Fabb & Ors v Peters & Ors [2013] EWHC 296 (Ch) (18 January 2013)

Neutral Citation Number: [2013] EWHC 296 (Ch) Claim No. 2BM30135 IN THE HIGH COURT OF JUSTICE CHANCERY DIVISION BIRMINGHAM DISTRICT REGISTRY Civil Justice Centre The Priory Courts 33 Bull Street Birmingham B4 6DS 18th January 2013 B e f o r e : HIS HONOUR JUDGE PURLE QC Sitting as a Judge of the High Court ____________________ Between: (1) DAVID LAWRENCE FABB (2) ALPA INDUSTRIES LIMITED (3) CKE ENGINEERING LIMITED Claimants -v- (1) ANDREW PHILIP PETERS (2) WILLIAM KENNETH DAWSON (3) GREIG MITCHELL (4) DELOITTE LLP Defendants ____________________ Transcribed from the Official Tape Recording by Apple Transcription Limited Suite 104, Kingfisher Business Centre, Burnley Road, Rawtenstall, Lancashire BB4 8ES Telephone: 0845 604 5642 – Fax: 01706 870838 ____________________ Counsel for the Claimants: MISS KATHERINE HALLETT instructed by Follett Stock Counsel for the Defendants (other than the Third Defendant): MR DANIEL MARGOLIN instructed by DLA Piper The Third Defendant did not appear and was not represented ____________________ HTML VERSION OF JUDGMENT ____________________ Crown Copyright © THE JUDGE: This is an application to strike out proceedings, or for summary judgment, brought by the First, Second and Fourth Defendants against the Claimants, David Lawrence Fabb ("Mr Fabb") and two companies in which he or his daughter are interested. Mr Fabb subsequently became bankrupt after the principal events with which these proceedings are concerned occurred. The Third Claimant, CKE Engineering Limited ("CKE"), was, at the time these proceedings commenced, a struck-off company, which has subsequently been restored to the register. The Second Claimant, Alpa Industries Limited ("Alpa") is an associated company. The Third Defendant is nor concerned with this application, and I can ignore him. In the remainder of this judgment, therefore, when referring to "the Defendants", I should be taken as referring to the First, Second and Fourth Defendants. The First and Second Defendants are members of the Fourth Defendant, and are sued for alleged deficiencies in their conduct of an administration. I shall not draw any distinction between them when referring to "the Defendants". The particulars of claim are homemade. I say that not by way of criticism – though there is certainly scope for real criticism - but because it makes them difficult to follow. In essence, the complaint is that the Defendants, following their appointments as administrators of a company called David Fabb (Holdings) Limited ("Holdings") made extravagant, unjustified claims, culminating in their alleging indebtedness owed by CKE to Holdings far greater than the true amount. The claims were made in a report to creditors on 23 rd December 2005, which was also circulated to Barclays Bank. The report alleged ownership by Holdings of plant and machinery which the Defendants subsequently came to accept was to a very large extent not Holdings' at all because hire purchase agreements relating to the plant and machinery had been novated in favour of CKE. As pleaded in the particulars of claim as they presently stand, the allegation looks very much like an allegation of malicious falsehood, but that would face obvious problems because of the short limitation period which applies to defamation claims (including malicious falsehood). Though the period can be extended with the permission of the court, that has not been sought and there are no apparent grounds which would justify such an extension. Accordingly, the claim is now put in three different ways, the Claimants being Mr Fabb, CKE and Alpa. Alpa has at all material times been dormant. It was intended at the time of the events in question that Alpa would be used to effect an acquisition or merger of or with a company called Secal Limited. Those plans were thwarted by, it is said, the wrongful claims made to creditors and the bank concerning the previously novated equipment. This was then followed up by proceedings which initially, and for some considerable time thereafter, asserted the same claims to their full extent. Eventually, those proceedings came on for trial in October 2008 before David Richards J. By that time the proceedings had been amended so that the bulk of the claim made by the Defendants was abandoned. Judgment was handed down in January 2009. In May 2009 judgment was entered against Mr Fabb on a loan account for £53,000-odd and also in respect of a conversion claim for another £35,000-odd. There was judgment also against Michelle Lewis Howell, also known as Michelle Lewis Fabb, for £50,000, with which I am not concerned, and for £70,000 as well. There were also interest claims, which were allowed in substantial sums. Those liabilities were very much smaller than the liabilities originally asserted by the Defendants. Over 96 percent of the original claim was, effectively, abandoned. Nonetheless, there was left this relatively small residue which still led to a judgment in a significant sum. There were also costs orders, but the costs have not yet been finally assessed. It was as a result of that order, so far as it affected Mr Fabb, that he was subsequently made bankrupt. The effect of that bankruptcy was that any cause of action that he had (with immaterial exceptions) became vested in his trustee. Miss Hallett, who appears for the Claimants, accepts that that is so in respect of all the causes of action now asserted by Mr Fabb. Those causes of action are based upon negligence, misfeasance of the Defendants as administrators of Holdings and, effectively, malicious prosecution of the earlier proceedings as regards the 96 percent claim (which I shall call for it for short, though it is in fact slightly more than 96 percent). It is said that by making the extravagant 96 percent claim and circulating their allegations widely amongst Barclays Bank and others, the Defendants assumed a duty of care or entered into a special relationship with the Claimants giving rise to a duty of care. It seems to me that that claim is quite hopeless. The real complaint is one of malicious falsehood, as I have said, and it is not in my judgment open to someone who might timeously have brought a malicious falsehood claim to say that the falsehood complained of gives rise to some sort of special relationship or assumption of responsibility giving rise to a duty of care, having the magical result of producing a six year rather than a one year period of limitation. The simple fact is that the Defendants made an adverse claim and there was nothing in their behaviour which put them into any special position different from any other adverse claimant. The idea that one claimant, by asserting a claim, comes under or assumes a duty of care to the other side, is obviously unsound, and would, if correct, transform the litigation landscape unrecognisably. This conclusion is also supported, if not compelled, by the decision of the Court of Appeal in Kyrris v Oldham [2004] BCLC 305 in which unsecured creditors sought to bring a claim for negligence against administrators. The Court of Appeal, for reasons which seem to me to apply just as much in this case as in that case, refused to accept, whether on the basis of assumption of responsibility, or special relationship, that any duty of care arose. Particular reliance was also placed on the earlier Court of Appeal authority of Peskin v Anderson [2001] 1 BCLC 372 , precluding, in the absence of special circumstances, a general common law duty to creditors. In the course of its judgment, the court also highlighted the statutory remedy provided by section 212 of the Insolvency Act 1986. Likewise, in the present case, paragraph 75 of Schedule B1 of the Insolvency Act 1986, which provides a class remedy in respect of any misfeasance or breach of duty, militates against duties being owed to individual creditors, especially as this might put them ahead of other class members. There is one other factor to be considered concerning Alpa's position in the negligence claim. Alpa was merely the proposed vehicle for the Secal acquisition or merger, and was never factually within the contemplation of the Defendants. Nor was Alpa mentioned by the Defendants in any of their reports to creditors and the bank, nor was it a party to the proceedings in which the 96 percent claim was advanced. For this reason alone, I can see not even the scintilla of a claim that can be advanced by Alpa as such, whether for negligence or any other cause of action. In conclusion, it seems to me that, insofar as these claims are based upon any duty or duties of care, there are no prospects of success whatsoever and the claims should be struck out and judgment entered for the Defendants accordingly. So far as the misfeasance claim is concerned, this is under paragraph 75 of Schedule B1 of the Insolvency Act 1986, and is based wholly if not exclusively upon the wrongful pursuit of the 96 percent claim. This is asserted by Mr Fabb alone in his capacity as (supposedly) a creditor and shareholder of Holdings. As things stand, however, any claim in either of such capacities is vested in Mr Fabb's trustee. Since these proceedings were commenced, His Honour Judge Barker QC, on 26 th October last year, directed Mr Fabb's trustee in bankruptcy, conditionally upon payment of £10,000 (which has still to be paid but which I am told Mr Fabb's solicitors have just received for transmission to the trustee), to assign to Mr Fabb the various claims listed in the schedule, including any claim he might have against the present Defendants, as particularised in these proceedings. I am prepared to assume that that includes the misfeasance claim, as the reference to particularisation seems to me to be descriptive and not a limitation on the generality of the assignment, and the facts pleaded (albeit discursively) in the present particulars of claim could be said to support an allegation of misfeasance. The misfeasance claim is not spelt out in as many words in those particulars of claim. However, there are before the court draft amended particulars of claim, settled by counsel, which it is said will form the basis of the proceedings if they continue, and these do articulate a misfeasance claim. There is a fundamental objection