seem a far cry from the summary procedure envisaged in Ridehaugh v Horsfield . But it cannot be right that a legal representative can escape the consequences of the wasted costs jurisdiction by the mere fact that the litigation in which his conduct is challenged is complex.”

Judge Brunning also noted the judgment of Lord Woolf M.R. in Manzanilla Ltd. v CortonProperty and Investments Ltd., Court of Appeal, 23^rd April 1997:-

“The ability of the court to make a wasted costs order can have advantages, but it can be of no advantage if it is going to result in complex proceedings which involve detailed investigation of facts. If a situation involves detailed investigation of facts, and indeed acts of dishonesty, then it may well be that a wasted costs order procedure is largely inappropriate to cover the situation, except in what would be an exceptional case. … (This) case is an unusual one but it is not one which should be dealt with other than in a summary way. If this limits the ability of someone … to obtain a wasted costs order, then in my judgment that is a restriction inherent in the nature of the remedy which they are seeking to receive. It would destroy that remedy if the court did not, except in an exceptional case, insist upon the matter being dealt with summarily.”

If the judge had accepted that he had the jurisdiction to make the wasted costs order and if he had decided he need not lift the stay, then he would have gone on to deal with the case on its merits. The parties were ready for a hearing on the merits: the judge had read the papers for a day and two days were set aside for the hearing. No protest had been made that the wasted costs application had not met the stage 1 threshold. If, therefore, I had to consider this appeal as an appeal against the judgment on the merits (though in my view we do not get that far down the road to final judgment) then I accept that the judge directed himself to the correct “guiding principle”. The question then is whether he erred in reaching the conclusion he did that “the wasted costs procedures are not here appropriate”.

Mr Davidson submits that great caution should be exercised by us in overruling a judge’s exercise of discretion on this point. He relies on Wall v Lefever [1998] 1 FCR 605, 614. There the judge who had conducted the trial and heard the evidence and seen the witnesses, had come to the conclusion that it was not a case in which it was appropriate to make a costs order because there was no justification for suggesting that counsel or solicitors had been negligent in the circumstances. Lord Woolf M.R. held:-

“The wasted costs jurisdiction is salutary as long as it is not allowed to be a vehicle which generates substantial additional costs to the parties. It should not be used to create subordinate or satellite litigation, which is as expensive and as complex as the original litigation. It must be used as a remedy in cases where the need for a wasted costs order is reasonably obvious. It is a summary remedy which is to be used in circumstances where there is a clear picture which indicates that a professional adviser has been negligent etc. If a judge has come to the conclusion that the case is not one which falls within that category, then an appeal will only be justified if there is some point of principle involved which indicates that the judge’s approach was wholly wrong. In my judgment, this case does not come within a mile of being a situation in which an appeal was appropriate. It seems to me that the judge tackled the issues which were raised on the application for a wasted costs order perfectly satisfactorily and gave reasons for not making the order that cannot be faulted.”

The case before us is very different. Judge Brunning did not reach a conclusion as to whether or not the conduct of the respondents was improper or unreasonable. All he did was outline three areas of difficulty, the first of which was “that the conduct complained of is not obviously a misrepresentation clearly within either of the two categories which would have to be established in order to give the court jurisdiction to make the order in any event”. His judgments however contain views that conflict with that conclusion. In the first judgment he had found in paragraph 15 “strong prima facie merit” in Mr Wagstaff’s complaint. He found in paragraph 13 of his second judgment that “the picture which was thus presented to the claimant at that stage in early 1995 was an incomplete and misleading one”.

The judge did not address the central point taken by Mr Wagstaff that the conveyancing transactions effected by the four deeds of 2^nd February 1995 were shams within the test laid down by Diplock L.J. in Snook v London & West Riding Investments Ltd. [1967] 2 Q.B. 786, 802, namely:-

“I apprehend that, if [“sham”] has any meaning in law, it means acts done or documents executed by the parties to the “sham” which are intended by them to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intend to create.”

In Stone v Hitch [2001] EWCA Civ. 63 [2001] STC 214 Arden L.J. made the following points about the Snook test:-

“64.

