England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
APPLICATION FOR PERMISSION TO APPEAL AND
AN EXTENSION OF TIME APPLICATION FOR
PERMISSION TO AMEND GROUNDS OF APPEAL
APPLICATION FOR PERMISSION TO RELY ON FURTHER EVIDENCE

		Royal Courts of Justice Strand London WC2 Friday, 28th September 2001

1. LORD JUSTICE ALDOUS: The defendants, Mr and Mrs Harwood, seek permission to appeal the order of 28th March 2001 of His Honour Judge Langan QC, sitting as a Judge of the High Court.
2. The proceedings arise out of an agreement dated 6th May 1993 between Mr and Mrs Harwood and Mr and Mrs Issitt. Mr and Mrs Issitt were the owners of Weald House Nursing Home in Croxton which they agreed to sell to Mr and Mrs Harwood. Clause 1 of the agreement provided that Mr and Mrs Issitt should sell and Mr and Mrs Harwood should purchase the freehold of the nursing home, the goodwill and the fixtures and all the contracts and engagements for work to be carried out by Mr and Mrs Issitt from 10th May. The purchase price of £1,250,000 was apportioned as £1,000,000 for the premises, £150,000 for the goodwill and £100,000 for the fixtures. The price together with interest was to be paid by instalments by bankers' standing orders to Barclays Bank.
3. Clause 5 of the agreement allowed Mr and Mrs Harwood to complete their purchase of the premises, goodwill and the fixtures at any time during the subsistence of the agreement by payment of the balance of the price outstanding. Clause 6 said the vendors would sell as beneficial owners. Clause 7 dealt with the title. Clause 11 provided that from the commencement date and for so long as the agreement subsisted Mr and Mrs Harwood would have possession of the premises and the fixtures and would conduct and carry on the business in the ordinary course of the premises for the purchaser's own benefit. All profits and receipts, all losses and outgoings were to accrue to Mr and Mrs Harwood. Clause 19.2 dealt with default of Mr and Mrs Harwood. On default Mr and Mrs Issitt could either sell the premises, the goodwill and the fixtures or resume occupation.
4. For the purposes of the proceedings the relevant clause was Clause 19.2.2. It provided for Mr and Mrs Issitt to take over the premises at a price calculated in accordance with that clause.
5. Pursuant to that agreement Mr and Mrs Harwood went into occupation of the nursing home and began to operate it. They could not keep up with the monthly payments of principal. The last monthly payment was that for July 1995 with a partial payment made in the following month. By letter dated 24th May 1996 Mr and Mrs Issitt called upon Mr and Mrs Harwood to resume capital payments in 1996. They did not do so. The relevant amount was not paid. By letter dated 2nd December 1997 Mr and Mrs Issitt gave notice of their election to resume occupation and possession unless arrears were paid; they were not.
6. The writ in this action was issued on 22nd December 1997. It was followed by an application for summary judgment seeking repossession together with appropriate accounts and inquiries. Evidence was filed and the application came before District Judge Gill on 11th March. In a reserved judgment he held that Mr and Mrs Issitt were entitled to resume possession. He ordered the agreement to be put an end to pursuant to Clause 19 of the agreement. He directed possession to be delivered up to Mr and Mrs Issitt. He made provision for an inquiry and account to be taken. The appeal against that order was not pursued.
7. On 24th September 1998 Mr and Mrs Issitt resumed occupation at the nursing home and once again began to carry on that business. At that stage Mr and Mrs Harwood changed their legal advisers who advised that a defence and Part 20 counterclaim should be served. After service Mr and Mrs Issitt applied to strike out that defence and counterclaim. That application came before the judge in March 2001. He concluded that none of the matters raised were arguable and struck them out. He went on to carry out the inquiry directed by District Judge Gill by his order of 9th June. He heard evidence from the parties and their experts over about six days. He concluded that pursuant to Clause 19.2.2 Mr and Mrs Issitt should pay to Mr and Mrs Harwood £94,571.37 and interest of just over £6,000. Mr and Mrs Harwood sought permission from the judge to appeal against the order striking out the relevant parts of the defence and counterclaim and also the conclusion reached by the judge on the inquiry. That was refused by the judge. They sought permission from this court which was considered on paper and refused.
8. This is my judgment on the hearing of the renewal of that application. The matter was listed for an oral hearing on 23rd August 2001 before Lord Justice May and myself. At the outset of the hearing Mr Berry sought an adjournment as his client wished to apply to adduce fresh evidence. Having heard his application an adjournment was granted. Since then the application has been made. I will deal with that first.
9. As will appear from what I will say later in this judgment, the judge had to arrive at a valuation having regard to the state of business as explained in the documents and dealt with in the oral evidence. Two of the witnesses were Mr Issitt and Mr Harwood. As to their evidence the judge said this:

"This is a valuation case in which judicial views and credibility of protagonists lies somewhat on the margins. It is nonetheless only right that I should record my impressions of these gentlemen. Each was to a degree self-serving, which is perhaps only to be expected in a case in which unhappily, personal relationships have sunk to a low ebb and a great deal of money is at stake. With that qualification, I have to say that I nonetheless found Mr Issitt to be an impressive witness."

10. The judge went on to deal with Mr Harwood's evidence and concluded that Mr Harwood's performance in the witness box was unimpressive. He gave his reasons for coming to that conclusion.
11. Those findings are not criticised by Mr Berry who appeared on behalf of Mr and Mrs Harwood, nor could they be. Those findings were the sort of findings the judge had to make having taken the advantage of seeing those witnesses give their evidence in the witness box.
12. Another witness was Miss Issitt, the daughter of Mr and Mrs Issitt. She was either the manager or both an important part in the management of the nursing home. As to her the judge said this:

"By far the most impressive of all the witnesses called in this case, was Ms Dawn Issitt, the daughter of the claimants, who carried out an analysis of the records of the nursing home, which, to my mind demonstrated quite convincingly that much of the information provided by the defendants was erroneous. Ms Issitt did accept - indeed she volunteered to Mr Jones - that notwithstanding a very poor month in August, average occupancy in the six-month period under consideration, was of the order of fifty. This was markedly higher than it had been in other earlier periods, when the nursing home was being managed by the defendants."

13. The judge also relied on her evidence on two other matters.
14. The fresh evidence consists of a decision of the Employment Tribunals given on 22nd August 2001 in a case in which Mrs Cleland contended that she had been wrongfully dismissed from Weald House Nursing Home where she worked. She had been accused of slapping a patient. Surprisingly, she did not give evidence. All the evidence came from employees of the nursing home. Mr Cooper gave evidence. He was the person who had the responsibility of investigating the allegations against Mrs Cleland. Miss Issitt also gave evidence. During the hearing it became apparent from the evidence of Mr Cooper that he had made notes. The tribunal held that those notes had been written and deposited in the appropriate files. Miss Issitt, it seems, gave evidence that she had looked at the files and there were no notes. As to that the tribunal held:

"We heard evidence from Miss Issitt that she had looked at the files, that there were no written reports in this case and that she proceeded on the basis of verbal information from Mr Cooper. We are satisfied that Miss Issitt's evidence is unreliable, to put it at its lowest. We also find that Mr Wright, whilst perhaps understandably doing his best to support Miss Issitt, was not entirely frank."

15. The tribunal's conclusion as to Miss Issitt's evidence was in these terms:

"Thirdly, we are satisfied there were notes produced by Mr Cooper in this case and that either Miss Issitt and her colleague did not investigate the matter properly in the sense of looking at the files or they deliberately suppressed these notes for the purposes of this hearing. Were the tribunal firmly of the view that the latter was the case it would be grounds for striking out the notice of appearance in any case."

16. It appears that the tribunal were not satisfied that the latter was the case as the notice of appearance was not struck out.
17. Mr Berry submitted that the tribunal's conclusion as to Miss Issitt's evidence was admissible to attack the credit of Miss Issitt in the present proceedings. I am prepared to assume that it would be admissible if it was materially relevant. In my view, it is not. First, the finding of the tribunal was that Miss Issitt had either not investigated the matter properly or had deliberately suppressed the notes. Thus, there is no finding that she had done other than failed to investigate the matter properly. Secondly, the judge had to decide the present proceedings on the evidence before him. On that basis he had to decide what evidence to rely on having formed a view of the credibility and reliability of the witnesses.
18. The conclusion reached by the tribunal as to the existence of the notes nor the evidence that Miss Issitt gave had any relevance to this case. The issue in the two cases are different as were the points upon which Miss Issitt gave evidence.
19. I do not believe that the conclusion of the tribunal as to the reliability of Miss Issitt on the point in issue in that case could have any bearing on the matter in these proceedings any more than the judge's consideration of Miss Issitt's evidence could have been relied on to support her reliability in the tribunal case.
20. Mr Berry referred us to the chart of occupancy and a table prepared by Miss Issitt. He told us rightly that the judge had relied on Miss Issitt's evidence as to how the chart should be preferred. The judge had the advantage of seeing Mr Berry cross-examine Miss Issitt upon the discrepancy and he came to the conclusion that her evidence should be relied upon. In my view, the fact the tribunal could not rely upon her evidence as to the existence of notes could not have had a material bearing upon that conclusion. He decided the case on the evidence before him. That was his duty.
21. I conclude that even if the tribunal's decision were admitted it would not give a real prospect of success.
22. I turn next to consider the points raised in the written skeleton argument which were in some cases amplified by Mr Berry in his oral submissions. The first ground upon which permission to appeal is sought concerns paragraph 2 of the defence which was struck out. In paragraph 2 reference is made to the fact that the nursing home was subject to legal charges in favour of Barclays Bank. It is alleged that because Barclays Bank had never expressly or by implication consented to Mr and Mrs Harwood taking possession the defendants were never in lawful occupation of the nursing home. That, it was said, was contrary to an implied condition that the defendants should have lawful occupation of the premises. It follows that there had been a total failure of consideration and Mr and Mrs Harwood were entitled to be repaid all the sums, both capital and interest, which they had paid.
23. That argument has no merit whatsoever. As the judge held, it was unarguable. Mr and Mrs Harwood obtained precisely that for which they bargained. They knew they were getting occupation of the property and that it was subject to two charges. The money paid was paid by standing orders to Barclays Bank. Barclays Bank could have been under no misapprehension as to the true position. There is no room for an implied term. Further, there is no ground to suggest that Barclays Bank were not appraised of the whole agreement and the position. Clearly, both Mr and Mrs Harwood and Barclays Bank acquiesced in the position and there are no grounds for them taking the point. Further, that point was clearly out of time by the time it came to be pleaded in the defence. By that time District Judge Gill had made an order for possession by Mr and Mrs Issitt. The time when that issue needed to be taken was before the order of the district judge. The district judge made his order upon the basis the agreement was enforceable. There was no appeal. Therefore that issue was concluded by that order.
24. The second point taken concerns the way the judge carried out the valuation. As required in Clause 19.2.2, the judge had to ascertain what was the sum which represented the open market value of the premises, the goodwill and the fixtures. It was the opinion of both experts called on behalf of the parties that the appropriate way to evaluate a nursing home was as set out in paragraph 7 of the judgment. That required ascertaining a number of factors listed there as A to L and from them to ascertain the appropriate figure. The judge did just that. He took various figures for the factors - again, I need not set them out in this judgment - and came to the figure that he did.
25. On behalf of Mr and Mrs Harwood it was submitted that the judge had not carried out the contractual task of ascertaining the open market value in accordance with the agreement. What is said in the written submissions is that he had not applied Clause 19.2.3 which provided for determination by a sole expert appointed by the parties or, if there was no agreement, by the President of the Royal Institute of Chartered Surveyors.
26. Mr Berry in his written submissions referred to a number of authorities which are said to establish that the judge was not entitled to substitute something different for that which was contractually agreed. In his oral submissions he said that the judge had failed to apply the subjective approach which would be required by such an expert.
27. In my view, there is no basis for suggesting that the judge fell into error. He carried out the matter proposed by the parties. Counsel at the trial did not persuade him, or suggest, that the value should be determined under Clause 19.2.3. In fact that was not open to the parties after the order made by the district judge. The judge did what had been decided by the district judge. It is too late for the parties to resile from that, particularly once the result was known.
28. Another complaint was that the judge had - when rejecting the evidence of an expert or the expert - applied an inconsistent test. At paragraph 23 of his judgment the judge said this:

"I am not bound by the views of experts, even where they are in agreement, but where they are in agreement I would be willing to over-ride them only if I were convinced by the evidence of other witnesses that they are plainly wrong."

29. That test was, submitted Mr Berry, inconsistent with his conclusion for rejecting the evidence of the expert when seeking to arrive at the appropriate figure for factor D. The judge said this in paragraph 40 of his judgment:

"I have, after considerable hesitation concluded that I have here one of those rare instances in which I am compelled to reject the joint view of expert witnesses."

30. The judge went on to give the reasons why he felt so compelled. One of them was that they had not given a reasoned explanation as to why one of them had departed from his original figure.
31. In my view, there is no inconsistency. In the latter case he concluded that he was compelled to reject the evidence because of other evidence. That is not inconsistent with the test he had set himself earlier in the judgment.
32. There is a considerable attack made in the written submissions upon the judge's rejection of Mr Camm's evidence, the expert valuer called on behalf of Mr and Mrs Harwood. In particular, it is said that it was the evidence of Mr Taylor, the expert called on behalf of Mr and Mrs Issitt, that is weak. Clearly, that was not the view of the judge. He gave his reasons, one of which was he thought Mr Taylor was more even-handed and flexible than Mr Camm whose performance he described as defensive. The judge concluded that he was unable to say that he had any clear preference for one expert over the other and therefore his duty was to examine conscientiously each point strictly upon its merits.
33. In my view he was entitled to adopt that approach. He was not bound to accept any particular piece of evidence by an expert. He was not bound to accept their evidence. I have read the judge's judgment on this matter, and I find it a careful analysis. I can see no real prospect of this court coming to a different conclusion. The conclusion he reached was one which he took having taken the advantage of seeing the witnesses give evidence orally, an advantage which this court does not have.
34. Criticism is made of the judge as to the way in which he arrived at a figure for costs and expenses incurred by Mr and Mrs Issitt in resuming possession. The amount was about £43,000. That figure came from a report of Mr Steven Chambers, an accountant, which was served on behalf of Mr and Mrs Issitt. Mr Berry's submission is that the judge should have acted on the evidence and that when it was properly looked at it did not establish the figure of £43,000. It followed that the burden of proof has not been discharged.
35. The judge considered that matter in detail. Clearly, the judge could not act where there was no evidence. However he was entitled to look at the evidence as a whole and come to a conclusion, particularly as Mr Chambers was not cross-examined. He set out over a number of pages the reasons why he felt it was appropriate to take into account the schedule prepared by Mr Chambers. The jurisdiction of this court is to review a judgment, and I do not believe there is a real prospect of this court concluding that the judge's approach was mistaken. The fact that arguments can be put forward to criticise the evidence - and those arguments it appears were put before the judge - does not mean that there is a real prospect of it succeeding in this court. The judgment of the judge is thorough. It appears to me to be a judgment to which he was entitled to come. I do not believe that there is a real prospect of this court coming to a contrary view.
36. I therefore would refuse permission.
37. LORD JUSTICE RIX: I agree.
Order: Application refused