Harrison v Madejski & Anor

These are appeals from the order dated 11 June 2013 of His Honour Judge Hamilton in the Reading County Court by which he ordered Mr Malcolm Harrison, who is the first defendant, to pay £31,585.00 and costs to Sir John Madejski, the claimant. Mr Harrison appeals the order and so do Coys of Kensington, who are the second defendants.

This is another of those cases in which the length and complexity of the proceedings (a three-day trial and two days post trial on costs and other matters) and the costs incurred (so far amounting to about £300,000) are out of all proportion to the value of the claim.

The proceedings concern the sale by the claimant of his Jaguar XJ220 motor car (“the car”), carrying the personalised car registration mark “JM2” (“the Mark”). The car was sold at auction on behalf of the claimant by Coys to Mr Harrison. The Judge held that Mr Harrison was liable to the claimant for damages on the basis of unjust enrichment by registering himself with the DVLA as the keeper of the car with the Mark. The Judge dismissed the claimant’s claim against Coys for breach of contract and negligence.

By his order dated 11 June 2013 the Judge ordered that Mr Harrison pay the claimant £31,585 as damages plus interest As to costs, the Judge ordered that (1) Mr Harrison pay 80 per cent of the claimant’s costs of the proceedings, including the proceedings against Coys; (2) the claimant pay 20 per cent of Mr Harrison’s costs; (3) the claimant pay 50 per cent of Coys’ costs; and (4) Mr Harrison indemnify the claimant against the costs which he pays to Coys (“the Bullock Order”).

Mr Harrison appeals against (1) the Judge’s holding that he was unjustly enriched by the transfer of the Mark and is liable to restore the benefit by way of damages to the claimant, and (2) the making of the Bullock Order against him in respect of the claimant’s costs liability to Coys.

Coys appeals against the Judge’s order that the claimant must pay only 50 per cent of its costs.

The claimant has filed a respondent’s notice to uphold the decision of the Judge on additional grounds.

The claimant is a collector of fine motor vehicles. He decided in July 2010 to sell some of his collection, including the car. He did not wish to sell the Mark with the car.

The claimant engaged the services of Mr Jeff Adams and Mr Gary Winter to assist in the sale by making enquiries of auction houses and specialist dealers. On the claimant’s instructions, Mr Winter approached Mr Nick Wiles, Coys’ auction manager, about the sale of the car through Coys. Mr Wiles proposed to sell the car at Coys’ auction on 7 December 2010. The claimant set a reserve of £135,000.

On 27 October 2010 Mr Wiles viewed the car with Mr Winter. Mr Winter made it clear at the meeting that the claimant wished to retain the right to use the Mark. Mr Wiles arranged for a lorry to collect the car in the afternoon and advised that the registration plates be removed. Mr Winter and Mr Adams removed the plates before the car was transported.

The car was listed in Coys’ auction catalogue, which was also available on its website. The entry was compiled by Mr Wiles. The entry consisted of eleven paragraphs of text, which were generally descriptive of the car and the claimant’s life, and seven photographs of the car. One of the photographs showed the space for the front number-plate of the car without a registration plate fixed. In the space for a registration number in the entry for the car in the auction catalogue it said “UK Registered”. There was no mention of the Mark. Numerous other British-registered cars appeared in the catalogue with their registration marks. At the foot of the third page, in very small print, buyers were advised to satisfy themselves as to the condition of each lot and to exercise and rely on their own judgment as to whether the lots accorded with the description. The price estimate was given of £100,000 - £130,000 but there was no mention of the reserve of £135,000 nor did it expressly state that the car was for sale without the Mark.

Mr Harrison saw the catalogue entry on Coys’ website and was interested in acquiring the car. Mr Harrison asked his son, Jack Harrison (“Jack”), to attend on his behalf and bid for the car because he was due to be away on holiday. Mr Harrison had searched for the car online and located images (not on Coys’ website) of the claimant with the car with the Mark.

Mr Harrison was aware of the possibility that the Mark might not be for sale with the car. Accordingly, he instructed Jack to check this at the auction and to bid up to £100,000 for the car without the Mark or up to £130,000 if it was being sold with the Mark.

Jack attended the auction on 7 December 2010. He obtained a copy of the auction catalogue and inspected the car. Jack was not supplied with a log book or any documentation about the Mark. He did obtain a file of documents about the car’s history which included three service invoices dated March 2005, March 2006 and March 2007. All of those invoices showed the vehicle’s registration number as “JM2”. At the auction Jack overheard a conversation between two men viewing the car that an online search against the Mark had identified a Jaguar XJ220.

There was no notice on the car stating whether the car was being sold with the Mark. There was no statement as to whether or not it had a current MoT certificate (which, as I explain below, was necessary for the vehicle to be allocated a new mark). It had a tax disc, which had expired on 28 February 2005, showing the Mark. The car was displayed without registration plates. When the auctioneer introduced the car, there was no mention of the Mark nor was there any mention about the purchaser having to arrange an MoT test so that it could be allocated a new registration mark.

