England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY & CONSTRUCTION COURT
(HIS HONOUR JUDGE BOWSHER QC)

		Royal Courts of Justice The Strand London
		Thursday 7 February 2002

Thursday 7 February 2002

1. LORD JUSTICE DYSON: The claimant is an insurance broker and the defendant a computer software supplier. At the end of 1993 the defendant contracted to supply the claimant with a computer system known as SYMBAL. The SYMBAL software was to be an integrated package providing the claimant with standard management information throughout its group of companies and to deal with the processing of policy contracts and related claims.
2. The contract date for full implementation of the SYMBAL system was November 1994. That date was not met. The defendant continued to try to get the system to work during 1995, but without success. In November 1995 the claimant terminated the contract.
3. The claimant started proceedings and obtained judgment with damages to be assessed. After a substantial hearing, on 7 November 1999 His Honour Judge Bowsher QC assessed the damages in the sum of £2,622,259. The defendant seeks permission to appeal certain aspects of that assessment.
4. In June 1996 the claimant acquired a new computer system known as GPM. The accounts module of the new system was installed first and all divisions of the claimant group were live as regards this system by January 1998. The contract and claims module was not implemented until August 1999. The direct division, Adam Brothers Legal Indemnity Division, was not implemented until January 2000.
5. One of the heads of loss claimed by the claimant was the cost of retaining staff who would have been made redundant earlier if the SYMBAL system had been implemented. The claimant's case was that had SYMBAL been successfully implemented, it would have saved the staff costs of twelve employees.
6. It is common ground that in November 1999 the claimant started a programme of redundancies. On 1 December 1999, nine employees were made redundant. In March 2001 a further three were made redundant. As a result of agreement between the parties' experts the quantum relating to the loss of the opportunity to make staff redundant earlier was agreed at £1,736,135. That sum was awarded by the judge to the claimant.
7. There are five grounds of appeal. The first concerns "job descriptions". The defendant submits that the claimant failed to demonstrate a causal link between the redundancies that were achieved and the implementation of the GPM system. In his judgment at paragraph 50 the judge said:

"The defendants made the point that some at least of the named individuals had responsible jobs and not all of their tasks could be called clerical. But the elimination of the clerical element from their work combined with the elimination of the clerical element from the jobs of others meant that the individuals named could be made redundant as they in fact were."

8. Miss Newman, who has put forward a comprehensive and clear written skeleton argument and has amplified her submissions cogently before me this morning, says that it is evident from the profiles of four employees, namely Mr Amor, Mr Weare, Mr Parson and Mr Noe, that they did not undertake clerical tasks and/or that their duties were not such that they could have been taken over by a computer. She submits that the implementation of the GPM system could not have rendered their jobs redundant; they must have been dismissed for other reasons.
9. This issue was explored comprehensively by Miss Newman in cross-examination. She suggested that the real reason for the redundancy at any rate of these four was that there had been a downturn in the claimant's business. That suggestion was, however, rejected by a number of witnesses: see, for example, Mr Dansie (Day 2, page 112). The claimant's case was that there was no reduction in the volume of transactions being processed. There was, however, a problem for the business in that the premium rates were declining and this led to a loss of income.
10. It seems to me that there plainly was evidence on which the judge could find as he did at paragraph 50. I have in mind, for example, the evidence of Mr Mainz (Day 5, page 59), despite the qualification that he entered at page 70, and the evidence of Mr Woolf (Day 6, page 70), although he too somewhat backtracked at page 78.
11. Mr Mawrey QC has submitted a response pursuant to the directions that I gave when I refused this application on paper. He has helpfully summarised the arguments that he would wish to have considered by me on this application. One of the points that he makes is that:

".... the amalgamation of the Direct and Reinsurance departments, made possible by the introduction of GPM, enabled Holman to shed staff whose functions had become duplicated (Mr Weare, the director of the Direct Department being a good example)."

12. As I understood it, Miss Newman did not dispute what Mr Mawrey says in his skeleton. It seems to me plain that it was that kind of evidence that the judge must have had in mind when he referred to the elimination of the clerical element from the jobs of others which enabled the individuals named to be made redundant. It would perhaps have been better if the judge had amplified somewhat that sentence of this important paragraph of his judgment, but it seems to me that Miss Newman is attempting to challenge here as elsewhere in her skeleton a pure finding of fact. The four staff in question were undoubtedly made redundant. The judge was entitled to reject the suggested explanation that this was because of a general downturn in business. In my view, he was entitled to find that these four employees were made redundant because of the introduction of GPM for the very reasons that he gave.
13. The second ground concerns the period in respect of which it was right to award damages for the salaries paid to staff who would have been made redundant earlier had SYMBAL been implemented. Miss Newman submits that the damages payable in respect of staff savings relating to the 1999 redundancies should be reduced from 60 months to 48 months. Damages were claimed on the basis of the employment costs between the time when the claimant would have dispensed with the relevant staff following successful implementation of SYMBAL and the time when they actually dispensed with them following the implementation of GPM. Damages were awarded for a 60 month period in respect of six employees who were made redundant in 1999. The 60 month period was arrived at by taking the contractual date for the implementation of SYMBAL (November 1994) and a rough average point between August 1999 (the date for implementation in the reinsurance division) and January 2000, the date of final implementation: see paragraph 48 of the judgment. The terminus of the period alighted upon by the judge therefore was November 1999. Miss Newman submits that it was unreasonable to take November 1994 as the start date since on any view it would have taken some time following implementation of the SYMBAL system before it would have been possible to dismiss staff for redundancy. She relies on certain aspects of the claimant's own evidence to the effect that, even if SYMBAL had been successfully implemented, staff savings could not have been achieved immediately and that it would have probably taken six months before staff savings could have been made. She also points to the fact that the claimant's preliminary calculation of loss was based on a 48 month period, although they subsequently amended to increase that to 60 months.
14. The judge dealt with this point at paragraph 48 of his judgment. That paragraph includes the following passage:

"Of course, there would have been some delay after implementation of the system. That would be true of the system as contracted as well as the system in fact provided. So when calculating the delay, it is reasonable to count from the contractual date for going live and the actual date for going live: the time taken to make people redundant thereafter would be the same in each case and can therefore be disregarded."

15. Mr Mawrey makes the point that no evidence was adduced and no plausible reason advanced by the defendant in support of the proposition that the redundancy process following the introduction of GPM would have differed from the process which would have followed the introduction of SYMBAL in 1994. Accordingly he submits that it was reasonable for the judge to assume a similar process and lead-in time, and to take five years as the basis of calculation since it was common ground that there was as a rough average a five-year interval between the contractual implementation date for SYMBAL and the actual implementation dates for GPM.
16. It seems to me that on the evidence the judge was fully entitled to conclude as he did. Mr Mawrey has referred to passages in the evidence which I have read. It seems to me that the passage in the evidence of Mr Powell at Day 1, page 53, is particularly apposite in this respect. I therefore conclude that there is no real prospect that this ground of appeal would succeed if permission to appeal were granted.
17. The third ground concerns a criticism of paragraph 51 of the judgment. It is in these terms:

"It is also said that, in respect of those made redundant, there were some who were not employed for the whole 60 month period and there is inadequate evidence of a predecessor in the same post. However, in the economic climate of the insurance market, I am sure that no extra jobs would have been created in this period and that all redundancies did in fact relate to a post that had been in existence for at least the extent of a 60 month period."

