FN (Gambia) v AL (Albania) v Secretary of State for the Home Department [2015] QB/2014/0626 & QB/2014/0627

Duty of candour did not require Respondent to disclose content of without prejudice communications in without notice application. In not doing so, the Respondent had not misled the court.

Mr Justice Hamblen today delivered judgment in these conjoined appeals against a decision of Master O’Hare not to set aside an award for costs consequent to an application by the Respondent for an unless order under CPR 47.8(2). The case explores the interplay and potential tension between the without prejudice principle and the duty of full and frank disclosure in without notice applications.

The Respondent had been ordered by the Court of Appeal, following successful judicial review proceedings, to pay the Appellants their costs to be assessed if not agreed. Over two years had elapsed since this order had been made and the Appellants failed to issue bills of costs and commence detailed assessment proceedings within the 3 month time limit specified in CPR 47.7. Negotiations had commenced over the assessment of costs. During these negotiations the Respondent issued a 7 day warning that it intended to make an application under 47.8(2) for an unless order to compel the Appellants to commence detailed assessment. The Appellants’ solicitor responded in terms that invited the Respondent to make the application and wrongly stated that there was no such time limit that applied. The Respondent then waited a further 7 weeks before following through with their threat of an application, which in the event was made without notice.

Master O’Hare made an unless order and awarded the Respondent its costs but allowed the Appellant leave to apply to set it aside. On such an application, the Appellants raised the issue of the duty of candor and accused the Respondent’s solicitors of misleading the court in a number of respects, including by not telling the court of the content and status of negotiations between the parties. The application to set aside was heard before the same Master and was refused, with the Master reviewing all of the information that was said to have been omitted from the application and satisfying himself that he had not been misled and that it would not have made any difference to the making of the order.

On appeal, the Appellant tried to argue that the Master had erred in law in his approach to assessing whether the duty of candor had been breached and had further erred in not setting aside the award of costs to the Respondent.

The Appellants further tried to adduce new evidence that had not been before the Master, namely correspondence in separate proceedings, which had suggested the Appellants had communicated to the Respondent a usual time frame for completing bills of costs. The Appellants argued the Respondent also left this information out of their application. The Respondent argued successfully that such evidence was available to the Appellants and could, with reasonable diligence have been put before the Master at the time of the set aside hearing. On Ladd v Marshall principles, such evidence was inadmissible in this appeal.

Hamblen J then reviewed the authorities in relation to the duty of candour, including the principles within the judgments of Henry LJ in Knauf UK GmbH v British Gypsum Ltd (No.1) [2002] 1 WLR 907 and Walker J in Standard Bank Plc and others v Just Group LLC and others [2014] EWHC 2687. However, he agreed with the Respondent that it was right to consider the fact that the documents and discussions that were said to have been omitted in this case had been without prejudice. In such a case the appropriate guidance to follow was that of Crane J in Pearson Education Ltd v Prentice Hall India Private Ltd [2005] EWHC 636, namely that the duty of candor might require a without prejudice document, or some indication of its existence, to be disclosed, but only if it is clear that without it the court might be misled. This was the correct test to apply in this case and the Master had correctly concluded that he had not been misled by the Respondent.

In any event, even if there had been a breach of the duty of candour it would not have been a serious one that would have required the Master to have applied a costs sanction. It was not one of those cases where any non-disclosure had some immediate or draconian effect and any breach would also have been unintentional. On the facts it was clear that any such breach would not have made any difference to the outcome of the application and considerations of equity, including the conduct of the Appellant’s solicitor when faced with a threat of an application, pointed against making such a sanction.

Both appeals were therefore dismissed with costs awarded to the Respondent.

Tom Kirk represented the successful Respondent, the Secretary of State for the Home Department, and was instructed by Keoghs LLP.