COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
(QUEEN'S BENCH DIVISION)
(His Honour Judge Geddes)
London, WC2A 2LL
B e f o r e :
LORD JUSTICE KEENE
LORD JUSTICE SCOTT BAKER
| BENHAM LIMITED
|- and -
|KYTHIRA INVESTMENTS LTD & ANOTHER
Smith Bernal Wordwave Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
(instructed by Messrs Cawdery, Kaye, Fireman & Taylor) for the Appellant
Augustus Ullstein Esq, QC (instructed by Messrs Philip Ross) for the Respondent
Crown Copyright ©
Lord Justice Simon Brown:
"6. In or about the spring of 1998, Jeremy Gee of the Claimant had dealing with the First Defendant and/or those connected with it in relation to a property known as Spedan Cottages and Leavesden Cottage Branch Hill London NW3 ('the property').
7. Jeremy Gee was at all material times acting in his capacity as an employee of the Claimant and the First Defendant knew him to be an employee of the Claimant by virtue of its previous dealings with Mr Gee and the Claimant.
8. The First Defendant subsequently retained the Claimant to act as its agent on the purchase of the property and as its sole agent on any subsequent resale of the property ('the retainer').
8A. To the best of the Claimant's knowledge this retainer was agreed orally, no later than the first half of May 1998, between the Claimant's agent Jeremy Gee and one or more of the Tsentas family who at all material times controlled and/or directed both the Defendants. it was, however, evidenced in writing by various documents relating to the purchase faxed to the Claimant by the First Defendant's solicitors in 18 May 1998. No further particulars can be given as Mr Gee was dismissed from the Claimant's employ for misconduct, but the Claimant will say the agreement was in consideration and/or in consequence of his introduction of the property to them and/or his instrumentality in the Defendants' acquisition thereof."
"7 The Defendants make no admissions as to paragraphs 6 and 7 save that:
a) It is denied that the First Defendant instructed Jeremy [Gee] as alleged or at all.
(b) It is admitted that the First Defendant approached Jeremy Gee in May 1998 in relation to the sale of the freehold of Spedan Cottages and Leavesden Cottages as Jeremy Gee was believed by the First Defendant to have a business relationship with Marcus Cooper, the vendor, and the First Defendant thought Jeremy Gee might broker a reduction in the purchase price.
c) It is admitted that Jeremy Gee was, at the material time, an employee of the Claimant.
d) Jeremy Gee attended a meeting on 14th May 1998 between the First Defendant and Marcus Cooper to negotiate a sale of the freehold of Leavesden Cottages and Spedan Cottages.
e) At the meeting on 14th May 1998 Marcus Cooper was unable to show good title for the freehold of Spedan Cottages and there were no further dealings between the First Defendant and Jeremy Gee in relation to the sale of the freehold.
8. Paragraph 8 is denied. The property was introduced to the First Defendant by Adrian Levy of The Estate Office. The First Defendant did not retain the Claimant in respect of the property as alleged. The only retainer the first Defendant entered into with the Claimant was to market that part of the property known as Leavesden on a multiple agency basis, particulars whereof are pleaded at paragraph 15.2 of this Defence."
i) Kythira's admission in paragraph 7 of their Re-amended Defence that Mr Gee attended the meeting on 14 May 1998 between the vendors and themselves in his capacity of estate agent with a view to assisting Kythira in the acquisition of the property at an acceptable price.
ii) On 18 May 1998 Philip Ross & Co ("Ross & Co"), Kythira's solicitors, sent to "Benham & Reeves (Jeremy Gee)" by fax "Re Leavesden Cottages NW3 for your information" copies of:
a) a letter dated 18 May 1998 from Adrian Levy of The Estate Office (see paragraph 8 of the Re-amended Defence above), the vendors' estate agents, to Ross & Co enclosing "our Sales Information Sheet",
b) the vendors' Sales Information Sheet, also dated 18 May 1998, recording the sale of the property (consisting of Leavesden and Spedan) for £1,650,000, apportioned as set out above,
c) a letter dated 18 May 1998 from D A Greenberg ("Greenbergs"), the vendors' solicitors, to Ross & Co enclosing documents relating to Leavesden and Spedan and stating that they were preparing a draft contract for the sale of both properties for £1,650,000.
iii) Also on 18 May 1998 Ross & Co wrote to Greenbergs acknowledging receipt of their hand-delivered letter of that date and indicating that they would not be attending Greenberg's office for exchange of contracts that day (as had originally been agreed). Ross & Co copied that letter to The Estate Office, Kythira and "Benham & Reeves".
iv) On 20 May 1998 Ross & Co wrote to Greenbergs enclosing certain Additional Enquiries and ending:
"We have taken [Kythira's] instructions and have also spoken to our client's Agents, Benham & Reeves, who have confirmed their understanding of what had been negotiated and agreed as follows:
(a) there would be a call option in favour of the Buyer;
(b) the full extent of the garden to be identified in advance;
(c) no deposit equivalent to 10% to be paid on the signing of the Option Agreement." (emphasis added: this perhaps is the high water mark of Benhams' evidence)
v) On 10 September 1998 Ross & Co wrote to Greenbergs in respect of Spedan (the sale of Leavesden having already by then been completed) concluding:
"[Kythira] inform me that a meeting took place with their Agents and the principal of your client company who had reassured my client's Agents that prior to completion my client would receive (and I assume the executed Transfer) what they were expecting." ("my client's Agents" were not named in that letter)
vi) On 11 September 1998 Greenbergs responded to Ross & Co:
"With regard to the final paragraph of your fax, your client's agent telephoned my client's agent expressing concern in relation to the freehold. My client's agent assured your client's agent that our client was doing everything it could to secure the sale of the freehold." (likewise: "your client's agent" was not named)
vii) Benhams' office diary recorded in Mr Gee's handwriting:
a) on 14 May 1998 his appointment at 11.20am to meet "Christos [Tzentas] and Marcus Cooper",
b) on 21 August 1998 "Spedan exchange" for 11.00am,
c) on 18 September 1998 "Check completion Spedan, Marcus/ Christos".
viii) Two undated scribbled notes were found in a file left behind by Mr Gee after his dismissal recording respectively:
a) "425 include payment for option … 1,225,000 ex[change] on Monday [18 May 1998, the date originally intended for exchange which in fact slipped to 22 May 1998]", those figures then being deleted and replaced by the alternative figures of 450 and 1.2 (million pounds), the apportionment finally agreed.
b) "450-1.2 quick comp[letion]".
"We … have also spoken to our client's agents, Benham & Reeves …"
"4. The course taken by the judge of deciding the case following the hearing of the claimant's evidence without putting the defendants to their election is one which calls, on any view, for considerable caution. I mention two particular considerations. First, where a defendant is put to his election, that is the end of the matter as regards evidence. The judge will not hear any further evidence which might give cause to reconsider findings made on the basis of the claimant's case alone. The case either fails or succeeds, even on appeal. But, where no such election is called for, the judge is required to make up his mind as to facts on the basis of one side's case, and then, if he is against the defendant, to hear further evidence and to retain and apply an open mind in relation to all the facts at the end of the trial. That is an inherently difficult exercise. Hence the difference in normal practice between criminal cases (where submissions of no case are common but are determined by a different test and by the judge rather than the jury) and civil cases (where the practice has been for the judge to put the defendant to his election).
5. In this respect, despite the objectives of the new Civil Procedure Code and the broad powers of court management which it contains, there remains force, in my view, in the general observation made in this Court in Alexander -v- Rayson  1 KB 169 at 178 that it is not right that the judge of fact should be asked to express any opinion upon the evidence until the evidence is completed. There may be some cases, probably rare, in which nothing in the defendant's evidence could affect the view taken about the claimant's evidence or case, but this is not one of them, and care would be required in identifying them.
6. Secondly, there is another consideration which is independent and general. If no election is extracted, then there is the risk, as here, that if the claim is dismissed, there may be a successful appeal against the judge's view of the merits, and the matter may then have to be remitted, quite likely to a different judge, for a complete retrial. That may waste far more money than might have been saved by hearing the defendant's evidence at the first trial."
Potter LJ and Sir Martin Nourse agreed, the former adding at paragraph 36:
"If such breaches of statutory duty might procedurally have been established against either or both of the second and third defendants, it was wrong for the judge to come to any conclusion as to whether both or either were liable without hearing the defendants' evidence (if they proposed to call any), unless the evidence of the claimant himself disclosed that he was bound to fail, in particular by failing to establish that the defendants' breaches of duty were causative of the accident."
"9. Since the judge determined the point there has been a decision of this court on the point. It is called Boyce -v- Wyatt Engineering and Others . In paragraphs 4 to 6 of the judgment, Mance LJ (with which the other members of the court agreed) said that, on the contrary, the general rule was as stated in Alexander -v- Rayson. There were good reasons for that rule and it should be, as a general rule, adopted unless there are circumstances which indicate the contrary.
10. It is unnecessary to refer to what Mance LJ said in any more detail, it can be read by those who wish to do so. I have no doubt that if the judge had had the benefit of that authority, rather than the authority to which he was referred, he would have come to the conclusion that he should put the defendants' counsel to his election. What he would have elected to do we do not know. But it seems to me that there is really nothing in this point bearing on the appeal because the judge made his decision. If he was right on the question of causation, then the appeal fails: if he was wrong on that point, then the appeal succeeds and there will have to be a new trial or continuation of this trial by Judge Cooke."
"61. At the time of this trial it was, it seems, common ground between counsel for both parties and the judge that under the CPR there was no need for a party making a submission of no case to answer to be put to his election. This has now been clarified by this Court in Boyce -v- Wyatt Engineering and Others  EWCA 692 per Mance LJ, so that certain limits are set on that proposition. But it is clear that on the basis of the learned judge's judgment he concluded that in this case, in the light of the evidence given by the claimant, nothing in the defendants' evidence could affect the view he had taken (see per Mance LJ at para 5 and the learned judge's judgment at p.15D-F). In any event, the question of further evidence from the defendants never arose because the learned judge found that there was no case to answer. We have to decide whether that conclusion was right."
"75. As Mance LJ has said in the case of Boyce, to which my Lord has already referred, it will only be in a rare case that the judge should be asked to determine the issues before him before all the evidence has been completed. However, it seems to me that, if a judge concludes at the end of a claimant's evidence, whether on the application of the defendant or of his own motion, that the claimant has no real prospect of success or, in other words, is bound to fail, on his assessment of the evidence before him at that stage, he is in my view entitled to give judgment for the defendant, in the same way as if there had been an application at an earlier stage in the proceedings for summary judgment under CPR Part 24.2. In that way he will be giving effect, in the circumstances of a trial, to the overriding objective and in particular to the need to contain within limits the expenditure of time and costs on the particular case before him."
"Mr Miller was not the best of witnesses. … Nevertheless it would be a bold judge who would say that realistically there were no prospects of any jury being able to find in his favour, and in my view, I am unable to come to that conclusion."
He therefore rejected the submission of no case to answer and concluded that the claimant had proved his case.
"17. Where a defendant is put to his or her election and elects to call no evidence, the position is quite different. As I said in Boyce at para. 4:
'First, where a defendant is put to his election, that is the end of the matter as regards evidence. The judge will not hear any further evidence which might give cause to reconsider findings made on the basis of the claimant's case alone. The case either fails or succeeds, even on appeal.'
18. The issue after an election is, in other words, not whether there was any real or reasonable prospect that the claimant's case might be made out or any case fit to go before a jury or judge of fact. It is the straightforward issue, arising in any trial after all the evidence has been called, whether or not the claimant has established his or her case by the evidence called on the balance of probabilities."
Mance LJ then repeated in paragraph 20 that:
"… once a defendant has elected to call no evidence, … the only issue then becomes whether in the light of the evidence already adduced the claimant has made out his case on the balance of probabilities and that was the test (more favourable to the defendant) which the judge ought to have been invited to apply".
"12 The determination by a judge of fact of a submission of no case to answer without putting the defendant to any election to call no evidence has been likened to the determination of a pre-trial application under CPR Part 24.2 on the basis that the claimant has no real prospect of success: cf Bentley -v- Jones Harris & Co.  EWCA Civ 1724, per Latham LJ at para. 75. The differences in context mean that the analogy may not be precise: for example, a judge pre-trial may make allowances for the possibility of development or amendment, whereas, by the close of a claimant's case, that case and the evidence supporting it will have been definitely identified. But it is clear that in some circumstances a submission of no case to answer at the close of a claimants' case can be appropriate and may, in the exercise of the judge's discretion, be entertained without the defendant being put to his or her election – cf both Bentley itself and Boyce -v- Wyatt Engineering  EWCA Civ 692, per Potter LJ at para. 36 (last 31 words). Some flaw of fact or law may, for example, have emerged for the first time, of such a nature as to make it entirely obvious that the claimant's case must fail, and it may save significant costs if a determination is made at that stage.
13 However, as I said in Boyce, considerable caution is necessary before a judge entertains such a submission or undertakes such a determination, without requiring any election. The trial is now in progress, and although the test (no real prospect) differs from that applicable after hearing all possible evidence (balance of probability), caution is dictated for reasons along the lines indicated in paras. 4-6 in my judgment in Boyce . The submission interrupts the ordinary trial process, and it is not desirable that, during that process, the judge of fact should be put in a position where he may find himself having to express first an initial view on the basis of the claimant's evidence alone and then (if he allows the claim to proceed) a further final view after taking into account further evidence, even though he does so by reference to different tests. There may be cases, as I pointed out in Boyce, where this consideration is of less force, because nothing in the defendant's evidence could affect the view taken of the claimant's evidence or case. But there is also the second and very important consideration that, if the judge rules that the claimant's evidence does not show a real prospect of success (whether this is for reasons of fact or law), he may prove wrong on appeal. In that event, the procedure adopted will prove to have caused much unnecessary cost, involving a re-trial (quite likely before a different judge, as was ordered in Boyce). It was considerations like these that led, as explained in Alexander -v- Rayson  1 KB 169, 178-179, to the general practice of entertaining applications at the close of the claimant's case in a civil trial only on the basis of an election by the defendant to call no evidence (in which event the position becomes as stated in paragraphs 17-18 below).
14. Where a judge does, however, embark at the close of the claimant's case on a determination whether the claimant's case has no real prospect of success without requiring any election, the judge will, if he determines that the claimant's case has no such prospect, dismiss the claim, and this will, subject to any appeal, be the end of the matter. If, on the other hand, the judge determines that the claimant's case has a real prospect of success, he must go on to hear the defendant's evidence and thereafter to find the factual position on the whole of the evidence and on the balance of probabilities."
"Where an action is being heard by a jury it is, of course, quite usual and often very convenient at the end of the case for the plaintiff, or of the party having the onus of proof, as the defendant had here, for the opposing party to ask for the ruling of the judge whether there is any case to go to the jury, who are the only judges of fact. It also seems to be not unusual in the King's Bench Division to ask for a similar ruling in actions tried by a judge alone. We think, however, that this is highly inconvenient. For the judge in such cases is also the judge of fact, and we cannot think it right that the judge of fact should be asked to express any opinion upon the evidence until the evidence is completed. Certainly no one would ever dream of asking a jury at the end of a plaintiff's case to say what verdict they would be prepared to give if the defendant called no evidence, and we fail to see why a judge should be asked such a question in cases where he and not a jury is the judge that has to determine the facts. In such cases we venture to think that the responsibility for not calling rebutting evidence should be upon the other party's counsel and upon no one else."
"(1) In certain circumstances a court may be entitled to draw adverse inferences from the absence or silence of a witness who might be expected to have material evidence to give on an issue in an action.
(2) If a court is willing to draw such inferences they may go to strengthen the evidence adduced on that issue by the other party or to weaken the evidence, if any, adduced by the party who might reasonably have been expected to call the witness.
(3) There must, however, have been some evidence, however weak, adduced by the former on the matter in question before the court is entitled to draw the desired inference: in other words, there must be a case to answer on that issue.
(4) If the reason for the witness's absence or silence satisfies the court then no such adverse inference may be drawn. If, on the other hand, there is some credible explanation given, even if it is not wholly satisfactory, the potentially detrimental effect of his/her absence or silence may be reduced or nullified."
The fourth of those principles, of course, can have no possible relevance to the consideration of no case submissions. The first three, however, seem to me clearly relevant. Let me explain why.
"There may be some cases, probably rare, in which nothing in the defendant's evidence could affect the view taken about the claimant's evidence or case, but this is not one of them, and care would be required in identifying them."
Mance LJ reiterated the point in paragraph 13 of his judgment in Miller (see paragraph 21 above). What, however, neither Boyce nor Miller specifically drew attention to is the possibility of a claimant's case being strengthened after the conclusion of his evidence, either by the defendant not calling evidence or by that evidence in the event damaging his defence.
Entertaining the submission
Upholding the submission
"10. There is no direct evidence that there was any agreement between Mr Gee and the defendant that he would do anything other than attend the meeting on 14 May or that Benhams would be paid for his services. I have to ask myself whether that is an inference on balance of probabilities that I can draw from the documents and any other evidence that may be relevant, and in my judgment the answer is no, it is not a reasonable inference that I can draw on balance of probability.
12. In my judgment it is more probable that either Mr Gee attended that meeting in the hope or expectation of receiving a secret commission or that he hoped and expected to receive instructions on the resale. I find those inferences in the circumstances to be more probable than that he entered into an agreement honestly to act on behalf of the defendant for reward. As I said, it is perfectly clear that he was in one respect acting on the defendant's behalf, that is what he was asked to do when he came to the meeting, but for the reasons I have given it seems to me that it is not a probable inference that he did that for reward for Benhams.
16. I am not prepared, I am afraid, from those entries [in Mr Gee's diary] to infer that Mr Gee had been employed for reward acting on behalf of Benhams in the negotiation and purchase of these properties. It seems to me that these entries are equally consistent with him keeping abreast of events, partly because he was a man who clearly liked to do that and was very skilful at doing that, but also because he had, it seems to me, an interest in arranging the resale of the properties. In my judgment those diary entries are far too tenuous to permit an inference on balance of probability that he had been instructed in the manner that I have indicated."
Lord Justice Keene:
Lord Justice Scott Baker: