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Finance cases round-up: May 2015

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Max Lewis of 29 Bedford Row reviews the latest finance cases


  • Max Lewis, 29 Bedford Row

    A bit of a change for this month from the usual run of litigants with too much money, setting legal precedent that is of no consequence in the usual run of things. There have been three significant cases that deal with matters which touch on basic and fundamental questions of practice in financial remedy applications, but which are also of far wider application. 

    These cases concern professional practice issues covering three different groups:

    1. Lawyers who have had "informal chats" with potential clients. 

    2. McKenzie friends who are overstepping the mark. 

    3. Judges who might not like to admit that they have got it wrong. 

    G v G [2015] EWHC 1512 – the risks of an informal chat with a lawyer

    In 2010, a husband and wife entered into a consent order. In 2014, the wife sought to re-open the proceedings on the basis of material non-disclosure. However, in 2012, the wife had had some suspicions about it. She talked about her concerns with a friend. That friend had a conversation with leading counsel by telephone, but did not formally instruct her.

    Two years later, the husband approached that same counsel, and without any recollection of the brief exchange two years earlier. It took some time before anyone realised the potential conflict.

    When the wife attempted to set aside the 2010 order in 2014, clearly it was important to ascertain whether she had acted quickly upon finding out that there might have been material non-disclosure, or whether she had 'sat on' the information. The wife sought to injunct the counsel concerned and the solicitors from using any of the information that they had gleaned from their conversations two years earlier; it could have been very damaging to her case.  

    The counsel concerned quite properly withdrew from the case, but were the 2012 conversations privileged? That is, could the fact that the wife had expressed concerns two years before she actually made an application be adduced to the court?

    Roberts J held that the conversation between the wife and her friend were not privileged, and counsel had indicated during her informal chat with the friend that she could not give advice on a direct access basis and so that conversation was not subject to the rules of privilege either. 

    Roberts J cited The Law of Privilege (Bankim Thanki QC, ed), which notes that:

    If you ask your lawyer for advice about your love life, this will clearly not be privileged. But even if he is consulted about the law, privilege will not arise if a lawyer is consulted on a social rather than a professional basis. While a formal retainer is not necessary, there are limits. Buttonholing your lawyer neighbour for free advice at a barbeque is unlikely to attract privilege, even if the subject matter is entirely legal. …. The fact that an individual happens to be a lawyer will not cloak all communications with him with privilege unless he is consulted professionally in his capacity as a lawyer.

    For this reason, the wife's injunction against counsel restraining breach of privilege (a legal remedy) had to fail. But what about confidence (an equitable remedy)? There was no doubt at all that the conversations with counsel were meant to be confidential

    The fact of the wife having had concerns two years before she issued her application was clearly relevant the wife's current application, but Roberts J was clear; "relevance alone, whilst a necessary ingredient, does not provide the answer" (100). The fact is, that what the wife knew or did not know in 2012 was key in the analysis of whether she had acted promptly or merely 'sat on' the information she had, and there were no other overriding circumstances which justified the grant of an injunction in confidence. 

    Remember – as the Court of Appeal powerfully re-stated in Imerman, an injunction in confidentiality is an equitable remedy; it is always important to come with clean hands. If you cannot assert the technical defence of privilege, what a client says informally to a lawyer may well not prove to be, in law, confidential. 

    Re Baggaley [2015] EWHC 1496 – an indefinite McKenzie banning order

    This case concerned Mr Nigel Baggelay, a former nightclub bouncer with a variety of convictions (including for dishonesty) who had set up a number of businesses through which he offered his services as a professional McKenzie friend. He was litigious in his own cases, and had been made the subject of an order restraining him from taking proceedings for two years. He accepted he had no legal training. Carrying on from G v G (above), presumably nothing said to a McKenzie friend is privileged (as opposed to confidential) either.  

    In 2013 there were hearings in two separate cases in different courts in Leicester. In one, Mr Baggaley, assisting the mother in a contact dispute, had been holding himself out as the mother's representative and at court had behaved in the most appalling manner to the court and an usher. In the other, this time assisting the father, he had been threatening and offensive to solicitors and counsel for the mother. 

    HHJ Bellamy made an interim Civil Restraint Order, under the inherent jurisdiction, preventing him from acting as a McKenzie friend in any family proceedings. The matter was sent up to the High Court, and eventually went before Munby P for full determination, the Attorney-General having appointed a friend to the court (a de-Latinized amicus curiae) in the matter.

    Munby J recorded that the court has statutory and inherent powers to control those who misbehave or abuse its process. As to what a McKenzie-friend can and cannot do, there are important guidelines, set out in in Practice Guidance: McKenzie Friends (Civil and Family Courts) [2010] 2 FLR 962.

    Munby P was clear – acting as a McKenzie-friend, properly understood, is not a regulated activity. Anyone can do it. Specifically:

    1. Giving legal advice is not regulated per se.

    2. The two primary regulated activities are: 

    a. "Exercising a right of audience" (the right to appeal before and address a court, including the right to call and examine witnesses.)

    b. "Conducting litigation" (issuing proceedings, prosecuting and defending proceedings and "the performance of any ancillary functions in relation to such proceedings"). "Conducting litigation" is hard to define, but it is clear that acting as a McKenzie-friend is not covered. 

    Mr Baggaley's conduct was so appalling that Munby P made an order – indefinitely – banning him from ever acting as a McKenzie friend in any litigation. This was not a decision made lightly. Munby J held at paragraph 59:

    I am not dealing here with a single 'one off' incident. I am confronted with a lengthy list of incidents the cumulative effect of which leaves me in no doubt that the court must exercise its inherent powers not just to protect itself but also to protect those lawfully going about their business from behaviour which is inimical to the proper and efficient administration of justice. In particular, those attending court are entitled to do so without fear of being treated by a McKenzie friend in the kind of way that both Jim the Usher and Mr O'Grady were treated. In my judgment, Mr Baggaley has repeatedly acted in ways that undermine the efficient administration of justice. His misbehaviour as a McKenzie friend has to be controlled. Given his repeated misconduct and the gravity of that misconduct, I am satisfied that Mr Baggaley's misbehaviour as a McKenzie friend can be adequately and appropriately controlled only by my extending indefinitely the order made by Peter Jackson J. In my judgment such an order is not merely proportionate but necessary.

    P v P [2015] EWCA Civ 447 – asking a judge whether he might have made a mistake

    The author of this note had the privilege of representing the wife in the Court of Appeal in this case, and can say that there is little which is substantively legally important in the decision. However, the case deals with some very important procedural matters. 

    Shortly after the first instance trial, Mostyn J received an email, asking him to approve a transcript. That alerted him to the fact that someone had applied for permission to appeal directly to the Court of Appeal. He listed the application for permission directly before himself, and directed the attendance of the proposed appellants. He not only refused permission, but gave a long judgment (reported at [2014] EWHC 2990 (Fam)) explaining exactly why the appellants were wrong in their criticisms of his judgment.

    In that second judgment, Mostyn J said that there were five reasons why an application for permission to appeal should by made to the trial judge, saying by reference to the notes in the White Book (52.3.4):

    (a) The judge below is fully seised of the matter and so the application will take minimal time. Indeed the judge may have already decided that the case raises questions fit for appeal.

    (b) An application at this stage involves neither party in additional cost.

    (c) No harm is done if the application fails. The litigant enjoys two bites at the cherry.

    (d) If the application succeeds and the litigant subsequently decides to appeal, they avoid the expensive and time-consuming permission stage in the Appeal Court.

    (e) No harm is done if the application succeeds but the litigant subsequently decides not to appeal.

    Mostyn J went on to say that (emphasis added):

    It is therefore my clear view that in the future, in the field of ancillary relief at the very least, an application for permission to appeal must always be made to the judge at first instance before an approach is made to the Court of Appeal.

    Undeterred, the appellants (trustees of a nuptial settlement) obtained permission (on slightly different grounds) from the Court of Appeal on paper. In the course of the appeal, Jackson LJ admitted that he had been the author of that note in the White Book (and rued the fact that the 2015 edition had only just gone to press at the point of the appeal and so it was too late to clarify for this next edition!).

    However, he was clear that:

    68. In my view, even under the current rules, it is still good practice for any party contemplating an appeal in the first instance to seek permission from the lower court. Ideally the party should do so when the judge delivers or hands down judgment. This is for the five reasons set out in paragraph 52.3.4 of the White Book commentary.

    69. On the other hand there is no longer a rule requiring the appellant to apply to the lower court for permission. Therefore the need to apply to the court below is no longer a mandatory requirement, merely a matter of good practice.

    70. These observations apply both to family cases and to civil litigation generally.

    It is difficult to ask a judge who has only just found against your client to accept that he or she might have got it wrong. There may be cases in which the nature of the complaint made against the judge render it wholly inappropriate to ask that judge to reconsider.

    Always remember this: the fact that a judge has found the way their discretion should be exercised to be very finely balanced is actually a powerful reason why permission should not be granted. If you can show that the judge has misapplied or misunderstood the law, an appeal will readily be granted. But an appeal against an exercise of a very broad discretion is a great deal harder to sustain.


Published: 01/06/2015

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