Case No: A3/2008/0835/A
Neutral Citation Number: [2008] EWCA Civ 888
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(MR JUSTICE BRIGGS)
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: Friday, 4th July 2008

Before:

LORD JUSTICE RIMER

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Between:

	GRAHAM CALVERT
	Appellant	
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WILLIAM HILL CREDIT LIMITED	
Respondent	

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Ms Anneliese Day (instructed by Messrs Collins Benson Goldhill) appeared on behalf of the Appellant.

Ms Rebecca Sabben-Clare (instructed by Messrs Dechert LLP) appeared on behalf of the Respondent.

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Judgment
Lord Justice Rimer:

1.	This was to have been the hearing of an interim application by William Hill Credit Limited, the bookmaker, which is the respondent to a pending appeal, for three heads of relief against the appellant, Graham Calvert. Mr Calvert sued William Hill in the Chancery Division for damages to compensate him for losses claimed to have been suffered in consequence of William Hill’s negligence in failing to operate its “self-exclusion policy” and thereby put a curb on his recourse to William Hill for gambling purposes. Briggs J found that William Hill owed Mr Calvert a limited duty of care, which it breached, but also found that his claim failed on causation grounds and dismissed it.  The essence of his reasoning was that Mr Calvert would anyway have ruined himself by placing bets with other bookmakers.  

2.	The judge ordered Mr Calvert to pay 80% of William Hill’s costs of the claim, their total costs amounting to about £420,000 excluding VAT. He also ordered Mr Calvert to make a payment of £175,000 on account of costs by 9 April 2008, but subject to a stay until then and thereafter pending the disposal of any appeal by Mr Calvert, for which he gave permission. He imposed the stay because he considered that the enforcement of that order would or might stifle the appeal.  Mr Calvert has appealed and I need hardly add that the costs payment has not been made either in whole or in part.

3.	William Hill’s Respondent’s Notice, filed on 13 May 2008, included in section 9 an application seeking interim relief under three heads: (i) an order lifting the stay on the payment of £175,000; (ii) security for costs of the appeal in the sum of about £160,000; and (iii) disclosure of the names of the persons who had funded the claim and were funding the appeal. That was the application that I was due to hear. In the event, having considered Mr Calvert’s evidence in answer to it served on 30  June, William Hill yesterday informed the court that it would not be pursuing any of those heads of relief. It nevertheless requires the court to deal with the costs of the application, in respect of which the parties have been unable to reach agreement. I am required only to rule on that question.

4.	Ms Sabben-Clare appeared for William Hill and Ms Day for Mr Calvert. On Tuesday 1 July William Hill proposed to Mr Calvert that the application should be withdrawn with no order as to costs. That proposal was rejected and the counter proposal was that William Hill should pay two-thirds of Mr Calvert’s costs and there should otherwise be no order as to costs. The parties did therefore make sensible efforts to avoid this hearing, but the gulf between them was too wide. In the event, both sides have advanced to me the same position as to costs which they respectively adopted in their earlier attempts to settle the question.  

5.	William Hill’s substantive application was supported by a long witness statement made on 7 May by Bernard Caulfield, a partner with Dechert LLP, solicitors for William Hill. The essence of the application was that William Hill was said to be concerned that Mr Calvert had been, and was being, funded by third parties, and was conducting the appeal on their behalf, but had declined to disclose who they were; and that he could not pay any costs order against him from his own known assets. In addition, or alternatively, it was asserted that there were grounds for believing that he had taken steps in relation to his assets which would make it difficult to enforce a costs order against him, the particular matters identified being a retrospective charge of his property, the disposal of greyhounds in undocumented cash deals and paying significant cash sums to a third party. In the meantime he was enjoying the stay on the enforcement of the order to pay £175,000.

6.	Mr Caulfield said that Mr Calvert’s case at trial was that he was wholly impecunious and unable to obtain credit. His claim was, however, being privately funded, with the only named funder being Mr Calvert’s sister.  Mr Calvert also gave evidence at the trial that, whilst unable to control his gambling, he had lent several hundred thousand pounds to a Mr Danski, all but £100,000 of which had been repaid. He sought time to put in his notice of appeal in order to obtain funding for the appeal but had failed despite requests to provide details of that funding. Earlier this year he changed his solicitors.  His former solicitors were now exercising a lien on his papers because their fees remained unpaid. William Hill’s suspicion was that the appeal was being pursued for the benefit of Mr Calvert’s creditors, with his status as appellant being that of a nominal one. In addition, or alternatively, William Hill suspected that to the extent that Mr Calvert was pursuing the appeal for his own benefit and at his own expense, he had taken steps to put his assets beyond the reach of his creditors. 

