Hanak v Green
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE HODSON,LORD JUSTICE MORRIS |
| Judgment Date | 01 April 1958 |
| Judgment citation (vLex) | [1958] EWCA Civ J0401-1 |
| Court | Court of Appeal |
| Date | 01 April 1958 |
[1958] EWCA Civ J0401-1
Lord Justice Hodson.
Lord Justice Morris, and
Lord Justice Sellers.
In The Supreme Court of Judicature
Court of Appeal
Mr. ALAN R. CAMPBELL (instructed by Messrs. H.B. Wedlake Saint & Co.) appeared on behalf of the Appellant (Defendant).
Mr. C. F. DEHN (instructed by Messrs. Ashurst, Morris, Crisp & Co.) appeared on behalf of the Respondent (Plaintiff).
In this case I have had an opportunity of seeing the Judgment which Lord Justice Morris is about to read, with which I fully concur. In those circumstances, I do not propose to deliver a Judgment of my own.
The disputes between the Plaintiff and the Defendant were decided by the learned Judge after considering the report made by a Referee before whom the parties appeared for three days. So far as conclusions of fact and conclusions as to amounts are concerned there is no appeal. The appeal originates in the discontent of the Defendant as to the orders as to costs. But in order to meet the difficulties that face those who complain of orders concerning costs when there is a discretion in a Judge as to the award of them, the Defendant challenges the form in which the Judgment was entered. if he does this successfully then he submits that on a different form of Judgment he can ask for a different order as to costs. It is only because of a very natural concern as to the costs of the struggle that submissions have been made to us as to the form in which the decisions in the struggle, not themselves now in issue, should be expressed.
So it has come about that we have heard a learned debate, rich in academic interest, but, save so far as costs are affected, barren of practical consequence, on the subject as to whether certain claims could be proudly marshalled as set off or could only be modestly deployed as counter-claim.
Before recording a view on the points of law it is necessary to have in mind the nature of the various claims. The Plaintiff bought a house from the Defendant. The purchase was to be completed on the 31st July, 1954. The Defendant, a builder, agreed to do certain works to the house which were detailed in a specification. For this he was to receive £800 in addition to the purchase price of the house. The works were to be finished by the date fixed for completion and the £800 was to be paid with the balance of the purchase money payable on completion. The works were not finished to time. The Plaintiff ordered certain extra items of work. The Plaintiff went into occupation of tae house on the 11th August, 1954. The Plaintiff said that most of the interior work was then finished but that a good deal of it had not been done satisfactorily: as to the exterior work the Plaintiff said that it was not at that date completed and that some of the work that had been done was not satisfactory. The Defendant in a letter of the 31st August agreed that some work remained to be completed. He complained of unreasonable behaviour on the part of the Plaintiff in that she had refused to give the Defendant's men entry to carry out repairs. Much correspondence took place in which mutual complaints were expressed. Both parties employed solicitors. In a letter of the 5th January, 1956 which contained detailed comments or replies as to the complaints that had been made concerning various items of work required by the specification, the Defendant's solicitors wrote: "Your client still owes our clients certain moneys for extras and taking into account the additional expense to which they were put as a result of your client's lack of co-operation, it seems to us that to settle the matter your client should be allowed this money to offset any expense which she may incur to complete any work which remains outstanding under the contract". No settlement was, however, effected. Eventually the Plaintiff commenced proceedings in the County Court. By her Particulars of Claim dated the 7th December, 1956, she complained of failures to complete items of work or properly to complete them. The items of complaint were 37 in number, and the referable items of damage added up to £266. 14s. 0d. In his pleading the Defendant admitted that certain of the works were not completed in proper manner and that "subject to the Counterclaim herein the Plaintiff is entitled to recover in respect of such matters as follows": there was then an enumeration of 10 items with referable amounts totalling £19. 2s. 0d.
On the reference, which was to a Chartered Architect, it was held that the Plaintiff was right as to 16 items and in reference to these the amount allowed was £110. 7s. 6d. This was considerably less than the Plaintiff had claimed and considerably more than the Defendant had admitted. When the matter came before the learned Judge he disallowed one of the 16 items, That left 15 items totalling £74. 17s. 6d.