18. Miss Newman submits that the judge was wrong in relation to the three employees who are affected by this point, namely Messrs Parson, Andrews and Hammond. She makes the point that they were in fact all employed for less than 60 months and, more relevantly, there was no evidence that any of those employees were successors to others before their employment commenced.
19. Mr Mawrey makes a number of points in answer to this submission. Mr Mawrey makes the point that there was no evidence or suggestion that any of the employees with under five years' service prior to their redundancy had originally been taken on to perform functions that had not previously been performed. I do not understand Miss Newman to dispute that. She makes the point that there was no evidence going the other way either. But it seems to me that, given that lack of evidence, the judge was entitled to have regard to the evidence that he had heard about the economic climate of the insurance market and to conclude on that basis that no additional jobs would have been created in the period in question. Again it seems to me that, attractively though Miss Newman puts the point, she seeks to disturb a pure finding of fact on grounds which, in my judgment, have no real prospect of success.
20. The next point concerns the finding in relation to downturn in business. The judge dealt with this at paragraph 40, where he said:

"The defendants suggest that staff losses were brought about by some other cause than the computer. Many, perhaps most, of the redundancy letters said that 'as a result of a reduction in the level of business, your position has become redundant'. However, it is clear from the evidence of the claimants' factual witnesses that the downturn in business was a reduction in the premium rates, not a reduction in the amount of transactions. The same amount of work had to be done to make a smaller return. To stay in business, the claimants had to process the same number of transactions at lower cost and that could only be done by substituting computers for people. The reduction in premium rates gave the claimants a strong motivation to reduce the work force. The computer enabled them to do it. The interviewing notes show that computerisation was put to the employees is one reason for redundancy. I reject the 'downturn in business' point, but other points were taken that have to be considered."

21. Miss Newman submits that the judge should not have rejected the defendant's argument that the redundancies were driven by a downturn in business rather than the implementation of a computer system. She refers to the fact that the principal reason given to employees during consultation and the interview process was that the downturn in the level of business led to a need to achieve savings, and that the downturn in the level of business was the sole reason given in the redundancy letters. She refers also to the absence of any reference to staff savings flowing from SYMBAL or GPM in other documents where she submits that if that had been the true reason for the redundancies such references would have been expected.
22. Notwithstanding the points made by Miss Newman on the basis of the documents, it seems to me that here too the judge was entitled to make the findings of fact that he made.
23. Mr Mawrey has referred to passages in the evidence of a number of witnesses which the judge must have accepted on this issue.The final ground of appeal concerns redundancies in the policy department. The judge dealt with this at paragraph 52 when he said:

"It is submitted that Allen and Gamble in the Policy Department were made redundant because of overstaffing in that department rather than because of the introduction of GPM. Reference is made in the defendants' submissions to a report by Mr Keith Richardson, the claimants' technical support manager. However, it is clear from the first page of that report that it was the implementation of GPM that brought the deficiencies in the organisation to light. If SYMBAL had worked, no doubt similar conclusions would have been drawn 5 years earlier."

24. Miss Newman submits that the judge was wrong to accept that those two persons were made redundant in November 1999 as a result of the implementation of the GPM system rather than over-staffing. She draws attention to Mr Richardson's report, to which the judge referred, and submits that the proper inference to be drawn from that report and Mr Richardson's oral evidence was that Messrs Allen and Gamble were made redundant because of over-staffing rather than the implementation of the GPM system.
25. I have considered those passages of Mr Richardson's report to which Miss Newman has drawn my attention. It is quite clear, it seems to me, that he was saying that the inefficiencies in the organisation which had previously gone undetected were made apparent once the GPM system was implemented. The judge was quite right to say that it was the implementation of GPM that brought the deficiencies in the organisation to light. It seems to me therefore that there was a clear causal link between the implementation of the system and the dismissal for redundancy of Messrs Allen and Gamble. The judge was entitled to conclude that a similar link would have been made five years earlier if SYMBAL had been implemented at that time.
26. I have dealt with each of the five grounds of appeal in a little detail because the points are detailed points of fact which merit consideration in detail. For the reasons that I have given I am not persuaded in relation to any of the five grounds that the defendant would have real prospects of success on an appeal. The challenges to the judge's findings are challenges to findings of pure fact. Those findings of fact were supported by evidence which the judge was entitled to accept. I do not regard them as being even arguably perverse findings of fact. For all these reasons this application must be refused.
27. Miss Newman, thank you for your very careful and meticulous marshalling of the detail of this.
ORDER: Application refused; the applicant defendant to pay the respondent claimant's costs of preparing Mr Mawrey's Response dated January 2002.