Dr Devan Moodley, a psychiatrist from Manchester, was found by the High Court to have ran a dishonest defence. That defence having been run by Dr Moodley for a period of 2 years up to and including at trial, raises serious questions with respect to Dr Moodley's compliance with the General Medical Council's code of conduct. The General Medical Council on it's website under it's "Maintaining Trust" to doctors states:

  • Be Honest and open and act with integrity.
  • Never abuse your patient's trust in you, or the public's trust in the profession.

It goes on to say, "You are personally accountable for your professional practise and always be prepared to justify your decisions and actions...."

Whilst Dr Moodley is South African, he works in the UK, he is subject to the code of conduct of the General Medical Council. Should the public simply accept and forgive doctors who have fallen below the standard expected of them or should the public expect those standards to be rigorously adhered to and maintained by a regulator which is there to protect the public?

Please not the the eminent and world renowned South African Oncologist, Dr Devan Moodley, is not involved or associated with this case. He merely shares his name with the psychiatrist Dr Devan Moodley from Manchester, England, who was found by the High Court to have ran a dishonest defence.

IN THE HIGH COURT OF JUSTICE

PROPERTY AND BUSINESS COURTS IN MANCHESTER CIRCUIT COMMERCIAL COURT

Case No: C40MA058

Manchester Civil Justice Centre, Manchester, M60 9DJ

Before:

HIS HONOUR JUDGE PELLING QC SITTING AS A JUDGE OF THE HIGH COURT

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Date: 09/01/2019

Between:

(1) MENTAL HEALTH CARE (UK) LIMITED       

Claimant

- and –

(1) EDWARD LUPEN HEALTHCARE LIMITED

(2) DR DEVAN MOODLEY

(3) W-I TECHNOLOGY LIMITED (IN LIQUIDATION

                             Defendants

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Ms Lesley Anderson QC (instructed by Knights PLC) for the Claimant

Dr Richard Wilson QC (instructed by Bond Adams LLP) for the First and Second Defendants

The Third Defendant did not appear and was not represented.

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Hearing date 9 January 2019

Costs Ruling

HH Judge Pelling QC: Introduction

1.    On 9 January 2019, I handed down my substantive judgment in these proceedings and in addition heard argument concerning the costs of and occasioned by these proceedings. Dr Wilson QC’s submissions concerning costs started at about 1130 and did not conclude until about 1530. Ms Anderson QC was not able to complete her costs submissions until 1710. In those circumstances, I directed Dr Wilson to file and serve any reply submissions by 1630 on 10 January 2019. This Ruling is delivered following receipt of those submissions. I have used in this Ruling the same defined words and phrases I used in the substantive judgment, where those words and phrases are defined.

2.    Dr  Wilson  submitted  that  the  defendants  should  recover  the  whole  of  their  costs  of  and occasioned  by  the  claim  to  be  assessed  on  the  Indemnity  basis  whereas  Ms  Anderson submitted that the appropriate order was that there should be no order as to costs. Aside from  the  main  issue,  there  is  a  dispute  between  the  parties  as  to  which  party should  be responsible for the costs thrown away by the ineffective hearing on 24 September 2018. As to that, Ms Anderson maintains that the claimant should have those costs in any event and Dr Wilson submitted initially that they should be in the case and then that there should be no order as to those costs. I determine that issue separately at the end of this Ruling.

Applicable Legal Principles

3.   The core principles applicable to the award of costs are those set out in CPR r.44.2 – 44.3, which in so far as is material provides:

“44.2 (1) The court has discretion as to –

(a) whether costs are payable by one party to another; (b) the amount of those costs; and

(c) when they are to be paid.

(2) If the court decides to make an order about costs –

(a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but

(b) the court may make a different order.

(4)  In  deciding  what  order  (if  any)  to  make  about  costs,  the  court  will  have regard to all the circumstances, including –

(a) the conduct of all the parties;

(b) whether a party has succeeded on part of its case, even if that party has not been wholly successful; and

(c) any admissible offer to settle made by a party which is drawn to the court’s

attention, and which is not an offer to which costs consequences under Part

36 apply.

(5) The conduct of the parties includes –

(a) conduct before, as well as during, the proceedings and in particular the extent to which the parties followed the Practice Direction – Pre-Action Conduct or any relevant pre-action protocol;

(b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(c) the manner in which a party has pursued or defended its case or a particular allegation or issue; and

(d)  whether  a  claimant  who  has  succeeded  in  the  claim,  in  whole  or  in  part, exaggerated its claim.

