Case No. A2/2000/5779
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
(His Honour Judge Mackay)

Royal Courts of Justice
Strand London WC2

Date: Monday 10th July, 2000

B e f o r e:

LORD JUSTICE PETER
GIBSON LORD JUSTICE CHADWICK
LORD JUSTICE BUXTON

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	TRAINING IN COMPLIANCE LTD T/A MATTHEW READ	Applicant	
	
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	CHRISTOPHER PAUL DEWSE T/A DATA RESEARCH COMPANY	Respondent	
 
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(Computer Aided Transcript of the Palantype Notes of 
Smith Bernal Reporting Limited, 190 Fleet Street, London EC4A 2AG
Tel: 0171 421 4040
Official Shorthand Writers to the Court)
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MR MICHAEL POOLES QC and MR PHILLIP MOSER (Instructed by Shadbolt & Co, Chatham Court, Lesbourne Road, Reigate, Surrey, RH2 7LD) appeared on behalf of the Appellant
MR TOM IVORY QC and MS CAMILLA BINGHAM (Instructed by Rakisons Solicitors, Clements House, 14/18 Gresham Street,London EC2U 7JE) appeared on behalf of the Respondent
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J U D G M E N T (As Approved by the Court)
1.	LORD JUSTICE PETER GIBSON: I will ask Buxton LJ to give the first judgment.

2.	LORD JUSTICE BUXTON: The parties to this matter are on the one side a company called Training in Compliance Ltd and an individual called Mr Matthew Read, and on the other side an individual called Mr Christopher Dewse, who apparently trades as, or who has traded as, an organisation called Data Research Company.

3.	There are two interlinked matters before the court.

4.	The first matter springs from an order made by Master Eyre on 25th November 1999 that the defendant, Mr Dewse, should pay into court the sum of £200,000. That order was upheld on appeal by Curtis J on the 14th January of this year, save that he reduced the amount to be paid in from £200,000 to £100,000. Leave was given to appeal against that order by a single Lord Justice of this court.

5.	The second matter is that, under the liberty to apply that was granted by Curtis J on that occasion, an application was made to Master Eyre on the 26th January of this year to vary the amount of the payment in. What was actually sought was the reduction of the payment in to a nominal sum; but indications were given to the Master that it might be possible to pay in the sum up to £25,000. The Master refused that application in total. The defendant appealed to His Honour Judge Mackay, sitting as a judge of the Queen's Bench Division, on the 23rd February, who dismissed the appeal and upheld the refusal of the Master.

6.	Leave was sought to apply to appeal to this court in respect of that judgement of Judge Mackay. Such an appeal would be a second appeal under the terms of section 55 of the Access to Justice Act 1999, that is to say it would not be entertained by this court unless it raised an important point of principle or practice or there was some other compelling reason for this court to hear it. The single Lord Justice to whom that application was referred on paper referred it to this court to be heard at the same time as the extant appeal.

7.	It is clear that the more important of these two matters is the appeal from Curtis J because, if that appeal succeeds, the other application effectively falls away. This case and litigation has a deplorable history which has attracted severe criticism from the courts that have had imposed on them the burden of dealing with it. In order to understand my judgement it will be necessary to refer, as briefly as possible, to some parts of that history. In so doing it should be understood that I do not purport to make, or confirm, any findings of fact in respect of the history, since, in the interests of brevity, it may be necessary to state, without full qualification, some matters that in the fullness of time may or may not be the subject of contestation.

8.	The claim was first formulated in December 1998. There had been a writ issued in November 1998, which can charitably be described as something of a muddle. However, in the points of claim that were filed in December 1998 the matter was addressed significantly differently from the way in which it had been addressed in the writ. What was claimed in those points of claim was unpaid commission under an agreement for the introduction of business to the defendant and his trading activities. The two claimants were Training in Compliance Ltd and Mr Read. Oddly and anomalously, the claim was not made in the alternative but said that Training in Compliance "and/or" Mr Read had made an agreement with the defendant. Under that agreement the sum of £266,000 was claimed.

9.	It is convenient to say now that it has never seriously been contended by Mr Dewse that he did not owe at least something like £200,000 as a result of his dealings with Training in Compliance and/or Mr Read, that is to say his dealings with the business operations in which those two bodies were concerned. However, his reasons for not paying, or, more accurately (in respect of the second one) his reason for saying that in fact he did not in total owe anything, were (i) unclarity on his part as to who in law the actual claimant was claiming to be; and (ii) even though on the computation of commission taken alone he owed something like £200,000, he had a substantial counterclaim arising directly out of the conduct of the business in which he had been engaged with Mr Read, which significantly overtopped any claim that Mr Read might have against him. That that was the position between the parties was made clear in an affidavit sworn by the defendant's then solicitor in connection with a summary judgement application as long ago as February 1999. That statement is to be found in paragraph 4 of the first affidavit of Helen Jane Boddy dated 3rd February 1999. I do not need, I think, to read it out because, as I understand it, it has not been significantly challenged; indeed, it has been asserted that it had the force that I have summarised.

10.	The counterclaim, which was clearly the crucial element in the dispute between the parties, was not, however, set out in a defence that was served on 19th February 1999 −− that is to say shortly after Miss Boddy had deposed in the way that I have just described −− and it was not pleaded, and not even sought to be pleaded, until a full defence and counterclaim was produced before Curtis J. I shall have to return to the status of that document. In the counterclaim, however, it is confirmed, as Miss Boddy has said, that the defendant's case was that there had been misconduct by Mr Read in connection with a contract that had been entered into with the Liverpool Victoria Insurance Company brought to Mr Dewse by Mr Read, or his company, in respect of which contract Mr Read was acting for the defendant, with the result that the Liverpool Victoria terminated the contract causing a loss to the defendant in a sum of something like £1m.

11.	So much for what appears to be the outline of the real dispute. I now turn to the (I am tempted to say) slightly less real world of the way in which the litigation developed.

12.	In February 1999 the claimants made an application for summary judgement. Predictably, that was unsuccessful, not least because of the uncertainty in the form of their pleading, that is to say the use of the formulation "and/or" between the two claimants as to whom in fact the money was owed.

13.	In March 1999 Training in Compliance Ltd were struck off the Companies Register; not as far as one can discern for any radical fault, but more for the fault (fault, of course, it being) that it had not filed its accounts. The claimants' then solicitor saw fit not to inform those representing the defendant of that fact, but went on acting in the action. That was clearly not a correct way of dealing with the matter.

14.	On the 23rd June 1999 an order was sought from Master Foster by the claimants, which was not contested, which constituted Training in Compliance Ltd as the only claimant in the action. Shortly after that event, that is to say at the end of June, those representing the defendant heard for the first time, as I understand it, that Training in Compliance Ltd (now the only claimant in the action) had been struck off the Companies Register. For reasons that she in fact explained but which have attracted criticism, the defendant's solicitor did not take the matter up with the other side or seek their cooperation in bringing the action to an end, as would have been the appropriate course, but issued an application, without notice to the other party's solicitor, for the writ and statement of claim to be struck out.

15.	While that application was pending, the claimants' solicitor informed the defendant's solicitor in writing of the striking off of the company, saying that the matter was one of technicality. For reasons that were not the fault of either party, that message did not reach the defendant's solicitor before the application was heard at which the Master struck out the action ex parte. The claimants, having been informed of that fact, applied on the 16th July, promptly on hearing of the Master's order, to restore Training in Compliance to the companies' register. They informed the defendant's solicitor that that application was being made and that there would be a contingent application for the action to be restored. The application to restore Training in Compliance was in fact not opposed by the defendant. The company was restored to the register on 27th August 1999. On some date that I do not have immediately to hand, but shortly thereafter, the Master's order striking out this action was set aside.

16.	When the matter came before Master Eyre in October, he found that there had been no costs incurred by the fact that Training in Compliance had spent time off the register. He held that such costs as had been incurred as a result of that by the defendant were unreasonable and irrecoverable because he did not consider that either side had dealt with the other with the frankness to which the courts have always looked and which are particularly required under the new Civil Procedure Rules.

17.	I say all that by way of background. On 25th November 1999 there was a Case Management Conference before Master Eyre. The position then (at least on the face of the case) was that much of the claim was not denied in substance, though there was a dispute as to whom the money was owed; and there had been no attempt until shortly before that date to plead the counterclaim, despite the fact that it had been clear since June that Training in Compliance was the claimant and clear from July or August that Training in Compliance was back on the register; its temporary absence not having affected the issues.

18.	Leading up to the Case Management Conference there were a number of requests made by those advising the claimants that the defendant should plead its case. Those requests, I have to say, were formulated in not wholly mollificatory terms; but even the short account of the history that I have so far given is perhaps sufficient to indicate that by that stage the relations between the solicitors then acting for the various parties were not such as the court would normally wish to see.

19.	On the 23rd November 1999, as a result of these exchanges −− that is to say two days before the case conference −− a new defence was produced, the previous defence (and the only defence at that time which stood) having been a simple denial. The new defence put the other side to proof and raised various matters about the state of the accounts. It had, however, two strikingly new features.

20.	First of all, it asserted that the contract in question had been entered into, not with Training in Compliance, but with Mr Read personally. There was no agreement with Training in Compliance; the agreement was with Mr Read. That appears to have been the first time that that defence had been advanced.

21.	Second, it was claimed that as a result of that there was no liability at all on the part of the defendant. The defence, however, ended in these terms:

Further or in the alternative, if, contrary to his defence herein, the Defendant is found to have contracted with the Claimant through Matthew Read acting as agent for the Claimant, the Defendant will seek to set off against any monies found to be due to the Claimant such monies as will be claimed against Matthew Read in separate proceedings to be issued against him personally arising out of the contract referred to in paragraph 2.1 above, which proceedings the defendant will seek to have consolidated with the proceedings herein."

22.	It will be seen from that that the pleaded position of the defendant was that the present case as formulated was ineffective because he was being sued by the wrong person. But, even if he was sued by the right person (in the shape of Mr Read), he had a substantial counterclaim, details of which, however, were not vouch safed in this pleading.

23.	On receipt of this draft defence, junior counsel for the claimants who was appearing at the Case Management Conference contacted counsel then acting for the defendant −− I interpose: not either Mr Pooles or Mr Moser who appear before us today −− and informed him of three things:

(i)	that the defence was deficient;

(ii)	that she would be resisting any application to serve it; and

(iii)	that she would be asking for judgement at the Case Management Conference.

24.	That is set out in the skeleton before this court, signed by counsel. It has not been challenged. No formal application to that effect was made before the Case Management Conference: the reason for that being, as the claimants say, that they simply did not have time to take steps of a formal nature in respect of this defence before they appeared before the Master.

25.	The parties duly appeared before the Master at the Case Management Conference on the 25th November. I do not hesitate to point out that, first, they were appearing before a very experienced Queen's Bench Master; and, second, he already had had substantial exposure to the case because on the 7th October of that year (on the date to which I have already referred) he had delivered a long and careful judgement setting out the history of the matter to that date: a judgement that Curtis J found of great help to him in understanding the case and which Curtis J annexed to and incorporated in his own judgement. I, likewise, have found the Master's judgement in October of the greatest assistance.

26.	We have a note agreed between the two solicitors of the exchanges at that Case Management Conference. We do not have any judgement delivered by the Master, if indeed he did deliver any formal judgement. There is one matter in particular which is disputed that is recorded in that note and which I shall have to consider in a moment. I also bear in mind that both the formulation of the exchanges on such an occasion and the notation of them is not a formal process of the sort that is engaged in, for instance, in this court. Nonetheless, with those caveats, I have found the account of what transpired extremely illuminating.

27.	The Master pointed out that there was no substantial dispute on the documents before him that a sum of £200,000 was owing. Counsel for the defendant said that he had a counterclaim; but that had not been pleaded because it was against Mr Read personally, whereas the claimant now standing on the face of the proceedings was Training in Compliance Ltd. The claimants' counsel said that on the facts Training in Compliance was an undisclosed principal; and that point was developed to some extent. Master Eyre, however, pointed out that Mr Read could be joined as a defendant to any counterclaim, a course that the claimants' counsel, who apparently had instructions from Mr Read, indicated would not be opposed. Master Eyre further pointed out that, in those circumstances, there was no reason for not pursuing the counterclaim, if indeed it was a valid claim: a matter as to which, in the light of the history, he expressed some reserve.

28.	In my judgement, and with the benefit of the documents that I have indicated, Curtis J correctly summarised, at page two of his judgement, the state of play at the Case Management Conference. He said this:

At the Master's Case Conference the following fact are in my view clearly established:

1.	the real issue(s) in the case turned on the counterclaim.

2.	none of those issues were before the Court since the Defendant had not pleaded any of them

3.	notwithstanding the errors committed by the Claimants, this state of affairs was the Defendant's responsibility

4.	large amounts of money were in dispute

5.	one or other of the claimants agreed to have earned the money as commission, were entitled to them."

29.	Curtis J continued:

There is no doubt that the Master took a strong line with his knowledge of the case from beforehand at that Conference ."

30.	The matter was adjourned, after a number of exchanges, so that the whole position could be considered in more detail later in the day; indeed, the Master sat from 4.20 until 5.10 in order to accommodate the parties.

31.	It will be convenient if I read paragraphs 8, 9 and 10 of the note of that second hearing, because they reveal the basis upon which the Master proceeded. They read as follows:

8.	Master Eyre asked what is the minimum that the Defendant owes Mr Read. That is the principal sum notwithstanding the counterclaim. Counsel took instructions. He said it was difficult to say. They were certainly accounting deductions ... It might be approximately £150,000. Counsel really could not say.

9.	Master Eyre said that in order to protect the Claimant he proposed a substantial payment into Court. The Defendant could not be troubled by paying £2,000 if he could afford to ignore a £1m counterclaim. Counsel for the Claimants said that ... in an Affidavit, the Defendant admits £266,000."

32.	I interpose to say that that was, I think, clearly a reference to the affidavit on the summary judgement proceedings to which I have already referred.

33.	The note of the Master's hearing continues:

10.Counsel for the Defendant said that this would not take account of the substantial counterclaim. The Defendant would be £900,000 out of pocket. Master Eyre said that it would be in Court and therefore he would not have lost it. Counsel for the Defendant said it would be gravely prejudicial to the Defendant if he had to pay this money. Master Eyre said the Defendant had permission to make an application − with detailed witness statement and accounts in support − to say why the conditions, either as to amount or timing, could not be met."

34.	Commenting on that order, and I think on that actual note, though I do not know that for certain, Curtis J said this:

In the end [the Master] rejected the Claimant's application for summary judgment and decided to give the Defendant an opportunity pay £200,000 into court by 16.12.99. The inference I am entitled to draw and do draw is that the Master recognized that should he give judgment for the sum claimed, the Defendant might not be able to recover that sum or any reasonable proportion of it, whereas by the order he devised, money would be in Curt to abide the event."

35.	In my judgement, Curtis J was right to think that the Master's order had been made to protect the defendant and not, as the note of the Master's judgement or reasoning stated, to protect the claimant. The Master's formulation, or, alternatively, the note of it, was a mistake; and that is what Curtis J indeed said at the top of page 4 of his judgement. Further, that analysis of the Master's reasoning fits entirely with his reply to the defendant's counsel in paragraph 10 of the note of his judgement which I have already read.

36.	I turn to the criticisms that are made in this appeal of the Master's order and approach and of the judge's substantial upholding of it. The judge said at page 3 of his judgement:

There was no dispute in the end that the Master had the power to make the order he did. See CPR3(1)(2)m: 3(1)(3) since he refused summary judgment and adjourned the hearing, and 3 1 (5) since the Defendant had failed to plead his defence properly in February 1999. In my view he had jurisdiction under each head."

37.	That formulation reveals two possible analyses of Master Eyre's order and of Curtis J's reason for upholding it. Both of those have been explored in argument before us. The first is that the order for payment in was a measure of discipline in the course of the Master's case management, and done in order to mark his disapproval of the way in which the case had previously been conducted. That, in my view, was not the basis, or the real basis, of the order that the Master made. It is true that he drew attention to the background of the case; it is true also that he drew attention to the delay that there had been, in his view, in pleading the counterclaim; and he drew the conclusion that at least in respect of the latent delay, that is to say the matter that was actively before him, the fault had been that of those advising the defendant. That was the inference also that the judge drew. Those were relevant considerations, particularly in a context where before the Master there was an application on the part of the defendant for yet further time in which to plead a counterclaim. It was entirely appropriate that the Master should draw attention to the history; but the need for there to be a measure of (putting it at its lowest) encouragement directed to the defendant and those advising him in order to progress the case was not an isolated or free−standing decision as to discipline: it sprang out of the state of the case before the Master, that is to say a case where there was in fact only a defence pleaded that he regarded as ineffectual.

38.	The complaint before us that the Master's order was unfair or disproportionate, or, indeed (I suppose it has to be) irrational in the light of the history, therefore misses its target, because that was not why the Master made it. Saying that, however, I should not be taken as necessarily thinking that the Master, or the judge, would have been wrong in law if they had acted solely on the basis that a measure of discipline was required.

39.	The second analysis of the Master's order is that the order was effectively, as Curtis J looked upon it, in connection with an application for summary judgement. There was no properly pleaded defence. Indeed, in the Master's view, if he did not give leave for the new defence, there was no defence at all, because he regarded the original defence as being a bare denial, something that would not suffice to resist an application for judgement.

40.	The Master could have given judgement on that occasion. But, instead of doing that, in order to protect the defendant, who said he had a counterclaim, he ordered payment in, pointing out to the defendant's counsel that the money would be in Court if the defendant subsequently became entitled to it.

41.	The objections that are raised to the Master proceeding in that way are two−fold. First, that the Master could not give judgement in favour of Mr Read and, therefore, could not order a payment in in substitution of that judgement because Mr Read was not at that point a party to the action. That was put to the Master; and he would have none of it. The pleading that was before the Master on the part of the defendant asserted, as I have indicated, that the contract had been with Mr Read. When the solicitor accepted on her oath in February that money was owed in this case, that must have been an acceptance that the money was owed to Mr Read. And in any event the objection was regarded by the Master as being of a purely technical nature.

42.	Objection was taken before us to the formulation that he used, saying that the matter was technical in the medieval sense. I will pass over that; but technical it certainly was. It would have been possible to join Mr Read there and then if there had been a substantial difficulty; and Mr Read through counsel, who appears to have had instructions to act on his behalf, indicated that that course would not be opposed, provided that it was contingent upon the payment to him of the money which he claimed to be owed. Those objections therefore were rightly rejected by the Master.

43.	The second objection taken before us, though I am not clear that it was taken in such clear terms either before Curtis J or before the Master, was that if this was a summary judgement application, it ought to be treated as such, and it was out of time in the sense that 14 days were needed for such an application to be made. The answer to that is three−fold. First, as is argued (and rightly argued) in the claimants' skeleton, the need for bringing this matter on summarily has been caused by delay on the part of the defendant in pleading his case. You cannot apply to strike something out until you know what it is you are trying to strike out. Second, as Chadwick LJ pointed out in the course of argument, the application could have been made under rule 3, paragraph 4 of the Civil Procedure Rules; indeed, those rules specifically provide for such an order to be made by the court of its own motion, provided that both parties have an understanding of what is proposed. In this case it was absolutely clear what was proposed. Third, if leave was not given for the new defence, there would in any event be a default of pleading which would entitle the claimants to judgment in any event. There was nothing in this case that required argument, save argument as to the substance of the rules. The short point was that, if the counterclaim had not been pleaded, should it be taken into account? The Master said no.

44.	It is also argued that the Master's reaction for his decision to order a payment in was disproportionate. He should have granted an adjournment to enable the counterclaim to be properly pleaded. I fear I do not agree with that view at all at this point in his consideration of the matter. The Master was entirely justified in adverting to the history.

45.	When the matter came before Curtis J he did have before him a properly pleaded, or at least a fully pleaded, defence and counterclaim, something that had been missing in the pleadings that were before Master Eyre; and his order was to give permission for that defence and counterclaim to be served, subject to the payment in that had been ordered by Master Eyre. It is suggested to us that the right course for Curtis J to have taken, without that being any criticism of Master Eyre, was to have set aside the payment in once the defence and counterclaim had been filed. I am not clear that that argument was ever put to Curtis J himself; indeed, it emerged before us, I have to say, as something of a secondary point. But, even if it had been put before him, Curtis J would have been entirely justified in not acting on it. He would have had in mind that Master Eyre thought that the counterclaim was, or may have been, of an elusive nature in view of the fact that it had not been pleaded, albeit it had been set out in affidavit by a solicitor nine months previously. Secondly, the judge had well in mind, and indeed said, that under the new rules the courts are to play an active role in driving the case forward. That was his formulation. In playing that role it would have been inappropriate for either Master Eyre or Curtis J to have removed the encouragement or requirement of the money being in court just because a document had been produced, not at the eleventh but at the thirteenth hour, setting out the counterclaim.

46.	I have analysed the criticisms of Master Eyre and Curtis J as if it fell to this court to substitute its judgement for theirs. For my part, I find there is no basis upon which, if that were this court's task, I would see any reason to differ from the judgement of either of those tribunals. But, of course, that is not this court's task. This court has to consider only whether there has been an error of law on the part of either of those tribunals and, more particularly, of the judge in chambers, not whether different decisions could possibly have been made in the discretionary judgements that those courts have to make. There is nothing approaching such an error in this case.

47.	The final point is this. The defendant says that he does not have the £100,000 that is required to pay into court, and therefore the effect of the order is (to use an old−fashioned phrase, which he did not use) to drive him from the judgement seat. That point was not taken in those terms, as I understand it, before Curtis J; neither was it taken in the notice of appeal before us. Paragraph 6 of the notice of appeal complains that the order of payment into court:

...without prior warning and without any investigation of means, is disproportionate, unfair and smacks of pre−judging on no real material whatsoever".

48.	Mr Pooles QC, when asked about that passage in the notice of appeal, properly said that it was a complaint about the approach generally of Master Eyre: it was not a plea that the obligation on the court to ensure the sum paid in did not stifle the action and had not been complied with.

49.	The fact that the question of the amount does not seem to be formally taken in appealing from Curtis J is not simply a technical point. If a party is complaining of a discretionary decision in an appeal to a court such as the Court of Appeal that has only very limited power to substitute its own discretion for that of the lower court, it cannot base its complaint on something that the lower court was not formally invited to consider

50.	The issue of the amount does, however, arise in the second set of proceedings, the appeal from Judge Mackay, for which leave is required. Subject to an argument made by Mr Pooles to which I shall come, this is a very short point. The principle, at least before the Civil Procedure Rules were introduced, was that a financial order, for instance a payment in, should not be paid if the amount of it would stifle what was otherwise an arguable action or defence. That principle was first recognised in the case of Allen v Jambo Holdings [1980] 1 WLR 1252, and it is further elucidated in Yorke (M.V.) Motors v Edwards [1982] 1 WLR, in particular at page 449. That guidance established that the burden of proof is on the person who says he cannot meet the financial conditions. The test is impossibility and not just difficulty. That was made clear in the judgement of Brandon LJ in this court in Yorke Motors, as specifically approved by Lord Diplock in that same case.

51.	Quite apart from that principle, the passage that I have already read from the order of Master Eyre, who granted the liberty to apply, made it clear that the Master would expect full information, including bank accounts, of the stated finances. A series of pieces of evidence were put before Master Eyre and, further, before Judge Mackay in the second application. The judge directed himself in terms of Yorke Motors that I have already referred to. He then said this:

I am quite satisfied here that there has been in this case from the defendant a complete absence of full and frank disclosure. I am satisfied, and I may say I am not just satisfied on the balance of probabilities I am almost certain that evidence has had to be dragged out of the defendant. I regard the figure of 100,000 as well within his capability of obtaining. It may well be that he does not have 100,000 sitting neatly in a bank account somewhere; very few people have, and indeed very few wealthy people have because wealthy people have investments because you get money back from the investments whereas you only get a small amount if it is in a bank account. I consider that the defendant can well meet this sum."

52.	It is not appropriate in the Court of Appeal to conduct a long investigation to see whether the judge was right or wrong. A very substantial skeleton has been filed on behalf of the claimants severely criticising the defendant's evidence, which I do not however need to go into. I do not need to go into it because the judge in this case applied the correct test (Yorke Motors) and took a view on the evidence. The case comes nowhere near to satisfying the requirements of section 55 that have to be fulfilled before leave could be granted to appeal to this court.

53.	Mr Pooles, I think, recognised that that was so, and did not seek to disturb the judge's ruling or indeed to seek leave to appeal against it on the basis that I have just indicated. He rather said that, with the introduction of the Civil Procedure Rules, the Yorke Motors approach was no longer appropriate. The court had to take a broader, or possibly a less rigidly divided, approach to a question such as this and should ask itself in broad general terms whether the amount of the order was proportionate to the end that it sought to serve. In that inquiry it would be for the person seeking the order to bear the burden and therefore to demonstrate the financial situation of the other side: rather than, as under Yorke Motors, for the defendant to bear that burden.

54.	I have two comments on that formulation. First of all, even if one were to apply that test, I do not see how it helps in this case. If the question is proportionality, the sum £200,000 was indeed directly proportionate to that which it was seen by the judge as being required to meet. Curtis J's reduction to £100,000 was in fact a step to accommodate the interests of the defendant. But, more radically, I cannot agree that anything in the Civil Procedure Rules or in the present attitude to litigation in any way undermines the principle set out in Yorke Motors. That principle is clear and salutary. It depends on the pre−condition that a payment in has been ordered for proper reasons, that is to say the court has first of all to be satisfied that this is a case for payment in, most usually in a case of summary judgement, but also in slightly more elusive cases such as the present. If, but only if, the payment ordered is prima facie proper, then Yorke Motors and Allen v Jambo Holdings say that it is open to the paying party to seek to avoid the rule that otherwise would apply to him if he can demonstrate, first of all, that he cannot pay, or cannot pay the full amount, and, secondly, that he has sufficient prospects of success in his defence that the court should not stop the case going on simply because of default payment. In other words, the jurisdiction applies to a case where the paying party comes to the court in mercy. That distinction is equally salutary whatever the reason may be for the payment order, be it under the Rules of the Supreme Court or be it under the new regime. This is no reason for not applying the Yorke Motors jurisdiction in this case. The judge was right to do so. It does not appear that in the court below anybody told him that he should not do it; and there is nothing in the argument put by Mr Pooles, shortly and clearly put though it was, to suggest that we are in a new regime.

55.	I therefore would dismiss the appeal from Curtis J and I would not grant permission for an appeal to be brought from the judgement of Judge Mackay.

56.	There is one technical point that I should mention which was pointed out by my Lord, Chadwick LJ, in the course of argument, that the order of Curtis J as drawn is not correct because it both dismisses the appeal from Master Eyre's order that required the payment in of the sum of £200,000 and also separately orders a payment in in the sum of £100,000; apparently, on its face, amounting to £300,000 in total. I mention that as a footnote. No doubt somebody can revise that order so that it coheres with the judgement that Curtis J in fact delivered.

57.	LORD JUSTICE CHADWICK: The order of 14th January 2000, in respect of which leave to appeal was given by this Court (Robert Walker LJ) on 9th March 2000, does not properly reflect the decision reached by Curtis J as it appears from the transcript of the judgment which he delivered a few days later.

58.	The order as sealed has four operative parts:

(1)	it dismisses the defendant's appeal against the order of Master Eyre made on 25th November 1999 by which it had been ordered that the defendant pay £200,000 into court not later than 16th December 1999;

(2)	it requires the defendant to pay £100,000 into court within 14 days as a condition of serving an amended pleading;

(3)	it gives leave to the defendant to apply for a variation of the amount to be paid in; and (4)it orders that the defendant pay the costs of the appeal to the judge in the sum of £12,500.
59.	It is clear, however, from the judgment delivered by Curtis J on the 19th January 2000, that what he had in mind was that the sum of £200,000 which the Master had ordered should be paid into court should be reduced to £100,000. The true position, as was very properly accepted by the respondents without hesitation, is that the second limb of the order of 14th January 2000 is in substitution for the order for payment of £200,000 which the Master had made on 25th November 1999; and that the requirement to pay money into court was imposed as a condition of serving an amended defence.

60.	For my part, I do not regard the difference between what Curtis J inteded and the form of the order as drawn as a mere technicality. There had been a material change in circumstances between the hearing before the Master on 25th November 1999 and the hearing before the judge on 14th January 2000; and, to my mind, the order which Curtis J intended to make recognised that change.

61.	At the hearing on 25th November 1999, the defendant was seeking leave to amend his defence so as to substitute for an existing pleading the document, described as a re−amended defence, which appears at tab 15 in the appeal bundle. The application was opposed on the ground that the proposed re−amended defence disclosed no reasonable ground for defending the claim. The Master accepted that criticism. He refused permission to amend, as appears from paragraph 2(a) of the order which he made on that day. But he did not proceed to give judgment for the claimant, as he could have done in the absence of any pleaded defence which showed reasonable grounds for defending the claim −see CPR 3.4 (2)(a) and 3.4 (3). What he did was to adjourn the Case Management Conference which was then before him to a date to be fixed in the future. He did that because it was urged on him by counsel for the defendant that the defendant wished to advance a counterclaim. He gave an opportunity for that counterclaim to be advanced; but, having regard to the history of the matter − and in particular to the fact that no pleaded counterclaim had yet been put before the court or disclosed to the claimant − he thought it right to do so on terms as to payment in. That was plainly a condition which he had power to impose − see CPR 3.1 (2)m and3.1 (3)(a). For my part, I would not criticise the Master's decision to exercise the power in the way that he did.

62.	When the appeal against Master Eyre's order came before Curtis J, matters had moved on. Neither £200,000, nor any other sum, had been paid into court. But a further draft amended pleading had been produced, and this did raise and plead a counterclaim which could not be rejected as disclosing no cause of action on its face. The document is at tab 2(1) in the appeal bundle before us. The judge was entitled to look at the matter afresh in the light of that development. He took the view that leave to introduce the counterclaim by way of amendment should be granted on terms of a payment in of £100,000. Again, that was an order which, plainly, the judge had jurisdiction to make − see CPR 3.1 (3). The judge made that order in the exercise of his discretion for the reasons which he gave in the judgment which he delivered on the 19th January. It is not for this court to interfere with that exercise of discretion.

63.	For those reasons, I too would dismiss the appeal; but subject to the appropriate variation of the order of the 14th January, by removing the first paragraph. I would also dismiss the application for leave for permission to appeal against the order made by His Honour Judge Mackay, for the reasons which my Lord Buxton LJ has given.

64.	LORD JUSTICE PETER GIBSON: I also agree. The only point on which I would add anything is one which featured prominently in the submissions of Mr Pooles QC for the appellant, that the order for payment in of £200,000, even as reduced by Curtis J to £100,000, was disproportionate for the reason he submitted, that, although the behaviour of the solicitors for the defendants at that time was not blameless, it was wrong to penalise Mr Dewse, the defendant, himself for the conduct of his solicitors.

65.	Mr Pooles characterised the order as being punitive. Mr Pooles submitted that under the Civil Procedure Rules the court must distinguish between a party and his lawyers in order to deal with a case justly as required by the overriding objective. This was not the position, Mr Pooles accepted, under the Rules of the Supreme Court. But he said that the introduction of the Civil Procedure Rules had changed that and that a client should not be penalised because of the faults of his lawyers.

66.	There is no doubt that the Civil Procedure Rules give the court greater powers, enabling the court to choose between a wider range of remedies and sanctions, and that in the exercise of its powers the court must have regard to the overriding objective which recognises the principle of proportionality. The Civil Procedure Rules relate to the making of a wasted costs order against legal representatives, as had the Rules of the Supreme Court; but I see no justification for Mr Pooles' submissions on the Civil Procedure Rules requiring the court to draw distinctions between a party and his legal representatives. Of course, if there is evidence put before the court that a party was not consulted and did not give his consent to what the legal representatives had done in his name, the court may have regard to that as a fact, though it does not follow that that would necessarily, or even probably, lead to a limited order against the legal representatives. It seems to me that, in general, the action or inaction of a party's legal representatives must be treated under the Civil Procedure Rules as the action or inaction of the party himself. So far as the other party is concerned, it matters not what input the party himself has made into what the legal representatives have done or have not done. The other party is affected in the same way; and dealing with a case justly involves dealing with the other party justly. It would not in general be desirable that the time of the court should be taken up in considering separately the conduct of the legal representatives from that which the party himself must be treated as knowing, or encouraging, or permitting. However, in the present case there is in fact no evidence at all as to what the defendant knew of the action or inaction on his behalf taken by those representing him. In my judgment, therefore, in this case there is even less scope for making an order against the legal representatives which would leave the defendant himself without any sanction against them.

67.	I agree with Buxton LJ and Chadwick LJ, for the reasons which they have given, that there is no scope for interfering with the exercise of discretion by the courts below. I too would dismiss this appeal from Curtis J and the application for permission to appeal from the order of His Honour Judge Mackay.

Order: Appeal dismissed with costs subject to detailed assessment. Payment on account of £12,5000 within 14 days.