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England and Wales Court of Appeal (Civil Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Ali v Keith Hudson (t/a Hudson Freeman Berg) [2003] EWCA Civ 1793 (11 December 2003) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2003/1793.html Cite as: [2003] EWCA Civ 1793 |
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IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CENTRAL LONDON COUNTY COURT
Mr Justice Leveson
Strand London, WC2 |
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B e f o r e :
LORD JUSTICE POTTER
LORD JUSTICE CLARKE
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MOHAMMED WARIS ALI | Appellant/Respondent | |
-v- | ||
KEITH HUDSON (TRADING AS HUDSON FREEMAN BERG) |
Respondent/Claimant |
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Smith Bernal Wordwave Limited
190 Fleet Street, London EC4A 2AG
Tel No: 020 7404 1400 Fax No: 020 7831 8838
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Crown Copyright ©
Lord Justice Clarke:
Introduction
The History
"The application has a long history and this is the third occasion the parties have appeared before me. The first occasion was on 5 March when I heard the submissions of Counsel for the Defendant setting out matters in detail. I adjourned the application for the Plaintiff to obtain legal advice and for the matter to come back to me on 7 May. On that day, the Plaintiff was represented by counsel. A Legal Aid Certificate had been just issued and as a further indulgence I adjourned the application until today. Since then, the court has received from the Plaintiff's solicitor a copy of the Legal Aid Certificate showing that it was discharged by consent.
The Defendants say a finding once made in the High Court on a document which the Plaintiff says was binding was not such a contract means that the losses now claimed cannot be attributed to the Defendants. I am bound by findings of fact the High Court made and I cannot resist those facts and make my own interpretation. The Plaintiff cannot sustain otherwise.
The Plaintiff makes other complaints of a much wider nature. The Defendants' solicitors refused to accept instructions and the losses from the High Court can be visited upon the Defendants. He has indicated that his personal life has extreme problems and I don't doubt that but he seems to allege that those problems are the fault of the Defendants and the monetary claimed by the Plaintiff are in my view fanciful.
I must grant the Defendants' application and strike out the Particulars of Claim on both grounds, that they disclose no cause of action and are frivolous and vexatious. I am not just striking out the Particulars of Claim but the action is struck out."
I shall return to that reasoning below.
"For some three years, between July 1998 and 25 August 2001, the Claimant and/or other of his solicitors did nothing save for a little activity for a few weeks in June and July 1999. On 18th July 1999, the Claimant wrote to the Defendant's solicitors, saying that he had lodged an appeal. The Defendant's solicitors replied, expressing surprise that he had lodged an appeal when his case had been struck out as long ago as 8th July 1998 and they had heard nothing since. Nevertheless the Defendant agreed not to pursue the taxation pending the outcome of the appeal. The Defendant then chased the Claimant and/or his solicitors to see what was happening to the appeal. They got no satisfaction, save for the following. On 18th June 1999, the Claimant told them that he was pursuing his appeal and hoped that [his] solicitor would be contacting the court to progress it. On 6th July 1999, Johnson Sillett Bloom, solicitors acting for the Claimant, wrote to the Defendant's solicitors, saying they were taking instructions on the circumstances surrounding his lodging of the appeal and in the meantime asked the Defendant to take no steps to enforce the costs order, provided of course that they kept the Defendant's solicitors informed of the progress of the application for legal aid for the appeal. The Defendant's solicitors chased the Claimant's solicitors several times, but heard nothing until, out of the blue … the court informed the parties of the date of the appeal, namely, 7th May 2002.
To my mind, the conduct of the Claimant in failing to take any steps to deal with his appeal between July 1998 and 25th August 2001, with the exception of those letters in June and July 1999, is unreasonable."
"If any existing proceedings have not come before a judge, at a hearing or on paper, between 26 April 1999 and 25 April 2000, these proceedings shall be stayed."
Paragraph 19(2) provides:
"Any party to those proceedings may apply for the stay to be lifted."
No such application was made. However, it appears that, notwithstanding that stay, the court fixed the date for the appeal as 7 May 2002.
