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URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/785.html
Cite as: [2001] EWCA Civ 785

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		Neutral Citation Number: [2001] EWCA Civ 785
		No A1/2001/0432

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
APPLICATION FOR PERMISSION TO APPEAL

Royal Courts of Justice
Strand
London WC2
Wednesday, 9th May 2001

B e f o r e :

LORD JUSTICE LATHAM
MR JUSTICE LLOYD
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	QPS CONSULTANTS LTD	Respondent
	- v -
	KRUGER TISSUE (MANUFACTURING) LTD	Applicant

____________________

(Computer Aided Transcript of the Palantype Notes of
Smith Bernal Reporting Limited, 180 Fleet Street,
London EC4A 2HD
Tel: 0171 421 4040
Official Shorthand Writers to the Court)

____________________

MR C REESE QC (Instructed by DLA of Manchester) appeared on behalf of the Applicant
The Respondent was not represented and did not attend
____________________

HTML VERSION OF JUDGMENT
____________________

LORD JUSTICE LATHAM: This is an application for permission toappeal two aspects of a judgment of His Honour Judge Gilliland QC which was formally handed down on 5th February 2001 and also for permission to appeal in respect of the orders made for interest and costs. The judgment was given at the end of a trial which had lasted more than 50 days, during the course of which there had been substantial oral evidence from the claimants, the defendants and their respective experts. There is no doubt that having heard all the oral evidence and put it against the documents, the judge formed, as he expressly said, an adverse view of the evidence given both by the witnesses as to fact on behalf of the defendants and the expert witnesses called by them.

The two aspects of the judgment about which complaint is made can be dealt with in the same order as did Mr Reese, who has very ably put forward what must always be a difficult argument in relation to permission to appeal to this court, that the judge essentially got matters of fact and discretion wrong, namely the argument based upon the defendants' counterclaim for £149,053 for the consequences of an overspill out of the defendants' building of a noxious liquid into a water course which required the amount claimed to be expended in cleaning up the building so as to prevent such an event from happening.

The background out of which the whole claim arises and explains the nature of this counterclaim was that the claimants were claiming professional fees in relation to the modernisation of a manufacturing entity being built on top of or in the old structures of a water mill. The water mill had been so constructed that there was - at least at one point - what might fairly be described as a sump which was capable of being filled with water and which contained within it substances such as paper and other organic material which, in conditions deprived of oxygen, produced a significantly unpleasant liquid. During the course of construction work supervised by the claimants a pipe was so positioned as to result eventually in the water level in what I have described as the sump rising in a way which had not occurred before and the liquid from that sump escaping into the water course, as I have indicated, so as to require the defendants both to clean up the consequences in the water course itself and also to remove the cause, namely the existence of this sump with its contents.

The judge in his judgment concluded that the defendants' counterclaim which was based on the argument, and had been from the beginning of the trial, that the claimants had failed accurately to determine the water levels should fail. He was not satisfied that the claimants had failed adequately and properly to identify the level of the water levels. Accordingly, he held that the claimants were not in breach of duty to the defendants. He further concluded that the sump's existence was a matter which was not caused in any event by anything which the claimants did or failed to do. The sump existed in any event and carried with it the potential for the overflow which resulted in the discovery of its existence, and at some stage the defendants were bound to have to deal with the sump and to deal with it by the expenditure of money which implicitly he concluded would be the same amount of money expended in any event.

Mr Reese criticises the conclusion of the judge as to causation. More importantly, in one sense, he also submits that the judge was wrong when, after his draft judgment had been circulated, he refused the defendants' application to call further evidence to show that the work done by the claimants had indeed been negligently done because the water levels were as the defendants had always maintained. That evidence was evidence from a surveyor which, it is submitted, establishes clearly that the judge's conclusions as to fact must have been wrong. Speaking for myself, I began to soften the views I had expressed when I saw the material on paper that the judge was correct as to causation. It seems to me that Mr Reese might well have an argument for saying that albeit that the sump would have existed in any event, it might have been that the consequences of the presence of the noxious substances could have been dealt with without any or any significant extra cost during routine maintenance of the building. The fact remains that the argument as to causation does not come into play unless Mr Reese has a proper argument for saying that the judge was wrong in declining to permit the defendants to call the further evidence to which I have referred. That is always a matter of discretion for a judge.

There is no doubt that the judge does have power until the order has finally been made to revisit a conclusion that he has reached such as the present in the judgment he circulated. It follows that the issue is whether or not the judge could properly be said to have reached a conclusion which was within the discretion open to him, or, to be more exact, whether there is a real prospect of persuading this court on a full hearing that the judge came to a conclusion which was outside the generous ambit of decisions which were open to him in the exercise of his discretion? There is no doubt that the material put before him was relevant and, if it had been accepted, could have affected the conclusions that he reached. However there is no doubt at all that the application was being made to him at the end of a trial during the course of which that material could readily have been presented. One recollects that the trial took some 50 or more days to be heard at the very beginning of which counsel for the claimants, we are told fairly by Mr Reese, made the point that the defendants' claim in this regard was dependent upon an assertion as to water levels without there being any material to support that assertion.

