England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CENTRAL LONDON COUNTY COURT
(His Honour Judge Rich QC)

		Royal Courts of Justice Strand London WC2 Monday, 27th May 2002

1. LORD JUSTICE BUXTON: This is an appeal from a judgment of His Honour Judge Rich QC in the Central London County Court. It is an appeal from a final judgment, but the substance of the appeal complains of a case management decision as to the admission of evidence that Judge Rich made immediately before he embarked on the hearing of the substantive case. The effect of Judge Rich's decision was to prevent the defendant from giving evidence in the case or calling any evidence on his own part and, as was realistically accepted by Mr. Becker who was then representing him and represents him now, that decision effectively non-suited the defendant, Mr. Williams.
2. To explain how that was, it is necessary to say something, as swiftly as possible, about the claim, the defence and the way in which it was pursued. The claim was based upon an oral agreement alleged to be by way of partnership. The judge said that the agreement had been made "in circumstances which do invite some suspicion", and later on that the alleged agreement (as to which, for the reasons already indicated, he had only heard evidence from the claimant) caused some concern. Although the judge did not go on and expand on those observations, I have no doubt that they were made for two reasons, (1) because the claimant, Mr. Jones, is a solicitor, and, (2) because the agreement alleged and the circumstances in which it arose were in themselves unusual. Speaking generally and without at this stage going to the detailed pleadings, the background was alleged to be that a lady for whom Mr. Jones was acting professionally wished to sell a flat in Peckham. He was minded himself to purchase the property but apparently was unable or disinclined to raise a mortgage in respect of it. He therefore suggested to the defendant, Mr. Williams, who apparently was an acquaintance or friend of his, that Mr. Williams should become involved in the transaction. The nature of the agreement entered into orally, by telephone calls and later at a meeting at a public house, was, according to the particulars of claim, that Mr. Williams should obtain a mortgage on the flat. Having purchased it, the flat would be rented out and the rent used to pay the mortgage and outgoings, with the surplus to be divided between the parties. The nature of the claim was that the flat had indeed been rented out, but that the defendant had not accounted to his partner, Mr. Jones, for Mr. Jones's aliquot share of the profits on the venture. What was sought in the county court was a declaration as to the existence and continuing existence of the partnership, the taking of accounts and dissolution and sale.
3. At that stage of the proceedings, which were issued in the year 2000, Mr. Williams was acting on his own behalf, as he appears to have done intermittently in these proceedings, though not during exchanges that gave rise to Judge Rich's order. The home-made defence opened by saying:

"The defendant will aver that there is no partnership agreement between the claimant and the defendant made either orally or in writing."

4. It went on to give a narrative account of what Mr. Williams says had happened. He agreed that he had spoken to Mr. Jones on the phone and met him at the public house, and had been encouraged by Mr. Jones to purchase the property and take out a mortgage on it. Mr. Williams however said that the object was not any form of long term letting, but that the property would be resold quickly, Mr. Jones having held out expectations that that could be done, and the profit on the resale be divided between the two men.
5. According to the defence as it then continues, Mr. Williams discovered in November 1997, the original exchange having been in October, that there was difficulty about completion of the sale and also that the property was in fact tenanted, that being a barrier to any scheme, if such scheme existed, for speedy resale. In paragraph 1.5 of his defence Mr. Williams therefore pleaded as follows:

"On or around the end of November [1997] the defendant informed the claimant orally that the initial agreement between the parties was terminated and that the claimant was requested not to draft the agreement [that is the agreement for purchase]. The defendant informed the claimant that he would pursue the purchase and take the risk and responsibilities on his own. The claimant accepted that the property was not the bargain that the claimant had envisaged and accepted that the defendant would not profit from the transaction."

