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 HIGH COURT
TECHNOLOGY & CONSTRUCTION COURT
(HIS HONOUR JUDGE LANGAN QC)

		Royal Courts of Justice Strand London, WC2 Tuesday, 26 November 2002

1. LORD JUSTICE KAY: I will ask Lord Justice Dyson to give the first judgment.
2. LORD JUSTICE DYSON: The fourth defendant seeks permission to appeal the order for costs made by His Honour Judge Langan QC as between it and the claimant at the end of a trial in the Technology and Construction Court.
3. Before I come to the costs order, I should, first, outline the issues that arose in the proceedings. The litigation concerns a proposed development of a riverside site in Hunslet, Leeds. There were three mills on the site as well as other buildings. One of the mills was a Grade II listed building.
4. The claimant brought a claim against the developers of the site who were the first, second and fifth defendants, the third defendant (an architect who was formerly employed by the claimant) as well as the fourth defendant. The claimant purchased the architectural practice of Fletcher Joseph Limited by an agreement made in June 1998. The third defendant had been employed as an architect by Fletcher Joseph Limited. Upon the claimant's acquisition of the company, the third defendant's employment was transferred to it. Towards the end of March 2000 there were meetings between the third defendant and a Mr Carey of the fourth defendant, as a result of which the fourth defendant offered to assist the third defendant in respect of the Hunslet project and to work in association with him.
5. On 3 April 2000 the third defendant resigned from the claimant company. At the end of April 2000 the developers terminated the claimant's retainer. In May they engaged the third defendant in conjunction with the fourth defendant to prepare drawings and do other work in order to submit an application for planning permission to develop the site. In May there was a meeting between the third and fourth defendants to discuss the project and on 11 May a bundle of 16 plans and drawings was handed over by the third defendant to the fourth defendant.
6. The agreement between the third and fourth defendants was that the third defendant, having particular expertise in dealing with listed buildings, would prepare the drawings relating to the conversion of the existing buildings. The fourth defendant was to be responsible for preparing the drawings in relation to the new buildings. A planning application was duly submitted to the council on 12 June 2002 based on drawings prepared by the third and fourth defendants.
7. The claimant started these proceedings against all five defendants. Its claim against the developers was for wrongful termination of its contract of retainer as architects. This claim was dismissed. The claim against the third defendant was based on the allegation that he was in breach of his contract of employment with the claimant. There was also a claim for malicious falsehood. The judge found that the third defendant had breached his contract in wrongfully informing the developers that the claimant did not have the resources required to proceed with the project, and in handing over to the developers and the fourth defendant plans and drawings that were the property of the claimant. The judge found those breaches of contract were established.
8. The claim against the fourth defendant comprised three elements: (i) That it had induced the third defendant to commit the breaches of contract found by the judge; (ii) that it had wrongfully converted plans, or a plan, to their use; and (iii) that there had been infringement of the claimant's copyright in the 16 plans to which I have referred. The judge found in favour of the fourth defendant in relation to the claim for inducement of breach of contract and the claim for conversion. In relation to the claim for breach of copyright, the judge found that there had been infringement in respect of two only of the 16 plans, and awarded damages of £5000.
9. The judge awarded the fourth defendant the costs of the breach of contract issue. He gave effect to that award by ordering the claimant to pay 25 per cent of the fourth defendant's total costs of the litigation. There is no challenge to that part of his ruling. As regards the costs referable to the claim for conversion in relation to drawing 238, the judge said that the appropriate way of dealing with that was to treat them as part of the costs relating to the copyright issue. In the course of his submissions Mr Engelman argued before the judge that he should have awarded the fourth defendant 10 per cent of its total costs of the action in relation to the conversion issue. It is plain from the judge's costs ruling that he took the view that the amount of costs referable to the conversion issue was minimal. In my judgment, he was entitled to do so.
10. As far as breach of copyright is concerned, the judge said:

"I am unable to regard the claimant as the losing party. Breach of copyright was established and there is, in my judgment, some force in the submissions made by Mr Russen on behalf of the claimant to this effect that his client has succeeded in bringing home against other professional architects a charge of quite a serious nature. Against this it could not, in my submission, be suggested that the Claimant should recover the whole of its costs of the copyright claim against the fourth defendant. The following criticisms are properly made of the claimant. First, the limited extent to which the copyright claim succeeded when one compares, as a starting point, the pleaded allegations in the amended Particulars of Claim and the conclusions reached in my Judgment; second, there are the shifts in the evidence of the claimant's expert and, third, and most seriously perhaps, there is the gross disparity between the amount claimed and relatively small sum awarded by me. I awarded £5,000. As late as the 29 May the claimant made a Part 36 offer that it would accept £175,000 plus costs. The deduction made in respect of these matters must be substantial. It seems to me the deduction should be of 50%, that is to say, that the fourth defendant should pay one-half of the claimant's costs which are attributable to the copyright claim which, on my calculation, would be 37.5% of the Claimant's total costs. In the result, therefore, the Claimant will pay 25% of the fourth Defendant's costs. The fourth Defendant will pay 37.5% of the claimant's costs."

11. Mr Engelman recognises, rightly, that in dealing with costs a judge has a generous ambit of discretion. Nevertheless, he submits that the decision in relation to the copyright costs fell comfortably outside that generous ambit of discretion. He highlights in particular the substantial disproportion between the costs involved and the small amount recovered; secondly, the small amount awarded as compared with the amount claimed, which started at £262,000. He tells us that was increased during the course of the argument, or evidence below, to a sum in excess of £2 million. Finally, the fact that a claim for £5,000 would normally be subject to the regime of the fast track under the CPR and would attract no more than fixed costs of £500.
12. Those were all matters which the learned judge took into account expressly in the passage to which I have just referred. The judge recognised, correctly, that they required a substantial deduction to be made from the amount which would otherwise have been awarded under this head. Mr Engelman submits that it is wrong to take a mechanistic approach to costs and that the realities of litigation must be looked at. With those submissions I entirely agree. It seems to me impossible to argue that this judge took a mechanistic approach to costs or that he failed to have regard to the realities of this litigation and, in particular, the important points emphasised by Mr Engelman.
13. The question remains, however, whether the decision that he reached was one which went beyond the range of the proper exercise of his discretion. Despite the submissions made by Mr Engelman, I cannot accept that this was a wrong exercise of discretion in the sense that it went outside the permissible range. The judge took into account all the relevant factors in reaching his decision. The contrary has not been suggested. He correctly made a substantial reduction of costs to reflect Mr Engelman's points. As I said when refusing permission on the papers, other judges might have made an even greater deduction. That is not sufficient to justify taking the view that there are real prospects of success on this appeal.
14. In my judgment, there are no real prospects of success and I would refuse this application for permission to appeal.
15. LORD JUSTICE KAY: I agree.
Order: Permission to appeal refused.