An inquiry as to whether an act or document is a sham requires careful analysis of the facts and the following points emerge from the authorities.

65.

First, in the case of a document, the court is not restricted to examining the four corners of the document. It may examine external evidence. This will include the parties’ explanations and circumstantial evidence, such as evidence of the subsequent conduct of the parties.

66.

Second, as the passage from Snook makes clear, the test of intention is subjective. The parties must have intended to create different rights and obligations from those appearing from (say) the relevant document, and in addition they must have intended to give a false impression of those rights and obligations to third parties.

67.

Third, the fact that the act or document is uncommercial, or even artificial, does not mean that it is a sham. A distinction is to be drawn between the situation where parties make an agreement which is unfavourable to one of them, or artificial, and a situation where they intend some other arrangement to bind them. In the former situation, they intend the agreement to take effect according to its tenor. In the latter situation, the agreement is not to bind their relationship.

68.

Fourth, the fact that parties subsequently depart from an agreement does not necessarily mean that they never intended the agreement to be effective and binding. The proper conclusion to draw may be that they agree to vary their agreement and have become bound by the agreement as varied: see for example Garnac Grain Co. Inc. v HMF Faure & Fairclough Ltd. [1966] 1 Q.B. 650, 683-4 per Diplock L.J., which was cited by Mr Price.

69.

Fifth, the intention must be a common intention see Snook’s case, above. …”

Mrs Colls’ case, and the respondent’s case, is that the further deeds did not have to be disclosed in the proceedings and were not a sham because it was intended that Mr Brewer should become the owner in equity of a half share. Accordingly the parties did not intend to create different rights and obligations from those appearing in the documentation (Hitch v Stone, paragraph 66). However whether this was their intention was clearly put in issue by paragraph 7 of the reply. It may be open to doubt whether Mr Wagstaff was correct in suggesting that the purpose was to clothe Mr Brewer with the status of a partner but that is a possible interpretation of the events as explained to this court, and in any event, there seems to be an arguable case at least for saying that the documents were a sham. Mr Wagstaff’s case is in essence that Mrs Colls wanted to stay at Beachside but did not want to have any further business with Mr Wagstaff himself and therefore wanted Mr Brewer to run the site for her.

Mrs Colls’ case was that she had served a notice severing the joint tenancy in December 1994. The effect of that notice in law was that Mr Wagstaff and Mrs Colls remained co-owners of the legal title of Beachside, but held it as trustees for themselves as tenants in common in equity. Mr Wagstaff’s case is that in that situation a licence to occupy Beachside could only have been given if both co-owners agreed. Mr Wagstaff relies on authorities including Hammersmith & Fulham LBC v Monk [1992] 1 A.C. 478. In this case the House of Lords held that the agreement of two joint tenants was necessary to the continuation of a contractual periodic tenancy. The respondents’ case is that this principle does not apply to two tenants in common and the respondents rely on Job v Potton (1875) 20 Eq. 84 at 93 and 97 per Bacon V.-C. for the proposition that not all tenants in common need to join in a licence with respect to their share of the property. Here the position was rather different. Mrs Colls having assigned her share in the property and business to Mr Brewer, was putting him into a position from which he in fact had control of both the business and the site. The partnership had been dissolved and therefore she should have been co-operating to ensure the winding up of the partnership and this would involve the sale of the business and any goodwill. There is, therefore, no justification for the grant of a licence to Mr Brewer, and Mr Wagstaff’s legal position would thus have been enhanced if Mr Brewer was not in truth an owner at all.

Another way that the respondents put their case is to say that Mr Brewer was only claiming the right of one joint tenant to occupy Beachside and that that occupancy did not oust Mr Wagstaff. However, the position is that Mr Brewer was claiming to be entitled to occupy the land as a beneficial co-owner and that entitlement had been put in issue by the amended reply. Accordingly, there must be a prima facie case that the declaration of trust and legal charge were relevant to the issues in the action. Moreover, there must be a prima facie case that, had those documents been disclosed, the court would have gone on to find that Mr Brewer was not in truth the owner of a half share in Beachside. In that situation it is further arguable that he was not entitled to be on the premises, as a licensee either from both joint tenants or from Mrs Colls on her own.

