England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE NEWCASTLE UPON TYNE COUNTY COURT
(His Honour Judge Bowers)

		Royal Courts of Justice Strand London WC2 Monday, 22nd April 2002

1. LORD JUSTICE POTTER: This is an application for permission to appeal and an extension of time against the order of His Honour Judge Bowers made in the Newcastle upon Tyne County Court on 4th June 2001 when he dismissed the applicant's claim for libel, including aggravated damages against the first defendant and the second defendant, and his claim against the first defendant for misrepresentation and deceit. There is also an ancillary application for a stay of execution and directions pending the outcome of the application in respect of the order of His Honour Judge Bowers that there be a detailed assessment of costs. As far as the ancillary application is concerned, the appellant seeks an order permitting him to access the first defendant's premises for the examination of certain specified rooms.
2. The factual background may be briefly stated. The applicant was employed for a period of just over six months by the first defendant which was the second defendant's company. The second defendant was the first defendant's acting managing director. The claimant's job was that of an electrician developments manager and among other things involved the use of a computer. The unhappy relationship which existed during this period of employment need not be canvassed in detail. It appears from long statements from the applicant and the second defendant and also in the written reasons of the Employment Tribunal in proceedings which the applicant brought for unfair dismissal. There were a number of associated issues, including an issue under the Working Time Regulations 1998 which might have enabled the applicant to avoid the misfortune for him that he was dismissed before the end of the one-year qualifying provision in respect of a straightforward unfair dismissal claim. The substantial issue before the tribunal on its findings as to the facts of the matter was whether the applicant was in reality dismissed because of a refusal, or at any rate an indication that he was not prepared, to work the number of hours required of him by the second defendant on behalf of the first defendant (that was the applicant's contention) or because of incompetence, as the second defendant contended. On that issue the Tribunal found for the applicant. However, the reason was not one, according to the tribunal, which took the claim out of the one year qualifying period, so that the applicant simply received a modest sum of money related to the precise calculation of his employment, taking into account the notice to which he was entitled and a short period of employment for which it appeared he had not been paid.
3. Within the proceedings there was reference to another matter which did not govern the outcome of the unfair dismissal claim but lies at the heart of these proceedings. That matter related to an accident which the applicant alleged he had had at his work premises on 14th June, during a period when his future with the company was in doubt. Indeed, he had been warned that its end was imminent.
4. The short facts were these. I leave aside the history and come to the matters immediately before the alleged accident and the dismissal. On 25th May the second defendant was due to leave for China bearing with him design drawings which the applicant had prepared for him in relation to a proposed new product. At the time when the second defendant received the drawings, just before his departure, a conversation took place with the applicant about the applicant's working hours, which was left unresolved, the second defendant saying that he would decide what to do when he returned. Following his return, according to the applicant the second defendant summoned the applicant to a meeting at which he informed him of a report that he received from China highly critical of the applicant's design and informed the applicant that he would soon be unemployed. Following this meeting the applicant cleared his desk, left work, went home and rang in to say that he was sick. He was off work for almost a week, going back on 14th June, only to learn from a colleague, Mr. Smith, prior to the second defendant's arrival at work, that because of his actions the company had given his work to someone else, as a result of which the applicant expected to be dismissed. It appears that the company thought that he had already decided to quit because his successor had found that the applicant's computer had been wiped clean and the company concluded, reasonably as the judge found, that that had been done by the applicant before he went home. The judge made no finding that it had in fact been done by the applicant.
5. The applicant's account of 14th January was that, while waiting for the second defendant's arrival, he decided to go outside for a cigarette, for which purpose, having first been to the toilet, he passed along a corridor with which he was not familiar and tripped over an obstruction and fell, injuring himself. The relevant obstruction was said to be part of an iron bar projecting beyond a white line down the side of the corridor, behind which items such as paint cans and the bar itself were from time to time stored. As a result of the accident the applicant went off to hospital and did not see the second defendant when he arrived at work. His dismissal actually occurred on receipt of a letter the next day from the second defendant who had written it after arriving at work after the occurrence of the accident and the applicant's departure for hospital. The letter said that the applicant was being dismissed on one week's notice because of the poor quality of his work. In relation to the accident the Tribunal stated:

