England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM TECHNOLOGY AND
CONSTRUCTION COURT
(HH Judge Havery QC)

		Royal Courts of Justice Strand, London, WC2A 2LL
		Tuesday 23rd May 2000

LORD JUSTICE BROOKE:

1. This is an appeal by the defendants, which is supported by the claimants, against a ruling by Judge Havery QC sitting in the Technology and Construction Court on 5th November 1999 to the effect that he would hand down his written judgment in this action notwithstanding the fact that the parties had compromised their dispute shortly before he was originally due to hand down his judgment on 18th October 1999.
2. This is a surveyors' negligence action arising out of a survey carried out for the claimants by Mr Ney, the sixth defendant, who is a partner in the firm of McBains Cooper, the first defendants. The action was tried by the judge on five days between 22nd and 29th June 1999. The judge completed his written judgment in draft on 14th September. He signed and dated it, and then sent copies of it to the parties' lawyers on a confidential basis in accordance with the procedure prescribed by the Practice Statement (Supreme Court: Judgments) [1998] 1 WLR 825. The day for handing down the judgment in open court was fixed for Monday 18th October 1999. The judge imposed an embargo on the notification of the terms of the judgment to the parties until 4pm on Friday 15th October 1999.
3. Just before the judge was due to hand down his judgment on 18th October he was asked by the parties to adjourn that hearing with a view to his making a Tomlin order on a paper application they would be making to him in due course, and he agreed to do so. In his judgment under appeal the judge said that counsel asked for an adjournment, rather than any other disposal of the hearing, on the ground that there was a possibility, expressed to be a small one, that the settlement would unravel. In the event a Tomlin order was signed by the representatives of both parties and lodged on 19th October.
4. Following these events it seemed to the judge on reflection that there were grounds which would justify handing down his judgment formally in open court. He therefore fixed a hearing, which took place on 5th November, in order to give counsel the opportunity to make submissions to him on this issue. At that hearing both counsel invited him not to hand down the judgment in open court for substantially the same reasons. Before describing the judge's conclusions I will first say something about the underlying proceedings.
5. The action related to a structural survey of a commercial property in Guildford. In April 1995 the claimants had offered to buy the building from the vendors of the property for £6.9 million subject, among other things, to a structural survey. This offer was accepted on 3rd May, and the defendants were instructed by the claimants to carry out the survey as soon as possible. Mr Ney inspected the building within seven days, and prepared an executive summary report in accordance with his instructions, which he sent to the claimants on 24th May. The executive summary was, in accordance with the agreement made between the claimants and the defendants, to be an overview of the recommendations and conclusions in the eventual report, and had to include major defects. Contracts were exchanged between the vendors and the claimants on 12th June, and the sale was completed on 23rd June, the day when Mr Ney's condition survey report reached the claimants. In these circumstances the latter report played no part in the proceedings.
6. The claimants' complaint which was at the centre of this litigation was that the defendants had been negligent in failing to warn them of the true condition of the roof, which had numerous defects, so that major remedial works had to be carried out. These were completed in December 1996 at a total cost of £174,684.77.
7. On pages 4-13 of his judgment the judge considered the issues of negligence that arose in the case, and made adverse findings against the defendants. On pages 13-15 he found that if the defendants' survey had put the claimants on notice about the condition of the roof, they would not have proceeded to purchase the property for £6.9 million. They would have tried to negotiate a reduction in price to reflect the perceived cost of remedying the defects, and the sale would not have gone ahead if they had not succeeded in negotiating a reduction to their satisfaction.
