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 CHANCERY DIVISION
(Mr Justice Lloyd)

		Royal Courts of Justice Strand London WC2 Thursday 22 March 2001

Thursday 22 March 2001

1. LORD JUSTICE CHADWICK: This is an application for permission to appeal against an order made on 15 January 2001 by Lloyd J in proceedings brought by the applicant, Mr Doulat Daryanani, against Kumar & Co, a firm of solicitors, and Mr David Gerrey, a barrister.
2. The judge struck out the action on the third day of the trial and refused permission to appeal. The reasons why he refused permission to appeal appear from the following note:

"The claimant's statement of case alleged financial loss only relying on a point which he was debarred from raising by a previous order. He sought permission to amend to formulate a different case. I heard his evidence before ruling on the application to amend. Having done so it was clear on the facts that the different case could not succeed. I therefore refused permission to amend because the case would be bound to fail on the evidence, being his oral evidence of an oral agreement allegedly made in May 1977. There was nothing else arguable in the case, so I struck it out as an abuse."

3. The present action may be seen as a sequel to an earlier action (which I shall describe as "the first action") brought by the applicant against his father, Mr Assandas Daryanani, in connection with property at 200 Blythe Road, Hammersmith, London W14. The defendants in this action had been instructed by the applicant in the latter stages of the first action. The first action had been commenced in 1986. It was ended by a compromise in 1989. The terms of compromise are embodied in an order dated 20 February 1989 in the Tomlin form.
4. The applicant's complaint in the present action relates to the circumstances in which the first action was compromised. The present action commenced on 10 April 1991. The claim in this action is that the defendants compromised the first action without the applicant's consent; that they failed to give him any, or any adequate, advice concerning the compromise; and that they prepared and approved documents (that is to say the Tomlin order and a declaration of trust referred to in that order) which did not adequately reflect the terms of compromise that had been agreed.
5. The action seems to have proceeded slowly. In 1999 the defendants sought summary dismissal of the claim under CPR 24. In the alternative, they sought to strike out the action on the grounds of inordinate delay. The application under CPR 24 succeeded before the Master. The claimant appealed. The appeal came before His Honour Judge Hicks QC, sitting as a Judge of the High Court in the Queen's Bench Division. He gave judgment on 13 March 2000. He allowed the appeal against the Master's order, but he directed that the claimant be debarred from taking certain points in the action. The order contained the following paragraph, paragraph 3:

"The Claimant is debarred from pursuing any claim based on allegations:

(i) that the terms of settlement of his action against his father to which he agreed included an agreement by his father 'to waive at any time in the future [the licences to reside for life in 200 Blythe Road in favour of the father and his wife] in exchange for a one-bedroom flat in the London Borough of Hammersmith, to be bought and owned by [the Claimant] for our occupation for life'; or

(ii) that he was told by the Defendants or either of them that under the terms of settlement of the said action, whether as agreed with his father's lawyers or as set out in the Tomlin Order made therein, he would be entitled to sell 200 Blythe Road aforesaid in his parents' lifetime, provided that he bought them a suitable flat out of the proceeds; or

(iii) that but for breaches of duty on the part of the Defendants or either of them he would or could have settled the said action upon terms which included a term to the effect set out in (i) or (ii)."

6. His Honour Judge Hicks QC gave directions as to the disclosure of expert valuation evidence and for the transfer of the action to the Chancery Division. The defendants appealed against that order, but the appeal was dismissed by this Court on 12 December 2000. The effect was that the order stood; with those provisions debarring the claimant from making the allegations set out in paragraph 3.
7. The action came before Lloyd J in the Chancery Division shortly thereafter. The trial commenced on 11 January 2001. The position as it then appeared to the judge is set out in a passage at page 22 in the transcript of his judgment. He said this:

"Judge Hicks' directions about witness statements have been complied with, and the defendants also put in an expert valuation report, the claimant relying on the one that had been served on his behalf in 1993. The result was that the matter came on for trial on Thursday of last week, the 11th January, and it came before me in a condition in which Mr Daryanani, still acting in person as he had for some years, and certainly before Judge Hicks and the Court of Appeal, was alleging negligent advice and acting without authority in compromising the action and was alleging, apart from a claim for damages by way of anxiety and distress, financial loss formulated in one very specific way, which was something which he was not entitled to assert. That was not really the most helpful condition for the matter to come before the court. On the face of his pleadings, therefore, Mr Daryanani would not be entitled to succeed and the matter could be struck out."

8. The reason why the judge took the view that the financial loss was formulated in a way which the applicant could not pursue in the action is found in the particulars of loss which had been served by the applicant in 1993. At paragraph 21 of his particulars of loss the applicant had said this (as quoted by the judge):

"The value of the plaintiff's reversionary interest in 200 Blythe Road, London, W14 as at January, 1990 upon the terms of the Declaration of Trust referred to in the Statement of Claim was £37,500. This was therefore the value of the plaintiff's interest in 200 Blythe Road as a result of the compromise apparently entered into. The above valuation is to be contrasted with the value of 200 Blythe Road on the basis that the reversionary [ie the plaintiff] could rehouse the defendants in a one-bedroomed flat, namely £126,000. The reversionary loss was therefore £126,000 less £37,500, that is to say £88,500."

9. But the applicant could not assert that he would have been able to reach a compromise with his father on the terms that his parents should be rehoused in a one-bedroomed flat in the London Borough of Hammersmith, because sub-paragraph 3(iii) of Judge Hicks's order had expressly provided that he should not pursue a claim based on that hypothesis. So that the claim which was being pursued before the judge was bound to fail.
10. Nevertheless the judge thought, from an examination of the applicant's witness statement, that his pleaded case was, perhaps, not really his true case. The judge explained what happened in the course of the trial in a passage which begins at page 25G of the judgment. After referring to passages in the applicant's witness statement, and observing that that seemed to put forward a rather different case from that which had been originally indicated, he went on:

"It seemed to me that in the course of debate with Mr Daryanani as to what his true case was that it was essential to try and reach a text which attempted as best one could to express the case that Mr Daryanani really wanted to advance in a way that was consistent with Judge Hicks' order and was also legally supportable and attempting to give expression in proper form to the case that he appeared to be seeking to advance in his witness statement. This became a rather lengthy process, and indeed basically the first day of the trial was occupied by this, something which one would have hoped could have been dealt with at an earlier stage, but there it is, that was one of the consequences of the orders of Judge and the Court of Appeal previously, together with the fact that the claimant was not legally represented. Ultimately, after a good deal of drafting and debate and helpful and constructive submissions by counsel for the defendants, a text was produced which was in very large part my drafting which Mr Daryanani, after having a fair opportunity to consider it, was prepared to say that that was what he would like to substitute for the answer under paragraph 21 in the Further and Better Particulars of the Statement of Claim served in 1993 which formulated the loss that he claimed. That test he adopted as the case that he wished to advance as regards loss and in effect he applied for permission to make the amendment necessary to bring that on to the pleadings, and I had better read the text. This would involve deleting the whole of his present answer under paragraph 21 (which I have quoted earlier) and inserting the following:

'The value of the claimant's reversionary interest in 200 Blythe Road, London W14 at as 28 February, 1989 upon the terms of the Declaration of Trust referred to in the Statement of Claim was £25,000. This was therefore the value of the claimant's interest in 200 Blythe Road as a result of the compromise apparently entered into. The claimant contends that if the terms of the compromise had been properly explained to him he would not have agreed to enter into it and that the case would have proceeded to judgment after the pleadings had been amended and the case transferred to the Chancery Division. The Statement of Claim would have been amended to show that the claimant sought an order on the basis of an immediate contract to sell the freehold to him but subject to the rights of his parents as defined below as the parents' right to occupation, that is to say, an order for the immediate transfer of the freehold to him but subject to such rights for his parents. The exact wording would have been drafted by counsel. The claimant would insofar as necessary have relied on the doctrine of part performance if the defendant had defended the claim on the basis of section 40.'"

11. The judge continued with the text of the proposed amendment:

"'The claimant would have obtained, or alternatively there is a substantial chance that he would have obtained, an order under which he is entitled to an immediate transfer of the freehold ownership of 200 Blythe Road subject to the parents' rights of occupation as follows. His parents would have had the right to continue to use and occupy the first and second floors of the property as they had done before but thereafter as part of the claimant's family unit and so that if the claimant chose to move to another property at which he offered them corresponding use and occupation, within reason his parents would have had to move out of the property whether or not they chose to accept the claimant's offer at his new property. In that event the claimant would have had a more valuable interest in 200 Blythe Road than he did as a result of the actual compromise, namely the freehold title subject only to the parents' rights of occupation. The claimant could have sold the property at any time thereafter subject to offering his parents corresponding use and occupation at the new property, within reason, to which he himself moved. The claimant contends that the value of his interest in the property in that case would have been £230,000, accordingly the claimant's loss was £205,000 as at 28 February, 1989, namely £230,000 less £25,000. Alternatively his loss is the loss of a substantial chance that he would have been better off to that extent.'"

12. I pause to draw attention to the fact that the claim, put in that way, is that, had the compromise not been reached, the matter would have proceeded to trial; and that, at trial, the order that would have been made would have been an order transferring the freehold to the claimant, but subject to his parents' rights to continue to occupy 200 Blythe Road unless they were offered alternative accommodation in a new house which the claimant himself would be going to occupy. In the circumstances that these were elderly parents who, no doubt, looked to their children as likely to recognise an obligation to look after them, that is an understandable arrangement to have made. Whether they would have continued to look on this claimant as likely to satisfy that obligation, in the circumstances that he had found it necessary to take them through litigation to judgment was another matter.
13. The judge went on:

"The way that counsel submitted that I ought to deal with that application which was then put to me by Mr Daryanani was that certainly I ought to consider it but I ought to hear the claimant's evidence before I ruled on it. They said that for a number of reasons, in particular because it might not be easy to tell without hearing the evidence whether the way that the new case was to be advanced would involve considerations of prejudice to the defendants such that if, to consider it in this way, if an amendment of that kind had been put to Judge Hicks or to the Court of Appeal they would have considered that it was unfair for the defendants to have to meet a case of that kind and would have taken a different course from that which they did and namely they would have struck out the entire action. It seemed to me in all the highly unusual circumstances of this case, particularly with the very long delay which has taken place since the accrual of the cause of action, if any, and since the issue of the writ that this was a reasonable course and I therefore acceded to it, so the matter proceeded."

14. The judge then heard further evidence from the claimant. At the conclusion of that evidence, the defendants applied for judgment under CPR Part 24; or, alternatively, for an order striking out the claim on the basis that, whatever the judge might find in relation to the allegations of negligence surrounding the compromise on 14 February 1989, there was no realistic prospect that the applicant could succeed on causation; that is to say, no realistic prospect that he could succeed in persuading a court in 2001 that, if he had proceeded with his action commenced in 1996, he would have obtained the judgment which he was asserting in the form to which he was proposing (following the discussion to which the judge referred) to amend his statement of claim.
15. The judge dealt with that submission in a passage which begins at page 28:

"All in all, the way the defendants invite me to proceed is to bring this trial to a close now on the basis that Mr Daryanani cannot succeed in the light of the evidence that he has given on his new case as to causation and I must therefore say a little bit about that.

His case on causation, rather than saying that if he had known what was happening in February, 1989 he would have insisted on and got a better compromise, involves saying that there would not have been a compromise, he would have fought on and he would have won, or at any rate he had a substantial chance of having won. The unfortunate consequence is that I have to consider in January, 2001 what a judge in 1989 or 1990 would have concluded as regards the merits of Mr Daryanani's case based on an oral agreement in May, 1977."

16. The judge considered that question at some length, and concluded, at page 34G, that Mr Daryanani could not prove that he lost more than a fanciful or negligible chance of success in the first action. It would follow that, in that respect at any rate, even if he were to prove negligence, he would be unable to succeed at the end of the trial. The judge thought that there was nothing in the claim for damages in respect of anxiety and distress, having regard to the decision in the House of Lords in Johnson v Gore Wood, and that this was not a case in which the trial should be allowed to continue so that he might claim nominal damages for breach of contract. As the judge pointed out, that would be a very considerable waste of everybody's time and the court's resources. The judge dealt with the matter, therefore, on the basis that the appropriate course was to refuse permission to amend on the ground that, having heard the evidence, it was clear that the amended case would be bound to fail; and, having refused permission to amend, he was then faced with the original pleading which showed no tenable cause of action which the applicant could advance in the light of Judge Hicks' order preventing him from asserting that he would have made a better compromise.
17. The grounds of appeal assert that the judge reached a conclusion that was unjust because of a serious procedural irregularity. It is said that the judge refused, in the course of the applicant's cross-examination, to look at material which had come into the possession of the applicant and which (it was said) was crucial in establishing that the claimant's chances of success in the previous action would have been good, had the action gone to trial.
18. The evidence which is relied upon is the second page of a letter written by the solicitors then acting for the applicant's father. The first page has not been included in the bundle, and so it is impossible to tell to whom the letter was written or in what circumstances. The solicitors appear to be saying, on the second page of that letter, that the father, Mr Assandas Daryanani, was in poor health and that his life savings were being used to defend a claim which was being brought against him by his son with the benefit of legal aid; and that therefore he would be content to settle the matter almost at all costs. But that is not evidence that the father would have been prepared, in fact, to settle the matter "almost at all costs". The basis upon which he did settle the matter, or thought that he had settled it, were contained in the Tomlin order. Nor is the letter any evidence at all as to what the result would have been if the first action had gone to trial - which was the case which the applicant was seeking to advance by the proposed amendment.
19. The judge refused to take account of that material, produced as it was at a late stage, in circumstances in which there was no explanation as to the provenance of the letter, the circumstances in which it was written, the person to whom it was written, or how it had turned up (being privileged correspondence between the claimant's father and the father's solicitors) on the third day of the trial. In my view he was entirely right to refuse to take account of that letter. He was right for the reason that to advance a case that the father would have settled the action commenced in 1986 upon terms that he could be put into a one-bedroomed flat in the London Borough of Hammersmith, or on any terms, would have been contrary to Judge Hicks' order; and, in the context of a case that the first action would have gone to trial, the letter is irrelevant.
20. It is quite plain that the reason why Judge Hicks made the order which he did in 1999 was that he was not prepared to allow this action to be fought on the basis of supposed recollections of who said what to whom - or who might have been prepared to say what to whom - some ten or eleven years earlier. Mr Daryanani had accepted before Lloyd J that he was going to put his case on the basis that he would have succeeded at a trial; not that he would have reached some other compromise with his sick father. In those circumstances, it seems to me that the judge was entirely correct in the view that he reached. He was entitled to hold that Mr Daryanani should not be permitted to shift his ground yet again.
21. The judge's decision to refuse to allow the amendment - and, having refused to allow the amendment, to dismiss or strike out the action on the basis that, as pleaded, it was bound to fail in the light of the fetters imposed by Judge Hicks' order - seems to me to be unimpeachable. In my view there is no prospect that the Court of Appeal would think it right to interfere with the judge's decision. Permission to appeal is refused.
ORDER: Application refused. (Order does not form part of approved Judgment)