England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE LIVERPOOL COUNTY COURT
(Her Honour Judge Daley) and
ON APPEAL FROM THE WIGAN COUNTY COURT
(His Honour Judge Morgan)

		Royal Courts of Justice Strand London WC2 Wednesday, 31st July 2002

1. LORD JUSTICE TUCKEY: There are two applications by Mr Cox before me today. In the first he applies for permission to appeal from a judgment of Her Honour Judge Daley given in the Liverpool County Court in proceedings between Mr Cox and his former partner, Mr Azdigh. He needs an extension of time to appeal that judgment, which I will grant for reasons which it is not necessary to elaborate. In the second application he asks for permission to appeal from a decision of His Honour Judge Morgan in the Wigan County Court dismissing his appeal from a district judge who had refused to suspend a warrant for possession of his home obtained by his mortgagees, Abbey National. The two proceedings are connected, as I shall explain, but I will deal first with the partnership dispute.
2. Mr Cox and Mr Azdigh went into a 50/50 partnership to run a secondhand audio-visual electrical business called Wigan Exchange in July 1996. The partnership was dissolved a year later because the partners had fallen out. The business was carried on from the ground floor of premises in Wigan owned by Mr Azdigh. The residential accommodation, which is apparently a three-bedroomed flat above the shop, was occupied by a tenant of Mr Azdigh. The judge found that when the partnership (which was not the subject of any written agreement) started, Mr Azdigh put in a certain amount of cash and Mr Cox a certain amount of stock. The partnership was liable to pay Mr Azdigh £50 a week for rent. It had also paid during its currency, and Mr Cox had paid after its dissolution for a time, the utility bills on the premises, including those for the flat. That was on the basis, I assume, that those utilities were all on one meter and so only one bill was received for each of the utilities.
3. After the partnership was dissolved Mr Cox remained in the premises trading on his own account until 16th June 1999, when he was evicted without being able to remove his stock. There were apparently criminal proceedings which followed the events of 16th June and Mr Cox tells me that he was advised that he should not take civil proceedings until those criminal proceedings had been concluded. He started these proceedings against Mr Azdigh on 29th November 2000 and in them asked for the return of the stock and the assets of the partnership, damages for loss of earnings and destruction of his credit rating. Mr Azdigh counterclaimed for, among other things, an account to be taken so as to determine the liabilities of the partners to one another.
4. The hearing before the judge took place over four days between March and September 2001, during which some of the issues were resolved by agreement and others were crystallised. In her reserved judgment the judge resolved a number of issues which are not relevant for present purposes, but they included a finding, as I read the judgment, that at the time of the dissolution Mr Cox and Mr Azdigh had made an agreement that Mr Cox should buy Mr Azdigh out of the partnership on its termination for £3,500. Of that £3,500 Mr Cox had paid Mr Azdigh all but £527 or £627. It is Mr Cox's case that he should not pay any more, and did not pay any more, because he had been paying the outgoings for the utilities on the flat.
5. Be that as it may, the judge noted in her judgment that some further enquiries needed to be made to enable the dissolution accounts of the partnership to be drawn up in the light of her findings of fact. I am not entirely certain what it is that she intended to happen, and Mr Cox tells me that no such accounts have in fact been drawn up. If it was the case that Mr Cox and Mr Azdigh had agreed that Mr Azdigh should be bought out for £3,500, I do not see how those accounts, which may be necessary for Revenue or other purposes, are going to reflect any indebtedness of the one to the other, although it appears from her judgment that the judge thought that that would be the case.
6. She did, however, give a money judgment for £9,644.49 in Mr Cox's favour for the value of his misappropriated stock and £2,450 in Mr Azdigh's favour for rent. No doubt she did this because she did not think that either of these liabilities arose out of the partnership. Certainly, so far as Mr Cox's stock was concerned, that was stock which he had in June 1999 which was not owned by Mr Azdigh and had nothing to do with the partnership, so one can understand that. But the finding against Mr Cox was on the basis that the rent was due to Mr Azdigh from the outset of the partnership. That was contrary to Mr Cox's assertion, which was that it was not due until some time later because that was what had been agreed and because the partnership was paying the outgoings on the flat.
7. Mr Cox cannot challenge the judge's findings of fact about that in this court, but I think that he does have a point in that £1,150 (that is to say, 23 weeks of the arrears of rent) for which the judge gave judgment against him accumulated in the first year, during the currency of the partnership. This was therefore a partnership debt for which the partnership was liable and for which Mr Cox was not solely responsible. If I am right in thinking that the indebtedness between the partners was settled by the agreement for £3,500, then the liability of the partnership for the rent for this period must have been taken into account in that settlement. If I am wrong about that, then the debt for the rent for that period is not, as I have said, Mr Cox's debt but is a partnership debt and should be reflected in any accounts which have still to be drawn up between the two partners as such.
8. On any view of the matter, therefore, there is obviously an arguable point for Mr Cox to make about the extent of the judgment which was given against him. I say "the extent" because the remaining 29 weeks of rent arrears accumulated after the partnership was dissolved and so Mr Cox, as he accepts, is liable for the whole of the arrears for that period.
9. The next point raised by Mr Cox relates to the judge's rejection of his loss of earnings claim. By this I understand him to mean the fact that he was unable to work after he had been evicted from the shop and his stock had been misappropriated. The judge rejected this claim by saying:

"...I say immediately that he has not proved to me nor do I accept his `loss of earnings' element. All the evidence and the answers he gave in cross-examination show that no matter how hard Mr Cox worked and I am prepared to accept that he did, the influence of competitors, his obvious failure to pay the rent, the failure to complete the Azdigh repayments, Mr Cox's explanation of inability to pay, indicate that Mr Cox's business was surviving by `robbing Peter to pay Paul' and bolstered up with credit and a bank loan. This is a speculative and unsupported claim not backed by any evidence (and that includes the `creative accounts') and I do not proposed to allow it."

10. The "creative accounts" were accounts which the judge accepted had been prepared but which were just that. In other words, what she was saying was that, as Mr Cox was not trading profitably from the premises, he could not establish any loss by his being prevented from doing so both by not being able to be there and by having his stock withheld from him.
11. In his written submissions Mr Cox refers to a number of documents and other matters which he suggests refute the judge's conclusion. But again this is a finding of fact made by the judge and I can see no real prospect of this court interfering with it. I add also that I think there are some difficulties in showing that any such loss would be recoverable as a matter of law, at least for anything but a very short period.
12. Finally, I have to consider what the upshot of the conclusion I have reached about the rent point should be in terms of permission. If I am right in my finding, it will reduce the judgment which the judge gave by £1,150. This court would be reluctant to give permission with such a small amount at stake and in the ordinary way what I would do is say that the other side should be sent a copy of this judgment to see if they will agree to vary the judgment to reduce it by that amount. But, having obtained some impression of the attitude of the other side to Mr Cox, I do not think it would be right to do that in this case because I suspect that he would be met with the lack of co-operation he has told me about this morning. I will therefore give permission for him to appeal on that point, and on that point alone, making it clear that all he can hope for from success on that appeal is a reduction of £1,150 in the amount of the judgment which was given against him.
13. Mr Cox's other application is altogether more difficult for him, being a second appeal where permission to appeal is only given if the case raises an important point of principle or practice. His house is mortgaged to the Abbey National and by the time of the hearing before the judge the arrears were £5,276.55. The monthly instalments then required were £328, as against Mr Cox's current income from benefits of about £200. The court had a discretion to suspend the possession order which had been granted, but in doing so had to have regard not only to the amount of the arrears and the prospect of paying those off, but also to the ability of Mr Cox to make the current and future repayments.
14. Mr Cox relied on the possibility that his appeal in the partnership action would realise a larger sum than he had been awarded by the judge, which would enable him to pay off the arrears and have enough left over to set himself up again in business so that he could make the repayments. The judge rejected this on the basis that it seemed problematical and in any event such reward would be considerably delayed. In the light of what I have said about this appeal, it is clear that Mr Cox does not stand to benefit greatly from it and so the judge's prediction about that was right.
15. He also relies on delay in producing the dissolution accounts. I have expressed my doubts as to precisely what those accounts are intended to achieve. But if they are required and there is anything to suggest that Mr Azdigh is deliberately obstructing the preparation of these accounts, as Mr Cox says, his remedy is to go back to Judge Daley and ask her to intervene, which one would expect her to do if there is any evidence of deliberate obstruction or delay.
16. As to the judgment in Mr Cox's favour for £9,000-odd, there is absolutely no reason why he should not proceed to enforce that judgment straight away, and anyone who has told him to the contrary has misled him.
17. Finally, on the mortgage point, Mr Cox says that there is at least £12,000 of equity in his house and he should have been allowed time to sell it. As the judge records, the house had been on the market for two years and nothing had happened.
18. In these circumstances I think the district judge and the judge had little option but to refuse the application to suspend the warrant for possession. Certainly it was well within their discretion to do so and I can see no grounds to justify a second appeal being heard by this court. So that application for permission must be refused.
Order: application for permission to appeal in partnership action granted to limited extent as indicated; application for permission in mortgage matter dismissed; copy transcript of judgment to be provided to applicant at public expense.