IN THE HIGH COURT OF JUSTICE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM CENTRAL LONDON COUNTY COURT
MR RECORDER HOCKMAN QC

DIBBLE V PFLUGER 2010

DIBBLE PLAINTIFF/CLAIMANT
PFLUGER: DEFENDANT
Factual background:
The cohabitants were engaged but never married, and they shared the woman's large home.
When the house needed to be renovated, the woman put it in their joint names and took out a
£25,000 mortgage. According to the deed of trust, the woman owned two-thirds of the
beneficial interest and the guy owned one-third, less the mortgage. The man sold his house and
signed a written agreement promising to pay his mortgage payments. The agreement stated
that it would end when the parties mutually agreed to stop living together, in which case the
agreement included procedures for the home's disposition.
The woman was given land in Poland by her parents, on which she built a house. The man made
a financial contribution to the Poland home's construction. A smaller English property was
purchased as tenants in common in equal parts after the main English property was sold. The
couple split up a few months after they moved to Poland. The woman requested an order for
the English property to be sold on the basis of an equal distribution of the selling proceeds. The
individual claimed a beneficial stake in Poland property, claiming express agreement and/or
shared intention, which he proved through his contributions. The recorder came to the
conclusion that the man had no interest in Polish real estate. The man made an appeal.
Recorder’s findings:
In reaching my final conclusions regarding the Polish property, it appears to me that I must
keep in mind that one peculiar characteristic of this case is that the land was given to the
claimant by her father rather than purchased by either of the parties. This has two
ramifications, according to Mr Dew: first, it is fundamentally less likely that there was a
common desire for the property to be jointly owned, because unmarried couples do not
generally seek to share property given to one of them. Second, because neither party
purchased the property, the defendant is unable to establish a contribution to the purchase. As
a result, he must rely on supposed donations toward the property's construction costs, which I
have previously determined. Another unusual characteristic of the case is that there are
obvious examples of cases in which the parties certainly did create a shared desire to own
property jointly and have written down and specified their individual rights.
Appeal allowed and re-hearing ordered. The recorder had not considered Law Reform
(Miscellaneous Provisions) Act 1970, s 2 concerning property of engaged couples. Payments
towards the purchase/building of a Polish property could indicate a common intention that the
defendant would have an interest in the property and it behoved the Recorder to explain why
he could not find an inferred or imputed intention to create an interest in the land if such
payments had been made.

Discussion:

The judgement, in my opinion, is gravely defective. The Recorder failed to make a sufficient
judgement on the usage of the £6,000 payment in March 2004. That payment was sufficient to
sustain a conclusion of common intent, and the Recorder provides no reason why it should not
have been drawn. Whether or not the £15,000 paid in July 2004 was a loan, it was used to help
with the roof's construction, but the Recorder couldn't decide whether that was enough to give
an interest in the land, whether on ordinary equitable principles or through the operation of
section 37 of the Matrimonial Proceedings and Property Act 1970. He came up with nothing.

Justice’s remarks for mediation:

For these reasons, I believe the appeal should be allowed. This lawsuit appears to have already
cost a significant amount of money 28. This scenario begs for each participant to provide a
realistic view of the likely outcome. As a result, it serves as a model for mediation. Spending
another four days at the County Court would be extremely dumb.

EGAN V MOTOR SERVICES (BATH) LTD

[2007] EWCA Civ 1002, CA (Civ), Ward, Arden and Smith LJJ, 18 October 2007

Sale of Goods - Implied condition – Satisfactory quality - Whether on the evidence the judge
had been entitled to find for the defendant - Sale of Goods Act 1979
In March 2004, Mr Egan took delivery of a brand new Audi TT car from the respondent. The
following month, he sought to reject it on the ground that it was unsatisfactory. The
respondent refused to accept the rejection and, in due course, the appellant sued for the return
of the purchase price and damages. The claim having been dismissed at first instance, he
appealed. CA held that the judge’s findings that the car had a tendency to veer and that the
steering was of satisfactory quality were not mutually inconsistent. Although it was unfortunate
that the judge has not provided any reasons for the rejection of certain evidence, he had been
entitled to prefer other evidence. The claimant further argued that a buyer should be entitled
to reject the car because, under section 14(2B)(c) of the Sale of Goods Act, goods may be of
unsatisfactory quality by reason of minor defects. While that was so, the overall test of whether
goods are of satisfactory quality was to be found in section 14(2A). Goods are of satisfactory
quality if they meet the standard that a reasonable person would regard as satisfactory, taking
account of any description of the goods, the price (if relevant) and all other relevant
circumstances. This was an objective test and a matter of judgment on the individual facts of
each case.

Remarks on mediation:

What I have found profoundly unsatisfactory, and made my views clear in the course
of argument, is the fact that the parties have between them spent in the region of
£100,000 arguing over a claim which is worth about £6,000b raise that matter again
in this judgment to make the point, as firmly as I can, that this is a paradigm case
which, if it could not have been settled by the parties themselves, customer and
dealer, then it behoved both solicitors to take the firmest grip on the case from the
first moment of instruction. That, I appreciate, may not always be easy, but perhaps
a copy of this judgment can, at the first meeting, be handed to the client, bristling
with righteous indignation, in this case the customer who has paid a small fortune
for a motor car which does not meet his satisfaction, and the dealer anxious to
preserve the reputation of his prestige product. "This case cries out for mediation",
should be the advice given to both the claimant and the defendant. Mediation is a
perfectly proper adjunct to litigation. The skills are now well developed. The results
are astonishingly good. Try it more often.

Nigel Witham Ltd v Robert Smith and others [No.2] [2008]EWHC 12

(TCC)
The High Court has reviewed and sanctioned an extension of the Halsey v Milton Keynes
General NHS Trust [2004] EWCA Civ 576 (CA) criteria beyond cases concerning mere refusals to
mediate. Business impacts include:

 Parties will wish to think very carefully before agreeing to lift the without prejudice veil
from mediation – costs sanctions may follow if conduct at the mediation is found to
have been unreasonable
 Beware delaying mediation until very late – costs penalties could follow in exceptional
circumstances

Facts of the case:

This case concerned building renovations undertaken by the claimant on two hotels owned by
the defendants. The work was delayed and relations broke down between the parties
culminating in the claimant issuing proceedings for unpaid fees. The defendants submitted that
the claimant had been overpaid. A judicial settlement conference took place shortly before the
trial but was unsuccessful. The defendants were eventually awarded £1,320.08 at trial, taking
into account the claim and counterclaim.
 Decision on costs

Judge Coulson QC found that an adverse costs order might be made against a successful party if
it mediated but delayed unreasonably in doing so. The court recognised that
the Halsey principles might apply in an “exceptional case” where mediation was very late and
had little chance of success and if the successful party unreasonably delayed in consenting to
mediation. On the facts the court held that nothing suggested that the defendants had
unreasonably delayed mediation, particularly given that the claimant had stalled in
particularising its claim. Further, even had the defendants consented to mediation earlier, the
court was not persuaded that it would have achieved a settlement. Nigel Witham Ltd illustrates
the tension between claimants proposing early mediation and defendants delaying it until they
know the case against them. In exceptional cases that delay may of itself amount to
unreasonable conduct attracting costs sanctions.

Brookfield Construction (UK) Ltd v Mott Macdonald Ltd

[2010] EWHC 659 (TCC) (31 March 2010)

These proceedings arise from the delayed Wembley Stadium development. MPX is claiming in
excess of £200m from Mott under various heads of claim in respect of engineering consultancy
services provided in connection with the project.
A hearing on the substantive issues has not yet taken place and as such a detailed review of the
underlying facts is not required for the purposes of this note. Rather, the purpose of Mr Justice
Coulson’s Judgment was to record the principal matters decided during two recent review Case
Management Conferences (“CMCs”) and to act as an aide memoir in the future conduct of the
proceedings. This was in furtherance of the Judge’s stated aim of trying to ensure that this
dispute does not go the same way as the Cleveland Bridge (UK) Ltd litigation, “notorious for the
vast costs incurred”, and for there to be a sensible cost/benefit ratio for both parties.

The Facts
MPX and Mott engaged in the TCC pre-action protocol process between 2005 and 2007 at
significant cost to the parties with apparently “little real value to either side”. MPX had spent
£8.48m during the pre-action process, which included £5m in relation to experts’ fees, and then
changed solicitors in September 2007.
The first CMC was held on 30 July 2009 and focussed on the deficiencies in MPX’s pleaded case
and the best way to try the claim, which included a proposal for a sub-trial of issues arising
during the project up until 2 August 2004. The Judge emphasised that if the Court ordered a
lengthy sub-trial in early 2011, the Court would, save in exceptional circumstances, expect the
parties to settle their differences thereafter, as it was not a proportionate use of the Court’s
resources to envisage a further lengthy trial.
A further CMC was held in December 2009, at which it became apparent that MPX had not
addressed the question of the proposed issues to be tried in the sub-trial in a coherent way and
Mott complained about the high level of MPX’s costs. This caused the Judge to convene two
further review CMCs to address the costs issue and the scope of the sub-trial.
The Issues
1. What issues would be included in the scope of the proposed sub-trial in 2011?

2. What were Mr Justice Coulson’s views on the costs that MPX had incurred?

3. Whether the Court should make any orders by reference to the amount of the parties’
estimated costs?
The Decision
At the CMC in relation to the sub-trial, the Judge expressed reservations about (1) whether any
meaningful decisions as to critical delay could be made at a sub-trial which had a cut-off date
part-way through the project, and (2) whether a decision on a small percentage of the claims by
value (~20%) would lead to a settlement of the whole case. Nevertheless, following assurances
by the parties that all relevant breaches had occurred by 2 August 2004 and that it would be
possible to address issues of criticality, the Judge finalised a list of issues to be decided at the
sub-trial.
At the costs related CMC, Mott made eight complaints about the level of MPX’s costs. The
Judge agreed to give an indication as to what might be regarded as reasonable and
proportionate costs, as this may assist the parties in the prospect of settlement or ADR.
Up until 11 December 2009, MPX had incurred costs of £28.675m and MPX estimated that it
would spend a further £17m for the sub-trial, i.e. an overall estimate of £45.695m up to mid
2011. By comparison Mott’s overall estimate of its costs up to the end of the sub-trial was
£27.5m. The Judge commented that in assessing reasonableness and proportionality, the sum
of the costs incurred had to be considered against the product of that expenditure. The Judge
expressed on-going concern about the clarity of MPX’s pleadings and concluded that the overall
costs incurred by MPX were potentially disproportionate and unreasonable.
On a related point, Mr Justice Coulson noted in round figures that £12m of the £28.5m incurred
by MPX related to experts and described the £5m spent during the pre-action process
as “astonishingly high”. The Judge considered the £12m expenditure to be prima
facie unreasonable and disproportionate because the existing pleadings did not clearly
demonstrate the use of an expert analysis of important events and causes of critical delay.

Mr Justice Coulson was also concerned about the level of future costs. Perhaps the most
significant outcome of the CMC in relation to costs was the Judge’s direction, and the parties’
agreement to a commensurate order, that costs would only be recoverable for the sub-trial
beyond the December 2009 estimate if the party in question was able to demonstrate an
unforeseen increase which, in all the circumstances, the Judge concluded was reasonable. In
this way the Court had achieved a form of costs control which was reasonable, proportionate
and in accordance with the overriding objective. The Judge also made further remarks
encouraging the parties to resolve their differences in a sensible and cost effective manner.
Comment
This Judgment is a helpful reminder to litigants and practitioners that although the Court is
available as a forum for objectively determining disputes, in any litigation, but especially large
complex cases, co-operation to properly refine key issues prior to trial and making reasonable
attempts to resolve differences by ADR are vital steps in order to avoid incurring excessive
costs.
Mr Justice Coulson is justly determined to avoid the Court’s resources being called upon to
make a final decision on all of the issues in this dispute beyond the sub-trial. The Judge’s timely
comments on costs considerations and ADR may well bring the parties closer to achieving a
similar result before the sub-trial begins.