Jack concluded that the Mark was included in the sale and, in accordance with his father’s instructions, he bid £130,000. This was short of the claimant’s reserve but Coys exercised its right to accept the bid and account to the claimant for £135,000 (bearing the deficiency out of the buyer’s premium). Jack completed the paperwork with Coys’ staff. There was no mention of the Mark or of any need to obtain an MoT certificate. Mr Harrison paid £147,037.50 for the car, including the buyer’s premium.

Mr Wiles subsequently informed Mr Harrison and Jack that Mr Harrison had not bought the right to use the Mark. There was some delay in Mr Harrison responding to Mr Wiles’ communications. On 22 March 2011 Mr Harrison asserted that he had bought the Mark and in June 2011, without warning to Coys or the claimant, he registered himself with the DVLA as the keeper of the car with the Mark notwithstanding that he was aware that there was a dispute over his right to do so.

On 30 June 2011 Coys wrote a letter to Mr Nigel Howe, acting on behalf of the claimant. They claimed in the letter that, when told that the Mark was not included in the sale, “the buyers … acknowledged immediately that they had no interest in the number and would make necessary arrangements and co-operate with us to have the number plate placed on retention”. Those assertions were untrue. Neither Mr Harrison nor Jack had disavowed any interest in the Mark. Neither of them had promised to co-operate in arrangements for it to be retained by the claimant.

On 16 December 2011 the claimant commenced proceedings against Mr Harrison and Coys. The claimant alleged that the Mark had been transferred as the result of a common mistake and, for that reason, the Mark was held on constructive trust for the claimant (“the mistake claim”). He claimed, in the alternative, that Mr Harrison had been unjustly enriched at the claimant’s expense and should make restitution to the claimant of an amount equal to the value of the Mark (“the unjust enrichment claim”). The claimant also sought damages from Coys on the grounds of their negligence and breach of contract in that they failed to take reasonable steps to retain the Mark or to ensure that the purchaser was aware that the Mark was not included in the sale or to ensure that the buyer did not become aware of the Mark. The claimant’s mistake claim was withdrawn by his counsel during closing submissions at the trial.

It is convenient at this point to mention very briefly the law in relation to the transfer of vehicle registration numbers. The relevant provisions are contained in Part II of the Vehicle Excise and Registration Act 1984 and in the Retention of Registration Marks Regulations 1993. These provide that, ordinarily when a vehicle is sold, its new owner acquires the right to use the registration mark. The Regulations, however, also provide for the retention and transfer of a registration mark separately from the vehicle. If a vehicle is sold without its attached mark, the owner may either (a) apply for the retention of the mark and the allocation of a new mark to the vehicle before sale or (b) stipulate that the vehicle is sold without the mark and that the buyer is required to co-operate in the retention of the mark by the vendor. The Secretary of State requires a valid MoT certificate for the vehicle before allocating a new mark.

The trial of the action took place before the Judge over three days in August 2012. The Judge handed down a lengthy and detailed judgment on 29 November 2012.

The Judge accepted that Jack believed that the car was being sold with the Mark. The Judge was nevertheless satisfied that it should have obvious to Jack that the car was being auctioned without the Mark and that “no reasonable buyer could have come to the conclusion that the mark was included in the sale”. The Judge noted that, while the expired tax disc indicated that the car had previously carried the Mark, the absence of the registration plates and of a current tax disc, together with the fact that the Mark was not expressed to be included in the sale, meant that any reasonable buyer would have, at the least, made an express enquiry as to whether the mark was included or, if he did not do so, he would have assumed that the Mark was not being sold with the car.

The Judge upheld the claimant’s unjust enrichment claim. He rejected the submission on behalf of Mr Harrison that he had paid for the Mark by bidding up to £130,000. The Judge made extensive reference to the decision of the Court of Appeal in Cressman v Coys of Kensington (Sales) Ltd [2004] 1 WLR 2775, [2004] EWCA Civ 47.

In that case, as in the present proceedings, there was a dispute over whether Coys had sold the vehicle with or without a cherished mark. The trial judge held that it was an express term of the contract that the mark would not be transferred to the buyer. In that case, as in the present proceedings, the vendor (and Coys on its behalf) failed to apply for retention of the mark before the auction. In consequence, the mark remained assigned to the vehicle contrary to the express term of the sale contract. The purchaser registered the vehicle bearing the cherished registration mark in his name and refused to relinquish the mark.

The Judge held that the purchaser had been unjustly enriched by receiving, at the expense of the vendor, a benefit in the form of the cherished mark which he knew or ought to have known that he was not contractually entitled to have. The purchaser appealed.

The Court of Appeal dismissed the appeal. Mance LJ, with whose judgment the other members of the court agreed, rejected the purchaser’s argument that his acquisition of the registration mark was a consequence of the statutory scheme and that, having performed his contractual obligations in ignorance of any problem about the mark, it would be contrary to public policy to hold the individual liable for these consequences. Mance LJ said as follows at [24] – [25]:

“It was the statutory scheme that meant that [the purchaser] acquired the registration mark. That does not mean that there was no enrichment or no unjust enrichment. On the contrary, it is the reason why there may have been. His potential enrichment consisted in his acquisition of a car carrying with it a potentially valuable registration mark. Any such enrichment must have been at the expense of [the vendor]. …

Further, it was legally unjust for [the purchaser] to keep the registration mark, since it was an express term of the auction contract that he would not receive the vehicle's existing mark (whatever that might be), but would instead get an age-related mark, and he only obtained the old, cherished mark as the result of a mistaken failure by Coys to operate the statutory scheme correctly on behalf of the estate, about which mistake [the purchaser] soon became aware.”

Mance LJ also rejected a submission that the receipt of the mark was insufficient to amount to a benefit or enrichment as it was neither a realisation of its value nor proof of an intention to benefit by realising its value. He concluded more generally that the receipt of a cherished mark fell within a category of cases of readily returnable benefits which, if kept by the recipient, would result in benefit or enrichment of the recipient for the purposes of establishing unjust enrichment.

In the present case the Judge rejected a defence of estoppel put forward by Mr Harrison. The Judge also refused to entertain submissions on a defence of change of position since such a defence had not been pleaded by Mr Harrison. The Judge ordered restitution of the value of the Mark with damages to be assessed on the basis of the value of the Mark less the cost which the claimant would have had to incur to bring the car up to MoT standard for the purposes of an application to retain the Mark. The parties subsequently agreed that damages should be assessed in the sum of £31,585.

The Judge dismissed the breach of contract and negligence claims against Coys. He decided that, although Coys could have done more, they had done enough to make it clear to prospective purchasers that the car was being sold without the Mark. The Judge also concluded that, in any event, liability would have been excluded by Condition 6.2 of Coys’ General Conditions of Business. The Judge held that Condition 6.2 was not an unfair term for the purposes of the Unfair Contract Terms Act 1977 or the Unfair Terms in Consumer Contracts Regulations 1999.

There were further consequential hearings before the Judge on 4 April 2013 and 11 June 2013. He delivered no less than six further judgments, including a number on costs. The Judge’s costs orders were those I have mentioned at the beginning of this judgment.

Mr Harrison appeals on the grounds that the Judge erred in law in finding that he was unjustly enriched and the Judge erred in principle in making the Bullock Order.

Mr David Lewis, counsel for Mr Harrison, structured his submissions on liability in the following way. He submitted that (1) it was not an issue before the Judge whether the contract for the sale of the car excluded the Mark; (2) the Judge did not in any event reach a conclusion that it did so; (3) if the Judge reached the conclusion that it did, he was not entitled to do so; (4) in any event, the enrichment was only £30,000 less the cost of doing the work necessary to obtain an MoT certificate, rather than £50,000 less that cost; and, moreover, (5) he had a defence of change of position.

Despite everything that Mr Lewis has forcefully submitted, I reject all those arguments.

Mr Lewis referred us to various passages in the statements of case and the skeleton arguments used at the trial to support his contention that it was never asserted by the claimant that the contract excluded the Mark. It is sufficient for me to point to the following as showing that this plainly was an issue before and at the trial. In paragraph 20 of the Particulars of Claim it was alleged that at no time could Mr Harrison have thought that the Mark was included in the sale. In paragraph 21 it was alleged that the Mark was not part of the sale.

Mr Lewis relied upon the statement in paragraph 4 of the Reply that “Sir John entered into the contract with Mr Harrison for the sale of the Car in the mistaken belief that the Mark was not included in the sale and that the Mark would not be transferred.” That statement, however, was in response to paragraphs 22 to 24 of Mr Harrison’s defence which were addressing the claimant’s mistake claim. There was no abandonment of the claimant’s alternative unjust enrichment claim.

Paragraph 23 of the claimant’s skeleton argument for the trial stated that “Mr Harrison was, or should have been, aware that the Mark was not included in the sale of the XJ220, and so has been unjustly enriched by the receipt of the Mark”. In paragraphs 24 to 29 of that skeleton argument the point was made that the facts of the Cressman case, in which the mark was excluded from the sale contract, were “very materially similar to the facts in this case” and that “the ratio of Cressman applies directly to this case”. In paragraph 38 of that skeleton argument the claimant invited the court to conclude that Mr Harrison and his son knew, or should have known, that the Mark was not included with the car and that, accordingly, it was unjust for Mr Harrison to retain it.

Furthermore, as Mr Matthew Cook, counsel for the claimant, highlighted in his submissions, the claimant had abandoned his mistake claim by the conclusion of the trial. The only issue on liability which the Judge was required to address by the time he came to deliver his judgment was the unjust enrichment claim. It is in that context that the Judge stated in paragraph 2 of his judgment that:

“The underlying issue is whether the car was sold with or without the cherished registration mark … Sir John contends that it was sold without the mark. Mr Harrison contends that it was sold with the mark and Sir John contends that, if that is right, [Coys] were in breach of their duty to him.”

The next issue is whether the Judge did conclude that the sale contract excluded the Mark. Mr Lewis submitted that the Judge did not anywhere in his judgment state clearly and expressly that the Mark was not included in the contract.

I entirely accept that the Judge did not use those precise words in his judgment. It is perfectly clear, however, that the Judge’s decision on the “underlying issue” identified by him in paragraph 2 of his judgment was that the car was sold without the Mark. That was correctly identified by the Judge as the critical issue because it is elementary and common ground that the enrichment of Mr Harrison by the transfer of the Mark could not have been unjust if Mr Harrison was entitled to the Mark pursuant to the contract.

The Judge’s conclusion on the point is perfectly apparent from the Judge’s conclusion in paragraph 39 of his judgment that:

“On the information provided by Coys no reasonable buyer could have come to the conclusion that the Mark was included in the sale.”

The decision of the Judge on the point is also apparent from his conclusion in paragraph 60 of his judgment that the first three questions posed by Mance LJ in paragraph [22] of his judgment in the Cressman case should be answered in the present case in favour of the claimant. Those three questions were whether (1) the defendant benefited or had been enriched; (2) the enrichment was at the expense of the claimant; and (3) the enrichment was unjust.

The next issue is whether the Judge was entitled to reach his conclusion that the Mark was excluded from the sale contract. Mr Lewis’s starting point, on this issue, is that under the legislative scheme a vehicle is sold with its registered mark unless steps are taken, consistently with the legislation, for the mark to be retained by the vendor. Accordingly, Mr Lewis contended, the contractual default position must mirror that of the regulations, namely that, in the absence of some clear and unambiguous express or implied provision excluding sale of the mark, the sale of a vehicle includes its registered mark. Mr Lewis supported that argument by illustrating the practical problems that would arise in the absence of provisions enabling the vendor to retain the registered mark in accordance with the requirements of the legislation. He emphasised, in that connection, the requirement of a valid MoT certificate for the vehicle before a new registered mark can be allocated to it. Accordingly, Mr Lewis submitted, the contract would have to provide for the MoT certificate to be obtained by the purchaser and for the time within which the certificate must be obtained. In the present case there were no provisions in the sale contract dealing with those matters. Mr Harrison in fact spent in the region of £20,000 to bring the car into a condition which enabled him to obtain an MoT certificate.

Mr Lewis submitted that the contractual default position, for which he contended, is reflected in Condition 6.2 of Coys’ General Conditions of Business, which were incorporated in the sale contract. Condition 6.2 provides that, if the seller wishes to sell the vehicle but retain the right to the registration number, it is the seller’s responsibility to take all necessary steps to ensure that current vehicle registration number is reserved and that a new number is allocated prior to the vehicle being sold at the auction.

Mr Lewis criticised the approach of the Judge on this issue. He submitted that the Judge had approached the matter from entirely the wrong angle in seeking to find whether there were indications as to whether the Mark had been included in the sale of the car rather than looking for factors indicating that it was excluded.

Mr Lewis said that there was nothing to show that the Mark was excluded from the sale contract and, on the contrary, that everything showed that it had been included. He relied, for example, on the various matters mentioned by the Judge in paragraphs 19 to 21 of the Judge’s judgment, namely the description of the car in the auction catalogue, the contents of the file of documents about the history of the car available to interested purchasers, the tax disc on the car (stating the Mark) and the conversation between the two men looking at the car which was overheard by Jack.

I do not accept those criticisms of the Judge’s analysis and conclusion on whether the Mark was excluded from the contract. As the Judge himself found at paragraph 67 of his judgment, it plainly would have been better if Coys had done more to make it clear to prospective purchasers that the car was being sold without the Mark. In paragraph 39 of his judgment the Judge listed the matters which, nevertheless, he considered should have alerted Jack and would have alerted any reasonable buyer that the Mark was not included in the sale. They included the information provided by Coys in the documents made available to purchasers, the absence of registration plates on the vehicle, the display on the car of an expired tax disc and the absence of any statement that the Mark was to be included in the sale.

Those points reflected the Judge’s fuller account of those matters earlier in his judgment. In paragraph 14 of his judgment he mentioned that the entry in the auction catalogue contained a headline description of the car below which, in the space for stating the vehicle registration number, it merely described the car as “UK Registered” and quoted the chassis number. In paragraph 15 of his judgment the Judge referred to various photographs of the car in the auction catalogue. He said that one of the seven photographs showed the space for the front number-plate without a plate affixed, and none of them showed clearly the space for the rear number-plate. He said that there was no mention of the Mark and, in that respect, the car differed from numerous other British registered cars which appeared in the catalogue with their registration marks. In paragraph 19 of his judgment the Judge referred to the examination by Jack of a file of documents about the history of the car, which contained only historic invoices and no vehicle registration document. In paragraph 20 of his judgment he referred to the tax disc on the car and that it had expired on 28 February 2005. The Judge emphasised that Jack did not mention in his witness statement the undoubted fact that the car was displayed without registration plates.

Those matters of evidence must be set against the background that both Mr Harrison and Jack were well aware that the Mark in the present case had a considerable value. The Judge accepted the claimant’s evidence that, after the auction, he received an unsolicited offer of £50,000 from a dealer in cherished marks. The Judge accepted that offer as the best indicator of the value of the Mark available to him. Mr Harrison’s evidence was that he attributed £30,000 to the Mark and instructed his son to bid up to a £100,000 for the car without the right to use the Mark and up to £130,000 for the car with that right. In the light of those matters, the fact that the car was displayed without number-plates and that there was no mention of the Mark in the auction particulars under the headline description of the car, together with the absence of any current tax disc showing that the car carried the Mark, are compelling reasons justifying the Judge’s conclusion that no reasonable buyer could have come to the conclusion that the Mark was included in the sale.

It follows from that conclusion of the Judge that what Mr Harrison or Jack may have subjectively thought, in reliance for example on the conversation overheard by Jack, is entirely irrelevant. The law does not allow a party to escape a contract simply by proving what he subjectively thought were the terms of the bargain.

Mr Lewis candidly accepted that at the trial he had not advanced the argument that, if the Mark was to be retained, the contract would have and should have dealt with the issue of the timing and cost of obtaining an MoT certificate so that a new mark could be allocated to the car in accordance with the legislation. I do not consider that it would be right in the circumstances for Mr Harrison to run the point on this appeal since I agree with Mr Cook that it is an aspect on which further evidence might have been relevant. In any event, as Mr Cook pointed out, the assumption that a reasonable purchaser could have made was that the claimant had already obtained an MoT certificate for the car and was waiting the allocation of a new registration mark. That is presumably the assumption that was made in Cressman since there were no contractual provisions in that case dealing with the need for an MoT certificate.

For all those reasons, I am satisfied not only that the Judge had adequate material on which to reach his decision that the Mark was excluded from the contract but that his decision on that point was correct.

The next issue concerns the amount of £31,585 ordered to be paid by Mr Harrison to the claimant as “damages” or, more accurately, the sum necessary to reverse Mr Harrison’s unjust enrichment. Leaving aside interest, that figure represents the difference between £50,000, which the Judge found was the market value of the Mark, and the cost which the claimant would have had to incur to bring the car to a standard necessary to obtain an MoT certificate (and which was in fact paid by Mr Harrison to obtain an MoT certificate).

Mr Lewis’ argument, in short, was that the valuation of Mr Harrison’s enrichment should have been based on the lesser value of £30,000 (rather than £50,000) which he had placed on the Mark at the time of the auction. This was, Mr Lewis submitted, consistent with the analysis of “subjective devaluation” in the judgment of Lord Clarke in Benedetti v Sawiris [2013] UKSC 50, [2012] 3WLR 351, at [14] ff.

I do not accept that argument. It is not necessary to set out and analyse in detail the passages in the judgment of Lord Clarke on which Mr Lewis relied. It is sufficient to say that Lord Clarke, who was in the majority in the Supreme Court, stated that in cases of unjust enrichment the starting point in valuing the enrichment is the objective market value or market price but it is permissible in certain circumstances to reduce the objective market value in order to reflect the subjective value to the defendant. This does not mean, however, as Lord Clarke observed in paragraph [23] of his judgment, that enrichment must be subjectively devalued simply because the defendant asserts that he or she valued a benefit at less than the market value. The principle is that the benefit is not always worth its market value to a particular defendant and that, when it is not, it may be unjust to treat the defendant as having received a benefit possessing the value it has to others: see the citation from Goff & Jones, The Law of Unjust Enrichment, 8^th ed. (2011) para. 4-06, at paragraph [18] of Lord Clarke’s judgment. Lord Clarke said at paragraph [25] that, if the principle of subjective devaluation is accepted, it can be defeated by a claimant proving that (1) the defendant received an incontrovertible benefit or (2) the defendant requested or freely accepted the benefit. He added that many different problems may arise, but that it was fortunately not necessary in that case to define the circumstances in which the principle of subjective devaluation can be defeated.

I cannot see that the fact that Mr Harrison was only willing to pay £30,000 for the Mark has the consequence that the figure of £30,000 should be taken as his enrichment (subject to the cost of the work to the car to obtain the MoT certificate) rather than the actual market value of £50,000.