8. Much the greater part of the judgment was concerned with matters relating to the amount of damages the judge should award. It was common ground that the appropriate measure of damage was the diminution in value of the property. On pages 16-25 the judge considered the expert evidence on this issue. He preferred the evidence given on behalf of the claimants to the effect that the diminution in value was £250,000. This evidence not only took into account the roof defects which had to be repaired but also what was described as the stigma attached to defective properties, arising not only out of the suspicion that they had been poorly constructed in the first place but also out of the large risk factor remaining with the purchaser that the structural survey might have uncovered only half the problem.
9. Up to this point, the judge was concerned only with resolving issues of fact against a common background of law. He then turned to resolve some disputed questions of law.
10. The first (pages 25-28) was concerned with an argument by the defendants to the effect that the stigma was removed once the repairs had been carried out, and that to award the claimants £250,000 in these circumstances would be to give them an award for loss which they had not in fact suffered. After considering the effect of two leading cases the judge held that the damages were not to be reduced by reason of the carrying out of the repairs, having regard to the logic behind the prima facie rule that the measure of damage was the diminution value.
11. The second question of law which the judge had to resolve (pages 28-34) arose out of the defendants' argument that the claimants ought to have mitigated their damage by charging the cost of the repairs to the tenants as part of their service charges, given that the tenants' leases contained repairing covenants. The judge considered the effect of five authorities before reaching his conclusion that the claimants' non-recovery of this cost, or part of it, from the tenants did not constitute an unreasonable failure to mitigate their damage.
12. Finally, the judge considered an argument by the defendants to the effect that the damages ought to have been reduced by £40,000, being the amount the claimants recovered from the original builders pursuant to a warranty whose benefit had been assigned to them, and that because this settlement of the warranty claim was unreasonably low, a larger sum should be allowed in mitigation of damages under this head.
13. The judge considered two authorities quite briefly (pages 34-35) before concluding that the recovery of £40,000 represented a collateral benefit under a wholly independent contract which did not have to be taken into account. He then went on to consider the evidence about the level of the settlement, and concluded that the settlement of £40,000 was reasonable.
14. It will therefore be seen that the judgment was concerned partly with the resolution of issues of fact which had no real interest to anybody other than the parties, and partly with the resolution of three disputed issues of law which could be of wider interest and application.
15. After hearing counsel on 5th November, the judge gave a short ruling in which he concluded that there were strong public interest grounds for formally delivering his judgment in open court. He immediately granted permission to appeal, and the effect of his ruling has been stayed until the conclusion of this appeal. He accepted that judgment was not given within the meaning of CPR 40.7(1) when it was sent to the parties' lawyers on 14th September, and he also accepted that it was open to parties to settle their case at any time, whether before or after judgment was handed down. He observed that a judgment for damages only has no effect unless it is incorporated in an order of the court, which must be sealed by the court (CPR 40.2(2)(b)). It was not the practice to seal written judgments, whether formally handed down in open court or not, and oral judgments could not of course be sealed. It was always open to the parties, after hearing or reading a reasoned judgment, to invite the court to make a consent order in some other terms at any time before an order of the court was perfected in pursuance of the judgment.
16. After considering the arguments addressed to him by counsel the judge concluded:

