England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE MAYOR'S AND CITY OF LONDON COURT
(HIS HONOUR JUDGE MARR-JOHNSON)

		Royal Courts of Justice Strand London WC2 Friday, 22nd June 2001

Friday, 22nd June 2001

1. LORD JUSTICE JUDGE: This is an application for permission to appeal the order made by His Honour Judge Marr-Johnson sitting at the Mayors and City of London County Court, on 16th February 2001, when the learned judge dismissed the appeal by the Institute for Independent Business from the order of District Judge Lipton dated 6th December 1999 and ordered the defendant to pay the claimant's costs.
2. This is, therefore, a second appeal for the purposes of Civil Procedure Rules 52.13, and permission should not be given unless the appeal raises an important point of principle or practice or there is some other compelling reason for the Court of Appeal to hear it.
3. The problem which has faced me is rather odd. His Honour Judge Byrt heard and determined the litigation between the parties on 7th June 1999. He held that the claimant had established his claim. He concluded that the contract between them had been terminated by Mr Dyason in breach of contract, and he then determined the issue of damages.
4. The case then took a rather surprising turn. In the pleaded case nothing had been advanced to support a claim that the claimant had failed to mitigate his loss. That point was never explored during the course of the trial in cross-examination. As the judge said, Mr Dyason's cross-examination of Mr Vella never canvassed these issues at all. He then went on to express concern arising because Mr Dyason was acting in person and unrepresented, and he thought that the Court had a duty to see that all aspects of the case had been properly covered. He reminded himself that the burden of raising the mitigation issue lay on the defendants. Nevertheless, he went on:

"What I propose to do is give to the defendants in this case the opportunity of canvassing these particular issues on an assessment of damage, liability having been established by my present judgment."

5. He then went on to add the salutary advice:

"Before the defendants exercise that option of an adjourned hearing, I think they will do well to ask themselves as to whether they have any material which they could put to Mr Vella suggesting that he has failed in his obligation to mitigate."

6. In due course the case was adjourned.
7. As I said to Mr Dyason this morning, in my judgment that order was overgenerous. But his response to it was that it was the order made by Judge Byrt; he was entitled to rely on it, and at no stage in the proceedings did Mr Vella, the claimant, appeal against it. He added that if Mr Vella sought permission to appeal against that order now at the very least it would be permission in respect of an order which was made a very long time ago on which both parties had acted.
8. That order having been made, on 12th August District Judge Lipton ordered the claimant to produce:

" ... a list together with copies of all supporting documents relating to the efforts he made to mitigate his loss in consequence of the breach of contract, together with a witness statement.

The defendant shall... submit to the Claimant a list of questions arising from the documents so disclosed..."

9. He fixed a date for the hearing.
10. The claimant produced a witness statement which is in the bundle at pages 69 to 71 in which he explained how he had searched for employment describing it as "the main priority in his life", and again, his whole day was devoted to searching. He was looking for employment with a business and science element and later he was prepared to work anywhere in the country or abroad. He referred to his endeavours to build a business consultancy using techniques he had been taught by the defendant, adding that he lacked the necessary experience or backing, in effect blaming the defendant's failure to comply with their contract for his lack of the necessary backing.
11. Attached to the statement was a list of the relevant applications he had made. In its own list of questions, which are at pages 33 to 38 of my bundle, the defendants claimed that Mr Vella had not sufficiently complied with the order and required him properly to comply with the requirements by producing a series of points of evidence, including a complete copy of all books of account including invoices, bank statements and VAT returns for the relevant period. It is fair to say that this document produced by the defendants was, on my reading of it at any rate, well in excess of anything that District Judge Lipton could have envisaged. Nevertheless, there was was a response to some of those questions, but not all were answered. In particular there was a dispute whether it was necessary or right for the claimant to disclose some of the documents sought by the defendant.
12. The defendant insisted on disclosure. On 22nd November he applied for an appropriate order. On 29th November Judge Lipton decided that there should be no order on the defendant's application, though he apparently made the point that if the claimant failed to produce evidence of mitigation that would be his loss, which is the note made by Mr Dyason on the document and which, he says, was meant to encapsulate the effect of the view expressed by Judge Lipton that it was for the claimant to comply with the order, and if he failed to do so the consequences would fall on him.
13. There was no appeal against the decision to make no order. Mr Dyason would contend, and I understood him to be so contending at any rate by implication, that he had no need to appeal because Judge Lipton had told the solicitors for the claimant that they should comply with his order. The assessment of damages hearing was heard on 6th December. The judgment of Judge Lipton includes this passage:

"Mr Dyason did ask a series of questions and further information of Mr Vella. It is quite true that Mr Vella has not provided all that information, some of which, no doubt under advice, he was told was not relevant. He has not disclosed his bank accounts. His answer to that is that bank accounts would not be very helpful, that he was living on capital. That is an answer which Mr Dyason invites me to reject, but I have to decide whether that is right or wrong. I have not seen the bank statements, as I say."

14. He then went on:

"What I must say is this. Had he had an income outside of his Jobseekers Allowance, Mr Vella would have been in breach of certain responsibilities and he may have a fraudulent claim it may be, to receive money fraudulently from the Department of Social Security."

15. And he then went on to say that he had seen Mr Vella give evidence and concluded:

"I am absolutely certain that he was not committing a fraud upon the Department of Social Security; and when he says he did not receive any other money, he did not. I have no reason to reject that statement of his."

16. He then went on to note that Mr Vella had not disclosed except under later enquiry an interest that he had in the company called Paragon International Limited. It was argued by his counsel at the hearing that that was "a complete red herring from the point of view of mitigation". The judge went on to record what was said by Mr Vella on this topic and concluded that he agreed with counsel for Mr Vella:

"It is totally unreasonable because what he was trying to do was, in fact, to mitigate his loss - exactly, indeed, what the law requires him to do. He did not take employment. He said: 'I am going to set up my own business.'.... He did exactly what, indeed one should do. He tried not to such [search] to get a job himself, but to build a business of his own. No court in 1999 would say that is unreasonable. It is exactly what, as I say, society encourages people to do now.

The significance of those passages in the judgment of District Judge Lipton will be appreciated when I come to deal with Judge Marr-Johnson's judgment which, as Mr Dyason points out, appears at any rate on the text to show that the judge confined himself to the question of alternative employment in the PAYE sense rather than efforts to mitigate a loss arising from the defendant's breach of contract.

Judge Lipton held that Mr Vella had made all appropriate and reasonable efforts to find work and mitigate his loss. The defendants had therefore failed to prove a failure to mitigate. He therefore left the judgment figure, calculated by Judge Byrt, unchanged.

The defendants appealed his decision on 24th December 2000, asserting that Judge Lipton misdirected himself on 6th December "by setting aside the requirements of his own order made on 12 August" -- that is in relation to discovery. Various further grounds complaining of the difficulties arising from non-compliance were then set out. District Judge Lipton erroneously found that the provision of bank statements had no bearing on the claimant's efforts to mitigate his loss. In so finding, District Judge Lipton unreasonably deprived the defendant of a full and fair hearing of the evidence in this matter and so the order should be set aside.

The hearing before Judge Marr-Johnson took place on 16th February 2001. For some reason there is only a tape of the first part of the proceedings before him. The explanation appears to be that someone in the court below failed to turn on, or arrange for, a new tape to be inserted in the machinery so that when the first tape ran out it was never replaced.

Mr Dyason complains of two essential points: first, the hearing before Judge Marr-Johnson was an unfair hearing, sufficiently unfair to constitute what he described as a breach of his right to a fair trial under Article 6 of the European Convention. Perhaps he need not go to Article 6 to establish the entitlement of a litigant whether in person or otherwise to a fair trial. It is fairly well embedded in the common law. His real point is that if the hearing was unfair to that extent, then in truth no second appeal had taken place. He particularly draws my attention to some of the observations made by Judge Marr-Johnson including, for example, at the very outset of the hearing when he said:

" ... let me just tell you what I have read. I see there is a bundle here which has arrived, and paged, which is very helpful. I have not actually read that."

17. Mr Dyason suggests that Judge Marr-Johnson never did read that bundle and that bearing in mind that he explained that this appeal before him was a re-hearing on the documents, the failure to read the documents on which he, Mr Dyason, relied, and all of them, itself demonstrated that the hearing had been unfair.
18. He also complains that he was never given a sufficient opportunity to advance his case. The assertion here is that the judge asked for the assistance of counsel who appeared for the claimant and in effect he, counsel, and the judge ran the hearing to the exclusion, or virtual exclusion, of Mr Dyason. You can see Mr Dyason's sense of frustration, he says, by simply noting that by page 24 in the transcript he had said very little indeed of any kind, so that when he, Mr Dyason, showed the judge his skeleton argument, he couldn't forebear to comment "may I take you through this or not" to which the judge said "yes". Unfortunately not long afterwards the transcript runs out.
19. I suspect that one of the problems for Mr Dyason is to understand that in reality there are different ways in which different judges conduct hearings of this kind. He described to me how he really felt in some difficulty because in the course of the argument thereafter there was a lot of, to use his words, of dodging about from point to point. He felt that the judge did not sufficiently address the further evidence that he had produced in relation to the issue of income support. The implication of the argument was that if he had not dodged about, perhaps the point would have been better made and therefore fully understood by the judge.
20. There is however a further difficulty relied on by Mr Dyason which is simply encapsulated in this proposition. Judge Marr-Johnson regarded himself as examining the issue on appeal, whether the claimant had sufficiently mitigated his loss by finding alternative employment. He therefore did not examine the evidence, in whatever form it was before him, to see whether mitigation had been established by the defendants. The judge decided that the only real question to be considered was whether Mr Vella had actually found alternative employment.
21. The point is perhaps better illustrated by looking at how Judge Marr-Johnson put it in the course of his judgment. He began by acknowledging that the relevant order was that the claimant should produce all supporting documents relating to the efforts he made to mitigate his loss in consequence of the breach of contract. Thereafter, he directed himself that District Lipton had accepted Mr Vella's sworn evidence that he had not obtained any alternative employment during the material period and had not received any income other than the Jobseekers Allowance during that period. He accepted that the claimant had made reasonable efforts to get alternative employment which had regrettably proved unsuccessful. He then went on to repeat the same point, the question whether the claimant had managed to obtain alternative employment during the relevant period, and again referred to it as the alternative employment issue.
22. In effect, therefore, what Mr Dyason submits is that on the material available to the judge, the question of whether Mr Vella had failed to take reasonable steps to mitigate, involved an analysis at least of the efforts that had been made by the claimant to mitigate his loss by working in a self-employed capacity rather than as an employed individual. He would suggest that the entire case failed to examine that issue sufficiently closely.
23. The problem, he suggests, was compounded by the fact that as a result of not being able to see the relevant bank statements, he could not examine all the sources of Vella's income. His contention is that if he had been allowed to see those documents, he would have been able to demonstrate a significant income which he would then have urged should be attributed to successful mitigation of damage. In effect, therefore, his attack on this part of the judgment is that either some mitigation of damage took place which was not revealed to him when it should have been, or if there was no mitigation at all, then there had been an insufficient examination of the issue whether Mr Vella had tried to improve his earning capacity as a self-employed individual.
24. I have taken some time to deal with the various issues raised by Mr Dyason for this reason. I am conscious of the requirements of the Civil Procedure Rules 52.13, and in the normal way and certainly my first impression when I read these papers was that in reality this was an attempt to appeal on the basis of a litigant dissatisfied with the findings of fact made by the judge below. That would not be a sufficient basis for granting permission.
25. On reflection, however, I have come to the conclusion that there are issues in this case which merit the attention of this Court. I say that with some hesitation, and I would not want Mr Dyason to assume from the fact that I think permission ought to be granted that he is necessarily going to succeed with his appeal or that he should have any undue sense of optimism about the likely outcome.
26. That said, the question of how the hearing was conducted below and whether or not there was in truth a second appeal at all, as well as the question whether Judge Marr-Johnson had misdirected himself in the way he approached the issue of employment, and the further question whether the bank statements ought to have been disclosed and their omission to do so prejudiced the defendant's prospect of a fair hearing ought to be examined in more detail by this Court. Accordingly, I shall grant permission to appeal.
(Application for permission to appeal allowed)