Mr Lewis accepted that the market value of the Mark was £50,000 but said that Mr Harrison may not in fact obtain that much if he sold it. I do not understand the legal significance of that assertion.

There is no indication that Mr Harrison’s willingness to pay £30,000 was based on anything other than his perception of the market value of the Mark. That is consistent with the way the Judge described Mr Harrison’s evidence in paragraph 34 of his judgment. There is no suggestion that due to considerations personal to Mr Harrison the Mark was worth anything less in his hands. We were not referred to any evidence as to whether or not Mr Harrison intended to keep the Mark for his own use or (because the Mark does not match his own initials) he would want to sell it. Whatever the answer to that point, it has not been suggested that there is not a ready market in the sale of cherished number-plates. Mr Harrison, accordingly, received something for which there was a ready market and which was worth £50,000 in that market. That was therefore the starting point for calculating the amount by which he was enriched.

This analysis is consistent with the reasoning of Mance LJ in the Cressman case. In that case the buyer of the vehicle gave evidence that the registration mark was a matter of indifference to him. Mance LJ said in paragraph [39] that, whatever their motives, numbers of car owners pay good money to have a personal number plate and that the inference was that the buyer, despite his denials, attached real value to the registration mark and wanted to retain it for that reason. Mance LJ referred to the test in Goff & Jones as to whether the defendant had “gained a financial benefit readily realisable without detriment to himself”. Mance LJ said at paragraph [40] that there could be no difficulty in reaching the conclusion that the buyer received an incontrovertible benefit in the market value of the mark on the simple test of realisability. He added that, even if realisability alone is not generally sufficient, the ability to realise the mark in the future, coupled with the enjoyment of its possession or use in the meantime, were considerable arguments in favour of the conclusion that the buyer in that case regarded himself as subjectively benefited by the mark and should be treated as benefited by its value. Mance LJ said, finally, on this aspect that, in his view, “the law must in any event recognise as a distinct category of enrichment cases of readily returnable benefit”, of which that case was an example.

In any event, the facts of the present case satisfy the two grounds for defeating subjective devaluation mentioned in Lord Clarke’s judgment at paragraph [25] of Benedetti. Mr Harrison did receive an incontrovertible benefit and he requested or freely accepted the benefit of the Mark when he procured registration of the car with the Mark in his name at the DVLA.

The next issue is whether Mr Harrison has a defence of change of position. As I understand the argument, it is contended that, in paying £130,000 in total for the car when he thought that the Mark was worth no more than £30,000 and he had a ceiling price for both the car and the Mark of £130,000, Mr Harrison changed his position so that it would be inequitable for him to be required to make restitution. The Judge appears to have declined to permit Mr Harrison to argue a defence of change of position on the ground that such a defence had not been pleaded by him. That was a matter for the Judge’s discretion. It cannot be said that he acted outside a proper exercise of judicial discretion on that point.

In any event, I cannot see that Mr Harrison has a change of position defence in the present case. Mr Lewis and Mr Cook advanced opposing arguments on whether Mr Harrison can satisfy the causal requirements for such a defence so as to link the alleged change of position with the enrichment. Leaving those arguments to one side, there cannot be a change of position defence which relies on Mr Harrison’s payment of £130,000 when (1) that was the sum due under the contract and (2) that contract was entered into in circumstances in which the Judge concluded that (a) no reasonable buyer could have come to the conclusion that the Mark was included in the sale and (b) Jack had, in the words of the Judge in paragraph 60 of his judgment, “allowed himself to be blinded to what should have been obvious to him”. The defence of change of position only comes into play if it would be inequitable in the circumstances for the recipient to be required to make restitution or restitution in full. In light of the findings of the Judge which I have mentioned, there would be nothing inequitable about ordering Mr Harrison to make restitution for the unjust enrichment he has received.

The second part of Mr Harrison’s appeal is against the Judge’s decision to make a Bullock order. Such an order is one which entitles a claimant, who successfully sues two defendants in the alternative and succeeds against only one of them and is ordered to pay the successful defendant’s costs, to recover those costs from the unsuccessful defendant as part of the claimant’s costs of the action: Bullock v London General Omnibus Company [1907] 1 KB 264. Mr Lewis submitted that such an order may only be made in the circumstances stated in paragraph [24] of the judgment of Griffith Williams J in Whitehead v Searle [2007] EWHC 2046 (QB) as follows:

“In my judgment [Bullock or Sanderson orders] are appropriate nowadays only in those cases where the claimant does not know which party is at fault and it is inappropriate to make either order when both defendants succeeded in defending a large part of the claim. I consider also that it would be contrary to the objective of [CPR] r.44.3 to make a qualified Bullock or Sanderson order.”