"The general point in favour of not handing down the judgment is that to do so could lead to further costly litigation. In my judgment, I have a discretion whether to hand down the judgment. The risk of further costly litigation is certainly a weighty matter to hold in the balance. Nevertheless, I think that in general, where a judgment has been finalised and notified to the parties and they enter into a settlement in the light of that judgment, there are overriding public interest considerations in favour of handing down the judgment in open court: (1) There are cases, for example, pollution cases, where the findings of fact themselves may be of public interest and importance. (2) There are other cases, such as the present, where decisions on points of law may be of public interest or may be considered worthy of being reported as authorities.

If it were the case that the settlement of an action after it had become the subject of a judicial decision prevented the publication of the judgment, it would be open to the parties, or to one party by making a sufficiently attractive offer to the other, to suppress the judgment. There are various reasons why a party may wish to do that. For example, the insurer of a party may wish to suppress the publication of an authority on a point of law which it may consider to be against its interests. Clearly, a situation where there may be a bias, however slight, in the selection of the authorities which see the light of day is contrary to the public interest.

I conclude that there are strong public interest grounds for formally delivering the judgment in open court. Those grounds, in my judgment, override all others. Thus, I shall now formally hand down the judgment. The judgment having been notified to the parties, I will take it as read and direct that no further transcript need be taken."

17. This appeal raises a novel point of general importance. The question we have been asked to consider could not have arisen, at any rate in its present form, before the introduction of the practice by which judges made a draft of their judgment available to the lawyers for the parties (or to the parties themselves if unrepresented) on a confidential basis before the time fixed for formally handing it down in court. On the latter occasion it was made generally available in written form and was not read out in open court. The practice started in the Civil Division of the Court of Appeal, and in 1995 Sir Thomas Bingham MR issued a practice note on the topic (see Practice Direction (Court of Appeal: Handed Down Judgments) [1995] 1 WLR 1055). The practice proved so popular, and was so effective in saving time and resources, that it was then adopted, on appropriate occasions, by the Criminal Division of the Court of Appeal and by judges in the three divisions of the High Court. A fuller practice statement was issued in April 1998 by Lord Bingham of Cornhill CJ, with the authority of the other heads of division: see Practice Statement (Supreme Court: Judgments) [1998] 1 WLR 825.
18. Before I consider the terms of that practice statement, so far as they are material, it will be convenient to set out the governing principles of law which would have been applied in a case not affected by this new practice, where judgment was given orally, in the traditional manner, or was handed down in writing without any prior notice.
19. It is elementary that parties to private litigation are at liberty to resolve their differences by a compromise, and that an unimpeached compromise represents the end of the dispute or disputes from which it arose (see Foskett, The Law and Practice of Compromise (4th Edition 1996), p 90, citing Plumley v Horrells (1869) 20 LT 473 per Lord Romilly MR; and Knowles v Roberts (1888) 38 Ch D 263 per Bowen LJ at p 272).
20. The House of Lords has on occasion declined to hear an appeal in the context of private litigation once it has perceived that the original lis between the parties is at an end, whether by virtue of a compromise or because, as in Ainsbury v Millington [1987] 1 WLR 379, there has been such a change in the underlying factual situation that the remedy sought by the appellant no longer raises any live issues. In Sun Life Assurance Company of Canada v Jervis [1944] AC 111 Viscount Simon LC set out the governing principles in these terms at pp 113-114:

"I do not think that it would be a proper exercise of the authority which this House possesses to hear appeals if it occupies time in this case in deciding an academic question, the answer to which cannot affect the respondent in any way. If the House undertook to do so, it would not be deciding an existing lis between the parties who are before it, but would merely be expressing its view on a legal conundrum which the appellants hope to get decided in their favour without in any way affecting the position between the parties. ... I think it is an essential quality of an appeal fit to be disposed of by this House that there should exist between the parties a matter in actual controversy which the House undertakes to decide as a living issue."

21. In Ainsbury v Millington [1987] 1 WLR 379, after restating this principle, Lord Bridge of Harwich added at p 318:

"Different considerations may arise in relation to what are called 'friendly actions' and conceivably in relation to proceedings instituted specifically as a test case... Again litigation may sometimes be properly continued for the purpose of resolving an issue as to costs when all other matters in dispute have been resolved."

22. In the recent case of R v Home Secretary ex p Salem [1999] 1 AC 450 the House of Lords recognised that different principles applied in cases where there was an issue involving a public authority as to a question of public law. In such a case there was a discretion to hear disputes, but Lord Slynn of Hadley said at p 457A that this discretion had to be exercised with caution. He then explained the circumstances at p 457A-B in which there might be a good reason in the public interest for proceeding to hear an appeal even though it was "academic between the parties".
23. This, however, is not a public law case, and counsel argued that if at any time before judgment was entered the parties told the court that they had compromised their dispute, that was the end of the matter, unless the parties wished the court to take steps to assist them to put their compromise into effect. If they presented a consent order to the court, the court would normally not be concerned to approve or disapprove its terms before directing that it should be entered (see Noel v Becker [1971] 1 WLR 355 and Bruce v Worthing DC (1994) 26 HLR 223).
24. It is clear to me that the resolution of this appeal turns on the nature of the exercise that is being performed from the moment the draft judgment is delivered to the parties in accordance with the new practice. Counsel argued that this new practice did not make any difference at all. They both submitted that once the parties knew what the judge intended to say in his or her judgment, they were at liberty to compromise their dispute and to make it a term of their compromise that the judge would not publish the judgment whose terms they had read. They accepted that one party might be so anxious to prevent publication that it might be willing to pay the other party far more than the total amount of its claim plus indemnity costs, but they submitted that such a compromise would be binding and enforceable and that a condition to the effect that the judge would not publish the judgment he or she had prepared did not offend against public policy in any way.
25. In order to consider the merits of this somewhat surprising submission it is necessary first to set out the relevant terms of the current practice statement ([1998] 1 WLR 825). After explaining in paragraph 1 the reasons for some changes in the previous practice, the practice statement states in paragraph 2:

"2. Availability of handed down judgments in advance of the hearing: new arrangements.

Unless the court otherwise orders - for example, if a judgment contains price-sensitive information - copies of the written judgment will now be made available in these cases to the parties' legal advisers at about 4pm on the second working day before judgment is due to be pronounced on the condition that the contents are not communicated to the parties themselves until one hour before the listed time for pronouncement of judgment. Delivery to legal advisers is made primarily to enable them to consider the judgment and decide what consequential orders they should seek. The condition is imposed to prevent the outcome of the case being publicly reported before judgment is given, since the judgment is confidential until then. Some judges may decide to allow the parties' legal advisers to communicate the contents of the judgment to their clients two hours before the listed time, in order that they may be able to submit minutes of the proposed order, agreed by their clients, to the judge before the judge comes into court, and it will be open to judges to permit more information about the result of a case to be communicated on a confidential basis to the client at an earlier stage if good reason is shown for making such a direction.

If, for any reason, a party's legal advisers have special grounds for seeking a relaxation of the usual condition restricting disclosure to the party itself, a request for relaxation of the condition may be made informally through the judge's clerk (or through the associate, if the judge has no clerk).

A copy of the written judgment will be made available to any party who is not legally represented at the same time as to legal advisers. It must be treated as confidential until judgment is given. Every part of every judgment which is made available in this way will be marked 'Unapproved judgment: no permission is granted to copy or use in court'. These words will carry the authority of the judge, and will mean what they say.

The time at which copies of the judgment are being made available to the parties' legal advisers is being brought forward 24 hours in order to enable them to submit any written suggestions to the judge about typing errors, wrong references and other minor corrections of that kind in good time, so that, if the judge thinks fit, the judgment can be corrected before it is handed down formally in court. The parties' legal advisers are therefore being requested to submit a written list of corrections of this kind to the judge's clerk (or to the associate, if the judge has no clerk) by 3pm on the day before judgment is handed down. In divisions of the court which have two or more judges, the list should be submitted in each case to the judge who is to deliver the judgment in question. Lawyers are not being asked to carry out proof-reading for the judiciary, but a significant cause of the present delays is the fact that minor corrections of this type are being mentioned to the judge for the first time in court, when there is no time to make any necessary corrections to the text."

