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IN THE SUPREME COURT OF JUDICATURE Case no. LTA 96/5763/G

IN THE COURT OF APPEAL (CIVIL DIVISION )

(HIS HONOUR JUDGE HAMMERTON )

Royal Courts of Justice

Strand

London W2A 2LL

Friday 18th April 1997

B e f o r e

LORD JUSTICE WAITE

LORD JUSTICE POTTER

JOHN AIREY Applicant

v.

COMPUTER SERVICES

(Computer Aided Transcription of the Stenograph Notes of

Smith Bernal Reporting Limited, 180 Fleet Street

London EC4A 2HD Tel: 0171 831 3183

Official Shorthand Writers to the Court)

THE APPLICANT appeared in person.

J U D G M E N T

(As approved by the court)

©Crown Copyright

LORD JUSTICE WAITE: The court has decided that this would be an appropriate case to grant leave to appeal. Exceptionally I propose to give a short judgment stating our reasons for giving leave because we believe that that will be helpful to the Lords Justices who eventually deal with the appeal.

The application for leave lies from an order of His Honour Judge Hammerton in the Brighton County Court on 8th March 1996 dismissing the appeal of the applicant, Mr Airey, from an order of the district judge dismissing his claim in an arbitration under the small claims procedure. The dispute arose in these circumstances. The applicant's Toshiba 1200 XE laptop computer had a hard disk with a 40 megabyte memory capacity. He wanted to increase the capacity and so on 20th February 1995 he took the computer to the shop of the business operated by Mr Kianzad to have this done. Mr Kianzad fitted the computer with a 130 megabyte disk drive for which Mr Airey paid him £230. However, after he had collected that machine on 15th March Mr Airey realised that only part of the megabyte capacity was usable. So on 20th March he took it back to Mr Kianzad who agreed to replace the hard disk with another one of yet higher capacity, 170 megabytes, but he said that there would be a further charge of £25 plus VAT for that replacement equipment.

However, there was a disadvantage with this new capacity, that only 60 megabytes of it would currently be usable. Some special software would be necessary to be applied to it in order to enlarge it to its full capacity. So Mr Kianzad told Mr Airey that he really had two options: either to pay the £29.37 and take the computer away as it was, or pay the £29.37 and wait for Mr Kianzad to obtain a set up disk from the computer manufacturer containing the necessary software. Mr Airey chose the first option. That would require him to pay over the £29 odd, but Mr Kianzad was not prepared to accept his cheque and insisted on cash.

On his way to go and collect some cash Mr Airey had second thoughts, and on his return told Mr Kianzad that he had decided to wipe the slate clean, that is to say to pay nothing further and simply take the computer with its new disk; or take the computer without any disk but with a refund of the £230 that he had already paid. Mr Kianzad refused to comply with either request and said he would keep the computer until Mr Airey had paid the outstanding £29.37 pence. The dispute remained unresolved and Mr Kianzad rote to Mr Airey and said if he did not pay by 1st June 1995 he would be charged for storage.

By particulars of claim filed in the county court in June 1995 Mr Airey sought an order for the return of his computer and damages for the failure to return it. His particulars of claim recited the facts which I have already summarised and concluded:

"Under the Sale of Goods Act, he has failed to keep his side of an agreement to supply goods of merchantable quality.

I am therefore proceeding with this claim in order to obtain my money back and my computer back, without a hard disk".

The defence put in by Mr Kianzad alleged that the latest hard disk had been installed with Mr Airey's approval on the basis that he would pay the supplementary charge of £25 plus VAT; and (by implication from the correspondence annexed to the defence) maintained his willingness to return the computer if and when the £29 odd was paid plus the storage charges that were now, according to him, accruing from week to week.

The plaintiff and Mr Kianzad appeared before the district judge sitting on 12th January 1996 as an arbitrator under the automatic reference provisions of County Court Rule Order 19, rule 3. Rule 7(8) of that order requires the arbitrator to inform the parties of his award and give his reasons. The only record of what took place before the district judge is his order, which simply reads:

"Upon hearing the plaintiff in person and a representative of the defendant

IT IS ORDERED THAT the Plaintiff's claim be dismissed."

Order 19, rule 8 provides that the award of an arbitrator is final and may only be set aside on the ground that there has been misconduct by the arbitrator on that the arbitrator made an error of law.

On 20th January 1996 Mr Airey appealed against the district judge's award, complaining that there had been misconduct in that he had been denied an opportunity of putting his case fully and there had been an error of law. I should interpose at this point that Mr Airey has told us this morning that the arbitrator did listen to each side, but at the end of the hearing he, the district judge, simply said, "Claim dismissed. The defendant has done all he could." He gave no judgment or other statement of his reasons.

Mr Airey's appeal came before Judge Hammerton on 8th March 1996 when both parties again attended. In the absence of any reasons or note of reasons by the district judge the circuit judge was in an obvious difficulty. He dealt with the matter broadly on the basis that the case involved what he described as a simple issue of fact and he continued (page 2 of his judgment):

"There is no note before me of what was actually said by Judge Jackson but Mr Kianzad and Mr Airey both agree that both had their chance of saying what was the nature of the dispute, and the documents which set out the situation before me were before the [the district judge]. In those circumstances it seems to me a simple case of ascertaining what the facts were which was essentially a matter for the arbitrator.

He clearly preferred Mr Kianzad's account and rejected the explanation that Mr Airey gave. That being so, Mr Airey had failed to satisfy the learned District Judge, sitting as an arbitrator, that he had a case and his claim was dismissed.

There is, as I see it, no matter of law involved if the facts are as Mr Kianzad asserts them. That appears to have been the view taken by [the district judge]. I can find nothing in the papers before me to indicate that [the district judge] in any way misconducted himself in the conduct of the arbitration or that he was wrong in law. As I say, if the explanation given by Mr Kianzad is accepted, the fault in this was totally that of Mr Airey in accepting and agreeing to the performance that the defendants had in fact supplied and thereafter resiling from it."

Mr Airey now finds himself in this unfortunate plight. He is in the dark as to what he must now do to recover his computer. Ironically he is by profession a computer systems operator. So it is a piece of equipment which he clearly needs back. The court is in the dark as to exactly what transpired, as the district judge appears to have given no reasons. None are recorded. What was the purport of the district judge's order? Did he dismiss Mr Airey's claim in its entirety or did he merely dismiss Mr Airey's primary claim, which was to set the whole transaction aside and claim a refund of all the payments he had made? Or did the district judge go further and also dismiss Mr Airey's claim at least to have his computer returned to him on the payment of £25 plus VAT? If he follows that course, is Mr Kianzad entitled to impose storage charges?

In this unsatisfactory state of affairs Mr Airey presented his leave application which came in the first instance before a division of this court on 28th February 1997 of which Lord Justice Waller was a member. He referred Mr Airey to a passage in Halsbury's Laws 4th edition (page 242) and the statement at paragraph 544 regarding the limitations upon the right of exercise of a repairer's lien. On that basis the application was adjourned that day in order to give Mr Kianzad an opportunity of returning the computer or at least making clear the terms upon which he was now insisting for its return. Thus encouraged, Mr Airey sent faxes to Mr Kianzad asking for a bill and reminding him that he had been waiting over 10 months for the situation to be worked out. Two such faxes were sent. One of them included an account of what had transpired in this court on 28th February. Unfortunately there has been no reply.

Two considerations influence me in regarding this as a suitable case for leave. The first is the fact that it seems doubtful whether the circuit judge was right to regard this case as involving a pure issue of fact. Issues of law may surely arise as to whether Mr Airey is entitled in the circumstances to repudiate the agreement altogether and demand his computer back without any hard disk and with a refund of the moneys he had paid; or as to whether he is entitled to the lesser remedy of a return of his computer on payment of £25 plus VAT; or whether, in either event, Mr Kianzad is entitled to impose storage charges. It therefore seems to be at least arguable that the judge was wrong to have refused to investigate the legal issues in the case upon the supposed ground that a mere conflict of evidence was involved.

The second consideration is a wider one. Many of the difficulties in this case stem from the fact that no note was kept by the district judge of the evidence presented to him. He appears to have given no reasons. No note has survived of such comments as he did make. The whole object of the small claims jurisdiction when it was introduced was to provide parties with an opportunity for achieving finality in small cases with the minimum of expense and delay. It seems to me that the full court might in this instance regard it as a suitable opportunity for giving guidance to district judge's as to the extent to which it would be desirable when dealing with awards in small claims cases to make appropriate statements as to the evidence they have heard and the reasons that have influenced their conclusions. Those are the grounds on which I would propose to grant leave in this case.

LORD JUSTICE POTTER: I agree.

Order: Application allowed;

7 days for setting down appeal.