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 SOUTHEND COUNTY COURT
(HIS HONOUR JUDGE YELTON)

		Royal Courts of Justice Strand London, WC2
		31st January 2007

1. LORD JUSTICE AULD: This is an appeal by the defendant, Countryside In Partnership with Hunters PLC ("Countryside"), against HHJ Yelton's decision in the Southend County Court on 24 April 2006 to make no order for costs in its favour on his dismissal of a claim against it in negligence by Mrs Barbara Murphy, now deceased. Countryside's case on this appeal is that the judge's decision depriving it of costs was, in the circumstances, wrong in principle. Mrs Murphy's claim, which was assigned to the multi-track list, was in respect of work done by a number of Countryside's subcontractors of different disciplines in replacing an old and leaky flat roof of the integral garage of Mr and Mrs Murphy's house, which they held as tenants of a housing association. Mrs Murphy had been seriously ill for sometime and her husband had converted the garage into a bed-sitting room for her. The allegation against Countryside was that its sub-contractors, in the course of the work, had caused a water leak to the roof leading to a partial collapse of an internal plasterboard ceiling which fell onto Mrs Murphy, causing her personal injury and consequential structural and decorative damage to the house.
2. Countryside's successful defence consisted in putting Mrs Murphy to proof of what had happened and a denial of any negligence. The water leak and what precipitated it, giving rise to the claim, were alleged to have occurred over six years before the hearing -- that is on 16 September 2000, a Saturday, when none of Countryside's sub-contractors or other staff were present at the scene and when it was raining heavily, part of a period of the heaviest downfall of the year.
3. On Mr Murphy's case, following the death of his wife, the accident happened when he was spreading a tarpaulin over the garage roof and a piece of internal ceiling plasterboard fell on to his wife. He reported the matter immediately to the landlords, the housing association, and on the Monday of 18th August Countryside's representatives visited the house. On their arrival it was still raining heavily. They found the roof covered by the tarpaulin that Mr Murphy had fitted over it, and saw no signs of a leak inside the garage. They took some photographs, showing disturbance or removal of parts of the plasterboard ceiling from inside. But given the weather conditions, the need to avoid rain penetration by disturbance of the tarpaulin and some scepticism as to Mr and Mrs Murphy's claim of a leakage, they did not examine the roof or the state of work on it. Mr Murphy appears to have made a start before their arrival in pulling down unsafe pieces of the plasterboard and, shortly after their visits -- a matter of days, I believe -- he replaced himself the ceiling plasterboard completely.
4. The claim was issued in the county court three years later in September 2003. The particulars of claim were served in January 2004 accompanied by medical reports of a surgeon, Mr Lightfowler. Those reports show that Mrs Murphy, before the accident, had been seriously handicapped in a number of respects, including osteoporosis, and had indicated that since the accident had begun to suffer from headaches, pain in her neck and left arm and occasional paralysis of her left arm -- conditions that Mr Lightfowler said could be improved but not completely cured.
5. Pursuant to an order of the judge, Countryside's solicitors by a letter of 30 November 2004 wrote to Mr Lightfowler with a number of detailed questions on his medical reports, which he answered by a letter of 14 December 2004. Mr and Mrs Murphy's solicitors had also obtained before service of the particulars of claim, a report of a chartered engineer, Mr DM Jackson, of a firm known as Strange, Strange and Gardner. In that report, dated 5th November 2003 and which Mr Jackson described as a "desktop report" prepared from documents provided to him by Mrs Murphy's solicitors, he considered various possibilities as to the cause of the partial collapse of the plasterboard ceiling alleged by Mr and Mrs Murphy. Among those possibilities he included defective work by Countryside's contractors, but he ended the report inconclusively, saying simply that the cause would be a matter for evidence and the court.
6. Mr Jackson's report was subsequently disclosed to Countryside's solicitors when, at an interlocutory hearing on 27 October 2005, the judge gave permission to Mr Murphy to rely on it as expert engineering evidence and to Countryside to put written questions to Mr Jackson on it, which Countryside, through its solicitors, did by letter of 30 January 2006 and which Mr Jackson answered by a letter of 6 March 2006. The hearing of the claim was set down for two days on the multi-track list. In fact it took less than that, only some five-and-a-half hours in all.
7. The evidence in support of the claim was given orally by Mr Murphy and in writing in the form of: witness statements from Mrs Murphy, who had by then died; a video film reproduction of an earlier video film of the roof and associated damage at the material time taken by a neighbour, Mr Bonnet; Mr Bonnet, orally, to prove the video film reproduction by reference to the original which he had apparently destroyed. Another neighbour, Mrs Jennifer Ray, gave brief oral evidence as to the condition of the roof and Mrs Murphy's state of health after its alleged partial collapse on her. And then there was the medical and engineer's reports of Mr Lightfowler and Mr Jackson respectively.
8. The evidence for Countryside consisted of oral testimony from Mr Peter Kenny and Mr Graham Collinson, Countryside's Construction Manager and Site Manager respectively, about the manner in which the work was carried out and the condition of the property after the alleged partial collapse. Two or three other employees of Countryside also gave evidence on what they saw of the condition of the property when they visited it afterwards. The nature of Countryside's defence, putting the claimant to proof of what had happened, was necessary since the critical leakage had occurred, as I have said, on a Saturday in a period of heavy rain when none of Countryside's employees or sub-contractors was at work.
9. As so often in such circumstances, counsel for the defence, Mr Stephen Morley, who appears again for Countryside on this appeal, considered it necessary to test Mr and Mrs Murphy's evidence by exploratory and detailed cross-examination. He did so to good advantage in his questioning of Mr Murphy as to what leakage had occurred. It is plain from the judge's interventions recorded in the transcript of the proceedings that he was, by turn, interested in and affected by the details as they emerged on the issue of causation, in particular in the evidence of Mr Collinson and Mr Kenny. But he was also irritated by Mr Morley's lines of questioning in their lack of any indication of a positive case on the part of Countryside. The judge suggested to Mr Morley on more than one occasion that to take issue with Mr Murphy's account could only be justified on the basis of an allegation of fraud or lying, which was not, of course, Countryside's case. The judge also criticised Mr Morley at times for prolixity and questionable relevance of his cross-examination.
10. The judge set out his reasons for dismissing the claim in paragraphs 20-21 of his judgment, after commenting in paragraph 19 that neither party had made what he called "the obvious point" that Countryside was not liable for the negligence of its sub-contractors, a further illustration, as he put it, of "how this litigation has obscured the wood for the trees". The material parts of his reasons for dismissal in paragraphs 20 and 21 were as follows:

"20. I am unable to find on the balance of probabilities that the water penetration was attributable to any fault on the part of the defendants or their sub-contractors (if they were indeed liable for the latter's negligence)…

"21. On the other hand, the fact that there was a very heavy downpour indeed on a time-expired roof which was likely to leak seems to me a far likelier explanation for what occurred.

"22. I therefore dismiss the claim."

11. In the course of his judgment leading to that conclusion the judge had made a number of criticisms of Countryside's conduct of the litigation and of Mr Morley's presentation of its case at the hearing, which led him to make no order for costs in favour of Countryside. At the end of his judgment the judge expressed, as a provisional view, that in the light of that conduct there should be no order for costs and he adhered to that view after hearing argument from counsel on both sides. In a further short judgment, he repeated his main criticisms of Countryside's conduct of the litigation, expressing the view that he should depart from the normal rule that the successful party should have its costs because of what he regarded as the wholly unreasonable way in which Countryside had conducted the litigation.
12. Mr Morley's principal submission on this appeal is that, even if those criticisms were well-founded, which he challenges, they should at the most merit only a small deduction in costs that otherwise should, in the normal course, have been awarded to Countryside as the successful party in multi-track litigation pursued by Mr and Mrs Murphy for the best part of six years.
13. The first of the judge's criticisms, which was in paragraph 3 of his judgment, was a general one that Countryside had complicated what was essentially a simple case by numerous allegations that had not assisted resolution in the matter. Instancing an assertion by Mr Morley that the video film produced by Mr Bonnet and relied upon by Mr Murphy was a replacement, he commented:

"The lack of common sense indicated by this approach is manifested in the fact that on the account given by … [Countryside] the 'lost' tape was of more use to the claimant than that which was produced to the court."

14. Mr Morley's response was that his assertion had been correct. Mr Bonnet, in his witness statement, had referred only to one video tape, but had explained in his evidence that he had left a small video tape with Mr Murphy for him to transfer to a larger one -- the one that was produced in court -- and that the original tape had been destroyed. Mr Collinson also gave evidence that the tape produced by Mr Bonnet was not the one that Mr Murphy showed to him when he had visited the house a few days after the accident and which had contrasted markedly with what he recollected as having seen on his visit.
15. The judge's second criticism, expressed in paragraphs 4 and 11(0) of the judgment, was that many of the problems that had arisen in the case resulted from Countryside's failure to investigate the roof when the leakage was reported to them on the Monday or later. Mr Morley's response was to remind the court of the evidence of Countryside's witnesses that when they visited the scene on the Monday after the accident the roof had been covered by tarpaulin, it was still raining and they had been sceptical of Mr Murphy's claims of a leak because they saw no signs of it inside the garage. Mr Morley also added for good measure that, given it was for Mr and Mrs Murphy to prove their case and that they had not instructed their own expert, Mr Jackson, to examine the roof, it was a bit rich the judge criticising Countryside for not having done so.
16. The judge's third criticism expressed in paragraphs 4 and 12 of his judgment was of compounding the failure to investigate:

"by administering grossly overblown questionnaires to the medical and engineering experts in an attempt to show discrepancies in the accounts given".

17. The judge instanced as part of this complaint what he described as "the unnecessary belligerent and obstructive attitude" adopted by Countryside, exemplified by their solicitor's letter to Mr Lightfowler of 30th November 2004, to which I have referred, citing the following passage from the letter:

"When our client's representatives attended to inspect [on 18 September 2000] … they found that the plasterboard ceiling was intact and was dry but an area of plasterboard equating to approximately the size of a dustbin lid was missing. No evidence of water penetration was found …"

18. Mr Morley's response to that criticism of the judge was that Countryside wrote only two such letters to Mr and Mrs Murphy's experts, one to each of them, each pursuant to an order of the judge himself though not, of course, in the precise terms. Neither, he submitted, whether read as a whole or in individual passages, could fairly be described as "belligerent", simply a thorough particularising of the experts on matters peculiarly within their and Mr and Mrs Murphy's knowledge. The particular passage to which the judge drew attention in a letter to Mr Lightfowler was no more, he said, than by way of introduction and was taken for the purpose from an identical passage in the witness statement of one of Countryside's witnesses, Mr Neil Rees.
19. The judge's fourth criticism, expressed in paragraph 19 of his judgment, was that neither party had taken the point that Countryside was not liable for the negligence of its sub-contractors. Why Mr or Mrs Murphy should have taken the point, which could only serve to defeat their claim against Countryside, escapes me. But the relevance of his even-handed criticism for the purposes of this appeal is that Countryside did not take it as a short-cut to their advantage.
20. Mr Morley's response to the judge's criticism was that because of Mr and Mrs Murphy's failure or inability before, or indeed at, trial to identify even as a matter of probability a specific cause for the water leak, Countryside took the view that it would add significantly to the complications and costs of the litigation to bring in the various sub-contractors involved in order to cover its position. He added that, whilst it had been evident throughout the hearing that Countryside's case was that the work had been undertaken by sub-contractors, the potential legal consequences of that to the Murphy's claim was not adverted to by either party or by the judge. The first time that the judge raised it was in the passage in paragraph 19, towards the end of his judgment, without having sought explanation or argument about it from either party.
21. The judge's fifth criticism, expressed in paragraphs 10 and 23 of his judgment to which I have already made some reference, was that Countryside's defence had obscured rather than clarified the issues in this case. In particular, in paragraph 10, he complained of Mr Morley having subjected Mr Murphy: "to considerable and, in the event, largely irrelevant challenge", and in paragraph 23, following his indication of dismissal of the claim, he said:

"I have been harsh about the conduct of this litigation by the defendants and even their defence obscures rather than clarifies the issues."

22. Mr Morley's short response to that criticism was to point to Countryside's pleaded defence and case from the start of the trial of a denial of knowledge as to when, how or why the roof began to leak and of any knowledge of it before Mr and Mrs Murphy complained of it on the following Monday.
23. In any consideration of criticisms of this sort made by a judge leading to his decision to make no order as to costs, I should, of course, acknowledge the reluctance of this court to gainsay his role as trial judge in an assessment of that sort. He has had the carriage of the interlocutory preparation for trial as well as of the trial itself, extending over the best part of two days. He has thus had the advantage of judging whether the issues were properly drawn as pleaded and adhered to in the conduct of the parties' respective cases at trial. Equally, he has a wide ambit of discretion in sitting back at the end of a trial in considering how, if at all, the conduct of either party should affect the normal exercise of discretion whether to award costs to one or other party, as provided by CPR 44.3(1) and, if so, whether to follow the general rule in CPR 44.3(2) to order the unsuccessful party to pay the costs of the successful party. In practice, the discretion to be exercised under each of those sub-rules falls to be considered together. The judge clearly took that approach here, deciding in the exercise of his discretion to make no order rather than an order in favour of Countryside.
24. In considering whether it is permissible in the circumstances for this court to interfere with the judge's exercise of discretion not to award costs, it is necessary to examine his criticisms of Countryside to see whether individually and/or collectively they could reasonably justify or support that decision. I am of the view that they did not, and that the judge rightly, in paragraph 23 of his judgment, described his criticisms of Countryside as "harsh".
25. Looking at each criticism individually and briefly, I am of the view that Mr Morley's responses are well made.
26. First, the replacement video tape -- Given Countryside's pleaded and evidenced ignorance of the leakage on the Saturday and/or of the circumstances giving rise to it, if it occurred to the extent, in the manner and with the consequences alleged by Mr and Mrs Murphy, the status of the tape was potentially a matter of some importance. It was certainly worth investigating whether it was the original and the best evidence of the state of affairs of the scene shortly after the leak. The fact that the original, if available, might have been of more use to Mr and Mrs Murphy was nothing to the point and certainly not a reason for a criticism of Countryside for testing the matter through Mr Morley in the way it did.
27. Second, Countryside's failure to examine the roof -- Given the teeming rain on the Monday when Countryside's representatives called to inspect the roof, Mr Murphy's coverage of the roof with a tarpaulin and the lack of any visible signs of leakage inside and already signs of removal of part of the damaged ceiling plasterboard, Countryside were on their case sceptical as to Mr and Mrs Murphy's account of what had happened. His claimed prompt replacement of the internal ceiling plasterboard and the need to continue and complete the ceiling's structural replacement rendered further investigation difficult and seemingly unnecessary. In any event, as Mr Morley noted, Countryside was not alone in not undertaking a close investigation of the roof. Mr and Mrs Murphy, on whom the burden of proof lay, did not conduct any such physical examination of it by Mr Jackson or any other competent witness.
28. Third, the grossly overblown questionnaire to Mr Murphy's experts -- I have to say that I see no justification whatsoever for the judge's criticisms in this respect. There was nothing "belligerent or obstructive" -- the judge's words -- about those letters. Each was written pursuant to an order of his, seeking -- albeit thoroughly -- further information or clarification of the potential witnesses' reports. Written as they were on behalf of Countryside -- on its case in the dark as to what had happened -- its solicitors would have been remiss in their duty at that early pre-trial stage not to have made thorough enquiries to enable it to determine what issues it would realistically have to take at trial if the matter got that far. And, as Mr Morley observed, these were letters to which Mr Lightfowler and Mr Jackson replied in full and without complaint.
29. Fourth, failure of Countryside to take the sub-contractor point -- it is unfortunate, if the judge was going to make so much of this point, that he did not raise it himself as a possible short-cut defence long before he reached the end of his judgment dismissing the claim. Quite apart from the possible complications as to the relationship of Countryside and its various sub-contractors and the execution of the work on the Murphys' home and similar works being carried out on other properties of the housing association, it is plain that for Countryside to have brought in the sub-contractors would have complicated and over-loaded the litigation, which as Mr Morley described it, was at the bottom end of the multi-track range -- the very reverse of a short-cut to dispose of the claim that the judge belatedly seemed to have in mind. In taking a considered decision not to do that, not to seek to lay-off any responsibility that might be established on its sub-contractors, Countryside, at the very least, should not have attracted criticism.
30. Fifth, defence conduct obscuring rather than clarifying the issues -- This criticism was, in effect, an amalgam of most of the individual criticisms to be derived from the judge's judgment. The only specific example that he added was of Mr Morley having subjected Mr Murphy to "considerable, and in the event largely irrelevant challenge". The words "in the event" in that phrase are telling. This, as I have said and repeat, was a case where, of necessity, the issue was, at its broadest, one that put Mr and Mrs Murphy to proof not only of what happened, but as to when but why, as plainly indicated from the start of Countryside's pleaded defence. It was only as the evidence unravelled that it became evident -- and the transcript shows it becoming evident to the judge in the evidence of Mr Kenny and Mr Collinson -- that the leakage could not have occurred for any reason advanced by Mr Murphy or otherwise be attributable to the fault of Countryside. Pending appreciation of likely success in that outcome, Countryside cannot, in my view, be criticised for adhering to its pleaded case of putting Mr and Mrs Murphy to proof of what had occurred.
31. In the result, I can see no justification for any of the criticisms of the judge, looked at individually or collectively, certainly not as a basis for causing him to depart from the norm of making an order for costs in favour of Countryside as the successful party. He may have had some cause to express irritation, as he did on occasion in the course of the evidence, about Mr Morley spending too much time on detail or following up points that, in the event, may have led nowhere. It is unfortunately an all too common feature in cases where advocates are concerned to do the best for their clients, especially where, as in this case, the client's case is that he has no knowledge of the matter the subject of the complaint, and is therefore driven to putting the other party to proof of it. It is no solution, as the judge appears to have suggested more than once to Mr Morley, that, in that state of ignorance, the probing advocate should put to a witness some positive case such as that he is lying.
32. In any event, forensic blemishes, some prolixity or undue detail or testing of points that in the end may prove not to have been important are, in general, no basis on their own for apportionment of costs otherwise accordable to a successful party, especially in this case as they did not add significantly to the length of the trial or the costs in a proceeding that was completed well before the two days set down for its hearing.
33. In those circumstances, and for those reasons, I would allow the appeal and order that there should be an order in favour of Countryside of its costs below.
34. LORD JUSTICE WALL: I agree.
35. LADY JUSTICE HALLETT: I agree.

Order: Appeal allowed.