Case No: B2/2008/1885
B2/2008/1886
B2/2008/2588
Neutral Citation Number: [2009] EWCA Civ 946
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(MR JUSTICE OPENSHAW)
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: Friday, 24th July 2009

Before:

LORD JUSTICE MUMMERY
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Between:

	WALLACE & ANR	
Respondents/
Appellants	
	- and -		
	
CROSSLEY & ANR	

Appellants/
Respondents	

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(DAR Transcript of 
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THE APPELLANTS APPEARED IN PERSON.

Mr L Jones (instructed by MFG Solicitors) appeared on behalf of the Respondents.

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Costs Judgment

Lord Justice Mummery:

1.	There are before the court three applications for permission to appeal which I adjourned from 26 June 2009.  There was a fourth application which was due to be heard by the Court of Appeal on 10 July.  That failed, with the consequence that these cases have come back for hearing.

2.	I expressed the wish on the last occasion, when Mr and Mrs Crossley made their applications in person and the proposed respondents to the appeals were represented by Mr Jones, that I hoped that an adjournment would enable the parties to come to some agreement about what is in essence an argument about the outstanding costs of litigation which has been going on for a number of years between Mr and Mrs Crossley and Mr Jones’s clients, Mr and Mrs Wallace.  I indicated that I had read the papers in the case and formed a provisional view that these applications for permission were unlikely to be granted.  They had already been considered on paper by Arden LJ, who had refused them.  What was before me were renewed applications on an oral hearing, and I pointed out the number of difficulties that there were in the way of granting permission for yet further hearings of the various aspects of the litigation.

3.	Unfortunately the adjournment has not produced a settlement.  I was rather hopeful that there would be, in the light of an open offer that had been made by Mr and Mrs Crossley on 24 June 2009.  But although, as Mr Crossley told me, a total of £165,277 has been paid by them so far in costs, there remains an outstanding balance, some of which is secured by the charging order.

4.	When the matter came back Mr Jones provided Mr and Mrs Crossley and the court with a document headed “Update”, which filled in the court with what had happened between 26 June and today.  It referred to the fact that Mr and Mrs Crossley were being given further time to settle the costs, and it was accepted that they had made payments on account, but submitted that there were still substantial costs outstanding which were long overdue.  The note refers to the hearing of the charging order case for which Arden LJ had given permission, but the appeal was unsuccessful on 10 July when it was heard by Sullivan LJ and Sir John Chadwick.  The updating also refers to the making of an extended civil restraint order which did, however, permit a final application to be made by Mr and Mrs Crossley.  They have referred me this morning to an application that they have issued in the Worcester County Court, dated 22 July, asking for a stay on the order of sale of their house at Kings End Cottage.  That refers to the recent lump sum payments that they have made in relation to the costs, which are secured by the charging order.

5.	In his note Mr Jones also indicated that he would not be asking for an order for costs in respect of today’s adjourned hearing, but he was seeking an order for costs in relation to the hearing on 26 June, and in respect of that he has served a schedule showing how today’s items total £3,163.80.  

6.	Between them Mr and Mrs Crossley have presented their applications this morning by making points orally in addition to the detailed written submissions that had already been submitted to the court and which I have read.  When I pointed out to them that I was surprised that there was the prospect of yet further litigation and further costs being incurred, all in relation to the issues between them and the Wallaces about costs for the past, Mr and Mrs Crossley asked if they could confer for a moment to decide whether they wished to discontinue these applications or wished to go on with them.  I explained to them that it was a matter for them.  If they discontinued, that was the end of the matter and I would not be giving a decision on the applications.  If they proceeded with them, as they were entitled to, then I would give a decision, though I again indicated that it was not likely to be favourable.  I also pointed out that they could choose to pursue one or more of the applications and drop others.  It was entirely up to them what they wished to do.  After conferring they decided that they would wish to proceed with the applications and obtain my ruling on them.  So I now give my rulings on the basis of the written submissions which were made for the previous hearing and the oral submissions which I have heard today.

7.	The few facts I need to mention by way of background to this very unfortunate, long running dispute are that Mr and Mrs Crossley live in Kings End Cottage, Powick in Worcestershire, and they were sued by Mr and Mrs Wallace, who live in Pond House nearby, on the complaint that sewage was escaping from a septic tank from the Crossleys’ land onto the Wallaces’ land, in particular their pond.  Those simple facts gave rise to substantial litigation.  On 4 May 2005 HHJ Geddes held that there was a nuisance by reason of the escape of the sewage.  He granted an injunction and ordered the Crossleys to pay £50,000 on account of the Wallaces’ costs, and they were to do so by 18 July.  But a lot of what has gone on since has been about two things: one about what, if any, orders ought to be made against the Crossleys while the new sewage system was being installed in order to remove the nuisance, and about the costs that were incurred in the numerous court applications.  On 25 May 2007 the District Judge made a charging order over the Crossleys’ property for over £133,000.  There were also other applications before the County Court in relation to attempts by the Wallaces to enforce their judgment by means of proceedings for contempt of court and the issue of a writ of sequestration.