(6) The orders which the court may make under this rule include an order that a party must pay –

(a) a proportion of another party’s costs;

(b) a stated amount in respect of another party’s costs;

(c) costs from or until a certain date only;

(d) costs incurred before proceedings have begun;

(e) costs relating to particular steps taken in the proceedings; (f) costs relating only to a distinct part of the proceedings; and

(g)  interest  on  costs  from  or  until  a  certain  date,  including  a  date  before judgment.

(7)  Before  the  court  considers  making  an  order  under  paragraph  (6)(f),  it  will consider whether it is practicable to make an order under paragraph (6)(a) or (c) instead.

(8) Where the court orders a party to pay costs subject to detailed assessment, it will  order  that  party  to  pay  a  reasonable  sum  on  account  of  costs,  unless there is good reason not to do so.


44.3 (1) Where the court is to assess the amount of costs (whether by summary or detailed assessment) it will assess those costs –

(a) on the standard basis; or

(b) on the indemnity basis, but the court will not in either case allow costs which have been unreasonably incurred or are unreasonable in amount.

(2) Where the amount of costs is to be assessed on the standard basis, the court will –

(a) only allow costs which are proportionate to the matters in issue. Costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred; and

(b) resolve any doubt which it may have as to whether costs were reasonably and proportionately incurred or were reasonable and proportionate in amount in favour of the paying party.

(3) Where the amount of costs is to be assessed on the indemnity basis, the court will  resolve  any  doubt  which  it  may  have  as  to  whether  costs  were reasonably incurred or were reasonable in amount in favour of the receiving party.

(4) Where –

(a) the court makes an order about costs without indicating the basis on which the costs are to be assessed; or

(b) the court makes an order  for costs to be assessed on a basis other than the standard basis or the indemnity basis, the costs will be assessed on the standard basis.”

4.    Although  Dr  Wilson  submitted  that  it  would  be  wrong  in  principle  to  depart  from  the general  rule  that  that  the  unsuccessful  party  must  be  ordered  to  pay  the  costs  of  the successful party because an otherwise successful party lost on some issues, in my judgment that does not reflect the law. On the contrary, whilst the starting point is undoubtedly to decide  who  has  been  successful  and who  has  not, the  authorities  encourage  the  court to make orders of the sort referred to in CPR r.44.2(6)(a) where an otherwise successful party has lost on particular issues – see by way of example Multiplex Construction (UK) Limited v. Cleveland Bridge UK Limited [2008] EWHC 2280 (TCC) at [72] where Jackson J (as he then was) summarised the applicable principles in these terms:

“From this review of authority I derive the following eight principles.

(i)  In  commercial  litigation  where  each  party  has  claims  and  asserts  that  a balance  is  owing  in  its  own  favour,  the  party  which  ends  up  receiving payment should generally be characterised as the overall winner of the entire action.

(ii)  In  considering  how  to  exercise  its  discretion  the  court  should  take  as  its starting point the general rule that the successful party is entitled to an order for costs

(iii) The judge must then consider what departures are required from that starting point, having regard to all the circumstances of the case.

(iv) Where the circumstances of the case require an issue-based costs order, that is what the judge should make. However, the judge should hesitate before doing so, because of the practical difficulties which this causes and because of the steer given by rule 44.3(7).

(v)  In  many  cases  the  judge  can  and  should  reflect  the  relative  success  of  the parties on different issues by making a proportionate costs order.

(vi) In considering the circumstances of the case the judge will have regard not only  to  any  part  36  offers  made  but  also  to  each  party's  approach  to negotiations (insofar as admissible) and general conduct of the litigation.

(vii) If (a) one party makes an order offer under part 36 or an admissible offer within  rule  44.3(4)(c)  which  is  nearly  but  not  quite  sufficient,  and  (b)  the other party rejects that offer outright without any attempt to negotiate, then it might be appropriate to penalise the second party in costs.1

(viii)  In  assessing  a  proportionate  costs  order  the  judge  should  consider  what costs  are  referable  to  each  issue  and  what  costs  are  common  to  several issues. It will often be reasonable for the overall winner to recover not only the  costs  specific  to  the  issues  which  he  has  won  but  also  the  common costs.”

