Petromec Inc v Petroleo Brasileiro SA Petrobras & Ors

In an appeal concerning a contractual construction ruling, success must be characterised by reference to the practical effect of the order, rather than an academic or intermediate point. Where the appellant remains required to provide proper particulars under the lower court’s construction, the appeal may be dismissed even though an argument on construction has succeeded in some respect. The court may decline to restate supposed critical points beyond the reasons already given. Costs should reflect the substance of the outcome, including the respondent’s success and any appropriate payment on account.

Petromec Inc appealed from an order made by Cooke J in the Queen’s Bench Division, Commercial Court. The appeal concerned the construction of an agreement and the effect of that construction on the particulars required for Petromec’s claim. Petromec argued that its construction point had succeeded and that the appeal should therefore be treated as a substantial success, with consequential relief on the order and costs.

The Court of Appeal considered the proper characterisation of the result, the form of the order, and the appropriate costs consequences.

The Court of Appeal dismissed the appeal, subject to limited modifications to Cooke J’s order. Lord Justice May gave the judgment, with which Sir Anthony Clarke MR agreed.

1. Characterisation of the result. The appellant’s submission that the appeal was a resounding success did not properly describe its practical outcome. Petromec had failed to resist providing the particulars which the court had decided were proper under Cooke J’s construction of the agreement.
2. Effect of the lower court’s decision. For practical purposes, although not entirely academically, the Court of Appeal accepted and confirmed the decisions made by Cooke J. It declined to spell out additional critical points said to arise from the judgment, leaving the judgment to speak for itself.
3. Order and costs. The appeal was dismissed subject to the qualifications in paragraphs (a) and (b) of Cooke J’s order. References to clause 12(3) were omitted and paragraph (c) was set aside. Petrobras was the successful party in substance. Petromec was ordered to pay the appeal costs, subject to detailed assessment if not agreed, and to pay £20,000 on account.

• Queen’s Bench Division, Commercial Court: Cooke J made an order concerning the construction of the agreement and the particulars required for Petromec’s claim.
• Court of Appeal (Civil Division): The appeal was dismissed, with the limited modifications to the order and costs directions stated above.