Bowerbank v Amos

The essential facts are as follows. The claimant, Mrs Amos, had experience as a salesperson, and the defendant, Mr Bowerbank, as a businessman. In June 1997 they decided to go into business together publishing trade magazines. A holding company, Paparazzi International Publications Limited (“Paparazzi”) was incorporated. They agreed that the beneficial ownership of the shares would be 30 per cent to the claimant and 70 per cent to the defendant. However, for commercial reasons, they wished to mask the defendant’s involvement in the business so the whole of the shares were actually issued to, and registered in the name of, the claimant alone. Several trading companies were incorporated, in particular Integrated Publishing Limited (“Integrated”), which were wholly owned subsidiaries of Paparazzi. Paparazzi owned two assets of some value. First, a database of trade contacts (which had been supplied by the defendant); and second, various magazine titles, trade marks and logos. Paparazzi licensed Integrated to use them.

The claimant was actively engaged in the day to day running of the business. The defendant was what the judge described as “a sleeping partner”, contributing his business expertise and connections, the database, and some funding.

During 1997 and 1998 a number of editions of trade magazines were published but Paparazzi and its subsidiaries struggled financially.

In November 1998 the claimant was diagnosed as having breast cancer and needed an urgent and serious operation and treatment. On 24^th November 1998, immediately before she went into hospital for the operation, there was a meeting between the parties and certain events took place which are at the core of the dispute. What certainly happened was that the claimant executed a share transfer to the defendant of the legal title to all the shares in Paparazzi, and she executed a power of attorney empowering the defendant to exercise her rights as a director of both Paparazzi and Integrated. The later case of the defendant was that the claimant did this because (in the words of the judge) “she was so ill that she wanted to be shot of all connections with the business” which by now was losing so much money that it was more a liability than an asset. The case of the claimant was more complex, as I will later describe, but in essence was that she retained a beneficial interest in 30 per cent of Paparazzi. She transferred the legal ownership of the shares and signed the power of attorney so the defendant could take active steps, while she was ill and convalescent, to preserve and maximise their value for the benefit (as to 30 per cent) of herself or, if she were to die, her daughter.

On 5^th January 1999 Integrated was placed in liquidation, with a deficit of around £223,000. On the same date Paparazzi, acting by the defendant, granted to Castle Publications Limited (“Castle”) a licence to use the database and titles in the same terms as that previously granted to Integrated. Castle was in fact owned and controlled by the defendant himself, and had no connection with the claimant. In short, the defendant made the database and titles of Paparazzi (which were its only asset of any significant value) available to his own company, Castle, hoping to make a profit from them; although, as the judge accepted, Castle in fact made a loss.

On 8^th July 1999, the claimant, acting in person at that stage, commenced her present proceedings in the Kingston-upon-Thames County Court. She claimed a total sum of £9,250. We were told that by the final conclusion of the trial in December 2002 each party (the claimant publicly funded; the defendant personally) had incurred costs of around £117,000 each, or in total, £234,000 (excluding any costs of this appeal). So it can be seen that the description “catastrophic” is indeed an understatement.

It is relevant to quote her “brief details of claim” on the claim form in full:

“In October 1998 I was advised by my consultant at the Royal Marsden to resign from my directorship of Integrated Publishing to ensure a successful conclusion to my treatment. It was agreed with Nigel Bowerbank my silent business partner that in my absence he would administer the sale of the company. Three commercial purchasers were identified and one was ready to conclude the sale. Mr Bowerbank blocked the conclusion of the sale and agreed to pay me my share of the valuation. These funds still remain unpaid.”

Later, the claimant instructed lawyers, and amended particulars of claim were served on 12^th April 2000. As to the events of November 1998, these pleaded that “By a further agreement between the claimant and defendant made in or about the middle of November 1998 ….. it was agreed that the defendant would administer the sale of the business.” The pleading went on to plead a “third agreement” in late April 1999 that in consideration of the claimant transferring her own interest in the business to the defendant, he agreed to pay her 30 per cent of the value of the business. The pleading then alleged breach of that third agreement and/or breach of a fiduciary duty owed by the defendant to the claimant by (a) failing to pay any sum to her, and (b) licensing the titles to Castle; and claimed damages and an account. Over the next 2½ years that pleading was frequently modified.

On 3^rd August 2002 the claimant served what was headed as “Particulars of Claim for Trial” which “replaces the previous particulars of claim in their entirety” but which was, accurately speaking, a Re-Re-Re-Re Amended Particulars of Claim. This was indeed the pleading upon which the trial finally proceeded. It set out the initial beneficial shares in “the business” as 30 per cent and 70 per cent to the claimant and defendant respectively, and continued as follows:

“6.

In 1998 the Claimant developed breast cancer. Thereafter the parties agreed to transfer the legal title in the said Business to the Defendant. It is the Claimant’s case that such transfer did not affect her entitlement under the trust set out above. The Defendant agreed in light of the same to use his best endeavours to ensure an orderly disposal of the business as a going concern in view of the Claimant’s poor medical condition which would preclude her from taking the active role which she had taken in the past.

7.

In the premises at all material times up to the facts and matters set out in paragraph 6 the Claimant owed to the Defendant the following duties as a trustee, which duties were thereafter owed by the Defendant to the Claimant:

7.1.

A duty of good faith;

7.2.

A duty not to make a profit to the detriment of the other’s interest;

7.3.

A duty not to place oneself in a position where one’s duty and interest conflicted.

8.

On or before 5^th January 1999, in breach of the said duties, the Defendant granted a licence to use the titles published by the Business to Castle Publications Limited for no or no adequate consideration. Castle Publications Limited is a company in respect of which the Defendant is and was the sole beneficial owner.

9.

By reason of the facts and matters aforesaid, the Defendant is liable to account to the Claimant in respect of the value of all assets of the Business which he has diverted to himself including those referred to in paragraph 8 as at 5^th January 1999 or such other date as the Court thinks appropriate.

10.

The Defendant has failed and neglected to account to the Claimant.

Further by reason of the facts and matters set out in paragraph 8 the Defendant has obtained a benefit in breach of trust including but not limited to the licence referred to therein.”

That claim was clearly and firmly founded on breach of trust, and claimed an account of the value of the assets of the business as at 5^th January 1999 and payment by the defendant to the claimant of 30 per cent of that value. At a pre-trial hearing before the trial judge on 20^th November 2002, the claimant further defined “the trust” as follows:

“The claimant agreed to transfer and did transfer on 23^rd November 1998 100 shares in Paparazzi back to the defendant. The legal title of the 70 shares were passed only, as the defendant already had beneficial ownership. The legal title of 30 shares was transferred to the defendant to hold in trust for the claimant. That is the trust referred to in paragraph 6 of the Particulars of Claim for Trial.”

Throughout all the defences filed from April 2000 there was a counterclaim for £15,000, which the defendant claimed to have lent the claimant. Her defence to that was that the £15,000 was not a loan to her but an investment in the business.

The trial, by now transferred to the Central London County Court, started on 25^th November 2002, with an original estimate of 3 days. In the event, the evidence and argument spanned 4 days, ending on Thursday 29^th November 2002. The judge prepared judgment during the Friday or over the weekend. On Monday 2^nd December 2002, which had been fixed as the day for judgment, the judge announced at the outset that he would be “finding for the claimant on the facts but for the defendant on the law.”

As later emerged, what this meant was that the judge rejected most of the evidence of the defendant (including rejecting his counterclaim, from which there has been no appeal). On the basis of the evidence of the claimant (although he later described it as “muddled and confused about much of the history”) he considered that she had never intended to “get shot of” the business or to divest herself of the 30 per cent beneficial interest; but that there had been an agreement at the meeting on 24^th November 1998 that the defendant would try to sell the shares and/or the database and titles for the best price and share the proceeds in the proportion 30/70. The judge considered, however, that the claim against the defendant personally for breach of trust or fiduciary duty must inevitably fail in law for a number of reasons which he later listed at paragraph 49 of his first judgment, albeit that at paragraph 21 of his later, second, judgment on Wednesday 4^th December he described them as “really technical pleading points.” The essence of the points was that the pleaded trust (viz by the formulation recorded at the pre-trial hearing on 20^th November – see paragraph 10 above) was of the shares in Paparazzi, not the assets of Paparazzi (viz the titles and database); it was Paparazzi, not the defendant personally, who granted the licence to Castle; no “assets” were diverted to Castle since the licence was terminable on short notice; and neither the defendant nor Castle had, in the event, profited.

At this point the judge indicated that if counsel for the claimant drafted an appropriate amendment and applied for permission to amend (yet again) the particulars of claim, he would consider granting permission to do so. Counsel did then draft and circulate an amendment which added an alternative basis to the Particulars of Claim as follows:-

“Breach of Contract

12.

Further or in the alternative, on or about 23^rd November 1998 the Claimant and the Defendant agreed orally that in consideration of the Claimant granting to the Defendant a Power of Attorney permitting the Defendant to exercise the Claimant’s powers as director of Paparazzi and of Integrated, the Defendant would either:-

(a)

seek additional funding in order to employ suitable staff to replace the Claimant during her illness as to continue the publication of the titles by Paparazzi and/or Integrated; or

(b)

sell to a third party either the entire share capital of Paparazzi or the assets of Paparazzi and/or Integrated for the best price that could reasonably be obtained.

13.

In breach of the said Agreement the Defendant failed to either refinance/employ or to sell as set out above. Instead, on 5^th January 1999 the Defendant permitted Castle Publications Limited to utilise the assets of Paparazzi as aforesaid.

14.

As a result of the Defendant’s said breach of contract, the Claimant has suffered loss and damage identified by the jointly appointed expert in these proceedings.

Particulars of Loss and Damage

Please see the report of Mr Woolf dated 25^th October 2002”

[Mr Woolf was the jointly instructed valuation expert to whose evidence I will later refer.]

The proposed amendment added a claim for “Damages for breach of contract.”

Most unfortunately, no verbatim transcript is available of the subsequent course of events that day as apparently the tape has been lost. On the basis of some notes and the recollection and explanation of Mr Quinn, counsel for the claimant then and now, what seems to have happened is as follows. The judge did not rule at that stage on the application for permission to amend. Mr Dickens (who was then acting for the defendant, but has since retired from practice) said that he was having difficulty in formulating his response to this late application to amend. He invited the judge first to give his full findings of fact. So the judge gave what has been called his “first judgment”. We have been told that he appeared to deliver it from a script and it was, presumably, a judgment which he had already prepared wholly or substantially verbatim. He made a large number of findings, including his reasons (not since challenged) for rejecting the counterclaim. As to the agreement on 24^th November 1999, he said, at paragraph 16:

“She says that they agreed at the meeting that he would take over the running of the business and would immediately try to sell the business for a favourable price for the benefit of them both in the proportions of 30 per cent/70 per cent. He denies any such agreement, but I prefer her evidence to his …. I cannot accept that when in so parlous a state, financially and physically, she would in effect have made a free gift to him of her 30% interest in the business. She put the agreement this way. She said they orally agreed to do one or two things. Either they would refinance (to use her word) the business in order to take on extra staff to replace her during her illness until she could return to work, or they would sell the business for the best possible price. As I shall explain below, he in fact did neither. He simply tried to exploit the database and titles by granting the licence to his own company, Castle ….”

The judge went on to consider the expert evidence of Mr Woolf, whom he described as a very impressive expert. On the basis of that evidence the judge concluded that the market value at arm’s length on the open market of Paparazzi (which consisted primarily of the database rather than the titles) as at 5^th January 1999 was £90,000 gross, of which the judge valued 30 per cent as £27,000.

But, for the reasons I have already very briefly summarised in paragraph 13 above, the judge held that the claimant’s claim (viz as then currently pleaded) “is bound to fail in law.” However, the judge continued, in the final paragraph of that judgment:

“As the claimant has all the merits on my findings, I find it unacceptable to let that happen. The only way in which justice can be done is if she is given permission to amend to seek damages for breach of the oral agreement on or about 24^th November 1998. She said, and I accept, that they agreed to sell the business and/or shares and/or assets of Paparazzi for the best price obtainable, or alternatively to refinance and employ several staff to take on the jobs that she had undertaken. The defendant did neither. Instead he procured the licence with a view to publishing for the sole benefit of his company. I have given this judgment on the facts and law so that the parties can consider the proposed amendment and make submissions about it.”

There was then a late break for lunch. When they resumed, Mr Dickens, understandably, strongly opposed the grant of permission to amend. He asked the judge to recuse himself, but he declined to do so. There was what seems to have been a somewhat inconclusive discussion about recalling the parties to give further evidence. The judge clearly indicated that in his view if Mr Dickens wished to do that, including further to cross examine the claimant, he was entitled to do so. Mr Quinn said that he would not be recalling the claimant himself and that in any event she could not attend on Wednesday 4^th December (when the judge proposed to resume the case) as she had to attend as an out patient at the hospital.

All duly returned to court on the Wednesday except, of course, the claimant herself. There was further discussion about further evidence, during the course of which the judge appears to have said that in principle he would permit Mr Dickens further to cross-examine the claimant but that as she was not available he would not grant an adjournment for the purpose. Mr Dickens said (according to the abbreviated note) “In that case, reconsider leave. Highly prejudicial. How can I make submissions on the new case without cross examination?” The judge replied “I think you can. I will not allow her to give evidence [viz will not allow an adjournment for the purpose]. Test it in the Court of Appeal.” He did, however, permit further evidence (which lasted about 10 minutes) from the defendant.

The judge then gave his “second judgment”, in which he first gave his reasons for permitting the amendment. The essence is in paragraph 1 where he said:

“Having delivered judgment on the unamended pleading on the sixth day of trial, I heard further submissions on leave to amend today, 4^th December, the seventh day of trial. Mr Dickens has understandably resisted vigorously my suggestion of an amendment. But there is no injustice involved in that all the factual matters relating to the amendment have been investigated in detail at the first leg of the trial. It was at the forefront of the entire debate for a week. I can see no way in which his evidence or submissions on fact would have been any different. It is wholly artificial to complain that the unamended pleading would have made a difference to the way in which the evidence was approached and dealt with.”

He then gave his reasons at paragraph 15 for not allowing a further adjournment for further cross-examination of the claimant.

“So I allowed the amendment. Mr Quinn stood on his decision not to recall the claimant in chief and not to tender her for cross-examination. Mr Dickens protested that he should have the opportunity to cross-examine her and that that should be done before he recalled his client. Unhappily, she has gone for out-patient treatment to the hospital today and was not available. I would otherwise have allowed her recall. Mr Dickens also asks for an adjournment to call prospective purchasers, such as Mr Peebles, who had not yet even been approached. I refused that request for an adjournment. For one thing, their evidence could have been called, if relevant, to Mr Woolf’s valuation. It was not. I do not see how it can become relevant on the amended claim if it was not relevant on the unamended claim. Furthermore, to allow a further adjournment, would have been disproportionate to the nth degree. This claim is now for only £18,639.30 after certain concessions made today. There were four days of evidence. On the fifth day I considered detailed written submissions. There have been two further days of submissions and a small amount of evidence today. I think seven days of private and public time and money is quite enough for a claim of £18,639 and a counterclaim of £15,000.”

At the hearing on Wednesday 4^th December, certain calculations were done as to the tax that would have been payable if Paparazzi had sold the assets for £90,000 which netted down a 30 per cent share to £18,639.30. The judge proceeded to give judgment for the claimant on her claim in the sum of £18,639.30 plus interest of £5,837.96. He dismissed the counterclaim. After further argument, he gave a short further judgment in which he ordered the defendant to pay 50 per cent of the costs of the claimant including costs reserved.

The trial judge himself granted permission to the defendant to appeal on the following matters:-

(i)

the granting of leave to amend to the claimant.

(ii)

the refusal of the defendant’s application to adjourn and to call further evidence and to cross-examine the claimant.

(iii)

the judgment of the 4^th December 2002 (the second trial)[sic] save as to findings of fact.

(iv)

costs.

He expressly refused “permission to the defendant to appeal on the facts found in the judgment of 2^nd December 2002 (the first trial) [sic].” Consistent with that refusal we have declined to examine in detail the transcripts of the evidence of the claimant on 25^th and 26^th November 2002, and declined to hear submissions from Mr Kevin Garnett QC (who now appears on behalf of the defendant in succession to Mr Dickens, who has retired) to the effect that the evidence which the claimant has given to date did not support or establish the agreement alleged.

During the course of a sustained and attractive oral argument, as well as a most thorough Skeleton Argument, Mr Garnett developed a considerable number of points. As I have reached the very clear conclusion that, deeply regrettably, this claim (but not the counterclaim) must be remitted to the trial judge to resume the hearing, it is neither necessary nor appropriate to deal with all his points, many of which will properly fall for further consideration by the trial judge at the resumed hearing. I propose, rather, to state my conclusions on each of the issues upon which permission to appeal was granted and the essence of my reasons.

The grant of permission to amend

Mr Garnett submits that permission should not have been granted and that, accordingly, the claim should now be dismissed without further ado, consistent with the conclusion of the first judgment as to the law. He submits that on a proper analysis the claimant was seeking to reopen a judgment and/or amend her claim after judgment had been given but before the order was perfected. The decision of this court in In re Barrell Enterprises [1973] 1 WLR 19 established that that can be done, but only “in most exceptional circumstances”. In Stewart v Engel [2000] 1 WLR 2268 Sir Christopher Slade said at page 2274 that the Barrell jurisdiction survives the implementation of the Civil Procedure Rules but must be “very cautiously and sparingly exercised.” He and Roch LJ held in that case that the judge should not have permitted the amendment after judgment. Clarke LJ considered that such an application should now be decided by application of the CPR alone, without the Barrell gloss requiring “most exceptional circumstances.”

In my view the course of events that I have described does not make this a Barrell case at all. It is true that the judge had already prepared a judgment which, indeed, he later delivered on Monday 2^nd December. But he himself raised the question of amendment before delivery of the judgment and Mr Quinn had drafted and circulated his proposed amendment (thereby effectively applying for permission to make the amendment) before judgment. It was indeed at the request of Mr Dickens that the judge actually delivered his judgment before formally ruling on the application to amend. I do not accept Mr Garnett’s submission that the judge effectively gave judgment when he announced that he was for the claimant on the facts but for the defendant on the law. This was not a Barrell case at all.

Rather, it was a case of a very late application indeed to re-re-re-re-re-amend, but one nevertheless made during the course of the trial. In deciding how to exercise his discretion the judge had to apply and give effect to the overriding objective. In Cobbold v London Borough of Greenwich (9^th August 1999), unreported, but referred to in the Civil Procedure, volume 1 at 17.3.5, Peter Gibson LJ said: “The overriding objective is that the court should deal with cases justly. That includes, so far as practicable, ensuring that each case is dealt with not only expeditiously but also fairly. Amendments in general ought to be allowed so that the real dispute between the parties can be adjudicated upon provided that any prejudice to the other party or parties caused by the amendment can be compensated for in costs, and the public interest in the efficient administration of justice is not significantly harmed. There is always prejudice when a party is not allowed to put forward his real case provided that it is properly arguable.”

In the present case, Mr Garnett submitted that prejudice to his client cannot be “compensated for in costs” since the claimant is publicly funded and protected from enforceable orders against her. However, a court must be extremely careful not to allow an argument to that effect to operate discriminatorily against a publicly funded litigant.

I remain baffled why, throughout all its amendments, the claimant’s particulars of claim never pleaded, at least in the alternative, the very agreement that she herself had tried to describe, at least in part, in her own original claim form (see paragraph 7 above). But I am in no doubt that it was well within the proper discretion of the trial judge to permit the amendment for the reasons essentially given to him in the last paragraph of his first judgment (quoted at paragraph 18 above): she had “all the merits” on his findings, and a claim which he considered a good one should not be defeated on what is fundamentally a pleadings point.

But, and this is very important, it behove the judge then to be scrupulous to minimise any prejudice to the defendant.

I would dismiss the appeal against the decision to grant permission to the claimant further to amend her claim, and would allow that claim to stand in its form as dated 4^th December 2002.

The refusal of the defendant’s application to adjourn and to call further evidence and to cross-examine the claimant

It is clear that the judge’s own instinct , both on 2^nd and on 4^th December, was that Mr Dickens should have been able further to cross-examine the claimant. I accept the submission of Mr Garnett that it is no answer to say, as the judge effectively finally did say, that further evidence from her would make no difference since her evidence had already covered all the relevant ground and, anyway, was “muddled and confused about much of the history.” When Mr Dickens was cross-examining her, the case he was meeting was a breach of trust case, not a case framed in contract. I agree with Mr Garnett that there are obvious areas on the case as now pleaded that need further probing. These include (but are not limited to): was the agreement intended to, and sufficiently clear as to its terms to, create a contract? what was the timetable for any proposed sale? who was to decide, and by what criteria, whether to proceed with the alternative of “refinancing” or that of sale? were both the alternatives actually agreed, the case of the claimant varying considerably in different parts of her statements and evidence? was there in fact a third possible alternative of “bolting-on” to another company, Peebles Publishing, to which the claimant made several references in her evidence on 26^th November 2002 (see transcript pages 11H – 14A and 39A – C)?

In my view, once the amendment was allowed, justice to the defendant overwhelmingly required that he be given the opportunity further to cross-examine the claimant. The judge considered any further adjournment “would have been disproportionate to the nth degree.” It is deeply shocking that so much court time and costs have now been expended on so relatively small an underlying claim. But unfortunately the costs themselves now loom so large that this case is no longer merely about an £18,000 claim. It is also about liability for costs of the order of £235,000 as at December 2002.

If the claimant had been so ill that it would have been months before she could return for cross-examination, different considerations might apply. But that was not the situation. She happened not to be available on the Wednesday, for a very good reason of which the judge had indeed been forewarned on the Monday. But (subject perhaps to further outpatient appointments on particular days) she was available and fit to give evidence on any other date convenient to the court and the other participants.

In my view, the decision of the judge not to adjourn for further cross-examination was, in the circumstances as a whole, so unjust that, with respect to the judge, it cannot stand.

I would accordingly allow the appeal and hold that the judge must permit the defendant further to cross-examine the claimant.

The defendant wished to consider calling other witnesses as well, in defence of the new claim. I would not have allowed this appeal on the refusal of the judge to adjourn for that purpose. But as there must now be a further hearing and some further evidence, I express the view that at a case management conference the judge should now consider afresh (but exercising his discretion, not mine) whether to permit new witnesses to be called and, if so, whom.

The judgment of 4^th December

Having heard no further evidence except, briefly, that of the defendant, the judge effectively incorporated into his second judgment the findings he had already made in the first. He did so, because he heard minimal further evidence and no further cross-examination of the claimant.

We have been scrupulous not ourselves to review the findings of fact so far made in either judgment. But as there must be further evidence, it follows that the judge himself must have the flexibility and openness of mind to review and replace any of his existing findings in the light of all the further evidence, and to reconsider his conclusions of law in the light of his final findings of the facts.

There is, however, one significant respect in which I am quite satisfied that the judge did err as to the law, even on his existing findings of fact, namely as to the quantum of damages. I propose to deal with this fairly shortly for it was, in effect, conceded by Mr Quinn. The evidence of Mr Woolf was entirely directed to the value of Paparazzi or (which probably comes to the same thing) of the data base and titles, as at 5^th January 1999. That date was selected because that was the date when the defendant caused Paparazzi to grant licences to Castle and, it was said, acted in breach of trust. After he allowed the amendment, the judge was considering in his second judgment, on 4^th December, a claim for damages for breach of contract . The true measure of damages to the claimant was not the value of the shares or assets at an arbitrary date, but, rather, the difference between what she actually received (which was nil) and what she would have received if the defendant had performed the contract.

The judge dealt with this very shortly in two paragraphs in his second judgment. At paragraph 19 he said:

“Mr Dickens says that there is no reason why 5^th January 1999 should be taken to be the date of breach and so the evidence of Mr Woolf directed to valuing the assets of that date does not help the court. I lack evidence of value at any later date. Again I disagree. The date of breach was 5^th January 1999. It is fair therefore to value the assets of Paparazzi (not its shares) at that date as Mr Woolf has done in his evidence.”

At the end of paragraph 21 he said:

“…on the amended claim for damages, for breach of the November 1998 agreement, the issue is not whether he made a profit from his breach of trust but whether she made a loss because of his breach of that agreement. She did and I value it gross before tax at £27,000” [which he then netted down to £18,639.30].

In my view, this was far too elliptical and almost certainly produced the wrong result. The judge failed to identify at all what test he was applying to establish the measure of damages for breach of contract. He needed to consider (and this may well have required further evidence from the parties and other sources) what market actually existed for the shares or the assets; when they might actually have been sold (if sold at all); and how much the claimant might actually have been reasonably expected to receive. Although the defendant disabled himself from performing the contract on 5^th January 1999, it does not follow that she would otherwise have received her share of the value at that date. Indeed, she unquestionably would not have done, for sale on that date was not in prospect.

Further, as Mr Garnett forcefully submits, one alternative way in which the defendant might have performed the contract in accordance with its terms (as now pleaded) was by “re-financing” and trying to “continue the publication of the titles by Paparazzi and/or Integrated”. The liquidation of Integrated on 5^th January 1999 and the subsequent losses made by Castle (as the judge accepted) may well support the conclusion that, if the defendant had adopted this alternative, the value of Paparazzi and/or the assets would merely have diminished further, to the point even that the claimant has suffered no loss from the breach at all.

Thus, even if every finding of fact as to the terms of the agreement remains in place, final quantification of the claimant’s loss needs further evidence and consideration, and the judgment in the sum of £18,639.30 cannot stand.

Mr Quinn conceded that the evidence of Mr Woolf did not address quantum at all of a claim based in contract, but was constrained to submit that it would be disproportionate now to remit this case on the issue of quantum alone. Since the true quantum could be as low as zero, this submission cannot possibly be right.

Costs

In his ruling as to costs the judge said, in summary, that the claimant lost her claim and succeeded on the counterclaim at the first leg of trial; where an amendment amounts to the assertion of a new claim and the abandonment of the original claim the starting point is that the defendant should have his costs to the date of the amendment; but in this case the facts on which the claimant finally succeeded had been fully investigated at the first trial; and to do overall justice, including the fact that she successfully defended the counterclaim, he should make a compendious order that the defendant pay 50 per cent of her costs and she pay none of his.

Mr Garnett has forcefully submitted that this approach may have been too favourable to the claimant. Further, he says that the claim which the defendant always faced until 2^nd or 4^th December was a claim for breach of trust. He had been correctly advised that he would win against that claim as a matter law, whatever the facts were found to be. Accordingly, he did not protect himself by a payment in or a Calderbank offer which, it is speculated, he would or might have done if he had faced a much more fact-dependant claim in contract.

I prefer to express no view on these submissions, for the following reason. The trial must now be resumed. The judge will have to reconsider the whole question of costs in the light of final outcome. One possibility is that after further cross-examination and evidence the claim will fail as to liability. Another possibility is that the damages may finally be assessed as zero.

I would accordingly allow the appeal against costs; but not because I think the order, made at that stage, was necessarily wrong; rather, so as to empower the judge to consider costs afresh at the final conclusion of the case.

In summary, I would allow this appeal to the extent of setting aside paragraphs 2 and 3 of the order of 6^th December 2002 and remitting the case part heard to His Honour Judge Green QC to resume the hearing on the “Amended Particulars of Claim for Trial” dated 4^th December 2002.

There must plainly be a case management conference before Judge Green as the next step.

Even at this late stage I urge the parties to see if they cannot bring the catastrophe to an end by agreement, aided perhaps by mediation. It seems to me that the fruits of any victory for the claimant may be so swallowed up by unrecovered costs that she is on a hiding to nothing whatever the legal or moral merit of her claim.

I agree.

I also agree.