Shalaby v London North West Healthcare NHS Trust

There are before the Court two appeals: first, an appeal against the order of Andrew Baker J dated 27 January 2017 dismissing the Appellant’s claim; secondly, the order by the judge of the same date, awarding costs to the Respondent on an indemnity basis from 1 November 2015. Permission to appeal was granted on the papers by Jackson LJ in an order sealed on 12 July 2017.

On behalf of the Appellant submissions were made by Ms Nawraz Karbani, acting under the Bar Pro Bono Unit scheme. Mr David Cunnington appeared on behalf of the Respondent. We are grateful to them both, particularly to Ms Karbani as she was acting pro bono.

The Appellant was at all material times a doctor, employed by the Respondent. Between November 2009 and June 2012 he was on secondment. At the material time he was employed as an Associate Specialist Surgeon, one service grade below that of a consultant.

The claim which the Appellant brought in the High Court was for breach of his contract of employment. The claim was issued on 31 July 2015. The particulars of claim were later revised on 27 November 2015.

The Appellant alleged that he had been underpaid for a period of time between July 2012 and June 2015. He claimed that he had worked more hours than the Respondent had paid him for. Central to the dispute were the issues of what work the Appellant was contractually required to perform and what work he actually did perform in the relevant period.

At the start of the trial in January 2017 the Appellant withdrew his claim in relation to the months of July and August 2012. Accordingly, the trial proceeded on the basis that the claim related to the period from September 2012 to June 2015.

The Appellant’s claim was that the Respondent did not pay him properly for his participation in the On-Call rota that came with his job during the relevant period: see para. 7 of the judgment. The judge went on to describe what the claim was about in slightly greater detail as follows. The Appellant claimed that, after his return to work from his secondment:

As the judge noted at para. 7(iii), it was common ground that the Appellant was entitled to an On-Call Availability Supplement of 4% of his basic pay for the whole three year period from July 2012 and that the Trust had failed to pay that supplement at the time. However, by the time of the trial the supplement had been paid, after the proceedings were commenced, on 31 October 2015.

The trial before Andrew Baker J took place over four days from 23 to 26 January 2017. The Appellant appeared in person; the Respondent was represented by Mr Cunnington. The evidence was heard on the first three days. Submissions were made on the fourth day. Judgment was given on the fifth day.

The judge heard evidence from the Appellant himself. The Appellant also relied upon a series of very short statements from a number of clinical and administrative colleagues (or, in some cases, former colleagues) of his at Ealing Hospital: see para. 25 of the judgment. The evidence called by the Appellant included that of Mr Carney and Mr Mahere: see para. 27 of the judgment.

The Respondent called evidence from Mr Saavedra and Mr Bartlett (another consultant orthopaedic surgeon who was, for the latter part of the claim period, clinical director of trauma and orthopaedics). The Respondent also called evidence from Dr William Lynn (a consultant physician), who had dealt with the Appellant’s re-grading appeal as a result of which he was successfully appointed to the Associate Specialist grade. The Respondent also called evidence from Ms Pami Kalia, who had a position in the human resources department at the Respondent Trust.

At paras. 12-15 Andrew Baker J said:

“12.

Mr Shalaby was re-graded to Associate Specialist from Staff Grade Surgeon in August 2010, following an appeal procedure he initiated against an initial decision taken in April 2009 against his application for that promotion. It was plain to all concerned and the explicit basis upon which Mr Shalaby made and pressed his application to be re-graded, that if his wish to be appointed Associate Specialist were granted, he would thereafter be employed and paid upon the terms applicable to Associate Specialists and would no longer be on the terms applicable to Staff Grade Surgeon. In those circumstances, it is irrelevant to consider what seems to be a further issue between Mr Shalaby and the Trust as to whether the two sets of terms were materially similar, and indeed, the only set of Terms and Conditions I have been asked to consider as applicable is the 2008 Terms and Conditions for Associate Specialists.

13.

It was far from clear prior to trial whether Mr Shalaby accepted the applicability to his case of the 2008 Terms and Conditions, but his written opening skeleton confirmed that he did and the trial proceeded on that basis.

14.