7.	The primary ground relied upon by William Hill for lifting the stay was the discovery of a change of solicitors. This is said to have underlined the likelihood that Mr Calvert would be unable to meet any costs order against him.  Mr Caulfield’s evidence was in part devoted to proving the probability that Mr Calvert would be unable to meet any costs from his own assets, and I need only say that the evidence to that effect is cogent. It also proves that Mr Calvert is significantly indebted to other third parties. Ms Sabben-Clare’s skeleton argument in support of the substantive application developed the case for the lifting of the stay by submitting that the inference from the fact that the appeal is now being pursued with the assistance of another firm of solicitors, Collins Benson Goldhill (“CBG”), is that it is being funded by a third party or parties or else that Mr Calvert has assets which he has hitherto concealed and which the judge did not know about when he imposed the stay. In addition she relied upon the fact that Mr Calvert had been disqualified by the NGRC on the grounds of concealing the true ownership of greyhounds.  

8.	The application for security for costs was pursued either in addition or in the alternative. The basis for it was that Mr Calvert is said to be a nominal appellant, pursuing the appeal for the benefit of others, or else that he had taken steps in relation to his assets that would make it difficult to enforce an order for costs against him. The first alternative was advanced on the basis that Mr Calvert claims total impecuniosity and so must necessarily have been, as he must still be, funded by third parties. In that context, Dechert sought the names of his funders from CBG by a letter of 11 April 2008, explaining that the purpose was so that they could be put on notice of claims for costs against them. There was no response to that request. It was repeated on 23 April, warning that non-compliance would be followed by an application to the court. The response on 25 April was that CBG had not been able to give proper consideration to the request or take instructions on it. They failed to provide the requested information. That failure led to the making of the application on 13 May.  

9.	The alternative basis of the application for security was that if Mr Calvert’s appeal was not being funded by others, he must have hidden assets with which he is funding the appeal; and reliance was placed on the various questionable features of the evidence about Mr Calvert’s financial affairs that Ms Sabben-Clare listed in paragraph 15 of her skeleton argument. At least one possible inference from the evidence given by Mr Calvert at trial is that he has access to considerable undisclosed cash sums.  

10.	Mr Calvert answered the evidence by a witness statement of 30 June. He confirmed that the only payments made to his previous solicitors, Ward Hadaway, were made by his sister Debbie. She had in turn obtained them from her husband Craig, and a family friend, Joe McGinty.  Mr McGinty is one of Mr Calvert’s creditors, although I am told he is a secured creditor.  Mr Calvert’s father has also provided assistance. The funds so provided covered only a small part of Ward Hadaway’s costs.  Mr Calvert could not pay the balance, hence his parting from that firm and their exercise of the lien. He confirmed that he was pursuing the appeal for his own benefit, although also for that of his family who live in his farmhouse, which he does not want to lose.  He is funding his resistance to the present application by a CFA with his solicitors as to 100% of their costs and one with counsel as to 50% of her costs, and he says they are willing to enter into like agreements for the appeal itself.  

11.	As regards the claim to lift the stay, he says that William Hill have always known of his precarious financial position and nothing has changed since the stay was ordered save the discovery of his parting from his former solicitors.  That was not a material discovery. If anything, it underlined the judge’s view that not to impose a stay would stifle the appeal. It has been difficult enough to pursue it anyway. 

12.	He admits that CBG did not respond promptly to Dechert’s letters, but that was because of his funding problems. He has not been able to respond to the application until recently because of the same problems and has only been able to do so by negotiating the CFAs. He said that his claim and appeal have not been funded by any third party creditors with an interest in them, nor has he sold the benefit of the claim or the appeal to any third parties.  

13.	Having considered Mr Calvert’s evidence, William Hill indicated that they did not propose to pursue any of the claimed heads of relief. They accept that Mr Calvert has explained how the proceedings have been funded and, although they do not regard the explanation as very satisfactory, they also accept that they cannot press their applications further at this stage. In particular, they do not now seek to lift the stay or press for security for costs.  

14.	Their position is that the outcome of the application has been in substance a “no score draw”, and they propose that there should be no order as to costs.  They justify that by saying that Mr Calvert failed to explain, despite repeated requests, how he is funding his proceedings in the appeal. They threatened to apply for an order if he did not provide the information. He did not and so they did. The result of the application is that he has explained who has provided the funding he has had, also explaining -- and for the first time -- that he is being funded by sources in addition to his sister. His explanation also shows that his previous explanation was untrue, or at any rate less than the whole truth.  Whereas he said that his sister was the sole funder, the reality is that she just paid over funds that others had provided. It is said that William Hill were fully entitled to be concerned about the position and to be given information about it.  On his own case, Mr Calvert could not have been funding the claim, and it was improbable that his sister was doing so alone. Someone else must have been doing so and William Hill were entitled to know who and why. The outcome of their application is that Mr Calvert has now provided the information that was requested.  The application was therefore successful at least to that very material extent. Ms Sabben-Clare accepts that it may not be regarded as successful as to the balance, and so she proposes that the just order overall would be no order as to costs.

15.	Ms Day disagrees and asks for an order that William Hill pay two-thirds of Mr Calvert’s costs. She says the application has been very distressing for Mr Calvert and has unnecessarily absorbed costs which could otherwise have been used for the substantive appeal. The CFAs have to some extent moderated this, but Mr Calvert has at least had to fund half of counsel’s fees and has also had to fund the cost of dealing with the application before the CFAs were entered into. If he is ordered to pay costs to William Hill in respect of this application, that may prevent him from pursuing the appeal.  An award of costs against him may therefore have serious consequences. 

