England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE LIVERPOOL COUNTY COURT
(JUDGE JAMES)

		Royal Courts of Justice Strand London WC2
		Tuesday, 13th February 2001

Tuesday, 13th February 2001

1. LORD JUSTICE PILL: This is an application for permission to appeal made by Ray Stevenson, trading as Tower Forestry (a firm). I refused permission on the papers and it is renewed orally before me. A short extension of time is required, as to which I make no ruling. There is a helpful skeleton argument from Mr. Winston Hunter Q.C., who has also addressed the court orally.
2. The relevant facts can be stated briefly for present purposes. The applicant provides pruning and other vegetation management services. They tendered for a contract with Eastern Electricity, a limited company. It was a limited company (Tower Forestry Limited) which entered into the written contract with Eastern Electricity. Before the company was formed, I am told the firm (the present applicant) made a sub-contract with Environmental Consultants International Limited ("ECI"), the proposed respondents and claimants in the action. They were to do survey work. In the action they claimed their fees for the survey work. The applicants disputed their claim to fees, and also made a counter-claim, as set out by the judge at page 1 of his judgment:

"...the loss that they say they have suffered as a result of breaches of the contract by the claimants including the termination in July 1999 of a contract between a concern called Tower Forestry Limited and Eastern Electricity.

"Tower Forestry also counter-claim an indemnity in respect of their liability to Tower Forestry Limited with whom they say that they themselves had entered into a contract to undertake the survey subject of the claim made by ECI.

"Further they claim an indemnity in respect of their liability to the limited company."

3. Three points have been raised. I dealt with them in writing. I do not change my view as to points 2 and 3. Indeed, on point 3 I somewhat understated the position in that I said that the judge was entitled not to rule on indemnity. I find that he did in fact come to a conclusion that there was no such entitlement and in my judgment that was a conclusion he was entitled to reach. However, as Mr. Hunter accepts, point 3 only arises if he has permission to appeal on point 2. I have heard his oral submissions on that subject, and considered the judgment.
4. The judge pointed out at page 59H and 60A of his judgment:

"... I have to bear in mind that the survey was over in March 1998 and Eastern did not terminate the contract with Tower Forestry Limited until July 1999 namely 16 months later."

5. I am not persuaded that it is arguable that the judge's finding was one he was not entitled to reach. There was indeed a long delay, and the case on causation has not, in my judgment, been rendered arguable by the persuasive submissions of Mr. Hunter. However, I am more troubled about the first point raised.
6. Mr. Hunter has submitted that the judge has misunderstood the agreement made as to what was to be the subject of the trial before him. He submits that, quite apart from the July 1999 termination issue, there were claims based on remedial survey work which the applicants had to do and also the loss of profit which they suffered by reason of defective survey work. The judge has found, at page 55, that the errors in the proposed respondent's work were greater than they ought to have been. Mr. Hunter submits that in substance that is a finding of breach of contract by ECI. He submits that it had been agreed that, in the event of such a breach being found, questions of damages would be deferred. The judge stated at page 2 of his judgment:

"The parties have agreed that if I find that Tower Forestry have suffered loss arising from breaches by ECI of the contract, it may be necessary to hold a further hearing to determine the precise amount thereof. In connection with that prospective issue, forensic accountants have been retained for each of the parties."

7. What the judge did in the end was to deal with the consequences of his finding that the survey had defects by reducing the fee to be paid to ECI. He reduced that on a proportional basis, having regard to the errors in the survey. His reasoning is at page 58 of the judgment.
8. Mr. Hunter accepts that the judge was seeking to do justice in that way. But, having regard to the procedure which had been agreed, that approach pays no regard to the fact that an opportunity was to be kept for the applicants to produce evidence at a further hearing of the loss that they had suffered if a breach of contract was found. The judge has purported to deal with the point by saying that ECI had offered to put things right. Mr. Hunter says that, while there was evidence of that, it in no way dealt with the opportunity which the applicants were to be given to prove a loss. It was not an issue for that hearing whether the loss could have been mitigated in some way or that an offer to resurvey would be sufficient compensation.
9. At the conclusion of the judgment, Mr. Hunter properly took up the matter he now pursues with the judge, and his submissions are set out at pages 63 and 64 of the judgment. The judge, at page 64, referred to the fact that ECI were prepared to carry out resurvey work. Mr. Hunter submits, for the reasons already mentioned, that that is not a sufficient answer.
10. I am sufficiently concerned about the procedure which was followed not to refuse the application for permission finally today. On the other hand, I am not prepared to grant permission because it appears to me that the case on point 1 turns on an alleged misunderstanding by the judge of the position and the proposed respondents ought to have an opportunity to be heard on whether the applicants have been deprived of the opportunities to which Mr. Hunter refers. Moreover, before any permission is given it would be necessary for some prima facie evidence to be placed before the court of additional costs and possible loss of profits being suffered by reason of the alleged breach of contract. The proposed respondents may also wish to argue on the renewed application as to whether the judge did in fact find a breach of contract by them which could found a claim for damages.
11. I therefore adjourn the application. The proposed respondents should be notified of the renewed application. They should be provided with the prima facie evidence of loss to which I have referred. Mr. Hunter makes the point that they will have received the original reports of the expert witnesses to which the judge referred. He submits that there will have to be some reworking of it, based on the judge's findings as to the extent of ECI's default in their survey.
12. The renewed application should not be listed within 35 days. That will give an opportunity for the calculation of the alleged loss to be reworked. Also, at least seven days of that time is intended for the respondents to consider the additional information. That information is therefore to be disclosed, if this application is pursued, within 28 days, and the application will not to be heard until 35 days from today have elapsed. I further direct that, if permission is granted, the hearing should follow immediately upon it. I would invite submissions from Mr. Hunter as to the time which, in that event, should be set aside.
ORDER: Application adjourned for 35 days; to be listed for a two-hour hearing before a two-judge court; costs reserved. (ORDER NOT PART OF APPROVED JUDGMENT)