Following his successful appeal, Mr Shalaby raised a back-pay grievance as to the date from which he should be treated for pay purposes as having been on the Associate Specialists Terms. That was resolved by a written compromise agreement in April 2012, by which it was agreed that:

(i)

Mr Shalaby would receive a tax free lump sum of £15,000;

(ii)

He would be moved to the top of the Associate Specialists pay scale with effect from 1^st April 2012; and

(iii)

He would complete and sign a salary variation form to confirm point (ii).

15.

That was duly done in a significant document signed on behalf of the Trust on 21^st and 31^st May 2012. It does not appear to be signed by Mr Shalaby, but he accepted in evidence that he was aware of it and agreed it at the time and that he understood it governed his contract from 1^st April 2012. It is significant because it confirms that Mr Shalaby’s employment from 1^st April 2012 was as Associate Specialist (Orthopaedics) on the top pay scale remuneration, on a contract to work a basic 40 hour week and a total working time equivalent of ‘10+2 sessions’, i.e. 12 PAs in all. His basic gross salary, paying [sic] for the basic 40 hour or 10 PA working week, was about £85,000 per annum. His agreed terms of employment during the Claim Period as confirmed and recorded in the May 2012 variation form therefore provided for gross pay of about £102,000 per annum (about £8,500 per month). Indeed, those terms continue to apply today (as I understand it).”

At para. 17 he said:

“The founding assertion behind Mr Shalaby’s claim is that he was in fact required by the Trust to undertake, and did undertake, duties amounting to the equivalent to the full 12 PAs for which he was paid before any On Call work and, in addition, to participate in the second on call orthopaedic rota, which I have found was a 1 in 8 rota at all material times. His claim, therefore, is that the Trust has wrongfully failed to pay him for his On Call duties. As a unit of pay calculation, 1 PA is equivalent to 4 hours of work at standard payment rates. So, for example, if a surgeon’s weekly duties included three four-hour clinics, that element of his responsibilities would contribute 3 PAs in the assessment of his pay. Four five-hour theatre lists would contribute 5 PAs, and so on. That concerns normal planned day-time working duties. For work out of hours (i.e. overnight during the week and at weekends), the rate of pay is time and a third. So three hours worked should contribute 1 PA.” (Emphasis in original)

At para. 20 he said:

“Mr Saavedra’s evidence (which I accept, although challenged by Mr Shalaby) was that the requirement for actual work out of hours reduced after 2008. Furthermore, his evidence is, and the documentary record shows, that from September 2012 the Trust moved to a non-resident On Call rota. The timed records of surgeries, even allowing for imperfections in the data set, strongly support the conclusion that being On Call during the Claim Period did not involve a substantial burden of actual worked hours.”

At para. 22 he said:

“The Trust says that from its perspective, during the Claim Period Mr Shalaby’s contract was for 10+2 PAs, being 10 PAs for his ordinary work plus 2 PAs for his On Call work. On the evidence I have summarised, 2 PAs for the On Call duty was, in my judgment, generous to Mr Shalaby.”

At paras. 42-51 the judge set out his conclusions on the claim. First, at para. 42 he set out the issues as follows:

“As confirmed by Mr Shalaby’s written and oral submissions in closing, his case requires me to be satisfied of all of the following necessary elements:

(i)

His final Job Plan as staff surgeon signed in June 2009, governed his employment as a matter of contract during the Claim Period;

(ii)

His actual duties as required of him by the Trust and undertaken during the Claim Period, were in fact as set out in that June 2009 Job Plan;

(iii)

A change to the timetabling of his On Call rota duties from September 2012 made a fundamental change to his working conditions such that his On Call duties became additional to a full 12 PAs (i.e. forty-eight hour) working week;

(iv)

Accordingly, from September 2012 but not for July and August 2012 he was required to work in excess of a forty-eight hour working week, thus beyond what his pay calculated for 12 PAs was paying him for and unlawfully contrary to the European Working Time Directive. Specifically in that regard, the Trust’s statements, contemporaneous and subsequent, that the change in September 2012 was in fact a change of resident On Call to non-resident On Call rota duties were and are a fabrication, ‘cooking the facts’ as he called it, to pretend that the Trust was complying with the Working Time Directive when in reality it no longer was.”