26. This extract makes it clear that the subject-matter of this practice statement is the judgment which the court is delivering in the case. This is the "handed down judgment" of which copies are to be made available in advance of the hearing 24 hours earlier than was allowed for in the previous practice. The express purpose of these arrangements was to enable the parties' legal advisers to consider "the judgment" and decide what consequential orders they should seek. The parties themselves were not ordinarily to be allowed to have the contents of the judgment communicated to them until an hour before the listed time for "pronouncement of the judgment" because "the judgment" is confidential until it is "given". The document which is sent to the parties' legal advisers in confidence is to be marked "unapproved judgment", and the reason why the procedure is being elongated is to enable minor corrections to be pointed out to the judge in time for them to be put right before the judgment is "handed down formally in court".
27. It is clear that when a copy of the judgment is sent to the parties' legal advisers in accordance with this new practice, it is not at that time being given or made within the meaning of CPR 40.7 ("a judgment or order takes effect from the day when it is given or made"): compare Holtby v Hodgson (1889 QBD 103. It is also clear that the judge is at liberty to alter the terms of his or her judgment (whether to make minor corrections or for any other reason) before handing it down formally in court. This, however, is nothing new, because it has always been within the powers of a judge to reconsider his or her decision at any time before it is entered and perfected (Re St Nazaire Co (1879) 12 Ch D 88, 91; Re Suffield and Watts ex p Brown (1888) 20 QBD 693 697). It has also always been within a judge's powers to alter at any time his or her judgment if it has been delivered orally, although not so as to contradict the order made on the judgment once it has been perfected (see Secretary of State for Trade and Industry v Rogers [1996] 1 WLR 1569, 1578 and Medcalf v Mardell (CAT 2 March 2000, para 62).
28. There is no indication in the practice statement that its purpose is to allow the parties to have more material available to them to help them to settle their dispute. Its purpose is to introduce an orderly procedure for the delivery of reserved judgments, whereby the parties' lawyers can have time to consider and agree the terms of any consequential orders they may invite the court to make and the process of delivering judgment can be abbreviated by avoiding the need for the judge to read the judgment orally in court.
29. It follows that under the new practice the process of delivering judgment is initiated when the judge sends a copy of it to the parties' legal advisers. Provided there is a lis in being at that stage, it will be in the discretion of the judge to decide whether to continue that process by handing down the judgment in open court or to abort it at the parties' request. I agree with the judge that there may well be a public interest in continuing the process, notwithstanding the parties' wishes that he should not do so, and that there can be no question of a judge being deprived of the power to decide whether or not to do so simply because the parties have decided to settle their dispute after reading the judgment which has been sent to them in confidence.
30. Counsel accepted that the logical consequence of the arguments they were both urging on the court was that the parties could prevent the judge from delivering judgment even if it contained findings of serious fraud or serious negligence, if the defendant was willing to pay the claimants large sums of money to suppress them. They also accepted that unless there was anything in the procedures of the House of Lords (which they had not researched) to the contrary it would be open on their arguments to the parties to private litigation, on reading the copies of their lordships' opinions made available to them shortly before they were delivered in the House, to settle their dispute there and then and require that the speeches should not be delivered.
31. The longer we tested their thesis, the more fragile it appeared. When we put to counsel the point made by the judge to the effect that if they were right, powerful defendants like insurance companies could pick and choose which judgments they were happy to see published and which judgments they were willing to pay money to suppress, we were told that it has always been a characteristic of the common law that it has developed haphazardly. It was then suggested to us that there might be one rule for first instance courts and a different rule for appellate courts. For the latter, it appeared to be conceded during the course of argument that this court might have a residual discretion to hand down its judgment notwithstanding the fact that the parties had compromised their dispute, if only to correct errors in the reported judgment in the court below or to reconcile conflicting lines of authority.
