Universal Cycles Plc (Claimant/Appellant) v Grangebriar Ltd
| Jurisdiction | England & Wales |
| Judge | LORD WOOLF, MR,Lady Justice Hale,LADY JUSTICE HALE |
| Judgment Date | 08 February 2000 |
| Judgment citation (vLex) | [2000] EWCA Civ J0208-6 |
| Date | 08 February 2000 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | FC3 99/7573/A2 QBENF 98/1350/A2 |
[2000] EWCA Civ J0208-6
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
(HIS HONOUR JUDGE HARRIS sitting as a High Court Judge)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
The Master Of The Rolls
(Lord Woolf)
Lady Justice Hale
FC3 99/7573/A2 QBENF 98/1350/A2
MR MICHAEL DRISCOLL QC (Instructed by Messrs Sprecher Grier, London, WC1V 7JH) appeared on behalf of the Appellant
MR RICHARD MORGAN (Instructed by Messrs Nabarro Nathanson, London, W1X 6NX) appeared on behalf of the Respondent
I will ask Lady Justice Hale to give the first judgment.
This is a claimant's appeal from that part of the order of His Honour Judge Harris QC, sitting as a judge of the High Court, dated 7 April 1998 which relates to costs. The underlying issue is a very simple one. In an ordinary case of sale of goods where the seller sues for the price and the buyer defends and counterclaims on the grounds that the goods were defective and thereby reduces but does not wipe out the sum due, what is the appropriate approach to costs?
The claimant is an English importer and distributor of bicycles. The defendant is an Irish dealer in bicycles both wholesale and retail. In 1995 the defendant bought a large number of bicycles from the claimant. The exact number does not matter, but it was around 4,800. The total price, less a small deduction for missing bikes, was £214,579.55. The defendant made payments totalling £108,039.66. The claimant claimed the balance of £106,539.89 plus interest.
The writ was issued on 4 June 1996. The defence and counterclaim is dated 3 January 1997. The defendant did not dispute that there had been sales and payments made, but defended the whole of the claim and counterclaimed on the basis that the goods were not of merchantable quality or, as some of them were mountain bikes, fit for their purpose.
It was alleged in paragraph 5.c that:
"….the Defendant has paid more than a reasonable and proper sum in respect of both the merchantable and defective goods supplied to it."
It was denied in paragraph 10 that the defendant was in breach of contract by failing to pay or otherwise. It was claimed in paragraph 11 that its own claim extinguished that of the claimant. It was denied in that, and other paragraphs, that the claimant was entitled to any relief at all. There was a counterclaim for damages including loss of business and good will.
By a reply and defence to counterclaim dated 17 January 1997, the claimant denied that a substantial number of the bicycles were defective and/or not of merchantable quality, and/or not reasonably fit for their purpose. If they were this was not caused in or by the manufacturing or packaging process or in the course of delivery to the defendant. It was contended that any such defects were caused by the defendant and/or its agents. The claimant also requested further and better particulars, including particulars of the alleged loss.
The reply to that request stated that those particulars were to follow. They only followed on 26 and 27 February 1998, three weeks before the trial. The figures for repairs, replacements and refunds to the defective bicycles were put at some £79,000. (I will not complicate this matter by going into the difference between the figures in IR£ and the figures in £ sterling). The loss of profit on future sales and goodwill was calculated in various ways but, on any view, went into six figures.
The defendant did not make any payment into court or other offer, nor did the claimant make any Calderbank offer. The trial took place over some 7 1/2 days. The judge gave judgment for the claimant on the claim for a total of £109,223.10 with interest from 4 June 1996. He also found that the bicycles had not been of merchantable quality and gave judgment for the defendant on the counterclaim for a total of £25,041.20 with interest from 15 November 1995.
It had been agreed between the parties that the judge, having found the position as to liability on the counterclaim, should deal with quantum with a broadish brush. He went through the defendant's heads of damage: the cost of repairs to the defective bicycles; loss of profit on refunds to retail and trade customers; losses due to the supply of new bicycles and other forms of compensation to dissatisfied customers; defective stock sold at trade prices; loss of profit on unsold bicycles. The judge awarded less on some of those figures, much less on some of them, the full amount on some and none on others, thus making up the total of just over £25,000 from a claim of £79,000.
The judge did not deal with two other heads of the counterclaim. Instead he directed, "if necessary", an inquiry as to any damages the defendant might be entitled to for loss of business and damage to business reputation and goodwill. He did however make observations in the judgment that this would be difficult to establish and that it should be for a modest sum. He also directed, if necessary, an inquiry as to the damages to which the defendant might be entitled with respect to 70 per cent of the unsold bicycles and/or returned bicycles calculated by determining the cost price of those bicycles and from the price allowed by the claimant for the purchase.
The overall result, therefore, was that, subject to those two extra items and the effect of interest, the claimant had succeeded in recovering a net sum of around £84,000 from the defendant. The costs order was that the claimant pay half of the defendant's costs, save that the defendant pay the claimant's costs up to the service of the defence and counterclaim and the costs of setting down.
The judge's reasoning, in summary, was:
(1) Neither party was anxious to have an order for the claimant to have the costs of the claim and the defendant to have the costs on the counterclaim because this was so hard to disentangle on assessment.
(2) There was no dispute as to the sum which was, prima facie, due, hence no time had been devoted at the trial as to how that sum was calculated.
(3) The substance of the case was whether the claimant or defendant was responsible for the defective state of bicycles supplied. On that issue the defendant won. The time and money at the trial had been spent mostly on establishing matters which the claimant denied.
(4) However the defendant had not succeeded to anything like the extent claimed, certainly not enough to extinguish the whole of the claimant's claim. The claimant had been offered nothing, nor had the defendant properly explained what he was complaining about at the time it was happening. It was for that reason that the defendant was only awarded half the costs.
The case advanced by Mr Driscoll, for the appellants, is a simple one. It is that that the judge was wrong to say that the sum claimed was not in dispute. The defendant had denied that they owed anything to the claimant at all. On the contrary it was alleged that they had paid too much already and they counterclaimed for what turned out, when the...
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