England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE COUNTY COURT AT OXFORD
(His Honour Judge Morton Jack)

		Royal Courts of Justice Strand London WC2 Friday, 4th May 2001

1. LADY JUSTICE ARDEN: This is an application by the defendant, Mr. Collinson, for permission to appeal from the order of His Honour Judge Morton-Jack sitting in the Oxford County Court dated 29th June 2000. By this order the judge dismissed an appeal from the refusal of the District Judge to set aside a judgment dated 18th December 1999 for £1,000.85 for beer sold and delivered. (£1 of this amount had apparently at some stage been paid.) Mr Collinson also seeks an extension of time because the notice of appeal ought to have been lodged within 14 days of 29th June but was not lodged until 15th November 2000. Mr. Collinson has appeared in person today and has made helpful submissions.
2. This is a second appeal. Accordingly, CPR 52.13 applies, and so Mr Collinson must show either that the appeal would raise an important point of principle or practice or that there is some other compelling reason for the Court of Appeal to hear it. It is a second appeal because the judge has already heard one appeal from the refusal of the District Judge.
3. I turn to the background to these proceedings. Hook Norton Brewery supplied the beer, and there is no dispute but that the £1,000 represents the amount of beer delivered. Mr. Collinson says that there might be a small error here. Substantially he accepts that figure. It arose out of an arrangement between Mr Collinson and the brewery for the supply of beer to public houses, where he had arranged that the landlord would take Hook Norton's beer. He would then receive the proceeds of sale and deduct his share. Mr. Collinson describes the arrangement with the brewery in his helpful written submissions:

"The conditions of the agreement were that if I entered licenced premises etc with the object of furthering Hook Norton sales, and found that the landlord was already dealing with the brewery, then I should immediately withdraw from such negotiations. Similarly, once I had brought a customer who was not dealing with the brewery into the fold, then all subsequent dealings with him must be done through me and not by the brewery direct.

I found the agreement eminently sensible, safeguarding the interests of parties on both sides, and so I readily acceded. Indeed, whenever I approached a pub or hotel for the first time, my early remarks were to make these terms known to the landlord.

Yet the brewery blatantly broke this agreement when they ripped my best customer, the Blue Boar, Chipping Norton, off my hands without even prior consultation with me."

4. Mr. Collinson says that the agreement was broken by Hook Norton by their taking over the supply of beer to the Blue Boar Public House and to his other outlets as well. I gather that there were some five other breweries. So far as reasons for doing this are concerned, it is Mr Collinson's case that Hook Norton repudiated the agreement wrongfully. The brewery suggested that their reason for breaching the agreement was because of late payments by Mr Collinson. Mr. Collinson tells me that there were two instances of late payment during the whole time of his trading with the brewery. On the first occasion it was when the defendant had difficulty in extracting the money from the publican and that on this occasion the amount due was paid in a very short time after the due date. The second occasion was owing to a banking error on the part of a large hotel group. Immediately the hotel group discovered the error they sent a letter of explanation dated 26th April 1999 to the brewery and to Mr Collinson. The brewery's then accountant saw no problem with either incident. Mr. Collinson has candidly explained to me what the brewery says was their reason for breaching it. His case, and I accept this, is that it was an act which was in breach of his agreement with them. I will come back to that in a moment.
5. I now summarize the various grounds of the appeal. First, Mr. Collinson says that the brewery refused part payment of the sum of £180. Second (this is a point I have already dealt with) the debt was a little less than £1,000. Third, he says that a part payment was made. Fourth, he says that, arising out of the breach of the agreement to which I have referred, he has a counterclaim of £17,043.59. Fifth, he says that the claim was entered against him personally when it should have been entered against his company, Shelui Co Ltd. However, Mr Collinson fairly stated that he was not really relying on this point because he had in fact paid cheques himself direct to the brewery. Therefore, I need say no more about this point. Sixthly, Mr Collinson has included within his written submissions a contention that the judge did not allow him to present his case properly and that the judge failed to hear the case properly. It appears that Mr Collinson went to the Banbury County Court and was there told that the case had in fact been transferred to Oxford. He then had to make his way as quickly as he could to Oxford and then present his case. He feels that he was not able to present his case properly in those circumstances. It was heard late in the day. But Mr. Collinson has put in a full written submission today and has made written submissions to this court, and I am satisfied that he has had a full opportunity now to present his case, and of course I have been through all of his papers before the hearing started.
6. I now turn to my conclusions. The test which had to be applied, in deciding whether or not to set aside the default judgment, is that set out in Civil Procedure Rule 13.3. The heading to this rule is "Cases where the court may set aside or vary judgment entered under Part 12. Part 12 is default judgment. It reads as follows:

"(1) In any other case, the court may set aside or vary a judgment entered under Part 12 if -

(a) the defendant has a real prospect of successfully defending the claim; or

(b) it appears to the court that there is some other good reason why -

(i) the judgment should be set aside or varied; or

(ii) the defendant should be allowed to defend the claim.

(2) In considering whether to set aside or vary a judgment entered under Part 12, the matters to which the court must have regard include whether the person seeking to set aside the judgment made an application to do so promptly."

7. It will be recalled that the opening words of Rule 13.3 are "in any other case". That means in any case not covered by Rule 13.2 but that is not applicable because it deals with a case where a judgment was irregular for failing to follow the correct procedure in the court. This particular case falls within 13.3. Mr Collinson says that he has a good defence to the claim. It is that rule which the court was and is today considering.
8. I therefore turn to the grounds of appeal, excluding those minor matters with which I have dealt. It is clear to me that the main contention on Mr Collinson's part is his counterclaim for £17,043.59 which of course far exceeds the claim against him. Indeed, it arises out of breach of the same transaction which led to the delivery of beer. The beer was delivered under the arrangement which Mr Collinson has described in his papers. The question is whether or not Mr. Collinson has a real prospect of successfully defending the claim on the basis that he has a cross claim for that amount or at least for £1,000.85. There is no evidence as to how that sum is made up. Mr Collinson has given me some information but it is not in written form. Were there to be an appeal it would have to be fully set out in witness statements and the court would have to agree to allow that evidence to be submitted on the appeal. Mr. Collinson was not able to give me details of the calculation of £17,043.59, but he was able to tell me that his arrangement with the Blue Boar generated for him personally a profit of about £15 per week on the three firkins of beer which they normally took. That would make about £45 a month. At the same time as taking orders from the Blue Boar, Mr. Collinson was also taking orders from five other outlets and placing their orders with the brewery. At the time when the brewery took over the Blue Boar account, they refused to supply any more beer to those other five sources. No doubt it would be said that all those acts were in breach of the agreement. It is clear that the Blue Boar was the most profitable part of this business.
9. Even working on the basis that each of the outlets generated the same income as the Blue Boar, this would not give a loss of profit claim for anything like the figure of £17,043.59. Mr. Collinson accepts that the arrangement between the brewery and himself could be brought to an end. He has accepted that two months' notice or thereabouts would have been reasonable. He tells me that there were about six other public houses that he was hoping to bring into the fold but they would not have been in the immediate future. There would have been about a three month delay because they were waiting for the summer season. Doing the best I can, and it has to be borne in mind that the court has no witness statements at this point, it seems to me that the maximum counterclaim which could be launched would be for about £450 or £500, which is less than half of the judgment debt.
10. There are a number of additional points which have to be recognized. First, this could only be a good ground of appeal if the court agreed to look at some more evidence because there is no evidence at the moment. As regards that, the position is that since this is an appeal court, further evidence can only be adduced under strict conditions and the court has to be satisfied that it would be just and fair to allow the admission of evidence. That usually involves the applicant showing that he could not, with due diligence, have put in that evidence at an earlier stage. The position here is that this evidence must have been available before the judgment was obtained or at least before the matter was heard by the district judge on his application or before the judge. There is no real prospect that the court would on an appeal receive this evidence or allow it to be adduced. The court would bear in mind that its refusal to admit the evidence would not in any way inhibit Mr Collinson from bringing that claim later, if he decided to do so, in separate proceedings, but there might be substantial prejudice to the brewery who has fought the case so far on the evidence as it stands, which contains no particularisation of the £17,000 claim. Until that figure is vouched by evidence it is a figure to which the court cannot give any credence at all. This is the main point on the appeal. Even accepting, as I do accept, that Mr. Collinson has a claim for repudiation by the brewery of his agreement with them, he would not before this court on an appeal be able to adduce evidence as to his loss. Therefore the court would not be able to say that he has a real prospect of successfully defending the claim as required by Rule 13.3, and that had the evidence been available to the lower court they would have set aside the default judgment. Rule 13.3 contains a separate part, which says that the court can set aside a default judgment even if there is no real prospect of success where there is some other good reason. I cannot think that there is such a good reason in this case, particularly because there is always the ability, subject to the limitation period, for Mr Collinson of bringing a separate claim for the money which is due to him for damages for breach of the agreement. Taking all those considerations into account, it seems to me that on the cross claim I cannot reach the conclusion that there is a real prospect of success.
11. That leaves the remaining points in the grounds of appeal which I have not already mentioned. They include the brewery's refusal to accept a part payment. Mr Collinson went along in all good faith to try and negotiate a settlement and a parting of the ways. The brewery refused to accept his proposal. In law, however, a tender of a part payment is not enough, and the amount tendered was £180 which is well below half of the debt. It is said in the papers that there was a part payment. The same point would apply. The brewery is not bound to accept a part payment in settlement of the whole. There is no information that this amount made any material difference to the judgment debt. As I have said, the wrong party point which is not one that Mr Collinson presses. I have dealt with the point about not having an opportunity to put his case properly before the court. Finally, Mr. Collinson makes the point that there was what he calls funny behaviour on the part of the brewery. If they had gone about this matter in a proper way rather than going behind his back, on his version of the events, then this litigation could have been avoided. I bear all those points in mind. None of them gives rise to a right to pursue this matter on appeal or to a conclusion that there would be a real prospect of success on appeal.
12. I have dealt with the case thus far on the basis of whether there is a real prospect of success on appeal. I have to be satisfied that there is that real prospect before I can give permission in any case. I am not so satisfied. There is in this particular case, because it is what we call a second appeal, a further hurdle that the appeal would raise an important point of principle or practice or there is some other compelling reason for the Court of Appeal to hear it. It is not such a case as to satisfy those requirements. Had I been satisfied that the court below had made a material error, it would have been possible for me to be satisfied as to those tests. I am not satisfied. Having considered the matter carefully and with the benefit of Mr Collinson's submissions, I dismiss the application.
Order: Application refused.