to the misfeasance proceedings, notwithstanding the proposed assignment. Proceedings under paragraph 75 can only (so far as presently relevant) be brought by a shareholder or creditor. Mr Fabb is neither of those things, and nor will he be either of those things even if the assignment takes place. Any interest he may have had in the shares of Holdings is now vested in his trustee. Likewise, any indebtedness formerly due to him is now vested in his trustee. The order of Judge Barker does not affect or change the trustee's status as shareholder or creditor. The trustee has not been ordered to transfer any shares (which I shall assume had, as I was told by Miss Hallett, by the time of Mr Fabb's bankruptcy been transferred into his name, though previously in his daughter's name) or to assign any indebtedness, as opposed to the listed claims. Moreover, so far as Mr Fabb's status as a creditor is concerned, David Richards J, in the proceedings to which I have referred, clearly found (in paragraphs 28 and 29 of his judgment) that Mr Fabb was not a creditor of Holdings in respect of unpaid salary, because he had no salary entitlement. That is the only creditor claim which Mr Fabb asserts in these proceedings, and that point has been finally determined against him. Accordingly, it seems to me that the misfeasance claims have no prospect of success either, even if I ignore the fact that the assignment has not yet happened. The assignment, even if now effected, would not give Mr Fabb standing to make a misfeasance claim. There is a still further objection. These proceedings were brought at a time when Mr Fabb knew that the causes of action he wishes to assert were vested in his trustee in bankruptcy, and that he needed an assignment. They were issued on 22 nd December 2011, no doubt because there was perceived to be a potential limitation problem. At that time, Mr Fabb had already applied to the court for an order directing his trustee to assign the causes of action, but that application had not been determined. The Defendants contend that all this means that these proceedings were, from their inception, at least so far as Mr Fabb's claims are concerned, an abuse of process. They rely upon the decision of the Court of Appeal, which does appear clearly to establish that proposition, in Pickthall v Hill Dickinson LLP [2009] PNLR 31 . As Mann J put it: "The starting point is that where a man starts proceedings knowing that the cause of action is vested in someone else, then it is hard to see why those proceedings are not an abuse. He has started proceedings in which, even if he proves all the facts he wants to prove and establishes all the law he wants to establish, he will still lose because he does not have a right to sue. It is hard to see how that cannot be an abuse. Only people who own causes of action or have an appropriate interest in proceedings have any business asserting the cause of action or starting proceedings. Any other use of the court's proceedings is improper". The Court of Appeal, reversing the decision of the judge below, struck out the proceedings as an abuse of process in circumstances very similar to the present. In particular, the Claimant in those proceedings knew that an assignment was required, which is precisely the position of Mr Fabb in these proceedings. It seems to me that this case is indistinguishable from the Pickthall case in that respect and that I am bound, therefore, to strike out Mr Fabb's claim on that ground also. In my judgment, similar observations apply with the same result in relation to the claims by CKE. When these proceedings were commenced, CKE had been struck off. It was restored to the register on 20 th March 2012. A statutory fiction then arose to the effect that CKE was deemed to have continued in existence: see sections 1028 and 1032 of the Companies Act 2006. That, however, does not require me to ignore what the position was in December 2011 when the proceedings were commenced. At that date, the proceedings were an abuse because CKE had not then been restored, and did not exist. The subsequent restoration and deemed continued existence means that proceedings in CKE's name cannot now be treated as a nullity. However, Mr Fabb, in causing proceedings to be issued in CKE's name, knew at the time that CKE did not then have a sustainable cause of action, and that he then had no authority to bring proceedings in its name, because CKE did not to his knowledge then exist. The issue of whether the proceedings were an abuse when instituted is not resolved by simply considering whether the formal defects are cured by the deeming provision. CKE's proceedings were in my judgment an abuse, notwithstanding that they cannot now be treated as a nullity. They were an abuse because Mr Fabb knew that CKE was struck off and wrongly chose to anticipate its restoration. I say "wrongly" in the sense that it was an abuse of process for a claim form to have been issued in advance of the restoration. The company should have been restored to the register first. To the extent that that gave rise to limitation difficulties, that did not justify the bringing of proceedings