all trans

The Weekly Law Reports 9 March 1984

[1984]

[COURT OF APPEAL] A

* A L L T R A N S E X P R E S S L T D . v. CVA H O L D I N G S L T D .

[1980 A. No. 2076]

Nov. 10 Stephenson, Griffiths and Purchas L.JJ. «

J Costs—Appeal, Court of—Jurisdiction—Appeal as to costs with leave of judge—Assessment of damages—No payment into court—Plaintiff awarded nominal damages and costs—Court's discretion to interfere with exercise of judge's discretion—Supreme Court Act 1981 (c. 54), s. 18(l)(f)

The plaintiffs brought an action against the defendants seeking C £82,500 damages for breach of warranty given by the defendants in an agreement for sale of a company's entire issued share capital. The plaintiffs issued a summons under R.S.C., Ord. 14, and obtained judgment against the defendants for damages to be assessed by an official referee. Judge Hayman, sitting as an official referee, assessed the damages at £2 and ordered the defendants to pay the costs on the grounds that because the r\ plaintiffs succeeded in having damages assessed under the judgment, costs would follow the event and further that the defendants, since the judgment under Order 14, had failed to pay damages into court. The judge gave leave to the defendants to appeal on the order as to costs.

On appeal by the defendants:— Held, allowing the appeal, that where, pursuant to section

18(1)(/) of the Supreme Court Act 1981, the judge had given E leave to appeal against his order for costs, the jurisdiction of the Court of Appeal was not limited to cases where there had been no exercise, or an unjudicial exercise, of discretion, but extended to the usual rules as on any appeal against the exercise of a judge's discretion when the court would allow an appeal if it were shown that the judge had erred in law or principle; that it was plain on the face of the judgment that the judge had erred in the p exercise of his discretion in that he gave too much weight to the absence of a payment into court of £2, and regarded the plaintiffs successful by the mere fact that they ultimately got something, although the damages awarded were only nominal; but that an award of £2 was not what the plaintiffs were aiming at, their claim being for £82,500 and that, accordingly, the court was bound to hold that the judge's exercise of his discretion was plainly wrong and that the plaintiffs should pay the costs (post, pp. 397D, G 398E-G, 400c-G, G-H, 401B-C, E-F, 403A-C, D-E, E-F, G — 4 0 4 B , E-G.

Findlay v. Railway Executive [1950] 2 All E.R. 969, C.A.' applied.

Anglo-Cyprian Trade Agencies Ltd. v. Paphos Wine Industries Ltd. [1951] 1 All E.R. 873 approved.

Jones v. McKie [1964] 1 W.L.R. 960, C.A. distinguished. „ Per Stephenson L.J. It does not matter much whether one

says that there has been no exercise of discretion, or a purported exercise of discretion on no materials, or on some matter wholly unconnected with the litigation. In all those circumstances the Court of Appeal would not be banned by the Supreme Court Act 1981 from considering an appeal, even in a case where leave to appeal had not been granted (post, p. 400A-B).

Per Griffiths L.J. When a judge has refused leave to appeal from his order as to costs the powers of the Court of Appeal to

The Weekly Law Reports 9 March 1984 395

1 W.L.R. AUtrans Express v. CVA Holdings (C.A.) ^ entertain an appeal against his order are extremely limited. Either

it must be shown that the judge failed to exercise his discretion at all or, alternatively, he took into account some wholly extraneous circumstance unconnected with the subject matter of the action, which is to be regarded as tantamount to a failure to exercise a judicial discretion (post, p. 403D-E).

The following cases are referred to in the judgments: " Anglo-Cyprian Trade Agencies Ltd. v. Paphos Wine Industries Ltd. [1951] 1

All E.R. 873 Baylis Baxter Ltd. v. Sabath [1958] 1 W.L.R. 529; [1958] 2 All E.R. 209,

C.A. Campbell (Donald) & Co. Ltd. v. Pollak [1927] A.C. 732, H.L.(E.) Findlay v. Railway Executive [1950] 2 All E.R. 969, C.A. Hong v. A. & R. Brown Ltd. [1948] 1 K.B. 515; [1948] 1 All E.R. 185, C.A.

C Jones v. McKie [1964] 1 W.L.R. 960; [1964] 2 All E.R. 842, C.A. London Welsh Estates Ltd. v. Philip [1931] W.N. 44, D.C. Ritter v. Godfrey [1920] 2 K.B. 47, C.A. Scherer v. Counting Instruments Ltd. [1977] F.S.R. 569, C.A. Taylor (K.H.) Ltd. v. Wold Farm Foods Ltd. (unreported), 29 June 1982;

Court of Appeal (Civil Division) Transcript No. 275 of 1982, C.A. Wagman v. Vare Motors Ltd. [1959] 1 W.L.R. 853; [1959] 3 All E.R. 326,

D C.A. The following additional cases were cited in argument: Bew v. Bew [1899] 2 Ch. 467, C.A. Bowen v. Mills & Knight Ltd. [1973] 1 Lloyd's Rep. 580 City of Manchester, The (1880) 5 P.D. 221, C.A. Civil Service Co-operative Society Ltd. v. General Steam Navigation Co. [1903]

E 2 K.B. 756, C.A. Hultquist v. Universal Pattern and Precision Engineering Co. Ltd. [1960] 2

Q.B. 467; [1960] 2 W.L.R. 886; [1960] 2 All E.R. 266, C.A. Rio Grande Do Sul Steamship Co., In re (1877) 5 Ch.D. 282, C.A.

APPEAL from Judge Hayman sitting as an official referee. By a writ dated 20 May 1980, the plaintiffs, Alltrans Express Ltd.,

F claimed against the defendants, CVA Holdings Ltd., £82,500, and interest. They alleged that under an agreement dated 28 February 1978 between the parties, the defendants agreed to sell to the plaintiffs the entire issued capital of CVA Road Freight (1977) Ltd. ("the company") for £453,776-84 and that that transaction was completed by the transfer of the shares and payment of the price.

Q Clause 14 of the agreement contained an undertaking by the defendants given to the plaintiffs and the company that the defendants would make good any loss either of them might suffer in the event of the company failing to make a net trading profit, before tax, in each year ending 30 June 1979, 30 June 1980, 30 June 1981, of at least £80,000 and a net trading profit, before tax, in the aggregate of at least £360,000. The defendants' liability under the clause was to be limited to the maximum

H sum in the aggregate of £82,500. The company failed to make trading profits. The plaintiffs thus claimed

that the defendants were indebted to them in the sum of £82,500 but despite demands they had failed to pay that sum.

The plaintiffs took out a summons under R.S.C., Ord. 14. On 6 November 1980, Master Lubbock made an order giving the plaintiffs leave to enter judgment for damages to be assessed and the action to be transferred to official referees' business for assessment of damages.

396 The Weekly Law Reports 9 March 1984

Alltrans Express v. CVA Holdings (C.A.) [1984] Judge Hayman assessed the plaintiffs' damages at £2 and ordered ^

judgment to be entered in that amount. He further ordered that the defendants should pay the plaintiffs their costs of the assessment. He gave the defendants leave to appeal against the order for costs.

By a notice of appeal dated 2 February 1983, the defendants appealed on the grounds, inter alia, (1) that the trial judge found (a) that the plaintiffs had failed to prove any entitlement to damages in respect of the judgment against the defendants under R.S.C., Ord. 14, other than B nominal damages, (b) that the defendants had succeeded in disproving the plaintiffs' contention that the audited accounts of the company disclosed the actual net trading profit before tax; and further (2) that the defendants had succeeded on every material point raised; (3) that no criticism of the conduct of the defendants having been made in his judgment, the judge (i) erred in so far as he held that the plaintiffs were Q not already entitled to nominal damages before he entered upon the assessment; (ii) awarded costs to the unsuccessful party; and (iii) acted unfairly and without material upon which to exercise his discretion.

/. M. Collins Q.C. and Jeremy Russell for the defendants. A. A. R. Thompson Q.C. and Ignatius Fessal for the plaintiffs.

STEPHENSON L.J. This is an appeal against an order of Judge Hayman, sitting as a judge dealing with official referees' business, in respect of costs. The order was made on 11 January 1983 and from it he gave leave to appeal. The order sets out the fact that there had been a hearing extending over 15 days, and ends by saying:

"I . . . do hereby assess the plaintiffs' damages in the sum of £2 (two E pounds). And do hereby order that judgment be entered for the plaintiffs for the said sum of £2 . . . with costs to be taxed if not agreed. And I do grant the defendants leave to appeal on the question of costs."

The assessment came about under an order of a master made as long ago as 6 November 1980; that order was: F

"that the plaintiffs have leave to enter judgment for damages to be assessed. 2. The action be transferred to the official referee business for assessment of damages. 3. Liberty to restore."

No question arises about the costs of the plaintiffs up to the entering of judgment under R.S.C., Ord. 14. Q

The claim related to the sale of shares by the defendant company to the plaintiff company; they were shares in a third company, and happily we are not concerned with the details of that sale. The claim was really a claim for £82,500, based on an undertaking that the defendants had given to make good a loss from the trading of the third company, and presumably because a breach of that agreement was proved or admitted, or taken to be proved, judgment was given against the defendants for H damages to be assessed as I have said. The defence was that the loss had been calculated on the wrong basis, but of course it was not open to the defendants to repeat that defence at the hearing for the assessment of damages and, as I have said, after 15 days the judge came to the conclusion that the plaintiffs were not entitled to £82,500 or anything like it; that they had failed to prove that they had suffered any damage as a result of the defendants' breach of contract and that they were therefore


1 W.L.R. Alltrans Express v. CVA Holdings (C.A.) Stephenson L.J. j. entitled to nominal damages, which he assessed at what I think is one of

the figures now given for nominal damages, namely, £2. But the order that he made was that the plaintiffs should have the costs of that expensive battle which, on the face of it, they would appear to have lost.

I think each member of this court, on seeing the order that the judge had made, thought that he had plainly got the matter wrong and that the right order in such a case would be that the plaintiffs should pay the

B defendants' costs, the defendants being the successful party and not, as the judge apparently thought, the plaintiffs.

The judge, after considering going as far as making no order as to the costs of the assessment of damages, was persuaded by Mr. Thompson that his clients were the successful plaintiffs and that they should have those costs. The preliminary view which this court took led us to call

_ upon Mr. Thompson to make that good without doing more than refer to the arguments submitted, according to the transcript that we have of them, by Mr. Collins to the judge and in his skeleton argument. When we put to Mr. Thompson in that way that the judge had made the wrong order and one that we could put right, he submitted with great clarity and cogency that we could not do that because we are prevented by statute and by authority from doing it where there is an appeal against an order

D for costs, which he submitted is in a special position in consequence of the statute and the authorities upon it. His submission was that this court can only entertain an appeal on the question of costs either where there has been no exercise of discretion by the judge who makes the order, or where his exercise of his discretion has not been judicial because he has taken into account some wholly irrelevant matter.

Mr. Thompson took us first to what is now section 18(1)(/) of the Supreme Court Act 1981, which re-enacts a provision which has been the law through the Supreme Court of Judicature (Consolidation) Act 1925 since the Supreme Court of Judicature Act 1873. Section 18(1)(/) provides:

"No appeal shall lie to the Court of Appeal— . . . (/) without the leave of the court or tribunal in question, from any order of the High Court or any other court or tribunal made with the consent of the

F parties or relating only to costs which are by law left to the discretion of the court or tribunal."

In support of his submission that on the hearing of appeals on costs the appellate court can only consider the two matters to which I have referred, Mr. Thompson relied first of all on a decision of this court in Jones v. McKie [1964] 1 W.L.R. 960. That was a case in which a judge

G had deprived one of two successful defendants of their costs because of conduct which he regarded as misconduct and as related to the issues in the action. By a majority, this court refused to interfere with his order. In the course of giving the leading judgment, Willmer L.J., at p. 965, referred to a well-known passage in the speech of Viscount Cave L.C. in Donald Campbell & Co. Ltd. v. Pollak [1927] A.C. 732, 811-812, in

JJ which the Lord Chancellor stated that it appeared to him that the true view was substantially that taken by Lord Sterndale M.R., in a passage which he had cited from Ritter v. Godfrey [1920] 2 K.B. 47, and which ends with this sentence:

"But when a judge, deliberately intending to exercise his discretionary powers, has acted on facts connected with or leading up to the litigation which have been proved before him or which he has himself observed during the progress of the case, then it seems to me that a


Stephenson L.J. AHtrans Express v. CVA Holdings (C.A.) [1984] Court of Appeal, although it may deem his reasons insufficient and A may disagree with his conclusion, is prohibited by the statute"—that is, the then existing predecessor of section 18(1)(/)—"from entertaining an appeal from it."

Willmer L.J. went on [1964] 1 W.L.R. 960, 966: "What it comes to, I think, is'that in order to justify an appeal as to costs only, this court must be able to say that the judge in the court JJ below, however much he may have been purporting to exercise his discretion, has not really exercised his discretion at all. This court can say that, but can say it only, as I see it, if it is satisfied that the judge in the court below has taken into consideration wholly extraneous and irrelevant matters. That, I think, is also substantially in accordance with what Jenkins L.J. said in Baylis Baxter Ltd. v. Sabath [1958] 1 W.L.R. 529, 536: . . . ' . . . the matter as it now c

stands really comes to this, that in a case of this sort—that is to say, in a case in which it is sought to appeal, without leave,' "—and I stress those words—"'from an order relating solely to costs—such an application should not be entertained in view of the express terms of section 31(l)(/i) of the Supreme Court of Judicature (Consolidation) Act 1925' "—that is, the predecessor of section 18(1)(/)—" 'unless j> the circumstances are such that this court can say, in effect, "In this case the judge did not in truth exercise his discretion at all." . . . it is only in a case of that kind that this court has jurisdiction to entertain such an appeal' ."

I stress again those words "such an appeal," which obviously refer back to an appeal without leave. E

Then Harman L.J.'s judgment was also called to our attention; Mr. Thompson relied on what he had said at the end of his judgment, at p. 969:

"Once one concludes that this was a case of an exercise of discretion, the matter is at an end so far as this court is concerned. It is only if there was no exercise of discretion at all that we could interfere, and I do not think there was."

Those words, if read literally, are, as it seems to me, too wide. They may have been too wide to cover the case with which their Lordships were dealing, if I may respectfully say so, namely, a case which was, like both the authorities they cited, a case where leave to appeal either had not been given or had been refused. But in my judgment they certainly do not have any application to the instant case, or to any case where " leave has been given by the judge who made the order as to costs.

Further, Mr. Thompson relied on a recent decision of this court in K. H. Taylor Ltd. v. Wold Farm Foods Ltd. (unreported), 29 June 1982; Court of Appeal (Civil Division) Transcript No. 275 of 1982. I need not refer to the facts of that case. Again it was an appeal from a judge dealing with official referees' business in which the court, through the leading H judgment of Ormrod L.J., quoted and followed a decision in Scherer v. Counting Instruments Ltd. [1977] F.S.R. 569. In that case, which was again a case where leave had not been given, but in fact refused by an official referee, Buckley L.J. said, at p. 573:

"This court can, however, interfere if upon a true view of the facts the judge has either not exercised his discretion at all, or has exercised it otherwise than judicially."


399 1 W.L.R. Alltrans Express v. CVA Holdings (C.A.) Stephenson L.J.

. Ormrod L.J. went on to point out the difficulties of distinguishing sometimes between a wrong exercise of discretion and an unjudicial exercise of discretion, and he ended his judgment, with which the other two members of the court agreed, by saying:

"So we do not get as far as considering whether the judge exercised his discretion correctly. For my part I am quite satisfied that he exercised his discretion judicially and made an order which he thought

® was the right order."

I could go at greater length into the speeches and the passages in them which have been relied upon—the speeches of Viscount Cave L.C. and Lord Atkinson in Donald Campbell & Co. Ltd. v. Pollak [1927] A.C. 732; both of them approving what Lord Sterndale M.R. had said in Ritter

Q v. Godfrey [1920] 2 K.B. 47, which the industry of counsel has not been able to identify as a case where no leave was granted. But I should refer to the last sentence of the speech of Lord Carson in Donald Campbell & Co. Ltd. v. Pollak [1927] A.C. 732, 826, on which Mr. Thompson relies. Lord Carson said:

"Whilst, therefore, it is, of course, true that a judge ought to exercise n his discretion judicially, whether he has done so or not is a question

which cannot be raised on appeal as to costs, unless the judge gives leave as provided by the section."

If that means, as Mr. Thompson submits, that where leave is given the court can only consider whether the judge exercised his discretion judicially, and if satisfied that he did, must treat his decision as sacrosanct, I

E respectfully disagree with it as unsupported by authority and, as I think, inconsistent with authority.

Mr. Thompson also referred us, in another connection, to Findlay v. Railway Executive [1950] 2 All E.R. 969. In that and other cases this court has had to consider appeals from judges' orders which departed from the usual practice as regards costs where there has been a payment in. It may just be worth referring to Wagman v. Vare Motors Ltd. [1959]

F 1 W.L.R. 853, where this court followed its earlier decision in Findlay v. Railway Executive.

Wagman v. Vare Motors Ltd. was a case in which Thesiger J. had awarded exactly the amount paid in by the defendants and, giving his reasons for making no order as to costs after the date of a payment into court, had said, at p. 855:

G "I take into account the fact that the sum of £575 has been paid into court; I take into account in—I am certain—my discretion, the fact that I was not, at any material time, giving less than that sum and was wondering about another £25 . . . "

and he refused leave to appeal against his order. TT In that case Morris L.J., in a judgment with which Ormerod and

Willmer L.JJ. agreed, said, at p. 860: "I propose to approach this case by considering whether, within the words used by Lord Greene M.R. [in Hong v. A. & R. Brown Ltd. [1948] 1 K.B. 515] there was a purported exercise of the discretion without any materials on which that discretion could be exercised. It seems to me quite plain in this case that although the judge naturally did not know of the payment in, the real issue between the parties


Stephenson L.J. Alltrans Express v. CVA Holdings (C.A.) [1984] ever after 18 August 1958 was whether £575 was or was not the right » sum for the plaintiff to receive . . . "

and Morris L.J. there decided that there had been a purported exercise of the judge's discretion without any materials upon which it could properly be exercised. It does not seem to me to matter much whether one says that there has been no exercise of discretion, or a purported exercise of discretion on no materials, or on some matter wholly uncon- B nected with the litigation. In all those circumstances, as I read the authorities, the Court of Appeal is not banned by the Supreme Court Act 1981 from considering an appeal, even in a case where leave to appeal had not been granted.

If I have understood the law rightly it follows, in my judgment, that Mr. Thompson's preliminary point must fail. We have here a case in _ which the judge has given leave; it is quite true that he has made it plain that he is not giving leave because he thinks that his order is wrong. In giving leave he said as much; but he thought that the defendants should have leave to appeal on the point, because he thought that he might be arrogant in thinking that there might not be some form of argument. Once the door is opened by leave being given, however, it seems to me that this court is in the same position as it is on any appeal against the exercise of D the court's discretion. We must be very careful not to interfere with the judge's exercise of the discretion which has been entrusted to him. We can only do so if he has erred in law or in principle, or if he has taken into account some matter which he should not have taken into account or has left out of account some matter which he should have taken into account; or—and this is an extension of the law which is now I think well recognised—if the Court of Appeal is of opinion that his decision is plainly wrong and therefore must have been reached by a faulty assessment of the weights of the different factors which he has had to take into account. There are various ways of putting that, and that may not be a very good one; but it is a category of error which permits, and indeed requires, this court to reverse or alter the judge's exercise of his discretion. In my judgment this is such a case. F

But there is also, I think, apparent on the face of the judge's judgment—and we have the benefit of a transcript of the short judgment that he gave in making the order which he did—an error which we can put our fingers on, namely, that in the circumstances he gave too much weight to the fact that there had been no payment in—in this case a payment in of £2 and no more. I start where I think Mr. Thompson would _, have me start, with the importance of not interfering with such an order as this; he gave us the illustration of a decision of the Divisional Court in London Welsh Estates Ltd. v. Philip [1931] W.N. 44, refusing to interfere with the order of an official referee which the court itself would probably not have made. I think the judge was right at any rate to consider the fact that there had been no payment into court in this case. Mr. Thompson said there could have been a payment into court; there could have been H (if the damages had been liquidated) a tender before action and a plea of tender; there could have been an offer by letter, and there was not. He pointed out that under R.S.C., Ord. 62, r. 5, the court "shall" take into account the fact of a payment into court, and I think it follows from that that one of the matters a court should take into account is the absence of a payment into court. He has also drawn our attention to the fact that here was an interlocutory judgment for damages to be assessed; and until


401 1 W.L.R. Alltrans Express v. CVA Holdings (C.A.) Stephenson L.J.

» damages are assessed, even if assessed at only £2, there is no judgment which could be registered or enforced abroad—nothing which would entitle or enable the plaintiffs to prove in a liquidation if unfortunately the defendants had gone into liquidation. He says that if this appeal is allowed and the order for which Mr. Collins contends is made, a defendant who has made no payment into court would be better off than a defendant who had made an inadequate payment into court or a late payment into

B court. These arguments are plausible, but in my judgment they ignore the

reality of the position. I think that the weight to be given first of all to an award of nominal damages and secondly to the absence of any payment into court depends on all the circumstances of the case. That the judge gave great weight to the absence of a payment into court is I think made

P plain by what we find in the transcript of the discussion as to costs where, giving his decision, he said:

"What was really exercising me was whether to call it a draw by saying no order as to costs. At the end of the day I feel that would be a Solomonian judgment which would not be right in all the circumstances. The procedure for payment into court is there. If that had been considered (it may have been considered and rejected, I do

^ not know) I imagine that out of caution something more than £2 would have been paid into court. No doubt counsel advising the defendants would have considered as to what sum they think might have been awarded on the alternative basis that the accounts were not going to be upheld by the court. As I say; having felt that a draw order, as it were, might be the fair thing, I do not feel that that is

E right in the circumstances. In my judgment, the ordinary rule should apply here which is that the plaintiffs have had judgment for damages to be assessed, the damages have been assessed at £2 and the order for costs will follow that event, which will mean the plaintiffs' costs up to and since the Order 14 [judgment]."

But the event of an award of £2 was not the event at which the p plaintiffs were aiming. They were aiming at £82,500, and the mere fact

that they ultimately got something—token or nominal damages—does not enable me to regard them as remaining successful plaintiffs.

I find support for that view of the matter in what Devlin J. said in Anglo-Cyprian Trade Agencies Ltd. v. Paphos Wine Industries Ltd. [1951] 1 All E.R. 873. The judge had that case before him and quoted fairly extensively from it. It was a different case from this, with its own special

G facts. The plaintiffs were claiming over £2,000 for defects in wine which they had bought. By amendment at the trial they pleaded in the alternative that they were entitled to £52, and that was what Devlin J. found they were entitled to. In those circumstances he thought that the defendants were really the successful party, not the plaintiffs, and he ordered the plaintiffs to pay the defendants' costs. It was not a case of nominal

H damages, although it was a case of trivial damages; but he made some carefully considered observations, strictly obiter, but if I may respectfully say so, they seem to me to have the force of common sense. He said, at p. 874:

"No doubt, the ordinary rule is that, where a plaintiff has been successful, he ought not to be deprived of his costs, or, at any rate, made to pay the costs of the other side, unless he has been guilty of some sort of misconduct. In applying that rule, however, it is

The Weekly Law Reports 9 March 1984 402 Stephenson L.J. Alltrans Express v. CVA Holdings (C.A.) [1984]

necessary to decide whether the plaintiff really has been successful, ^ and I do not think that a plaintiff who recovers nominal damages ought necessarily to be regarded in the ordinary sense of the word as a 'successful' plaintiff. In certain cases he may be, e.g., where part of the object of the action is to establish a legal right, wholly irrespective of whether any substantial remedy is obtained. To that extent a plaintiff who recovers nominal damages may properly be regarded as a successful plaintiff, but it is necessary to examine the facts of each B particular case."

I do not think that Mr. Thompson could contend that the plaintiffs here were interested in establishing a legal right; they had established that already; what they wanted was money.

Then Devlin J. went on to say, at p. 875: "The plaintiffs, therefore, have not established anything which is of the least value to them, and, in my judgment, they are not to be regarded as successful plaintiffs. If the matter stopped there, therefore, I should treat the defendants as having succeeded and award them the costs of the action."

Then he considered the special position raised by the amendment, and at D the end of his judgment he came back to the first point and said, at p. 876:

"With regard to [that]"—that is, the question of costs where a plaintiff has recovered merely nominal damages—"I wish to make a further observation. Where a defendant thinks that nominal damages may be recovered and pays into court Is., or 20s., or 40s. (which the plaintiff, normally, does not take out), and only nominal damages are in fact g recovered, the defendant is entitled to his costs. If the contention of counsel for the plaintiffs were right, viz., that a plaintiff who has recovered nominal damages has a prima facie right to obtain his costs, or, at any rate, not to pay the defendant's costs, it would be putting a premium, so to speak, on what is in the case of a nominal payment into court, hardly more than a mere matter of ritual. Accordingly, I shall accept the application of the defendants in this ^ case. There will be judgment for the plaintiffs for the sum which I have awarded, but the costs of the action will be paid by the plaintiffs to the defendants."

That decision has found no place in the notes to Order 22 in The Supreme Court Practice 1982; in my judgment it is time that it did. It is Q quite true that Anglo-Cyprian Trade Agencies Ltd. v. Paphos Wine Industries Ltd. which Devlin J. had to decide was not a case of nominal damage, although it is quite clear that he regarded the £52 as trivial damages and in effect as nominal damages. It is also true that the amendment in that case was made at a time which deprived the defendants of the opportunity of making a payment into court. Mr. Thompson stressed that that was a different case and a case decided only at first H instance and one which has not apparently had much influence on the development of the law. All that may be true but, as it seems to me, what Devlin J. said is of great weight and does apply very forcibly to the facts of this case. To have paid £2, or possibly £5 or £10, into court in this case would have been very near to a "ritual" act. It would not have been taken out; the plaintiffs would have gone on with their mouth opened wider for a much larger sum; they did go on, having established a breach of


1 W.L.R. Alltrans Express v. CVA Holdings (C.A.) Stephenson L.J. . contract, in the hope of getting a large sum of damages for that breach;

in pursuit of that object they took up the time of the court and, more important from the point of view of this appeal, put themselves and the defendants to considerable expense over, as I have said, 15 working days; and at the end they came away empty-handed, because I cannot think that £2 in the hand disqualifies them from that description.

Who was the successful party? In my judgment there is only one B answer to that question, and once the door is opened by leave being given

by the judge, as it seems to me this court is bound in accordance with ordinary principles to say that his exercise of his discretion was not unjudicial, but plainly wrong; that he gave much too much weight to the fact that there had been no payment in in a case in which a payment in would have made no difference at all, and that in all the circumstances of the case the right order was plainly the one which, if Griffiths and Purchas L.JJ. agree, I would make in substitution for that of the judge.

For the reasons I have given, I would allow the appeal and order the plaintiffs to pay the costs which the judge has ordered the defendants to pay.

GRIFFITHS L.J. I agree. By the Supreme Court Act 1981, costs are D placed within the discretion of the trial judge. When a judge has refused

leave to appeal from his order as to costs, the powers of the Court of Appeal to entertain an appeal against his order are extremely limited. Either it must be shown that the judge failed to exercise his discretion at all or, alternatively, that in exercising his discretion he took into account some wholly extraneous circumstances unconnected with the subject matter of the action, which is to be regarded as tantamount to a failure to exercise a judicial discretion: see Donald Campbell & Co. Ltd. v. Pollak [1927] A.C. 732 and in particular the speech of Viscount Cave L.C., at p. 812, and the judgment of Jenkins L.J. in Baylis Baxter Ltd. v. Sabath [1958] 1 W.L.R. 529.

When however the judge has given leave to appeal, the Court of Appeal is not so severely restrained. In Findlay v. Railway Executive

F [1950] 2 All E.R. 969, Denning L.J. said, at p. 972: "The learned judge gave leave to appeal on the question of costs, which is generally a matter for his discretion. The effect of giving leave is that the judge invites re-consideration by this court of his decision, and this court enters on a review of it with less hesitation than it would otherwise do."

In such cases the ordinary rules as to a review of the judge's discretion apply. This court must not be tempted to interfere with the judge's order merely because we would have exercised the discretion differently from the way in which the judge did. Before a court can interfere it must be shown that the judge has either erred in principle in his approach, or has left out of account, or taken into account, some feature that he should, or

H should not, have considered, or that his decision is wholly wrong, because the court is forced to the conclusion that he has not balanced the various factors fairly in the scale.

With this in mind, I turn to consider the judge's decision in this case. In my view he went wrong in principle. As a general rule a successful party is entitled to his costs, expressed by the lawyer's phrase "costs follow the event." Who was the successful party in the issue, or lis, tried by the judge in this case? Undoubtedly it was the defendants. There was


404 Griffiths L.J. Alltrans Express v. CVA Holdings (C.A.) [1984]

never any contest as to the plaintiffs' entitlement to nominal damages for A breach of contract; that flowed inevitably from the Order 14 judgment. The contest between the parties was whether the plaintiffs were entitled to more than nominal damages, and on this, the only issue tried by the judge, the defendants succeeded. But because the defendants had not paid a nominal sum into court, the judge regarded the plaintiffs as the successful party. This appears clearly from two passages in his short judgment on costs. He said:

"Undoubtedly costs are in the discretion of the court; there is no argument about that. That discretion is to be exercised judicially and the general rule is that a successful plaintiff ought not to be deprived of his costs or, at any rate, slightly lower down the ladder, be ordered to pay the costs of the other side. . . . In my judgment, the ordinary rule should apply here which is that the plaintiffs have had judgment C for damages to be assessed, the damages have been assessed at £2 and the order for costs will follow that event, which will mean the plaintiffs' costs up to and since the Order 14 [judgment]."

This appears to me to be a fundamentally wrong approach, and to attach far too much weight to the absence of any payment into court. If the defendants had paid £2 into court, there was no prospect whatever of that D sum being accepted; it would have merely been what Devlin J. referred to in Anglo-Cyprian Trade Agencies Ltd. v. Paphos Wine Industries Ltd. [1951] 1 All E.R. 873, 876, as "no more than . . . matter of ritual." It would have had no relevance whatever to the lis between the parties, namely, whether the plaintiffs were entitled to more than nominal damages. The object of a payment into court is to enable a defendant to make £ a reasonable offer to settle the lis between the parties and to protect himself in costs if it is not accepted.

In this case, as I have pointed out, there was no lis other than the entitlement of the plaintiffs to more than nominal damages. A payment of nominal damages into court would have been wholly irrelevant to that lis, and in my view the absence of such a payment is no justification for regarding the plaintiffs as the successful party in the proceedings before F the judge. The truth is that it was the defendants who were the successful party.

Accordingly, in my view this court is entitled to review the exercise of the discretion and, for the reasons given by Stephenson L.J., I agree that we should exercise the discretion by awarding the costs to the defendants.

PURCHAS L.J. I agree with both judgments that have been delivered by Stephenson and Griffiths L.J J.; there is nothing that I can usefully add.

Appeal allowed with costs. Leave to appeal refused.

Solicitors: Speechly Bircham; Joynson-Hicks & Co. H

A. R.

all trans

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