England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
HIGH COURT APPEAL CENTRE CARDIFF
BUSINESS AND PROPERTY COURTS IN WALES
APPEALS (ChD)

ON APPEAL FROM THE COUNTY COURT AT CARDIFF
HHJ Jarman QC
Claim No. CF0CF057

		Cardiff Civil Justice Centre 2 Park Street, Cardiff CF10 1ET
		29/06/2018

Mr Justice Birss :

1. This is an appeal from the judgment of HHJ Milwyn Jarman QC in a boundary dispute between next door neighbours in Leven Close, Lakeside, Cardiff. The dispute started when the respondents commenced building works on their home to build an extension. The works started in March 2016. One of the issues was that the appellant considered that the works were likely to encroach on a gas flue outlet on his property.
2. The appellant sought an injunction. Directions were given on 15^th August for the matter to be heard on 31^st August 2016. At the hearing the respondents offered an undertaking pending trial, essentially not to build the existing extension higher than the appellant's gas flue. The terms of the undertaking did not prevent the respondents from carrying out other work on the extension. The appellant gave a cross-undertaking in damages and the parties agreed to nominate a single joint expert.
3. The expert decided there was no encroachment by the respondents' works and the respondents' undertaking was discharged on 8^th February 2017. The respondents sought damages on the cross-undertaking. The respondents' claim on the appellant's cross-undertaking was set out in their Defence and Counterclaim in July 2017. At the time of the undertaking the respondents had four young children. They contended that they had to move out of their home on 1^st September 2016 to the first respondent's mother's home and as a result had to pay rent for 11 months (at £850 per month). Their builder could not complete the work and as a result of the undertakings the costs of materials and costs of an alternative builder increased from £68,000 to £80,000. They also claimed the cost of having to store their possessions for 11 months, for having to protect exposed RSJs with weather resistant paint, having to cancel their Sky contract and the cost of driving and collecting their children from school since they could no longer walk. The damages were set out in the Counterclaim as follows:

i) Additional cost of materials and builders £12,000

ii) Renting alternative property £9,350

iii) Off site storage £1,650

iv) Painting of exposed steel work £250

v) Cancelled Sky contract £140

vi) Costs of transporting children to school £470

Total £23,860

4. The respondents were also concerned that the gas flue was too close to their boundary line and the counterclaim included a claim for an order that the appellant moved the flue to a location compliant with gas safe and building regulations.
5. The appellant accepted that in principle the respondents were entitled to damages but denied the damages claimed. In terms of the work itself the appellant's case was that the undertaking did not cause any delay and therefore any additional cost, contending that work had continued after the undertaking. The appellant denied the claim to rent, noting that it was unusual for a parent to charge their family £850 per month to reside with them. The appellant argued that the property was watertight and the respondents' belongings could have been left there. The respondents were put to strict proof of the other claims. One of the points made by the appellant was to draw attention to the lack of details and lack of substantiating documents in support of the respondents' claim.
6. Mr Newton the joint expert had been asked a series of questions to address the damages claim. He had answered them in a written report dated 18^th October 2017. He was not asked to quantify the claim and did not do so. Nevertheless his answers firmly supported the respondents' case. He gave two reasons why the project might have incurred additional costs in these circumstances. One was an increase in rates for material and labour over the period, for which he gave a range of 1.2% to 3%. The other was that in his opinion there is often a premium charged by a second contractor reflecting their reluctance to take over an unfinished job. He considered the effect of the undertaking and said that when he visited the site the work had ceased and he did not agree with the appellant that the respondents would have been able to continue the project in the circumstances. Although the undertaking was limited, its limitations had a significant knock on effect on all the other works. His view was that the undertaking did in practice prevent completion of the whole the external works. On the issue of delays, he said that there could be delays in trying to rearrange and coordinate subcontractors. On the issue of the family moving out he said that while if the works had been carried out in the summer months it may have been possible for them to remain in occupation, he considered the extent of the works on his site visit in October and the condition of the property and said it would have been very difficult for the family to occupy the property during the winter months. He also considered it would have been necessary for the family to remove their possessions. Finally he addressed the need to paint the RSJs confirming that once the work recommenced they would need to be rubbed down and painted. He also said that he would always recommend painting them even if they were not exposed.
7. The matter came on for trial before the judge on 24^th January 2018. The trial took a morning. In addition to the report of the expert Mr Newton, the court had witness statements from both sides. In his statement Mr Drury explained his view that other work could and did proceed despite the undertaking. He pointed to the lack of documentation to support the cost increase from £68,000 to £80,000. He accepted that the family might have needed to move out for a period but since the undertaking only ran for about 5 months he did not accept they had to move out for 11 months. The same point was made on storage. He also challenged the respondents on the other issues (RSJ, Sky and driving to school).
8. The respondents served two witness statements which each purported to be a joint statement of both of them although read as a statement by Mr Rafique. In the statements Mr Rafique maintained the respondents' case. He said that when the undertaking was given their builder moved on to other works and when it was lifted he contacted several builders but they were reluctant to do the work and since the works had been open to the elements for 5 months their prices included the cost of remedial works caused by the delay. The evidence exhibited various documents but, as the appellant pointed out below and before me, the documentation supporting the cost of building costs is confusing and thin.
9. The appellant's counsel cross-examined both the Mr and Mrs Rafique and the respondents' counsel cross-examined Mr Drury. During the re-examination of Mr Rafique a document was produced and admitted which showed a schedule of payments to IB Contractors, the builders who finished the works, from March 2017 to Sept 2017. The total paid was £80,000 (less a discount for delay).
10. The judge gave an oral judgment in the afternoon.
11. The judge found in favour of the respondents. He accepted Mr Rafique's evidence entirely, holding that he was a patently honest person. The judge ordered the appellant to pay damages assessed as £22,860. The reason for the difference between that sum and total claimed was because there had been a reduction off the £80,000 the respondents had paid to their builders to complete the work as a penalty for a two week delay. This was shown in the statement from IB Contractors.
12. At the hearing the judge awarded costs on the standard basis. In the post-judgment submissions the respondents asked the judge to deal with the issue of the location of the gas flue. In January 2017 the expert Mr Newton had expressed his opinion that the position of the gas flue did not conform to current gas safe and building regulations because it was less than 600mm from the boundary. The judge heard brief submissions from the parties and made an order requiring the appellant to reposition the flue to 600mm or more from the boundary. There were also points on issues on damages and interest under Part 36 because the outcome of the trial meant that the respondents had beaten a Part 36 offer they had made.
13. When the order came to be drafted the respondents' counsel raised with the judge two points on the terms of the order in a letter dated 26^th January 2018. One was about the recitals and the other was a point on the basis of assessing costs arising from the Part 36 issue since r36.17(4) applied. The appellant's counsel responded in writing by producing a marked up copy of counsel's letter. The judge decided to adopt the appellant's counsel's point on the recital but accepted the respondents' counsel's point on Part 36 and made an order for indemnity costs after the relevant date under r36.17(4).
14. The appellant appeals with permission given by Garnham J on 9^th March 2018. The appellant's main case on appeal was that the assessment of damages was flawed because judge failed to give any or any adequate reasons for his conclusions or to deal with all the areas of controversy and that he misunderstood the evidence. The appellant submits that none of the heads damages claimed should have been accepted. The respondents supported the judge, denying that the judge had failed to give adequate reasons and denied he misunderstood the evidence.
15. The appellant also contended that neither the order relating to the gas flue nor the indemnity costs order should have been made. The appellant submissions are the following: the gas flue order was wrong because in making it the judge erred in giving weight to the opinion of the single joint expert since that opinion was about a legal consequence and not a matter of expert opinion or a description of factual observations. The indemnity costs order was wrong because the judge had not been asked to make an order for indemnity costs and did not do so; if the judge thought indemnity costs might be correct he should have invited submissions on the point.

Appeal on damages

16. Despite the fact that a failure to give adequate reasons was put at the forefront of the appellant's case relating to damages, no attempt was made to invite the judge to consider whether to amplify his reasons before complaining about their inadequacy on appeal. Counsel for the respondents submitted this was contrary to the guidance given by Wilson LJ in Paulin v Paulin [2010] 1 WLR 1057 at paragraph 30(a). Counsel for the appellant's response as I understood it was that there would have been no point in doing so given that his client had lost. That is wrong. It seems to be on the assumption that the reasons would have rejected the appellant's case on the topics he says were not covered. That is no excuse but even if it is what would have happened, the approach the appellant has therefore taken runs a real risk of unnecessarily prolonging the proceedings. If the appeal court rejects the submission that the reasons are inadequate then that is one thing, but if the reasons are lacking then it does not follow that the right thing to do is conduct a rehearing on appeal without the benefit of hearing the witnesses. The right thing to do might be to direct a retrial, which would have been entirely unnecessary if the judge had had the opportunity to amplify his reasons.
17. A judge's duty to give reasons was explained in Flannery v Halifax Estate Agents [2000] 1 WLR 377 at 381 g-h. These principles were not in dispute:

"(1) The duty is a function of due process, and therefore of justice. Its rationale has two principal aspects. The first is that fairness surely requires that the parties - especially the losing party - should be left in no doubt why they have won or lost. This is especially so since without reasons the losing party will not know (as was said in Ex p. Dave) whether the court has misdirected itself, and thus whether he may have an available appeal on the substance of the case. The second is that a requirement to give reasons concentrates the mind; if it is fulfilled, the resulting decision is much more likely to be soundly based on the evidence than if it is not.

(2) The first of these aspects implies that want of reasons may be a good self-standing ground of appeal. Where because no reasons are given it is impossible to tell whether the judge has gone wrong on the law or the facts, the losing party would be altogether deprived of his chance of an appeal unless the court entertains an appeal based on the lack of reasons itself.

(3) The extent of the duty, or rather the reach of what is required to fulfil it, depends on the subject-matter. Where there is a straightforward factual dispute whose resolution depends simply on which witness is telling the truth about events which he claims to recall, it is likely to be enough for the judge (having, no doubt, summarised the evidence) to indicate simply that he believes X rather than Y; indeed there may be nothing else to say. But where the dispute involves something in the nature of an intellectual exchange, with reasons and analysis advanced on either side, the judge must enter into the issues canvassed before him and explain why he prefers one case over the other. This is likely to apply particularly in litigation where as here there is disputed expert evidence; but it is not necessarily limited to such cases.

(4) This is not to suggest that there is one rule for cases concerning the witnesses' truthfulness or recall of events, and another for cases where the issue depends on reasoning or analysis (with experts or otherwise). The rule is the same: the judge must explain why he has reached his decision. The question is always, what is required of the judge to do so; and that will differ from case to case. Transparency should be the watchword."

18. Picking up on paragraph (2) from Flannery, there was an attempt to suggest on this appeal that one could not tell whether the judge had erred in law because the judge had not set out the propositions of law. However the legal propositions which related to the issues the judge had to decide were entirely uncontroversial and straightforward on the facts of this case. They are that the respondents had to prove their case, and the damages on a cross-undertaking are assessed on contractual principles (Abbey Forwarding v Hone [2014] EWCA Civ 711) this not being a case which might engage the exceptions to that principle. The appellant has no specific point to make about any particular point of law. The judgment cannot be criticised for not setting them out.
19. The next issue which needs to be addressed is the judge's acceptance of Mr Rafique's evidence. The appellant submitted this conclusion was flawed because the judge did not deal with a point on a tenancy agreement which was said to undermine Mr Rafique's credibility as a witness.
20. The judge heard Mr Rafique being cross-examined, made a clear finding that Mr Rafique was an honest witness and a clear finding that he accepted Mr Rafique's evidence. He made those findings about Mr Rafique in paragraph 8 of the judgment. This paragraph deals with Mr Rafique's evidence about how he paid for the building work. It contains a minor muddle unrelated to the witnesses credibility about the nature of the sources other than cash which Mr Rafique used to pay for the building works which the appellant's counsel sought to magnify. The point was that Mr Rafique had said that he mostly paid in cash for the works but some payments were made in a different way using loans. He also separately said he mostly paid the rent in cash but some payments were made in a different way using credits for rent due to him. In the paragraph the judge makes a mistake, mixing up the non-cash alternative source of payment for rent with the non-cash alternative source of payment for building works. It is not significant.
21. The judge's paragraph 8 is:

"There was some confusion as to precisely how these monies were paid. Mr Rafique said in evidence that largely they were paid in cash, but also that some payments were made by way of credited sums due to him in other respects, whereas in other documentation it is suggested that all these sums were paid in cash. I accept his evidence in this regard. He came across as a patently honest witness trying his best to recall what had been going on in what he described as hectic times. When the undertaking was given Mr and Mrs Rafique had four very young children, including their youngest who had been born in April beforehand, at about the same time when their works of extension had been commenced. He said that he would not have gone for the most expensive builders, and that he chose a builder to minimise his expenses. It seems to me a telling point he made in his evidence was that at this stage he did not know whether he would recover these extra expenses or not, and so it was not in his interest to do anything other than seek to minimise the cost, and that part of his evidence and indeed all other parts in my judgment had the ring of truth about it and I accept it."

22. Here the judge has found Mr Rafique to be a good witness and has given cogent reasons for that view which are entirely adequate to explain it.
23. While this finding was made in the context of addressing the building work there had also been challenges to the evidence about the rent Mr Rafique said had to have been paid while his family had moved out of their home. The respondents had produced statements from a property agent called Jupiter which recorded the rent paid. The documents showed rent due and payments. At the trial there was a challenge to the authenticity of these documents even though the point had not been taken before. It was in this context that questions were asked about a tenancy agreement. The point was made that in correspondence before trial a tenancy agreement had been asked for and not produced. Mr Rafique was asked about the tenancy agreement in cross-examination. He said there was one and that he had given it to his solicitors. No document was produced. In closing counsel mentioned this point as a reason for treating Mr Rafique's evidence with scepticism and also raised it with the submission that that the judge should not accept the Jupiter documents as genuine. The major point at trial was the submission that the absence of a tenancy agreement supported the conclusion that the Jupiter documents were not genuine. There was a submission that the landlord probably was not registered under the Housing (Wales) Act 2014 and so the letting was unlawful.
24. The judge considered the rent issue fully in paragraphs 11-13. He accepted the Jupiter rent account, found that the respondents did pay this rent and that it was a sum they were entitled recover. He did not accept the Housing (Wales) Act was relevant because it only came into force after the respondents were already renting. So although he did not say so in so many words, the judge clearly found that the Jupiter rent documents were authentic and clearly was not concerned by the absence of a tenancy agreement.
25. However the appellant's counsel submitted that the appellant cannot know what the judge made of the point on Mr Rafique's credibility on the tenancy agreement. Before me counsel submitted that if what Mr Rafique said was true then the solicitors had a duty to disclose it or withdraw if the respondents refused to allow them to disclose it and thus, since they had done neither Mr Rafique's evidence was not true. So rather than being "patently honest" as the judge held, it was submitted that Mr Rafique ought to have been found to be a witness whose evidence should be approached with extreme caution. The appellant also submitted that the judge's finding about Mr Rafique's honest was not adequately explained and must have been based on demeanour, which would be an unsound basis to do so.
26. However all counsel said about this in the context of Mr Rafique's credibility at trial was that the judge was invited to treat the answer that there was a tenancy agreement with some scepticism. When advanced like that, I cannot see any justification for criticising the judge for not addressing that particular point when he assessed Mr Rafique's credibility. He gave solid reasons for finding Mr Rafique to be credible and this was not presented as a point which fatally undermined the witness. Before the judge the major issue was the status of the tenancy and the Jupiter documents, which he addressed and decided. It is always possible to find a minor submission which a judgment does not address. To magnifying this point on appeal and then submit that the judgment does not answer the magnified version of the point does not establish a basis to overturn the judgment. I reject this submission.
27. I turn to the particular factual issues, starting with the building costs. The appellant identified five factual issues were said to flow from the respondents' submissions but which the judge failed to make findings in relation to. They are:

i) the cost of the works as originally commissioned;

ii) the works done by the time the undertaking was given;

iii) the works that were delayed by the undertaking, including whether the delay was partial or total;

iv) the costs of the delayed works as when originally commissioned; and

v) the cost of the delayed works when recommissioned.

28. The appellant submitted that the respondents produced no evidence at all of points (ii) to (iv) and on point (i) only a quotation for the original works was produced while on point (v) the only evidence was the IB Contractors document produced in re-examination. For example, no schedule of works was produced, nor any statement from a building contractor or evidence of payment. The appellant also submitted that the judge failed to find or identify the scope of the particular individual works which were delayed, the length of the delay, the cost of those delayed individual works as originally commissioned and the costs of the delayed works post discharge of the undertaking.
29. The appellant contends that the judge seriously misunderstood the evidence about whether work stopped on site. Part of this submission was based on an accidentally mistaken quotation from the judgment. That point was withdrawn. Another part of the submission was that the judge had not understood that some work had continued in the period after the undertaking on 31^st August and 26^th October 2016. It is clear that work did continue in that period (not in breach of the undertaking) but there is no basis for the suggestion that the judge misunderstood that. The judge noted in paragraph 6 that Mr Newton had reported that the work had stopped by the time he visited (i.e. 26^th October) and the judge then accepts Mr Rafique's evidence that the work stopped a short while before that. The judge then dealt with Mr Newton's opinion about the wider practical effect of the undertaking and accepts the respondent's evidence when they said that the contractors left the site. The judge had well in mind that Mr Drury's evidence was that work did not cease. The judge dealt with it in paragraph 10, holding that Mr Drury's evidence was not a good basis for discounting the evidence of Mr and Mrs Rafique. Paragraph 10 refers to Mr Drury's evidence about the number of different vans on the site and the fact he spends one or two days a week at home. The appellant is right that paragraph 10 does not go through every single point Mr Drury made but it was not necessary to do so. Having heard the witnesses the judge was entitled to reach the conclusion he did.
30. As he was entitled to the judge relied on Mr Newton's observation that work had ceased when he visited, his opinion that the undertaking had a significant knock on effect on all works and his view that completing the top dormer roof and other things would not be possible. In paragraph 7 the judge noted that the works were stopped apart from some on going works to the rear and some works to close the property to the elements. The judge accepted the evidence of Mr and Mrs Rafique that the contractors left the site and it took them some time to look around for other builders until they alighted on IB Contractors.
31. The appellant is right in that the judge did not approach the matter by breaking down the overall project into specific items of work, identifying which were delayed and which were not and identify the costs by reference to that broken down set of work items. The appellant is also right that no schedule of works was produced nor a statement from a builder. The appellant is also right to draw attention to the original quotation document – which is for a higher sum than that the £68,000 on which the claim is based.
32. However these points do not undermine the judgment. The respondents case was put at a higher level of generality than that. In his cross-examination Mr Rafique confirmed that the increase in costs he claimed was from £68,000 up to what was in fact about £78,000 rather than £80,000. Although the IB Contractor's document was produced in re-examination, it did substantiate the respondents' case about the payments made when the works were restarted. Crucially the opinion of the expert Mr Newton supported the respondents case that some increase in the cost was realistic due to both increases in rates but also the attitude of a second contractor. It might be said that the respondents were taking a risk in the litigation because they had no fall back material to rely on if Mr Rafique's credibility was not accepted but that does not matter. The judge found Mr Rafique to be a credible witness.
33. Focussing on the five factual findings referred to by the appellant, the respondents' case on points (i) and (v) depended on Mr Rafique's credibility but the judge dealt with that. Points (ii) to (iv) only matter if one does not accept the respondent's approach of taking the figures overall. The judge was entitled to take the approach he did. That means there was no need to consider these detailed points.
34. I reject the appeal in relation to the additional building costs.
35. Aside from the tenancy agreement point addressed above, the point on appeal about rent is concerned with timing. The appellant does not dispute that the family would have to move out for some time but contends the 11 months period is too long. The judge had well in mind that the 11 month period of rent claimed was longer than the 5 months during which the undertaking lasted. He accepted Mr Rafique's evidence that it took time to find a builder to come in and take over. He noted that the builder who did come took three weeks even to come and see the property.
36. The appellant's case is that Mr Newton's opinion was that if the works had been carried out in summer then it may have been possible for the family to stay but in the winter it would have been very difficult to do that given the state of the works, particularly the roof. Next the appellant submits that since the undertaking was on 1^st September, if the work had not been stopped it would have continued into the winter and so the family would have had to move out anyway. Therefore even accepting everything else about the rent (which the appellant does not) the loss caused by the undertaking cannot be the rent for the whole period because some period of moving out was always going to happen if there had been no undertaking. In other words the fact that the judge accepted (as he did) that the delay in returning to the property of 11 months was caused by the undertaking does not mean that he should also have accepted (as he did) that 11 months' rent represents the recoverable loss.
37. Although attractively put I do not accept this submission. The flaw is in the premise that if the undertaking had not been given, the family would still have had to move out in any event. That was not established. Mr Rafique's evidence in cross-examination was that the plan when the works started in March 2016 had been that if need be they would move out for a month or so in August so that when they moved out it was summer, not winter, but the undertaking took the whole schedule out of place. He said if things had been carried out according to plan then the family could have stayed in their home. When challenged that he had contemplated moving out he said that was only "if need be". That was the only cross-examination on the point. It was not established that if no undertaking had been given then the family would have necessarily had to move out in any event. Before me the appellant's counsel pointed out that given the state of affairs we know them to have been by the time the undertaking was given the likelihood must have been that the work was going to go on into the autumn and so the family were bound to have to move out. But that was not put to the witnesses. The judge in paragraph 12 makes an express finding that the reason the family moved out was solely because of putting the works on hold as a result of the undertaking. On the evidence as it was before the court, the judge was entitled to make that finding.
38. It follows that the appeal relating to the rent payments must be dismissed and necessarily therefore the points on the storage and the sky contract. The evidence on the sky contract was thin and depended on Mr Rafique's credibility but that has been addressed above.
39. The issue on painting the RSJ is that the appellant seeks to turn Mr Newton's usual recommendation that this be done anyway even if RSJs are not exposed into a basis for saying that therefore the cost of painting the RSJs after they had been exposed as a result of the stopped work was not loss caused by the undertaking. The judge had this aspect of Mr Newton's opinion well in mind in paragraph 15. He takes it into account and concludes that it was reasonable for the painting to be done even if it had not been done before. He was entitled to reach that conclusion.
40. Before me no separate point was taken on the costs of travel to school aside from the issue of credibility, which as been addressed already.
41. The deals with the appeal on damages.

Gas flue and indemnity costs

42. I do not accept the submission that the judge was wrong to decide the issue of the gas flue. It was in accordance with the overriding objective to deal with that issue in the circumstances. The expert had given an admissible opinion, on which the judge was entitled to rely, about the location of the flue and its status as far as the relevant building regulations and gas safe regulations were concerned. It was clearly a matter in dispute between the parties and by resolving it the judge saved the parties from coming back to court another time.
43. Nor do I accept that the judge erred in dealing with costs in the way he did. Although the judge had said at the hearing he would order costs on the standard basis, the order had not been sealed and so it was open to the judge to entertain counsel's later written submissions inviting him to make a different order based on Part 36. Since he had clear written submissions from both sides – in the form of the letter and the appellant's counsel's marked up version – there was no need for the judge to invite further submissions. Nor is there any suggestion before me that any further submissions would have made any difference. The point taken by the appellant's counsel in writing was that no order for indemnity costs had been made. That was true but it was not a reason not to reconsider the order based on applying Part 36. The suggestion that the judge might not have seen the appellant's counsel's submissions is falsified by the fact that the judge adopted the submission on the recital. So I reject this as a free standing ground of appeal.

Conclusion

44. This appeal must be dismissed.