At para. 43, the judge answered the first of those questions in the following way:

“… I do not regard it as even arguable that the June 2009 Job Plan governed Mr Shalaby’s job as Associate Specialist upon his return from secondment. It therefore did not govern his job during the Claim Period as he contends.”

At para. 44, the judge said:

“The contention arises at all because no formal replacement Job Plan was put in place when he returned from secondment. Indeed, even today, such a standing formal Job Plan remains to be finalised. However, the pay variation form (to which I have already referred), following the agreement in April 2012 dealing with the back pay claim, makes clear, expressly, Mr Shalaby’s basis of contract by then, and for the period from April 2012 with which I am concerned, namely that of Associate Specialist on a forty hour basic working week and on the basis of (as I have described it) 10+2 working sessions.”

At para. 45 the judge said:

“Mr Shalaby’s return to work from secondment was in addition immediately preceded by exchanges of email correspondence in May and June 2012, the upshot of which was:

(i)

To make it abundantly clear, that when he returned he would be doing so on the basis of new working arrangements to fit his return from secondment and re-graded Associate Specialist Terms and Conditions.

(ii)

That that would mean a new Job Plan would apply;

(iii)

That the Trust would expect a degree of flexibility to be built into any Job Plan; and

(iv)

Pending any finalisation of a formal standing Job Plan, Mr Shalaby could take it that his duties would accord with the example weekly plan with which he was provided by that email correspondence.”

At para. 46 the judge said that:

“…in my judgment, the basis upon which Mr Shalaby returned to full-time work with the Trust at the Ealing Hospital from secondment was that the June 2009 Job Plan was historic and no longer relevant. As it seems to me, the correct analysis, put more positively, is that his Job Plan was to work in accordance with the weekly plans that would be created from week to week and to be willing to show a degree of flexibility in relation to that, all under cover of the Job Variation Form providing for his employment to be on a 10+2 sessions basis both as to duty and as to pay. …”

At para. 47, the judge turned to the second necessary ingredient which he had earlier identified at para. 42, namely that the Appellant’s actual duties during the Claim Period were as per the June 2009 Job Plan. He rejected that assertion for the reasons which he set out in more detail in three sub-paragraphs. He rejected certain contentions which the Appellant was making, at para. 48. He concluded on this issue, at para. 49:

“In conclusion, therefore, in my judgment, Mr Shalaby’s actual duties during the Claim Period were all within the agreed 10+2 basis for his employment and pay. Indeed, if anything, by reference to what I said in my initial analysis of the claim about the contribution of the On Call rota, there might if anything be room for the view that 10+2 had been generous.”

At para. 50 the judge turned to the third and fourth ingredients of the claim as he had identified them at para. 42. He rejected the claim that the On Call rota timetabling change which had been made in September 2012 was anything other than the change as described by the Respondent Trust. It was a change from resident On Call to non-resident On Call. The judge therefore, and in any event, rejected the further claim that from September 2012 the Appellant’s On Call duties took him beyond the 48 hour working week. He specifically rejected what he described as the very serious allegation to which the logic of the Appellant’s argument took him, that since September 2012 the Trust had been “cooking the facts” in order to maintain a false façade of compliance with the Working Time Regulations, which implement the EU Working Time Directive. The Judge further dealt with why he rejected that assertion at para. 51 of his judgment.

I will return later to the judgment on costs which was given after the judgment on the claim had been delivered.

At first sight it might appear that the Appellant faces an uphill struggle in mounting this appeal. It might be said that he seeks simply to query findings of fact which were made by the trial judge after three days of evidence and in circumstances where he had the opportunity to consider the evidence as a whole, including live evidence from witnesses as well as documentary evidence. However, the foundation for the submissions which are made on behalf of the Appellant by Ms Karbani is the decision of this Court in Weymont v Place [2015] EWCA Civ 289, at para. 4, where Patten LJ said:

“The relative immunity of findings of fact from interference on appeal depended upon the trial process having been conducted in a way which confirmed that the judge had properly considered and understood the evidence; taken into account the criticisms of the evidence advanced by the parties’ legal representatives; and reached a balanced and objective conclusion about points on which differing or inconsistent evidence had been given.”