"It seems to me that a highly relevant factor on the grant or refusal of the stay is the strength of the appeal. Quite apart from the passage of time, it seems to me that there are no reasonable prospects of successfully appealing the order of District Judge Hasan, an experienced district judge, who gave a short but clearly reasoned ruling for her decision and one which was well within the legitimate ambit of her discretion. She had given the Claimant a number of chances to put his house in order, including an adjournment, in the hope that he would get legal aid."
"CPR 3.1 gives the court fairly wide case management powers, the exercise of which may well depend in significant part on how a party has conducted the proceedings to date: see particularly 3.1(2)(f) and (m). Further, CPR 3.4(2)(b) and (c) in terms respectively empower the court to strike out a statement of case if it is an abuse of the process or there has been a failure to comply with a rule, practice direction or court order. In my judgment, it is plain from these Rules and the overall scheme of the CPR that the conduct of a party relevant to the exercise of the powers conferred by CPR 3.1(2)(f) and (m) and CPR 3.4(2) (b) and (c) is not restricted to conduct involving bad faith. Instead, the conduct in question must be looked at in the round and, even if it cannot be shown that there has been bad faith, if in respect of a particular incident or having regard to a course of conduct overall, a party has acted oppressively or very unreasonably, it may still be appropriate to stay his claim conditionally or unconditionally or strike it out or order a payment into court."
Judge Green finally concluded as follows:
"The Defendant's counsel … does not rely on the expression 'oppressively' in that passage, but relies on the phrase 'very unreasonably'. I am content to leave out the adverb 'very'. I characterise the conduct of the Claimant as unreasonable and have no hesitation in imposing the stay. If the costs are paid and an application is made to lift the automatic stay, the court will have to cross that bridge when it comes to it."
"1. The CPR shall apply to this action.
2. The Claimant's appeal listed to be heard on 7th May 2002 be stayed pending payment by the Claimant of the Defendant's costs pursuant to the judgment of District Judge Hasan dated 9th July 1998 in the sum of £14,592.64 plus interest of £4,390.40 up to today's date and continuing at a daily rate of £3.20.
3. The hearing on 7th May 2002 be vacated.
4. The Claimant do pay the Defendant's costs of this application summarily assessed at £4,883.44.
5. Permission to appeal be refused."
"That lack of prosecution may have reflected the limitations arising from Mr Ali's status as a litigant in person. It may also have been contributed to by the incompetent, half-hearted intervention of solicitors purportedly acting for Mr Ali. Suffice it to say that over a considerable period of time the Defendant's solicitors were unaware that there was an appeal extant and again the solicitors apparently were taken by surprise when on 17th December 2001 the court fixed a date for the hearing of the appeal, that is 7th May 2002."
"First, the practical effect of the order is to dismiss Mr Ali's appeal. He is unable by virtue of the order to pursue it unless he finds the monies that are the subject of the original order and those monies if and when found are not to be paid into court but paid over to the Defendant. In a practical sense there is no difference from Mr Ali's standpoint between having the appeal stayed upon that condition and having the appeal dismissed."
Pausing there, it seems to me to be plain that Holland J (presumably either on the basis of the evidence and submissions put before him or because he regarded it as obvious) concluded that the effect of the order of Judge Green would be to stifle any appeal from the decision of District Judge Hasan. Holland J added:
"I turn then to Mr Ali's further point. He is confronted with the loss of an appeal without having the merits investigated by the court. Judge Green himself made it clear that he was not looking into the merits at all of the appeal in question. Thus it is I am concerned particularly with the terms on which the stay was imposed, which terms involved the payment of costs as ordered by the District Judge direct to the Defendant rather than into court. I am also concerned about the notion of dealing with this matter by way of a stay, more particularly when the matter was due to be heard by way of an appeal within the ensuing month. The notion of a stay is arguably inherently unsatisfactory. It can be tested. Let it be supposed that Mr Ali pays the money now as is required by the order. Then presumably the appeal becomes extant and is then to be pursued. We have in effect a very unhappy halfway house. Thus it is that the order as currently made cries out for review and it does so with, as I concede (conceive?), a real prospect of success."
"All that said, I cannot see that the matter can fairly be left as it presently is and that the matter therefore can be further ventilated on an inter partes basis when the appeal that I am permitting now is heard."