"The applicant returned to work for a brief period on 14th June. He left at approximately 08.45 to go to hospital. There is other litigation pending in relation to an injury which it is alleged took place at that time. We have not fully investigated in relation to that aspect and it would be inappropriate for us to make any findings of fact regarding what happened that morning which might have any effect on other litigation."

6. The proceedings referred to were contemplated proceedings for personal injury which the applicant has told me have not yet actually been commenced, in the light of difficulties encountered under the CPR and the various protocols and practice directions required to be observed prior to issue of proceedings. Nonetheless, the Tribunal contemplated that some other tribunal would be examining the circumstances of the accident and themselves concluded that it was not necessary for them to do so.
7. The proceedings before Judge Bowers were proceedings brought by the applicant for defamation and misrepresentation. The claim was drafted by the applicant personally. It was clearly set out. The causes of action on the face of the claim were: (1) libel in a letter and report by the first defendant to the Health and Safety Executive. Those documents were said "to contain allegations of criminal acts highly defamatory to the claimant and were beyond any duty of the defendants to answer the inquiries of the HSE". The relevant parts complained of were pleaded as follows:

"We believe he totally manufactured the 'accident' in order to pursue his own ends. Mr Orford is attempting to obtain money and benefits from whichever source he can.

We have also received several accusations from Mr Orford with regards to his employment. He is also taking us to an industrial tribunal in order to see what he can obtain by that method."

8. From the report:

"We assume he wanted to claim money from Rasmi Electronics by staging an accident. He did not trip over the bar, indeed he prised open the top of the paint cans and splashed himself and the surrounding area in paint then claimed an 'accident'".

9. And another passage which reads:

"Also, we do not see the reason why Mr Orford was in that corridor. His office is on the second level of the factory. For him to go to that area where he claimed to have an accident was purely to pretend he had an accident and claim compensation from Rasmi Electronics."

10. Finally:

"Before the incident, Mr Orford had been made aware by Mr Smith that his work was not up to the standard required and that Mr Smith thought it was highly likely that he would be finished from Rasmi Electronics."

11. The second part of the claim for defamation, on the face of it at least, is for repetition of the defamatory allegations by the second defendant to the claimant's brother. Then there is the claim for misrepresentation. That is not in connection with the accident but in relation to the claimant's original employment with the first defendant. Paragraphs 25 to 28 of the claim read as follows:

"The second defendant induced the claimant into entering a contract by misrepresenting that the contract was for the claimant to develop products for the defendant whereas in fact only illegal copying of other companies' products was to be undertaken.

26. The second defendant induced the claimant into entering a contract by misrepresenting that appropriate time and funding would be given for product development.

27. The second defendant was in breach of contract by causing the claimant to carry out illegal activities.

28. The second defendant was in breach of contract by failing to provide the appropriate funding and time allowance to allow the claimant to carry out his duties."

12. In paragraph 49:

"The second defendant induced the claimant into entering employment with the second defendant by misrepresenting the purpose of this employment and by concealing that it was for an illegal purpose. The misrepresentation is pleaded under the Misrepresentation Act 1967 or alternatively in the tort of deceit."

13. The damage claimed to result from the misrepresentation was: (1) loss of earnings. It is not really clear how that was put; (2) some bank charges, the background and purpose of which was unexplained in the pleadings; (3) loss of benefits of an endowment policy taken out in July 1990, i.e. 8 years before employment and maturing in June 2014 in return for premiums of £44.90 per month. The basis of claim was again unexplained. It was presumably on the basis that following dismissal the applicant, who tells me that he has not found regular employment, was unable to make the payments of premium.
14. Pleaded like that there was no realistic chance of success in establishing causation or other damage sufficient to sustain a claim in damages for misrepresentation. However, I am told by the applicant, and have no reason to doubt, that by an earlier order giving directions in relation to the trial the question of damages had been put over for different formulation and later assessment, the contemplated trial at the time the order was made being in respect of liability only. Certainly, before me (and it may have been made clear to the applicant at that time) he appears to have appreciated that the way in which his claim could and should be put was that he was induced to leave his previous regular employment in order to become employed by the first defendant as a result of the misrepresentations made about the nature of the activities he would be required to perform and the description of the job to which he was going and that, but for his employment and subsequent dismissal by the second defendant, he would have remained in his earlier job. Thus damages should be assessed on the basis of that assumption, alternatively that of an orderly movement to a better job from his original employment rather than, as happened, a period of unsatisfactory employment with the defendant, following which he has found and will find difficulty in obtaining employment, not merely in relation to any required references but also because, at his age, to be cast onto the unemployment market with a career break of that kind is one which creates great difficulties and therefore gives rise to a claim for damages. Such a claim would not be easy, but I would certainly not be prepared to say impossible, to establish on the assumption that the appropriate misrepresentation findings were made.
15. Unfortunately, directions which had been given for exchange of witness statements and documents had not been complied with, certainly on the defendants' side. At a point about two weeks before the date fixed for the hearing the claimant, who was pressing for exchange, received a letter from the defendants' solicitors saying that they were no longer acting for the defendants and that the second defendant would be appearing in person and on behalf of his company. The defendants then failed to effect any exchange of documents prior to the date of hearing. Consequently, when the day for trial arrived, the claimant came to court and was faced with a bundle of documents, some documents which had been hitherto undisclosed, as well as witness statements, photographs, plans and documents which before that time he had had no opportunity to consider. Apparently, when the judge came into court he made clear that he considered that the misrepresentation aspect of the action was doomed to failure, and allowed the claimant some half hour or so (a) to consider the submissions he might wish to make in that respect, and (b) to consider the documents with which he had but lately been served.
16. Upon his return from his consideration the claimant informed the judge that he required more time and wished for an adjournment but the judge indicated that that matter could be costly and, as a result of observations which he made to the claimant, persuaded him that he was unlikely to succeed in relation to misrepresentation in any event. He refused an adjournment and gave reasons as to why he considered that the pleaded claim for misrepresentation had no real chance of success. Those reasons as stated are not before me but they were summarised in his judgment, the transcript of which is before me, that being the judgment which he gave after trying the defamation proceedings. He said:

"I ruled at the beginning of this hearing that that latter aspect of the case had no real prospects of success. It seemed to me - and I have already given reasons - but it seemed to me briefly that if there was a question of misrepresentation or fraud, then the claimant knew that in January, affirmed his employment and continued with the contract until June and the court would not lend itself to a remedy where a contract in those circumstances had been so affirmed. Secondly, after he was dismissed, the claimant, by going to the Industrial Tribunal alleging unfair dismissal, reaffirmed the contract of employment, rather than going back to the misrepresentation. If this contract was, as is being alleged, illegal, then it seems to me that this court would not become involved in such a tainted arrangement in any event, as it would be contrary to public policy.

Finally and more importantly, Mr Orford had to concede there is really no evidence produced by Mr Orford in his statements of either loss or damage as a result of what he alleges was the misrepresentation and such claims as were made for bank charges and for the loss of the policy are, in my judgment, far too remote and were not caused by the alleged misrepresentation in any event and so for those reasons, briefly, I dismissed that aspect of the case."

17. He then proceeded to deal with the matter of libel. Dealing with the matter on the basis of that passage, I would comment that plainly the judge was right that there could be no question, nor indeed was there any claim, for rescission of the contract of employment into which the claimant entered as a result of what he said were misrepresentations. However it seems to me at least arguable that the judge was in error in suggesting (a) that the activities under the contract, which basically were the copying of designs rather than the creation of original work, was necessarily illegal, or that, if it was, it was necessarily the position that the court would not lend itself to an action for damages sought to be recovered as a result of the original misrepresentation.
18. So far as the observations on damage were concerned, I would also agree with the force of the judge's observations on damage in relation to the way in which it was pleaded. However, as I have already indicated, the question of the way in which the damage should be pleaded and progressed had been left over till after liability following the original order for directions. The claimant, faced as he was with an application for which he had had no notice or warning, was unable to make good his claim to damages in the way which he now accepts is the proper way in which it should be put.
19. I have referred to the earlier order in relation to the question of damage. It was an order by District Judge Alderson dated 16th March 2001, item 4 of which said:

"There be a trial limited to the issues of the defamation claim and in respect of liability only on the misrepresentation claim."

20. It appears that His Honour Judge Bowers purported to exercise his jurisdiction to rule as he did (i.e. at the outset of the trial and without hearing any evidence) on his powers under CPR 24. However, as the applicant has pointed out on this application, the provisions of CPR 24 are subject to the requirement that, if the court is to make an order of its own motion, as plainly this was, some three days notice should be given to the parties of that intention. In this respect the applicant relies on CPR 3.3(3) which appears to make that clear.
21. On that basis and having heard the applicant, with no little misgivings as to his ultimate prospects of success in any such claim, it seems to me that he has legitimate cause for complaint in respect of the striking out of his misrepresentation claim and that he should have permission to appeal in relation to that aspect of the judge's order.
22. Turning, however, to the question of the claim in libel, the judge held, having heard evidence from both sides, that the observations made to the Health and Safety Executive were an occasion of qualified privilege, as was plainly the case, unless the applicant could prove that the defendants were motivated by malice. The judge held that they were not. He was the judge of fact and came to that conclusion on the evidence which he heard. He had ample grounds on which to do so, setting out his reasons in extenso in his judgment. He said:

"I take the view that the defendants quite reasonably and genuinely took the view that the allegation to the Health and Safety Executive was part of the same attack by the claimant to recover funds from them, either from the Industrial Tribunal or via the accident.

It is suggested on the part of Mr Orford that the report, which was sent to the Health & Safety Executive, was effectively fabricated to meet the IT claim, and also to cause problems for the claimant generally.

It seems to me that the defendants genuinely believed the claimant was going to seek to obtain finance of some sort by way of compensation or benefits from one or the other and it strikes me that the very fact that on the same day, on the 14th June, the claimant, Mr Orford, spoke to Mrs Moran reinforces that view because what he said in that was - and this is the same day as he is starting to formulate his claim for the Industrial Tribunal - he says to her, 'Sorry, Dr Surendra is going to have a slight problem now because this industrial accident is going to cost him money because he hasn't fired me. I haven't left, he has jumped to a conclusion, the wrong one, I did ring in, well my wife rang in sick but there was nobody answering the phone at Tanfield, so she rang Steve Wiers at the factory and that will be logged on my phone bill. So they are going to drop themselves in the (inaudible). This is silly all over."And certainly, even by the end of the 14th June, Mr Orford was contemplating financial recompense as a result of this accident and certainly was going to use it against the company and Dr Surendra."

23. By way of summary, he said:

"I have seen the witnesses produced by the defendants. I have heard them cross-examined by Mr Orford and I have listened, I hope with sufficient care and with some concern, to the witnesses that he has cross-examined, but it seems to me that one looks at Mr Smith and Mr Wiers, neither of whom are in fact defendants, people upon whom Dr Surendra relied, and they then believed, they still believe, that this incident was not a genuine accident, for the reasons that they have given in the course of their evidence.

In those circumstances, I consider the report was a reasonable, accurate and honest attempt to investigate this accident and it reflected the genuine beliefs at the time, and now, of those who prepared it, including Dr Surendra, and thereby the company. The beliefs, which they held, were genuine and they were held, in my judgment, on reasonable grounds that the claimant was seeking by one means or another to obtain money from the company."

24. Having thus dealt with the claim in respect of the report to the Health and Safety Executive, the judge turned to what appeared to be the slander claim in respect of the repetition of those matters to the applicant's brother, Dr. Orford, whom the second defendant had involved in an effort to get him to dissuade the applicant from taking further action. Because, as he rightly said, that was not an occasion of qualified privilege, it was necessary for the judge to decide whether a defence of justification was available, ie was it a genuine accident? At this point the applicant intervened in the judgment and stated that he did not wish the judge to make a finding upon that question. After some discussion, the applicant said:

"It was never actually pleaded as a separate cause of action, it was only pleaded in aggravation",

to which the judge replied:

"All right, well in which case I will not make such findings as I would have probably made in respect of that matter then. I am sorry, Mr Orford, but really I do not think this case has got any legs at all."

25. It is noteworthy that at the end of the judgment the appellant did not seek to appeal the judge's finding on the defamation aspect but simply upon the dismissal on the claim for misrepresentation. That is apparent from the exchange at the end of the transcript. However, having been denied leave by the judge on both grounds, upon mature reflection he has sought to do so, having collected his thoughts. In particular, he says (I can see some force in the plea) that in relation to his libel action, he was at a disadvantage in having to begin to conduct the proceedings at a time when he had had insufficient opportunity to consider the documents which had only recently been submitted to him. He had only had the chance to peruse superficially before dealing with the case.
26. However, having listened to his submissions before me as to any specific disadvantage which he says he sustained, now that he has had time to consider the various matters of complaint, I find no substance in them. He has a concern about some difference between the initial set of photographs which were taken following the accident and a set of photographs taken some weeks later by the defendants' loss adjusters, which appear to show the metal bar and some or other of the cans of paint in a slightly different position in the corridor (but still, I observe, behind the white line). He points to a statement in the report that the adjusters were told that the items were in the same position as on the day of the accident, when it can be seen that longitudinally rather than laterally they are indeed in a somewhat different position. This point seems to me to have little significance and I am sure would have played no part in disturbing the judge's findings upon the day.
27. The applicant has also made a number of points on the merits of the judge's judgment, going essentially to whether or not the judge should have believed the account of the second defendant. In particular, in relation to the timing of the accident, the defendants stated in their report to the Health and Safety Executive that it was 9.45; whereas the applicant says it was 8.45. This seems to me a point of little significance. The judge made clear in his judgment that he was accepting that the accident happened at 8.45. He was aware of a dispute as to time, but it did not affect his overall conclusion as to the genuineness of the defendants' belief that the applicant had staged this accident.
28. Accordingly, the position still prevails whereby no court (either the industrial tribunal or the judge) has made a finding as to whether, on the balance of probabilities, the accident actually did happen. That will remain for adjudication by a judge if ever proceedings are brought to court in respect of the personal injury sustained. Nonetheless, so far as the defamation proceedings are concerned, any suggestion of a slander to the applicant's brother has been withdrawn and the merits of the libel proceedings have been conclusively dealt with by His Honour Judge Bowers. While there may be cause for concern that insufficient notice was afforded to the applicant to deal with the documents which were produced, as I have already indicated, he has demonstrated to me no credible ground on which this court might, if permission to appeal were given on that ground, arrive at any different conclusion from the judge below. The application for permission to appeal in respect of the defamation proceedings is therefore refused.
29. I should add that the ancillary ex parte application in relation to the applicant's claim to go to the defendants' premises to inspect documents and/or certain rooms on the defendants' premises, is likewise refused because no good ground has been shown for it; nor is this court the right place in which to make such an application.