in the name of what was then known to be a non-existent company to assert a cause of action which could not then be asserted in CKE's name. Those proceedings were, therefore, in their inception, an abuse. It seems to me that the Pickthall reasoning applies to that as well. I now turn to consider the merits of the claims, to the extent that I have not already done so. I have already dealt with the absence of any duty of care as undermining the negligence claims. The misfeasance claim, were Mr Fabb able to bring it, appears to rest upon the assertion that costs were improperly incurred in pursuing the 96 percent claim. That dovetails into the allegedly malicious prosecution of the 96 percent claim. Alpa was not a party to the earlier proceedings and cannot therefore have a claim for malicious prosecution. Only Mr Fabb and CKE can, and their claims are an abuse for the other reasons I have already given. It is said that the 96 percent claim was brought abusively, for an improper motive or an improper purpose. The improper motive is said (though not in the proposed amended particulars) to have been spite, as a result of previous bad blood between Mr Fabb and the Defendants' firm, Deloittes. The improper purpose is said to have been the pursuit of a claim which the Defendants knew was bad because of the novation which had previously occurred with their consent. I must assume, though I am certainly not deciding anything on the point, that there is something in those allegations factually. What to my mind makes the claim impossible is that the proceedings in which the 96 percent claim was included were pursued to judgment. True it is that the 96 percent claim was abandoned, but the rest of the claim was pursued over an eight day hearing, I think it was, and the claim succeeded in substantial amounts, despite a fully argued defence. It is difficult to see in those circumstances how the proceedings can be characterised as malicious or an abuse, as they had to be, and were successfully, pursued to judgment, albeit in a much smaller sum than originally claimed. I was referred to, amongst other cases, the decision of Teare J in JSC BTA Bank v Ablyazov , [2011] EWHC 1136 where it was held (see paragraphs 21 and 22) that even if there is some illegitimate purpose in bringing proceedings, if there is also a proper purpose, in this case the recovery of monies due, the fact that there may also be some other improper purpose does not render the proceedings an abuse. It seems to me that the highest that the claim for abuse of process could properly be put here is that there was, in part, an illegitimate purpose. However, the fact that there was ultimately a judgment wholly belies the assertion that the proceedings as a whole were improperly motivated or brought for an improper purpose. Those factors also contradict the allegation of misfeasance. It is difficult to see how the pursuit of a successful albeit exaggerated claim can be said to amount to misfeasance unless perhaps some significant costs are lost as a result of the exaggerated element. It is said that there were wasted costs in the earlier proceedings, referable to the 96 percent claim, which Mr Fabb and CKE ought to be allowed to claim as damages. However, the costs were dealt with as part of the earlier proceedings. Specifically, the costs of the amendment (abandoning the 96 percent claim) were considered and made the subject of an order. It is also suggested that the Claimants in these proceedings are entitled to complain of the treatment as administration costs by the Defendants of their costs of the 96 percent claim. There are other ways of challenging the costs within the administration, at least if the complainant has standing. Separate proceedings by claim form by strangers to the administration are not appropriate. Moreover, no-one appears to have thought it was appropriate to ask in the previous proceedings that the Defendants should be disallowed any of their costs as administrators, even though the court plainly had power to limit their right of recoupment from Holdings' assets. The earlier proceedings were in fact brought by an application notice within the insolvency, as the heading to the action confirms. I make these observations assuming, which is not at all clear, that the tort of malicious institution and prosecution of proceedings would be available in the circumstances posited in the particulars of claim. That is challenged by Mr Margolin on behalf of the Defendants. It is a point I have not had to decide because, even assuming that the tort would be available in appropriate circumstances, it does not seem to me that the present circumstances are appropriate. Serious question marks also arise as to whether any recoverable damage has been occasioned in this case by the acts complained of. Again, I need not decide these issues, but mention one example to highlight the uphill struggle which would still face Mr Fabb if his other difficulties could be overcome. Amongst other heads of relief, Mr Fabb seeks redress for his ultimate bankruptcy, and the consequential loss of his home. This is very sad, but the bankruptcy