8.	On 16 June 2008 HHJ Geddes dismissed the committal proceedings and the attempted sequestration and he also discharged the existing injunction, all that being on the basis that the new sewage works had been completed.  He made an order for costs against the Crossleys and directed an interim payment of £15,000 to be paid within seven days.  That order was made, and on 2 July 2008 he refused to grant permission to appeal against it.

9.	This application arises out of the Crossleys’ attempt to obtain permission to appeal.  In this court the application has been given the number 1885.  The application was first of all heard by Arden LJ on the papers, and although she granted an extension of time, which was required, she refused permission to appeal and refused a stay.

10.	In their written submissions Mr and Mrs Crossley complained that it was a breach of natural justice for them to be ordered to pay £15,000 on account of the Wallaces’ costs, when the Wallaces’ applications to the court had in fact failed.  The Crossleys had already had to pay the costs of the new sewage treatment system, which were in the region of £20,000, and they had lost the use of their property for about two years.  So it was said it was unjust to make the order for costs against them and the judge had not exercised his discretion properly in making that order because he had not taken account of the number of relevant matters, in particular their financial position and circumstances, and it had not taken account of the monthly payments that they had been making on account of costs since June 2005.

11.	This morning Mr Crossley has added a number of other points relating to the judge’s defective exercise of his discretion.  He said that the judge had failed to take into account the extenuating circumstances that existed in their favour. He reminded me that the Wallaces’ attempt at sequestration had been dismissed, and he and Mrs Crossley emphasised the difficulties there were encountered in the installation of the new sewage treatment plant.  There had been difficulties in doing it timeously because, for example, of the various events which occurred at around that time.  I was referred in particular to the difficulties caused by the flooding that occurred in 2007 as covered by various newspaper reports.  I have been supplied with copies of them.  There was also a complaint that the costs were unnecessarily increased by the Wallaces in the making of repeated applications to the court.  I was referred to correspondence which had taken place in 2007 involving both the Wallaces and the neighbours of the Crossleys and Wallaces, and there had been attempts to mediate various points.  They said the judge had not taken any of these relevant circumstances into account and therefore he had not exercised his discretion properly and permission to appeal ought to be granted in relation to the £15,000.

12.	Now I should indicate that in any appeal against an order for costs the applicant faces a serious difficulty.  Costs are quite rightly given to the discretion of the judge who decided the case in which the costs were incurred.  He knows more about it than anyone else ever will and he knows all the different factors that can be weighed one way or the other in deciding who should pay the costs entirely or partly and so on.  Appeals to this court can only be brought against a discretion if it is shown there is a real prospect of persuading a full court that the judge has made an error in legal principle or for some other reason has made an order that is plainly wrong.  He must have misunderstood the facts of the case or what he was doing or overlooked something that was relevant or taken into account something that was not relevant.  Those are the sort of circumstances in which the court here would grant permission to appeal.  

13.	This court is naturally reluctant to grant permission to appeal about costs when the effect of granting a permission will almost inevitably lead to the incurring of yet further costs.  On this point I agree with Arden LJ that there is no real prospect of the appeal succeeding.  Both the decision as to who should pay the costs and the decision of whether there should be an interim payment and for how much are within the discretion of the judge.  It has got to be shown the orders were perversely made, and as Arden LJ commented the fact that the writs of sequestration and committal were ultimately dismissed did not mean that the proceedings by the Wallaces had not been properly brought.  The time for compliance with the judge’s order had expired before the application had been made by the Wallaces for the sequestration writ.  She said that the restrictions that there were on the financial resources of the Crossleys was not a reason for refusing to make orders that the judge considered the Wallaces were properly entitled to.

14.	I do not think that even the additional matters that have been put before me by Mr Crossley affect the exercise of the judge’s discretion.  Another judge might have exercised a discretion differently.  He might not have made an interim award, he might have made a interim award of a lesser amount than £15,000, he might have made one for a bigger amount.  They were all matters of discretion and it is not open to me simply to give permission on the basis that the Court of Appeal might think that the judge should have made a different order.  It has to be shown that he was legally wrong in the order that he made, and I do not think that those points which have been made and which I have attempted to summarise establish a real prospect of the court being persuaded to substitute a different order than the one that was made by HHJ Geddes, who had had a long involvement in the case, knowing such relevant things as the basis of the dispute, the conduct of the parties and so on.