It is plain that Holland J intended that an appeal should then be heard from Judge Green's order. Mr Hudson filed a respondent's notice on 9 January 2003 which asserted that Mr Ali's appeal would in any event have been stayed automatically by paragraph 19 of practice direction 51.
The Appeal to Leveson J
"28. The learned judge ordered that the claimant should pay the entirety of the costs of the action, which themselves were only due from the claimant to the defendant pursuant to the very order which the claimant was seeking to appeal. In other words, the defendants sought the fruits of the judgment, which was then the subject of appeal, and argued before me that this stance was entirely legitimate on the basis that the claimant had not sought a stay of the order as to the payment of costs pending appeal.
29. Be that as it might, in my judgment it was not appropriate for the court to stay the action pending the payment of costs which were subject to appeal. What the learned judge was entitled to do, however, was to point to the fact that, prior to commencing his appeal, Mr. Ali had to overcome the problem of the automatic stay which itself would involve a substantial expense, given that the defendants would be entitled to contend that the circumstances did not justify the removal of the stay. The automatic stay was entirely a consequence itself of the failure expeditiously to prosecute the appeal. It seems to me that the learned judge, if exercising his power as he was entitled to do, should have restricted his order to a sum which reflected the costs that would be incurred in seeking to remove the stay and in requiring those costs to be paid not direct to the defendants but rather into court as security purely for the application to remove the stay rather than the costs of the entire action.
30. To that extent and to that extent only, I take the view that the learned judge fell into error, although I accept that he did have power, as I have said, under 3.1(6)(b) [to order] the payment into court of costs that have been incurred. I make it clear, following the decision of Field J, to which I have referred [viz Reed v Oury], that had there been other outstanding orders for costs, that would indeed have been an appropriate decision but there were not. All the costs involved were costs that had only been ordered to be paid by virtue of the order which Mr Ali, the claimant, sought to appeal."
"31. In my judgment, it would be reasonable and appropriate to reflect that difference by reducing substantially the amount which Mr Ali must find in order to justify the removal of this stay quite apart from going back before the judge to remove the automatic stay. In the circumstances I order that the claimant must pay into court the sum of £1,750 in order to justify the removal of the stay imposed by Judge Green. That seems to me to be sufficient security for the costs of appearing before the judge to remove the automatic stay which is the next step before Mr Ali can go on to seek to appeal the order of the district judge. In assessing the sum I have had some regard to Mr Ali's financial position.
32. Mr Justice Holland was concerned that the effect of the order would be to dismiss Mr Ali's appeal on the basis that he would be unable to pursue it without finding money to pay into court. He observed that in a practical sense there was no difference from Mr Ali's standpoint between having the appeal stayed upon the condition, albeit in a very much larger sum being paid into court, and having the appeal dismissed.
33. Mr Charlwood submits that the circumstances of this case justify the order, which would in any event have the same effect, if Holland J is correct, as that which Field J made in the case to which I have referred. In that regard, in my judgment, a broad view of the merits does in fact justify the view being taken. The learned judge took the view that Judge Hasan's decision was likely to be unassailable. Mr Justice Goldring observed on paper that any other decision would have been surprising. Mr Justice Holland himself observed that the appeal would be difficult to conduct, not least because of the lamentable lack of prosecution, and that it may be found to be totally bereft of merit. It is common ground that Mr Justice Eady made similar observations.
34. Thus, it may be that the claimant requires to rethink whether his claim is worth the effort that he is undeniably putting into its present prosecution. That is not, however, for me to decide. In my judgment, doing justice between the parties, it is right for me to make the order to which I have referred, recognising that the sum is far less substantial than ordered by the learned judge and represents no more and possibly rather less than the costs which the claimant is likely to be required to meet in any event, should he seek to remove the automatic stay."
This Appeal
The Principles
"In my view the starting point in any case where a stay is sought in circumstances which are not provided for by Statute or Rules of Court should be the fundamental principle that in this country an individual (who is not under a disability, a bankrupt or a vexatious litigant) is entitled to untrammelled access to a court or first instance in respect of a bona fide claim based on a properly pleaded cause of action, subject only to the sanction or consideration that he is in peril of an adverse costs order if he is unsuccessful, in respect of which the opposing party resort to the usual remedies of execution and/or bankruptcy if such order is complied with. This principle is of course subject to the further proviso that, if the court is satisfied that the action is not properly constituted or pleaded, or is not brought bona fide in the sense of being vexatious, oppressive or otherwise an abuse of process then the court may dismiss the action or impose a stay whether under the specific provisions of the RSC or the inherent jurisdiction of the court.
Imposition of a requirement that security for costs be provided subject to the sanction of a stay is a plain fetter upon the exercise of such right of access. That is a principle underlying and recognised by Order 23 which excludes from its regime as to the provision of security any individual who does not fall within the categories specifically provided for."
See also page 377, where Millett LJ set out the competing policy considerations to the same effect. Those principles were approved by this court in relation to the CPR in Hamilton v Al Fayed [2002] EWCA Civ 665, [2003] QB 1175, at paragraphs 47 and 63-65.
"3.1(1) The list of powers in this rule is in addition to any powers given to the court by any other rule or practice direction or by any other enactment or any powers it may otherwise have.
(2) Except where these Rules provide otherwise, the court may –
…
(f) stay the whole or part of any proceedings either generally or until a specified date or event;
…
(m) take any other step or make any further order for the purpose of managing the case and furthering the overriding objective.
(3) When the court makes an order, it may –
(a) make it subject to conditions, including a condition to pay a sum of money into court;
(b) specify the consequence of failure to comply with the order or a condition.
…
(5) The court may order a party to pay a sum of money into court if that party has, without good reason, failed to comply with a rule, practice direction or a relevant pre-action protocol.
(6) When exercising its power under paragraph (5) the court must have regard to –
(a) the amount in dispute; and
(b) the costs which the parties have incurred or which they may incur.
(6A) Where a party pays money into court following an order under paragraph (3) or (5), the money shall be security for any sum payable by that party to any other party in the proceedings
…"
The judge quoted extensively from rule 3. He also quoted paragraph 34 of the judgment of Field J Reed v Oury.
"21. I pass, therefore, to the more difficult second question which arises on this appeal: what should be the court's approach to the exercise of its wider new jurisdiction to order security for costs and, more narrowly, was such an order properly made in the particular circumstances of this case?
22. The first point to be made is I think this. Before ordering security for costs in any case (ie whether or not within rule 25) the court should be alert and sensitive to the risk that by making such an order it may be denying the party concerned the right to access to the court. Whether or not the person concerned has (or can raise) the money will always be a prime consideration, not least since article 6 of ECHR became incorporated into domestic law. Paradoxically, of course, the more difficult it appears to be for the person concerned to raise the money, the more obvious becomes the need for an order for security to protect the other party against the risk of incurring irrecoverable costs. The court will have to resolve that conundrum as best it may.
23. Assume, then, that in a given case the court concludes that an order for security would not unfairly deprive the party concerned of his ability to litigate the dispute. Should such an order then be made? In addressing this question it is right to bear in mind that under the new rules it is not just the claimant against whom an order for security for costs can be made; it can also be made against the defendant. Under the old rules, of course, it was only the defendant who could be ordered to pay money into court, principally in proceedings for summary judgment, as a condition of his being allowed to defend the claim. That payment in was not, of course, in respect of costs, but rather to provide some security for the claim. But if, as a condition of pursuing an unpromising defence, it is appropriate to secure the claim, why not also the claimant's costs of advancing the claim? And if that, why is it not at least as appropriate to require someone advancing an unpromising claim to secure the defendant's costs. He, after all, has chosen to involve the defendant in litigation and the defendant has no option but to concede the claim or incur costs in resisting it. Such no doubt was the thinking underlying the new rule 24.
24. Now, it is clear, the court has an altogether wider discretion to ensure that justice can be done in any particular case. Obviously relevant considerations, besides the ability of the person concerned to pay, will be (a) his conduct of the proceedings (including in particular his compliance or otherwise with any applicable rule, practice direction or protocol), and (b) the apparent strength of his case (be it claim or defence). And these considerations, of course, are expressly reflected in the new rules governing the court's power to order payment into court: rule 3.1(5) dealing expressly with compliance, rule 24 with the probabilities or otherwise of success.
25. That, however, is by no means to say that the court should ordinarily penalise breaches of the rules and the like by making orders for payment into court under rule 3.1(5). Quite the contrary. The one case drawn to our attention in which this question has been considered - Buckley J's judgment in Mealey Horgan plc v Horgan (transcript 24 May 1999, briefly reported in The Times, 6 July 1999), to which reference is made in paragraph 3.1.5 of the Annual Practice - held that it would be inappropriate to order a defendant to give security as a penalty for failure to serve witness statements in time when that had prejudiced neither the trial nor the claimant. Buckley J suggested, however, that such an order might be appropriate if "there is a history of repeated breach of timetables or of court orders or if there is something in the conduct of the party which gives rise to suspicion that they may not be bona fide and the court thinks the other side should have some financial security or protection". That seems to me to point the way admirably: a party only becomes amenable to an adverse order for security under rule 3.1(5) (or perhaps 3.1(2)(m)) once he can be seen either to be regularly flouting proper court procedures (which must inevitably inflate the costs of the proceedings) or otherwise to be demonstrating a want of good faith - good faith for this purpose consisting of a will to litigate a genuine claim or defence as economically and expeditiously as reasonably possible in according with the overriding objective.
26. Similarly it is not to be thought that an order for security for costs will be appropriate in every case where a party appears to have a somewhat weak claim or defence. The last thing this judgment should be seen as encouraging is the making by either side of exorbitant applications for summary judgment under rule 24.2 in a misguided attempt to obtain conditional orders providing security for costs. On the contrary, the court will be reluctant to be drawn into an assessment of the merits beyond what is necessary to establish whether the person concerned has "no real prospect of succeeding" and the occasions when security for costs is order solely because the case appears weak may be expected to be few and far between."
i) it would only be in an exceptional case (if ever) that a court would order security for costs if the order would stifle a claim or an appeal;
ii) in any event,
a) an order should not ordinarily be made unless the party concerned can be shown to be regularly flouting proper court procedures or otherwise to be demonstrating a want of good faith; good faith being understood to consist (as Simon Brown LJ put it) of a will to litigate a genuine claim or defence (or appeal) as economically and expeditiously as reasonably possible in accordance with the overriding objective; and
b) an order will not be appropriate in every case where a party has a weak case. The weakness of a party's case will ordinarily be relevant only where he has no real prospect of succeeding.
"That consideration is reinforced by the greater significance, since the Human Rights Act 1998 came into force, which the court attaches to not impeding access to justice."
The Facts
i) As already indicated, under CCR Order 13 rule 1(10) Mr Ali had a right of appeal from District Judge Hasan's decision on 8 July 1998 to strike out the action.
ii) On Mr Ali's case he timeously filed a notice of appeal against that decision. Judge Green accepted that that was the case and it is now common ground. The notice of appeal is dated 15 July 1998 and bears a Central London County Court stamp evidencing receipt on that day. It appears that the court did not initially take action on the notice of appeal but notified Mr Ali that he had omitted to give an estimate of the time for the appeal. Mr Ali says that shortly thereafter he gave the court an estimate of two days and it appears likely that he took that step by the end of July 1998. There is also a stamp on the notice of appeal, which is dated either 22 July 1998 or 22 September 1998 and which states "Fee Exempt".
iii) The notice of appeal contains a section to be completed by the court notifying the parties that the application will be heard on a particular date and warning them that if they do not attend the court will make such order as it thinks fit. Unfortunately that section was not completed and no date for the appeal was notified to either party until December 2001.
iv) That seems to me to be a very significant factor in considering the character of Mr Ali's conduct after, say, September 1998. The next step was one for the court to take, namely the fixing of a date, but it did not take it. In particular it did not take it in the latter part of 1998 in circumstances in which, if it had, (as indicated earlier) a date would have been fixed and the appeal heard before the CPR came into force in April 1999. At least until then, Mr Ali had a right to have his appeal heard from the decision of District Judge Hasan.
v) Mr Hudson's solicitors, Barlow Lyde & Gilbert ("Barlows"), were not aware of Mr Ali's appeal in 1998 because on 16 July 1998 they wrote a letter (wrongly dated 21 June 1998) to him enclosing a copy of the order made by District Judge Hasan and asking him to acknowledge receipt, which he failed to do. On 2 February 1999 they wrote to Mr Ali informing him that they were instructed to proceed with taxation of Mr Hudson's costs and enclosing a bill of costs. On 9 February the court wrote to Mr Ali's previous solicitors with regard to the taxation and on 18 February Mr Hudson's solicitors sent a copy of that letter to Mr Ali because it was appreciated that he was a litigant in person. The court received no reply from Mr Ali and proceeded provisionally to tax the costs. Barlows accepted the taxation on behalf of Mr Hudson (and no doubt his insurers) and on 17 June wrote to Mr Ali enclosing service of notification of taxation in the amount of £14,592.64 plus interest.
vi) On 18 June Mr Ali replied saying that he was concerned about the position because he had sent the bill of costs to new solicitors whom he had instructed both to oppose the taxation and to act in connection with his appeal against the order of District Judge Hasan, which he had lodged in time. On 21 June Barlows replied to Mr Ali setting out the position as summarised above and sent a copy both to Mr Ali's new solicitors, Johnson Sillett Bloom, and to the court. On 26 June Mr Ali wrote to Barlows asking them not to process the taxation further until the conclusion of the appeal and saying that his solicitors were seeking legal aid for him.
vii) On 28 June the court replied as follows:
"It appears that the Plaintiff did lodge an appeal in July 1998. The appeal was returned to him as he did not state a time estimate. According to our records it appears that the appeal was not returned to the Court by the Plaintiff so no hearing was listed."
As indicated above, that statement was not accurate in so far as it stated that the appeal was not returned to the court. The statement does however confirm that, if it had appreciated the true facts, the appeal would have been listed.
viii) On 29 June Johnson Sillett Bloom wrote to Barlows repeating Mr Ali's request to hold off pursuit of the costs pending the appeal and saying that they were applying for legal aid. They also enclosed a copy of Mr Ali's notice of appeal which showed the stamps to which I referred earlier.
ix) On 30 June Barlows wrote to the court asking what it was proposing to do with regard to the appeal and to Johnson Sillett Bloom commenting upon the delays but saying that it would not take further steps on costs without notice, on the understanding that they would inform them as to what progress was being made with legal aid and as to whether the appeal was to be pursued.
x) On 2 July the court wrote to Barlows, but not (so far as I can see) to Mr Ali or his solicitors saying that the court would not process the appeal because it was now out of time so that it was up to the claimant to apply for leave to appeal out of time and, until he did, the appeal would not be dealt with. I am not sure what, if any, provision of the rules the court had in mind because, as explained earlier, Mr Ali had a right of appeal and had appealed in time. On 6 July Barlows sent a copy of that letter to Johnson Sillett Bloom. On the same day Johnson Sillett Bloom replied to Barlows' letter of 30 June saying that they would contact them shortly. They did not, however, do so and, after a reminder on 19 August, Barlows wrote saying that they would take such steps as they considered appropriate without further notice.
xi) In the event Barlows took no further action but advised their client to close the file. They and their client thus thought that the best course was to let sleeping dogs lie.
xii) Nothing then happened until the court wrote to Barlows on 17 December 2001 out of the blue enclosing a notice of the hearing date of Mr Ali's appeal for 7 May 2002. The letter simply stated that "the appeal was lodged on 15 July 1998 but unfortunately was not processed". No further explanation was given and no reference was made to the court's previous assertion that Mr Ali needed leave to appeal.
xiii) On 21 February 2002 Barlows wrote a lengthy letter to the court asking for an explanation but received no reply, despite reminders of 7 and 22 March 2002. They also wrote to Johnson Sillett Bloom on 21 February asking similar questions but received a reply saying that the partner dealing with the matter had left taking the file with her. On 7 March Barlows wrote to the partner's new firm but on 15 March received a letter from her (at another firm) saying that she had had no contact with Mr Ali since she left Johnson Sillett Bloom, that she did not take any of the files with her when she left and that she did not have his address. It was in those circumstances that Barlows issued the application for the stay which came before Judge Green on 12 April.
Discussion
Lord Justice Potter:
Lord Justice Ward: