Mastercigars Direct Ltd. v Withers Llp

An appellate court has all the powers of the lower court. Its specific statutory or procedural powers do not necessarily exhaust that jurisdiction. Where the interests of justice require it, the appellate court may conduct a rehearing, admit further evidence, assess that evidence and determine the underlying dispute. The criteria in Ladd v Marshall are guidance for exercising that jurisdiction, rather than limits on its existence. A stay may be granted where the cost of continuing proceedings may be wasted and would impose particular financial hardship, balanced against delay and the need for finality.

Mastercigars appealed an earlier costs decision concerning the amount payable to its former solicitors, Withers LLP. In an earlier judgment, the court had identified a procedure involving a report by a senior costs judge and a determination by the court of the underlying dispute. Mastercigars sought further reasons and clarification, and contended that the court lacked jurisdiction to adopt that procedure. It also sought a stay pending its application for permission to appeal the earlier judgment.

The issues were whether the appellate court had jurisdiction to proceed by way of rehearing and receive further evidence, whether the proposed procedure should be adopted, and whether a stay should be granted.

1. Further reasons and clarification. The application for additional reasons or clarification was refused. The earlier reserved judgment gave clear and appropriately proportioned reasons, which remained the reasons intended by the court.
2. Jurisdiction. Under CPR rule 52.10(1), the appellate court had all the powers of the lower court. The specific powers listed in rule 52.10(2) were additional powers and were not an exhaustive statement of the court’s jurisdiction. CPR rule 52.11 also permitted the court, where appropriate, to order a rehearing and receive oral or other evidence not before the lower court.
3. The court therefore had jurisdiction to conduct a rehearing, receive and assess further evidence, and determine the underlying costs dispute itself. The jurisdiction did not depend on the particular ground on which the appeal succeeded. A distinction between procedural unfairness and other grounds of appeal had no foundation.
4. The criteria identified in Ladd v Marshall were guidance based on common sense for exercising the jurisdiction to admit further evidence. They were not restrictions on the existence or scope of that jurisdiction. U v Liverpool City Council provided support for the conclusion that an appellate court could proceed by way of rehearing and admit evidence not before the first-instance judge.
5. The court directed further determination of four questions: the reasonable sum for work reasonably done; work during the estimated period outside the estimate; the impact of Mastercigars’ reliance on the estimate; and the reasonable sum payable in light of that reliance and other material considerations. A report on the first two questions was to be prepared by Master Hurst. The estimate was to operate as a yardstick, with greater divergence requiring greater explanation.
6. A stay was granted pending final determination of the application for permission to appeal the earlier judgment. If permission was refused finally, the stay would lapse automatically. If permission was granted, the question of continuation would be for the Court of Appeal or the relevant Lord Justice. Costs of the appeal to date were reserved.

The judgment followed an earlier judgment of the same court, reported as [2009] EWHC 651 (Ch), concerning an appeal from a costs decision. Mastercigars had applied for permission to appeal that earlier judgment; the present court granted a stay pending final determination of that application.