It is important to place that passage in its context and begin with the starting point, which was set out by Patten LJ at para. 1:

“The Court of Appeal does not usually entertain appeals where the only grounds of challenge to the judgment of the trial judge relate to the judge's findings of fact. Decisions of this Court and the Supreme Court have repeatedly recognised the advantages which the trial judge enjoys in hearing the live evidence and assessing the credibility of the witnesses. The function of the appeal court is not to re-hear the case but to review the decision which the trial judge has made. For this reason, it will only interfere with his findings of fact if it becomes clear that there was no evidence to support them; that the judge misunderstood the evidence; or that he made findings which no reasonable judge could, in the circumstances, have made …”

As Patten LJ went on to say, at para. 2:

“The reasons for this reluctance to interfere with the fact-finding process that has taken place at trial are not difficult to discern. The need for finality in litigation; a speedy resolution of disputes; and not least the costs of bringing a claim to trial all militate strongly in favour of respecting the trial process as determinative of the factual disputes between the parties. The trial should therefore ordinarily be treated as what the United States Supreme Court in Anderson v City of Bessemer (1985) 470 US 564, at pp. 574–575 described as the main event …”

The first criticism that Ms Karbani makes of the judgment is that it lacked balance. In particular she submits that the judge failed to take proper account of the fact that there had been failings on the Respondent’s part, for example in not providing the Appellant with an up to date statement of the terms and conditions of his employment in 2012 or later. I would reject the submission that there was a lack of balance in the judgment. The judge was well aware of the various ways in which the Respondent had failed in its obligations, for example to provide an up to date written set of the terms and conditions of employment: see para. 44 of his judgment, which I have cited above. In my view, this did not affect the judge’s fundamental findings of fact as to what the contractual duties of the Appellant in fact were.

Secondly, Ms Karbani submits that the judge misunderstood part of the Appellant’s argument. The judge understood the Appellant’s argument to be that there was an attempt by the Respondent to mislead as to the truth, in order to circumvent the employer’s obligations under the Working Time Regulations: see paras. 32(iii), 42(iv) and 50 of the judgment. If I understood her argument correctly, Ms Karbani submits that it was obvious that there could have been no such attempt. She reminds this Court that there is express provision, in Regulation 5 of the Working Time Regulations, which enables the parties to “opt out” of the normal 48 hour working week by agreement. In fact there are documents before the Court which at least suggest that there was an agreement to opt out in this case: a letter dated 5 January 2003 from Tracy Nelms (Payroll Manager) to Mr Shalaby, asking him to sign a form which was attached to the letter; and an opt-out agreement which appears to have been that attachment. Although the version of that document which is before the Court was signed by Mr Shalaby it is undated.

Even if there were any force in this submission by Ms Karbani, it does not, in my view, materially affect the central findings of fact which the judge made, which were based on the core documents at the trial and which led him to conclude that the true contractual arrangements were that the Appellant had to work a schedule of “10+2” PAs.

Thirdly, Ms Karbani complains about the way in which the judge referred to the topic of a fee remission form in the High Court: see paras. 35-41 of the judgment. She submits that this was “worrying” because it seems to have betrayed a concern about the Appellant’s trustworthiness which was not warranted. In my view, it is unnecessary to go into the details of that matter. Even if what the judge said in that passage was or may have been incorrect, it did not have any material impact on the substance of his judgment. This is made clear by the paragraph immediately preceding that passage At para. 34 he said:

“Since that is sufficient for the purposes of this judgment ...”

That makes it clear that the judge’s reasoning, which he had already set out in full before he turned to the topic of fee remission, was sufficient to decide the claim for breach of contract against the Appellant. In particular I would note that, at para. 33, the judge said:

“… What matters in this case is what Mr Shalaby’s contractual and actual duties were, undertaken at the requirement of the Trust as his employer during the Claim Period. …”

To the extent that the judge took into account the live evidence before him, he was entitled to form the view which he did about the credibility and accuracy of recollection of the various witnesses from whom he heard, including the Appellant. He did not find the Appellant to be an impressive witness: see paras. 32-33. Of greater importance, in my view, he found that the evidence of the witnesses called by the Respondent was both honest and, in substance, unchallenged. He accepted that the evidence of Mr Saavedra in particular was “accurate”: see para. 31. Of great importance is the fact that the judge accepted the submission made to him by Mr Cunnington

“that none of those witnesses make any suggestion or hints at the possibility that their participation in the On Call rota was on top of a requirement to work a forty-eight hour week on ordinary duties …” see para. 26 of the judgment.