In Medcalf v Mardell Lord Bingham expressed his opinion in the House of Lords (at p. 186) that:-

“The desirability of compensating litigating parties who have been put to unnecessary expense by unjustified conduct of their opponents’ lawyers is, without doubt an important public interest …”

It seems to me that Judge Brunning failed properly to consider Mr Wagstaff’s case and to weigh its prospects of success in the balance he had to hold.

As Lord Bingham went on to observe, other public interests have to be considered. Lord Hope of Craighead identified one of those others in Harley v McDonald [2001] 2 A.C. 678, 704 namely:-

“Bearing in mind the extra costs which an investigation of that kind [calling evidence] may involve, and the overriding requirements of fairness to those who are at risk of being penalised, the court may well conclude that further investigation under this procedure is not appropriate.”

It seems to me that Judge Brunning was in error in concentrating on that aspect of the case without regard to the husband’s prospects of success or how proper case management – another of the difficulties he had identified – could properly control the time and complexity of the dispute.

If, therefore, it is necessary for me to decide this appeal on this part of the exercise of the judge’s discretion, then I would find again that he erred in not giving weight to material factors.

In his notice of appeal Mr Wagstaff invited us, if we were to allow the appeal, to decide the wasted costs application ourselves rather than remit it. That met with some early protest from me, and Mr Ter Haar accepted that he could not advance that case. It would be wrong for us to delve deeply into the merits, though we have explored them more fully than might be strictly necessary had we brought this appeal to an end by dealing with the first two issues only. The parties are entitled to a judgment from the court of first instance where there is a dispute of this nature.

There is perhaps one matter on which we can rule. Mr Davidson submitted that at the time when the decision was taken to disclose only two of the four deeds, the respondents were not acting as legal representatives as that phrase is defined in s. 51(13) of the Act. He relies on Byrne v Sefton Health Authority [2002] 1 W.L.R. 775. There solicitors were acting for a prospective claimant for damages for personal injuries for some six and a half years. They failed to issue proceedings in time. They then ceased to act and other solicitors issued the proceedings which were eventually struck out as time-barred. The disappointed claimant then applied for an order under s. 51(6) of the Act against his first solicitors. Chadwick L.J. held at p. 781-2:-

“There is no suggestion in the present case that [the solicitors] have ever exercised, or sought to exercise, rights of audience on behalf of [the claimant]. … The answer, therefore, to the question whether [the solicitors] are or ever have been persons exercising a right to conduct litigation on behalf of [the claimant] as a party to these proceedings must be “no”.”

That was obviously a totally different case and the important point is that the solicitors were never exercising the right to conduct litigation. The respondents here were. True it is that there was no litigation in March 1995 when they sent the two deeds but it is not without interest that the deeds were sent in response to a letter from Mr Wagstaff’s solicitors of 1^st March 1995 in which they had written:-

“In any event please ask your clients not to do anything to effect [sic] our client’s enjoyment and interest [in the caravan site] and if they persist it may well be that we shall apply for an injunction.”

The respondents replied:-

“We do therefore feel that injunction proceedings in the circumstances are inappropriate. As requested we enclose a copy of the conveyance and assignment …”

The threat of litigation was hanging heavy in the air and was, one might have thought, almost virtually inevitable.

It seems to me that the purpose of s. 51(6) is to ensure that a wasted costs order be made only against legal representatives as that phrase is to be understood. The respondents fell within that category because they had conduct of the litigation. It must, therefore, be for the judge to decide whether they were under a duty to conduct themselves properly and reasonably in March 1995 or whether that responsibility only arose when the claim was brought, or when the particulars of claim made reference to the “assignment or purported assignment” and the “conveyance or purported conveyance” or at the injunction stage or the disclosure stage or whensoever. The judge must take that decision in the light of the whole of the facts as he finds them when considering improper or unreasonable conduct.

