Gresham Pension Trustees v Ivan Cammack
| Jurisdiction | England & Wales |
| Judge | Lady Justice Sharp,The Master of the Rolls,Lord Justice Hamblen |
| Judgment Date | 01 March 2016 |
| Neutral Citation | [2016] EWCA Civ 655 |
| Court | Court of Appeal (Civil Division) |
| Date | 01 March 2016 |
| Docket Number | A2/2014/3896 |
[2016] EWCA Civ 655
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE COUNTY COURT AND FAMILY COURT
SITTING AT READING
(HIS HONOUR JUDGE HARRIS QC)
Royal Courts of Justice
Strand
London, WC2A 2LL
Master of the Rolls
Lady Justice Sharp
Lord Justice Hamblen
A2/2014/3896
Mr A Walker (instructed by Allan Janes LLP) appeared on behalf of the Appellants
Mr T Talbot-Ponsonby (instructed by Withy King) appeared on behalf of the Respondent
This is an appeal against a costs order made by His Honour Judge Harris QC on 7 November 2014.
The parties in this case compromised their respective claims against each other at court on 23 October 2014 on the second of two days fixed for trial. The case had been opened on 22 October, but the parties had then been given a firm indication by the judge that they should endeavour to resolve the differences between them. Unfortunately, they could not agree on the issue of costs, and put the matter before the judge for resolution. During the course of the oral argument that followed, several offers and counter offers were referred to. In particular, counsel for the Respondent referred the judge to a attendance note ("the October 2013 note") which purported to record conversations that had taken place between counsel outside court on 11 October 2013.
The central submission for the Appellants is that the judge should never have been referred to that Note, as what it purported to record was a without prejudice exchange. His subsequent reliance on it was an error of principle, which vitiated the discretion he exercised when making the costs order. In my judgment, that submission is well-founded, and, I would allow this appeal.
The background facts
The Respondent was a former commercial tenant of the Appellants at a property in the High Street in Chinnor in Oxfordshire, and continued to make payments of rent in error after he vacated the property. The claim was issued on 11 November 2011 for the return of £9,850 (plus interest) paid by the Respondent to the Appellants by mistake. The Appellants then brought a counterclaim for dilapidations (totalling £43,095) and raised the defence of set-off. In the Amended Defence and Reply to Counterclaim, the Respondent alleged that a compromise had been reached between the Respondent and the Appellants' surveyor in December 2009 as to the work required to discharge his obligations under the lease, and the Appellants were not entitled to claim more by way of dilapidations.
On 2 January 2013, the court listed a trial of a preliminary issue relating to the alleged compromise agreement advanced by the Respondent. That came before HH Judge Kay on 11 October 2013. At that hearing, the Respondent sought to argue estoppel rather than compromise, and the case was adjourned for the Respondent to re-amend his Amended Reply and Defence to Counterclaim. On 15 October 2013, the Respondent's then counsel, Mr Andrew Sheriff, prepared a note for his solicitor of what had been discussed in and out of court on 11 October 2013 (the 'October 2013' note).
The matter came on for trial on all issues, just over a year later, on 22–23 October 2014. The parties negotiated and reached a compromise set out in a Schedule dated 22 October 2014, appended to the Tomlin order dated 7 November 2014. The Schedule recorded that the claim and counterclaim were each valued at £13,167 as at 22 October 2014, and that apart from the sum already paid by the Respondent to the Appellants, no additional sum was to be paid by either party. The parties agreed that the issue of costs should be decided by the judge. It comes as no surprise, that despite the relatively modest nature of the claims, the parties' costs were substantial by this time; we are told that by then, the Appellants' costs on their own exceeded £53,000.
At the hearing on 23 October 2014 both parties lodged a small bundle of further documents. The Appellants put in written submissions and the Respondent put in a Schedule of Offers ("the Schedule of offers") together with a small clip of correspondence. The Schedule of offers was prepared by the Respondent's solicitor and given to Mr Walker, counsel for the Appellants, on 22 October 2014. It said this:
i. "11/10/2013. Verbal offer at court. Claimants to Defendant's counsel. Claimant offers dropped hand settlement, i.e. no claim either way and each side to bear its own costs. This was rejected out of hand by the Defendant."
These words were repeated in the typewritten note (not contemporaneous), placed in the chronological sequence of the further correspondence put in by the Respondent.
The judge then heard argument on the issue of costs. The Appellants made their submissions first. During the course of the Respondent's submissions, the judge was shown the October 2013 note. It had not been disclosed before; and was produced for the first time during the course of oral argument. A copy of it was shown briefly to Mr Walker while counsel for the Respondent, Mr Talbot-Ponsonby, was making his submissions, but the Appellants did not actually get a copy until one was emailed to Mr Walker, at his request on 17 November 2014. The note said this, in part:
i. "5. In the absence of any agreement as to the preliminary issue to be tried, it was decided that it was probably best if the matter was to be brought on for trial as soon as possible. Counsel for both parties agreed to discuss directions over the lunch break. The judge suggested that we might also have global settlement discussions and I took the view that, with both surveyors there, it seemed like a good opportunity to try to resolve some of the outstanding issues.
ii. 6. We agreed direction over the lunch break but did not manage to have any constructive discussions as to settlement at that time.
iii. 7. Since the 'preliminary issue' had presented an obstacle to settlement thus far, when we returned to court we (i.e. both counsel) invited the judge to give any indication he felt he could in relation to the issues as to whether the Ds were bound by the pre-termination matters. The judge was keen to emphasis that he remained open minded but he gave a loose indication. The (tidied) note that I had read as follows (note that it is not entirely verbatim):
iv. My impressions is that it is arguable insofar as anything [i.e. item of disrepair] was reasonably capable of being seen (as at 21 Dec 2009), that the Claimant might have been led to believe that that was as far as his responsibilities went, as long as the work was carried out properly and without prejudice to the outstanding issues [already notified] as at 24 Dec 2009. [There would not have been] much point in having meeting on 21 Dec 2009 if it was not to try to agree outstanding works.
v. 8. By the time we came out of Court is was approaching 3pm. I was still keen to see if there was any scope for either settling the whole claim and counterclaim or at least narrowing the issues. Mr. Maling [the respondent's expert] was more than happy to speak to Mr. Mallard [the appellant's expert] to try to resolve some of the issues between them but my opponent told me that Mr. Mallard did not wish to meet with Mr. Maling at that point. He seemed to be concerned that he might be caught unprepared.
vi. 9. Inevitably perhaps, costs were the real difficulty. The client, although otherwise open-minded about compromise, was not willing to discuss terms based upon him paying any of Mr. Ashby's costs. For his part Mr. Ashby was not interested in a 'drop hands' settlement so far as costs were concerned. The only offer made came from Mr. Cammack. He offered to pay £12,000 by way of global settlement, with return of the overpaid rent leaving a balancing payment to Ds of just over £2,000. This was rejected outright by Mr. Ashby and we all left court."
I should record at this stage that the Note's tone is described by Mr Walker as partisan, and the accuracy of its contents are disputed.
The judge handed down judgment on 7 November 2014. The material part of his Order said this:
i. "3. Each party shall bear its own costs of the action up to and including 11 October 2013;
ii. 4. The Defendant shall pay the Claimant's costs of the action after 11 October 2013 on a standard basis to be the subject of a detailed assessment if not agreed;
iii. 5. The Defendant shall pay £7,000 on account of costs by 21 November 2014."
There is no doubt that the content of the October 2013 note played an important part in the judge's conclusion that the Appellants should pay the Respondent's costs after 11 October 2014. The judge referred to it at several points in the judgment both when considering the background of the offers, and then at the end of his judgment where he said this:
i. "9. It seems to me that the correct analysis here is that:
The Claimant has always had a clean and unanswerable case in respect of the overpaid sums, which precisely match the rental payments;
The Defendants have refused to concede that, both in correspondent and on the pleadings;
The only conceded that claim in the settlement;
The claim for dilapidations was initially put very high, manifestly too high, given the statutory limitation on such claims. It was only reduced to the sum which matched the Claimant's claim on the morning of the trial;
The Claimant's defence, by way of estoppel, now abandoned, was unlikely to have been efficacious, given the terms of the surveyor's communications, but does not affect that very large figure that the Defendants initially inserted...
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