The fourth criticism that Ms Karbani makes of the judgment is that the judge failed to take proper account of various documents that were before him.

The first of those documents is a letter dated 6 June 2012 from Seema Ahmed (Medical Staffing Manager) to Mr Shalaby. That letter confirmed “the following changes to your contract with effect from 1^st April 2012”, which were an increase in the basic salary from £70,126 per annum to £84,948. The letter continued:

“All other terms and conditions of employment remain the same. This letter should be regarded as a formal amendment to your current contract of employment …”

I note that the letter is strictly speaking only an offer to vary the contract: it left space at the bottom for Mr Shalaby to sign and date it to accept the changes to his contract but that part of the document is in fact unsigned and undated in the version which is before the Court. That may not matter in the scheme of things. What is crucial is that the Appellant accepted before the trial judge, and Ms Karbani accepted on his behalf before this Court, that a document headed ‘Staff Variation Form” which bears the dates 21 May 2012 and 31 May 2012 was agreed by Mr Shalaby at the time: see para. 15 of the judgment, where this was described by the judge as “a significant document”. That document also refers to an increase in the Appellant’s basic salary from £70,126 to £84,928 but it includes other terms too, in particular that the hours required would be 40 per week and that the number of sessions would be “10+2”. Once that is accepted by the Appellant, it is impossible to see how the letter of 6 June 2012 helps his case.

The second document that Ms Karbani submits was not properly taken into account by the judge is the 2009 Job Plan. She submits that that document treated participation in the On Call rota as an additional service, not part of the basic duties of Mr Shalaby. The fundamental difficulty with this submission is that the judge carefully took account of the Job Plan but did not regard it as “even arguable” that it governed the Appellant’s job as Associate Specialist on his return from secondment: see para. 43 of his judgment; and also para. 46, where he said that the 2009 Job Plan “was historic and no longer relevant.” In my view, those findings were amply open to the judge, who had the advantage of seeing and hearing all of the evidence at trial, including the evidence of the witnesses to whom I have referred earlier.

The third document that Ms Karbani submits was not properly taken into account by the judge is the Terms and Conditions for Associate Specialists dated April 2008. Ms Karbani submits that this was at most a “framework” document, and that it left to be worked out in further detail what precisely would be the “concrete” requirements which would have to be worked. In that context she drew our attention to Tables 1 and 2 in the document, which set out “possible allocation of Programmed Activities” where emergency work arises either out of hours or not out of hours. No doubt Ms Karbani is right to say that the 2008 Terms and Conditions document is a framework document. After all it is a document expressly designed for the whole of England and is not confined to this Trust or the contract between this Trust and this Appellant. However, the judge had a great deal of other evidence before him, in particular the “significant” Staff Variation Form to which he referred at para. 15 of his judgment. The crucial finding that the judge made was, as he concluded at para. 46 (and which I quote again for convenience):

“… the correct analysis, put more positively, is that his Job Plan was to work in accordance with the weekly plans that would be created from week to week and to be willing to show a degree of flexibility in relation to that, all under cover of the Job Variation Form providing for his employment to be on a 10+2 sessions basis both as to duty and as to pay. …”

In my view, the judge was perfectly entitled to reach that conclusion on the totality of the evidence before him, both documentary and oral.