was brought about not by any wrongful act of the Defendants, but by Mr Fabb's failure to comply with the judgment entered against him in May 2009. The loss of his home followed on from that. In the circumstances, it seems to me that these proceedings are totally without merit and that I should strike them out, enter judgment for the Defendants and make a declaration to the effect that the proceedings are totally without merit. I will now hear counsel. [Hearing continues] I am now asked to consider making a civil restraint order either under the CPR, having regard to the criteria set out in Practice Direction 3C, or under the court's inherent jurisdiction. It is clear that the inherent jurisdiction still exists, though it has been said on more than one occasion that the circumstances in which the inherent jurisdiction can be invoked, given that there is a detailed code under the CPR, must be rare and the jurisdiction should be exercised with caution: see R on the application of Kumar v Secretary of State for Constitutional Affairs [2007] 1 WLR 536 at paragraph 62 and following. I consider, first, the position of Mr Fabb. He was the recipient of a statutory demand dated 6 th April 2009 for £88,859.48, being the principal sums (exclusive of interest) awarded against him in the judgment handed down by David Richards J in January 2009. Although this was before the hearing following which the order was perfected, that judgment clearly established a debt which was beyond dispute. Mr Fabb, nevertheless, applied to set aside the statutory demand. That application was dismissed and permission to appeal was refused. A bankruptcy petition was then presented against Mr Fabb by the Defendants on 27 th July 2009. A bankruptcy order was made against Mr Fabb on 8 th September 2009. Subsequently, there were two applications by Mr Fabb to annul his bankruptcy on the grounds that the bankruptcy order ought never to have been made. They were dated 29 th June 2010 and 8 th December 2010 respectively. Each of them was dismissed. It is difficult to see what possible grounds could have existed either to set aside the statutory demand or to apply for annulment on the grounds that the bankruptcy order ought never to have been made given that the Defendants had a judgment which had not been appealed and could no longer be appealed without an extension of time. This is true both of the annulment applications and the application to set aside the statutory demand. Once the judgment was handed down in January 2009, the time for appealing ran, and had expired well before the statutory demand was served. So far as I know, there never was any attempt to appeal the 2009 judgment. Further, by the time the application to set aside the statutory demand came to be heard, David Richard J's order had been entered. None of the orders made in relation to Mr Fabb's three bankruptcy applications contained a recital or other indication that the applications were "totally without merit", as the practice direction puts it. However, it is clear from the Kumar decision, to which I have referred, that that does not prevent the court from considering whether or not the applications were totally without merit, though ordinarily a rather more detailed examination of the earlier litigation history would be required: see paragraph 68 of the judgment of Brooke LJ in that case. I asked Miss Hallett, who appears for Mr Fabb as well as his companies, what was the basis for challenging the statutory demand and for asserting that the orders ought never to have been made and she was unable to help me, beyond saying that Mr Fabb took the point that the costs which he was ordered to pay had never been assessed. If that was the basis for any of the applications then clearly the applications were totally without merit, as neither the statutory demand nor the bankruptcy petition was based upon unpaid costs, and there is no (or no serious) dispute that, upon any assessment, more costs will be shown to be due to the Defendants as administrators than the other way. Each of the three applications I have mentioned faced the apparently insuperable obstacle of the judgment of David Richards J and ensuing judgment debt. In those circumstances, the onus is, for practical purposes, on Mr Fabb to demonstrate that there was some reality in the applications. The applications seem inevitably to have been without any vestige of merit unless some can now be identified, which has not proved to be the case. Accordingly, it seems to me that I can (and must) treat those three applications as "totally without merit" applications. I have declared today's proceedings to be totally without merit also. It seems to me in those circumstances that Mr Fabb is someone who persists in issuing claims or making applications which are totally without merit within the meaning of Practice Direction 3C. That conclusion is the same whether I am looking at an extended civil restraint order under paragraph 3(1) or a general civil restraint order under paragraph 4(1). I am not considering a limited civil restraint order in this case because the present proceedings are now concluded. It