England and Wales Court of Appeal (Civil Division) Decisions

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Cite as: [2001] EWCA Civ 390

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		Neutral Citation Number: [2001] EWCA Civ 390
		B1/00/3618

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE LUTON COUNTY COURT
(HIS HONOUR JUDGE VILJOEN)

Royal Courts of Justice
Strand
London WC2A 2LL
Thursday 15 March 2001

B e f o r e :

LORD JUSTICE LATHAM
____________________

	PERTEMPS GROUP LIMITED
	Claimant/Applicant
	- v -
	NEEDHAM & NEEDHAM LIMITED
	Defendant/Respondent

____________________

(Computer Aided Transcript of the Palantype Notes of
Smith Bernal Reporting Limited, 190 Fleet Street,
London EC4A 2AG
Tel: 020 7421 4040 Fax: 020 7831 8838
Official Shorthand Writers to the Court)

____________________

MR SIMON CLEGG (Instructed by Messrs Hall Reynolds, Birmingham, B50, 4BU) appeared on behalf of the Applicant.
The Respondent did not attend and was not represented.
____________________

HTML VERSION OF JUDGMENT
____________________

LORD JUSTICE LATHAM:This is an application for permission to appeal against an order for costs made by His Honour Judge Viljoen on 16 November 2000. Permission was refused on paper by Keene LJ. The action, in respect of which the order appealed against was made, arose out of a claim made by the claimants against the defendants who had arranged hospitality facilities for the claimants for the Gold Cup meeting at Cheltenham in 1997. The claimants were seriously disappointed with the level and standard of service which the defendants provided and consequently brought a claim for breach of contract. The claim for damages was based originally on three heads: (i) the risk that they ran of losing custom by reason of the disappointment of their clients; (ii) the partial failure of consideration; (iii) the loss of the benefits that the successful meeting would have had and for distress and humiliation arising from the fact that the day was not a success.

The damages were not quantified in the particulars of claim which was originally brought under the old County Court Rules. After the coming into effect of the Civil Procedure Rules the matter proceeded on the multi-track. On 7 July 2000 the matter came before the court for a case management conference at which it is clear that the court considered that it was a case which cried out for settlement. The matter was adjourned for 28 days and the claim stayed for that period so that the parties could consider whether a settlement could be achieved.

By a letter of 11 August 2000, the claimants, having received no communication from the defendants, first contacted the defendants suggesting that a compromise might be possible. On 18 August the claimants proposed that the defendants should pay to them the overall sum of £16,500, to include costs, in order to compromise the claim. No reply was received to that letter, nor was any counter offer made. On 26 October the claimants' solicitors wrote a letter in which they put forward a Part 36 offer to the effect that they would accept £50 pounds by way of damages for breach of contract plus their costs and disbursements to date.

The trial date had by then been fixed for 16 November. The Part 36 offer was not received within the 21 day period for the offer to be effective, as it was made so close to trial.

On 30 October 2000 the defendants first responded to that offer. The proposal they made was that the parties should each bear their own costs and that the action should be discontinued. On 15 November, immediately before trial, having received no favourable response to that offer, the defendants asked the claimants' solicitors to confirm that they would not oppose the defendants seeking leave to accept the £50 offer. That is a reference to the fact that an offer under Part 36 (where it has been made out of time) can be accepted by the other party in two eventualities: where the parties have agreed costs or, alternatively, with the permission of the court.

The matter came before the judge on 16 November on the basis that there was no opposition by the claimants to the defendants' application to accept the offer, but that the matter of costs remained to be dealt with. It was against that background that the judge, having heard submissions, came to the conclusion that there should be no order for costs up to 30 October, the date upon which the defendants made their counter offer, but thereafter the costs would be the defendants'. The claimants' application for permission to appeal is based on the proposition that the judge erred in the exercise of his discretion in making that order.

It is accepted by Mr Clegg on behalf of the applicants that costs were at large in the sense that they were not constrained by the provisions of Part 36. Therefore, the matters that the judge had to take into account were those set out CPR 44 rule 3. It is equally, without doubt, that the judge directed himself in accordance with that rule. It is said that the conclusion that he reached was one that was not open to him on the facts. It is submitted that this was a case in which the Part 36 offer should have taken priority in the judge's mind and should have resulted, since essentially it was being accepted, in an order in the claimants' favour.

The judge correctly took into account that the Part 36 offer had been made. He also took into account the fact that the defendants had made no offer, despite the clear desirability of settling the action, until 30 October. Nonetheless, he took the view that the offer that was being made by the claimants, namely that they would accept £50, indicated that this was a case in which the claimants appreciated, but belatedly, that they really had no effective claim for damages. He took into account the fact that, nonetheless, the matter had been pursued as if it was a claim for substantial damages throughout the period up to trial. The judge concluded that the mere fact that there was to be a small payment to the claimants did not justify the conclusion that they had succeeded in such a way as to entitle them to costs. He took into account the fact that a claim for £50, if originally pursued in the first instance, would have been in the small claims court and would have attracted no costs consequences whatsoever and, if the matter had proceeded under the Civil Procedure Rules, it would have been a fast track case or even submitted to arbitration. On the other hand, he came to the conclusion that, as is apparent from his judgment, the offer proposed by the defendants, namely that there should be no order for costs on the action being discontinued, was "eminently reasonable".

In my view that properly reflects what the judge concluded was the right way to approach this case. This was a case in which there was, in truth, no winner and no loser. That was the way in which the matter should have been understood by both parties. Accordingly, the right order was for each party to pay its its own costs.

I can see no misdirection of law in the judge's approach in this case. He was entitled to take the view that he did about the way the case was conducted on both sides. In particular, he was entitled to take the view that the fact that there was effectively a small award of £50 to the claimants was not a matter which meant that they had, in substance, succeeded on the claim so as to entitle them to their costs.

For those reasons, I do not consider that there is any real prospect of success in this proposed appeal and I would dismiss this application.

Order: Permission to appeal refused.