IN THE HIGH COURT OF JUSTICE IN THE QUEEN'S BENCH DIVISION COMMERCIAL COURT

NO. 1316 OF 1998

Royal Courts of Justice

Monday 20th March, 2000

B e f o r e: MR. JUSTICE LONGMORE

THE SOCIETY OF LLOYDS Claimant

v.

(1) KARL JAN ERIK HUMMEL (2) BREYDON LIMITED Defendants

2000 WL 544204

Transcribed by BEVERLEY F. NUNNERY & CO.,

Official Shorthand Writers and Tape Transcribers

Quality House, Quality Court, Chancery Lane, London WC2A 1HP

Telephone: (0171) 831-5627

MR. C. SMITH ( instructed by the Legal Department of Lloyds) appeared on behalf of the Claimant.

THE FIRST DEFENDANT appeared in person. MS. S. TOLANEY ( instructed by Messrs. Lawrence Jones) appeared on behalf of the Second Defendant.

J U D G M E N T

(As approved by the Judge

MR. JUSTICE LONGMORE: I have to deal with an application by

Mr. Hummel to set aside a judgment given against him in default, in favour of the Society of Lloyds. This is a judgment which was in the sum of 185,000 or so, given on 26th November 1998.

Mr. Hummel says that he did not become aware of the proceedings--the claim form, or the writ, as it was then, having been issued in September 1998--or, indeed, of the judgment in default until May 1999. He says that since that date he has been ready and willing to enter into meaningful discussions with Lloyds. At the time he did not have sufficient funds to pay, but funds have been in his hands since that time, and he has been making sensible and detailed proposals for the discharge of his liabilities.

The basis on which Lloyds have obtained their judgment is that Mr. Hummel did not accept the R and R offer, and that they are therefore entitled to bill him for the full premium for reinsurance into Equitas, and there is no dispute between the parties on the detailed figures as to that. If Mr. Hummel had been an accepting member then he would have had to pay a sum in the region of 105,000, whereas, as I say, now he finds himself at the receiving end of a judgment for 185,000.

I have to deal with the matter as a matter of law, of course, and the position is this; that subsequent to the judgment being given in November 1998 a charging order was made in the form of a charging order nisi, over what was said to be Mr. Hummel's interest in 8 Cheyne Court, Flood Street in Chelsea. That charging order was made absolute in October 1999, subject to an application being made before 26th October for the judgment to be set aside, and that evidence should be filed that Mr. Hummel was not the owner of that property. Both those things have now happened.

I am, therefore, firstly concerned with Mr. Hummel's application to set aside the judgment, because if that is successful obviously the application in respect of making absolute the charging order could not take effect.

Mr. Hummel, as I say, has applied to set aside the judgment, and he has put in evidence of two kinds. First of all, he has pointed out that the original writ, marked "Not for service out of the jurisdiction", was addressed to him at an address in Grunwelt in Germany, and, as he said in his affidavit, he assumes that it must have been served at the house in Chelsea, and that since it was marked "Not for service out of the jurisdiction", therefore, there was ineffective service. He has said, secondly, that he accepted the Lloyds offer in respect of R and R, and, therefore, he has a defence on the merits.

As far as the point on service is concerned, the position is not that the writ was served at Flood Street in Chelsea, but that pursuant to the statutory and regulatory position at Lloyds the writ was served on the agents AUA9, pursuant to clause 25(2) of the arrangements made and described in

Mr. Coldbeck's affidavit in response to Mr. Hummel's affidavit to set aside the judgment. Mr. Coldbeck, in that affidavit, exhibits the affidavit of service that was presented to the court at the time that the judgment was obtained, and explains how the relevant clause in relation to service of process came to come into effect as far as members of Lloyds were concerned. Clause 25.2, under the head of "Service of Process", provides:

"Each Name and Closed Year Name not domiciled in the United Kingdom hereby irrevocably appoints the Substitute Agent as agent to accept service of any proceedings in the English courts on his behalf."

