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England and Wales Court of Appeal (Civil Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Oriakhel v Groupama Insurance Co Ltd & Anor [2008] EWCA Civ 748 (04 July 2008) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2008/748.html Cite as: [2008] EWCA Civ 748, [2008] CP Rep 37 |
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COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM WILLESDEN COUNTY COURT
HIS HONOUR JUDGE COPLEY
4 SF 08232
Strand, London, WC2A 2LL |
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B e f o r e :
LADY JUSTICE ARDEN
and
LORD JUSTICE JACOB
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Oriakhel |
Claimant |
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- and - |
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(1) Mr Dominic Vickers (2) Groupama Insurance Company Limited (3) Mohammed Munaver Khan (4) Graham Coffey & Co (a firm) |
1st Defendant 2nd Defendant/Appellant 3rd Defendant/Respondent 4th Defendant |
____________________
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Nicholas Macleod-James (instructed by 3rd Defendant/Respondent under the terms of the Direct Public Access Scheme)
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Crown Copyright ©
Lord Justice Jacob:
"The question whether a dishonest witness, alleged to be a party to a conspiracy to bring a dishonest claim, might be ordered to pay costs is worthy of consideration by the Court of Appeal."
The Law
" (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 – (a) the civil division of the Court of Appeal; (b) the High Court . . . shall be in the discretion of the court. . . . (3) The court shall have full power to determine by whom and to what extent the costs are to be paid."
"to lay down principles for the guidance of judges of first instance for the purpose of controlling the exercise of the statutory power vested in the judges." (see pp. 980-981)."
(1) Where a person has some management of the action, e.g. a director of an insolvent company who causes the company improperly to prosecute or defend proceedings [citations omitted] It is of interest to note that, while it was not suggested in any of these cases that it would never be a proper exercise of the jurisdiction to order the director to pay the costs, in none of them was it the ultimate result that the director was so ordered.
(2) Where a person has maintained or financed the action. [detail omitted]
(3) In Gupta v. Comer [1991] 1 Q.B. 629 this court approached the power of the court to order a solicitor to pay costs under Ord. 62, r. 11 as an example of the exercise of the jurisdiction under section 51 of the Act of 1981.
(4) Where the person has caused the action. [detail omitted].
(5) Where the person is a party to a closely related action which has been heard at the same time but not consolidated - as was the case in Aiden Shipping itself.
(6) Group litigation where one or two actions are selected as test actions [citation omitted].
"I accept that these categories are neither rigid nor closed. They indicate the sorts of connection which have so far led the courts to entertain a claim for costs against a non-party."
"In my judgment the following are material considerations to be taken into account, although I do not suggest that there may not be others which are relevant.
(1) An order for the payment of costs by a non-party will always be exceptional: see per Lord Goff in Aiden Shipping at 980F. The judge should treat any application for such an order with considerable caution.
(2) It will be even more exceptional for an order for the payment of costs to be made against a non-party, where the applicant has a cause of action against the non-party and could have joined him as a party to the original proceedings. Joinder as a party to the proceedings gives the person concerned all the protection conferred by the rules, as to e.g. the framing of the issues by pleadings; discovery of documents and the opportunity to pay into court or to make a Calderbank offer (Calderbank v. Calderbank [1976] Fam. 93); and the knowledge of what the issues are before giving evidence.
(3) Even if the applicant can provide a good reason for not joining the non-party against whom he has a valid cause of action, he should warn the non-party at the earliest opportunity of the possibility that he may seek to apply for costs against him. At the very least this will give the non-party an opportunity to apply to be joined as a party to the action under Ord. 15, r. 6(2)(b )(i) or (ii).
Principles (2) and (3) require no further justification on my part; they are an obvious application of the basic principles of natural justice.
(4) An application for payment of costs by a non-party should normally be determined by the trial judge: see Bahai v. Rashidian [1985] 1 W.L.R. 1337.
(5) The fact that the trial judge may in the course of his judgment in the action have expressed views on the conduct of the non-party constitutes neither bias nor the appearance of bias. Bias is the antithesis of the proper exercise of a judicial function: see Bahai v. Rashidian [1985] 1 W.L.R. 1337, 1342H, 1346F.
(6) The procedure for the determination of costs is a summary procedure, not necessarily subject to all the rules that would apply in an action. Thus, subject to any relevant statutory exceptions, judicial findings are inadmissible as evidence of the facts upon which they were based in proceedings between one of the parties to the original proceedings and a stranger: see Hollington v. F. Hewthorn & Co. Ltd. [1943] K.B. 587; Cross on Evidence , 7th ed. (1990), pp. 100-101. Yet in the summary procedure for the determination of the liability of a solicitor to pay the costs of an action to which he was not a party, the judge's findings of fact may be admissible: see Brendon v. Spiro [1938] 1 K.B. 176, 192, cited with approval by this court in Bahai v. Rashidian [1985] 1 W.L.R. 1337 1343D, 1345H. This departure from basic principles can only be justified if the connection of the non-party with the original proceedings was so close that he will not suffer any injustice by allowing this exception to the general rule.
