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 TRURO COUNTY COURT
(His Honour Judge Neligan)

		Royal Courts of Justice Strand London WC2 Tuesday 7th May, 2002

1. LORD JUSTICE THORPE: In 1991 Lawrence Smith, then a married man, commenced a relationship with a lady named Julie Andrew, who was unmarried and a local authority employee. They commenced cohabitation in 1992, at a time when Miss Andrew was living in St Austell. Mr Smith was going through divorce proceedings, including ancillary relief proceedings, and his insolvency was impending. They wanted to live nearer Truro and in September 1993, after a previous abortive purchase, they chanced upon a derelict property called Fernleigh Barn. It obviously had potential and it was agreed that it would provide a future home for them, since its acquisition could be financed with the sale of the St Austell house and the subsequent renovation could be achieved from Miss Andrew's salary and from Mr Smith's labour, since he was by trade a builder.
2. All this then came to pass. Miss Andrew bought Fernleigh Barn and for the following five years Mr Smith devoted himself to the work of improvement, using materials purchased by Miss Andrew. It is unnecessary to go into further detail for the purposes of this brief judgment. There was a joint venture taking in lodgers on a bed and breakfast basis who were directed to the couple by Miss Andrew's local authority employer. But that arrangement does not bear on the issue that I decide.
3. The relationship between the couple broke down in June 2000 and Mr Smith left. On 13th October he issued proceedings in the Truro County Court claiming to be a joint owner of Fernleigh Barn. That claim came for trial before His Honour Judge Neligan and judgment was delivered on 22nd November 2001. The judge decided that in fact and as a matter of law Mr Smith was entitled to half the value of the improvements to which he had so obviously contributed, and that in relation to the property as a whole equated to a 26 per cent share. That worked out in round figures to about £55,000 and that was the scale of his success. It was, of course, considerably less than the 50 per cent for which he had striven and that reality was subsequently reflected in the judge's costs order. He awarded Mr Smith nothing in respect of his costs but awarded Julie Andrew her costs between 13th November and the trial, since he held Mr Smith's rejection of a letter offer of 12th November unreasonable.
4. Mr Smith was represented at the trial by Mr Pickering. He asked the judge for permission to appeal which he refused. Accordingly, Mr Pickering applied to this court and supported his application with a careful skeleton argument of 19th December. The papers were not referred to me until 23rd March and on 18th April I gave my reasons for provisional refusal. In relation to the outcome, I said that on the judge's findings of fact it was open to him to conclude that the claimant's recovery should be limited to 50 per cent of the costs of the works. In relation to the costs, I said that the letters, not only of 12th and 13th November but also 23rd August, were highly relevant to the exercise of the judge's discretion and that there were no realistic prospects of success in a submission that he exceeded his discretion.
5. This morning Mr Pickering has exercised his right to an oral hearing. He has argued tenaciously that the judge as a matter of law was wrong to have confined Mr Smith to 26 per cent of the equity, given the concessions made by Julie Andrew during the course of her cross-examination. He has referred to passages at pages 18, 19, 20, 26, 27, 34 and 35 of the transcript from which he extracts what he says are the defendant's essential concessions. They are as follows. First, that the decision to buy had been made by the two of them together; second, that the purchase and renovation had been a joint venture; and third, that the claimant working virtually full-time on the renovation was a conscious decision and not a matter of chance.
6. I do not think that those concessions can in fact be extracted from the evidence. I think that all that the defendant was conceding was that inevitably the claimant had been involved in the decision to buy, because the renovation had been a joint venture and that the renovation was not a matter of chance but something consciously decided. I do not take it that she ever conceded that the purchase was a joint venture, and indeed one answer in her evidence in relation to purchase rings out. In answer to Mr Pickering, who was questioning her about the purchase, she said:

"I just took control of everything basically."

7. The judge was very clear in his findings. As we can see from pages 11, 12 and 14, he rejected the claimant's evidence on a number of vital points. Furthermore, he explained his preference for the evidence of the defendant in five reasoned points to be found at pages 14 and 15. He made further findings adverse to the claimant at pages 19 and 20, and upon those findings based his conclusion that Mr Smith's beneficial interest should be a sum equal to one half of the amount by which his work and contribution added to the present value.
8. Despite Mr Pickering's efforts, the judge was in my opinion manifestly entitled to come to that conclusion having rejected the evidence of the claimant and accepted the evidence of the defendant. There was no dispute between counsel as to the law. They both agreed that the judge's determination was governed by the decision of the House of Lords in Lloyds Bank v Rossett, and I see no evidence of any misdirection by the judge in the application of that authority to the facts as he found them. Accordingly, the re-examination of the documents and the oral argument that I have heard this morning has only served to strengthen the view that I expressed provisionally on 18th April.
9. As to the costs, the principal argument addressed by Mr Pickering to the judge was that since the winning offer of 12th November had been made only 12 days before trial, his client had not had the 21 days provided by the Civil Procedure Rules in which to reflect upon it. The judge rejected that submission, having regard to the very firm terms of rejection, namely that the only compromise that the claimant would consider was an equal share. He also had regard, as he was entitled to, to an earlier letter of 23rd August in which the defendant's solicitors had made a genuine effort to settle the case, albeit offering less than they offered on 12th November.
10. This morning Mr Pickering has realistically withdrawn his attack upon the judge's order for his client to pay the costs after 13th November. What he does say, however, is that his client should have had his costs prior thereto, rather than no order. The judge gave his ruling on the procedural point, the Part 36 point, at pages 6 and 7. He referred to the earlier letter of offer and explained his discretionary reasoning for condemning the claimant in the costs of trial. But what should happen prior thereto only arose when Mr Pickering made this submission at page 8. Mr Pickering said:

"... the normal order would be for the period beforehand is the claimant to pay his costs."

11. The judge rejected that vehemently. He said:

"No, no, no, no order for costs up to the 13th. ... she gets the costs from the 13th.

MR PICKERING: Nothing for the period beforehand?

HIS HONOUR JUDGE NELIGAN: No.

MR PICKERING: With respect that would be contrary to the normal order.

HIS HONOUR JUDGE NELIGAN: Well you will have to address me about it at 4 o'clock because I have to address the next case."

12. The discussion then went off on a point that Mr Elliott, for the defendant, was pursuing in relation to assessment. Again the judge said that he was not prepared to go into it then, and if Mr Elliott wanted to pursue that point he would have to do so at 4.30. Mr Elliott collapsed. So the judge said:

"So the order as to costs is that there is no order for costs up to the 12th of November 2001. From the 13th of November 2001, the Claimant pays the Defendant's costs to be assessed if not agreed. Public funding, detailed public funding assessment of the Claimant's costs and that's all I will say about that."

13. Mr Pickering did not avail himself of the opportunity to return to the judge at the end of the list to contend that the order prior to 13th November should be in his client's favour. Accordingly, there is no fuller explanation of why the judge rejected Mr Pickering's submissions. But looking at this in the round and proportionately, I am perfectly satisfied that the judge was in general entitled to assume the position he did, given the August offer and given the absence of any produced correspondence in reaction and given the strength of the rejection contained in the letter of 13th November.
14. So on this question of costs, I am fortified again in the provisional view that I reached in April by the argument that I have heard this morning.
15. For all those reasons, this application for permission to appeal the order of Judge Neligan of 21st November 2001 is dismissed.
ORDER: Application for permission to appeal refused. (Order not part of approved judgment)