The "substitute agent" being AUA9 and the affidavit of service explaining that it was served in that way.

That is how the position stands, and one can quite understand that Mr. Hummel might think that the proceedings were served at the address in Cheyne Court in Chelsea, but that turns out not to be the case, and it seems to me that

Mr. Hummel cannot have any genuine complaint, or sense of grievance, about the fact that the proceedings were served in the way that the Lloyds rules and regulations permit, unless it turns out that he does have a genuinely arguable defence to the claim. Of course if he does then, on general principles, I should set aside the judgment in any event. But I do not consider that there is any substance in any argument, as put forward by Mr. Hummel in his affidavit in support of his application to set aside the judgment, to the effect that he was never served or ineffectively served.

So I come to the question as to whether or not if

Mr. Hummel had received notice of the proceedings at an earlier stage, when he would have been able to put in a defence, he could have then put in an arguable defence which the court should now allow him to put forward in the circumstances that have arisen. Mr. Hummel has asserted in his affidavit in support of the application to set aside the judgment that he was an accepting name. He has put forward, in his attractive submission--I should perhaps say that he has appeared in person--reasons why he says that he was an accepting name. I now look at p.91 of the bundle, which has the Lloyds settlement offer. Attached to it are two letters of his in relation to the settlement offer. They are both dated 11th September 1996. The important one, for present purposes, is that at p.93, where he says this:

"Further to my acceptance of the settlement offer,

I would like to inform you that it is subject to the following conditions:

1) That my membership of syndicates has been correctly recorded,

2) that the amount shown in my finality statement in respect of outstanding calls is accurate,

3) that the amount shown in my finality statement in respect of the value of my funds at Lloyds as at 12 July 1996, is accurate,

4) that my acceptance will not be binding if the settlement offer is subsequently revised in a manner which is materially adverse to me and

5) all Action Group fees which I have paid to date be deducted from my finality payment."

Then he stresses another couple of points. The short point here is whether that is an acceptance of the Lloyds offer or a counter offer made by Mr. Hummel. I regret to have to come to the conclusion that on any view it is in fact a counter offer made by Mr. Hummel and cannot constitute an acceptance of the Lloyds settlement offer on p.91. Mr. Smith, who appears for Lloyds, reserved his position on item 4, taking no point on items 1-3, but submitted-- and submits correctly--that item 5, on any view, must constitute a counter offer, even if, as Mr. Hummel tells me is the case, the action group fees which he has paid to date turn out to be very small. Looking at it, as I have to, as a matter of technical law in the law of offer and acceptance, that cannot be construed as an acceptance of the Lloyds offer. Mr. Hummel makes the point that many Lloyds names have been treated as accepting names with materially similar clauses in their acceptances of the offer, but that cannot affect the legal position. I have to look at the matter as a matter of law, and it is not, to my mind, arguable that the situation could be said to be that

Mr. Hummel is an accepting name. I must, therefore, come to the conclusion that there is not any arguable defence here and that, in the circumstances, I cannot accede to the application that the judgment should be set aside. The judgment will have to remain and the other part of the proceedings, in relation to the application to make absolute the charging order nisi, will have to proceed.

MR. SMITH: My Lord, in those circumstances our application would be for our costs of Mr. Hummel's application. I hope our summary schedule has made its way to your Lordship. It has certainly been lodged at court.

MS. TOLANEY: My Lord, may I interrupt on that point? You will see from the costs schedule ---

MR. JUSTICE LONGMORE: Is this the one that ends with the figure of 3,812?

MR. SMITH: My Lord, yes.

MS. TOLANEY: --- actually merges the two applications. The point that I will make in time, or may have to make in time, is that that should not be the case and this should be broken down. If my friend is proposing to do that now I would be very grateful for that.

MR. SMITH: My Lord, we have lodged a schedule. It deals with all of the costs of today together, apart from the witness statements. It contains in it the statement my learned friend has averted to, saying basically we have not sought to separate them out because it is all part and parcel of the same thing, apart from the witness statements. I was going to say to your Lordship that I have made the application and there is the schedule. Would your Lordship then leave over the assessment until such time as your Lordship knows whether your Lordship is dealing with the whole of today's business or just the part we have already concluded. So I am making the application let it rest until we know what the situation is at the end of the day.

MR. JUSTICE LONGMORE: I will put it back in its folder for the moment then.

LATER:

MR. JUSTICE LONGMORE: I now deal with the question whether the charging order nisi, obtained in respect of the premises at 8 Cheyne Court, Flood Street in Chelsea, should be made absolute. It was made absolute by Master Miller in October last year, but in such a way that it was not to come into effect if the judgment debtor, Mr. Hummel, served evidence supporting his parents-in-law's claim that they were the beneficial owners of the premises and his parents-in- law applied to be joined as parties.

The position is that on 25th October last year Mr. Hummel swore an affidavit in support of his parents-in-law's claims, stating that his father-in-law was dead and that he therefore made the witness statement in support of a claim by his mother-in-law, Mrs. Wanda Beckert, and a company registered in the Isle of Man owned by his mother-in-law and her family, that company being called Breydon Limited. He asserted in that affidavit that he was the registered proprietor of the property, which was transferred to him on 3rd March 1993 from the owner, namely Breydon Limited. He said that Breydon wished to obtain some leverage on the property, but as it was owned by a company no bank was prepared to give a loan to it. He, therefore, applied for a mortgage on the property on behalf of Breydon Limited and obtained a mortgage from Barclays in the sum of 275,000. He has always serviced that mortgage from his own resources. He further said that he did not pay the full sum of 345,000 to Breydon, and "... therefore the equity in the property remains with Breydon Limited and ultimately with my mother-in-law and her family."

The document from the Land Registry gives Mr. Hummel as being the owner of the registered title. The title number is given; the property described, and states:

"In consideration of 345,000, the receipt whereof is hereby acknowledged, we, Breydon Limited, of Springfield Court, Douglas, Isle of Man, as beneficial owner hereby transfer the land comprised in the title to Mr. Hummel."

Mr. Hummel's original witness statement called for a request for further information, which Lloyds served on Mr. Hummel. The Land Registry document appeared, together with the response of the further information, and Lloyds served evidence saying that that constituted evidence that there was a beneficial interest on the part of Mr. Hummel.

There matters remained until last Friday, 17th March. Mrs. Wanda Beckert has served a witness statement of her own, indicating that she had no beneficial interest in the property herself; explaining that Breydon wanted to raise money on the property, but banks were not prepared to grant funds to Breydon, and stating that her fellow director and she approached Mr. Hummel to see if he would be interested in purchasing the property on the basis that he would obtain a mortgage in his own name, and would service that mortgage, but that Breydon would retain the complete equity in the property. She went on to say:

"The benefit of the Agreement to the Defendant would be that he would be entitled to live at the property and thereafter have an opportunity to buy it. This is consistent with the fact that the Defendant advanced only part of the purchase price as there was never an intention to sell the beneficial interest in the property to the Defendant. The Defendant is my son-in-law and I trusted him and

I and my fellow director felt it unnecessary to register Breydon Ltd on the Charges register."

Attached to the affidavit is a copy of a document witnessed on 6th March 1993, which reads as follows:

"The Seller (Breydon Limited) has sold the property 8 Cheyne Court, Flood Street, London SW3, to the Buyer (KE Hummel). The Buyer has only paid an amount of 275,000 (two hundred and seventy-five thousand pounds) although the total consideration amounted to STG 345,000. In view of this, the parties have agreed the following:

1 The Seller accepts that the Buyer only pays STG 275,000 of the total purchase price. The Seller will, however, retain the complete equity interest in the property.

2 The Buyer is, however, granted the right to live in and use the above mentioned property as he sees fit for his needs. He has the right to let such property on a short-term basis. A rental contract can under no circumstances have a duration longer than 12 months.

3 The Buyer is obliged to serve the mortgage, which is taken up at Barclays Bank plc.

4 This agreement has validity for ten years, i.e. March 2003, or until the Buyer decides to buy the equity interest. The value of the equity interest will be assessed through a valuation by a chartered surveyor, which the Buyer and the Seller will select mutually. The amount payable by the Buyer to the Seller will be such valuation less the 275,000 already paid. Should the Buyer not buy the equity interest prior to such date then a surveyor will automatically be selected to perform a valuation. The Buyer must pay the equity interest to the Seller within 60 days of such valuation.

5 If the Buyer is not in a position to buy such equity interest the Seller will have the right to buy back the remaining part of the property for an amount of 275,000."

Then it provides that in case of dispute such dispute will be resolved in London.

In the light of that document, of which a copy was given to Lloyds on Friday, Mr. Smith, for Lloyds, makes two points. He says that it is not arguable, in the light of the documentation as a whole, that Mr. Hummel does not have a beneficial interest and therefore the charging order should remain as a charging order absolute. Secondly, he submits that if I am not persuaded by that, Lloyds do not accept the authenticity of the document exhibited and produced, as it was, at such a late date, not accompanying Mr. Hummel's original affidavit, and therefore I should reserve the position for the moment so that the authenticity of that document can be determined after discovery and examination of relevant witnesses.

Ms. Tolaney for Breydon submits, while having the burden of proof of this issue, that it is clear that as a matter of law even where you might expect someone in the position of Mr. Hummel to have a beneficial interest, he can contract that the entire beneficial interest should be with another party or remain with the vendor, as it is in the circumstances of this case.

Mr. Smith as to that submits that as a matter of reality, where Mr. Hummel has the right to live in the property, the right to receive the rents of the property--and the property is indeed at the moment rented and the rents are received by Mr. Hummel--where he has the right to buy the property and, indeed, the right to have the property acquired from him, provided that Breydon reimburse the initial expenditure, then there is a beneficial interest sufficient for the purposes of the Charging Order Act.

It seems to me, looking at the document that has been produced and witnessed on 6th March 1993, that that document does purport to declare that the full equity interest, full beneficial interest, therefore, in the property, does remain with Breydon. I accept Ms. Tolaney's submission, therefore, on that basis, as set out in Snell--Equity at para. 9-26, and in Pettit v. Pettit [1970] A.C.777 at 813, that the full beneficial interest is purportedly retained by Breydon.

Mr. Smith submits that in fact by a complete equity interest in the property what is meant is the equity remaining in the property after Mr. Hummel has either spent himself or procured a mortgage from Barclays Bank in the sum of 275,000. I, for my part, find that a difficult and, indeed, impossible interpretation of the complete equity interest in the property in para.1 because, as Ms. Tolaney pointed out, if that was the intention it would say 'the remaining equity interest'. It is very difficult to read the words "the complete equity interest in the property" as "the remaining equity interest in the property".

So it does seem to me that if this document is to be taken at face value, that Mr. Hummel does not have a beneficial interest, although of course he may well acquire one in the future, but I am dealing with a situation where it is necessary for there to be a present beneficial interest and not one that may be acquired in some events in the future.

I do accept, however, what Mr. Smith says, that it is very curious how this document was not exhibited to Mr. Hummel's original witness statement in October. There are questions that are relevant about it. No original has been produced.

I am told there are, in fact, two originals, one in Germany and one in Sweden.

I will receive submissions as to whether this is an appropriate stage for the matter to be transferred to the Chancery Division or no, but the right order for me to make is no order on the application save that it be stood over for directions as to disclosure and the calling of witnesses before a tribunal which can determine whether or not the agreement is an authentic agreement.

If you are going in due course, if you succeed, to apply for an order for sale it probably is sensible to transfer this to the Chancery Division at the present stage, is it not,

Mr. Smith?

MR. SMITH: My Lord, can I take some instructions?

MR. JUSTICE LONGMORE: Yes. (A pause).

