International Campaign for Real History
In the High Court of Justice


DJC Irving
- v -
Penguin Books Ltd and Deborah Lipstadt

The Final Gavel: Dossier
To open an index to the dossier in a separate window click click | [summary]


Confidential

 

Opinion

Adrian Daviesby Mr Irving's Counsel, Adrian Davies, a legal expert in the Chancery Division

 

Background

1. On 4th March 2002, Deputy Registrar Derrett made a Bankruptcy Order ("the Bankruptcy Order") against David John Cawdell Irving ("Mr Irving") on the petition of Penguin Books Limited ("Penguin").

2. The Bankruptcy Order was founded upon an interim costs order ("the Interim Order") made on 5th May 2000 by Gray J. pursuant to CPR Rule 44.3 (8), following Gray J's dismissal of Mr Irving's libel action ("the Libel Action") against Penguin. The Deputy Registrar declined to go behind the Interim Order.

3. Mr Irving appealed against the Deputy Registrar's Order of 4th March 2002, contending that the Court sitting in bankruptcy might go behind the Interim Order, and look afresh at the evidence that Penguin had been maintained throughout the Libel Action.

 

The Judgment of Peter Smith J.

4. On 21st May 2002 Peter Smith J. upheld the Bankruptcy Order, albeit on different grounds, for he was critical of the Deputy Registrar's reasoning, and took a different view from her on the question whether the Court might go behind the Interim Order.

 

Mr Bays' Witness Statement

5. Under some pressure from Peter Smith J., Kevin Bays, Penguin's solicitor and the partner in the firm of Davenport Lyons who had the conduct of the Libel Action, made a witness statement the material paragraphs of which read as follows:--

"2. . . . I can confirm that the liability for the costs incurred by Penguin is that of Penguin, that all accounts for fees and disbursements have been rendered to Penguin, and that in the event of non-payment, I would hold Penguin liable to account for such fees.

"3. In practice, the VAT exclusive sums in relation to bills was (sic) transferred directly to my firm by Penguin's insurers, and the VAT element of such bills was paid by Penguin."

 

Maintenance and Damnification

6. Peter Smith J. thought that the words "in the event of non-payment, I would hold Penguin liable to account for such fees" were conclusive in Penguin's favour, because they showed that, in the last resort, Penguin was liable for costs.

7. On the authorities, that view may well be sound on the issue of maintenance, though much will turn on the construction of the retainer in question; see Baillie v. Neville (1920) 149 IA 300.

8. In my opinion, however, it is at the least highly arguable that the words "in practice, the VAT exclusive sums in relation to bills was (sic) transferred directly to my firm by Penguin's insurers" are conclusive in Mr Irving's favour, because they show that Penguin has not suffered any damnification (a word which Gray J. said was new to him, but simply means "loss" in the context of costs).

9. On the face of it, Mr Irving therefore has (or had) good grounds to appeal against Peter Smith J's order. There are, however, problems, which are not necessarily insuperable, but which ought equally not to be underestimated.

 

Obstacles in the way of an appeal from Peter Smith J.

10. The first is that Mr Irving is long out of time for appealing. It will not be easy to surmount this obstacle. The delay is now very serious. If, however, Mr Irving can show by compelling and detailed evidence (in the form of a witness statement or affidavit) that the only or at any rate the principal reason for the delay is that it has taken him six months to raise the funds to pay for a further appeal, it might be that the Court of Appeal would be reluctant to refuse him an extension of time for appealing on the grounds of delay alone.

11. Secondly, as those instructing me will be very well aware, but Mr Irving may not, second appeals face a high threshold. As Brooke LJ explained in the leading case of Tanfern v. Cameron-Macdonald [2000] 1 W.L.R. 1311 at 1319, permission to appeal will only be given if the Court of Appeal itself considers that the appeal would raise an important point of principle or practice, or that there is some other compelling reason for it to hear a second appeal.

12. Thirdly, there is the risk that Penguin's insurers will simply ratify Penguin's actions, and take the benefit for themselves. This objection is the most formidable that Mr Irving faces, as it seems to me to have a solid foundation of merit, unlike the other objections that I have canvassed, which are based on technical rules or the shortness of the time limits fixed for bringing appeals.

Notes

1 Section 11 of the Defamation Act, 1952 remains in force, notwithstanding the repeal of parts of the 1952 Act by the new Defamation Act of 1996.

13. The third ground is moreover in some measure supported by section 11 of the Defamation Act, 1952[1], which provides that:--

"An agreement for indemnifying any person against civil liability for libel in respect of the publication of any matter shall not be unlawful unless at the time of the publication that person knows that the matter is defamatory, and does not reasonably believe there is a good defence to any action brought upon it."

 

The strengths and weaknesses of the parties' positions

14. In the last analysis, Mr Irving will have to take a view on this objection. If Penguin's insurers support its hard line against Mr Irving, it seems to me that in the long run they will prevail, even if they have to begin again at the beginning.

15. On the other hand, it is at least possible that they will grow weary of throwing good money after bad, and either abandon their efforts to recover money from Mr Irving, or (more plausibly) become more amenable to a composition or other negotiated solution than hitherto.

16. It will also be difficult for Penguin to justify the continuation of the Interim Order, if the Court accepts that it was obtained on a mendacious basis. While this consideration is perhaps the strongest card in Mr Irving's hand, it does not really relate to an appeal against the judgment of Peter Smith J., so I will consider it at paragraphs 19 et seq. below, in the context of a possible application to Gray J.

17. A further serious problem for Penguin is that ratification by the insurers would not necessarily be an answer to a claim for damages for malicious presentation of the petition in bankruptcy. In my opinion the time for determining the question whether there was reasonable and probable cause for presenting the petition is at the latest the date of service of the petition (but probably the date on which it is issued), and Penguin could not rely on events occurring after that date (such as ex post facto ratification by its insurers).

18. In view of the matters that I have set out at paragraphs 10 to 13 above, there are formidable obstacles in the way of a further appeal from Peter Smith J. My considered view is that an appeal would not at present be likely to succeed. There is however another course open to Mr Irving, which he might pursue with far greater prospects of success.

 

Discharging or staying the Interim Order

Notes

 see para. [ ] below

3  Time having been extended by the Court of Appeal on [ ] July 2001

19. It seems to me that there are grounds for going back to Gray J. by way of a further application in the Libel Action, to seek the following relief:--

1. That the Interim Order be discharged, on the ground that it was obtained by what was called (before Lord Woolf purported to ban Latin from our Courts) suppressio veri et suggestio falsi;

2. Alternatively, if Gray J. does not have jurisdiction to discharge the Interim Order,[2] a stay on the Interim Order, with permission to appeal against it out of time;

3. In either case, an Unless Order pursuant to CPR Rules 47.8 (1) (b)[3] and 47.8 (2), requiring Penguin to lodge its bill for detailed assessment, or have all or some part of its costs disallowed.

Notes

4

25.8 (1) Where a defendant has been ordered to make an interim payment, or has in fact made an interim payment (whether voluntarily or under an order) the court may make an order to adjust the interim payment.

25.8 (2) The court may in particular --

  (a) order all or part of the interim payment to be repaid;

  (b) vary or discharge the order for the interim payment.

20. The following considerations arise. While the point is not without difficulty, in my opinion the right to make such an application is not "property" which vests in the trustee on bankruptcy under section 306 of the Insolvency Act, 1986.

21. Less helpfully, it must be said that there is no direct equivalent to CPR Rules 25.8 (1) and 25.8 (2) (a) and (b)[4] under CPR Rule 44.3 (8).

22. Absent an express power to discharge an interim costs order, it may be arguable that the High Court has an inherent jurisdiction so to do; see per Brooke LJ in Seray-Wurlo v. Hackney L.B.C. (2002) Times 4th July, holding that:--

" . . . the High Court . . . possessed an inherent jurisdiction to do what it had to in order to maintain its character as a court of justice."

23. If I am wrong about the existence of an inherent jurisdiction to discharge the Interim Order, the court has an unfettered discretion to grant a stay. Factors militating in favour of a stay include firstly the matters raised at paragraph 16 above, and secondly, the inordinate delay in lodging Penguin's bill for detailed assessment.

24. I have not overlooked the recent, and as yet (to my knowledge) unreported, decision of Laddie J in Allason v. Random House UK Ltd 27th February 2002 (of which I enclose a transcript).

25. No doubt there is force in the words of Laddie J. at para. 12, specifically:--" . . . What the court should not be doing is forcing the receiving party to engage on a detailed assessment before receiving any money at all because that will just simply be an expenditure of further money on a process which will give no returns."

Notes

5   While I am confident that Mr Irving can prove what he has to prove, he should be under no illusions that it is for him to lead evidence on this issue: mere assertions (however plausible) will not be sufficient. I have already suggested how he should write both to his trustee in bankruptcy, and to the mortgagee in possession of 81 Duke Street.

6   Time having been extended by the Court of Appeal on [ ]July 2001.


NB: The necessary letters have been written. -- David Irving, Saturday, November 23, 2002

26. If (as seems likely) Mr Irving can show[5] that his assets very largely exceed the amount in which the Interim Order was made (by way, for example, of a witness statement exhibiting a completion statement in respect of his flat at 81 Duke Street) then the position would be different from that in Allason v. Random House UK Ltd.

27. Penguin will also be in pronounced difficulties in justifying the line taken by Mr Rampton Q.C. in the Court of Appeal on the instructions of Davenport Lyons, when seeking an extension of time for lodging Penguin's bill in the Supreme Court Costs Office. It must be open to doubt whether Davenport Lyons ever seriously intended to lodge the bill.

28. There are no time limits for making an application under CPR Rules 47.8 (1) (b)[6] and 47.8 (2), nor is there any time limit for applying to stay or discharge an interim order, which, by its very nature, is provisional.

29. If successful, such an application would pave the way for a further appeal to the Court of Appeal against the Bankruptcy Order, based on a material change of circumstances, or else (perhaps more appropriately, more cheaply and more straightforwardly) an application to a Registrar in Bankruptcy under section 282 (1) (a) of the Insolvency Act 1986 to annul Mr Irving's bankruptcy.

30. My advice is that there is little to be lost and much to be gained by making an application to Gray J. In order to prepare for such an application, I shall have to complete the revision of the transcript of the argument before Gray J. on 5th May 2002.

31. I am grateful to my instructing solicitors for making the appropriate enquiries with the clerk to Gray J. and of the official shorthand writers, Smith Bernal Reporting Ltd. Would my instructing solicitors kindly arrange for me to have access to the tape as soon as possible.

32. For his part, Mr Irving should pursue the matters canvassed at paragraph 26 above, and also urgently take steps to collate the worst examples of Penguin's apparent mendacity on the funding issue.
Notes

The Times article was headlined PENGUIN MAY BE £2 MILLION DOWN BUT THERE WAS AN IMPORTANT PRINCIPLE INVOLVED, SAYS MARK BATEMAN. [Full text]

I already have Mr Irving's helpful extracts from Mr Rampton QC's more touching submissions to Gray J about the expense to which Penguin was being put. I have also seen the claim by Mr Mark Bateman of Davenport Lyons in the Times of 18th April 2000 (Law, p. 11) that:--

"Despite Irving's assertions to the contrary, it was Penguin that paid the fees of the experts, leading counsel, junior counsel and my firm."

Any further striking examples should be collated.

35. It follows that my advice is not to seek permission to appeal against the order of Peter Smith J. (at least for the present), but rather to direct all our energies to progressing an application to Gray J. on the lines that I have suggested.

36. Needless to say, I shall be pleased to discuss this advice in conference or on the telephone, as those instructing me prefer.

ADRIAN DAVIES

3 Dr. Johnson's Buildings
Temple
London
EC4Y 7BA
tel. 020-7353-4854

22nd November 2002

 

Next related file on this website:

Having perfected passages of the key transcript, Mr Davies reports on Nov 29, 2002 to Mr Irving's lawyers recommending they proceed to an Application to dismiss the Order


The Times, July 4, 2002

Law Report

Power to re-open decision

COURT OF APPEAL
Published July 4, 2002
Seray-Wurle v Hackney London Borough Council
Before Lord Justice Simon Brown, Lord Justice Brooke and Lord Justice Dyson
Judgment June 25, 2002

The High court, like the court of Appeal, had jurisdiction to re-open proceedings which had concluded before it, if it was necessary to do so to avoid injustice. The court of Appeal so held on a reference by Mr Justice Lloyd upholding his dismissal of an application by the claimant, Adu Aezick Seray-Wurie, acting on behalf of himself and other trustees of the Hackney African Organisation, a registered charity, for permission to re-open an application refused by Mr Justice Gibbs for permission to appeal against an order setting aside a default costs certificate made against the defendant, Hackney London Borough council.

The claimant in person; Hackney did not appear and was not represented.

LORD JUSTICE BROOKE said that the charity occupied premises in Hackney under a ten-year lease granted by the council. In 1992 the council issued proceedings whereby it forfeited the lease on the ground, inter alia, of arrears of rent.

The charity made a counterclaim based on the contention that the council owed it money in relation to contracts which more than extinguished the claim for arrears of rent.

In the event, the council repossessed the premises under powers granted to it by a compulsory purchase order, and a long-running litigation which came to a head at an eight-day county court trial before Judge Thornton, QC culminated in an order made by him on October 31, 2000 granting the charity nearly £300,000 on its counterclaim. The judge decided that interest and costs should be dealt with at a subsequent hearing.

On September 10,2001 the claimant filed and served his bill of costs accompanied by a notice which stated that points in dispute had to be served by October 1,2001. On October 2 he obtained a default costs certificate in the sum of £280,063.

On October 5 the council applied under rule 47.12 of the civil Procedure Rules for an order that the certificate be set aside. The council maintained that the points of dispute had been sent by Royal Mail special delivery and that the guaranteed delivery date was October 1.

It appeared that the documentation came into the claimant's possession on October 6. Deputy Gosts Judge Jefferson set aside the default costs certificate.

The claimant sought permission to appeal against the order. Mr Justice Gibbs, in a carefully reasoned judgment, refused permission to appeal.

That would ordinarily be the end of the matter because the court of Appeal had no jurisdiction to entertain an appeal from a judge in a lower court who had himself refused permission to appeal.

The claimant, however, relying on Taylor v Lawrence (The Times February 8, 2002; [20021 2 All ER 353), applied for an order that the case be re-opened for a hearing.

When Mr Justice Lloyd originally dealt with the application on paper he made the assumption that the High Court had the same power to re-open its own decisions as the Court of Appeal. But he said that the grounds on which the claimant relied were not sufficient for reopening the decision.

The question which Mr Justice Lloyd referred to the Court of Appeal for its consideration was whether the High Court, when sitting as an appeal court, possessed a jurisdiction to re-open its decisions in exceptional circumstances in order to avoid real injustice.

It appeared to his Lordship that the same logic which had driven the Court of Appeal in Taylor to hold that the Court of Appeal possessed such a power drove their Lordships to hold that the High Court, which also possessed an inherent jurisdiction to do what it had to in order to maintain its character as a court of justice, possessed a similar power.

In Taylor the Lord Chief Justice said: "It should be clearly established that a significant injustice has probably occurred and that there is no alternative effective remedy."

The present case, as Mr Justice Lloyd correctly observed, got nowhere near satisfying that extremely tough requirement and the judge was right when he disposed of the application on paper in the way that he did.

On any future occasion an application of that kind should be handled in the High Court on paper along the lines described by the Lord Chief Justice in Taylor. Whether such an application should be referred to a High Court judge or High Court master would be a matter for the Civil Procedure Rules Committee to consider.

Nothing in the present judgment should be interpreted as having any effect in relation to the re-opening of decisions made by circuit judges sitting as an appeal court in the county court.

For the avoidance of doubt, the present judgment was free from the restrictions on citation contained in paragraph 6.1 of Practice Direction (Citation of Authorities) (The Times May 1, 2001; [2001] 1 WLR 1001, 1002).

Lord Justice Dyson and Lord Justice Simon Brown agreed.

 

 


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