Mr Lewis submitted that the first obstacle to a Bullock order in the present case is that the claims against Mr Harrison, on the one hand, and Coys, on the other hand, are not and were not expressed in the statements of case to be true alternatives. He submitted that it was always possible in theory for the claimant to succeed against both of them. He emphasised that the causes of action against each of them were distinct and different: mistake and unjust enrichment against Mr Harrison and breach of contract and negligence against Coys. Mr Lewis submitted that the claimant’s complaint was that both Mr Harrison and Coys were liable to him but for different reasons.

Furthermore, Mr Lewis submitted that the test in Whitehead was not satisfied because Mr Harrison and Coys did succeed in defending a large part of the claim against them. Mr Lewis said that the abandonment at trial of the mistake claim against Mr Harrison meant that a large part of the case against both Mr Harrison and Coys had not succeeded.

Mr Lewis also criticised the Bullock order on the ground that the Judge took into account conduct of Mr Harrison and Coys after the transaction had taken place. Mr Lewis particularly highlighted the Judge’s criticism of Mr Harrison’s conduct in failing to communicate swiftly with Coys when the problem arose and in registering in his name the car with the Mark without notice or warning to the claimant, at a time when correspondence about the issue was being sent and he knew that the claimant’s position was that the Mark had not been included in the sale. Mr Lewis submitted that the conduct of the defendants after the transaction was entirely irrelevant to the issue whether it was appropriate to make the Bullock order against Mr Harrison.

Mr Lewis also submitted that, in any event, the Judge had been unduly lenient to the claimant in relation to his conduct. He emphasised that the claimant and those acting for him did not complete the documentation appropriately and did not comply with Condition 6.2 of Coys’ General Conditions of Business.

The Judge had a wide discretion as to costs. I consider that it was well within a proper exercise of the Judge’s discretion to make the Bullock order.

Mr Cook was content to accept that what was said by Griffith Williams J in the passage in Whitehead quoted above is a correct statement of the principles. For that reason the correctness of that statement was not further examined on the appeal. The Judge’s order in the present case did not contravene the principles stated in Whitehead. I consider that it is clear that the case against Mr Harrison, on the one hand, and Coys, on the other hand, was advanced by the claimant in the alternative. That is expressly stated in paragraph 7 of the Particulars of Claim.

Mr Cook submitted, and I agree, that the claims against Mr Harrison and Coys were not merely expressed as alternatives as a matters of form but they were in substance alternative claims even though it was theoretically possible to envisage circumstances in which the claimant might recover against both of them.

I also agree with Mr Cook that this was a case in which it was entirely reasonable of the claimant to sue both Mr Harrison and Coys since the case against them turned critically upon what had taken place at the auction. That was a matter on which they were taking different positions and the claimant was not able to say which version was correct until their evidence was presented and tested at trial. As the Judge said, in paragraph 11 of his judgment of 4 April 2013, the causes of action advanced by the claimant against Mr Harrison and Coys arose out of the same event, the auction, and the same transaction, the claimant’s instructions to Coys and their conduct in complying with those instructions, but Coys had “muddied the waters about just what had happened at the auction and it was only when the oral evidence was heard and tested that it became very clear what had happened”.

I do not accept that it was obvious that the claim against Coys was bound to fail because of the exclusion of liability provisions in Condition 6.2 of Coys’ General Conditions of Business or that the abandonment at trial of the mistake claim meant that Mr Harrison had succeeded in defending a large part of the claim. The claim did succeed against Mr Harrison on one of the two alternative bases on which the proceedings had been launched against him. The Judge made a deduction of only 20 per cent from the claimant’s costs recoverable from Mr Harrison to reflect the abandonment of the mistake claim. So far as concerns Coys, the Judge addressed the exclusion of liability provisions in Condition 6.2 at some length in paragraphs 71 to 80 of his judgment on liability. In the event, the Judge was satisfied that Condition 6.2 satisfied the test of reasonableness under sections 3 and 11 of the Unfair Contract Terms Act 1977. He said, however, in his costs judgment of 4 April 2013 that he had found it:

“quite a difficult area to explore, as is apparent not only from the length of the passages in my judgment in which it is considered, but also from the efforts devoted to it in the skeleton arguments at trial.”

There are two final points to make on this aspect of Mr Harrison’s appeal. The Judge was referred to a number of authorities on the issue of costs, including Irvine v The Commissioner of Police for the Metropolis [2005] EWCA Civ 129. He was fully conscious that a Bullock order is a strong order which is capable of working injustice for the losing party. In the present case, it imposed a particularly heavy burden on Mr Harrison because of the amount of Coys’ costs. Those costs were high because the litigation was conducted on their behalf on a CFA. Notice of the CFA was, however, given to Mr Harrison and, as Mr Cook fairly submitted, in continuing to defend the litigation Mr Harrison took the risk of having to pay Coys’ costs incurred on that basis.

In view of what I have said above there is no need to consider the respondent’s notice.

I now turn to the appeal by Coys against the Judge’s order by which he ordered the claimant to pay only 50 per cent of their costs. The Judge dealt with this issue in his ex tempore judgment delivered on 11 June 2013. He was highly critical of the entire course of Coys’ conduct from before the auction to the giving of their evidence at the trial. He criticised particularly the following aspects of their conduct:

The Judge acknowledged that each of those matters might not in itself be sufficient to merit a sanction in costs but he considered that the position was otherwise if taken together “as a course of conduct”. The Judge said in paragraph 19 of his judgment of 11 June 2013 that “as a course of conduct [Coys] had chosen throughout to be as difficult as they could be”.

Both Mr Wright and Mr Cook were in agreement that conduct which is not reprehensible at all cannot properly be the basis for penalising a successful party in costs and so deviating from the general rule in CPR r.44.3(2)(a) that the unsuccessful party will be ordered to pay the costs of the successful party. I agree with Mr Wright that some aspects of Coys’ conduct criticised by the Judge were not ones which he could properly take into account in reducing their recoverable costs. They were not, whether taken in isolation or as part of the entire history, reprehensible in any relevant sense.

The first is the Judge’s criticism that Coys could have done more to bring to the attention of purchasers the fact that the car was being sold without the Mark. The Judge, having found that the Coys were not in breach of duty of care or in breach of contract, could not properly apply a sanction in costs against them for their general business standards which were not legally causative of any recoverable loss. I reject Mr Cook’s submission that incompetence and reprehensible conduct are synonymous in this context. Furthermore, as Mr Wright observed, if the Judge was entitled to take such conduct into account, he would have had to throw into the balance the claimant’s own failure to take the steps specified in Condition 6.2 of Coys’ General Conditions of Business. The same points apply to the Judge’s criticism that Coys had not “made a back up” of files that were lost when a laptop computer was stolen from Coys’ premises.

I also consider that the Judge was wrong to apply a sanction in costs for Coys’ refusal to mediate. One of the initial reasons for Coys’ refusal was that the claimant denied in his Reply statement of case that Coys’ General Conditions of Business, including Condition 6.2, were applicable on the ground that the agreement between the claimant and Coys was an oral agreement reached on 27 October 2010 between Mr Winter, for the claimant, and Mr Wiles. Coys did not wish to enter into mediation until they received the witness statements on which the claimant relied indicating the evidence for such an agreement. That was not an unreasonable position for Coys to take. In the event, the evidence was not forthcoming and that allegation was not pursued.

Coys’ solicitors subsequently sent the claimant’s solicitors a letter dated 18 June 2012, following the service of witness statements, stating in detail the reasons for their refusal to enter into mediation at that stage. The Judge did not address the grounds set out in that letter. At least two of the matters stated there were reasonable justifications for the refusal to enter into mediation. One was that the claimant had put in issue the legality of the exclusion of liability provisions in Condition 6.2 and Coys considered that it was important to establish whether or not those provisions were valid and effective. The other was that Coys took the view, having seen the witness statements, that they had a strong case. In the event, they were proved to be correct in that they successfully defended the claims against them without having to rely on Condition 6.2.

I consider that, for those reasons, the Judge made errors of principle in the exercise of his discretion in reducing the costs payable by the claimant to Coys and that his order so providing should be set aside. I also consider, nevertheless, that the Judge was entirely justified in criticising certain aspects of Coys’ conduct. In particular, I consider that he was fully justified in criticising Coys for the deceitful letter of 30 June 2011, the failure of Coys directly or through their solicitors to address the requests of the claimant’s solicitors for information over an extended period until late November 2011 (in the absence of any evidence that Mr Wiles was uncontactable during that time while on an extended holiday), the failure of Coys directly or through their solicitors over an extended period to correct the untruthful statements in the letter of 30 June 2011, and the unreliable evidence given by Mr Wiles in court on that and other matters. Those matters relate both to conduct before the commencement of the proceedings and to conduct during the proceedings. The effect of Coys’ untruthful and evasive conduct prior to the proceedings promoted the litigation since the claimant had no confidence in their truthfulness or reliability and so was not in a position to form a view about whether Coys or Mr Harrison were correct in their differing versions of what took place at the auction and related matters. In that sense, Coys were the authors of their own destiny in causing the litigation against them. The effect of Mr Wiles’ unreliable evidence at the trial was, as in the case of all unreliable witnesses, to add cost, time and complexity to the resolution of the litigation. In the circumstances I consider that it would be appropriate for Coys’ costs recoverable from the claimant to be limited to 75 per cent.

For all those reasons I would dismiss Mr Harrison’s appeal. I would allow Coys’ appeal to the extent of substituting “75%” for “50 %” in paragraph 5 of the Judge’s order of 11 June 2013.

I agree.

I also agree.