(7) Again, the normal rule is that witnesses in either civil or criminal proceedings enjoy immunity from any form of civil action in respect of evidence given during those proceedings. One reason for this immunity is so that witnesses may give their evidence fearlessly: see Palmer v. Durnford Ford [1992] Q.B. 483, 487. In so far as the evidence of a witness in proceedings may lead to an application for the costs of those proceedings against him or his company, it introduces yet another exception to a valuable general principle.
(8) The fact that an employee, or even a director or the managing director, of a company gives evidence in an action does not normally mean that the company is taking part in that action, in so far as that is an allegation relied upon by the party who applies for an order for costs against a non-party company: see Gleeson v. J. Wippell & Co. Ltd. [1977] 1 W.L.R. 510, 513.
(9) The judge should be alert to the possibility that an application against a non-party is motivated by resentment of an inability to obtain an effective order for costs against a legally aided litigant. The courts are well aware of the financial difficulties faced by parties who are facing legally aided litigants at first instance, where the opportunity of a claim against the Legal Aid Board under section 18 of the Legal Aid Act 1988 is very limited. Nevertheless the Civil Legal Aid (General) Regulations 1989 (S.I. 1989 No. 339/89), and in particular regulations 67, 69, and 70, lay down conditions designed to ensure that there is no abuse of legal aid by a legally assisted person and these are designed to protect the other party to the litigation as well as the Legal Aid Fund. The court will be very reluctant to infer that solicitors to a legally aided party have failed to discharge their duties under the regulations - see Orchard v. South Eastern Electricity Board [1987] Q.B. 565 - and in my judgment this principle extends to a reluctance to infer that any maintenance by a non-party has occurred."
"There is a danger that the exercise of the jurisdiction to order a non-party to proceedings to pay the cost of those proceedings becomes overcomplicated by reference to authority".
"I would only observe that, although funding took place in most of the reported cases, it is not, in my view, essential, in the sense of being a jurisdictional pre-requisite to the exercise of the court's discretion. If the evidence is that a respondent (whether director or shareholder or controller of a relevant company) has effectively controlled the proceedings and has sought to derive potential benefit from them, that will be enough to establish the jurisdiction. Whether such jurisdiction should be exercised is, of course, another matter entirely and the extent to which a respondent has, in fact, funded any proceedings may be very relevant to the exercise of discretion."
Longmore LJ elaborates on this a little at [11 -12] but it is not necessary to repeat that here.
"[20] The sixth proposition set out by Balcombe LJ in Symphony Group plc v Hodgson, which I have quoted, indicates that the findings in other proceedings may be admissible against a person who was not a party thereto against whom an application for costs is made. The test suggested by him is the closeness of the connection of the non-party with the original proceedings. In my view the proximity of the solicitors on the record for a party could hardly be closer and certainly entitled the judge in his discretion, as confirmed by Brendon v Spiro [1938] 1 KB 176, to rely on his findings in the actions on the application for costs against Miller Gardner. In any event if objection was to be taken it should have been taken before the judge. It was not. I would reject this submission."
So an objection to admissibility must be taken before the Judge who is being asked to make the non-party costs order. Additionally there must be a close connection between the non-party and the original party.
"[15] … The litigation had been pursued on behalf of [the party which had made a fraudulent defence and counterclaim], driven by the [non-party] and for the purpose of advancing a case which [the non-party] knew to be false."
"(3) Where, however, the non-party not merely funds the proceedings but substantially also controls or at any rate is to benefit from them, justice will ordinarily require that, if the proceedings fail, he will pay the successful party's costs. The non-party in these cases is not so much facilitating access to justice by the party funded as himself gaining access to justice for his own purposes. He himself is "the real party" to the litigation, a concept repeatedly invoked throughout the jurisprudence - see, for example, the judgments of the High Court of Australia in Knight and Millett LJ's judgment in Metalloy Supplies Ltd (in liquidation) v MA (UK) Ltd [1997] 1 WLR 1613. Consistently with this approach, Phillips LJ described the non-party underwriters in TGA Chapman Ltd v Christopher [1998] 1 WLR 12 as "the defendants in all but name". Nor, indeed, is it necessary that the non-party be "the only real party" to the litigation in the sense explained in Knight, provided that he is "a real party in ... very important and critical respects" - see Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation (2001) 179 ALR 406, referred to in Kebaro at pp 32-3, 35 and 37. Some reflection of this concept of "the real party" is to be found in CPR 25.13 (1) (f) which allows a security for costs order to be made where "the claimant is acting as a nominal claimant"."