seems to me also that what I have said in relation to Mr Fabb's standing inevitably applies to a further claim form, to which reference was made in the course of the hearing: 2BM30146. Those proceedings are brought in the name of the same claimants as these proceedings. The claim form (although not sealed until 21 st March 2012), was received by the court, and therefore taken as issued on, 9 th March 2012. They also relate to causes of action pre-dating Mr Fabb's bankruptcy and must also be an abuse of process because no assignment in Mr Fabb's favour had been ordered by that date. Even today the assignment is not complete, though it may well be completed very shortly. By the order under which the causes of action are to be assigned, Mr Fabb has until the end of January (I think) to pay £10,000. That money has not been paid, although I was told it has recently been received into Mr Fabb's solicitor's client account and would, therefore, be paid imminently. It seems to me, therefore, that I can properly regard those proceedings, irrespective of the content of the claims, as being totally without merit, at least so far as Mr Fabb is concerned and, if it becomes necessary and appropriate to do so, CKE as well. By the time the court seal went on to the document CKE had been restored, but not at the time the claim form was lodged with the court. Furthermore, consideration of the present statement of case in the new proceedings, 2BM30146, also leads to the conclusion that those proceedings also are, as things stand, totally without merit. The pleading in 2BM30146 adopts a scattergun approach against 20 named Defendants. The pleading self-evidently requires refinement and amendment in order to reduce the allegations to an intelligible state. That was the position in relation to 2BM30135 also, which was why draft amended particulars of claim were prepared. In it present state, the pleading in 2BM30146 is wholly unacceptable and an obvious abuse of process. It may perhaps be seen as an example of why the civil restraint jurisdiction exists. It seems to me therefore that these proceedings must also be regarded as totally without merit. Apart from questions of standing affecting both Mr Fabb and CKE, the contents of the pleading simply cannot be allowed to stand. The new pleading embodies a rerun of the claim against the Defendants, and there are other claims which also appear to implicate Deloittes, though it is not at all clear how, as well as many others, whose misfortune was to have been around at the time, and who are said to have contributed in some way to the Claimants' problems. Despite that general scattergun approach, or maybe because of it, the identification of a recognisable cause of action is elusive. In the circumstances, it seems to me that the CPR requirements as against Mr Fabb for either an extended or a general civil restraint order are made out. In all the circumstances, the public interest requires in my judgment the making of a general civil restraint order against Mr Fabb. His scattergun approach against all and sundry must be subject to proper scrutiny and restraint. The question then arises as to whether it is appropriate to make a civil restraint order also against Alpa and CKE. In practical terms, their role in the proceedings has been to act as vehicles through which Mr Fabb has brought his claims. It would seem to follow that, if it is appropriate to make a general civil restraint order against Mr Fabb, it must be appropriate to make a similar order against Alpa and CKE. However, the earlier applications, one for setting aside the statutory demand, and two more for annulment, were not made by Alpa or CKE, but by Mr Fabb alone. In those circumstances, it is very difficult to conclude that Alpa or CKE have "persisted" in making applications or issuing claims which are totally without merit, which is a requirement of Practice Direction 3C. There are just two claim issued by Alpa and CKE: one, the claim I dealt with earlier, 2BM30135; and two, the claim I mentioned a few moments ago with 20 Defendants, 2BM30146. The requirement of persistency is not satisfied, at first blush, by 2 claim forms alone. Alpa and CKE are, however, intimately bound up with everything Mr Fabb is trying to achieve. It is possible that one could look at the 2BM30146 claims and conclude that, as there are, within that single claim form, a number of claims against 20 different parties arising out of a series of separately identified events, that should be regarded as several claims. On that footing, it could be said that Alpa and CKE were by that single claim form alone persisting in issuing claims (in the plural) which are totally without merit. Any other construction would, it can strongly be argued, enable a misguided litigant to avoid the civil restraint jurisdiction by dressing up multiple claims against multiple parties as one. However, in my judgment, I need not resolve that issue because there is also the inherent jurisdiction. It seems to me that where one finds a third party, controlled by an individual who has persistently made or issued "totally without merit" applications or