Bankamerica Finance Ltd v Nock
| Jurisdiction | England & Wales |
| Judge | Lord Bridge of Harwich,Lord Brandon of Oakbrook,Lord Templeman,Lord Ackner |
| Judgment Date | 03 December 1987 |
| Judgment citation (vLex) | [1987] UKHL J1203-1 |
| Date | 03 December 1987 |
| Court | House of Lords |
[1987] UKHL J1203-1
Lord Bridge of Harwich
Lord Brandon of Oakbrook
Lord Templeman
Lord Ackner
House of Lords
My Lords,
I have had the advantage of reading in draft the speech of my noble and learned friend Lord Brandon of Oakbrook. I agree with it and for the reasons he gives I would dismiss the appeal.
My Lords,
This appeal is unusual in that it relates solely to the costs of an action. The action concerned was brought in the Queen's Bench Divison of the High Court. It arose out of a hire-purchase transaction, the subject-matter of which was a second-hand Porsche motor car. That motor car ("the car") later turned out to be stolen property: hence the litigation about it.
The person who sought to acquire the car on hire-purchase terms was Gerard Nock ("the hirer"). The company purporting to own the car was Lotmate Limited trading as Principal Garages ("the dealers"). The company affording hire-purchase facilities to the hirer was Bankamerica Finance Ltd. ("the finance company").
On 10 May 1981 a contract of sale was made between the dealers and the finance company, under which the latter bought the car from the former for a cash price of £20,000. On 12 May 1981 a hire-purchase agreement was made between the finance company and the hirer under which the latter hire-purchased the car from the former for a total price of £25,627.76, payable by an initial deposit followed by 36 monthly instalments over a period of three years. Pursuant to that agreement the hirer took possession of the car.
In July 1982 the hirer discovered that the car had, before it came into the possession of the dealers, been stolen in Italy from its true owner, a German. During the same month the Metropolitan Police took possession of the car from the hirer and did not return it to him.
By a letter to the finance company dated 30 July 1982 solicitors acting for the hirer claimed on his behalf to terminate the hire-purchase agreement on the ground that the finance company were in breach of the condition as to good title implied in it. At that time the hirer had paid £7,450.83 to the finance company under the agreement.
On 14 December 1982 the finance company began an action against the hirer in the Queen's Bench Division of the High Court by specially indorsed writ claiming damages of £13,176.93 for breach of the hire-purchase agreement. On 31 January the hirer served a defence and counterclaim. By his defence he resisted the claim on the ground that, since the car had been stolen earlier in Italy, the finance company had never had a good title to it and accordingly had never passed one to him. By his counterclaim the hirer claimed £6,874.92, later amended to £7,450.83, as monies paid on a consideration which had wholly failed. On 8 February 1983 the finance company served a reply and defence to counterclaim, in which it expressly denied that the car had been stolen. On 21 July 1983 the finance company amended its writ and statement of claim so as to join the dealers as second defendant to the action. By the amended statement of claim the finance company claimed against the dealers, in the event of it being found that the car was stolen, damages for misrepresentation and/or breach of the contract of the sale of the car.
The action was tried by Cantley J. on 18 July 1985. Before then, in or about January 1985, the dealers had ceased trading, and by then they were in the process of liquidation. These facts, however, were not known to the hirer before the trial. Neither the dealers, nor their liquidator if there was one, attended or took any part in the trial.
Cantley J. found that the car had been stolen earlier in Italy, as alleged by the hirer but denied by the finance company. On that basis the judge (1) dismissed the finance company's claim against the hirer; (2) gave judgment for the hirer for £8,344.93 including interest on his counterclaim against the finance company; and (3) gave judgment for the finance company for £23,996.34 including interest on its claim against the dealers.
With regard to costs the judge heard submissions from counsel for the two parties before him. Counsel for the hirer, Mr. Ashton, submitted that the finance company should pay the hirer's costs of both claim and counterclaim in any case. He further indicated, at one time at any rate, that he would be content with a Bullock order, that is to say an order (a) that the finance company should pay to the hirer his costs of both claim and counterclaim and (b) that the dealers should pay the finance company's costs of claim to which should be added the costs payable by the finance company to the hirer. Counsel for the finance company, Mr. Brunner, submitted that the appropriate order would be what is known as a Sanderson order: that is to say no order as to costs as between the finance company and the hirer, but an order that the dealers should pay all the costs of both the finance company and the hirer. The expression Bullock order is derived from Bullock v. London General Omnibus Co. [1907] 1 K.B. 264; the expression Sanderson order is derived from Sanderson v. Blyth Theatre Co. [1903] 2 K.B. 533.
My Lords, if the dealers had been financially sound, it would not in the end have mattered whether the order made had been a Bullock order or a Sanderson order. But, because the dealers were insolvent it mattered a great deal to both the hirer and the finance company. So far as the hirer was concerned, if a Bullock order was made, he would be assured of recovering his costs of the action in full from the finance company; but, if a Sanderson order was made, the likelihood was that he would be unable to recover his costs from the dealers. So far as the finance company was concerned, if a Bullock order was made, it would be obliged to pay the hirer all his costs of the action, and the likelihood was that it would be unable to recover such costs from the dealers; but, if a Sanderson order was made, the finance company would escape any liability for the costs of the hirer.
The judge, expressing the view that he had a discretion to make either the one order or the other, and purporting at least to exercise such discretion, decided to make a Sanderson order. He further refused the hirer leave to appeal against that order.
The hirer wished to appeal to the Court of Appeal on the question of costs. Such an appeal is prima facie precluded by the combined effect of sections 51 and 18(1)( f) of the Supreme Court Act 1981. Section 51 provides that the costs of and incidental to proceedings of the Supreme Court shall be in the discretion of the court and that the court shall have full power to determine by whom and to what extent the costs are to be paid. Section 18(1) provides:
"No appeal shall lie to the Court of Appeal— …
( f) without the leave of the court or tribunal in question, from any order of the High Court or any other court or tribunal … relating only to costs which are by law left to the discretion of the court or tribunal;"
These provisions are re-enactments of similar provisions in earlier Acts.
It has, however, been held that, despite these provisions, an appeal against an order of the High Court relating to costs alone will lie without the leave of that court in certain exceptional cases. Those cases are cases in which it can be shown that the judge who made the order either did not exercise his discretion at all, or did not exercise it judicially. Principles relating to these matters were stated by the Court of Appeal in Scherer v. Counting Instruments Ltd. [1977] F.S.R. 569; [1986] 1 W.L.R. 615, an authority to which I shall refer later.
That being the state of the law, the hirer's solicitors on or about 19 August 1985 attempted to enter a notice of appeal against the order of Cantley J. as to costs only. The registrar, pursuant to the ruling of the Court of Appeal in Marshall v. Levine [1985] 1 W.L.R. 814, refused to enter the appeal and caused the matter to be referred to that court in order to enable the hirer to satisfy it, if he could, on an ex parte application, that he had an arguable case for a hearing inter partes having regard to the principles stated in the Scherer case. The matter came before the Court of Appeal (Sir John Donaldson M.R., Stephen Brown and Woolf L.JJ.) on 18 February 1986 in the form of an application by the hirer for a declaration that he was not precluded by section 18(1)( f) of the Supreme Court Act 1981 from proceeding with his notice of appeal. That application was refused. Sir John Donaldson M.R. said to counsel for the hirer:
"We cannot help you, Mr. Ashton. We ourselves would never have made this decision on costs and it was probably an unjust one, but it was within the judge's discretion and you do not come within the Scherer principles. Therefore we shall not set the appeal down."
By an order dated 17 June 1986 the Court of Appeal allowed an application by the hirer for leave to appeal to your Lordships' House.
On the appeal two submissions were made for the hirer. The first submission was that the ruling in Marshall v. Levine (Practice Note) [1985] 1 W.L.R. 814 was wrong and that the hirer should accordingly have been allowed to enter his appeal without first having to satisfy the Court of Appeal, on an ex-parte application, that he had an arguable case. The second submission was that the Court of Appeal erred in law, on hearing such application, in holding that the hirer did not have an arguable case.
The first submission relates to a matter of procedure only. The ruling in Marshall v. Levine was clearly designed to provide a filter for appeals of the kind here concerned, so as to eliminate unarguable cases at an early stage and by doing so save both time and costs. In my...
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