32. Since the hearing ended, it has been possible to consider the procedures in the House of Lords which we discussed briefly with counsel. An appeal to the House of Lords which has been set down for hearing may only be withdrawn by order of the House on petition (Practice Direction of the House of Lords Applicable to Civil Appeals (January 1996 Edition), para 28.3). In Grovit v Doctor [1997] 1 WLR 640 Lord Woolf described at p 647E-F how an Appellate Committee of the House of Lords announced that it had not been prepared to give leave for that appeal to be withdrawn during the course of the hearing. After argument for the appellant had concluded, the parties had been invited to withdraw so that the members of the committee could consider whether it was necessary to call upon the respondents. When the hearing resumed, and before the presiding law lord, Lord Goff, could inform the respondents that the committee did not require their assistance, counsel for the appellant told their Lordships that he had been instructed to seek leave to withdraw the appeal. Such leave was refused. Since the Practice Direction gives the House an unfettered discretion whether or not to permit an appeal to be withdrawn after it has been set down for hearing, there seems to be no reason to suppose that the House would not insist, if it considered it appropriate, to give judgment on an appeal even if it was informed that both parties wished the appeal to be withdrawn in circumstances similar to those under consideration on the present case. The practice of allowing the parties to an appeal to see the opinions of the Lords of Appeal shortly before judgment is given, under strict embargo terms, is described in paragraph 21.2 of the Practice Direction.
33. In my judgment the judge was correct in the way he gave his ruling in this matter, for the reasons he gave. He did possess a discretion to decide whether or not to hand down his judgment, and there are no grounds on which this court could interfere with the way in which he in fact decided to exercise his discretion. As I have said, although much of his judgment was of interest only to the immediate parties to the dispute, there were three rulings on points of law which were potentially of wider interest, and a judge sitting in a specialist jurisdiction like the Technology and Construction Court is uniquely well placed to judge whether it would be of value if his judgment was a matter of public record.
34. Of course the courts are always anxious to assist parties to resolve their disputes, and I realise that one consequence of this judgment is that the parties to the present action may now face ancillary litigation on the question whether their compromise is binding, or may face the expense and inconvenience of an appeal if it is accepted or held that it is not. They have, however, placed themselves in this position by making a compromise agreement on the mutual understanding that, as a consequence of their compromise, the judgment would not be handed down. This mutual understanding is unenforceable, in that public policy dictates that the judge should have an independent discretion to decide whether to deliver his judgment or not. The wishes of the parties are just one factor, but not an overriding factor, which a judge should take into account in deciding how to exercise his discretion.
35. I should make it clear that the situation I have been considering in this judgment is quite different from the situation which confronted another division of this court recently in HFC Bank Plc v HSBC Bank Plc (CAT 10th February 2000). In that case the court had granted an expedited hearing of an appeal at the request of the claimant, and the members of the court then gave priority to preparing their judgments over the preparation of judgments in earlier cases which were not of the same degree of urgency. At the beginning of the third week after the end of the hearing of the appeal counsel's clerks were told that judgment would be given on the Thursday of that week and that copies of the draft judgments would be made available to counsel at midday on the Tuesday. Early on the Tuesday morning, however, the court was told that the parties had come to terms overnight and wished that the appeal should be dismissed. The draft judgments were therefore not made available.
36. The parties had therefore not been shown the judgments which were going to be delivered at the time they settled their dispute, and this, in my judgment, makes all the difference. In the circumstances of that case Nourse LJ said at paragraph 9 that the court wished to make it clear that it would always encourage the parties to settle their differences even at a late stage and nothing the court said was intended to detract from this principle. He went on to express the view of the court that it had been the duty of the parties themselves to inform the court of the possibility of a settlement at any rate on the Thursday of the previous week when arrangements were made for a meeting in the United States in four days' time between representatives of the parties' holding companies with a view to seeing whether the dispute could be compromised even at this very late stage. It was no part of the compromise agreement that the judgments of the Court of Appeal should be suppressed, since neither party had seen the draft judgments at the time they settled their differences.
37. For the reasons I have given in this judgment I would dismiss this appeal.

LORD JUSTICE ROBERT WALKER:

38. I agree.

LORD JUSTICE PETER GIBSON:

39. I also agree.
Order: Appeal dismissed. No order as to costs. Leave to appeal to House of Lords Refused. (Order does not form part of the approved judgment)