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 RELY ON
FURTHER EVIDENCE
APPLICATION FOR DIRECTIONS
APPLICATION FOR SECURITY OF COSTS,
APPLICATION FOR AN INTERIM PAYMENT,
APPLICATION FOR ORDER TO BE VARIED
APPLICATION FOR PERMISSION TO RELY ON FURTHER EVIDENCE
APPLICATION FOR DIRECTIONS

		Royal Courts of Justice Strand London WC2 Monday, 29th July 2002

1. LORD JUSTICE TUCKEY: The first question I have to decide today is whether permission to appeal needs to be or should be extended to enable Servico to argue a further point or points on this appeal which they accept were not specifically made when Lord Justice Rix and I last dealt with this case on 26th April 2002. The background to the matter can be found in the judgment I gave on that day. The question is whether on the appeal Mr Gee QC for Servico, when dealing with what the order we made on 26th April defines as "the reasonable diligence in collection issue", can or should be allowed to argue the points now raised in most of paragraphs 7 to 21 of the amended grounds of appeal. I say "most" because there are one or two that do not add anything to the debate.
2. Put shortly, these grounds contend for the first time that, properly analysed, CNA's claim is not in debt but a claim for damages following Servico's repudiatory breach of contract at the end of January 2001 which was accepted by CNA. At that time they say there was no debt owing under the contract so, Mr Gee submits, it was for CNA to plead and prove a claim for damages and they have not done so. As the case is presently put, he says Servico are not liable at all. If they are liable it is on the basis of what would have happened but for the breach, an inquiry which would focus on how much of the uncollected premium Servico itself would have recovered. Some additional points have been woven into the paragraphs to which I have referred, notably the effect of a letter of 27th February 2001 which is said to have varied the contract or to give rise to an estoppel by convention.
3. All these points however are said to be short points of law. I very much doubt that, since their development occupies no less than 44 of the 106 paragraphs of Mr Gee's full skeleton argument which he put in following the directions we gave on the last occasion. It has taken him a fair time to develop these arguments this morning even in outline. There is a bundle containing 17 authorities on which he relies in support of propositions. I am bound to say at the outset that this is all very unsatisfactory given that this is now the third time this court is being asked to consider the shape of this appeal. Mr Gee candidly acknowledged that this all arises from an inadequate or mistaken legal analysis of Servico's position hitherto. At some point in the papers the further analysis is now described as being profound. For all that I have to consider the submissions Mr Gee now makes.
4. First, he submits that he does not need permission to raise the point at all. Any consideration of mitigation, which is one of the ways in which the reasonable diligence in collection issue was described, would necessarily involve a legal analysis of how mitigation arises in this case and that would be in the context of mitigation of loss arising from a repudiatory breach of contract. This court cannot be precluded from making such an analysis by the failure of parties to raise it in time. On the 26th April we dealt with Servico's allegation that CNA had failed to collect collectable premium as purely a quantum point described in the order as "reasonable diligence to collect premium/failure to mitigate" without more.
5. When I dealt with the matter on paper I had no doubt that the permission we granted did not extend to the root and branch points which Mr Gee now wishes to make. I have reconsidered that decision today at Mr Gee's request under the provisions of CPR 52.16 (6) but remain of that view. Servico need permission to argue this point on appeal.
6. Mr Gee submits that the whole of the litigation has been conducted on the basis that there was a repudiatory breach by Servico which was accepted by CNA at the end of January. I do not agree. Neither CNA's particulars of claim nor Servico's defence say this. They merely say that the agreement was terminated. In other words, that Servico's authority to bind risks on behalf of CNA was brought to an end. No detailed legal analysis is attempted. This is not surprising in the light of the history to which I will refer in a moment. The particulars of claim asked not for damages or for a specified debt but for the taking of an account and/or premium received or payable in respect of contracts of insurance to which Servico, have bound or purported to bind CNA and an order for the payment of all sums found to be due and owing whether on the taking of an account or otherwise.
7. Just before these proceedings were issued Servico's solicitors said in answer to a letter by CNA's solicitors That:

"Our clients have accounted, continue to account and will account for all sums due to your clients under the contract in accordance with the contract provisions, or pursuant to such other terms as from time to time our respective clients may have agreed or may agree between themselves."

