Excelsior Commercial and Industrial Holdings Ltd v Salisbury Hamer Aspden & Johnson
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE WALLER,LORD JUSTICE LAWS |
| Judgment Date | 12 June 2002 |
| Neutral Citation | [2002] EWCA Civ 879 |
| Court | Court of Appeal (Civil Division) |
| Date | 12 June 2002 |
[2002] EWCA Civ 879
The Lord Chief Justice of England and Wales
(The Lord Woolf of Barnes)
Lord Justice Waller and
Lord Justice Laws
IN THE SUPREME COURT OF JUDICATURE A2/2001/1734
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(HIS HONOUR JUDGE BRADBURY)
MR NICHOLAS DAVIDSON QC (instructed by Messrs Ward Hadaway, Newcastle
upon Tyne NE1 3DX) appeared on behalf of THE APPELLANT
MR ALASTAIR HAMMERTON (instructed by Messrs Beachcroft & Wansbrough Manchester M2 7LP) appeared on behalf of THE FIRST RESPONDENT
MR ROGER STEWART QC and MR GRAHAM CHAPMAN (instructed by Messrs Reynolds Porter Chamberlain, London WC1V 7HA) appeared on behalf of THE SECOND RESPONDENT
Wednesday 12 June 2002
: This appeal raises an issue of some importance to the run of general litigation as to when it is appropriate to make an order for costs on an indemnity basis. It arises in a case where the defendants made a joint payment into court of £100,000, and where the claimant recovered nominal damages of £2 against the fifth defendant, and failed entirely against the other defendant who was then involved in the proceedings.
The appropriate order as to costs to be made is usually a question which is determined having regard to the facts of the particular case and having regard to the relevant provisions of the Civil Procedure Rules. For that reason it is important where there is an appeal on an issue of costs for this court to have well in mind the facts of the particular case in determining the appeal. In many situations an order for costs which may seem initially surprising becomes readily explicable when the particular facts are examined. In my judgment that is true of this case. Fortunately in this appeal this court is greatly assisted by the judgment of His Honour Judge Bradbury in the court below. Mr Davidson QC, for whose submissions we are immensely indebted, appropriately acknowledged how well and carefully reasoned was the judgment of Judge Bradbury. That judgment enables us to deal with the facts more succinctly than otherwise.
The Facts
The claimant purchased a company which owned Wesley Mill, at Bamber Bridge near Preston on 9 March 1992. Prior to the company being purchased, the mill was substantially destroyed by fire. In view of the fire, the amount of the insurance payable for the damage to the mill clearly was an important factor in assessing the value of the company. £1.32 million was recovered from the insurance company. The claimants contend that if the mill had been fully insured approximately £1 million more would have been payable by the insurers. The first defendants were the loss assessors in relation to negotiating the claim on behalf of the company. It is suggested that the first defendants represented that the mill was fully insured. The other (the fifth) defendant with whom we are concerned were the solicitors for the claimant in relation to the acquisition by the claimant of the company, namely William Coupe (Bamber Bridge) Ltd ("Coupe").
The claimant contended that the fifth defendants failed to carry out their retainer and failed to ascertain that the mill was not fully insured. The fifth defendants contend that their retainer did not require them to perform that task. On that issue the fifth defendants were unsuccessful. However, nominal damages of £2 only were awarded by the judge for two reasons. First, the judge was satisfied that the failure of the fifth defendants to ascertain that the mill was not fully insured did not affect the conduct of the claimant. They would in any event have wanted to proceed with the purchase. The second basis upon which the judge came to his conclusion, that only nominal damages were payable, was because the claimant had not suffered any loss in consequence of the breach of duty by the fifth defendants. We were shown the relevant figures by Mr Stewart QC who appeared before us and in the court below on behalf of the fifth defendants. On those figures it is not surprising that the judge should have come to the conclusions to which I have just referred. This was an attractive proposition for the claimant, and it is clear that they would have wished to have proceeded with it. The additional sum which, if the property had been fully insured, would have been payable would have been a windfall because the claimant's proposal in relation to the property meant that the sum of money for insurance actually received was ample to enable the claimant profitably to carry out the transaction upon which they were intent.
