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England and Wales High Court (Chancery Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Beechwood Construction Ltd v Afza & Anor [2008] EWHC 2671 (Ch) (31 October 2008) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2008/2671.html Cite as: [2009] BPIR 7, [2008] EWHC 2671 (Ch) |
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CHANCERY DIVISION
LEEDS DISTRICT REGISTRY
B e f o r e :
____________________
BEECHWOOD CONSTRUCTION LIMITED | ||
Judgment Creditor | ||
AND | ||
NUDRAT AFZA | ||
Judgment Debtor | ||
AND | ||
STAN BATTY | ||
Third Party |
____________________
Crown Copyright ©
1. Introduction
2. Representation
3. The Facts
1. On 3rd March 2006 the Judgment Debtor obtained a default judgment against the Third Party in the Bradford County Court for £10,260 inclusive of interest. At that time she was a litigant in person.
2. On 20th November 2006 the Judgment Creditor and the Judgment Debtor compromised the trial of an action in the Leeds District Registry of the TCC Court which was due to be heard by Judge Cockroft. Under the terms of the compromise the Judgment Creditor obtained judgment for £15,000 against the Judgment Debtor payable by 5 monthly instalments of £3,000. None of the instalments were paid with the result that the whole outstanding balance became due.
3. On 30th October 2006 the Judgment Debtor obtained public funding from the LSC in respect of the claim against the Third Party. On 19th December 2006 an application by the Third Party to set aside the judgment in default was dismissed by DJ Lingard. The order records a public funding direction in relation to the Judgment Debtor's costs but does not contain any order requiring the Third Party to pay the Judgment Debtor's costs. At the hearing before me Mr Pennock suggested that this was a mistake in drawing up the order but no application has been made to have the order amended under the slip rule.
4. On 27th September 2007 Judge Hawkesworth QC granted the Third Party permission to appeal on condition that £2,500 was paid into Court before 22nd October 2007. No sum was paid into Court pursuant to the order.
5. On 15th November 2007 Judge Hawkesworth QC struck out the Appeal and ordered the Third Party to pay the Judgment Debtor's costs. There is no transcript of the hearing before me but according to Mr Pennock who appeared for the Judgment Debtor Judge Hawkesworth QC did consider the merits before making the order he did.
6. No sums have been paid by the Third Party either in respect of the judgment debt, interest or costs. There must be significant doubt as to whether he has any assets and as to whether there is any point in the litigation before me.
7. On 25th January 2008 DDJ Caswell made an interim Third Party Debt Order in favour of the Judgment Creditor in respect of £16,435.65 being the sum then due under its judgment.
8. After a directions hearing before DJ Fairwood, the matter came on before DJ Anderson on 19th May 2008. After a contested hearing she prepared a full and helpful reserved judgment which was handed down on 4th July 2008.
4. DJ Anderson's order
"1. The Third Party, Stan Battye, is to pay to the Defendant (Applicant), Beechwood Construction ("the Judgment Creditor") on or before the 18th July 2008 £10,260 plus any amount which it is liable to pay Nudrat Afza in respect of the costs of proceedings 6BD01193.
2. The Judgment Creditor is to pay all sums recovered from the Third Party pursuant to paragraph 1 of this Order to its solicitors to be held in his solicitors client account not to be paid out except by agreement between the Judgment Creditor and the Legal Services Commission or pursuant to further order of the court.
3. The Judgment Creditor's costs of this application £1,502.50 are to be retained out of the money recovered by the Judgment Creditor under this Order in priority to the Judgment Debt which shall not be paid to the Judgment Creditor until after the court has given directions referred to in paragraph 2 above and any sums which the court subsequently orders the Judgment Creditor to pay to the Legal Services Commission shall be paid in priority to such costs.
4. The Judgment Debtor (Mrs Afza) is by no later than 4 p.m. on 2nd August 2008 disclose the following documents by serving copies on the solicitors for the Judgment Creditor :-
a) any draft bill of costs prepared in respect of proceedings 6BD01193;
b) all records held by Mrs Afza or the solicitors of Mrs Afza's costs and disbursements of proceedings 6BD01193;
5. Mrs Afza shall co-operate with the Judgment Creditor in all steps necessary for quantification of the costs which the Third Party was ordered to pay to Mrs Afza in proceedings 6BD01193.
6. The Judgment Creditor is to file and serve on the Legal Services Commission by no later than 4 p.m. on 18th July 2008 copies of :-
a) the application;
b) the evidence;
c) this Order.
7. Mrs Afza has liberty to apply to discharge the Order set out in paragraph 1 of this Order :-
a) if after six months the Judgment Creditor has not succeeded in recovering sufficient funds to cover the sum payable by Mrs Afza to the LSC in respect of costs of proceedings 6BD01193;
b) if the LSC seeks to recover any costs payable to it in proceedings 6BD01193 directly from Mrs Afza.
8. The matter be listed for a further hearing on the first available date after (no date given) with a time estimate of 30 minutes. At that hearing the court will consider the question of whether any sums recovered from the Third Party by the Claimant shall be paid to the Legal Services Commission.
9. If the parties are able to resolve the matter by consent, the parties have liberty to apply by letter to vacate the further hearing of this matter and for approval of any consent order.
10. On the basis that the Legal Aid Statutory Charge does not apply in this case, there may be a direction for assessment of costs of Mrs Afza as a public funded party."
1. Paragraph 1 of the order relates not only to the judgment debt of £10,260 but also to the costs of the proceedings. These costs remain unquantified.
2. The order for costs in paragraph 3 of the order does not take into account the provisions of section 11 of the Access to Justice Act 1999
3. The provisions of paragraphs 4 to 9 of the order are, on any view, highly unusual. They appear to be a scheme set up by DJ Anderson (with some help, I was told from Miss Toman) to enable the Judgment Creditor to enforce the judgment debt and get round the difficulties caused in particular by Regulation 18.
5. Relevant provisions
5.1 CPR Part 72
(1) Upon the application of a judgment creditor, the court may make an order (a "final third party debt order") requiring a third party to pay to the judgment creditor—
(a) the amount of any debt due or accruing due to the judgment debtor from the third party; or(b) so much of that debt as is sufficient to satisfy the judgment debt and the judgment creditor's costs of the application.
(1) A final third party debt order shall be enforceable as an order to pay money.
(2) If
(a) the third party pays money to the judgment creditor in compliance with a third party debt order; or(b) the order is enforced against him,
the third party shall, to the extent of the amount paid by him or realised by enforcement against him, be discharged from his debt to the judgment debtor.
(3) Paragraph (2) applies even if the third party debt order, or the original judgment or order against the judgment debtor, is later set aside.
5.2 Access to Justice Act 1999
Except so far as regulations otherwise provide, where services have been funded by the Commission for an individual as part of the Community Legal Service—
(a) sums expended by the Commission in funding the services (except to the extent that they are recovered under section 11), and(b) other sums payable by the individual by virtue of regulations under this section,
shall constitute a first charge on any property recovered or preserved by him (whether for himself or any other person) in any proceedings or in any compromise or settlement of any dispute in connection with which the services were provided.
5.3 CLS (Costs Regulations) 2000
18 (1) Subject to the following paragraphs of this regulation, and to regulation 17(2), all money payable to or recovered by a client in connection with a dispute by way of damages, costs or otherwise, whether or not proceedings were begun, and whether under an order of the court or an agreement or otherwise, shall be paid to the client's solicitor, and only the client's solicitor shall be capable of giving a good discharge for that money.
19(1) Where money is payable under regulation 18, and that money is payable by a trustee in bankruptcy, a trustee or assignee of a deed of arrangement, a liquidator of a company in liquidation, a trustee of a pension fund or any other third party ("the third party") the client's solicitor shall send to the third party notice that funded services have been funded for the client by the Commission.
(2) Notice under paragraph (1) shall operate as a request by the client that money payable under regulation 18 be paid to his solicitor, and shall be a sufficient authority for that purpose.
20(1) The client's solicitor shall forthwith:
(a) inform the . . . Director of any money or other property recovered or preserved, and send him a copy of the order or agreement by virtue of which the property was recovered or preserved;(b) subject to the following paragraphs of this regulation, pay to the Commission all money or other property received by him under regulation 18.
6. Concessions during the hearing.
7. Third party debt Order
8. Costs
1. the Judgment Creditor obtained a Third Party Debt Order in relation to the Third Party debt and has therefore succeeded in the application. In my view (and subject to section 11 of the Access to Justice Act 1999) the Judgment Debtor should pay the costs of the Judgment Creditor in relation to the application before DJ Anderson. There is no reason to interfere with her assessment of £1,502.50
2. the position on appeal is more difficult. Both sides have had some success. The Judgment Creditor has succeeded in upholding a Third Party Debt Order. However there have been a number of respects in which the order will have to be varied relating to costs and to the ancillary orders made by DJ Anderson. In my view the fair order is that there be no order as to costs of the Appeal.
3. It is plain that in the proceedings in the Bradford County Court the Judgment Debtor will have recovered any sum that is ultimately paid by the Third Party. In those circumstances costs incurred by the Judgment Debtor's solicitors are plainly within and caught by the statutory charge under section 10 of the Access to Justice Act 1979.
4. The position with regard to the Leeds proceedings for a Third Party Debt order is however quite different. In those proceedings the Judgment Creditor sought to attach the Third Party debt and succeeded. In no way can it be said that the Judgment Debtor preserved or recovered any assets. She lost the right to the fruits of her judgment. In those circumstances any costs incurred by the Judgment Debtor's solicitors are not in my view within the statutory charge. They are costs that will have to be recovered by under the CSL Funding Certificate for the Third Party Debt proceedings.
5. I was told that the costs of the Judgment Debtor's solicitors were about £7,000 when the matter was before DJ Anderson. I do not know how this sum is made up. If it includes (as I suspect it may) the costs of the Third Party Debt proceedings then it includes costs that are not within the statutory charge. If it simply includes the costs of the 2 hearings in the Bradford case then the costs seem to be disproportionately high. I was also told that the Judgment Debtor's solicitors are looking for a charging rate of £174 per hour. It has to be remembered that this case involved a dispute over £10,000. In those circumstances it must be very arguable that such a charging rate was disproportionate to the work involved.
9. Conclusion
1. I would omit the reference to the costs of the Bradford proceedings in paragraph 1 of the order. I would add to paragraph 1 an order that the moneys are to be paid to the Judgment Debtor's solicitors pursuant to regulation 18.
2. I would omit paragraphs 2, 4 – 9 of the order
3. I would provisionally make an order for costs in the following terms
The Judgment Debtor shall pay the Judgment Creditor's costs of the proceedings before DJ Anderson assessed in the sum of £1502.
The Judgment Debtor having the benefit of public funding, no steps (other than any assessment of costs) shall be taken until there has been a determination of the amount which it is reasonable for the Judgment Debtor to pay pursuant to section 11 of the Access to Justice Act 1999, directions in respect of which stand adjourned generally to be restored on the written request of the Judgment Creditor.
There shall be no order for the costs of the appeal.
JOHN BEHRENS