Horace Holman Group Ltd v Sherwood International Group Ltd

On an application for permission to appeal, a challenge to a trial judge’s pure findings of fact has no real prospect of success where the findings are supported by evidence the judge was entitled to accept and are not arguably perverse. In assessing loss caused by delayed implementation of a computer system, the period may run from the contractual implementation date to the actual implementation date where the same redundancy process would have applied in either scenario. A downturn in revenue does not preclude a finding that computerisation caused redundancies where transaction volumes remained constant and the system enabled work to be done at lower cost.

The claimant, an insurance broker, contracted with the defendant computer software supplier for implementation of an integrated computer system. The system was not successfully implemented, and the claimant terminated the contract. The High Court entered judgment for the claimant with damages to be assessed, and on 7 November 1999 assessed damages at £2,622,259.

The defendant sought permission to appeal five aspects of the assessment, principally concerning causation, the period used to calculate staff costs, and whether particular redundancies resulted from implementation of a replacement system. The central issue was whether any proposed ground had a real prospect of success.

Lord Justice Dyson, sitting alone, refused the application for permission to appeal. The defendant was ordered to pay the claimant’s costs of preparing the response to the application.

1. Factual findings and causation. The five grounds challenged findings of fact concerning whether the GPM system enabled earlier redundancies. The judge had evidence on which he was entitled to rely. The Court of Appeal would not interfere merely because other explanations were available.
2. The judge was entitled to find that falling premium rates, rather than reduced transaction volumes, created pressure to reduce costs, and that computerisation enabled the same work to be performed with fewer staff. He was also entitled to find that GPM exposed organisational inefficiencies and that similar redundancies would have occurred earlier if SYMBAL had worked.
3. Calculation period. The judge was entitled to calculate the staff-cost loss by reference to the period between the contractual implementation date for SYMBAL and the actual implementation dates for GPM. Any delay in carrying out redundancies after implementation could be disregarded where the same process and lead-in time would have applied in both scenarios.
4. Employees with shorter service. In the absence of evidence that new posts had been created, the judge was entitled to infer from the economic climate that the relevant redundancies related to posts existing throughout the calculation period.
5. The findings were supported by evidence accepted by the judge and were not even arguably perverse. None of the proposed grounds therefore had a real prospect of success.

1. Court of Appeal (Civil Division): The defendant’s application for permission to appeal was refused. The defendant was ordered to pay the claimant’s costs of preparing the response.
2. High Court of Justice, Queen’s Bench Division, Technology & Construction Court: His Honour Judge Bowsher QC entered judgment for the claimant with damages to be assessed and assessed damages at £2,622,259 on 7 November 1999.