6. There are then accounts of how in fact further transactions took place between the two men, but on the basis simply that Mr. Jones was to give some assistance in the process of letting.
7. That specific pleading is, in my view, consistent with the defendant's averment already set out, that as at the date of that pleading, in the year 2000, there was in existence no partnership agreement between the parties; and also that there was no debt owing by way of share of income from the defendant to the claimant. This might well, therefore, have seemed to be a comparatively straightforward piece of litigation, it being clear from what I have already said that much was going to turn, indeed everything was going to turn, on what view the court took of the respective accounts given by the two gentlemen about meetings that had taken place something like four and a half years before the date of the trial.
8. There were, however, difficulties in pursuing the action. Those stemmed, as far as we know almost entirely, from failure on the part of the defendant to provide and serve witness statements that had been ordered. As we now know, he wished to call evidence, not only by himself, but also by three or four other people, whose statements we have looked at. None of those, as it seems to us -- it was not otherwise strongly pressed by Mr. Becker -- advanced the case, because there is nobody who was an actual witness either to the phone calls or to the meeting at the public house. It will also be appreciated that, in view of what the defendant alleges about further transactions on an ad hoc basis with Mr Jones about the letting, any evidence as to further involvement of Mr. Jones in the property is far from conclusive in itself.
9. During the period where the difficulties arose -- that is to say, in September and October 2001 -- the trial being fixed for 8th November, frequent efforts were made by the claimant's solicitors to extract, by way of exchange, witness statements from the defendant. A hearing took place before His Honour Judge Wakefield who ordered that witness statements should be disclosed by 19th October 2001. That did not happen, despite the claimant making it entirely clear that he was in a position to comply with the court's order; but did not intend to do so, and perfectly understandably, except by way of exchange. I entirely accept that the matter was being conducted in an extremely unsatisfactory way on the part of the defendant and those advising him. However, on 25th October 2001 the claimant's solicitors wrote to the defendant's solicitors in relation to the case and noting, as I should have noted earlier, that the hearing was originally listed for 5th November 2001 but was stood out until 8th November because of problems on the part of the court. The claimant's solicitors wrote as follows:

"We refer to our letter dated 22nd October 2001 and our subsequent conversation with Mr Cunningham on that date. You stated that you would like to extend time for exchange of witness statements until the end of the week to correct various procedural matters. In the circumstances, we suggest that witness statements be exchanged on Monday 29th to agree the mechanics of this."

10. There were then references to various documents that had to be disclosed in pursuit of another order by Judge Wakefield, with which we are not concerned in this appeal.
11. That letter, no doubt prudentially intended by the claimant's solicitors to set a deadline that could be achieved, and no doubt also seen by them as giving them sufficient time before trial to deal with the matter properly in the interests of their client, nonetheless constituted a variation agreed between the parties of the timetable laid down by His Honour Judge Wakefield. The status of such variations under the regime of the Civil Procedure Rules, where the timetable is driven by the court and not by the parties, is perhaps a matter of some uncertainty. But, in the reality of this case, the date that had to be met was 29th October. It was not in fact met. There has been some disagreement as to whether the statements were served on 30th or 31st October but, on any view, the statements were served either one or two days late.
12. When they arrived it was perceived by the claimant's solicitor that there were two things wrong with them. The first was that some of them had not been signed. Mr. Rees, who has represented the claimant/respondent in this appeal with care and discretion, accepted that, although he had properly pointed that out to the judge below, it was not a point that could be stood on as a ground for not admitting the evidence to which the statements related. More to the point was the fact that the statements, which had been taken not by a solicitor but, because of impecuniosity, effectively by the defendant himself, contained a substantial amount of inadmissible matter. We have been shown both those statements and the form in which they were eventually put, but have not given close consideration to that point because it was accepted on the 8th November, during exchanges to which I shall shortly come, that a considerable amount of material had properly to be removed as inadmissible or embarrassing. For that reason the statements were not regarded as being in proper form, and for fear that, as Mr Rees has explained, the judge might form an incorrect view of the case by being exposed to a large amount of inadmissible matter, the statements, although in the hands of the claimant's solicitors, were not included in the trial bundle.
13. That meant that when everyone arrived at court on 8th November to start the trial, Judge Rich had before him, as he thought, no evidence from the defendant. Understandably, the judge required to know why that was. The matter was made the more difficult for him by the fact that Mr. Becker, who appeared on that day, had only, as we understand it, been instructed in the case a very short time previously, and had the further disadvantage that there was nobody with any knowledge of the case whatsoever attending upon him from the defendant's solicitors. He was therefore not in a position to give an explanation to the judge.
14. Had the matter been properly attended to by the defendant's solicitors and had the gentleman who had the conduct of the case been present, or indeed even been contactable which he does not appear to have been, a lot of the trouble that thereafter arose might have been avoided. However, with no clear illumination, the judge took, and rightly took, a severe view of what had occurred. He took the view that the claimant was in breach of the court's order with regard to the service of the statements. That, of course, was the case, but it is at least possible that the judge formed a more severe view of the extent of the failure than was in fact justified.
15. First of all, Mr. Becker, who only had instructions from his client, told the judge that the statements had been delivered to the solicitors on 29th October. Mr. Rees then properly informed the judge that they had been received by his clients on either 30th or 31st, but the judge appears to have thought that there had been some significant delay, longer in my judgment than would be accounted for by a day or two, in the solicitor complying with the court's order. The judge took a severe view of that matter because he said at page 151 of the transcript of the exchanges on that day, referring to Mr. Williams:

"What he says is that he put his solicitors into a position to comply with the time as extended by agreement, and they elected not to do so. That seems to me to be intentional."

16. The point that the statements were only one day late, taking into account the agreement to extend the order of Judge Wakefield, equally does not seem always to have been in the forefront of the judge's mind. I have to say that he was not helped in that respect by the skeleton argument that had been filed on behalf of the claimant, which set out a history, already referred to, of chasing letters, including the letter of 25th October, already referred to, but without indicating that that letter, as well as admittedly expressing discontent with the position, did in fact propose the revised date of 29th October.
17. Anything that I say about the impression formed by the judge of the circumstances is not in any way intended to be critical of him. That is because the matter was presented to him ambulando and without any clear guidelines, and that was largely because, as I say, Mr. Becker was wholly inadequately prepared, not through his fault, to meet the objections that were raised.
18. The judge, however, said that, since the statements had been late, and they certainly had been, an application must be made for their introduction. The judge expressed considerable concern about the delay that was going to be caused, but he decided that he would hear the application at 2 o'clock on that date. As a condition of that application he ordered that Mr. Williams should in fact pay £6,000 into court. His reasons for so ordering appear to have been, first, that he thought that there was a serious danger that the day would be lost, and indeed the trial lost, with Mr. Williams thereby having to pay the costs of that day; but, secondly, also the judge thought that he had not had a satisfactory explanation of why, as he understood, the statements had not been filed. That was however a striking order to make in respect of a man about whom there was every reason to think he was impecunious. Mr. Williams did succeed in raising the money, he tells us in the statement, by borrowing it from various friends. He returned to court at 2 o'clock with the £6,000 in cash which was duly counted in the court office, a process which took up some half an hour, and found to be adequate. The judge heard submissions and accepted that, although that statements were now in the hands of the claimant and had been for some time, it was necessary for them to be redacted in order that irrelevant material was not adduced. The following exchanges took place:

"(Judge Rich): What has then happened since is that they were proffered two days later and in fact are in your hands before you prepared the witness bundle. Have you been unable to deal with them in the intervening week? (Mr. Rees): Your Honour, the reality of the position was that if they had remained unedited, very much so. The claimant was placed in an extremely disadvantaged position. (Judge Rich): Are you now unable to deal with them on the basis of having been able to consider them for a week and having had them duly expurgated? (Mr Rees): On the basis that the defendant concedes the editing that I have put forward, I cannot say that the claimant will be disadvantaged. (Judge Rich): Very well then. Do you accept that if we begin now, and I am prepared to sit a little late, that we would be capable, if I admit all this evidence, of completely, including judgment, by the end of tomorrow?"

19. Mr. Rees said that he was not so satisfied. The judge then had to make a decision as to how the matter should continue, he having well in mind that he himself was committed to a long action in the following week and that if this case went off, it would go off for a considerable length of time.
20. What he ordered was this:

"I do not think you are going to be able to call these witnesses today, and the witness statements are to be delivered to the court in such form as you are proposing to rely upon by 9 o'clock tomorrow so I can read them before the hearing beginning at 10 o'clock tomorrow. (Mr Becker): So be it."

21. When Mr. Rees asked about his position, the judge pointed out to him that copies should be provided for him also at 9 am the following morning. The judge appreciated that starting at that hour was going to produce a very tight timetable for the hearing, but he was nonetheless prepared to pursue the matter in this way, and, I will point out in passing, incommode himself to a considerable degree by arriving at court at 9 am in order to read the statements in the midst of all the many other things that a judge at that court has to do before he actually sits, for a prompt start at 10.
22. That is not what happened. When the court sat at 10 o'clock Judge Rich pointed out that he had not received the statements. Mr. Becker told him that they were available and had been brought by his client, but Judge Rich said that that simply was not good enough. He therefore withdrew such leave as he had given to rely on the witness statements and refused to have the matter pursued further.
23. In this appeal Mr. Becker complains that the judge did not permit him effectively to give any explanation why the witness statements had not been there at 9 o'clock. I, for my part, do not think that that advances the matter because the explanation appears to have been that it had not been brought home, either to Mr. Becker or to his client, that the judge really did mean the statements to be there at 9 o'clock. That, I have to say, was a misapprehension on the basis of the exchanges that I have set out, and it led, I have to say culpably led, to Mr. Williams not completing the statements in time and not setting out for the court in time, even allowing for the vicissitudes of travel in London, and getting himself there well before 9 o'clock.
24. Mr. Jones was then called. He gave his evidence and there was no evidence on the other side. In giving judgment the judge explained why he had not allowed relief from the sanction of exclusion that he was otherwise minded to impose. He said this at page 127E:

"I have arrived at that conclusion having particular regard to the interests of the administration of justice which would, by reason of the late service, inevitably involve throwing out a tight programme for the consideration of the outstanding evidence in the case, and throw into doubt the ability to finish the case in the course of today. I have however been moved further by the conclusion that the failure to comply with the direction which I gave, is one which has not been explained, and, without explanation, indicates a contempt for the directions of the court which should not, in the circumstances where there has already been a prolonged application for relief, be lightly overlooked.

I am afraid that in circumstances where (i) a whole morning has been devoted to the consideration of whether or not it was just to provide relief from the sanction which followed from the original failure to serve, and (ii) the defendant has been required to serve a witness statement to explain his conduct, and (iii) I have leaned over almost unreasonably in overlooking the failure, which also was not explained, of those who represented him to serve as promptly as they might the objectionable witness statements which had been served immediately before the hearing, I find it quite impossible to understand how the defendant, if he wished to respect the directions of the court, and to co-operate in the fair and expeditious trial of this action, could have failed to deliver the witness statements as directed.

In those circumstances, I did not relieve him from the consequences of his further breach of directions which have been given yesterday, and he has not been able to rely upon any evidence."

