Foden v Humphry & Co (A Firm) & Anor

A statutory demand founded on a costs order that remains in force should not be set aside merely because the debtor disputes the underlying litigation, has a claim against the creditor, or alleges judicial or legal misconduct. A litigant who knowingly chooses not to attend a hearing cannot later challenge the resulting determination and consequential costs order on that basis. Obtaining and enforcing a costs order through due process does not infringe the property protection in the First Protocol to the European Convention on Human Rights, nor does it of itself breach Article 6 of the European Convention on Human Rights. Permission to appeal from the High Court is required and should be refused where the proposed appeal is hopeless and discloses no important point or compelling reason.

The applicant sought permission to appeal from orders made by Lloyd J on 2 July 2002 dismissing two appeals. Those appeals concerned Judge Overend’s refusal to set aside statutory demands served by two solicitors’ firms for unpaid costs orders. One set of costs orders followed the applicant’s failure to attend a hearing of which she was aware. The other followed the striking out of her negligence action after non-compliance with case-management orders.

The costs orders remained outstanding and had not been discharged or varied. The applicant alleged bias, conspiracy, procedural unfairness and breaches of Articles 1 of the First Protocol and 6 of the European Convention on Human Rights. The central issues were whether the statutory demands could be challenged while the costs orders stood and whether permission to appeal should be granted.

Applications for permission to appeal refused. The Court of Appeal treated the issue as narrow: whether the proposed appeals from Lloyd J’s dismissal of the challenges to the statutory demands had any realistic basis.

1. Each statutory demand was based on a costs order which remained in force. The orders had not been discharged or varied. Complaints about the underlying litigation, including the existence of a substantial claim against one of the firms, did not provide a basis for setting aside the demands. The statutory-demand applications could not be used to reopen concluded proceedings or unsettle standing costs orders.
2. A litigant who knows of a hearing but chooses not to attend cannot complain that the matter was determined adversely in her absence or that consequential costs were ordered. The absence of a transcript did not justify non-attendance. The effect of the transcript had also been considered below, and no reason had been shown why it would have altered the outcome.
3. The human-rights complaints were unfounded. Obtaining by due process an order for costs against an unsuccessful litigant, and seeking to enforce it, did not infringe the property protection in the First Protocol to the European Convention on Human Rights. The adverse orders did not breach Article 6 of the European Convention on Human Rights, particularly where the applicant had knowingly declined to attend the relevant hearing. General allegations of bias and malice were unsupported by objective evidence.
4. Permission to appeal to the Court of Appeal from the High Court was required under the Civil Procedure Rules. The proposed appeals were hopeless, raised no important point of principle or practice, and disclosed no other compelling reason for them to proceed. The applications were therefore refused. The court additionally observed that any genuine allegation of fraud required a separate, timely action against the persons accused.

• Court of Appeal (Civil Division): Lord Justice Peter Gibson refused both applications for permission to appeal. [2002] EWCA Civ 1714
• High Court (Queen’s Bench Division): Lloyd J dismissed the applicant’s two appeals against Judge Overend’s orders.
• Plymouth County Court: Judge Overend dismissed the applications to set aside the respective statutory demands, which were based on unpaid costs orders.