15.	For those reasons I would refuse permission to appeal in that case.  I think that the appeal would just involve the Crossleys in further costs because they would lose it and be ordered to pay those costs.  I would not be doing them any favours to allow that to go on and it would not be fair to the Wallaces, who have not been paid what costs have already been incurred.

16.	The second application for permission, which has been given the number 1886 in this court, was the subject of submissions this morning by Mrs Crossley.  I also have written submissions that were submitted for the earlier hearing.  The position on this is that on 7 December 2006 there was a consent order that the Crossleys’ property at Kings End Cottage would be kept vacant.  On 19 October 2007 an order was made that the Crossleys keep their house empty until the new sewage treatment system was in operation.  They wish to appeal against this order.  Arden LJ refused it and also refused an extension of time, saying that the application was some 20 months out of time, and she refused a stay.

17.	The points that were made in support of the application for permission on the renewed hearing were these.  It is said that there was an earlier order which they were referred to as a consent order was not in fact a proper consent order, it was made really out of fear on the part of the Crossleys.  Mrs Crossley told me about the effect that the Wallaces’ attempts at contempt and sequestration had aroused in her, causing her great stress and on one occasion causing her to faint in court and be taken to hospital.  She said that I should not underestimate how much anxiety had been caused by the Wallaces taking these steps which they had in the end not proceeded with, and she said that she thought that she and her husband had done all they could to stop the nuisance. It was disproportionate, she said, for them to be ordered to be stopped from using their house at 19 October 2007.  There had been a breach of their Article 8 rights and to their property rights contrary to Article 1 of the protocol to the European Convention because they had been prevented from using their own home.

18.	I was also reminded by Mrs Crossley about the attempts that had been made to settle the matter by mediation and that this should have been a factor in deciding that it was not necessary to continue excluding them from their own property.  

19.	Now Arden LJ, as I have said, thought the matter was so long out of time that the application could not even be brought, because it was not appropriate to grant an extension, and I find it difficult to disagree about that.  20 months is a long time to wait before applying to this court for permission, particularly when no reason is given for quite a substantial part of that delay.  She also relied on the fact that there had been a consent order at an earlier stage on 7 December 2006, and I have to say that, as a matter of law, that was a consent order even if it was made when Mr and Mrs Crossley were in a state of fear or anxiety about what the consequences were going to be of the Wallaces’ attempts to obtain sequestration and committal.  In my judgment no good reason has really been made out for the delay.  Even if an extension of time were granted I do not think that there is a real prospect of the appeal succeeding.  The order of 7 December was a consent order as far as the law is concerned.  It would be very difficult to persuade the court that the judge was wrong to require the property to be kept empty until the new sewage treatment was in commission so as to prevent the seepage of further sewage from the Crossleys’ property onto the Wallaces.  

20.	For those reasons I refuse permission to appeal in application number 1886.

21.	The third application faces a different kind of difficulty.  This is number 2588, and is a case in which the Crossleys are the claimants in proceedings for defamation against the Wallaces.  The proceedings for defamation arise out of an article that was published about the litigation in the local newspaper, the Worcester News, and, as a result of that, defamation proceedings were begun by the Crossleys against the Worcester News, Newsquest Limited and the Wallaces.  I am not concerned with the proceedings against the Worcester News.  Mrs Crossley told me that in fact there had been a separate hearing in respect of that case.  It is not an application that is before me.  What I am concerned with is the Wallaces involvement in the litigation.  They applied to the court to strike out the claim for defamation against them.  On 15 November 2007 Master Miller delivered a substantial judgment for his order that the defamation claim should be struck out. Mr and Mrs Crossley then appealed and on 10 October 2008 Oppenshaw J dismissed that appeal.  Permission was then sought from this court and on 24 April 2009 Arden LJ refused permission, refused a stay and refused to grant an extension of time.  The real difficulty which I have explained to Mr and Mrs Crossley that is faced by them on this application is that this is a second appeal, unlike the previous ones where the first level of appeal was to this court.  On the strike-out the first level appeal was to the High Court, and under Part 52 of the Civil Procedure Rules, a second appeal can only be brought to this court with permission, which is only to be granted if the proposed appeal raises an important point of general principle or practice or there is some other compelling reason for granting permission.  

22.	The question which Mrs Crossley relies on as raising a general point relates to the question of malice.  She referred me to attempts that had been made to obtain health records and to track the movements of her and her husband.  She took particular exception to the amount of costs that were being claimed which were in the region of £40,000.  That really is the purpose of seeking permission to appeal in this case.  On this she referred me to the attempts which had been made to obtain a mediated settlement with the Wallaces and she also referred to the fact that she had no idea as to the enormous sum of costs that they were likely to have claimed against them.  She emphasised that they would far have preferred to settle this and they had made sincere attempts and efforts to obtain a mediated solution to this case.  I certainly agree that it would have been better to mediate the dispute.  I think it also may have been better never even to bring this case in the first place.  Libel proceedings are notoriously costly and complex and, in my experience, usually not worth bringing.  

23.	The real dispute here between the Wallaces and the Crossleys was about the sewage, not about articles in newspapers, and it seems that in this case a lot of time and money has been spent on legal proceedings which to me do not have any obvious justification.  As Arden LJ says in relation to the application and the test that this court must apply, the Master and the judge gave full detailed judgments on why they did not think that this case should be allowed to proceed and should be struck out.  The judge had concluded that malice was not a relevant factor, there were only three sentences in the article which could be imputed to the Wallaces and the sting in the part of the article that emanated from the Wallaces was no more than that the Crossleys’ sewage system was ineffective and those points had been decided against them by HHJ Geddes at the trial. 

24.	I am of the same view.  It seems to me that no good purpose would be served by allowing this case to go on because it has no real prospect of succeeding, either in relation to the striking out order or in relation to the costs which have been incurred.  The costs follow the event, and if the amount of costs is challenged that can be resolved on detailed assessment of them.  

25.	I would refuse leave to appeal in this case on the grounds that there is no real prospect of the appeal succeeding and moreover the requirement that some important point of principle or practice involved is not satisfied.  This is a decision fully reasoned by two judges below on the particular facts of this case as demonstrated in the terms of the article in the context of the history of this litigation.

26.	I therefore refuse permission to appeal in number 2588.  So the upshot is that all of these outstanding adjourned renewed applications for permission are dismissed.

27.	That only leaves the question about the payment of costs for the last hearing.   The matter was adjourned, as I have explained.   Mr Jones has made it clear he is not seeking any order for costs today, which was a further hearing, but he does seek an order for the sum of £3,163.80 in respect of the last hearing.  

28.	Following my dismissal of the three applications for permission a question has arisen about the costs of the initial hearing.  As I indicated in my judgment, Mr Jones, who is counsel for the Wallaces, appeared both on the earlier occasion on 26 June and has appeared today.  On the first occasion he appeared following a request which was granted by me on 10 June that the Wallaces’ counsel should be permitted to attend the hearing.  I emphasise that the attendance was not either at the direction or request of the court.  Permission was given having been quite rightly sought on the basis that applications for permission to appeal are normally made ex parte by the applicants without any requirement for the respondent to the proposed appeal to do anything, and the purpose of the ex parte procedure is to eliminate unnecessary costs.

29.	Mr Jones very helpfully put before the court on the last occasion a bundle of documents and a skeleton argument, dated 18 June 2009, which made various representations in respect of the applications for permission.  It set out the background and then made points on the details of the particular applications.  I do not hesitate to say it was a helpful document.

30.	He accepted quite rightly that it was unusual for a respondent to put before the court at the application stage a skeleton covering the points.  If permission was not granted the respondent would never be bothered about the proposed appeal, and if it was granted then the respondent would only incur costs in relating to fighting the appeal.  He said, however, that having regard to the history of this whole matter it was important to bring to the court a number of points which might have a bearing on the decision on the applications.  He said it was of serious concern to his client that the court should not be fully apprised of all the relevant matters in what was a disturbing case underlying this round of applications. 

31.	 As I have also indicated in my judgment that Mr Jones made it clear in his update note that he was not seeking any costs for today it was simply the costs for the earlier first hearing of the renewed applications.  In the schedule of costs there are various items timed and costed in relation to the consideration of the applications for permission, and the largest items of that are in relation to his fee including the skeleton argument which had been prepared between him and his instructing solicitors.

32.	I pointed out to Mr Jones that it would have been possible for his client simply to have sent in a skeleton argument or even just a letter to the court saying what points they wished the court to have in mind when considering the applications.  I do not think it was necessary for him to attend the hearing and as Mr and Mrs Crossley have pointed out, I have decided the applications simply on the basis of what they have put before the court and not on the basis of any submissions, oral or in writing, which have been put before me by the Wallaces.

33.	It would be incorrect to say I had not received any help from Mr Jones. His update itself was helpful to fill me in on what had happened last time, and I had read his skeleton argument which did helpfully highlight important parts of the detail.  I think it would be wrong for me to grant the application for all the costs which have been incurred, and, as regards the costs which have been relevant to the written submission, I have formed the view that they were taken really to protect the Wallaces’ interests.  It was in their interests that permission should not be given.  They were not really items of expenditure involved in contesting what are ex parte applications.  

34.	On balance I think that the right order to make in relation to the Wallaces’ costs on 26 June is that I should make no order.  It seems to me that it would not be fair to expect the Crossleys to pay what the court was not requesting or requiring, even though the court had found what was supplied was of assistance.  I decline to make an order for costs in relation to the 26 June hearing.

Order: Applications refused