The facts in this case
"As far as Mohammed Khan is concerned, there is no doubt that he had links to Vickers, not only as his landlord of 82 Westminster Way but through the various companies with which he, and/or his brother have been concerned and in connection with the various road traffic accidents in which Vickers, by whatever name he has used, has been involved. He also has links to Amadi, he has woven the tangled web, using various limited companies, some having very similar names or trading names and he has sought to obfuscate the issues and his various trading activities. I am equally quite satisfied that he was not telling me the truth and I reject his evidence. I am satisfied that he had the links alleged by the 2nd defendants and although, as I have indicated, I accept that he was involved, I am not satisfied at this stage that he was necessarily the mastermind or one of the masterminds behind this claim. If necessary I shall hear further submissions in relation to this."
"Mohammed Khan's conduct already exemplifies why he should be paying costs."
Some details were given. The allegation was that he with the claimant had "set up this accident and has in effect run this claim." Reliance was also placed on his false evidence and it was alleged the reason for that is "he was behind the Claimant's claim." Curiously the paragraph then said "The legal grounds on which Mohammed Khan should be ordered to pay the second defendant's costs are .. " – and then omitted to say anything.
"The Second Defendants will seek to argue that either Mr Khan, who referred this claim knowing it was dishonest, or the Claimant's solicitors …. should be responsible for the Second Defendant's costs."
It was suggested that these submissions would have been shown by counsel or solicitors for the claimant to Mr Khan so he must have had earlier notice. But one just does not know that and I see no reason to infer notice was given earlier.
"I neither received any referral nor was I funding the case nor to have nay [sic] financial gain as has been alleged."
and:
"The invoices of the vehicles involved in the said accident have no connection with my Company and I was not to derive any benefit whatsoever as has been alleged."
Whether the detailed facts referred to in the witness statement, if true, would affect the findings made in the primary case was not explored either before the Judge or before us. They have simply never been considered. For present purposes it is sufficient to note that they are matters which Mr Khan wished to advance in his defence of the non-party costs claim.
"The facts are res judicata and I am functus officio."
and:
"It is a question of I having made those findings, what flows from that as far as Mr Khan is concerned."
"14. … I go back to the third principle enunciated by Lord Brown in Dymock which states, and I reiterate:
"Where the non-party not merely funds the proceedings but substantially also controls, or at any rate is to benefit from them, justice will ordinarily require that if the proceedings fail, he will pay the successful party's costs."
15. It seems to me that that proposition as set out there envisages the usual position that:
"The non-party not merely funds, but also substantially controls, or at any rate is to benefit from them …"
So we have the alternatives, "controls, or at any rate is to benefit from them", but in addition to, also, funding the proceedings. Apart from Phillips v Symes which, as I have said, relates to expense incurred by the nature of the evidence given by an expert, which is not the case here, all the other cases involve non-parties who are either funding the proceedings, or are behind those who are funding them, and are controlling the proceedings. It is not suggested that Mr Khan falls into either of these categories.
16. For all of those reasons it seems to me that this application for an order for costs against Mr Khan, that he should pay the applicant's costs, must fail. It does seem to me that, as envisaged in those authorities to which reference has been made, the proper course would be for the insurers, if they consider that they have a claim against Mr Khan for these costs, to commence a separate action against him so that the whole matter can be considered."
The attack on the judgment
My reasoning and conclusion
(a) This case falls squarely within Balcombe LJ's proposition (2) – as indeed the Judge noted. Prior to trial Groupama were, in their amended Defence and Counterclaim, contending that Mr Khan was a dishonest conspirator. If he had been made a defendant to the counterclaim, he would had a full opportunity of taking legal advice, adducing such evidence and documents as might support his defence and indeed considering his own position.
(b) Even now it is conceded, rightly, by Mr Macleod-James for Mr Khan that Groupama are free to sue Mr Khan for his part in the dishonest conspiracy and that if they succeed, the costs of successfully defending the primary claim would be recoverable damages flowing from the conspiracy. I say it is conceded rightly for it would be illogical if a non-party costs claim could be defeated on the basis that an independent claim could be advanced, only for that later independent claim to be defeated by some sort of quasi-estoppel.
(c) Mr Khan was not given notice of the claim at any time when he could have taken legal advice and, if necessary, deployed further material by way of his "defence" and, if so advised, applying to be joined as a party (see Balcombe LJ's third proposition).
(d) The findings in the primary claim are not admissible against Mr Khan pursuant to Balcombe LJ's sixth point. Where a non-party effectively has controlled the primary litigation (as for instance in Globe or Dymocks) it is, in the language of estoppel, a "privy" and will be bound by the result. But that is not the case here. One cannot say that Mr Khan had such a close connection or "proximity" (to use Morritt LJ's word in Globe) with the primary claim that he must be bound by the result. He neither funded it nor controlled it – it was not his claim even though, if the findings are correct, he stood to benefit from it. True it is that in the primary judgment Mr Khan was found to be a co-conspirator and a liar but neither of these matters taken separately or together are enough to bind him. Mr Khan must be free to contend that he was not a conspirator and adduce evidence to support his own defence.
Lady Justice Arden:
The Master of the Rolls: