Before:
Lord Justice Leggatt
Lord Justice Staughton
Lord Justice Nourse
 
 

B E T W E E N

JUDGMENT
 
DATED: 8 December 1994

LEGGATT LJ

The plaintiff, Ian Rawlinson, appeals against the dismissal of his claim against the defendants, Neil Gowanloch Westbrook and Mary Joan Westbrook (now Sir Neil and Lady Westbrook), by Morritt J, sitting as the Vice-Chancellor of the County Palatine of Lancaster, on 19 November 1992.

The plaintiff is a chartered surveyor. From 1975 until 1985 he worked as a self-employed consultant with a firm in Manchester called Frank Westbrook. They were chartered surveyors. At all material times the only equity partner was the first defendant, until he was joined by his wife as a partner. She, however, played no part in the running of the firm, nor has she featured in these proceedings, save in the formal capacity of partner in the firm and so second defendant.

The essence of the dispute between the parties was that, according to the plaintiff's view, he was paid during the time that he acted as consultant at an agreed rate of remuneration which was, however, less than a fair and reasonable rate for what he did. He says that it was so because the defendants had promised to transfer the practice to him when the first defendant retired.

The firm had been in existence for many years and, indeed, the first defendant himself joined the firm before the Second World War. During the period with which the court has been concerned there were two salaried partners called Lawson and Collins. Mr Lawson retired in October 1980 and Mr Collins died in February 1983. It should be mentioned that by the time the plaintiff started work as a consultant for the firm about 30% of its income came from the management of properties which were owned either by the first defendant or by what he called "family companies". 20% of the income came from managing properties owned by a particular company called Wingate Investments Plc.

The first defendant had a number of outside interests. They included being Lord Mayor of Manchester 25 years ago, and he was, by the time the plaintiff became associated with the firm, the chairman and chief executive of a company called Trafford Park Estates Limited. The defendants had a son called Fraser, who was at one time expected to join the firm, as his father had before him, but he, as I shall mention, has since become an equity partner in the firm of Healey & Baker in London.

The judge made findings of fact about the credibility of the parties, which are important for the purposes of this appeal. He held (at page 14 of the transcript of his judgment) that he was not prepared to accept the uncorroborated evidence of the plaintiff. He did so principally on the ground that the plaintiff had claimed that a sum of over £2,000 that he initially received from the firm was a "golden hello", but the judge held that it was in fact paid to him by way of fees for his services as a consultant in order that he should not have to bring that sum into account by way of mitigation in a claim which he was making against his previous employers for damages for wrongful dismissal. The judge also held, in relation to the evidence of a friend of the plaintiff called Catherine Wilson, that he did not accept her evidence as corroboration of the evidence of the plaintiff, and that he would not be prepared to accept her evidence unless corroborated by other evidence.

The judge also mentioned that there were similar problems with the evidence of the first defendant. That arose out of the defendants' claim, by way of defence, that connected companies or clients were charged fees on the same basis as unconnected clients. The first defendant had said in his witness statement that they were not, but sought to justify it by pointing out that in other respects they were charged more than the recommended scale. The judge said (at page 15 of the transcript):

"The obvious inference being suggested was that the overpayment in one respect made up for the lack of charge in the other respect. But this suggestion was false. As Mr. Westbrook accepted in his cross-examination, with the exception of Wingate Investments Plc, unconnected clients were similarly overcharged in the one respect as well as being fully charged in the other respect. Thus the Westbrook connected clients were receiving favourable treatment as Mr. Rawlinson had alleged. The false impression must have been put forward deliberately."

The judge concluded:

"... in addition to this attempted deception I do not think that Mr. Westbrook could clearly remember when various events occurred.

The upshot is that I have to reach a conclusion on the material and associated issues from the documents and the probabilities arising from other facts which are not in issue."

In short, that puts a premium upon the contemporaneous letters and other documents that were before the judge and are now contained in a core bundle for use in this court.

The plaintiff and the first defendant seem first to have met when, some time before 1975, the plaintiff had worked for a company of which the first defendant was chairman. But in April 1975 they had a meeting at which the first defendant offered to retain the plaintiff as a self-employed consultant at the rate of £80 a week. The plaintiff accepted that proposal and soon thereafter entered upon the consultancy. Later in 1975 the plaintiff claimed that the first defendant had paid a visit to the plaintiff's home at a time when Miss Wilson and someone else were also present. He alleged that it was then that the first defendant had originally made suggestions about handing over the practice to him when the first defendant retired. It was not until 1978 that documents appear to have been brought into being which dealt with the question of takeover by the plaintiff from the first defendant upon the retirement of the latter. They were in the form of documents variously headed "Draft Heads of Discussion" and "Points for Discussion", but the judge did not find that any of them, being documents of the plaintiff's, were shown to the first defendant at the time.

In March 1978 the plaintiff's remuneration was increased by £2,000 a year to a sum of over £6,000 a year and backdated to June of the previous year. At the end of that year the salaried partners had their salaries increased, in Mr Collins' case to £6,000 per annum and in Mr Lawson's case to £5,000 per annum. It was in 1979 or 1980 that the plaintiff and the first defendant agreed that, in respect of clients introduced by the plaintiff to the firm, the fees generated should be shared equally between them.

In April 1980 Fraser Westbrook, the defendants' son, was offered an equity partnership in Healey & Baker, and that offer took effect in May of the following year. In June of 1980 the first oral negotiations, as the judge held, took place between the plaintiff and the first defendant about the first defendant's retirement and the takeover of the practice from him by the plaintiff. The first letter in which this problem was seriously discussed between the parties was written by the plaintiff on 10 November 1980. In it he said (page 32 of the core bundle):

"I am still willing to consider the proposal we have discussed in the last fortnight as I promised you. However, from my point of view I can see that much would need to be ironed out which would take time, whereafter I would wish it to be formalised to safeguard my own position.

From your point of view this may not suit, and if indeed we could not conclude some satisfactory arrangement for whatever reason, then that would be that. My only concern now is to crystallise the position one way or the other since time is running out, but to give you as much time as I can offer, if I have to phase out altogether."

One might have thought that one only had to read that letter to see that there had been no previous assurance given by the first defendant to the plaintiff about what he might expect upon the retirement of the first defendant.

The response to that letter by the first defendant was immediate. On the following day he wrote in acknowledgement of the plaintiff's letter, repeating what he called his "suggestion". The suggestion took the form of eight points relating to a takeover of the practice by the plaintiff. Paragraph 1 read:

"I give you the goodwill of the chartered surveyors business carried on by me under the title of Frank Westbrook."

There also was provision for what was to happen to furniture, offices and working capital, as well as suggestions about the first defendant remaining as a consultant for a period of two years.

The plaintiff answered that letter on 9 December 1980, suggesting that he should treat the first defendant's suggestion as an option for the transfer of the practice which would be exercisable by 31 March 1981. The plaintiff said that he would examine the business and agree a plan for the future. In response to that the first defendant repeated the terms on which he would transfer the firm. It seems that discussions about the transfer ensued between them during 1981.

At the beginning of 1982 the first defendant reached his 65th birthday and was intent thereafter on retiring. In 1983 the plaintiff arranged for his brother, who is an accountant, to conduct a management accounting investigation into the firm. During that month the plaintiff wrote to the first defendant about the terms of a prospective transfer. To those terms the first defendant appears to have been agreeable. But two events occurred which made a takeover of the practice less attractive. First, the plaintiff's brother discovered that one of the employees of the firm called John Bower had been defrauding the firm of sums of money. Secondly, at about the same time the company called Wingate, to which I have referred, indicated their intention to dispose of those properties which had hitherto been managed by the firm. The judge, in explaining why the plaintiff considered that he could only sensibly proceed with a takeover if he obtained support from the first defendant over and above that which had been agreed in principle in 1980, said about those two matters (at page 8 of the transcript):

"First on 25th May 1983 Mr. Keith Rawlinson [the plaintiff's brother] discovered evidence to prove beyond doubt that the accounts manager had stolen money belonging to the Firm or to clients of the Firm. Thus the Firm was exposed to liability of an unknown amount. Secondly and by coincidence on the same date, namely 25th May 1983, Wingate Investments Plc notified Mr. Rawlinson of their intention to sell the three developments managed by the Firm from which 20% of the Firm's income was derived."

There followed exchanges of correspondence between the plaintiff and the first defendant in which each made to the other points connected with the takeover, until the first defendant's letter of 16 November 1984 (page 110 of the bundle) in which he made it plain that he could not afford to go on increasing the losses of the firm by paying the plaintiff as a consultant out of his own pocket. He said (at page 111) that he:

"... hoped that you would obtain new business on the basis of your obtaining commission for yourself as with Molems and that over the past few years you would have built up something in excess of what already existed to make it remunerative for you to take it over just as I did when I was young."

Later in the same letter the first defendant said:

"I think you should ask yourself whether you are confident that you would be able to encourage new business and in sufficient quantity to produce you an income commensurate with your undoubted abilities. For some time I have had this at the back of my mind but I did not wish to say anything although you will recall I had mentioned the possibility of your amalgamating with somebody else.

I fully accept that you could have earned considerably more by not working at Frank Westbrook's, but to be fair I never encouraged or put pressure on you in any way to work solely for the firm, as you know at your request you have never been an employee. You have come as it suited you and have been able to take on outside work that you procured for yourself on terms which showed no profit at all to Frank Westbrook and you are still in that position and to be blunt and without wishing to hurt you in the slightest degree I think it is this that strikes a note of caution in my mind that is as to whether you will be able to proceed in the way we have discussed."

Following that letter, on 11 January 1985 the first defendant terminated the consultancy of the plaintiff with effect from the end of the month. The plaintiff's response to the termination was by letter of 13 January 1985 (page 114) in which he enclosed a note of salary due to him. He made reference to the transfer of the business, which was still a live issue between the parties, and he said:

"I have always been frank with you, Neil, and I'll be no less here; I have never been confident that we could reach an agreed position."

He then set out fourteen matters which he said still needed discussion.

There was further discussion and correspondence between the two of them during 1985, but by letter of 3 June 1986 the plaintiff wrote to the first defendant (page 159), a letter which bears all the hallmarks of his having by then taken legal advice. Erroneously headed "Without Prejudice", it says, at paragraph numbered 3:

"The basis of the claim is an obligation on your part to recompense me at a full and fair rate for my past consultancy services from the time when you first gave me to understand that the Surveyor's Practice would be transferred to me. In computing that claim, you are to be given credit for the payments which you have already made, and the balance I am entitled to sue for upon a quantum meruit basis. Briefly that is the legal principle involved."

That was followed, on 23 October 1986, by the issue of the writ.

That, in summary, is an outline of the relationship between the parties during the period of the plaintiff's consultancy.

The judge identified four main issues of fact, saying (at page 6 of the transcript):

"Thus the material issues of fact are

1. Whether in March 1978 Mr. Westbrook offered the practice to Mr. Rawlinson as and when he Mr. Westbrook came to retire.

2. Whether the remuneration paid to Mr. Rawlinson from 1975 to 1978 was less than fair and reasonable.

In addition there are further issues which are relevant to the background or which go to credibility, namely

3. Whether at the initial meetings in 1975 Mr. Westbrook offered the practice of the Firm to Mr. Rawlinson when he, Mr. Westbrook, came to retire.

4. Whether from April to November 1975 Mr. Rawlinson was investigating the business of the Firm for no remuneration or whether he was working in the Firm as a self-employed consultant."

The latter point the judge answered in the manner that I have already indicated, which was unfavourable to the plaintiff and his credibility.

The judge then proceeded to answer in chronological order the issues that he had raised. He said (at page 16 of the transcript):

"... the first issue is that I have numbered 3, namely whether at the initial meetings in 1975 Mr. Westbrook offered the practice to Mr. Rawlinson when he, Mr. Westbrook, came to retire. In my judgment he did not."

He then proceeded, after mentioning issue 4, to consider the first issue, namely the position of Mr Rawlinson in March 1978. The judge concluded (at page 18 of the judgment) that the first defendant did not offer the practice to the plaintiff at the meeting in March 1978 as alleged; and (at page 19) he held that takeover discussions commenced between the first defendant and the plaintiff in June 1980, saying:

"In my judgment there were no discussions between them on this topic before that time."

The judge finally proceeded to consider the second issue, namely whether the remuneration paid to the plaintiff from April 1975 to March 1978 was less than would be fair and reasonable for the services he had rendered. He said (at page 20):

"Thus the agreed remuneration to which Mr. Rawlinson was entitled was a minimum sum capable of being increased by overtime, half the fees for work introduced to the Firm, and all the fees for outside work done in Mr. Rawlinson's own name."

His conclusion, at the last page of his judgment, was in these terms:

"Nevertheless I think that it is plain and I find as a fact that as at March 1978 Mr. Rawlinson was being paid and had since April 1975 been paid at a rate which was in all the circumstances fair and reasonable."

On the plaintiff's behalf, Mr De La Rosa contends that the plaintiff provided ten years of consultancy services for the benefit of the defendants' firm, during which he was underpaid but had the assurance that he would in due course succeed to the practice. Having acted on the faith of that assurance, he is entitled, if he is not to get the practice, to reasonable recompense measured by the difference between what he would have received by way of remuneration and what he did in fact receive. In short, the plaintiff worked at a low rate of salary because there was an understanding between him and the defendants that he would take over the firm when the first defendant retired. Mr De La Rosa submits that in those circumstances the judge should have implied a term of the plaintiff's consultancy contract that he was entitled to a reasonable sum for his services in and after 1978 or, alternatively, June 1980, or that the plaintiff was entitled to a like sum by way of quantum meruit. In the course of his submissions I think he elected to rely mainly, if not wholly, on quantum meruit.

He cited four cases in particular, the first of which was Craven-Ellis v. Canons Limited [1936] 2 KB 403. In that case the plaintiff was appointed as the managing director of a company but omitted to acquire his qualification shares. Having acted for the company, he claimed remuneration on a quantum meruit. It was held by this court that the fact that a plaintiff had done work under an agreement which was in fact void did not disentitle him from recovering on that basis. After reaching that conclusion, Greer LJ said, at page 412:

"In my judgment, the obligation to pay reasonable remuneration for the work done when there is no binding contract between the parties is imposed by a rule of law, and not by an inference of fact arising from the acceptance of services or goods."

The next case cited by Mr De La Rosa was Way v. Latilla [1937] 3 All ER 759. The appellant in that case claimed that he had made an agreement with the respondent that the appellant would supply information about gold mines and concessions in West Africa, in return for which he should receive a share in the concessions and a reasonable sum for the information that he provided. The respondent, on the other hand, argued that there was no evidence of any contract, that there was no agreement sufficiently certain to be enforceable, and that the amount of profit made on the resale was not a proper basis for assessing the amount due. The House of Lords concluded that the appellant was entitled to recover on the basis of a quantum meruit and that in fixing remuneration for services the court was entitled to pay regard to the discussion between the parties, and the House proceeded to fix the appropriate sum by way of remuneration.

More pertinently, Mr De La Rosa referred us to Powell v. Braun [954] 1 WLR 401. In that case there was an employee remunerated in the usual way by means of salary but her employer, the defendant, offered to pay her, in recognition of past services and additional responsibility which she was to undertake, a bonus on the net trading profits of the business rather than increase her salary. When some time afterwards she was dismissed, the defendant sought to disclaim the obligation to pay a bonus. But Denning LJ, at page 406, succinctly summarised the position in these words:

"The facts are quite simple. In lieu of a rise in salary, the defendant agreed to pay the plaintiff a bonus each year on the net trading profit. The defendant made trading profits, but he refuses to pay any bonus. He refuses to pay anything, whereas the agreement quite clearly contemplated that he should pay something. The judge said that it was a matter for the defendant in his discretion as to what he should pay, that is, whether he should pay something or nothing. I do not agree with that. I think the defendant plainly bound himself to pay something. The precise amount would not be an amount in his unfettered discretion. It would be an amount which a fair and just man would pay in the exercise of a reasonable discretion."

And, to the like effect, the Master of the Rolls and Romer LJ agreed that the plaintiff could recover a reasonable sum in respect of bonus in addition, of course, to the salary that was her due. Mr De La Rosa relies upon that case as an example of a case in which a sum is accepted to be due by way of quantum meruit in addition to a sum already contracted for.

He also relies on the case of William Lacey (Hounslow) Ltd. v. Davis [957] 1 WLR 932. In that case a plaintiff builder supplied estimates to the defendant, who used the estimates in connection with his war damage claims, but the building contract pursuant to which the estimates were submitted was never completed. The judge held that the whole of the work in respect of which the plaintiffs claimed fell outside the normal work which a builder, by custom, would normally perform gratuitously when invited to tender for the erection of a building. He concluded that the proper inference from the facts proved was not that this work was done in the hope that this building might possibly be reconstructed and that the plaintiff company might obtain the contract, but that it was done under a mutual belief and understanding that this building was being reconstructed and that the plaintiff company was obtaining the contract.

Mr De La Rosa also cited a Canadian case, which relies on the High Trees House case, but which does not seem to me to assist him.

Where a party claims by way of quantum meruit reasonable remuneration for a benefit conferred on him, he may claim under a contract which does not expressly provide for remuneration or he may claim under a purported contract which does. With the latter, of which Craven-Ellis v. Canons Limited is an example, we are not here concerned. Into the former category fall cases, such as Way v. Latilla and Powell v. Braun, in which the contract does not provide for remuneration, and cases, such as William Lacey (Hounslow) Ltd. v. Davis, in which there is no concluded contract.

In the present case there was no concluded contract for the payment of increased salary in the event that the plaintiff did not take over the firm; nor did the parties believe that there was. The argument is that to be implied from the conduct of the parties is a contract to pay ex post facto a sum by way of recompense for low salary in the event of the plaintiff not succeeding to the practice. But of that there is no vestige of evidence. It is common ground that there was no express arrangement to that effect. For his services as a consultant the plaintiff was paid a salary which was not proved to be unreasonably low. But even if it had been, it is impossible to imply a promise to make good the supposed shortfall. No case has ever so held, and it is easy to see why. In Way v. Latilla and Powell v. Braun services, or additional services, were performed in respect of which remuneration was obviously payable though the amount of it had not been agreed. Here services were performed in respect of which the amount of remuneration was agreed. That is fatal to the plaintiff's claim, and as a matter of law no further remuneration was recoverable. In any event, although the first defendant terminated the plaintiff's consultancy, the plaintiff looks to have been as much to blame as the first defendant for the failure to agree terms for the takeover of the practice by the plaintiff. In my judgment the plaintiff cannot succeed either by way of implied term in contract or on a quantum merit. That is enough to dispose of the appeal on liability, but I shall briefly refer to Mr De La Rosa's salient arguments of fact.

The judge reached the same conclusion by findings of fact that (a) the first defendant did not in 1975 or 1978 offer the practice to the plaintiff as and when the first defendant came to retire, and (b) the remuneration paid to the plaintiff between 1975 and 1978 was not less than was fair and reasonable. The judge further found that there were no discussions between them before June 1980 about taking over the partnership, and that the plaintiff's first complaint about his remuneration was made by letter dated 15 December 1981. He also referred to the first defendant's acknowledgement that the plaintiff could have made more from about 1980 or 1981 had he not been working for the firm. It is to be noted that at no time did the plaintiff relate his low salary to his expectation of taking over the practice until his letter of 3 June 1986 which, as I have remarked, was evidently written after he had taken legal advice.

We gave leave to amend the notice of appeal except in relation to ground (2)(a) of the draft amended notice of appeal which concerned the evidence of Catherine Wilson. The judge indicated that he would not accept her evidence or that of the plaintiff unless it was corroborated. Miss Wilson claimed that after the trial she had found in a drawer a tape-recording of a conversation between herself and the first defendant made without his knowledge at a meeting between them at her house on 2 June 1987. The argument was that her evidence was corroborated by recorded admissions by the first defendant, and so was available to corroborate the plaintiff's own evidence that the first defendant had promised to transfer the practice to him. De bene esse we looked at parts of a transcript of the tape-recording. In my judgment none of the four passages relied on amounted to an admission by the first defendant. At best it might be argued that he took no issue with it or did not deny suggestions made by Miss Wilson. But they did not go even as far as that. Mr De La Rosa relied on page 13D of the transcript itself (at page 24 of bundle N) as the best example for his purposes. Miss Wilson said:

"Well I suppose he's referring to all the times going back years and years and years when you were almost pleading with him to take the business over when you kept coming to Laneside and offering him the business and offering him the job at Trafford Park as Managing Director that goes back to when Brassington left you wanted him to go to Trafford Park ..."

The first defendant then said:

"I never I never offered him the job of Managing Director at Trafford Park because I wasn't in a position to do it."

In my judgment there cannot possibly be wrung from that exchange an admission by the first defendant capable of corroborating Miss Wilson's evidence that he had promised, in or before 1987, to transfer the practice to the plaintiff. We accordingly refused leave to amend the notice of appeal so as to rely on evidence of Miss Wilson on that issue, because had the tape-recording been admitted in evidence it would have had no influence on the outcome of the trial. The judge held that no promise was made by the first defendant in March 1987 to transfer the practice to the plaintiff.

In default of Miss Wilson's evidence, Mr De La Rosa relies on the plaintiff's memoranda of heads of agreement in 1978. But the judge held that none of them was handed to the first defendant at the time. It is said that when the first defendant claimed to have been "keeping his options open" in favour of his son, one such option would have been the takeover by the plaintiff. But if the first defendant had made a promise to the plaintiff, the first defendant would no longer have enjoyed the option of letting his son take over the practice. The plaintiff's allegedly low salary and the first defendant's acknowledgement that he initially engaged the plaintiff as someone who might step into his shoes are not capable of affording corroboration of the promise.

In relation to the period from 1975 to 1978 the judge was entitled to find that the plaintiff's salary was not lower than was reasonable. In relation to the period between 1978 and 1985 there was no such compelling evidence as in my judgment should prompt this court to hold that it was lower than was reasonable. The judge expressly mentioned the first defendant's recognition on several occasions that the plaintiff earned less with the firm than he would have earned elsewhere. But even if the plaintiff's salary was unreasonably low at any time during the consultancy, that would not constitute any ground for concluding that the plaintiff enjoyed on that account any right to compensation when he did not succeed to the practice.

A so-called "mutual understanding" has no effect in law. Both men may have seen the transfer of the practice from the first defendant to the plaintiff as a natural step for both of them to take. But there was no agreement to that effect; and the plaintiff never alleged before his consultancy was determined that he had any enforceable right to compensation if the practice was not transferred to him. He does not claim the value to him that the practice would have had. He does not claim remuneration for services which he could not have been expected to render gratuitously. He failed to establish to the judge's satisfaction that he was paid at less than the going rate. Yet he now claims that there was such a relationship between the amount of his salary and the transfer of the practice to him as should move the court to imply, or impose as a rule of law, an obligation to pay him retrospectively such sum as would have made his remuneration reasonable had he enjoyed no right to expect that he would succeed to the practice.

In my judgment the appeal on liability is as unsound factually as it is misconceived in law, and I would accordingly dismiss it.

The plaintiff was not entitled to appeal as to costs except as an adjunct of an appeal on the merits. So if the court had concluded that the appeal as to liability was merely being used as a vehicle for the appeal as to costs, it should refuse to entertain it. But although the appeal as to liability was in my judgment hopeless, I decline to hold that it was brought solely for the purpose of prosecuting the appeal on costs.

The plaintiff submits that because the first defendant was not believed about the basis on which he and connected companies were charged for work done by the firm, he should bear the substantial costs of that issue, or, alternatively, the plaintiff should not have to do so.

The legal position is made clear by the case of In re Elgindata (No. 2) [1992] 1 WLR 1207. The case concerned a minority shareholders' petition. There was an order in the petitioners' favour, notwithstanding allegations against the respondent that had only partly been established, and the judge ordered the petitioners to pay three-quarters of the costs of the second respondent and gave leave to appeal. The relevant principles were set out by my brother Nourse at page 1214. After remarking that those principles are derived in part from Ord 62, rr 2(4), 3(3) and 10 and the practice of the court, he said:

"The principles are these. (i) Costs are in the discretion of the court. (ii) They should follow the event, except when it appears to the court that in the circumstances of the case some other order should be made. (iii) The general rule does not cease to apply simply because the successful party raises issues or makes allegations on which he fails, but where that has caused a significant increase in the length or cost of the proceedings he may be deprived of the whole or a part of his costs. (iv) Where the successful party raises issues or makes allegations improperly or unreasonably, the court may not only deprive him of his costs but may order him to pay the whole or a part of the unsuccessful party's costs."

In relation to the fourth principle Lord Justice Nourse remarked that it implied that:

"... a successful party who neither improperly nor unreasonably raises issues or makes allegations on which he fails ought not to be ordered to pay any part of the unsuccessful party's costs."

He added:

"It was because of his disregard of that principle that the judge erred in this case."

By para 12 of the defence in the present action it was alleged that the defendants could not afford to pay the plaintiff more than they did because they traded at a loss. Although the plaintiff did not accept that that was an answer to his claim on a quantum meruit, he sought to rebut it on its merits. In doing so, he is said to have incurred substantial costs which are put at two-thirds of the whole, and Mr De La Rosa asserts that the issue lengthened the proceedings, although not the trial itself. It was the plaintiff's contention that the reason for the apparent accounting loss made by the firm was that for work done the defendants failed to charge themselves and connected clients on the same basis as unconnected clients.

The judge dealt with the matter in the passage which I have already read at page 15 of the transcript, in which he disbelieved the first defendant's explanation about the basis of the charge and concluded that the Westbrook connected clients were receiving favourable treatment as the plaintiff had alleged. But it does not follow from that, of course, that if connected companies had been correctly charged there would not still have been a loss.

In a supplemental skeleton argument, which he supported orally, Mr De La Rosa has sought to emphasise the magnitude of the costs associated with the issue on which he says the defendants failed. After showing how the issue arose, he asserts that out of the defendants' taxed costs amounting to £195,744, £71,657 related to experts' reports, as Mr De La Rosa contends, concerning non- or undercharging, or matters necessarily related thereto, such as the plaintiff's contribution to the firm's revenue. In that submission he acknowledges that those two matters were in effect inextricably intertwined. We have also been told that the plaintiff's estimate of costs incurred on this issue amounted to £20,000 for solicitors and counsel and £66,300 for the experts.

After showing how the issue arose and was maintained by way of further and better particulars, Mr De La Rosa showed us the directions given in this case in relation to the expert evidence which initially permitted each side to rely upon the report of a surveyor or valuer. After further orders accountants were instructed on both sides and discovery was ordered of documents, which the judge described on appeal to him in relation to discovery as being documents which go to liability in the sense that they go to the question of whether the defendant firm was capable of trading profitably if all work was properly carried out. The plaintiff himself provided a so-called chart of work, which listed 175 instances of work done by him for connected companies where he claimed that the defendants had not charged fees or had not charged at the appropriate rate. We were told of various supplemental reports also provided by experts which might have had relevance to that issue.

In summary, Mr De La Rosa submitted that the costs of what he called the "paragraph 12 issue" as to the defendants' inability to afford to pay the plaintiff more ought to be borne by the defendants, or, alternatively, the defendants' substantial costs ought not to fall on the plaintiff.

Mr Sterling, on behalf of the defendants, submitted that the expert evidence was directed to the value of benefits received by the plaintiff; to a comparison of the relative earnings of surveyors in private practice and in employment; and to valuation of the plaintiff's contribution to the practice by way of fee income. According to Mr Sterling, the defendants' experts did not deal with the profitability of the practice, but the plaintiff's accountants, Mitchell Charlesworth, advanced the opinion that if the plaintiff could prove that he did the additional work which he said he had undertaken and that it had a certain value, it would have resulted in an additional profit to the practice sufficient to convert the annual loss into a profit. But the defendants never accepted the plaintiff's figures either at trial or in this court. The plaintiff had, as I have indicated, examined the defendants' files relating to various clients and projects in order to value (a) the work which was said not to have been charged or to have been undercharged, and (b) the plaintiff's contribution to such work. It only took a short time in court, according to Mr Sterling's recollection, to resolve the issue about whether connected companies had been properly charged by the defendants, and the matter was determined by the first defendant's admission in cross-examination. But the finding that the connected companies had not been properly charged did nothing to establish whether or not the practice had been profitable. It was to that issue that the expert evidence was primarily directed, and the first defendant's method of charging connected companies was only an incident of that enquiry. Mr Sterling submitted that when one adds that, although the experts' reports were in court, no expert evidence was called because it was agreed between the parties that expert evidence would go to quantum only, whereas the trial, as it turned out, was concerned with liability only, it is not surprising that the judge should have decided that the costs should follow the event.

When judgment was given counsel then appearing for the plaintiff accepted that that was a proper order. The judgment was drawn up. At a later date application was made on the plaintiff's behalf for leave to appeal on the costs issue, and counsel agreed at a fairly early stage that the judge should be invited to deal with liability first. The judge remarked that there had not until that moment been any order for a split trial, and he said (at page 4F of the transcript):

"The consequence of that agreement was that none of the expert witnesses were called to give oral evidence, and it was left, as I recall, on the rather fluid basis that the reports would be available and that I might or might not be invited in due course to read parts of them, or counsel might or might not refer to parts of them."

After referring to parts of the Mitchell Charlesworth report, which the judge recollected as having been read, he said:

"The expert's opinions were never referred to at all."

It is now said that there was some reference to them, albeit not so striking that the judge would recall them.

The judge said (at page 7F of the transcript):

"The costs order took the form it did in part because counsel for Mr. Rawlinson expressed himself to be unable to oppose the application for the usual order, namely that costs should follow the event. Counsel for Mr. Rawlinson then appearing has since been appointed to the Circuit bench. Counsel now appearing for Mr. Rawlinson tells me that former counsel described the matter as an oversight. It is suggested therefore that I should grant leave, leaving it to the Court of Appeal to determine whether or not they will be prepared to entertain the matter ..."

The judge then said (at page 8E of the transcript):

"I have come to the conclusion that I should refuse the application. First, my order was made in the exercise of my discretion. The order I made followed the rules, in the sense that it was an order that the costs would follow the event, first because that was the event, and secondly because counsel for Mr. Rawlinson had not raised any opposition. It does not follow at all that if he had opposed the application that costs should follow the event I would have made a different order to the one I did make.

There is substantial argument open to counsel for the other side to the effect that the costs involved would have been incurred anyway on the question of quantum and that it was not possible so to sever the experts reports that you could say that part of it was devoted to the discrete issue and not the other matters which were part of the costs of the action."

The fact that experienced counsel did not see fit at trial to ask for a special order tells against regarding any such order as appropriate. It is nothing to the point that a different judge might have made a different order. When he came to deal with the application for leave to appeal on the costs issue, the judge was fully aware of the considerations that had been argued in this court, and we are told that he had before him the defendants' bill of costs which was then in the process of being taxed. Most importantly, from the fact that the judge held that the connected companies were not correctly charged, it does not follow that the plaintiff would have been able to prove the value of the uncharged work or that the firm would not still have made a loss. The judge has explained the basis of his order. Although I do not believe that he ever was in the position of exercising his discretion as to costs, since the order that he made was not opposed, he sufficiently explained, when rejecting the application for leave to appeal, how he would have exercised it if the need had arisen. In particular, the judge considered that the costs involved would probably have been incurred anyway on the question of quantum, and that it was not possible in the experts' reports to separate the issue about the charging of connected companies from the remaining costs of the action. As an exercise of discretion in relation to costs it cannot be said that that approach would have been plainly wrong. His order for costs, in my judgment, should stand.

The conduct of these proceedings leaves much to be desired. Despite the fact that directions were initially given which were intended to confine expert witnesses to one surveyor or valuer for each side, several experts were consulted by each of the parties. None of the experts gave evidence at trial. The costs at first instance were enormous and, as I have indicated, after a trial lasting eight and a half days the defendants' taxed costs amounted to £195,000. Those costs were much larger than they need have been because no application was made in advance of the hearing to defer the issue of quantum, to which the expert evidence primarily related.

For the reasons I have given, I would dismiss the appeal.

The expression "quantum meruit", or "how much he deserved", refers to an enquiry which the law allows in at least two different situations. One is where there is a contract with a figure missing. For example, a contract to provide services may say, expressly or by implication, that they are to be paid for but fails to state a price. The law then lays down that the provider shall receive a reasonable sum by way of reward. Or a contract for the sale of goods may fail to state the price but provide, expressly or by implication, that there is to be payment. The law requires the buyer to pay what the goods were worth: quantum valebant. The second situation is where there is no contract at all, but the law implies a contract to pay a reasonable sum. A leading example is where the plaintiff has supplied, and the defendant has accepted, services under a contract which turned out to be void, or during negotiations for a contract which never materialised.

It is said that the law in that case implies a contract but that the implication is not one of fact. The authority for that is the case of Craven-Ellis v. Canons Limited [1936] 2 KB 403, which Lord Justice Leggatt has referred to. That was an appeal from Goddard J He had held that there could be no implied contract because there had been an express contract which had turned out to be void (see page 405 in the report):

"... in his Lordship's opinion such a cause of action depended on an implied request, and an express request negatived an implied request."

The decision was reversed by the Court of Appeal. Greer LJ, at pages 410 to 412, held that it was an implication of law and not one on the facts of the particular case. It follows that the law defines the circumstances in which a remedy will be afforded under this head, whether it is described as an implied contract or as a quasi contract. It is nothing to the point whether, in any particular case, parties would or would not have agreed to a contract. The only question is whether the case is in a category where the law provides a remedy.

I do not profess to describe the classes of case where the law awards compensation for services rendered under an ineffective contract or an embryo contract which never reached birth. But I am confident that they do not include the present case. That is because there was already an actual contract between Mr Rawlinson and Mr Westbrook (as he has been called) under which Mr Rawlinson provided services and received the reward on which they had both agreed. It may well be true that both parties contemplated the formation of another and larger contract under which Mr Rawlinson would acquire the Westbrook business. That larger contract never materialised, as all are agreed. There is no case that I know of where the law has provided a remedy in such circumstances, and I decline to create any new category. Mr Rawlinson's claim is not within either of the kinds of quantum meruit that I have mentioned and he is not entitled to a remedy.

It seems to me that this result could have been reached without a trial lasting eight and a half days and without incurring several hundred thousand pounds worth of costs. It could, as it seems to me, have been achieved under Ord 14A with a review of the law and perhaps some minimal enquiry into the facts. But I am conscious of the dangers of hindsight. It may be that a judge would have considered it an unduly bold course to dismiss the claim on the threshold (in limine) and drive Mr Rawlinson from the judgment seat.

As to costs, I have considerable sympathy with the notion that those who raise issues on which they lose should, in some cases, suffer a penalty in costs. Now that litigation is so vastly expensive, a just treatment of costs is more important than ever. Litigants should be discouraged from taking bad points and from raising issues on which they fail, even if overall they are the successful party. They should be encouraged to abandon issues as soon as, in consequence of discovery or for some other reason, it becomes apparent that they have other and better points. Those objectives may be somewhat hampered if the discretion as to costs entrusted to the judge by the Rules of the Supreme Court is encumbered with judge-made principles as to how it should be exercised.

However, I recognise that there are principles which are binding on this court. Even so, it would in my opinion have been open to the judge in this case to make a substantial reduction in the proportion of his costs which Mr Westbrook could recover from Mr Rawlinson if there were grounds for doing so. That is eminently a decision for the trial judge. He knows far more than we do about how the trial progressed, which points were strenuously maintained, which might have been abandoned and were not, and so forth. We do not have the benefit of the judge's views on an application of that nature in this case. For my part, for the reasons given by Lord Justice Leggatt, I am not satisfied that Mr Rawlinson won on an issue of sufficient magnitude as to require a reduction in the costs payable by him to Mr Westbrook.

Before leaving this case, I must say something about the costs overall. Some years ago Ord 38 of the Rules of the Supreme Court first dealt with the evidence of expert witnesses. The relevant provisions for present purposes are rr 4 and 36. Rule 4 enabled the master or judge to limit the number of expert witnesses at or before the trial of an action. It has been held that that does not enable the court to limit the number to zero, even if it takes the view that no expert witnesses are necessary: see the case of Sullivan v. West Yorkshire Passenger Transport Executive [1985] 2 All ER 134. There Stephenson LJ said, at page 135:

"I cannot find in the rules (and if I did I suspect it would be ultra vires) any general power in a master, however robust, to take it on himself to decide what evidence is necessary for the trial of the action and to take out of the hands of the trial judge and the parties something which, as I understand the procedure, is left to be divided between them in the way in which I have already indicated."

Sir David Cairns, at page 140, said about r 4:

"I am satisfied that only gives jurisdiction to limit the number, not to say that no expert witness shall be called."

So it would seem that the court has power to say there shall not be two expert witnesses but only one, but it cannot say that there shall be none. Rule 36 of Ord 38 does not enable the court to restrict expert evidence, if the parties make a proper application in due time for directions as to how reports shall be exchanged and so forth. It is only if they do not do that that the leave of the court is necessary. So judges and masters are forced to observe the spectacle of litigants like lemmings rushing to their own doom by engaging unnecessary and very expensive experts.

In this case there was an order of 15 August 1988 that both parties be at liberty to adduce expert evidence of a surveyor/valuer. That was made on hearing the solicitors for the parties. Later, on 7 March 1990, there was an order for discovery of accounts which also referred to an exchange of copies of reports of experts the parties proposed to call. That seems to contemplate that the experts would be commenting on the accounts. There was a further order on 4 July 1990 upon hearing the solicitor for the defendants. This gave the defendants' leave, apparently ex parte, to rely upon the evidence of an accountant. There was another order on 23 September 1991. By consent it was ordered that the plaintiffs have leave to rely upon the evidence of an accountant. In the result, the taxed costs of the defendants' experts came to £71,657, and the actual costs of the plaintiff's experts came to £66,300. That seems to me totally absurd. I rather think that there was no need for expert evidence at all. Mr Westbrook and Mr Rawlinson are both chartered surveyors. They could have given their own evidence as to what reasonable remuneration was. They could have added up the relevant figures, instead of employing Touche Ross to do it for them, which is what the defendants did.

This, it seems to me, is possibly a fault of Ord 38. Every litigant now seems to think that he must have at least one expert, or at any rate his solicitor thinks that. It may well be that the time has come when the court should have power to refuse any experts, and it may be that the court should exercise that power in order to save parties from their own folly. If that is an inquisitorial rather than an adversarial procedure, so be it. Alternatively, it may be that the costs of unnecessary expert evidence should be more readily disallowed, either on taxation or at an earlier stage, than happens at present.

I have one last complaint - not perhaps of as great significance as that which I have already said - which concerns the order drawn up by the Manchester District Registry of the High Court. They seem to be unaware that the word "doth" has been obsolete in the English language for about a hundred years, as in "This court doth order ..." Even in Chancery cases the orders of the court should be written in current, rather than obsolete, language.

Morritt J found as a fact that the first defendant did not offer the practice to the plaintiff at the meeting in March 1978. The fresh evidence of the first defendant's alleged admissions in June 1987 as to what was said at the meeting in March 1978 has not been admitted by this court, on the ground that, if given, it could not have had an important influence, or indeed any influence, on the result of the case. With or without that evidence, there is no ground on which the findings of the judge can be impeached and, as he himself said at the end of his judgment, it followed that there was no basis on which to imply a term or found a claim to a quantum meruit as alleged by the plaintiff at the trial.

That made it unnecessary for the judge to express any view as to whether the plaintiff would have had a legal basis for his claim if his findings had been different. In my view it is clear that he would not. The plaintiff's case made at the trial was summarised by the judge in a manner with which Mr De La Rosa, who has appeared for the plaintiff in this court, does not quarrel:

"At a meeting at the home of Miss Wilson at 4 Queen's Terrace, Handforth, Cheshire held in March 1978 and attended by Mr. Rawlinson, Mr. Westbrook and Miss Wilson Mr. Westbrook again offered the practice of the Firm to Mr. Rawlinson in anticipation of his own retirement and suggested that Mr. Rawlinson should pay himself an extra £2,000.00 a year for his consultancy services on the basis that he was expected to work more or less full time in the business of the Firm. The liability to Mr. Rawlinson is alleged to stem from this agreement allegedly made in March 1978 ..."

In my judgment that does not make out a case for additional remuneration on the basis either of an implied term or a quantum meruit. The plaintiff accepted the first defendant's offer by drawing remuneration at the increased rate thereafter and, in spite of Mr De La Rosa's submissions to the contrary, I am unable to see any difference of substance between an agreement thus concluded and one arrived at only after bargaining between the parties. In either case the agreement is quite simply inconsistent with a right in the plaintiff to receive additional remuneration on top of the extra £2,000 a year.

In this court Mr De La Rosa has relied more on a quantum meruit than an implied term. But none of the authorities he has cited supports such a claim in the present case. Thus in William Lacey (Hounslow) Ltd. v. Davis [1957] 1 WLR 932 the successful plaintiffs, at the request of the defendant, did work for him, outside that which a builder would normally have performed gratuitously when asked to submit a tender, in the belief, shared by the defendant but later disappointed, that they would receive a contract for the works. But remuneration for the work done was never discussed. The case would have had a very different outcome if there had been an agreement that the plaintiffs should receive some remuneration, however inadequate it might have been. Likewise with the Canadian case of Brewer v. Chrysler Canada Ltd. [1977] 3 WWR 69. In Powell v. Braun [1954] 1 WLR 401 there was an agreement to pay additional remuneration of an unspecified amount. It was held that the additional remuneration was recoverable on a quantum meruit. It was not held, it could not have been held, that additional remuneration was recoverable on top of an amount already specified.

Similar objections are fatal to the plaintiff's alternative claim based on an offer of the practice to him in 1980 or later. Whenever the offer was made, the plaintiff must be treated as having taken his chance on whether it would come to fruition or not, being resigned in the meantime to work for the remuneration previously agreed. It may at the time have seemed inadequate. It may now seem to have been very inadequate. On that ground sympathy with the plaintiff may be appropriate. But it does not give him a claim in law. However his claim is put, it is doomed, as I believe it was always doomed, to failure.

The question of costs has caused me great anxiety, mainly by reason of the defendants' costs below having been taxed at over £195,000, of which more than £71,000 was incurred in obtaining experts' reports which could have been dispensed with if there had been an earlier agreement for a split trial or if the issue of liability had been tested in some other way at a preliminary stage of the proceedings. We are told that the plaintiff incurred an expenditure of not much less in obtaining the experts' reports on his side. But however great our anxiety on that point, it is not one with which we are directly concerned. Our concern is to decide whether the plaintiff has made out a case for ordering the defendants to pay a part of his costs below or, more realistically, for depriving the defendants of part of their costs below. While I have felt the force of Mr De La Rosa's persuasive argument on this question, I have, for the reasons stated by Lord Justice Leggatt, come to the conclusion that it would not be right for us to make either of those orders in the circumstances of this case.

I too would dismiss the appeal.