Budgen v Andrew Gardner Partnership
| Jurisdiction | England & Wales |
| Judge | Lord Justice Simon Brown,Lord Justice Mance,Lord Justice Latham |
| Judgment Date | 31 July 2002 |
| Neutral Citation | [2002] EWCA Civ 1125 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: 2001/2298 |
[2002] EWCA Civ 1125
Lord Justice Simon Brown
(Vice-President of the Court of Appeal Civil Division)
Lord Justice Mance and
Lord Justice Latham
Case No: 2001/2298
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(The Hon Mr Justice Wright)
Bernard Livesey Esq, QC (instructed by Messrs Thomson Snell Passmore) for the Appellant
Dermot O'Brien Esq, QC & Tim Lord Esq (instructed by Messrs Druces & Attlee) for the Respondent
On 10 October 2001, after a trial lasting 7 1/2 days, Wright J gave judgment for the claimant (the respondent) in the sum of £328,970 and ordered the defendant (the appellant) to pay 75% of the claimant's costs of the action on the standard basis. The respondent had beaten the payment into court by some £44,000. He had failed, however, on one particular issue (the HIS issue) which had taken up a substantial part of the trial and which should not have been pursued and it was on that account that he was deprived of 25% of his own costs.
This appeal, brought with the permission of Buxton LJ given (following his initial refusal of the application on the papers) at an ex parte hearing on 7 December 2001, is directed solely to the costs order. The appellant had sought from the judge below an order under CPR 44.3(6)(f) (an issue based order) that the costs relating to the HIS issue should be paid by the respondent—the appellant being liable (subject to a different argument which failed, is not renewed, and need not therefore be further explored) to the respondent for the remaining costs of the action since he had beaten the payment in. The appellant's primary complaint is that the judge refused to make such an issue-based order and made instead an order under rule 44.3(6)(a) (a "percentage" order, as it was called by this court in English v Emery Reimbold [2002] 3 All ER 385, 410j at paragraph 115). By its Notice of Appeal the appellant asks that the judge's order be varied and that there be substituted for it an order:
"That the defendant should pay the costs of the action save those relating to the HIS issue and the claimant should pay the defendant's costs of this issue."
The grounds of appeal follow the same approach. Having set out as part of the background the fact (clearly accepted by the judge) that the respondent had failed on a substantial issue which he ought never to have pursued, the grounds continue:
"4.5 In these circumstances, unless there were a good reason for exercising his discretion in a judicial manner to the contrary, the Learned Judge ought to have awarded the costs of litigating the HIS issue to the defendant.
4.6 There was not any circumstance, good or otherwise, which can have constituted a sufficient reason for not making an award of the costs of fighting the HIS issue in favour of the defendant.
4.7 The Learned Judge was wrong to conclude that he was in the best position to determine what proportion of costs was just. He did not have the information to be able to do so. The only person who could have done this was a taxing officer.
4.8 The reduction of the claimant's costs by only 25% (where the claimant's costs were £174,000 and the defendant's were over £200,000 and a broad estimate made by the defendant suggested that the costs of litigating the issue were about 66% of the action) was mathematically equivalent to an order that the defendant paid to the claimant 85% of the costs of litigating the issue on which he had lost.
4.9 Such an order was unjust."
In his brief judgment granting permission to appeal Buxton LJ gave two specific reasons for having been persuaded (albeit only "by a narrow margin") to do so:
"First of all, recent authority, particularly after the Civil Procedure Rules, has indicated that it may be appropriate to take a wider view of issue based costs orders than was the practice previously. The two authorities in particular that point in that direction are the well-known observations of Lord Woolf MR (as he then was) in AEI Rediffusion Music Limited v Phonographic Performance Limited [1999] 1 WLR 1507, and the case put before me this morning by Mr Livesey, unreported, Winter v Winter 10 th November 2000. None of those authorities, of course, come anywhere near to saying that a judge must always consider an issue based order. But I think it is arguable that in the present climate this case was such a strong one in respect of the separate HIS issue, and that that issue played such a large part in the trial, that it was necessary, even allowing for the wide ambit of the judge's discretion, to make such an order. That is the first point." (paragraph 12)
The second reason was more narrowly based on the particular (I wish I could say "precise") terms of Wright J's judgment below. I shall return to it later having set out something of the factual background to this appeal. My concern thus far has been to emphasise the essential focus of the appeal: what is principally under challenge is the judge's decision to make a percentage order rather than an issue based order. And that certainly appears to be the central point of principle upon which permission to appeal was granted. Insofar as the appellant now seeks alternatively to challenge the sufficiency of the percentage order in fact made (contends, in other words, that any such order should more favourably have reflected its success on the HIS issue), not only is there little if anything in the Notice of Appeal to herald such a contention but, as I shall come to explain, there is scant material which would enable this court to reach any satisfactory decision of its own.
Having made those introductory remarks let me now sketch in, more briefly perhaps than either side would wish, the essential background to this appeal.
The respondent was injured in a road traffic accident on 25 February 1990 for which he was not to blame. The appellant firm of solicitors acted in the litigation which he brought against the negligent driver. Liability in that action was admitted. The appellant pursued the litigation actively but, through an oversight, fell foul of Order 17, rule 11 of the County Court Rules 1981 with the result that the action was automatically struck out in September 1994. An appeal against that striking out order failed in February 1995.
The respondent therefore in 1995 advanced a claim against the negligent appellant firm claiming damages for the loss of his chance of recovering damages in the underlying litigation. It was not in dispute that the appellant was negligent and that the respondent was entitled to recover 100% of the value of the underlying claim as it would have been assessed at the notional trial date—agreed to be the sixth anniversary of the accident, namely 25 February 1996. At an early stage of the hearing below, Wright J ruled that the underlying claim was so well evidenced by contemporary documentation that he would assess its value as though he were the trial judge adjudicating on it in February 1996. I come therefore to the underlying claim.
The respondent had suffered polio at the age of two, but was at the time of the accident still able to walk using weight-bearing callipers and elbow crutches. The effect of his injury was to cause immediate pain and disability and, after his recovery from the acute phase, deterioration so that he lost his ability to get about independently and became dependent on the use of a wheelchair. It was agreed between the parties that the effect of the accident was to advance his symptoms and disability by a period of nine years.
The major issue was the respondent's claim for loss of earnings. In his working life he had become proficient in computer programming and had worked for a company called Lamix whose main customer was the Hyde Housing Association ("Hyde"). He became friendly both professionally and personally with Hyde's manager, Mr Len Bishop. In about 1982 Mr Bishop suggested to the claimant that he set up in business on his own account and Hyde would transfer from Lamix to him a contract with a guaranteed income of some £5,500 per annum for the maintenance of its computers and software. The respondent duly formed his own company, Datared Computer Services Limited ("Datared"), which initially worked predominantly for Hyde (whose computer needs increased) but gradually extended its business to other customers, in part selling computer hardware and software but mainly providing maintenance services of systems and software. By 1989 Datared's turnover had grown to £193,500 and during those seven years the respondent had become a specialist in the requirements of housing associations for computer software applications.
In early 1989, ie about a year before the accident, Hyde commissioned Datared to work on an ambitious scheme for the writing of an integrated software package which, if successful, would have dealt effectively with the whole of Hyde's information technology needs (HIS is the acronym for Hyde Information System). If successful, this would have been the first product of its type on the market and the leader in the field. Each package would have a market value of between £250,000 and £500,000 and it could be projected that two such packages might be sold each year to other large housing associations, in turn engendering continuing maintenance and servicing contracts. In the underlying action a claim had been advanced for loss of profits based on the HIS package. The appellant firm had instructed...
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