8. What followed is described by CNA's regional claims manager, Mr Slaven as follows:

"Following the commencement of this action, and the imposition of a freezing order over Servico's accounts, Servico agreed to the taking of an account by Messrs PricewaterhouseCoopers ("PwC") on behalf of CNA.

PwC were instructed jointly by CNA and Servico in March 2001. On 17 July 2001, PwC provided to CNA and Servico a draft report summarising their methodology and the results of their investigations."

"By letter dated 20 September 2001 ..... solicitors for Servico, confirmed that Servico considered the PwC investigation and report to be the taking of the account sought by CNA in this action, subject to the raising of some further uncertainties as to the concept of `usage days' which Servico proposed to raise with PwC."

9. They obviously did that. A dispute arose between the parties about that issue which is subject ti the appeal.
10. On 16th October, CNA's solicitors took out the application for summary judgment which said:

"An account from each of the defendants as sought under paragraph 37.1 of the amended particulars of claim at paragraph 4 of the prayer having been undertaken by Messrs PricewaterhouseCoopers with the consent of the first to thirteenth defendants the claimant seeks summary judgment for -

1. an order for payment of a sum in excess of £12m being premium found on the taking of the said account to have been received and or payable in respect of contracts of insurance to which the first to thirteenth defendants have bound or purported to bind the claimant."

11. That was how the matter proceeded before the judge, as his judgment made clear. The starting point was the figures contained in the jointly commissioned PwC report. The judge considered submissions that those figures were not correct because they did not reflect Servico's case on the usage days issue. And the quantum point to the effect that CNA had not collected all the collectable premium.
12. The taking of an account is an equitable remedy if ordered by the court. It has the merit of flexibility without the need to resort to lengthy legal analysis to produce a bottom line result so as to determine how much, if any, one of the parties owes to the other. That is a sensible procedure which is essentially what commercial men - and we talking about commercial men in this case - want to know. Here, that account taking process was done consensually and I do not think Servico can resile now from the exercise in which they participated fully and require CNA to embark on a lengthy and, as Mr Gee submits, legally problematic assessment of damages in the way he suggests. Their point that CNA failed to mitigate their loss can easily be taken in the context of a challenge to the account which is how the matter was put before the judge and how the matter was advanced before us as being a ground of appeal for which we should extend permission on the last occasion.
13. For these reasons I do not think it would be right to extend permission to appeal to allow Servico to argue the substance of the points raised in paragraphs 7 to 21 of the notice of appeal.
14. On the last occasion we directed -

"The defendants [Servico] to serve a draft notice of appeal in relation to the issue concerning Direct Car Finance as referred to in paragraph 11 of the second witness statement of Andrew McGall ..... "

15. That direction stands. To some extent this point is rolled up in paragraphs 7 to 21 of the notice of appeal, but the direction should be followed so this point is clearly identified in a separate notice and elaborated in the skeleton argument in order that CNA can understand precisely what it is that is going to be said on that point.
16. The next question I have to consider arises out of an application by CNA for a judgment on admissions. That is not the sort of application which this court expects to entertain. I doubt whether it has jurisdiction to do so for the reasons elaborated by Mr Gee in his skeleton argument and supported by a case he supplied this morning. This court does have a jurisdiction to stay the execution of any judgment given by the first instance court pending the termination of any appeal. When Lord Justice Rix gave permission on paper to appeal the usage days issue he said he would order a stay of Mr Justice Steel's judgment which was for £10,982,000 to the extent that it was affected by the usage days issue. At the hearing on 26th April I think I did raise the question of whether any further stay was being sought. But no submissions were addressed to us about this at that time. In due course the order drafted as a result of agreement between the parties provided for a stay of the whole of the judgment, pending final determination of the appeal. Mr Gee, quite rightly in my judgment, conceded that this court has jurisdiction to vary any stay made pending appeal and Mr Temple accepted that his application for judgment on admissions should be taken to be an application to vary that order.
17. So with the jurisdictional basis for the decision I have to make out of the way, I can now proceed to the numbers. In a skeleton argument put before the judge, Servico put forward a number of figures to which I will come in a moment. The sum upon which the judge gave judgment was based on PwC's calculation of the minimum premium due to CNA under the terms of the slip which came to something approaching £17,000,000. From that they gave credit for over £5,000,000 received by CNA from Servico or collected by them since termination and, on the judge's ruling, gave credit for a further £58,000 for claims which had been paid. The judge knocked off a further £500,000 because of some discrepancy (which I have not been able to run to earth) in the figures put before him. This produced a total of £10,982,000 which took no account of the usage days point and, what I will call now, "the mitigation argument".
18. Taking full account of those arguments, Servico's skeleton argument before the judge makes it clear that Servico would, on the figures as they then stood, have been liable to pay £1,544,198.13 on the basis of premium actually collected by Servico and by CNA. The application before me to vary the stay has been made on the basis of this figure, reduced to take account of the fact that since the hearing before the judge a further £632,361 has been collected by CNA.
19. Mr Gee's principal reason for resisting a variation of the stay is based upon his point which I have dealt with to do with the claim being for damages. Put shortly, he said that as there was no debt due at the date of termination the figures which have been used for the purpose of this calculation are incorrect and do not reflect what he described as the mitigation argument. I have however rejected the first part of this argument. The sum claimed is based upon what has been collected and does not depend at all on what could or should have been collected. So whether one labels the claim as one in debt or for damages does not matter because the figures are based on actual amounts collected.
20. For those reasons I can see no reason for mentioning the ont this part stay of the judgment. Only £9,651,793.88 should be the subject of that stay. The judgment for the balance therefore still stands and can therefore be, executed if that is what CNA choose to do.
21. That leaves only the applications by Servico to adduce further evidence. When I originally looked at this evidence it seemed to me that it was directed solely to the argument which I have rejected about damages. But on closer analysis I think I was wrong about that. Mr Gee summarises the evidence as being to the effect that had Servico been allowed to collect the premium they would have been "pretty brilliant" at it and, so CNA should have entrusted them with the collection of the premium in one of the four ways described in an expert's report from Mr Turnstone which they have commissioned, depending upon what degree of control over the money to be collected by Servico was required. There is a mass of material which seeks to make those two fairly simple points: 6 or 7 witness statements from various Servico employees and a large expert report from Mr Turnstone which together Run to about 600 pages. I was most anxious to try and relieve the court which finally has to hear this appeal from having to read all this, and was most gratified to hear that Servico believe they can summarise the effect of that evidence on no more than 3 A4 size sheets of paper.
22. Accepting this promise, I think that they should be allowed to adduce this further evidence on the hearing of the appeal in that form. It has the merit that it will enable CNA to focus - on the essential points which are sought to be made, so they can, with equal brevity put in their response to that evidence and thus produce a manageable amount of pre-reading and material for this court to consider before it hears this appeal.
23. In the course of today I have made observations about other evidence which servico wish to adduce. Rather than asking the court to deal, having looked at the matter, I rule that the evidence of Mr Emmerson, Mr Harbinson for what that is worth, and the second statement can be asmitted of Mr McGall. This evidence will add relatively little to the volume of paper the court will have to consider on the hearing of the appeal. As I see it at the moment, the only matter which this court will have to determine as a preliminary is whether Servico should have permission to appeal on the DCF issue.
24. In making the rulings about permission to adduce further evidence, I have not overlooked the strong arguments advanced on behalf of CNA to the effect that Ladd v Marshall and the CPR, do provide or should provide a hurdle which appellants should have to surmount and be seen to surmount if they wish to put in further material. My response is that I may have been over generous, but in the interests of trying to get a manageable appeal that is a preferable course and that this is a case in which there already is permission to appeal on two grounds and therefore it is not as if this court were dealing with someone who wanted to put in further evidence to justify getting permission to appeal in the first place.
25. I also bear in mind that this is, a summary judgment for a large amount of money which is under appeal and that is a further reason for being over generous if that is what I am being.
Order: A minute to be lodged with court