The only direction I would give is that there be an early case management conference to be held by the judge who is to hear this matter. I have sympathy for Judge Brunning who was deflected from what he clearly expected to be doing at the first hearing – deciding the merits – by the way in which fresh and unexpected arguments were presented to him. He will, therefore, I hope, not take it amiss - indeed he will probably be very relieved – if I suggest that he should not deal with the rehearing of this application.

The trial judge should have a free hand to give directions but he may like to give careful consideration to the following aspects which appear to me to be important.

This is a case now crying out for early resolution. Enough money has been wasted on it. The trial judge may, therefore, care to direct that the parties consider mediation. I strongly recommend that they do.

Mr Wagstaff must make clear exactly how he is putting his case. At times it seems not to have been well understood by the respondents. Mr Wagstaff may (and probably does) choose to stand by the case set out in the skeleton argument in the court below (see paragraph 25 above). He should, however, make explicit whether or not he is raising a case of fraudulent misrepresentation. He may consider that he does not need to go so far to bring the conduct of the respondents within the scope of “improper” conduct as defined at p. 232 in Ridehalgh v Horsefield. The meaning given to the phrase includes the meaning given to it in earlier cases of which Myers v Elman [1940] A.C. 282 is one which deserves close consideration by Mr Wagstaff and by the respondents. It establishes that it is the solicitor who is in charge of deciding what documents are or are not to be disclosed and he cannot hide behind his client’s instructions. If he cannot persuade his client to comply with what is right in the circumstances, the solicitor must withdraw from the case. If this is an independent duty to the other side and to the court, the client’s instructions may not matter much and questions of legal privilege may not prove to be an obstacle in a complaint as raised here.

How the case is being run is important for case management purposes. If fraud is not alleged, then whether or not all four deeds should have been disclosed and if so when is a comparatively short and simple matter for a judge to decide. It is an area within judicial knowledge and so capable of summary assessment, important considerations as pointed out by the Privy Council in Harley v McDonald. Unless Mr Wagstaff is asserting that any part of the solicitor’s evidence is untrue, the trial judge may feel that for the purposes of this summary procedure he is well able to proceed on the written evidence only and that there is no need for oral evidence.

If Mr Wagstaff does raise fraud, one sees why the respondents would wish to refute the charge of dishonesty by calling evidence. Mr Wagstaff then risks the trial judge concluding that an investigation of such a charge is inappropriate for this summary procedure and quite disproportionate. Mr Wagstaff then risks his application being struck out for that reason.

Justice can be served and fairness still shown to the competing interests of Mr Wagstaff and the respondents by robust case management. Both parties have had and have taken the opportunity fully to put their case in writing. That has been fair. From the respondents’ point of view their case is fully before the court and it can get no better. From Mr Wagstaff’s point of view he must accept the limitations inherent in a summary procedure which must not be turned into a state trial. If he cannot succeed on the written material, he should not succeed at all. This has to be a hearing which perforce has to be summary, a bit rough and ready, and ultimately, because it is governed by s. 51(1) is a matter, like all questions of costs, within the broad discretion of the judge. I am confident the case can be managed in that way.

I am satisfied the judge erred in the several respects I have identified. Accordingly, the appeals against both orders must be allowed and the orders of 27^th June 2001 and 20^th July 2001 set aside. The matter must be remitted back to the County Court for rehearing.

What follows is a provisional view only and it is proffered in the hope of saving further costs and in the hope that following the hand down of this judgment the parties will agree terms without the necessity for an appearance on the handing down of the judgment. Since I am clearly of the view that the difficulties in this case have arisen from the mistaken challenge to the court’s jurisdiction and from the insistence on the need for an application to lift the stay, I cannot at present see why costs should not follow the event and why Mr Wagstaff should not have his costs not only in this court but also his costs of both hearings in the court below. I stress this is a provisional view and I am, of course, prepared to entertain argument on those questions, orally or, if the parties choose, in writing. I would also discourage any application for permission to appeal to the House of Lords, but if that permission is to be sought, the application should be made in writing so that we can consider the matter without the expense of attendance by solicitors and counsel.

I agree.

I also agree.