In addition to dealing with the Plaintiff's claim as referred to above and saying that his admissions of liability were "subject to the counterclaim herein", the Defendant also pleaded (in paragraph 7) as follows: "The Defendant will refer to his Counterclaim in this action and will if necessary seek to set up the same by way of set-off in extinction or in the alternative in diminution of the Plaintiff's claim". It is necessary to see, therefore, what the Counterclaim was. It was threefold. Firstly, a claim based on a quantum meruit for extra work ordered and done. There were 4 items and £95. 15s. 10d. in total was claimed. The Referee allowed the 4 items and fixed the figures to total £69. 11s. 0d. Secondly, there was a claim that loss was caueed because the Plaintiff refused access to the Defendant's workmen. Under this heading £18. 2s. 2d. was claimed. The Referee allowed £12. 7s. 6d. Thirdly, there was a claim that the Plaintiff had thrown away certain tools of the Defendant's workmen. Damages in trespass were claimed in the sum of £3. 0s. 9d. This was allowed by the Referee.
To the Counterclaim of the Defendant the pleading of the Plaintiff was as follows: "The Plaintiff makes no admissions as to any of the facts and matters alleged in the Counterclaim and puts the Defendant to the proof thereof. If any sum is found due from the Plaintiff to the Defendant the Plaintiff will give credit for the same against the sum due to her on her claim".
In the result, therefore, the Plaintiff became entitled to £74. 17s. 6d. because the Defendant had done bad work or omitted to do certain work. The Defendant became entitled to £69. 11s.0d. for doing work not originally ordered? the Defendant further became entitled to the £12. 7s. 6d. and to £3. Os. 9d. as damages for trespass. The total entitlement of the Defendant was £84. 19s. 3d. The Plaintiff was given Judgment for £74. 17s. 6d. and the Defendant was given Judgment for £84. 19s. 3d. An Order was made that the Plaintiff should pay to the Registrar of the Court the sum of £10. Is. 9d. being the balance in favour of the Defendant after deducting the amount adjudged to the Plaintiff.
When the question of costs came to be considered, there were submissions made to the learned Judge, and Mr. Campbell urged that all the claims arose out of one transaction and should be set off. The learned Judge gave the Plaintiff her costs (on Scald 3) on the Claim and gave the Defendant his costs (on Soale 3) on the Counterclaim. The Referee had stated in his report that the Defendant failed to complete the work by the agreed time and did some of the contract work some few months after the agreed time. In deciding what Order to make as to costs, the learned Judge was influenced by the fact that "the root cause of the trouble was the Defendant's failure to do properly and on time the work he originally contracted to do". The learned Judge thought "that Justice would best be done" by the Order he made and by setting off one total against the other. He thought that it would be fair to treat the costs of the reference as attributable as to one-half to each of the parties. The learned Judge did not in his Judgment deal with the question as to whether there was a set-off: this was probably because the submission as to set-off was only being made in furtherance of the endeavour to have an Order as to costs which was favourable to the Defendant.
Mr. Campbell submits that the items which total £84. 19s.3d. should have been treated as being in part set-off, with the result that the Plaintiff should have been adjudged to recover nothing and the Defendant to recover £10. 1s.9d. on his Counterclaim.
In In re a ( Bankruptoy Notice 1934 Chancery, page 431) Lord Hanworth, Master of the Rolls, said, at page 437: "With regard to the word 'set-off' that is a word well known and established in its meaning: it is something which provides a defence because the nature and quality of the sum so relied upon are such that it is a sum which is proper to be dealt with as diminishing the claim which is made and against which the sum so demanded can be set off". But in an action at law a defendant could only set off after the passing of the Statutes of Set off. The Statute of 2 George II chapter 22 provided that if there were mutual debts between a plaintiff and a defendant then one debt might be set against the other. But under that statute and under the statute of 2 George II chapter 24 the claims on both sides had to be liquidated debts or money demands which could be ascertained with certainty at the time of pleading. Counterclaim is the creature of statute. The Judicature Act, 1873. section 24 enabled the courts to hear a counterclaim: until then a cross-claim had to be advanced by a separate action. But before the Judicature Act there were circumstances in which a defendant who was sued could without bringing a separate action set up certain contentions...
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