Paragraph (v) reflects the correct approach. That is so because the Overriding Objective “… informs …” both the exercise of the court’s powers and the correct interpretation of CPR Part 44 – see Bank of Tokyo and another v. Basken Gida Sanayi Ve Pazarlama AS and others [2009] EWHC 1696 (Ch) (“BoT”) per Briggs J (as he then was) at [4] and Kew v. Bettamix Limited [2006] EWCA Civ 1535 per Leveson LJ at [46], where he observed that “ … It is incumbent on all those involved in litigation to ensure that they carefully reflect on those issues that they seek to put before the court and it will be no bad thing if that leads to the reduced pursuit of bad points.”.  It is not every case where a party loses on a particular issue that such an approach will be appropriate – see Kew v. Bettamix Limited (ante) per Leveson LJ at [49], where he observed that “ … there is a distinction between putting the case at its highest (for example, in relation to many heads of damage in a personal injuries claim)  and  advancing  a  basis  for  relief  on  a  basis  that  fails  (especially  if  it  is  entirely unsupportable)”.  This  approach  applies  with  equal  force  where  a  defendant  has  been successful in the result but in so doing relied on a ground that has been rejected – see by way of example Grupo Hotelero Uravesco SA v. Carrey Value Added SL [2013] EWHC 1732 (Comm) and R (OAO Viridor Waste Management Limited) v. HMRC [2016] EWHC

2502 (Admin) [2016] 4 WLR 165.

5.    Whilst it is possible to address such situations by making an order requiring the otherwise successful party to pay the costs of and occasioned by any particular issues on which that party  has  been  unsuccessful,  that  approach  should  be  avoided  if  possible  –  see  CPR r.44.2(7) and Multiplex Construction (UK) Limited v. Cleveland Bridge UK Limited (ante) at  [72(iv)].  In  most  cases  any  necessary  adjustment  can  and  should  be  carried  out  by adjusting the proportion of costs otherwise recoverable that will in fact be recovered by a partially successful party. Arriving at the proportion by which recoverable costs should be reduced is inevitably broad brush but is not penal.

6.    Aside from adjustments that take account of failure on issues, the court is required to have regard to the conduct of all the parties before and during the proceedings in deciding what costs order to make. In this context, conduct includes but is not limited to whether it was reasonable  for  a  party to  raise  pursue  or  contest  a  particular  allegation  or  issue  and  the manner in which a party has pursued or defended its case – see CPR r.43.2(5)(b).

Issues

7.    In the circumstances of this case two general issues arise.

8.    First,  the  defendants  contend  that  MHC  has  brought  and  pursued  this  claim  not  for  any legitimate  commercial  purpose  but,  as  Dr  Wilson  put  it  in  the  course  of  his  oral submissions, for the purpose of inflicting personal and professional ruin upon DM and at a cost that was entirely disproportionate to the sums claimed. This leads Dr Wilson to submit that the defendants should recover all their costs of the proceedings to be assessed on an indemnity rather than the standard basis.

9.    Secondly, the claimant contends that in important respects (being those connected with the issues on which the defendants lost) the defendants have advanced a case that DM knew to be false and to have supported that case with false evidence. In relation to these allegations, the applicable principles are those summarised by Briggs J in BoT1 at [19] in these terms:

“The  principles  which  I  derive  from  the  cases  to  which  I  have  referred  are  as follows:

i) There is no general principle that where an otherwise successful party has put forward  a dishonest case in relation to an issue  in the litigation,  the  general rule that costs follow the event is thereby wholly displaced. I leave on one side cases such as Molloy and Arrow Nominees Inc v. Blackledge [2000] 2 BCLC 167, where the conduct in question is so grave that the entire case of the party can properly be described as amounting to an abuse of process. In such cases it is difficult to conceive how that party would ever be the successful party in the litigation. For reasons which will be apparent from the main judgment, and to which I will return, this is not one of those cases.

ii)  The  court’s  powers  in  relation  to  the  putting  forward  of  a  dishonest  case include  (a)  disallowance  of  that  party’s  costs  in  advancing  that  case,  (b)  an order that he pay the other party’s costs attributable to proving that dishonesty, and  (c)  the  imposition  of  an  additional  penalty  which,  while  it  must  be proportionate  to  the  gravity  of  the  misconduct,  may  in  an  appropriate  case extend  to  a  disallowance  of  the  whole  of  the  successful  party’s  costs,  or  an order that he pay all or part of the unsuccessful party’s costs.

iii) In framing an appropriate response to such misconduct, the trial judge must constantly  bear  in  mind  the  effect  of  his  order  upon  the  process  of  detailed assessment  which  will  follow,  in  the  absence  of  agreement,  in  particular  to avoid   unintended   double  jeopardy:  see   per   Waller   LJ   in  Ultraframe  at paragraphs 33 to 34.

iv) There is no general rule that a losing party who can establish dishonesty must receive all his costs of establishing that dishonesty, however disproportionate they may be.”: per Waller LJ in Ultraframe at paragraph 36.”

