Belfairs Management Ltd v Sutherland & Anor

Where an appeal requires additional liability issues to be tried, existing directions for a damages inquiry may need to be reconsidered so that liability and quantum are dealt with coherently. The appellate court may remit those issues to the judge who conducted the original trial and reserved the damages inquiry, particularly where that judge has a comprehensive understanding of the litigation. Existing directions may be stayed pending revised directions. Although success ordinarily attracts the costs of an appeal, costs may properly be reserved where the practical significance of the appeal depends on the outcome of the remitted issues.

Belfairs Management Ltd appealed from orders made by Norris J in the Chancery Division following a trial concerning breaches of warranties in a share purchase agreement. The Court of Appeal had previously allowed the appeal in [2013] EWCA Civ 185 and directed that an additional issue be tried concerning an alleged breach of the paragraph 16.1.5 warranty.

This judgment concerned the consequential directions and costs. The court had to determine whether the additional liability issue and any resulting damages inquiry should be integrated with the quantum trial already ordered, and whether the costs of the appeal should be awarded immediately or reserved.

1. Remission and directions. The appeal having been allowed, the question whether the respondents breached the paragraph 16.1.5 warranty, and the amount of any resulting damages, was remitted to Norris J for trial. The existing directions under paragraph 5 of his order, which had contemplated a quantum trial only, required reconsideration because the further liability issue might generate an additional damages inquiry.
2. Where the additional warranty issue is found proved, the resulting inquiry as to damages should, if appropriate, be conducted at the same time as the quantum trial already directed. It was appropriate for Norris J to give revised directions because he had a comprehensive understanding of the litigation and had reserved the existing quantum inquiries to himself.
3. Pending revised directions, the operation of paragraph 5 of Norris J’s order was stayed. The Court of Appeal directed that an application be issued before Norris J for directions covering both the existing quantum trial and the remitted issues.
4. Costs. Although a successful appeal ordinarily carries the costs of the appeal, the just order was to reserve those costs to Norris J. The ultimate significance of the appeal depended on the outcome of the remitted liability issue and the further inquiries. Norris J was therefore to decide the costs following determination of the remitted matters.

• Court of Appeal (Civil Division): In the earlier appeal, reported at [2013] EWCA Civ 185, the appeal was allowed and an additional warranty-liability issue was directed to be tried.
• High Court of Justice, Chancery Division: Norris J made orders following the trial, including directions for a later quantum trial: [2010] EWHC (Ch) 2276.
• Court of Appeal (Civil Division): The present judgment remitted the additional liability and damages issues to Norris J, stayed the existing quantum directions pending revised directions, and reserved the appeal costs.