In those circumstances it seems to me that the judge was entitled to take into account the fact that he was being asked essentially by the defendants to reopen an issue with which they had had ample opportunity to deal during the course of the trial and to determine that it was not in the interests of justice to permit them to do so. Accordingly, it seems to me that the decision of the judge was well within the ambit of the discretion he was entitled to exercise. It follows that there is no real prospect of persuading this court - even in the absence of my presence on the bench - to come to a contrary conclusion.

The second aspect of the judgment to which Mr Reese takes exception is the conclusion of the judge that a particular invoice identified by the number 743 was an invoice the claimants were entitled to raise in relation to work done, as they asserted, to a system which had been given, during the course of the trial, the shorthand description of the Oxypro-system. There had been substantial problems arising out of a fire, and there had been the need for changes to the original scope of the work to be done by the claimants. It would appear that during the course of the contract the work had been divided, at least as to part of it, into two aspects which were very generally described as work relating to the chemical agreement, as it was described, and the other in relation to what I have referred to as the Oxypro-system.

The dispute which gave rise to the raising of the invoice to which I have referred arose out of the conversations and correspondence between Mr Ashby, on behalf of the defendants, and Mr Leyland, on behalf of the claimants, during the course of the autumn of 1995. Without seeking to go into any detail about the matter, it is plain that in relation to one aspect of the negotiations which took place at that time the judge concluded that the matter was essentially a matter of construction to be gleaned from the contemporaneous correspondence and came to a conclusion as to one aspect of the dispute at that time, that the matter could be dealt with on that basis. However the invoice with which we are concerned was an invoice raised against the background, it is said on behalf of the defendants, of those discussions essentially directed to determining lump sum additions or variations to the original contractual entitlement of the claimants, in particular, a sum of £45,000 and the way in which the originally agreed bonus of £75,000 was to be dealt with. Emerging, as Mr Reese says, rather uncomfortably from such discussions is the invoice which was an invoice raised by the claimants based simply on a quantum meruit and originally in the sum of over £160,000.

Mr Reese submits that the conclusion of the judge at the end of the day that those discussions did entitle the claimants to the quantum meruit figure, albeit, as the judge found, at a significantly reduced amount, is wholly incompatible with a sensible reading of the correspondence against the background I have described, namely discussions in relation to some lump sum entitlements of the claimants. In particular, it is said that the conclusion the judge reached was wholly inconsistent with the contents of a letter of 28th November 1995 in which Mr Leyland refers specifically to an agreed sum of £45,000 in relation to what he described as "our estimate for the scope changes". There is no mention there to suggest that the scope referred to is anything other than the overall scope of the contract which included both the chemical agreement and the Oxypro-system.

One can see that, first, the submissions of Mr Reese have force. One can see also that the judge in his original judgment fails to mention the letter of 28th November 1995 and deal with it expressly when coming to the conclusions he did that the evidence of Mr Leyland to the effect that all that the £45,000 was referring to was the chemical agreement leaving untouched the Oxypro-system which was the subject, he said, of the agreement which entitled the claimants to the quantum meruit.

Mr Reese submits that the consequence is that the judge came to a conclusion which was wrong in the sense that at least at this stage we can conclude that there is a real prospect of persuading the court to interfere with it. Again, speaking for myself, one sees the force of Mr Reese's submissions. I suspect the force of those submissions was equally great when made to the judge at first instance and undoubtedly provided a good argument for seeking to persuade the judge that although he accepted generally Mr Leyland's evidence as against Mr Ashby's, nonetheless Mr Leyland must have been in error in relation to this aspect of the case. However the fact remains that the judge did have very detailed evidence and, one expects, cross-examination in relation to this aspect of the case.

Mr Reese fairly makes it clear that although the criticisms which he makes of the way in which the claimant's case was put were put to Mr Leyland forcefully in cross-examination, nonetheless Mr Leyland maintained his stance namely that there were indeed essentially two agreements during the course of the autumn which are relevant; one was in relation to the chemical aspect of the matter which was referred to in the letter of 28th November and the other as to the Oxypro-system and that those negotiations resulted in an agreement entitling the claimants to raise the quantum meruit invoice which they did.

Accordingly, it seems to me that this court would not be prepared to interfere with the conclusions of the judge having heard that evidence. It seems to me to be quintessentially a decision for the judge which cannot be categorised at this stage as sufficiently arguably wrong to justify permission to appeal being granted.

Mr Reese further complains about the orders made in relation to interest and costs but I think realistically anticipates that this court is unlikely to conclude that the judge, having heard all the evidence and having come to the conclusions he did, again went beyond the proper bounds of the discretion he had when he made the orders as to costs and interests that he did.

In those circumstances I would refuse permission to appeal.

MR JUSTICE LLOYD: I agree. Despite the very attractive way in which Mr Reese presented his submissions, I am no more persuaded than my Lord that there would be a reasonable prospect of his eloquence persuading this court on the full hearing of an appeal to allow the appeal on either of the principal points argued. Accordingly, I would too dismiss the application for permission to appeal.

Order: Application dismissed