England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HALIFAX COUNTY COURT
(HIS HONOUR JUDGE BERRY)

		Royal Courts of Justice Strand London WC2A 2LL Tuesday 23 October 2001

1. LORD JUSTICE MANCE: This is an application which is renewed after refusal on paper. The circumstances do not need repetition because they are set out in full in my previous judgment of 27 April 2001. In that judgment, as appears by paragraphs 4 and 5 and paragraphs 11, 12 and 13, I left open only two issues. I asked for information and assistance from counsel who appeared below for the present applicant and for the first respondents. In seeking the present hearing, the applicant has, however, represented himself. Today, despite having received notice sent by the Criminal Appeal Office at the beginning of October, and despite having written to the Criminal Appeal office on 11 October, the applicant, Mr Zazulak, has not appeared. In the circumstances, I propose to proceed in his absence, although he will have the usual right under CPR 23.11 to seek a relisting in the court's discretion.
2. After my judgment dated 27 April 2001, comments were obtained from Mr Godfrey of counsel, who acted for Mr Zazulak below. The papers were then returned to me by the Criminal Appeal Office on 9 July with those comments and also with a letter dated 4 July from the solicitors to the first defendants. That letter, however, did not address the questions I had asked, but raised a point on costs.
3. On the basis of counsel's comments, I made an order dated 11 July 2001, in which I refused permission to appeal on two issues not already disposed of by my judgment dated 27 April. I gave brief reasons and informed Mr Zazulak of his right to renew his application orally.
4. On 8 August Mr Zazulak did request the present further oral hearing. Meanwhile, unknown to me, on 6 July, although only received by the Court of Appeal office on 24 July, counsel for the respondents, Mr Casement, had made his own comments. Both sets of counsel's comments were sent to the applicant on 27 August 2001, so that the matter may be considered today in the light of those comments. I propose to do so briefly.
5. As my judgment of 27 April indicated in paragraphs 4 and 5, the first point was whether there were any arrears justifying the termination and repossession which was the basis of the successful counterclaim and which, in the event, overtopped Mr Zazulak's claim and led to judgment overall being given against him. I pointed out that the figures indicated that, if there were any arrears, they must have been very small. I said:

"But that does not mean that they did not exist and that they were not conceded, and that is the point on which the first respondents and counsel for the applicant at trial should be asked to comment. Were they conceded? If they were, that explains why the judge did not deal with the issue. Was it conceded that termination and repossession was justified? If it was not conceded, then there is, putting it at the lowest, a proper case for consideration on appeal that the judge ought to have dealt with the issue."

6. When responding in his note, Mr Godfrey said:

"It was conceded before His Honour Judge Barry at the outset of the trial in opening that there were arrears which justified the termination of the agreement and repossession. Mr Zazulak was advised of this respect and specifically agreed to this course."

7. That led to my order refusing permission on this issue on 11 July, but the matter is now fortified by the further comments obtained from counsel for respondent. Mr Casement said:

"....Lord Justice Mance has correctly noted the fact that it was an issue on the pleadings as to whether the Claimant was in default of the lease agreement and whether the First Defendant was entitled to terminate. There was also a dispute as to how much was due to the Claimant under the lease agreement and what had been paid by the Claimant. It therefore appeared it would be necessary to trawl through, among other things, the Claimant's bank statements to ascertain what he contended had been paid. I recall this was going to be particularly difficult since the Claimant was also making payments to the First Defendant for vehicle finance at the time.

The bank statements and other documents which were relevant to these issues were never considered at the trial because, prior to the trial commencing, I agreed with counsel for the Claimant, on behalf of our respective clients:

(1) that the Claimant had fallen into arrears and the lease agreement was validly terminated;

(2) that the First Defendant was entitled to repossess the goods which were the subject of the lease agreement;

(3) the amount of the arrears and the amount due from the Claimant under the lease agreement.

Because of the dispute between the parties in respect of the amounts paid under the lease agreement, and in an effort to save time and costs, a compromise figure was agreed in respect of the arrears and amounts due under the lease agreement. The figure claimed in the Amended Defence and Counterclaim was £987.45 for arrears and a balance due of £6245 giving a total of £7232.45 for both items. The note I have on the original papers before me is that this was agreed at £4900 with counsel for the Claimant. To the best of my recollection no agreement was reached in respect of the other items (damages payable to the landlord and removal and storage costs)...."

8. The judge's judgment below indicates that that is correct.

"....and therefore the trial judge would have adjudicated upon those. I would however note that paragraph 4 of the Judgment referred to arrears claimed of £7337.59. This leads me to assume that the court has not been provided with the supplemental bundle and the Amended Defence and Counterclaim in which a much lesser figure (£987.45) was claimed for arrears."

9. In the light of that further explanation, my previous view that there is no basis for permission to appeal in respect of this issue is confirmed. It has no prospect of success and there is no other reason for an appeal.
10. I turn to the second issue that was identified in my judgment of 27 April. It relates to a plea raised by the claimant in his defence to counterclaim by amendment to the effect that the first defendant, now the first respondent, had failed to mitigate his loss by not selling the goods, which he legitimately retook under the repossession, at the open market value, as contained in a report and said to be worth £6,400 in the pleading.
11. The report was by Mr Mascall, a partner in Bache Treharne, surveyors, valuers and auctioneers specialising in the valuation and disposal of plant and machinery assets. I said that the only real point arising from Mr Mascall's statement was that, in his opinion, the open market value was £6,400 and the estimated restricted realisation price was £3,150. In the event, the goods were sold for £2,000 plus VAT (a total of £2,350) on 6 June 1998 to a Mr David Taylor of G M Machinery of Oldham, Greater Manchester under an invoice which is in the papers.
12. Mr Mascall issued two documents: a letter dated 18 May 1999 with accompanying report and a report of 12 July 1999 in which he said:

"In my opinion the relevant basis of valuation is the Estimated Restricted Realisation Price as these assets had to be sold as it is alleged that Mr Zazulak was in breach of his agreement. The net realisable value of the assets in my opinion is in the order of £4,750 plus VAT excluding any costs which could be incurred for removal or commission which in my experience should not exceed 15% of net realisations. I understand that in this instance there were no costs."

13. That has to be read with the previous paragraph which says:

"In our opinion the Open Market Value/Estimated Realisation Price and the Estimated Restricted Realisation Price of the assets included within the agreement with Asset Finance and Leasing is £6,400 and £3,150 respectively as per Appendix 2."

14. Those confusingly expressed and, on their face, contradictory paragraphs take one back to the previously dated document where there is a definition of Open Market Value/Estimated Realisation Price and Estimated Restricted Realisation price. For present purposes one is concerned with the difference between the latter two. Estimated Realisation Price is defined as involving:

"(a) a willing seller;

(b) that the sale will take place on a future day specified by the Valuer to allow a reasonable period for proper marketing;

(c) that no account is taken of any additional bid by a prospective purchaser with a special interest;

(d) a sale as a whole for use in its working place;

(e) that both parties will act knowledgeably, prudently and without compulsion."

15. The only ingredients of an Estimated Restricted Realisation Price which differ are the second and fourth condition. The second is that:

"Completion which will take place on future date specified by the Client (and recorded in the Valuers Report) which does not allow a reasonable period for proper marketing."

16. The fourth is (in lieu of a sale either as a whole for use in its working place):

"a sale either-

i) as a whole for removal from the premises at the expense of the purchaser; or

ii) of individual items for removal from the premises at the expense of the purchaser."

17. There is further confusion in the sense that in this document of May 1999 Estimated Realisation Price is given the same value as Open Market Value, whereas Estimated Restricted Realisation Price is given the value of £3,150. However, it would appear clear that Estimated Restricted Realisation Price would be relevant in the present context. In other words, the figure of £3,150 would appear to have been, on the basis of the reports, the relevant starting point.
18. Nonetheless, in his judgment, the judge took only the actual sale price and the question arises whether he should have dealt with the matter expressly. That was the question on which I asked for counsel's assistance. Mr Godfrey's response was:

"As to the allegation that the First Defendant failed to mitigate his loss as regards the sale price of the leased goods, whilst it was pleaded that such should be in relation to the open market price, Mr Mascall in his report advised that the relevant basis should be the estimated restricted realisation price of £3,150 plus VAT. The latter figure was the best that Mr Zazulak could have hoped to achieve. I have no notes but, to the best of my recollection Mr Mascall in giving evidence stated that he had made such estimate without obviously having had the chance to view the goods and he admitted that in view of the condition of goods and the prevailing market demand for such goods as put to him the figure of £2,350 [inc VAT] represented a reasonable re-sale value. In the circumstances, the plea of failure to mitigate was not sustainable."

19. In the light of that comment, I again indicated on paper that I would refuse permission to appeal on this issue.
20. Mr Casement's note is not of great assistance in carrying the matter any further. It says:

"It was contended throughout by the First Defendant that this allegation was underparticularised and wholly unsustainable since the allegation could only properly be framed as a failure to take reasonable care to achieve a proper price (however defined). A failure to obtain the proper price in itself was no ground for criticising the First Defendant. The First Defendant effected a sale by private treaty. It was not suggested in the pleading or in submissions that there was anything wrong with this method of achieving a sale. It was never suggested by the Claimant what steps should have been taken to obtain a better price.

I cannot now recall so long after the event...."

(referring to the judge's judgment dated 4 February 2000):

"....whether and to what extent the judgment dealt with this point and if it was not expressly dealt with, why it was not dealt with."

21. He does however recall that the figure of £4,750 was highlighted during the expert evidence as being unclear.

"I cannot, however, recall the explanation that was given. It was, however, clear from the report and the evidence that the relevant figure for the Claimant's allegation was £3,150 (page 6 of the Report). The allegation was however not properly particuarlised or supported by evidence. i would only add that a 'no reasons' point was not taken by Counsel for the Claimant at the time of HHJ Barry's decision or subsequently.

Unfortunately, the above comments are the best clarification I can provide given the lapse of time."

22. Earlier in his report he also observed that he had been unable to locate the notebook he had used. Those comments confirm the general gist of what was said by the applicant's former counsel. Further, the last point made by Mr Casement seems to me a valid point. Counsel who were present at the trial did not take up with the judge that he had failed to address any issue. This is particularly of note when the judge, after concluding his ex tempore judgment, expressly asked counsel this:

"Have I found everything that is necessary as far the as the facts are concerned first to start working out the legal order that has to be made or are there some facts still adrift?"

23. Neither counsel suggested that there were further matters to be dealt with then or at any point in the post judgment discussion.
24. In those circumstances, I do not consider that there is any real prospect of success on appeal on this point, and there is certainly no other compelling reason justifying permission to appeal on this point either. Accordingly, disposing with the matter as I am in the absence of the applicant on this renewed oral application, I am of the same opinion as I was when I made my written order dated 11 July. I consider that this renewed application must be dismissed.
Order: Permission to appeal refused.