The fourth document which Ms Karbani submits was not properly taken into account is a document dated 14 August 2014 with the title ‘Job Planning – Key Principles for Consultants, Associate Specialists and Speciality Doctors’. The document was issued by this Trust and was addressed to Clinical Directors, Divisional General Managers and Heads of Operations. Ms Karbani submits that what can be derived from this document is that the 2008 Job Plan was not comprehensive in setting out all the duties that were required because the 2014 document refers to other matters such as administrative duties. Leaving aside (i) any difficulties arising from the fact that the document post-dates the relevant time (when the Appellant returned from secondment in 2012) and (ii) that it does not appear on its face to be a document setting out terms and conditions of anyone’s employment, this document simply informs its recipients of the sort of duties that could be included in a Specialist Associate’s PAs. It does not assist in answering the question: what were the PAs agreed in the case of an individual doctor such as the Appellant?

The final document that was drawn to our attention by Ms Karbani (one which we were told was before the trial judge but which was contained in an “Unagreed Bundle of Documents” filed by the Appellant in this Court) is an email dated 2 March 2015 from Roy Kuku (Senior Employment Advisor at the British Medical Association). That email sets out what happened at a meeting which took place on 25 February 2015 and which was attended by Mr Shalaby and various representatives of the Trust as well as Mr Kuku. The email appears to record the discussion that took place at that meeting, which was called to try to resolve a dispute about the way in which back pay should be calculated. Ms Karbani submits that this discussion supports the inference that the contractual terms were as the Appellant contends and not what was found by the judge. I do not find this email helpful in resolving the issues in this case. It post-dates the crucial events of 2012 by nearly three years. On its face it does no more than record a discussion rather than an agreed position between the parties. Even at its highest, Ms Karbani relies on it only for what inference can be drawn rather than on what the email actually says.

The fifth criticism that Ms Karbani makes is that the judge failed to have regard to certain documents that the Appellant wished to place in evidence before him. That application was made just before Christmas 2016. The trial was due to take place in January 2017. Such decisions as to the admissibility of evidence and the timing of its receipt are very much matters for the case management function of the trial judge, who will be better placed than this Court to assess how a particular piece of evidence fits into the overall structure of the case, and therefore a wide ambit of discretion will be afforded to him or her by this Court on appeal.

However, at the hearing of this appeal we were prepared to look at those documents, which were contained in Unagreed Bundle, on a contingent basis in case they were relevant and important. I will address them here because I do not consider it to be fruitful to have unnecessary and potentially sterile arguments as to the admissibility of documents and I would not wish the Appellant to have any sense of grievance that justice has not been done. However, I should not be taken in any way to be criticising the judge’s exercise of his wide discretion and in the end I have come to the view that none of the documents in fact takes things further.

The first of these documents is ‘A UK guide to job planning for speciality doctors and associate specialists’ issued by the British Medical Association in November 2012. Ms Karbani drew our attention in particular to para. 8.18, where it was said: “A basic full-time contract is for ten PAs. …” I am far from persuaded that this document has any relevance to anyone’s terms and conditions of employment in the way that, for example, a collective agreement between an employer and a trade union can be incorporated by reference into an individual contract of employment. Leaving that aside, the fundamental difficulty with this submission is that the document itself goes on to recognise that there may be “additional” PAs required and that, while this should be regarded as “a temporary and short-term measure” (para. 8.18), such additional PAs “may be used to reflect regular, additional duties or activities … that cannot be contained within a standard ten PA contract.”

The second document that falls into this category is Guidance from the Royal College of Surgeons of England SAS Committee on ‘Quality indicators for job plans for SAS surgeons’. There are several difficulties with any attempt to place reliance on this document. First, it is dated May 2015, long after the variation of the Appellant’s contract with which this case is concerned in 2012. Secondly, it is not a collective agreement or any similar document that might have any direct relevance to an individual’s terms and conditions of employment. Thirdly, the document is expressed in general terms and provides (no doubt helpful) guidance but it does no more than that.

The third set of documents in the Unagreed Bundle to which our attention was drawn by Ms Karbani is an exchange emails between Mr Shalaby and his employers in June and July 2017 concerning a possible reduction from 12 PAs to 11 (a proposal which was not pursued) and arrangements that were made for some arrears of pay to be made. Ms Karbani submits that these emails support the inference that the Appellant was in fact working 12 PAs before account was taken of his participation in the On Call rota. I do not think that such correspondence, which took place some five years after the crucial variation of contract in 2012, provides any assistance in the resolution of the issues in this case. In any event, it is far from clear to me that the content of the emails supports the inference which Ms Karbani submits can be derived from them.

