Sykes and Another v Packham T/A Bathroom Specialist
| Jurisdiction | England & Wales |
| Judge | Lord Justice Gross,Lord Justice Stanley Burnton,Lord Justice Kay |
| Judgment Date | 18 May 2011 |
| Neutral Citation | [2011] EWCA Civ 608 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: B2/2010/0228 |
| Date | 18 May 2011 |
[2011] EWCA Civ 608
IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM
His Honour Roger Connor DL
7 MK 00900
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Kay
Lord Justice Stanley Burnton
and
Lord Justice Gross
Case No: B2/2010/0228
Mr Piers Hill (instructed by Geoffrey Leaver Solicitors) for the Appellants
Mr Robert Christie (instructed by Austin Ray) for the Respondent
Hearing dates: 01/02/2011
INTRODUCTION
By his order dated 21 st January, 2010 ("the judgment" or "the order", as appropriate), HH Roger Connor gave judgment for the then Claimant (now "the Respondent") in the amount of £25,910.72 plus £8,282.80 by way of interest, a total of £34,183.52, to be paid within 28 days. The Judge further ordered that the then Defendants (now "the Appellants") pay the Respondent 85% of his costs of the claim and counterclaim on the bases set out in the order. The Judge refused the Appellants' applications for permission to appeal and for a stay of execution.
As explained in the Judgment, the Respondent is a plumber and heating engineer, trading, at the material time, as a bathroom specialist. He claimed in respect of work done by him at a substantial house called Midsummer Moon at Wavendon, Milton Keynes ("the house"). The dispute relates to the period immediately before and after purchase of the house by the Appellants, in the latter part of 2005. By the claim, the Respondent sought payment for what he alleged was the balance due to him in respect of works done by him, his employees and sub-contractors at the house ("the works") and for materials supplied. The Appellants denied that they were liable to pay any further money to the Respondent and counterclaimed, alleging overpayment and that some of the work done by the Respondent (or his employees or sub-contractors) was defective. As already recorded, the Judge found in favour of the Respondent in the amounts set out in the order.
The Appellants sought permission to appeal from the judgment, on the following three grounds:
i) The Judge erred in rejecting the Appellants' case that this was a fixed price contract (plus extras).
ii) Having rejected the Respondent's case that this was a "cost plus" contract, the Judge erred in finding that the Respondent was entitled to recover on a quantum meruit; instead, the Judge should either have dismissed the claim or given the Appellants an opportunity to call evidence as regards the "reasonable price" and to make submissions in this regard before judgment.
iii) There was insufficient evidence to support the Judge's findings as regards what was in fact a reasonable price for the works.
The single Lord Justice granted permission to appeal on all these grounds, together with a stay of execution (by reason of the Respondent's financial difficulties). There had been a further ground of appeal as to matters arising from the draft judgment; the single Lord Justice refused permission to appeal in this regard and the Appellants did not pursue it before us. Nothing more need be said of it.
There is also before this Court a Respondent's Notice ("the cross-appeal"), advanced on two grounds::
i) Essentially, a suggested arithmetical error in the judgment; if this ground is well-founded, the Respondent should have been awarded the principal sum of £30,506.70 (instead of £25,910.72) plus interest in the amount of £9,746.12 (rather than £8,282.80).
ii) A submission that if the Judge was wrong to hold that this was a contract for a reasonable price, he should have held that it was a cost plus contract, as originally alleged by the Respondent.
There are, accordingly, four principal issues for decision by this Court:
i) The true nature of the agreement ("Issue (I)")?
ii) What should the Judge have done ("Issue (II)")?
iii) A reasonable price ("Issue (III)")?
iv) An arithmetical error ("Issue (IV")?
Pausing here, this litigation prompts a number of reflections. It concerns a domestic building contract which, on any view, went badly awry. The resolution of the disputes which have arisen matters greatly to both parties. On the facts found by the Judge, the Respondent is (or was) a small builder, honest but unsophisticated; as we understand it, he is now bankrupt with liabilities to Her Majesty's Revenue and Customs. So far as concerns the Appellants, there can be no minimising the severity of various findings made by the Judge as to their credibility (in particular, that of the first Appellant), findings which have not been appealed – leading to the Judge's conclusion (at [52] of the judgment) that where there were conflicts in the evidence between the parties "in most matters I prefer the evidence of the Claimant". That said, it only fair to record that the Appellants were always on what might be termed a hiding to nothing – given the Respondent's impecuniosity, there has never been a realistic prospect (whatever the merits of the Appellants' case) of recovery from him.
Against this background, I confess to some sympathy with both parties, not to mention the Judge holding the ring. A case of this nature, where the costs of protracted litigation may so readily exceed the sums in issue, necessarily gives rise to acute concerns. In such circumstances, giving effect to the "overriding objective" ( CPR, Part 1.1) presents a formidable challenge. There is a need to strike the right balance between saving expense, proportionality, expedition and fairness – all components of dealing with a case justly ( CPR, ibid). As will be seen, this is indeed what the Judge, to his credit, has sought to do. The underlying question on the appeal is whether he was right in what he did.
THE JUDGMENT
Before proceeding further, it will be convenient to outline the Judge's principal findings.
As is not in dispute, the key document was an "estimate" dated 25 th May, 2005 ("the estimate"), of which more below. The Judge's central conclusions with regard to the estimate and, in consequence, the approach he thought it right to adopt, were as follows:
" 54. ….having regard to the round figures given and the terminology used in the estimate, no reasonable person reading the estimate could…have thought that the Claimant was offering to supply the goods in question for a fixed price, notwithstanding the passage referring to changes in manufacturers' list prices……
55. As to whether the decision of the Defendants to instruct the Claimant to do the work gave rise to an agreement to provide the necessary labour for a fixed price, or a contract upon some other basis I, again, conclude that no reasonable person, reading the oft repeated phrase, 'Approximate labour and expenses costs' would have concluded that the Claimant was offering to provide the labour required for a fixed price. I am reinforced in that view by the evidence of the Claimant that the Defendants had asked him to provide a quotation and he told them that he was unable to do so…..If, as I accept, the Defendants asked the Claimant for a quotation and were told that he could only provide an estimate, it is simply not credible that they believed that, by his estimate, he was offering to carry out the works for a fixed price.
56. On the other hand, I cannot read into the words used in the estimate or, indeed, any other part of the evidence, any basis for concluding….that the Defendants agreed to pay for the works upon …..a form of costs plus contract. There is simply no evidence that that is what was agreed and there is no basis upon which I could conclude that such an agreement is to be inferred. Conspicuously, there is no evidence as to what the 'plus' would be. In the absence of an express agreement as to how the price of the works was to be ascertained, I conclude that there was an implied agreement that the price to be paid would be a reasonable price for the work to be done and the materials to be supplied, as would also be the case in respect of the additional works, no other means of ascertaining the price having been agreed…
………
58. Evidence to assist me in determining the amount of a reasonable price in this case is by no means abundant. I do, of course, have the experts' report giving me figures in respect of their valuation of the additional works. However……that evidence is of limited value because the experts had no means of assessing the amount of time wasted due to the presence of other trades or the amount of additional work resulting from changes in instructions given by the Defendants. I perceive that my duty, in those circumstances, is to seek to assess what would have been a reasonable price, doing the best I can. There must, inevitably, be an element of rough justice in this process. (I could, of course, decline to make this finding and adjourn the case for further enquiry. However, this would, in my view, be incompatible with the requirements of the overriding objective set out in part 1.1 of the Civil Procedure Rules, particularly having regard to the lack of proportionality between the costs involved and the sums remaining in issue and the further delay that would result.)"
Thereafter the Judge proceeded to consider the reasonable price payable under the contract, with reference to amounts paid by the Respondent (1) by way of wages, (2) to sub-contractors and (3) for materials, tools, equipment and items supplied; further, the Judge concluded that the Respondent must be entitled (whether by way of addition to the above items or separately) to (4) appropriate sums in respect of his own labour and an element of profit.
In very broad terms, the Judge's conclusions with regard to these items were as follows:
i) Wages: Having regard to (a) the submission of the Appellants that some of the time of...
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