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 OF JUSTICE
QUEEN'S BENCH DIVISION
(MR JUSTICE CRESSWELL)

		Royal Courts of Justice Strand London, WC2
		22nd November 2005

1. LORD JUSTICE CHADWICK: This is a renewed application for permission to appeal from orders made on 11th June 2004 and 17th June 2005 by Cresswell J in proceedings brought by the applicants, Asiansky Television Plc and Asiansky Property Ltd, against a firm of solicitors, Bayer-Rosin, formerly retained by the applicants in connection with the purchase of a development site adjoining the North Circular Road.
2. The hearing before Cresswell J was itself a retrial limited to a single issue relating to liability, defined by this Court in an order made on 11th November 2003 but redefined by agreement between the parties at or before the retrial. The issue - in its agreed form - was this:

"If Mr Patel had been advised as to the effect of the implemented CPOs on the title to Twyford Tip, by a competent solicitor, would he have proceeded, through the second claimants, to purchase Twyford Tip on the terms of the contracts exchanged on 19 October 1992 (subject only to the possibility of a variation in price)?"

3. The reference there is to Mr Sharadchandra Patel - who, as the judge found, controlled the claimant companies and was in substance the real claimant in the action. He was the only witness who gave evidence before the judge.
4. The judge's answer to that question is found at paragraph 183 of his judgment:

"I find that Mr Patel (had he been properly advised as above) would probably have negotiated and obtained a further reduction in the price of £300,000. Brent was keen on the project. Brent had recognised the commercial significance of the points made by or on behalf of Mr Patel in agreeing to the two price reductions referred to above. Brent would (I find) have recognised the commercial significance of the additional points Mr Patel would have made (had he been properly advised as set out above) and would (I find) have agreed to a third price reduction."

5. He gave effect to that answer by the first paragraph of the order which he made on 11th June 2004. He ordered that:

"unless an application is made by the Defendant [that is the firm Bayer-Rosin] within 14 days hereof then Judgement be entered for both Claimants in the sum of £300,000 (Three Hundred Thousand Pounds) on all causes of action (contract and tort)."

He also gave permission to apply for consequential orders.

6. The factor which had given rise to the conditional nature of the first paragraph in that order was the defendants' concern that they had not had a proper opportunity to investigate whether £300,000 was the appropriate figure to take as the discount which the council might have accepted. But in the event they decided not to pursue that point; and no application was made within the 14 days limited by the 11th June 2004 order. So the order became unconditional and could have been appealed not later than 25th June 2004.
7. By 1st October 2004 the sum of £300,000, with interest, had been paid on behalf of the defendant firm to the claimants. The £300,000 was paid more promptly than that; but it took until the beginning of October to agree the figure for interest.
8. The proceedings came back before Cresswell J for argument about costs - that being, at least, one of the matters that he had in mind when he gave permission to apply for consequential orders -- some 12 months later, on 17th June 2005. On that date the judge made orders that the defendant pay the claimants' costs of issues relating to liability and contributory negligence (but the not the costs of quantum and causation issues) down to the 20th November 2003; that, in respect of the costs of quantum and causation issues down to 20th November 2003, there be no order; and that in respect of costs after 20th November 2003, the claimants were to pay the defendant 60% of its costs (save for costs of hearings on 29th April and 17th June 2005, which were themselves costs hearings, as to which there was to be no order).
9. The appellants' notice was filed on 1st July 2005. It sought to appeal both the order of 11th June 2004 and the order of 17th June 2005. Application was made for an extension of time in relation to the appeal from the order of 11th June 2004, which was by then some 12 months in the past. The reason why it was said that an extension should be granted appears at section 10 of the appellants' notice:

"In so far as it may be necessary, [the appellants] be granted an extension of time for applying for permission to appeal and appealing against the judgment of Cresswell J, handed down on 11th June 2004

because:-

if the time for such appeal did start to run on the 11th June 2004, then the appellants and their legal advisors mistakenly understood, and believed, that time was not yet running, such mistake being reasonable in all the circumstances."

10. That explanation is elaborated in a witness statement made by the applicants' solicitor on 30th June 2005. At paragraphs 5 and 6 the solicitor, Mr Khanzada, said this:

"5. At the hearing on the 11th June 2004, at which the judgment was handed down, an issue arose between the parties as to what orders, if any, ought to be made at that stage as a consequence of that judgment. In particular, the Respondent contended that as a result of the judgment, the Appellants were not entitled to any money judgment at all, relying on the argument that the Appellants had not pleaded their case so as to encompass a judgment based on the judge's findings that if competently advised, Mr Patel would have successfully renegotiated the purchase price (securing a £300,000 reduction) and on that basis would have proceeded with the transaction. Thus, the Respondent's leading Counsel argued that there should therefore be no judgment in the Appellants' favour. The judge made it clear that he did not have the time and was not prepared to hear argument that day on any issue.

6. Following some exchanges between the judge and leading Counsel for the Respondent, the judge directed that the Respondent should consider its position before pressing ahead with this argument, and that judgment would be entered for the Appellants in the sum of £300,000 'unless an application was made within 14 days'. At that stage it was premature for any application to be made for Permission to Appeal, with the form of the final Order depending on whether the Respondent would apply successfully for the dismissal of the Appellants' case on this basis."

And then at paragraph 10:

"Following that hearing on 11th June 2004, the Respondent chose not to make any further application as regards its pleading point, and not to challenge its liability to the Appellants for £300,000 plus interest. However, a long period then elapsed as negotiations ensued between the parties in order to try and resolve the outstanding issues, including interest and, more importantly costs."

11. That explanation might well have been the reason for not making an application for permission to appeal on 11th June 2004; but those paragraphs provide no reason at all for not making an application for permission to appeal - either to the judge or by filing an appellants' notice - once the 14 days provided in the order for further consideration had expired.
12. Mr Khanzada goes on to deal with that point at paragraph 17:

"In so far as time in fact started to run on 11th June 2004, the delay in making an application for permission to appeal was certainly not one for which the Appellants are themselves responsible. The Appellants' legal team took the view that any application for permission was deferred as part of the judge's Order effectively standing over any application for consequential Orders. If that approach was wrong, I respectfully submit that the Appellants should not themselves be penalised for such mistake."

The suggestion that the mistake was reasonable in all the circumstances is not made out by that explanation.

13. It is clear that paragraph 1 of the order of 11th June 2004 became unconditional by 25th June 2004, at the latest; and that an appeal from that order ought to have been pursued (if at all) shortly thereafter. The appellant's notice was filed almost 12 months out of time. It is not now suggested that that is not a proper analysis of the position.
14. In that context it is, I think, pertinent to have in mind an exchange of correspondence between the parties on 20th October 2004. The applicants' solicitors sent an e-mail to the defendant's solicitors in these terms:

"The parties have successfully dealt with the payment by your client to ours of the judgment sum of £300,000.00 and similarly a sum of £250,170.00 has been paid to our client in respect of interest. We are of the view that all outstanding matters should be dealt with by the Court and we intend to make an application to restore the matter within the next day or two."

The response of the defendant's solicitors was that that proposal was wholly inappropriate:

"Whilst, as you point out, payment of the damages of £300,000 plus interest has been effected, the key issue between the parties was always going to be that of costs, and this has yet to be resolved."

15. If the claimants intended to challenge the order of 11th June 2004 that was an opportunity to say so. If the "key issue" was "always going to be that of costs", it was necessary that the judge and the defendant should know whether or not the basis upon which the costs were going to be awarded - by then long after the judgment of 11th June 2004 - was that the claimants had succeeded only to the extent reflected in the order of 11th June 2004. If there was a prospect that that order would be overturned on appeal by the claimants, the time taken to decide how costs should fall on the basis of that order might well be time wasted. At the least, both the judge and the defendants were entitled to know that the order was challenged before the court's resources were committed, and the defendants incurred expense, in deciding costs on the basis of an order that might well turn out to have been wrongly made.
16. If that were known, a decision could then have been taken whether to extend time for appealing; or to defer deciding the costs until after the application for permission to appeal had been heard and disposed of or (perhaps) until after an appeal (if permission to appeal had been granted). There is no reason to think that an application for permission to appeal, either to the judge or to this court - if made timeously in July 2004 (when it should have been) - would not have been disposed of long before the time that the matter came back before the judge in April 2005. Indeed, an appeal itself might well have been listed for hearing by April 2005.
17. At first sight, therefore, there has been a substantial period of delay in filing an appellant's notice from the order of 11th June 2004, for which no satisfactory explanation or excuse has been offered and by reason of which (if permission to appeal were now granted) there is now potential for wasted expense and a waste of court time and resources. It is necessary, therefore, to ask whether the risk of injustice to the claimants, if an extension of time for appealing from the order of 11th June 2004 were now granted, is sufficient to outweigh the prejudice caused to the defendant - and to other litigants who have an interest in the court's resources being used effectively and efficiently - if the claimants are relieved from the need to comply with the Civil Procedure Rules in this case.
18. The applications for permission to appeal came before Mance LJ on 6th September 2005 for consideration on the papers. He took the view that the prejudice to the defendants, in terms of the loss of finality, outweighed any disadvantage to the claimants in terms of the loss of the opportunity to appeal. He identified, as the basis upon which the claimants sought permission to appeal, the judge's decision to accept an intermediate case upon which neither party had relied at trial. That is to say, a case that, had Mr Patel been given the advice which he should have been given by the defendant firm, he would have proceeded with the purchase of the site but at a reduced price, which he would have negotiated.
19. Mance LJ noted, under head (2) in the reasons annexed to his order of 6th September 2005:

"The basis on which the applicants seek permission to appeal is that the judge erred in accepting an intermediate case (that Mr Patel would have gone ahead, but negotiated a price reduced by some sum). The applicants suggest that, having rejected the respondents' defence that Mr Patel would have regarded proper advice as to the CPOs as effectively immaterial, the judge was left with no option but to accept the applicants' only pleaded case, viz that he would have backed out of the proposed transaction altogether. They also suggest that the intermediate case was not canvassed until counsel for the respondents' closing submissions. But the respondents' Note dated 29th July 2005 and its annexures (which also explain the background to the issue as stated in paragraph 4 of the judge's judgment) show that that is not so. It was in the arena, and the applicants (as well as the respondents) deliberately refused to plead or raise any intermediate case (or to call any evidence on it, such as that from Brent, which they now suggest could have been material) - while accepting through counsel that it would be open to the judge to consider and conclude that this intermediate case represented the most probable scenario. It is true that, presumably because neither side was raising it explicitly, the intermediate case was never explored in evidence, in chief or cross-examination, but, since it was in the arena, I cannot see how the applicants can complain about the judge accepting it, in a sense in their favour, rather than simply finding that they had failed to satisfy the burden of proving to his satisfaction that Mr Patel would have withdrawn completely."

20. The applicants seek to develop the point to which the Lord Justice refers there in a statement filed under paragraph 4.14A of the Practice Direction supplemental to CPR 52. They submit that it was not open to the judge to hold, on the evidence, that Mr Patel would have gone ahead with the purchase at a lower price.
21. The problem which has now emerged was identified clearly by the claimants' counsel at the trial before Hunt J in October 2002 which led to the earlier hearing before this Court to which I have referred. On 29th October 2002, at page 18 of the transcript, leading counsel for the claimants is recorded as addressing the judge in these terms:

"I am addressing your Lordship now on the all-important point as to whether you accept Mr Patel's evidence that had the true position been explained to him he would have said 'I am pulling out of this deal' or, as my learned friend suggests, he would have gone ahead, either at that price or some reduced price."

22. The issue, as identified by this court on 11th November 2003, raised that question squarely. There was to be a retrial of the issue as to whether the negligence and/or breach of contract of the respondent was causative of any loss suffered by the appellants. But by the time the parties had, by agreement, reformulated that issue, the point had become less obvious. The judge was asked to decide whether, if Mr Patel had been advised as to the effect of the CPOs, he would have proceeded to purchase the site on the terms of the contracts exchanged, subject only to the possibility of a variation in price?
23. That question, posed in that form, elides four distinct questions: (i), whether, if proper advice had been given, Mr Patel would have walked away from the purchase - that was the claimants' case; (ii) whether, if proper advice had been given, Mr Patel would have purchased at the price originally agreed without seeking to negotiate any discount - that was the defendant's case; (iii) whether, if proper advice had been given, Mr Patel would have sought to negotiate a lower price - that was what the judge found; and (iv) if so, would he have been successful in negotiating a lower (and if so what) price.
24. The point was clearly identified by the judge in the course of the claimant's opening - see day 2 of the transcript at pages 202 and 203. The judge said in terms:

"Then of course there is an intermediate position, he might have gone ahead only at a reduced price but neither side is advancing that case."

25. The judge returned to that point on the third day of the opening, where he said this:

"I am sorry to interrupt you again but there is one point I should raise. I am conscious of the fact that this is neither side's case, but it would theoretically be open to me to find in answer to the question that there is some middle ground. I touched on this at the end of yesterday. I really do not want to discuss it in detail because I have not heard the evidence, but Mr Gibson [counsel for the defendant] referred to some comment of the Court of Appeal the first time round."

Then he went on:

"In theory it would be open to me to take some intermediate position. It is not necessarily a 'yes' or 'no' question."

Counsel for the defendant then said to him:

"In common sense what you say is absolutely right, but as a matter of construction of the question it is 'yes' or 'no'. Even if he would have bought it at a reduced price, he still would have bought it. Because of the way the claimants either put or do not put their claims, although the possibility is obviously there it does not sound in damages if that is what your Lordship finds."

26. That was a correct analysis of the question, in the way that it was put. The question was: would he have proceeded to purchase subject only to the possibility of a variation in price? That question admitted of the answer, "Yes, he would have proceeded to purchase the subject only to the possibility of a variation in price"; or of the answer "No, he would not have proceeded to purchase even if there was a possibility of a variation in price." That was what the judge was asked to decide; and that is what he did decide. He took the view that Mr Patel would have sought a reduction on the price and would have obtained it; a possibility that he had raised at page 244, in the course of the opening:

"Supposing I took the view that Mr Patel would not have proceeded unless he obtained a substantial reduction on the price. Then I would have to answer the question to that effect. It depends how you phrase the answer, I think. I just want to draw both sides' attention to the fact that you can ask me to answer a question, but it does not necessarily follow the answer would be yes or no."

27. Mr Patel then gave his evidence. He never addressed, in terms, the question whether or not he would have sought to negotiate a lower price; but it is said on behalf of the claimants that it was implicit in his evidence that he would have walked away.
28. The problem which faced the claimants is that the judge did not accept Mr Patel's evidence. He found him to be an unsatisfactory witness: see the remarks made at paragraphs 151 and following - and, in particular, at paragraph 154. He said, at paragraph 161:

" I approach Mr Patel's evidence with considerable caution."

29. Having heard Mr Patel give his evidence, the judge came to the conclusion that Mr Patel would have tried for a lower price. That is a conclusion which is not at all surprising in the context that Mr Patel was seeking to purchase a site for development. The judge could, at that stage, simply have reached the decision that he should answer the issue that had been put to him (by agreement) in the affirmative: that is to say, that he could have decided Mr Patel would have purchased, subject to a possible variation in price. It was not necessary for him to go on to say what that variation would have been. The claimants had failed to persuade the judge that the answer to that question had to be "no".
30. As I have indicated, it had become clear in the course of the opening how the problem appeared to the judge. But the claimants sought to address that problem on the basis that the only answer which the judge could give to the question posed was that the claimant would have walked away from the purchase. The claimants' advisers had already foreshadowed that answer in response to a judicial question in advance of the trial; they had said:

"At this re-trial the only live witness will be Mr Sharad Patel. Save for Counsel's submissions, the entirety of the re-trial will be devoted to the Defendant's challenge to Mr Patel's assertion that, had he been properly advised as to the CPOs and the potential difficulties as regards the obtaining of vacant possession, the purchase of the Site and the Pavilion would not have proceeded."

That is, as it seems to me, a clear echo of what counsel described as "the all-important point" when addressing Hunt J on 29th October 2002: would Mr Patel have said "I am pulling out of this deal" had he known the true position?

31. The claimants did not seek to meet the problem that the judge had identified; and they failed to persuade the judge that the answer for which they contended was the only answer that could be given. It was not for the defendants to satisfy the judge that Mr Patel would have sought to proceed at a lower price, or that he would have succeeded in that endeavour. It was for the claimants to satisfy the judge that Mr Patel would have walked away from the purchase. That is what they set out to do; and, as I have said, they failed on the basis of the only evidence which they called - the evidence of Mr Patel.
32. For my part, I am not persuaded that there is any real prospect that an appeal in this case would have succeeded had it been brought in time. But it is necessary to weigh the prejudice to the applicants in not being able to pursue an appeal - which, if it has any prospect of success, has only a very slight prospect of success - against the waste of time and expense and the prejudice which would result from an appeal after such delay, including (as Mance LJ observed) the prejudice to the defendants of not being able to proceed on the basis that the order in June 2004 is final. It seems to me (as it seemed to Mance LJ) that the balance comes down firmly and decisively in favour of not granting an extension of the time that would be needed.
33. That leaves only the proposed appeal against the judge's order as to costs. In relation to that order - the order of 17th June 2005 - the appellant's notice was in time, so that no point as to delay arises. The point which does arise is whether the judge can be said to have erred in principle in reaching the conclusion that he did as to the appropriate order as to costs. It is not enough to say that the judge should have given more weight to one factor than to another. Weighing the relevant factors is essentially a matter for the judge, with whose exercise of discretion on which this court does not interfere. What is said - not I think in the course of the paragraph 4.14A statement, but in the course of the submissions to us - is that the judge failed to take into account the fact that the defendants could have protected themselves by a larger payment in; or the fact that the defendants have ended up paying £300,000 and interest. But those are factors which, as it appears from his judgment on costs, the judge clearly did take into account - see paragraphs 40, 41 and 42. The judge made the order that he did because he thought the claimants had been pursuing an exaggerated claim; and that, accordingly, they were not entitled to any costs themselves. But he did not order that they should pay the whole of the defendant's costs after 20th November. He ordered only that they should pay 60% of those costs. That, no doubt, reflected his view that the defendants could have done more to protect their position and that they did not succeed on the whole of their defence.
34. I can detect no arguable point of principle on which the judge can be said to have erred. The most that can be said is that other judges might have reached a different conclusion as to where the balance lay. But that is not the basis for an appeal on costs to this court. I would refuse permission to appeal from the order of 17th June 2005.
35. LORD JUSTICE WILSON: I agree.

ORDER: Applications for permission to appeal refused.

(Order not part of approved judgment) ______________________________