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 ORDER OF HIS HONOUR JUDGE MARR-JOHNSON
(Mayor's and City of London County Court)

		Royal Courts of Justice Strand London WC2 Thursday, 28th February 2002

1. LORD JUSTICE MANTELL: This is an appeal from a decision of His Honour Judge Marr-Johnson by which he upheld an assessment of damages made by District Judge Lipton.
2. In 1994 Mr Anton Vella found himself out of a job. His company had been taken over and his employment as a manager terminated. I do not think he had been sacked, merely made redundant. He was not destitute - his wife was in business designing wedding dresses. But he was anxious to find a source of income. He responded to an advertisement in the Daily Telegraph -

"Become Management Consultant. Guaranteed £28,000 first year."

3. That was in February 1995. The advertisement had been placed by a company trading as the Institute of Independent Business of which the principal and guiding light was Lyndon P Dyason.
4. On 14th March 1995 he received an invitation to attend a seminar which was to take place on 29th March at the Institute of Directors in Pall Mall. Mr Vella accepted the invitation and attended the seminar where he was assessed as ideal material for the course which comprised (1) what I would call a correspondence course but which was described by the Institute's representatives as "a distance learning programme", (2) a seven-day residential business school and (3) continuing support which would consist of marketing support to include 12 analysis appointments, net-working, monthly workshops and mentoring. The cost of all of this was to be £7,650 plus VAT of £1,338 bringing about a total of £8,988.
5. Following the meeting in March others acting for the Institute spoke to Mr Vella about the advantages of the scheme. On 21st June Mr Vella signed up to a Business Consultancy Agreement and paid over the £8,988.
6. That was not enough to secure the guaranteed income, which had attracted Mr Vella in the first place. For that to kick in it was necessary for Mr Vella to enter into a further agreement known as the Minimum Invoicing Guarantee Agreement by which, in return for Mr Vella committing himself to a certain level of activity, the Institute would pay (I quote from the relevant clause) -

"such sum as is the difference between the guaranteed minimum invoicing of £36,000 and the total of invoices rendered for any or all services to clients introduced during the guaranteed period."

7. Within three days of receiving any payments in respect of those invoices Mr Vella was to pay 20 per cent to the Institute as a "guaranteed invoicing training and administration charge". So that brought the sum guaranteed down to the advertised figure of £28,000.
8. I take the terms of the agreements from the particulars of claim as we have not been furnished with either contract.
9. Mr Vella claims to have done all that was expected of him under the agreements but save for a single instance was unsuccessful in locating or, at any rate, securing clients. The one instance where he had been successful was where, having enlisted the help of another client of the Institute, he did manage to recover £1,400 including VAT for a business plan. He and his associate fell out over the payment, which led, in part at any rate, to a meeting in January 1996 with Mr Dyason. At that meeting there were harsh words said about the falling out between Mr Vella and the other client which led to recriminations on both sides and Mr Dyason setting Mr Vella a little test of his proficiency in soliciting clients over the telephone. In Mr Dyason's judgment Mr Vella failed the test dismally and that resulted in the termination of Mr Vella's relationship with the Institute. According to Mr Vella the relationship had been brought to an end by Mr Dyason; according to Mr Dyason it was Mr Vella who had withdrawn from the scheme. Indeed this is what Mr Dyason wrote on a compliments slip which he handed to Mr Vella:

"Please accept this as our acceptance of your having dismissed yourself from the guarantee scheme mainly because you failed to present to me today the BSS (that is the business support scheme) in the manner prescribed by the Institute."

10. Mr Vella sued the Institute. He claimed £26,600, being £28,000 less the £1,400 received.
11. Matters moved very slowly but eventually on 7th June 1999 a trial took place in the Mayor's and City of London County Court before His Honour Judge Byrt QC. In the result Mr Vella succeeded in his claim save that the £1,400 achieved in the one transaction which had gone ahead was deducted from the £28,000 claimed. Judgment was for £29,568 to include a figure for interest somewhat reduced to take account of Mr Vella's slowness in getting on with the action.
12. Then something happened which in my view should not have happened at all. Conscious of the fact that the Institute was unrepresented, save by Mr Dyason in person, the judge took it upon himself to suggest that there might be an issue as to mitigation of damage albeit not pleaded, not cross-examined to and not argued. Consequently he allowed the Institute fourteen days in which to apply for a hearing at which damages could be assessed and the matter of mitigation argued should that be the wish of the Institute or, should I say, of Mr Dyason, its moving spirit.
13. The way that His Honour Judge Byrt put it, appearing at page 107 of the bundle, internal page 23 of the judgment, was this:

"At this point, I have to consider whether the claimant has done what he could to mitigate his loss. I have been told by counsel - and indeed it was mentioned in opening - that Mr Vella was unable or unsuccessful in getting any employment in the remainder of the twelve month period, that is between 16th January and the anniversary of his signing up the contract. There is also the other issue, namely whether he ought to have had employment, whether he had made reasonable efforts to obtain employment."

14. For my part I am extremely doubtful that any question of mitigation could possibly arise in the circumstances of this case. As I have said, we have not been shown the relevant agreements but, assuming the material parts are accurately recorded in the particulars of claim, it would seem to me that Mr Vella had committed himself under the scheme to no more than a limited number of hours each week in pursuit of business clients. He does not seem to have agreed to devote himself exclusively to the seeking out of business clients under the scheme and there is nothing in either agreement of which I am aware which prevented Mr Vella from taking advantage of any additional source of income. That being so, he was under no obligation to mitigate his loss either by seeking out or attempting to seek out alternative sources of income or by giving credit for any actual income received. Be that as it may, from the time His Honour Judge Byrt gave judgment it seems to have been assumed by everyone connected with the case that there was a duty to mitigate. I shall proceed on the same basis.
15. The defendant having applied for a hearing at which damages were to be assessed, the matter came before District Judge Lipton for directions on 12th August 1999. He made the following:

(1) by 10th September 1999 the claimant do produce to the defendant a list together with copies of all supporting documents relating to the efforts he made to investigate his loss in consequence of the breach of contract, together with a witness statement,

(2) the defendant shall within 14 days thereafter submit to the claimant a list of questions arising from the documents so disclosed and the claimant shall respond in 21 days,

(3) the issue be heard by a district judge in chambers on Monday 6th December 1999 at 10 o'clock. The time allocated for the hearing of this action is 1 day.

16. Mr Vella provided a witness statement although, unfortunately, it does not seem to be included in our bundle. Mr Dyason then presented what is termed a "List of Questions" which included a number of what are undoubtedly questions but also a number of requests for documents including bank statements and Mr Vella's diaries for the relevant period, namely January to June 1996. In his response Mr Vella answered, so far as he was able, all the questions but in the main refused to produce the documents requested on the basis that they were not relevant to the forthcoming inquiry.
17. Mr Dyason, for the defendant, applied to District Judge Lipton for an order requiring what may be termed discovery of the disputed documents. That application came on for hearing before District Judge Lipton on 29th November 1999 when the district judge made no order. That decision was never appealed. It is Mr Dyason's recollection that the district judge said something to the effect that Mr Vella would suffer the consequences of any failure to produce relevant evidence.
18. At the substantive hearing which took place on 6th December 1999 the district judge heard evidence from Mr Vella as to the efforts he had made to find alternative employment either in the service of others or his own behalf. He was asked about the job seekers allowance which he had received during the relevant period, about his interests in a company which did not start to trade profitably until after the end of the relevant period and his efforts to obtain any kind of gainful employment, it being put to him at one stage by Mr Dyason that he might perhaps have become a cleaner. Notwithstanding the questions put, the acknowledgement by the district judge that some matters might have been mentioned earlier and that in other respects there had been a failure to produce certain documents, the judge came to the conclusion that he accepted from Mr Vella that he had taken all reasonable steps to mitigate his loss; or rather that Mr Dyason had not demonstrated that he had failed to take all reasonable steps to mitigate his loss. This is how it was put by the district judge:

"But as I say, the burden of proof lies upon Mr Dyason. He has pointed out that not all of the information has been supplied. I accept that but I had as His Honour Judge Byrt had, a tremendous advantage of hearing Mr Vella give evidence and forming a view about it and the answers he gave both to Mr Dyason and to me, and to his own counsel, Mr Segal, have the ring of truth about them. I therefore consider whatever criticisms can be made on Mr Vella can be rejected because I think Mr Vella behaved very reasonably in the circumstances. And so therefore as a result of that I can find no reason to make any adjustment whatever to the decision of His Honour Judge Byrt and I propose therefore to leave the figures unchanged."

19. The defendant appealed that decision, as I have noted in the opening sentence of this judgment. The matter came on for hearing before His Honour Judge Marr-Johnson on 16th February 2001. We have an incomplete transcript of the proceedings because for a period, at any rate, the tape recorder was either not switched on or had broken down. We have enough, however, for me to be able to get the flavour of the hearing. It seems that some of the documents had not come before the judge until relatively late and that he had not yet either had the opportunity or taken the opportunity of reading all of them. Accordingly he sought assistance from Mr Dyason and Mr Segal of counsel, who appeared for Mr Vella, as to what the issues were. So far as I can see he did that in a perfectly courteous manner and without prejudice to anything which Mr Dyason might have been wishing to advance. He then gave judgment in which he upheld the order made by District Judge Lipton.
20. Mr Dyason was dissatisfied. He sought permission to appeal. To that end he appeared before Judge LJ at an oral hearing which took place on 22nd June 2001. During the course of the oral hearing it was pointed out to Mr Dyason that in the ordinary way there could be no second appeal unless it involved an important point of principle. This case did not. However, in the end permission was granted and this is what Judge LJ said:

"24 I have taken some time to deal with the various issues raised by Mr Dyason for this reason. I am conscious of the requirements of the Civil Procedure Rules 52.13, and in the normal way and certainly my first impression when I read these papers was that in reality this was an attempt to appeal on the basis of a litigant dissatisfied with the findings of fact made by the judge below. That would not be a sufficient basis for granting permission.

25 On reflection, however, I have come to the conclusion that there are issues in this case which merit the attention of this Court. I say that with some hesitation, and I would not want Mr Dyason to assume from the fact that I think permission ought to be granted that he is necessarily going to succeed with his appeal or that he should have any undue sense of optimism about the likely outcome.

26 That said, the question of how the hearing was conducted below and whether or not there was in truth a second appeal at all, as well as the question whether Judge Marr-Johnson had misdirected himself in the way he approached the issue of employment, and the further question whether the bank statements ought to have been disclosed and their omission to do so prejudiced the defendant's prospect of a fair hearing ought to be examined in more detail by this Court. Accordingly, I shall grant permission to appeal."

21. Against that background I have studied the transcript of what transpired below with some care, as I have the transcript of Judge Marr-Johnson's judgment. I bear in mind that Mr Dyason had other complaints to make which in the main related to adverse findings of fact or findings as to the credibility of Mr Vella as a witness.
22. As for the suggestion that the appellant did not receive a fair hearing from the judge, I cannot agree. I take no account of the fact that Mr Dyason had succeeded in achieving for the appellant a hearing on mitigation to which, in all probability, it was not entitled as I do the fact that the directions originally issued by District Judge Lipton effectively reversed the burden of proof on this issue. I do take account of the fact that District Judge Lipton seems to have considered that it was implicit in the order for directions that Mr Vella should produce the various documents which he declined to produce on the basis that they lacked relevance. However the decision which District Judge Lipton had to make turned on findings of fact. It was for the appellant to show that Mr Vella had failed to mitigate his loss. The only relevant evidence before the district judge was that of Mr Vella himself. He was accepted as an honest witness. It was also accepted that the efforts which he had made were sufficient to discharge any duty which lay upon him to mitigate his loss. His Honour Judge Marr-Johnson came to the conclusion that District Judge Lipton had been entitled to each the conclusion he did on the available evidence. Indeed, for my part, I fail to see how he could have reached any other.
23. In the ordinary way that would dispose of this matter. It is only because of the single Lord Justice's concern that the appellant may not have had a fair hearing before His Honour Judge Marr-Johnson that I have been led into giving judgment at what I would otherwise consider to be inordinate length. And it is for that reason that I have studied the transcript and the judgment given by His Honour Marr-Johnson with particular care. Having done that, I am bound to say that I find no suggestion of unfairness at any point in the proceedings. Where Mr Dyason complains that he was treated with condescension, I can only find evidence of courtesy. Where Mr Dyason complains of lack of preparation and confusion, I can only find evidence of a fair-minded approach to the identification of the issues and then a clear-headed attempt to reach a proper determination of those issues. In particular, it is apparent from page 9 of the transcript of the judgment that the judge properly understood that the investigation before the district judge had been into whether or not Mr Vella had been in receipt of income during the relevant period and, secondly, if not, whether he had taken all reasonable steps to secure such income. In my view he rightly rejected the suggestion that bank statements should have been supplied, it being his view that they were irrelevant to the issues left by His Honour Judge Byrt. It also seems to me that the learned judge was quite right to comment that District Judge Lipton had himself been correct in refusing to order further discovery on 29th November 1999, and still further that if District Judge Lipton had been wrong in so refusing to order, the proper course would have been for the appellant to appeal at that stage. As His Honour Judge Marr-Johnson proceeded to say:

"The practical result was that the matter was tried out in front of District Judge Lipton on the basis that the order of 29th November was a good and effective order. The learned judge heard the claimant. He heard him cross-examined. He heard him deal with, no doubt, cogent questions put in cross-examination by Mr Dyason. It seems to me that it would be wholly wrong for this court now to seek to go behind that judgment and undo the whole basis upon which the later trial was conducted."

24. I am wholly in agreement with that conclusion. Accordingly, I would dismiss the appeal on the main issue.
25. There was a second question which arose in front of the learned judge as to whether or not the original order made by His Honour Judge Byrt had been for a specific sum to include costs. The matter had previously been raised before District Judge Lipton. It was Mr Dyason's contention that the order made for £29,568 inclusive of interest and costs to be taxed if not agreed meant that costs were included in that finite figure. That submission had been rejected by District Judge Lipton as it was by His Honour Judge Marr-Johnson. It is a submission which is totally without merit and was recognised by the tribunals on the two previous occasions. I am not entirely clear as to whether or not the appellant is pursuing that matter before this court, but if he is I would reject it for the reasons advanced below.
26. LORD JUSTICE TUCKEY: I agree.
27. THE VICE-CHANCELLOR: I also agree.
Order: Appeal dismissed with the costs