COURT OF APPEAL (CIVIL DIVISION)
NOURSE, AULD LJJ
9 June 1995
The Respondent did not appear and was not represented; M Hill for the Applicant, King and Franckeiss, Portsmouth
This application arises out of an arbitration in a small claims hearing in the Portsmouth County Court. The Applicant was the Defendant to a claim in trespass and negligence by the Plaintiff that he had deliberately driven his car at her, causing minor injury to her back. His pleaded case, by way of an amended defence and counterclaim, and his evidence in support of it, was that the Plaintiff had deliberately stepped into the path of his car. The two were neighbours, and it is apparent that there had been much bad feeling between them.
On 15 September 1993, after a hearing of two separate half-days, Deputy District Judge Gale found for the Plaintiff, awarding her £500. In his short judgment he said that he accepted the Plaintiff's evidence that the Applicant had driven his car at her and that he rejected the Applicant's evidence. This is how he put it:
"I do not place any credibility on the way the Defendant explains the incident. It was not feasible for the incident to have occurred as he says. I do not accept the Defendant's evidence. I reject the Defendant's evidence. My rejection is backed by his evidence that he saw the Plaintiff spinning after he had passed her but went back into the courtyard and got his camera. If she had spun then any normal human being would have been anxious about the injuries which they might have caused her."
Then later on, after recording that he accepted the evidence of the Plaintiff, he said this:
"I do find the Plaintiff's version to be more credible and I accept it. I find for the Plaintiff on the ground of trespass because I had come to the conclusion that what happened was as told to me by the Plaintiff. The Defendant drove his car at her. I accept that."
So on the sharp issue on the facts of the matter raised by the Applicant the Deputy District Judge, in finding as he did for the Plaintiff, had to form the view, however he expressed it, that the Applicant had lied in a big way.
The Deputy District Judge eventually dealt with the question of costs on 18 May 1994. I need not rehearse the circumstances and reasons for that delay. Normally the only costs recoverable in such arbitration proceedings are the costs stated on the summons and the costs of enforcing the award. That is provided for by County Court Ord 19, r 4(2)(a) and (b). However, that rule also provides, in paragraph (c), that a district judge may direct the payment of further costs:
"... where there has been unreasonable conduct on the part of the opposite party in relation to the proceedings or the claim therein".
At the hearing on 18 May 1994 the Deputy District Judge heard representations from both sides on that issue and ordered the Applicant to pay to the Plaintiff a total of £1,444.28 in costs because of his unreasonable conduct in having pleaded a lying case and having lied in evidence as to what occurred. This is what he said in so ordering:
"I accept there is no specific precedent for my finding in the Green Book rubric but this case was out of the ordinary in the way it was conducted by the Defendant and justice demands that at the end of the day if you fail you must pay the penalty. I hold that Order 19, rule 4(2)(c) entitles me to make an order for costs against the Defendant in the arbitration proceedings. The case the Defendant put up was not substantiated.
It was not just a question of there being two different views of an accident. It was a question of the Defendant deliberately lying as to what had occurred. I took the view he had conducted himself unreasonably in relation to the proceedings. I am still of that mind and having had an opportunity of looking at the notes I made at the time and the note of my judgment I am still of that mind ..."
He fixed on the figure of £1,444.28 as being the costs incurred by the Plaintiff after the Applicant had first pleaded, in an amended defence and counterclaim, his lying account. That order represented 80 % of the Plaintiff's total costs, assessed, I believe, on scale 1.
The Applicant appealed against that order to His Honour Judge Milligan, sitting in the Portsmouth County Court, on 9 January 1995. Judge Milligan dismissed his appeal, expressing the view that it had not been shown to him that the Deputy District Judge was unreasonable in concluding that the Applicant had behaved unreasonably in the proceedings. As to quantum, the Judge indicated that it might have been appropriate for the Deputy District Judge to have ordered the Applicant to pay all the Plaintiff's costs from the start of the proceedings, not just from the service of the amended defence and counterclaim; but he felt that there was no basis on which he should interfere with the amount ordered by the Deputy District Judge.
The Applicant now seeks leave to appeal to this court from the order of Judge Milligan upholding the decision of the Deputy District Judge. Mr Hill has advanced four arguments in support of that application.
The first was based on the nature of the arbitration proceedings and the special code as to costs provided for them in Ord 19. He points out that such proceedings were established to provide a swifter, cheaper and less formal method of resolving disputes where the claim is modest, and now where it is under £1,000. In the main, it is designed to operate without legal representation. He submitted that simply because a district judge in such proceedings prefers the evidence of one party to that of the other it does not make that other party's conduct unreasonable, because such a finding is likely to be an incident of most small claims arbitrations.
Second, he suggested that the Deputy District Judge's finding on the issue of liability was, on its face, little more than a finding that he preferred the evidence of the Plaintiff to that of the Applicant. He submitted that it was not in terms a finding that the Applicant had lied. As I have already indicated, the issue drawn here by the Applicant was a sharp one, and one on which there was no room for a finding that one or other party had not lied. It is clearly implicit in the Deputy District Judge's award that his view was that the Applicant had lied, and had lied in a big way.
Third, Mr Hill attacked the sequence of reasoning of the Deputy District Judge in the order that he made as to costs and his judgment on that issue. His attack stems from the opening words of the judgment, which I have read: "justice demands that at the end of the day if you fail you must pay the penalty". Mr Hill submitted that that was not the appropriate approach in a case of a small claims arbitration because of the separate costs code provided for it. He suggested that the Deputy District Judge's view, expressed a line or two later, that the Defendant had lied, was inconsistent with his less trenchantly expressed findings on the issue of liability. For the reasons I have given, there is no mileage in that argument because there was a clear, implicit, finding on the issue of liability that the Defendant had lied.
Fourth, Mr Hill suggested that, even if the Deputy District Judge had correctly found and taken a view, both on the issue of liability and on the issue of costs, that the Applicant had lied, that in itself was not capable of amounting to unreasonable conduct for the purpose of making an award of costs under this rule. I note from the gloss to the rule in the current Green Book that one of the circumstances held to have been capable of amounting to unreasonable conduct for this purpose is the resisting of a claim to which, judged objectively and as a matter of law, there is no defence. Fabrication of a wholly untruthful defence, as the Deputy District Judge found here, seems to me to be equally capable of falling into that category.
In my judgment, both the making of the order by the Deputy District Judge and its quantum were within his discretion. I see no arguable basis to interfere with his view that the Applicant's lying defence was unreasonable conduct within the rule in question. Accordingly, I would refuse this application.