The first and fifth defendants made a Part 36 payment into court of £100,000 on 7 June 2001. After a lengthy trial, on 18 July 2001 His Honour Judge Bradbury dismissed the claim against the first defendant. He concluded that the claimant was entitled to judgment against the fifth defendant in the sum of £2 as nominal damages. Thirdly, he concluded that the claimant should pay the first defendant's costs of the action on the standard basis up to 8 June 2001, the day after the Part 36 payment, and on an indemnity basis thereafter, such costs to be the subject of detailed assessment if not agreed. He also came to the conclusion that the claimant should pay the fifth defendants' costs of the action on the standard basis up to 8 June 2001, and on an indemnity basis thereafter, such costs to be the subject of detailed assessment if not agreed. He also made an order for payment out of the sum which had been paid into court.
There had originally been 14 defendants. It is unnecessary to go into the reasons why by the time of the trial the action proceeded against only the first and fifth defendants.
The judge was asked to give permission to appeal. He was prepared to give only limited permission to appeal against the order for the indemnity costs in favour of the first defendant and against the order for costs which was made in respect of the fifth defendant.
The claimant wished to advance other arguments on the appeal and therefore sought permission from this court. Permission was refused on the papers by Latham LJ who gave his decision on 19 October 2001, and by Rix LJ who considered the matter on 30 November 2001. In respect of the decision of Rix LJ, a copy of the transcript of which is before us, it is to be noted that, whereas he considered in relation to the fifth defendant there was no arguable grounds for appealing the issue of causation, he was not as emphatic about the position in relation to the proposed appeal in respect of quantum. Rix J said that as the claimant could not succeed on the point of causation, it was not necessary to go into the question of quantum because clearly in order to succeed on an appeal as to quantum the claimant would have to succeed on the question of causation.
The Argument on the Appeal
Before coming to the main matter on this appeal, it is convenient to consider Mr Davidson's argument in support of the appeal in relation to the part of the judge's order which required the claimant to pay costs to the fifth defendant throughout the proceedings. As has already been indicated, those costs were on two separate bases: one on the standard basis up to the payment into court; and thereafter, on the indemnity basis. Mr Davidson correctly submits that the claimant was partly successful against the fifth defendants. The fifth defendants had argued that their retainer did not require them to go into the adequacy of the insurance. In that they were found to be wrong. Again it was not surprising that Judge Bradbury should have come to that conclusion because the contemporary documents supported the claimant's contention that that was a matter on which they were required to advise. However, this is a case where Mr Stewart submits that the fact that the fifth defendants were contesting the issue of their liability to the claimant did not significantly affect the costs. That argument was canvased before the judge who heard the case. He was well aware of all the relevant circumstances and he accepted Mr Stewart's arguments. It is very difficult for this court to second-guess a decision of that sort. The trial judge is in by far the best position to do so. In my judgment it would be inappropriate for this court to try and establish that this was a case where a separate order for costs should have been made, having regard to the decision in relation to the issue as to the terms of the retainer.
Partial Orders for Costs
Mr Davidson referred to the decision of this court on special orders for costs in A E I Rediffusion Music Ltd v Phonographic Performance Ltd [1999] 1 WLR 1507, and relied in particular on a passage in my judgment in that case at page 1522. If the factual situation had been different from that which was contended for by Mr Stewart, it seems to me that this could well have been a case where it would have been appropriate to have recognised the failure of the claimant on a particular issue and reflected that in the costs. But if Mr Stewart was right in the argument that he advanced (which, as I have indicated, the judge was in the best position to determine), then it would not be an appropriate case in which to take that view. Putting the matter shortly, Mr Stewart is saying that in a practical sense the fact that the terms of the retainer was in issue did not affect the evidence which would have had to be called before the hearing. I am not satisfied that the judge's approach...
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