16.	More specifically, as regards the application to lift the stay, no pre-application warning was given of the proposal to make it. The evidence in support of it was unimpressive, virtually the only new material being the point about the parting from Mr Calvert’s former solicitors. That merely underlined the financial difficulties to which Mr Calvert is subject, which were the very reason for the stay that the judge imposed. All the other points made as to William Hill’s suspicions about Mr Calvert’s assets, and as to whether he has concealed any assets, emerged at the trial, and the judge knew of that evidence when he made the stay order. It is said that the application was always misconceived; it is no longer being pursued, and William Hill should pay the costs referable to it.  

17.	As for the application for security, that was not preceded by any request either.  It is said that there was, and is, no evidence that Mr Calvert is a nominal appellant, nor is William Hill now asserting that. William Hill is also not now pressing any argument that he has taken steps to make it difficult to enforce a costs order against him. The application for security was always a speculative one and it has failed.  

18.	As for the request for the names of funders, Dechert wrote on 11 April to CBG saying that they propose to warn all funders that they would seek non-party costs orders against them. That was admittedly not responded to, but when on 23 April Dechert repeated their request as to the identity of any funders, CBG replied on 25 April saying they hoped to respond by 14 May. William Hill chose not to wait for that but issued their application on 13 May, which was criticised as being premature and unreasonable. I should, however, point out that that was the last day for the service of the Respondent’s Notice, and so it is understandable why William Hill chose to include its current applications in that notice. On 15 May CBG wrote that they would not be able to respond until counsel returned from holiday on 28 May but would deal with the matter as soon as possible thereafter.  In the meantime Mr Calvert’s financial position became so dire that his legal team could not resume work on the case until 24 June when the CFAs were entered into. Mr Calvert’s witness statement was served as soon as possible after that.

19.	In my judgment, the position is as follows. I regard William Hill’s case for the lifting of the stay as having been hopeless. The change of solicitors did not assist that application but merely underlined Mr Calvert’s inability to pay costs, which was the reason the judge imposed the stay. The inference that he was or is being funded for the appeal did not justify a lifting of the stay either.  Any such funding would not be for the purpose of meeting accrued liabilities in the past. The assertion that Mr Calvert had hidden assets was all based on evidence that emerged at the trial, of which the judge would have been aware, and so there was nothing new there either. This head of the application was a mistaken one.  

20.	The case for security for costs was similarly mistaken. Mr Caulfield provided no evidence justifying the inference that Mr Calvert was or is a nominal appellant; the assertion was advanced merely on the basis of suspicion, and the non-pursuit of the application for security justifies the inference that it is now tacitly accepted that he is not such a nominal appellant. Again, to the extent that the application was based on an alleged concealment of assets, there was no evidence of that beyond what had emerged at the trial. In the light of that evidence, the judge still considered that there should be a stay on the enforcement of £175,000 order since otherwise an appeal would, or might, be stifled. That indicates that William Hill’s thought that there was a prospect of a successful application for security for costs of the appeal was a triumph of hope over judgment. Anyway, the claim for security has been abandoned and it should be treated as a failed claim.  

21.	The application for the disclosure of the identity of funders can be said to have succeeded. Whether it will do William Hill any good to know who the funders are remains to be seen. Pure funders are not ordinarily made liable for costs, although whether William Hill will try to investigate the basis of the funding to see whether the funders are pure funders remains to be seen. Ms Day complained that William Hill’s request for the identity of the funders and the pursuit of this application for their revelation has had, or probably will have, a chilling effect on the funders’ willingness to contribute further, and so shows the application to have been an oppressive one. But I would not regard Dechert’s pressing for the identity of any funders as unreasonable, since the giving of early notice to funders that they may be the target of a non-party costs application is a course that it is ordinarily expected of those contemplating such an application, and is a matter that is taken into account when considering whether any order should be made. 

22.	It is also said that William Hill jumped the gun by issuing the application on 13 May rather than awaiting CBG’s response which, it was said, was hoped to be made by 14 May but was not. I do not agree that William Hill jumped the gun. The original request was on 11 April, and it would have been as easy as pie for Mr Calvert to have given a simple instruction to CBG as to who the funders were, so that an answer to the request could be given. There really was no need to treat that enquiry as such a heavy one as to require the mature consideration of lawyers over an indeterminate period in the future, probably expiring on the Greek calends. If CBG were, as I have no doubt that they are, equal to taking on Mr Calvert’s appeal, they should have been equal to dealing with that elementary question without delay. 

23.	I would therefore be disposed to regard the application as justified to the extent that it sought, and obtained, the identity of funders, but not further or otherwise. William Hill’s application should therefore be regarded as having failed in two respects and to have succeeded in one respect. I will therefore make the following order. William Hill will pay Mr Calvert two-thirds of his costs of the application. Mr Calvert will pay William Hill one-third of their costs of the application and there will be an appropriate set-off.  If I am able to deal with the necessary assessments now, on a summary basis, I will do so.  Otherwise it may be necessary to direct detailed assessments. I will hear counsel as to that.

Order:  Application granted in part