claims, and that third party, still under the individual's control, is either making or issuing or threatening to make or issue such an application or claim, that is a special feature justifying the making of a civil restraint order in like terms against the third party, under the court's inherent jurisdiction, even though the third party has not been associated with all the past applications or claims which justify the making of the order against the individual. Applying that to this case, it is in my judgment appropriate to make a civil restraint order against Alpa and CKE. I, therefore, do so under the court's inherent jurisdiction. The order will be in the same form as the civil restraint order against Mr Fabb with all necessary modifications to reflect the fact that these are different parties. I shall require any application for permission to be made to District Judge Truman of this court or, failing her availability, any judge entitled to sit in the High Court. That is to say, a High Court judge or a judge (like myself) authorised under s.9 of the Senior Courts Act 1981 to sit as a High Court Judge. The period of restraint will be two years. I shall invite counsel to agree the detailed terms of the civil restraint order. It must be made clear, not just to the parties but to the court officers who come to list any application, that the first port of call will be District Judge Truman, and not a section 9 or High Court Judge. [Hearing continues] THE JUDGE: The Claimants are to pay the costs of these proceedings. I am now called upon to assess the costs. It does seem to me to follow from my earlier judgment that the conduct of the Claimants in this case was such as to take this case out of the ordinary run of cases and that to bring proceedings, which I have found to be an abuse when, so far as Mr Fabb and CKE were concerned, it was known that there was then no extant cause of action which could be pursued, make it appropriate for indemnity costs. So far as Alpa is concerned, it did no more in the context of these proceedings than piggy-back onto CKE's claim. Nothing was put before me that suggested that Alpa had a viable cause of action of its own even if all other hurdles could be overcome regarding the causes of action said to be vested in Mr Fabb and CKE. Alpa should be in no different position costs-wise from the other Claimants. With that start, I turn to the costs which are put at £41,186.40 in the schedule of costs for summary assessment. Complaint is taken as to the rates attributable to the fee earners. It seems to me that in the context of this claim, which was for a substantial amount alleged in millions not hundreds of thousands, it was appropriate to have the close supervision of a grade A solicitor. Further, in the specialist field of insolvency and restructuring, the rate claimed of £350 an hour, although comfortably in excess of the guideline rates, is justifiable. The guidelines rates are exactly what they say, guideline rates, and are not for specialist, heavy litigation where one has to be realistic and allow rates at an appropriate commercial level. I also bear in mind that office holders are very conscious about rates and under a duty, generally speaking, to scrutinise solicitors' charges and ensure that they charge an appropriate rate. The same observations apply to the grade B and grade D solicitors. I am not going to trim their rates. Approximately 60 hours has been attributed to Mr Vickery (the Grade A solicitor) and only 4.9 hours, if my arithmetic is correct, to the grade B and grade D earners. In those circumstances, it was also appropriate in my judgment to have Mr Vickery in court. So far as the attendances are concerned, a total of 60 hours may be a little bit on the high side, especially as some of it may relate also to other proceedings. I shall reduce the total hours by ten hours, which at £350 an hour is £3,500. That apart, the costs are allowed in full, subject to VAT. So far as VAT is concerned, I am not going to award the VAT at this stage. The Defendants will have permission to apply in respect of VAT and they will have to put in a witness statement, if this be the case, explaining why VAT is not recoverable by one or more of their clients. It may well be that that is the case or it may be that some of it can be recovered or it may be that the VAT can be recovered in whole. It has been my experience in other cases, even where the office holders are sued in their own name, that sometimes, though not always, the VAT is recoverable. As they were sued for personal misfeasance, it would appear to me that there must at least be a prospect through Deloittes, who are no doubt indemnifying them, that the VAT could be recoverable. They will do their best and can always report back to the court. Therefore, we are taking £3,500 off plus the VAT. I will leave it to you to do the arithmetic, but you have got permission to apply in respect of the VAT, which can be on paper, incidentally, and there will be no court hearing unless either side particularly wants one. [Discussion re order follows] BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII