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Birkin v Guardweald Ltd & Anor [1997] EWCA Civ 1005 (12 February 1997)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/1997/1005.html
Cite as:
29 HLR 908,
[1997] EWCA Civ 1005,
(1997) 29 HLR 908
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SUSAN BIRKIN v. GUARDWEALD LIMITED (In Liquidation) and GREENHILL SECURITIES (DEVELOPMENTS) LIMITED [1997] EWCA Civ 1005 (12th February, 1997)
IN
THE SUPREME COURT OF JUDICATURE
FC3
97/5230/B
COURT
OF APPEAL (CIVIL DIVISION)
QBENF
95/1454/N
ON
APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN's
BENCH DIVISION
OFFICIAL
REFEREE'S BUSINESS
(Mr.
Recorder Dermod O'Brien QC)
Royal
Courts of Justice
Wednesday,
12th February 1997
B
e f o r e :
LORD
JUSTICE NOURSE
LORD
JUSTICE MORRITT
SIR
IAIN GLIDEWELL
---------------
SUSAN
BIRKIN
Plaintiff/Respondent
-v-
(1)
GUARDWEALD LIMITED (In Liquidation)
Defendant
(2)
GREENHILL SECURITIES (DEVELOPMENTS) LIMITED
Defendant/Appellant
---------------
Computer
Aided Transcript of the Palantype Notes of
Smith
Bernal Reporting Limited
180
Fleet Street London EC4A 2HD
Tel:
0171 831 3183 Fax: 0171 831 8838
(Official
Shorthand Writers to the Court)
---------------
MR.
F. TREGEAR
(instructed by Messrs. Morgan Bruce, London EC4) appeared on behalf of the
Appellant Second Defendant.
MR.
D. LORD
(instructed by the Simkins Partnership, London W1) appeared on behalf of the
Respondent Plaintiff.
---------------
J
U D G M E N T
(As
Approved by the Court)
Crown
Copyright
Wednesday,
12th February 1997
LORD
JUSTICE NOURSE: I have asked Sir Iain Glidewell to deliver the first
judgment.
SIR
IAIN GLIDEWELL: This is an appeal by the second defendant, Greenhill
Securities (Developments) Limited (which I shall call "Greenhill") against a
decision of Mr. Dermod O'Brien QC, sitting as an Official Referee, in one of
two actions brought by the plaintiff, Mrs. Birkin, against the first defendant,
Guardweald Limited, and the second defendant, Greenhill.
The
appeal relates to the action numbered 1994 ORB (Official Referee's Business)
117, in which the Judge entered judgment in a form which covered both that
action and indeed the later action (to which I shall refer again in a moment)
which, somewhat confusingly, is numbered 1994 ORB 717.
The
order, treating both actions as one for this purpose, was:
"(1) That
there be Judgment for the Plaintiff against the First Defendant and the Second
Defendant for £14,363.76 plus interest thereon of £3,452.21
(2) That
there be Judgment for the Plaintiff against the First Defendant alone for [a
further sum which is irrelevant in this appeal]
(3) That
there be Judgment for the Plaintiff against the Second Defendant alone for a
further £14,717.54 plus interest thereon of £8,286.50
(4) That
the First and Second Defendants pay the Plaintiff's costs of these actions,
such costs to be taxed if not agreed
(5) That
leave to appeal against the aforesaid costs order be refused."
The
writ in action No. 117 was issued on 18th December 1991. At the time of the
hearing, Guardweald was in liquidation and took no part in the proceedings.
There is no appeal against the judgment entered against Greenhill in the other
action brought by Mrs. Birkin, No. 717, in which the writ was issued on 26th
August 1994. Moreover, the damages awarded in that action were in the same sum
as those awarded in action No. 117. Indeed, as I have made clear, they are the
subject of the same order. The appeal in respect of action No. 117 is
therefore in relation to the Judge's order for costs alone. Mr. Tregear, for
Greenhill, argues that the Judge, in the events to which I am about to refer,
should have entered judgment for his client in action No. 117 and should then
have ordered the plaintiff to pay the costs of that action.
I
summarise the facts and the history of this matter briefly, I hope, but in
order that the points can be understood. On 9th March 1988 Mrs. Birkin took an
assignment of the leasehold interest in a basement flat at 13 Stanley Mansions,
Park Walk, London SW10. That was the residue of the term of 199 years from
25th September 1985. The lessor was Guardweald. Some time after Mrs. Birkin
moved into the flat, a damp patch appeared in the hallway. She drew it to the
attention of Mr. Nako, the lessor's managing agent, in the spring or early
summer of 1989. At that stage nothing was done about it. The damp patches
increased and tiles in the kitchen started to bulge and fall off. Mrs. Birkin
complained again to the agents, who engaged two firms to investigate and
recommend treatment, which they did in September 1989. In short, they
recommended some damp-proofing and tanking.
In
January 1990 Mrs. Birkin went abroad. When she returned, matters had got
worse. There were now signs of fungus as well as substantial damp. In June
1991 the contractors, apparently for the first time, attributed the damp to a
leakage from above.
The
flat above was leased to a Mr. and Mrs. Lendrum. The structure of the
intervening ceiling and floor was as follows. The floor of the Lendrums' flat,
consisting of wooden floor boards, was laid on battens. They in turn were laid
on steel beams. Between the steel beams there was an infill of clinker, which
formed a solid mass, but which, being constructed of clinker, was friable. The
plaster forming the ceiling of Mrs. Birkin's flat was applied to the bottom
surface of the infill below the beams.
A
domestic water pipe serving the Lendrums' flat was attached to the battens. It
sprang a leak, presumably some time before the spring of 1989. By the time the
matter was fully investigated, the clinker infill was completely saturated and
no longer solid. The floor of the Lendrums' flat, the battens to which the
floor boards were attached and the water pipe were comprised in the demise to
Mr. and Mrs. Lendrum; but the solid structure, consisting of the steel beams
and the clinker infill, was not included in any demise.
In
September 1990 some works of attempted repair commenced, which merely had the
effect of rendering the flat uninhabitable. That work did not progress very
far, and it ceased that autumn. On 20th May 1991 Guardweald assigned its
interest in the reversion to Greenhill. Mr. Nako remained as Greenhill's
managing agent.
On
20th December 1991, as I have already said, the writ was issued in action No.
117. The relief claimed in the statement of claim was:
"(1) An
Order that the First and/or the Second Defendant do effect such remedial works
to the Premises as are required pursuant to the matters pleaded above.
(2) Damages."
(3)
was a claim against the first defendant only for interest.
Despite
the action being commenced and the claim for a mandatory order, no further
repair work started until 20th September 1992. The work was not finally
completed, the last major item being the fitting out of the kitchen, until 9th
April 1993. But the Judge found that Mrs. Birkin could reasonably have resumed
occupation of the flat at the end of January 1993 and therefore held that she
was dispossessed for 124 weeks from 10th September 1990 to 29th January 1993.
The
lease contained covenants by the lessor:
"(a) To
maintain and keep in good and substantial repair and condition;
(i) The
main structure of the Building ...
...
(d) To
insure and keep insured the building ... against loss or damage by ... such
other risks (if any) as the lessors think fit ...."
with
a further obligation which the Judge interpreted as requiring an insurance
claim to be made with reasonable speed.
The
Judge held that both defendants were in breach of the repairing covenant and
the first defendant was in breach of the insuring covenant as he had so
interpreted it. The action was argued by counsel on both sides on the basis
that the breach of the repairing covenant was one for which a lessor, and
certainly Guardweald, was not liable until it had been given notice of the
defect and a reasonable time to repair it.
The
decision of this Court (my Lord, Lord Justice Nourse's judgment) in
British
Telecommunications plc v. Sun Life Assurance Society plc
[1996] 1 Ch. 69, which lays down a principle which at least arguably
establishes that the basis on which this action was argued was not, in the
particular circumstances, one in which notice was required, was decided on 28th
July 1995, after the judgment, save as to costs, was given in this action.
The
Judge concluded that when Greenhill took the assignment of the reversion it was
not liable until notice had been given to it of the defect and it had been
given a reasonable time to make the necessary repairs. He so decided although,
of course, Guardweald had already had notice and time and was already well in
breach of covenant. The Judge said:
"In
my view the Second Defendant was entitled to a reasonable time to put right
what the First Defendants had failed to do and the First Defendants remain
liable until the Second Defendants could and should have done it. I accept
from Mr. Pyle [a witness he had heard] that a reasonable time should have been
7 months including 3 months for actual execution of the work. Both Defendants
are concurrently liable for the repair costs since each should in their
respective times have carried them out or prevailed upon the insurers to carry
them out. So far as loss of use is concerned the First Defendants will be
liable in respect of the period from 10th September 1990 to 20th December 1991
(7 months after they ceased to be the reversioners) while the Second Defendants
will be liable for the period from 20th December 1991 to 30th January 1993."
In
reaching the conclusion that Greenhill was not liable until it had had notice
of the defect and a reasonable time had passed to repair it, the Judge
purported to draw an analogy with the decision of Garland J in
Duncliffe
v. Caerfelin Properties Ltd.
[1989] 2 EGLR page 38.
After
the judgment had been handed down on 27th July 1995, there was an argument on
another day, 31st August 1995, about costs. The Judge recorded Mr. Tregear,
for Greenhill, as arguing:
"...
since I have held that there was, as against the Second Defendant, no cause of
action sounding in damages until 20th December 1991 and the writ was issued on
18th December 1991, I ought to regard the first writ as prematurely issued and
I ought to award the Second Defendant the costs of the action as commenced by
the first writ."
That
is a succinct and wholly accurate summary and, indeed, it is the argument which
Mr. Tregear advanced to us today.
The
Judge rejected that argument. His reasons for so doing were expressed in the
following words of his judgment:
"The
tenant under the circumstances, as at that point in time [that is to say, on
18th December 1991] would have been fully justified in serving a writ to seek
an injunction to compel the landlords to do that which they were already
failing to do.
That
is what the plaintiff did. She was fully entitled to take the course she did.
It makes no difference whatever that the cause of action began to sound in
damages a mere 2 days later. In my view there is no real argument for saying
that she should not also get her full costs of the action commenced by the
first writ against the Second Defendant."
In
his forceful and clear argument in this appeal to us today, Mr. Tregear has
concentrated on the Judge's rejection of his straightforward argument in the
court below. He submits that, although in the pleading in the statement of
claim there is a claim for an injunction, that claim was not pursued. Thus, at
the time of the hearing this action was in substance a claim for damages at
common law and nothing else; and, in awarding damages against Greenhill for
the period starting from 20th December 1991, that is how the Judge treated it.
Thus, if Greenhill were only liable in damages from 20th December 1991 and
there was no other cause of action established against that company, there was
no liability at the time when the writ was issued on 18th December; in other
words, the writ was issued prematurely.
In
my judgment that argument, forceful though I have already characterised it as
being, was specious. The injunction was not pursued, for the very good reason
that the claim had taken so long to come on for trial that, long though it took
for the work to be done, it had been completed some two years before the action
finally came on. Had the plaintiff sought to argue the point, I see no reason
why, although it would have been futile to grant an injunction, some damages in
lieu of an injunction should not have been awarded for the period before 20th
December 1991. It was quite apparent, of course, at 18th December that
although Greenhill may not strictly have been in breach at that date (though
that may be arguable), they could not conceivably have completed the works by
the 20th, which, on the Judge's basis, they would have been bound to do. Thus,
an injunction would properly have issued and, in lieu of the injunction, I can
see no valid reason why damages should not have been awarded.
Mr.
Tregear argues that they would have been equitable damages - there was no
claim for equitable damages and the Judge did not award equitable damages - and
thus that we should not conclude that the judgment could properly be based upon
that possibility. That, with respect to him, seems to me to be coming close
to forgetting that law and equity have been fused for something over 120 years
now.
In
my judgment, the Judge's decision in relation to the argument that was advanced
to him on 31st August 1995 was not merely sound common sense, it was sound in
law as well. For those reasons, I would dismiss this appeal.
We
also then had an application from Mr. Lord, on behalf of Mrs. Birkin, for leave
to serve a respondent's notice out of time. My Lord, Justice Nourse, indicated
this morning that we refused such leave. I now give my reasons for arriving at
that conclusion.
The
notice of appeal was issued on 5th October 1995. By Order 59, rule 6 of the
Rules of the Supreme Court, the respondent's notice should have been served, if
one were going to be served, within 21 days thereafter.
The
respondent's notice seeks to raise three points. The first is that, contrary
to the basis upon which, as I have already said, the whole action was argued,
neither notice to either lessor nor time to carry out the work after the giving
of notice was required before either lessor was liable to the plaintiff. This
can be characterised as the
British
Telecommunications v. Sun Life
point. Secondly, so far as Greenhill is concerned, Greenhill was in breach
immediately it took the assignment of the reversion. Whether or not, as a
matter of law, notice to Guardweald originally was required, no notice was
required to be given to Greenhill, which took the assignment at a stage when
Guardweald was already well in breach, as I have said. The argument is that
the Judge was wrong to conclude that notice to Greenhill was necessary and time
ought to be given to Greenhill to carry out the work. He misinterpreted, it is
sought to be argued, the decision in
Duncliffe
v. Caerfelin Properties Ltd.
.
The third point depends upon the effect of the claim for the injunction, and I
have already dealt with that in giving judgment on the appeal itself.
We
were referred to the decision of this Court in
VCS
Ltd. v. Magmasters Ltd.
[1984] 1 WLR 1208. That was a case in which leave was sought to serve a
respondent's notice out of time, which was, as this one is, not merely a
respondent's notice supporting the decision on other grounds, but was in effect
a cross-appeal. In the event in that case the Court thought it right to grant
leave, but it did so because it took the view that a note which appeared in the
then current edition of the Supreme Court Practice was at least potentially
misleading. Giving the judgment of the Court, Sir John Donaldson MR said, at
p.1209 F:
"...
it will be recalled, as I pointed out, that a respondent's notice covers three
quite different situations. In sub-paragraph (b) it covers the situation to
which this note [i.e. the note in the White Book] refers, namely adding further
arguments to an existing appeal, but under (a) and (c) it is in reality a
cross-appeal. Where it is a cross-appeal, the time limit should, as a matter
of logic, be applied in exactly the same way as they are applied to a notice of
appeal."
Applying
that to the circumstances of this case, we have to consider, amongst other
matters, the apparent strength of the arguments which it is sought to advance
in the respondent's notice, but in particular we have to consider the time
which has elapsed since the respondent's notice should have been entered and
the prejudice to either party if leave to issue the respondent's notice is
either given on the one hand or refused on the other. Of course, there is
prejudice to the plaintiff in that, if she were allowed to enter her
respondent's notice and succeeded in either of the first two arguments, then
she might well recover a somewhat greater sum by way of damages than that which
she had already recovered in the judgment, because the damages could be
ante-dated to 20th May 1991.
But
as far as the present appellant, Greenhill, is concerned, the detriment is
considerable indeed. Not merely will Greenhill suffer the risk of having to
pay greater damages - obviously this is a detriment in itself - but they have
been deprived effectively of the opportunity of considering whether they should
go ahead with their appeal and hence with the cross-appeal. It is a matter of
speculation, of course, as to what that company and its advisers would have
done. But if it had been faced with a cross-appeal, and if it had been faced
moreover with the judgment in the
British
Telecommunications
case (which, if not reported in full, was certainly available in some form by
October or November 1995), then it may be that the company would have decided
not to proceed with this appeal, or at any rate would have so arranged matters
that it would not have incurred the costs, time and trouble it undoubtedly must
have incurred in preparing for the appeal. I regard that as a considerable
detriment and in my judgment, because of the very considerable lapse of time,
it outweighs the other factors which have been advanced to us in favour of
granting leave to enter the respondent's notice.
Solely
because this application is so late and because of the detriment that follows
from that, I concur in the refusal of leave for the respondent's notice.
LORD
JUSTICE MORRITT: I agree.
LORD
JUSTICE NOURSE: I also agree.
Order: appeal
dismissed with costs; application for leave to serve a respondent's notice out
of time refused; appellant's costs of and occasioned by the application for an
extension of time to put in the respondent's notice to be paid by the
respondent to the appellant.
© 1997 Crown Copyright