MR. SMITH: My Lord, I think it would make sense for it to be transferred. I think the matter would then have to start at the bottom level there, because this part of the application only comes before your Lordship because of the application to set aside. Otherwise it would have been dealt with by Master Meadows, a Queen's Bench Master. So, my Lord, we would invite your Lordship to transfer the matter.

MR. JUSTICE LONGMORE: Yes.

MR. SMITH: My Lord, of slight concern to me is the following point, if I can mention it to your Lordship. My Lord, your Lordship's judgment proceeds right at the end on the basis that some future request is not what your Lordship is concerned with. Your Lordship is concerned with a beneficial interest as at today's date.

MR. JUSTICE LONGMORE: I thought that was common ground.

MR. SMITH: My Lord, it was not, and it is my fault if it was not. Right at the end of my submission I said to your Lordship

I had understood that all interests I had averted to, I said

I was not sure if it was accepted they were capable of being a beneficial interest. My Lord, that included the future interest, as it now is, and I had understood my learned friend to concede that that was right. I was going to take your Lordship to a number of cases that show that effectively an inquest now into something that might happen in the future is sufficient, which I did not do because I thought it was common ground. My Lord, it is probably not open to me--particularly given the time--to re-open that issue now, but I would be asking for permission to appeal your Lordship's judgment. That would certainly be one of the grounds. Again I will accept the responsibility. I misunderstood the concession that was made, but I came on to address your Lordship on the point that your Lordship has ruled against me on without, as it were, hearing our argument.

My Lord, what I am anxious to ensure is that we should not be shut out from that appeal. My Lord, if there is going to be an appeal that may be obligatory if my learned friend cannot get home on proving the documents point. My Lord, obviously we need to think about how the matter proceeds from here so that any putative appeal does not go ahead unless it needs to. My Lord, a number of options immediately spring to mind, one of which is that your Lordship could grant permission and extend the time for service of the notice of appeal until the determination of what is being transferred to the Chancery Division. My Lord, the other would be to give me, as it were, a second crack of the whip in the Chancery Division, so that that argument could be vented if necessary. So that your Lordship for today's purposes simply orders that the charging order should remain nisi and the matter transferred to the Chancery Division, and we can then deal if necessary--if your Lordship were to clarify that no issue estoppel arose on the matter--with what we might call "the future interest point". Certainly it was our case, and

I apologise if I did not make this clear, that an interest in an event happening in the future is capable of being charged is within the concept of a beneficial interest now.

MR. JUSTICE LONGMORE: Yes. I do not suppose it makes any difference if the basis of my conclusion is that the contract for the moment puts the entire beneficial interest in the company, in Breydon. The fact that there may arise a beneficial interest in the future on the option to buy being exercised, or perhaps more strongly, from your point of view, if it is not exercised and there is some compulsory option exercised the other way, would not preclude what the agreement actually says about where the beneficial interest is at the moment. But, as I say, I thought it was common ground that

I was concerned with.

MR. SMITH: My Lord, I can only apologise for that certainly.

I think the confusion arises from this aspect, a future beneficial interest that may or may not arise is, in fact, in our submission, a beneficial interest now. Your Lordship's ruling is obviously against us on that because it turns on the construction of the contract, but, my Lord, we would certainly want to keep open the ability to go to the Court of Appeal and take them to the authorities I have not taken your Lordship to this morning, which we would say show that a beneficial interest in the future is a beneficial interest now, whatever the parties may try and say.

MR. JUSTICE LONGMORE: Is there actually an application before the court I can endorse?

MR. SMITH: My Lord, there is an application to be joined. In the light of your Lordship's judgment it clearly is going to be appropriate that the order should be that the company should be joined.

MS. TOLANEY: Indeed, my Lord, that is at Tab 11.

MR. JUSTICE LONGMORE: I will endorse something on that, shall I? I will do it on the inside of the document. I will say: "Leave to Breydon Limited to join proceedings as defendant". I would have thought I direct an issue to be tried as to the authenticity of the document of 6th March?

MS. TOLANEY: Indeed.

MR. JUSTICE LONGMORE: "Direct issue to be tried as to authenticity of document of 6th March". Shall I give some directions: "Any application by claimant for further disclosure to be sent to defendants within 14 days", that is appropriate, is it not, Mr. Smith?

MR. SMITH: My Lord, I envisage we could do it somewhat shorter than that. I do not think there is any uncertainty as to what it is ---

MR. JUSTICE LONGMORE: I will say by 27th March, if you like. If I direct an issue to be tried then it will just be for the parties to decide what oral evidence they wish to put before the court on that occasion, is it not?

MR. SMITH: My Lord, yes, in the light of the disclosure. Again, slightly thinking on my feet, the concern, with respect, in terms of narrowing the issue to be tried simply to the authenticity of the document is obviously what we want is disclosure of the surrounding documents, and I have averted to a number of them, which may go not only to the authenticity of the document but to the factual matrix of the proper construction of the document. That is why our case to your Lordship was either say "there is" or say "I cannot determine it", and it goes over for another day. What I am very concerned is that we should not end up with this litigation going down two limbs, one to the Court of Appeal--if your Lordship gives permission--in respect to the ruling today, and another to the Chancery Division where we may end up with an issue being tried that in vacuo seems very simple, is this document authentic, but given whatever is disclosed or is not disclosed of the surrounding documents, the legal charge, whatever declarations Mr. Hummel made to Barclays when he applied for his mortgage, etc., etc., they may have knock on implications as to your Lordship's finding today that on a proper construction of para.1 equity interest and beneficial interest can be read together, and Mr. Hummel has contracted out of that. One can see, for example, what we would say would be a legitimate line of cross-examination of Mr. Hummel: "If you intended to contract out of your beneficial interest why did you sign a charter to Barclays saying you were the beneficial owner?". My Lord, with respect, we would want to keep open, if at all possible, all the lines of enquiry when we investigate the underlying authenticity of this document, rather than just the narrow question of was it executed on 6th March.

MS. TOLANEY: My Lord, that is not an option that is open to

Mr. Smith, in the light of your judgments. I have stayed seated for some time during Mr. Smith's attempts to re-open the issue that has been already argued. The fact is, my Lord, that you would have been minded to dismiss this application but for the sole issue of whether this document is authentic. Your Lordship has already given the proper construction of the document. The document is clear as to its meaning on the face of it. Therefore there is no scope for Mr. Smith to go behind that document and start cross-examining Mr. Hummel on the intention behind it and the factual matrix. That is a basic principle of construction, my Lord. The position is simply this, that is not open to Mr. Smith. The only correct order in these circumstances is exactly as your Lordship has directed, that disclosure can only be sought of documents relevant to this issue, not the surrounding documents and the surrounding circumstances, except in so far as they go to the question of authenticity. Then it is open to Mr. Smith to cross-examine whoever he likes, subject to them being tendered, on this question of authenticity.

My Lord, if Mr. Smith is not content with this--and it is quite an unusual order, one that he invited the court to make--then in the circumstances your Lordship should dismiss the application and allow Mr. Smith to appeal it.

MR. JUSTICE LONGMORE: Thank you. I basically accept that. I do not quite know what it is you are asking me to order.

MR. SMITH: My Lord, lest there be any doubt, I hear what my learned friend says, I cannot re-open an argument we have had, with respect, what I am trying to do is find a modus operandi to get round the fact that she made a concession and I thought she was making a different one, and therefore did not address your Lordship on one of my arguments. I am trying to find a way round that.

My Lord, the point is this, that if your Lordship simply orders that the charging order remains nisi, and that the hearing of the application effectively for it to be made absolute should be transferred to the Chancery Division with disclosure on the issue of authenticity, then in the light of whatever documents come to light in that disclosure, all matters are legitimately then open for the Chancery Division to consider.

MR. JUSTICE LONGMORE: I do not think I am in favour of that. That is having two bites of the cherry.

MR. SMITH: My Lord, I have made my submission.

MR. JUSTICE LONGMORE: Yes. I think I shall just direct an issue to be tried as to the authenticity of the document. Any application for further disclosure to be sent by 27th March. Statements of witnesses to be exchanged. What date do you suggest for that?

MR. SMITH: My Lord, I am in my learned friend's hands because she obviously has witnesses abroad, and we will not be calling any witnesses on the issue. We would obviously expect to see the signatories and the witnesses.

MS. TOLANEY: My Lord, a month should be sufficient from the date of the application, so 27th April.

MR. JUSTICE LONGMORE: I will give your four weeks from today actually, which will be 17th April. To be exchanged by 17th April. Transfer to the Chancery Division.

MS. TOLANEY: My Lord, I must say that I am very concerned that my friend does not have the opportunity to re-open this argument, and that if he does wish to do so he can appeal the judgment. My Lord, I am very anxious that this is restricted and that this is not set down then for a re-opening along my friend's lines. I do not know whether that can be in any way indicated that you, in fact, were minded to dismiss this application save for the question of authenticity.

MR. JUSTICE LONGMORE: I do not think I am minded to say anything more than I have done so far, but obviously what I have stated does remain as far as any judge of coordinate jurisdiction is concerned, subject to any appeal.

MS. TOLANEY: Indeed, my Lord.

MR. JUSTICE LONGMORE: So I shall say transfer to the Chancery Division. Charging order nisi to remain meanwhile.

I understand from what you say you have no objection to permission to appeal being granted?

MS. TOLANEY: My Lord, that is a separate issue and, yes, I do object to it. My Lord, Mr. Smith has made the application for permission to appeal on the grounds that he did not put forward to your Lordship the full argument based on his misunderstanding of a concession I made. My Lord, that does not seem to me good enough justification for permission to appeal.

MR. JUSTICE LONGMORE: I do not understand that the ground for permission to appeal is so narrow. He, no doubt, just wishes for permission to appeal on the construction of the document.

MS. TOLANEY: Indeed, my Lord.

MR. JUSTICE LONGMORE: On the question of whether there is a beneficial interest.

MS. TOLANEY: Indeed, my Lord. Then my submissions are simply that the construction of the document is straightforward. In order to get the interpretation Mr. Smith seeks he is hoping to go behind the document, which is not permissible. On that basis there is no basis to grant permission to appeal. This is not an arguable appeal.

MR. JUSTICE LONGMORE: Yes. That is, of course, the whole question, is it not? I shall grant permission to appeal. Now, costs of today.

MR. SMITH: My Lord, I am grateful for that. Would your Lordship extend time, as I indicated, for serving the notice of appeal, so that if the matter is not resolved and we are going to the Chancery Division we do not all have to embark on a costly exercise of going up to the Court of Appeal on the construction issue? It would at least keep the option open. It may be that after consideration what we do is try and bring the appeal on quickly, so that if we are right then whoever hears the matter in the Chancery Division can list the whole matter de novo. But, my Lord, it would keep the options open if your Lordship were to grant an extension of time pending the determination of the Chancery Division.

MR. JUSTICE LONGMORE: Yes. So time for appeal extended until 14 days from the determination of the issue sort of thing?

MR. SMITH: My Lord, that is what I had in mind.

MR. JUSTICE LONGMORE: Yes. It does seem quite sensible really, does it not?

MS. TOLANEY: Indeed, my Lord. I do not object to that.

MR. JUSTICE LONGMORE: Time for service of notice of appeal to be extended to 14 days after determination of the issue.

MS. TOLANEY: My Lord, costs. May I hand up a statement of Breydon's costs?

MR. JUSTICE LONGMORE: Breydon's costs, it seems to me, are going to be costs in the issue.

MS. TOLANEY: Indeed, my Lord, although we have succeeded to the extent that you have granted leave for us to be joined, which was opposed by my friend.

MR. JUSTICE LONGMORE: Well, not in any serious way. I could reserve the costs, or I could say that they are to be costs in the issue. It is probably better to reserve the costs since that gives a slightly wider discretion to the person who has to determine the costs at the end of the day.

MS. TOLANEY: My Lord, I would submit it should be costs in the issue.

MR. JUSTICE LONGMORE: Unless you both agree with that, I think

I am minded to say costs reserved really for the reasons

I have given you.

MR. SMITH: My Lord, our application would be three-fold. Firstly, that Mr. Hummel pays the costs of the issues he has lost, which we have dealt with; secondly, that in so far as we, until Friday, were dealing with a line application by Mrs. Beckert we should have the costs of her application, but, thirdly, the costs of the company's application should be reserved.

MR. JUSTICE LONGMORE: I obviously have to deal separately with the costs of the application to set aside the judgment, but as far as the costs of the charging order application I think

I should just reserve those generally. Costs in relation to charging order application and leave to be joined to be reserved to the judge who determines the issue.

As far as the application to set aside, I will draw a line under what I have done so far, and I will say application to set aside judgment dismissed. Now, obviously you are entitled to the costs of your application but I cannot summarily assess them if they are combined with the other costs of today really, can I?

MR. SMITH: My Lord, we would say your Lordship can. Mr. Coldbeck says, in the note that he has produced, they are roughly incurred equally. He is the person in charge of the Department. It is the note at the bottom. That for all practical purposes it is impossible to isolate things out, but roughly speaking they have been incurred equally, with the exception of the costs of the witness statements, which your Lordship will see at the foot of the first page. 200 for the witness statement we will be setting aside, and 300 for the other witness statement, which was somewhat longer. So, my Lord, we do say that, therefore, with that information it is appropriate and possible for your Lordship to make a summary assessment. A summary assessment is just that, a summary assessment. My Lord, we would commend to your Lordship a figure, therefore, on the basis of roughly equal or something just under half. The reason I am saying "just under half" is because the matter would be weighted towards the application to join slightly, as it is clear from the longer witness statement there. So subject to anything your Lordship were to assess, we would invite your Lordship simply to fix a figure in the region of one half of the grand total originally put forward, subject to any point Mr. Hummel has to reasonable costs.

MR. JUSTICE LONGMORE: I do not think the rules permit me to make a summary assessment in respect of V.A.T., and taking that into account, and the slight over-weighting, I think I will proceed on the basis of a claim for roughly 3,000, and half of that would be 1500. So that would be the starting point at any rate, I think, for the application to set aside. Do you have anything to say about that, Mr. Hummel? I am afraid you have to pay the costs of the application to set aside, and it seems to me that I should summarily assess them, and it seems to me that 1500 is about right.

MR. HUMMEL: Yes, my Lord, that may be in the right region. I was just quickly confirming, given my lack of experience in matters like this, that 1,000 may be appropriate. That is what I would suggest, given that Lloyds have not separated this and they knew that it was two different hearings, so it would have been appropriate and prudent to separate that. So I would suggest that we set 1,000. Thank you, my Lord.

MR. JUSTICE LONGMORE: No. I think I will say that Mr. Hummel is to pay claimant's costs summarily assessed at 1500. I ought to deal with the question of permission to appeal from that order, but I am afraid I am going to refuse you permission to appeal because I have no hesitation in thinking that on this matter I am right. I ought to make an order to that effect.

MR. SMITH: My Lord, the only other matter is time. Would your Lordship say the usual 14 days for payment perhaps?

MR. JUSTICE LONGMORE: For costs? It follows without an order, does it not?

MR. SMITH: My Lord, with Mr. Hummel in court, I think it is just fair on him that it should be clarified.

MR. JUSTICE LONGMORE: That is entirely fair, yes. The effect of my making an order for you to pay costs, which I assess summarily at 1500, is that you do have to pay that within 14 days. So I will actually say that on the order but it follows anyway. I will say so in terms.