I have therefore come to the conclusion that there is nothing in any of the documents that have been drawn to our attention on behalf of the Appellant to lead me to doubt the correctness of the decision reached by the trial judge on the central issue before him. He was entitled to reach the view that he did as to what the contractual terms were as a result of the variation that took place when the Appellant returned from secondment in 2012 and to dismiss the claim for breach of contract.

After giving judgment on the claim for breach of contract the judge considered the application for costs which was made on behalf of the Respondent by Mr Cunnington.

The factual background to the costs order made by the judge can be summarised briefly. The Respondent made a Part 36 offer on 11 September 2015 to pay £10,842.15. On 30 October 2015 it was ordered to pay that sum by the order of Master Leslie and did so on that date.

It was inevitable that the Appellant should have to pay the Respondent’s costs as his claim had been dismissed. However, what was in dispute was whether the basis for such an order should be the standard basis or the indemnity basis. On behalf of the Respondent Mr Cunnington applied for an order that costs should be awarded on an indemnity basis from 1 November 2015. That was the day after the Respondent paid the supplement to which the Appellant was entitled.

At para. 3 of his judgment on costs the judge said:

“In relation to the indemnity basis of that part of the costs order, that follows as the default rule because the Claimant has failed to better the Part 36 offer, the first Part 36 offer, made I am told in September 2015, which was an offer to settle the matter for the 4% supplement amount paid at the end of October.”

At para. 5 of the costs judgment, the judge said:

“I emphasise (in case it matters) that Mr Cunnington only put his application on the basis of Part 36, but of course would say that certain features of the judgment that I have delivered which might even in the absence of a Part 36 offer perhaps have led to a submission with some force that costs should be awarded on an indemnity basis on any view make it not unjust to apply the Part 36 default rule.”

It was and is common ground that the Appellant failed to obtain a judgment which was more advantageous than the Respondent’s Part 36 order and therefore CPR 36.17(1)(a) applied. It followed that CPR 36.17(3) also applied: where that provision applies the court must, unless it considers it unjust to do so, order that the defendant is entitled to costs from the date on which the relevant period expired.

The terms of para. (3) are different from those of para. (4). Para. (4) applies in a case falling within CPR 36.17(1)(b), that is where judgment is given against the defendant which is at least as advantageous to the claimant as the proposals contained in a claimant’s Part 36 offer. Where that provision applies, costs are to be awarded on the indemnity basis: CPR 36.17(4)(b).

Before this Court Mr Cunnington fairly and candidly accepted that the judge did not receive the assistance from him that he should have done and therefore fell into error. The judge appears to have thought that the provision relating to costs on an indemnity basis also applied to the present sort of case, when judgment is entered against a claimant. In fact it has been made clear by this Court that the significance of the absence of any reference to an indemnity basis in what is now CPR 36.17(3) is that:

“… In normal circumstances, an order for costs which the court is required under that Part to make, unless it considers it unjust to do so, is an order for costs on the standard basis. That means that if the court is going to make an order for indemnity costs, as it can …, it should do so on the assumption that there must be some circumstance which justifies such an order being made … there must be conduct or (I add) some circumstance which takes the case out of the norm.”

See Excelsior Industrial and Commercial Holdings v Salisbury Hammer Aspden and Johnson [2002] EWCA Civ 879, at para. 19 (Lord Woolf CJ).

At one time there was before this Court a Respondent’s Notice, in which it was suggested that, although the basis on which the judge made the costs order on an indemnity basis was wrong, nevertheless the judge was entitled to make such an order because of the conduct of the appellant. This is something to which the judge himself alluded in giving his costs judgment, at para. 5. However, it is important to note, as the judge himself did, that the only basis on which the application for costs to be on an indemnity basis was made by Mr Cunnington was that this was the default position required by Part 36. Before this Court, having had the opportunity to reflect on his position and take instructions, Mr Cunnington informed us that he would not pursue the grounds raised in the Respondent’s Notice.

In those circumstances I have come to the conclusion that the appeal against the costs order must be allowed. The only basis on which costs were ordered to be on an indemnity basis was that this was required by CPR Part 36. That was wrong as a matter of law, as is now conceded by the Respondent. Accordingly I would substitute an order that the costs had to be paid on the standard basis and not the indemnity basis.

For the reasons I have given I would dismiss the appeal against the order dismissing the claim for breach of contract but allow the appeal against the order that costs should be paid on an indemnity basis and substitute for that an order that the costs awarded below should be on the standard basis.

In accordance with the normal practice governed by Practice Direction 40E of the Civil Procedure Rules (“CPR”) a draft judgment was circulated to the parties on a confidential basis on 22 May 2018. It was directed that the parties should either file an agreed order or make written submissions on any outstanding consequential matters by 4 pm on 5 June 2018. The Respondent complied with that direction. The Appellant, who by then appears to have been acting in person again, did not comply. He has not given any explanation for his failure to comply. Further, this Court has been informed that he has failed to respond to attempts by the Respondent to seek agreement on consequential matters, on 29 May 2018 and again on 4 June 2018. Rather than engaging with the Court or the Respondent the Appellant has made written submissions dated 6 June 2018. I have taken those submissions into account despite the Appellant’s failures so as to avoid any risk of injustice.

The Respondent applies for its costs of the appeal except that the Respondent accepts that it should bear the cost of its own Respondent’s Notice in the costs appeal. The Appellant resists that application and submits that the Respondent should pay his costs in the Court of Appeal (if any).

The starting point is the general rule in CPR 44.2(2) that the unsuccessful party will be ordered to pay the costs of the successful party. In the present case, the Respondent is undoubtedly the successful party in the substantive appeal. As a matter of common sense it was the substantive appeal which concerned the real issue in dispute between the parties. It was the substantive appeal which took up the vast amount of the time needed both in preparation and at the hearing itself.

The Respondent submits that the Court should not make a split order as to costs. The Appellant agrees although he disagrees as to the costs order that should be made.

I accept the submissions made on behalf of the Respondent. Any percentage reduction to the costs payable would either be miniscule or would risk unfairness because it would not properly reflect the victory which the Respondent has secured. The justice of the case overall (in particular the fact that the costs appeal was allowed) can be properly reflected by not permitting the costs of the Respondent’s Notice. It is difficult to see what costs the Appellant can have incurred in relation to the costs appeal.

The basis for the Appellant’s objection to the Respondent’s application for its costs is that he submits that the Respondent unreasonably refused to mediate. I do not accept that submission. This is not a case which is analogous to PGF II SA v OMFS [2013] EWCA Civ 1288. This is not a case in which the Respondent was “silent” in response to an invitation to mediate. To the contrary, from the outset it expressly stated that it wished to engage in the Court of Appeal mediation scheme. It was the Appellant who declined to participate in that scheme because he suggested an alternative approach, by way of a meeting which he would attend only on certain conditions which were not acceptable to the Respondent. In the circumstances of this case therefore I do not consider that there is any good reason to depart from the normal order as to costs.

Accordingly I would order that the Appellant shall pay the Respondent’s costs of the appeal, save that the Respondent shall bear the costs of its own Respondent’s Notice. I do not accept that this is a case which is suitable for summary assessment, as the Appellant has suggested. This is a case which is eminently suited to detailed assessment by a costs judge if agreement cannot be reached.

The Appellant applies for permission to appeal to the Supreme Court. With respect to him he appears to rely upon provisions which apply to appeals to the Court of Appeal rather than the Supreme Court, invoking CPR 52.6(1).

In my view an appeal to the Supreme Court would have no reasonable prospect of success and certainly would not raise the sort of points of law of general importance which are suitable for consideration by the Supreme Court.

The Appellant also seeks an order from this Court extending the time for filing an Appellant’s Notice until 20 July 2018. The time limit which applies for an application for permission to appeal to the Supreme Court after this Court has refused to grant such permission is governed by the Supreme Court Rules 2009: see rule 11(1). Any application for an extension of any time limit set by those Rules must be determined by the Supreme Court itself: see rule 5(1).

Accordingly I would refuse permission to appeal. I would also refuse the application for an extension of time.

I agree.

I also agree.