10.  In  relation to the defendants’ application  for indemnity costs, the applicable principles were summarised by Briggs J in BoT at [26] in these terms:”

“i)  The  court’s  discretion  to  grant  indemnity  costs  is  not  limited  by  any  hard rules of exclusion.

ii)  Nonetheless  the  primary  considerations  relevant  to  the  award  of  indemnity costs are first, whether the conduct of the party against whom the order is sought is such as to take the  case out of the  norm, and  secondly,  whether that   party’s   conduct   can   properly   be   categorised   as   either   deliberate misconduct, or conduct which is unreasonable to a serious degree.

iii) The bringing of a case alleging serious dishonesty may qualify for indemnity costs if on the material it can properly be categorised as speculative, weak, opportunistic or thin, if it is advanced on the basis of a constantly changing

1  Approved by the Court of Appeal in Hutchinson and Penning v. Neale and Neale [2012] EWCA Civ 345 at [25] and [41] case, and if it is pursued on a very large scale without apology to the bitter end, including by hostile cross-examination,  without constant regard  to its merits.  Some  combination  of  those  factors  may  justify  the  view  that  the litigation has been unreasonably pursued.”

27. It follows in my judgment that it is not enough for a party to assert simply that it has successfully fought allegations of the utmost gravity, regardless of the circumstances in which those allegations came to be made. Although a case in which such allegations are made may for that reason alone be out of the  norm,  especially  a  case  of  the  present  size  and  complexity,  that  is unlikely  in  itself  to  constitute  a  good  reason  for  the  award  of  indemnity costs.”

Finally, before turning to the issues it is worth noting the warning given by Briggs J in [28] of his judgment in BoT:

“  28.  To  those  conclusions  on  the  issues  of  principle  separating  the  parties  I would  add  this.  Whenever  the  court  is  asked  to  make  some  out-of-the- ordinary costs order in consequence of the alleged misconduct of the party against  whom  the  application  is  made,  the  court  must  bear  constantly  in mind the conduct of the party making the application. I consider this to be so for two main reasons. The first is that the conduct  of the party making the application  may  have  been,  in  some  respect,  a  contributory  cause  of  the conduct  complained  about.  It  may  even  lead  to  the  conclusion  that  the conduct  complained  about,  although  unsuccessful,  was  nonetheless  not unreasonable in the circumstances.

29. The second reason is one of common sense  and justice. Penal costs orders (like all costs orders) lead to a financial adjustment between the parties, not to  penalties  in  the  nature  of  fines  payable  into  the  Consolidated  Fund. Although  there  may  be  cases  where  the  conduct  criticised  is  such  that  a public  example  needs  to  be  made  of  the  guilty  party,  to  an  extent  which overrides the practical justice of the matter between the litigants before the court,  they  are  in  my  judgment  likely  to  be  the  exception  rather  than  the rule.”

Discussion and Determination of Costs Applications

Success

11.  The starting point is to decide who has been successful and who has not been. Dr Wilson submits and Ms Anderson accepts that the defendants have succeeded in the result. It is that which leads Dr Wilson to submit that the defendants should on any view recover the whole of  their  costs  of  and  occasioned  by the  proceedings.  In  my judgment  that  is  an  entirely unsustainable and unrealistic position for the defendants to adopt. My reasons for arriving at that conclusion are as follows.

MHC’s Partial Success

12.  As will be apparent from the substantive judgment, there are a significant number of issues on which the defendants have failed. In summary they are (a) the employment issue – see [44] to [81] of the substantive judgment (“SJ”); (b) the issue concerning DM’s commercial interest in SCL – see SJ at [153] to [163] - in relation to which I rejected DM’s evidence as untrue and as adversely impacting on his credibility as a witness   – see SJ [163]; (c) the issue concerning DM’s commercial interest in (i) Achieve Connect Limited and Achieve E Learning Academy Limited – see SJ [184] and [185]; and (d) the issue concerning DM’s commercial interest in  WIT – see SJ [191] to [192].  It is also the case that I found ELHL in breach  of  its  contract  in  relation  to  Contract  1  in  a  limited  respect  –  see  SJ  [131]  and [211(f)(i)] – and Contract 4 – see SJ [179] and [211(f)(ii)].

13.  In relation to the employment issue, Dr Wilson maintains that the issue was one of limited importance to the issues between the parties and that it did not have a serious impact on the length  of  the  trial  because  it  was  dealt  with  by  way  of  submissions  that  relied  on  the documents in the trial bundle. He maintains that merely because it took 41 paragraphs of the judgment  to  dispose  of  is  immaterial  and  that  in  any  event.    In  my  judgment  that significantly underplays both the significance of the point on the litigation and its impact on the costs of these proceedings.

14.  As  to  the  significance  of  the  point,  it  is  necessary  to  remember  why  the  point  was significant.  Although  Dr  Wilson  maintained  in  his  costs  submissions  that  the  point  was relevant because of the assertion by the claimant that DM was jointly liable with ELHL for breach  of  the  2nd  Consultancy  Agreement,  that  was  not  its  real  significance.  Dr  Wilson addressed  that  point   in  opening  and  closing  submissions  on  the  basis  that  it  was unsustainable  as  a  matter  of  law  and  it  was  determined  by  me  by  reference  to  those submissions – see paragraph 40 of the judgment. The real significance of the point was that the defendants and Dr Wilson wished to establish that the 2nd Consultancy Agreement was a sham, void and of no effect so as to avoid any conclusion that ELHL was liable for breach of that agreement and further that ELHL owed fiduciary duties under that Agreement for breach of which DM could be held personally liable as an accessory. In addition, Dr Wilson argued (successfully as it turned out) that ELHL did not owe any relevant fiduciary duties to MHC  see  SJ,  paragraphs  114  –  117.  However  that  issue  would  not  have  arisen  had  I accepted Dr Wilson’s submission that DM was MHC’s employee and the 2nd  Consultancy Agreement was a sham void and of no effect. For these reasons I reject the suggestion that the employment issue was anything other than a central part of the defendants’ defence to

MHC’s claims.

15.  In relation to the impact of the employment point on costs, merely because the point was one that generated little or no cross examination of witnesses is almost beside the point. The issue was a complex one that greatly lengthened the submissions made at the end of the trial. The written opening served by Dr Wilson places the employment issue at the forefront of his case - see Section C, Section D(a)1 and paragraphs 72-82 which refers extensively to the written evidence as well as to documentation within the trial bundle. It featured equally extensively in the closings and led Ms Anderson to include within her closing submissions a discrete  section  addressing  the  issue  in  the  preparation  of  which  she  was  assisted  by  a specialist   junior,   introduced   into   the   case   only   for   the   purpose   of   addressing   the employment issue. Although the length of the judgment is not directly relevant, it is relevant in the sense that it reflects the length and complexity of the submissions made both on the law and on the evidential material.  I have no doubt that the trial would have been shorter, the evidence and pleadings would have been shorter and the submissions in opening and closing, both written and oral, would have been shorter had this issue not been argued. It is plainly an issue on which the defendants lost and which added to the cost and complexity of the trial and was not an issue that could be or which I was asked by either party to dispose of as anything other than an issue of central importance in the case. That said, I accept that much of the documentation relevant to the employment issue was also relevant to the de facto director issue so that it would and should have been disclosed in any event.

16.  In relation to the issues concerning interest in and control of SCL, WIT and the Achieve companies (“Control Issues”) , there can be no real doubt that these issues were highly fact intensive, were in issue throughout the trial, until closing submissions at any rate, drove much of the disclosure process and led to a significant amount of oral evidence that might otherwise have been avoided.

17.  This leads me to conclude that notwithstanding that the defendants have succeeded in these proceedings in the result, the claimant ought in principle to be recover its costs of the issues on which it succeeded and the defendant should not be permitted to recover their costs of the issues on which they lost., I am satisfied however that it would not be appropriate to make an issue based order for all the practical reasons alluded to by Jackson J in Multiplex.

I am satisfied that fairness can be achieved by directing that the defendant should recover only  a  proportion  of  his  costs  of  and  occasioned  by  the  proceedings.  I  return  to  the proportion at the end of this Ruling.

18.  Ms  Anderson  goes  further  that  I  have  so  far  gone  in  relation  to  the  Control  Issues  and submits that at any rate in relation to SCL and WIT the defendants advanced a dishonest defence. In my judgment there is substance in this submission as is apparent for example by comparing what DM had said in his email to Dr Charles of 6 October 2014 (SJ, paragraph

159)  with  what  he  had  said  in  his  4th   witness  statement  (SJ,  paragraph  162).  DM’s unwillingness to concede on the SCL issue save and to the extent he was driven to do so by the questions he was asked in cross examination is apparent from SJ, paragraph 162. All this led me to reject DM’s evidence concerning his involvement in and control of SCL as untrue  and  to  conclude  that  I  ought  to  be  cautious  before  accepting  his  uncorroborated testimony save where it was admitted or against his interest – see SJ, paragraph 163. I also rejected his case concerning his interest in and control of WIT as untrue – see SJ, paragraph

192. I return to this issue below.

Other Conduct

19.  As I indicated at the outset, Dr Wilson alleges that this claim has not been prosecuted for any  legitimate  commercial  purpose  but  in  order  to  bring  about  DM’s  personal  and professional  ruin  and  followed  his  dismissal  for what  he  alleges  was  whistle  blowing in relation to MHC’s activities. The alleged whistle blowing activities were not investigated in the  course  of  the  trial  so  it  is  not  possible  to  reach  any conclusion  as  whether  this  was MHC’s  motivation  for  terminating  the  2nd   Consultancy  Agreement.  Nevertheless,  Dr Wilson maintains that not only should the defendants recover the whole of his costs but that they should be assessed on the indemnity basis because the proceedings were not brought for  any  legitimate  commercial  purpose  but  in  order  to  bring  about  DM’s  personal  and professional ruin. This allegation was the main focus of Dr Wilson’s costs submissions.

20.  This is a very serious allegation that cannot be viewed in isolation. As I have noted already, in  BoT,  Briggs  J  warned of  the  need to  bear  in mind the  conduct of  the applying  party whenever the court is asked to make some out-of-the-ordinary costs order in consequence of the alleged misconduct of the party against whom the application is made.

21.  In  SJ,  paragraph  23,  I  noted  that  these  proceedings  appeared  to  have  been  driven  by  a remarkable level of hostility between the parties. In that regard, I drew attention to what Ms Holgate had said concerning Mr Adey’s approach to this litigation. Dr Wilson submits that this evidence was not challenged. Ms Anderson did not refer me to any part of the transcript that suggested that this was wrong. Whilst it is true to say that Ms Holgate’s credibility was in dispute, there are some other indicators that corroborate what she has said on this issue. These include it being asserted that DM was a de facto director of MHC notwithstanding that  the  shareholder  in  that  company (Mr  Adey)  and  its  two  statutory directors  (Messrs Adey and Pino) did not give evidence. In the circumstances of this case, that was a startling omission for which no explanation has ever been offered. It is all the more startling because of  the  clear  need  to  demonstrate,  where  there  are  statutory  directors  who  are  actively concerned in the management and operation of the company concerned, that the alleged de facto director acted on an equal footing with the de jure directors – see SJ, paragraph 83. Although in the course of the trial Ms Anderson dismissed this point on the basis that what Mr Adey thought the position to be was irrelevant to the outcome, that misses the point. Had DM been a de facto director, Mr Adey and Mr Pino would have been able to give evidence of facts and matters that supported such a contention and clearly demonstrated that DM was acting on an equal footing with each of them in relation to MHC.

22.  The main foundation of MHC’s case that DM owed MHC relevant fiduciary duties was its assertion that DM was a de facto director of MHC. However, that allegation was made at a relatively late  stage  in  these  proceedings,  when  the  proceedings  were  amended  so  as  to include  the  allegations  concerning  SCL,  WIT  and  Contracts  1  to  4.  It  was  entirely inconsistent   with   the   position   adopted   by   MHC   in   earlier   Employment   Tribunal proceedings brought by Ms Johnson against MHC – see SJ, paragraph 87.

23.  There is also some support for the proposition that this litigation was not being prosecuted for legitimate commercial reasons by the cost that were budgeted when compared to the sums that were at stake. Dr Wilson submitted that originally MHC had sought a budget for these proceedings of in excess of £800,000. Ms Anderson did not challenge that submission factually. It was heavily reduced during the cost budgeting exercise but the point remains that MHC’s budgeted costs came to £549,698 to which must be added a further £16,491 has to be added for budgeting costs making a grand total of £566,189. That was over twice the likely maximum  value  of  the  claim  as  pleaded  –  see  SJ,  paragraphs  19  to  23.  It  is  also supported inferentially by the inclusion within the claim of a claim for £6,000 in respect of investigative costs which if recoverable at all were recoverable as costs and a claim for £250 in respect of the Patient X issue.

24.  Finally there is some support for the proposition for which the defendants contend from the previous recourse to the GMC and to the constant reminders to DM in the course of his cross examination of the impact of his evidence being disbelieved on his regulatory position – see SJ, paragraph 23. Dr Wilson relied on the fact that MHC had reported DM to the GMC  in  relation  to  the  Patient  X  and  three  other  issues.  Ms  Anderson  submitted  that regulatory issues were different from the commercial issues that arise in these proceedings. I accept that submission, as I also accept that there is an obligation that rests on medical practitioners to report other practitioners’ apparent misconduct to the GMC. However, it is legitimate to point out that the GMC took no action in respect of those complaints. In the GMC’s decision letter, its decision maker noted that the origins of the dispute were a “… clearly difficult professional relationship between MHC and [DM] …”, that much of the material provided to the GMC “… relates to employment issues …” and concluded that no further action was required in relation to the four complaints made by or on behalf of MHC because there was not “ … sufficient evidence … to indicate that [DM]’s fitness to practice medicine may be impaired”. A complaint about the use by DM of his private email account for  MHC  business  was  dismissed  because  there  made  been  no  data  breach  and  the complaint “… appears to be more of a contractual dispute between MHC and [DM] than a GMC matter”. The psychiatrist consulted by the GMC supported DM’s position in relation to Patient X and overall the complaints were rejected without further enquiry because they did  not  identify any  issues  that  would  lead  the  GMC  to  launch  a  full  investigation  into DM’s fitness to practice.

25.  Dr Wilson maintained that a review of the correspondence passing between the parties after the  commencement  of  proceedings  demonstrated  or  supported  a  conclusion  that  MHC prosecuted this litigation for the reasons that I have summarised at the start of this section of this  Ruling.  Although  he  took  me  to  a  number  of  letters  that  passed  between  MHC’s solicitors  and  those  acting  for  DM,  in  my  judgment  they  take  matters  no  further.  They demonstrate   an   aggressive   and   uncompromising   approach   that   on   occasion   was unreasonable to a high degree. An example was declining to extend time to take account of a bank holiday. Another example was the correspondence from MHC’s solicitors in relation to   the   24   September   issue   referred   to   later   in   this   judgment,   which   was   entirely inappropriate. However, significantly more than correspondence of the sort to which my attention was drawn would be required before it could be concluded that an indemnity costs order was called for.

26.  As I have said, MHC’s conduct cannot be viewed in isolation. As I have indicated already, MHC’s  case   in  relation  to  the  SCL  and  WIT  control  issues  was  met  with  a  dishonest defence. The defendant’s conduct of the litigation has been unsatisfactory for at least the reasons  alluded to  by Ms  Anderson in her  submissions. These included in particular the approach to disclosure which undoubtedly increased cost and resulted in delay that in the end  led  to  both  parties  being  placed  under  avoidable  pressure  in  the  final  stages  of preparation prior to the trial. Equally unsatisfactory was the repeated threat made on behalf of the defendants to bring a substantial counter claim in these proceedings which was never the subject of pre action protocol correspondence and never materialised but which led to lengthened procedural hearings and prolonged uncertainty as to what issues would have to be  resolved.  I  am  also  satisfied  that  the  failure  by  DM  to  answer  fairly and  frankly the questions which he was asked in cross examination greatly lengthened that process  both because  of  the  need  to  refer  to  material  that  it  would  have  been  unnecessary  for  Ms Anderson to refer to had her initial question been answered as it should have been and by the need to return to the same issues on repeated occasions.

27.  Where  a  party  is  exposed  to  the  cost  and  inconvenience  of  litigation  unreasonably  and disproportionately, it may be appropriate to direct that some or all of that party’s costs be paid on an indemnity basis. Where such a litigant has lost on some issues that ought not to be have been contested, it may be appropriate to direct that such a litigant should recover a proportion  of  his  her  or  its  costs  assessed  on  an  indemnity rather  than  a  standard  basis. However, where such a litigant has not merely lost on some issues that should not  have been contested but has done so on the basis of a dishonest defence exacerbated by other misconduct during the litigation process then it may be appropriate to limit the costs that such a litigant recovers and direct that the costs that he recovers should be assessed on the standard basis in order to strike the correct balance between the misconduct of each of the parties.

28.  In my judgment MHC prosecuted these proceedings unreasonably and disproportionately either for or primarily for reasons other than a desire to recover the sums claimed. However, that does not justify requiring the payment of any of the defendants’ costs on an indemnity basis having regard to DM’s conduct in relation to the SCL and WIT control issues and his conduct  of  this  litigation.  However,  these  last  mentioned  factors  do  not  lead  to  the conclusion  that  there  should  be  no  order  as  to  costs.  That  would  fail  to  take  account adequately of the fact that the defendants won in the result and the disproportionate nature of  these  proceedings.  In  my judgment  the  two generic  issues that  generated  most  of the disclosure and much of the oral evidence were the de facto director issue and the Control Issues.  The  defendant  succeeded  on  the  first  of  these  issues  but  lost  on  the  latter.  The employment issue did not add greatly to the evidence or disclosure though it did add to the length and complexity of the submissions both legally and factually. In addition, it must be remembered that both defendants succeeded in relation to most of the breach of contract and  duty  issues  and  on  the  loss  issues.  The  breaches  I  found  proved  do  not  assist  the claimant since they entitle MHC at most to nominal damages. It has long been recognised that success in recovering nominal damages does not equate to success. Doing the best I can with this material and taking account of all these issues, I consider the fair and just result is that  the  defendants  should  recover  one  third  of  their  costs  of  these  proceedings  to  be assessed on the standard basis.

The 24 September Hearing

29.  At  the  conclusion  of  the  trial,  I  gave  the  parties  4  days  in  which  to  prepare  closing submissions  being  Thursday and  Friday 20  and  21  September  and  the  weekend.  I fixed Monday 25 September for the delivery of oral submissions.  Both parties were directed to serve written closing submissions during the course of Sunday 23 September. Dr Wilson submitted that I did not direct that submissions be served. I do not follow this submission. Whilst I might not have expressly used that word it would or should have been obvious to experienced  practitioners  that  there  is  little  or  no  point  in  preparing  written  closing submissions unless they are exchanged with the other side prior to a submissions hearing as well as being supplied to the court. Equally it is or ought to be obvious that it would be wrong in principle for something to be provided to the court that was not provided to the other side. Finally Dr Wilson submitted that I had not directed that the purpose of the oral submissions  hearing  was  to  enable  each  party  to  respond  to  the  others  written  closing submissions.  With  respect  this  ought  to  have  been  obvious  to  experienced  practitioners. That is the means by which oral submissions can be reduced in length and judges assisted in reaching a conclusion. No useful purpose will be served by oral submissions that simply repeat or summarise submissions previously made in writing.

30.  The reality is this - the timetable had been structured so as to enable each counsel to read and digest the written submissions of the other during the course of Sunday afternoon and evening so as to enable the points made to be answered orally on the following Monday. Incidentally it was also structured to enable me to read both parties’ closing submissions so that I would be able to understand and test the responses when they came to be made orally. In the event, Dr Wilson sought extensions of time during Sunday that I granted but which he did not comply with. In the end he delivered his written submissions to me on Monday

24 September at about 0815 and to Ms Anderson at about 0845. This led Ms Anderson to apply for an adjournment of the submissions hearing because she had not had a reasonable opportunity  to  read  or  digest  the  submissions  made  by  Dr  Wilson.  I  acceded  to  that submission given the length and complexity of the submissions made and the fact that it was  entirely  unreasonable  to  expect  Ms  Anderson  to  respond  meaningfully  to  such submissions served so late in the day.

31.  Dr Wilson submits that I should not have acceded to that submission for two reasons. First, he submits that he was in the same position because Ms Anderson did not send him a copy of her submissions until he was in a position to offer his to her for exchange. Secondly, he submits  that  Mr.  Anderson  could  and  should  have  chosen  to  ask  for  the  morning  of  24 September to read the submissions and then address the court in the afternoon. Both of these submissions are entirely unrealistic and without merit. The first is without merit because Dr Wilson was only in that position because he had failed to comply with the directions that had been given. Ms Anderson’s conduct cannot be criticised. Secondly it is entirely unreal to suppose that Ms Anderson could have foreseen that if she had the morning to read the submission, she could have responded to them in so little time as to enable Dr Wilson to complete his oral submissions that day. It would have been entirely inappropriate for Ms Anderson to have been placed under such pressure in an attempt to mitigate something that was none of her doing. In the result I conclude that the appropriate order is one that requires the defendants to pay the costs of occasioned and thrown away by the adjournment of the hearing on 24 September.

Interest

32.  Ms  Anderson  dos  not  dispute  the  defendants’  submission  that  her  client  ought  to  pay interest at the rate contended for by Dr Wilson. I agree subject to all necessary adjustments in order to give effect to the conclusions reached above.

Payment on Account

33.  The  defendant  is  entitled  to  a  payment  on  account.  I  direct  that  the  defendants  should recover a payment on account of  60% of the one third of their costs that they are entitled to recover.

ELHL’s Costs

34.  Since ELHL as well as DM was sued by the claimant it follows that both it and DM are entitled to recover their respective costs. However it has not at any stage been suggested that ELHL has suffered any costs that have not been incurred by DM or vice versa or that there was any issue that justified ELHL being separately represented. It is for that reason that the defendants costs budget was sought and approved on the basis that it was for both defendants.  It  follows  that  the  budget  caps  the  costs  that  both  defendants  together  are entitled to recover.

Disposition

35.  The parties are directed to lodge a draft order giving effect to the SJ and the conclusions set out above.

Dr Devan Moodley

devan moodley

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