25. I have to make two comments. First, there was indeed already a tight timetable to this case but, even giving full weight to the judge's perception of the case and his mode of conducting it, it is not immediately apparent, I have to say, that the further time required by him to read the statements before the evidence was adduced would have made that position materially worse. Secondly, the judge appears to have thought in this passage, although he was clear in other exchanges that I have referred to that that was not the case, that the statements had only been served immediately before the hearing. That is not a correct description of the service of the statements on 30th or 31st October, bearing in mind also the exchange with Mr. Jones that I have set out, when Mr. Jones properly accepted that, subject to the matter of redaction, the statements had been in his hand early enough for him to be able to deal with the evidence. I accept also that the defendant was already on 8th November in mercy to a considerable extent. The judge might have been minded to take a different view of the matter and not grant that indulgence on 8th November. But indulgence is what he granted.
26. One can understand the reaction of the judge, running, as he does, a busy and hard pressed court, at the further delay that he was faced with on 9th November. However, before taking the step of, in effect, non-suiting the defendant, it was necessary for him, in accordance with guidance given on a number of occasions by this court, most recently in the case of Bansal v Cheema, decided by this court on 2nd March 2000, to consider the criteria set out in CPR 3.9 relating to the circumstances relevant to relief from sanction. I am far from saying that it is incumbent on a judge, more particularly on a judge as experienced as Judge Rich, to go pedantically through this list and say, item by item, what his view of it was. That is not least the case because a number of the tests set out on the list are much better suited to a consideration of a case management decision made weeks or months before the date of the trial than they are to a decision, as this was, taken by the judge actually on the day of the trial. However, if one looks at that list it becomes apparent that there is one striking element in the list that the judge did not refer to and which, in my judgement, has to have considerable weight. That is item (i), the effect which the granting of relief would have on each party. It is properly accepted that the granting of the relief sought would not have had a deleterious effect on the way in which the claimant could conduct his case because he had already had the witness statements, such as they were, in his hands for nearly a week. But the effect on the defendant was a disaster. I do not say that of the refusal to allow his other witnesses to give evidence because, as I have said, it is difficult to see what they could add; but it was disastrous for him not to be able to give evidence himself, which was the effect of the judge's order, because it meant, as the judge said when he came to give judgment, that he had no account of the oral transactions between the two men other than that given by Mr. Jones. It followed from the judge's order, as night followed day, that the effect of it was to decide the case in favour of Mr. Jones. Had the judge had his attention more clearly drawn to that criterion, I have to say that I think that he would have been bound to have given it some significant weight.
27. The other consideration which impressed the judge, and which was urged by Mr. Rees, was that there had been a systematic failure on the part of the defendant to comply, and that he should not be given further indulgence. I am sympathetic to such a view, but I do not think it carries in this case the weight that it might carry in other cases. Firstly, although the defendant was open to significant criticism for the way in which he or his legal advisers dealt with the exchange of witness statements, we have been shown nothing, save in that respect, to indicate that he had otherwise in the course of this litigation disobeyed orders of the court. It is that type of behaviour rather than what happened here, undesirable though it was, that was in the mind of the courts in cases such as Arbuthnot Latham Bank v Trafalgar Holdings [1998] 1 WLR 1426 or Mealey Horgan Plc v Horgan, The Times, 6th July 1999.
28. In my judgement, therefore, and approaching this case with all the caution with which this court approaches this sort of management decision by a highly experienced judge conducting the case on the ground, I am bound to say that relevant factors, and more particularly the effect on the litigation, were not given proper weight.
29. Would it, however, have made a difference if Mr. Williams' evidence had been adduced? I say nothing as to the other witnesses. The judge thought that it would not have done, because at page 7 of his judgment he drew attention to a letter drafted by the claimant but signed by the defendant, dated 25th November 1997, which appeared, in the judge's view, to be indicating that Mr Williams was content, contrary to his apparent pleaded case and his intended evidence, to go ahead with the deal. However, as my Lady pointed out in the course of argument, in the structure of this case this letter, at least prior to cross-examination and further inquiry, is ambiguous, in that it appears to indicate that Mr Williams is prepared to go ahead with the purchase but does not conclusively indicate a willingness on his part to continue with whatever deal it was that he had originally made with Mr. Jones; bearing in mind that on his case Mr. Jones had not completely left the scene by that stage. It may well be that much could be made of this letter and would have been had Mr. Williams ever been able to give evidence. But that evidence he was not able to give. I cannot, therefore, be in any way satisfied that the exclusion of Mr. Williams' evidence would in any event have made no difference to this trial. I say no more than that, but I do say that, in order for the court to try this case properly, it was of such paramount importance that the court should hear both of the protagonists give evidence and be cross-examined that it would need the strongest reasons, which were not present here, in order to exclude that evidence.
30. I therefore feel constrained to allow the appeal. It will be necessary for the judgment of the court below to be set aside and, subject to the view of my Lady, my view is that the matter should be remitted to the Central London County Court to be retried. Because of the history of the matter and not in any way through criticism of him, I think that the case should be retried before a judge other than His Honour Judge Rich. I would give permission, in so doing, to Mr. Williams to adduce his own evidence but no other evidence in the retrial. I make the latter order, firstly, because now that we have had the benefit of examining it it seems that the other evidence that he wants to adduce is not going to advance the matter but only extend it. Secondly, I think that if it had been borne in more clearly upon Judge Rich, as I think it probably was not, that there was a stark distinction between preventing Mr. Williams giving evidence and preventing the other people giving evidence, he would have concluded, in a way that I would not have been minded to disturb, that the other witnesses should be excluded but Mr. Williams should not. I would allow the appeal on those terms.
31. LADY JUSTICE HALE: I agree. There is no part of my Lord's judgment with which I wish to quarrel or in any way add anything.
Order: Appeal allowed as per judgment.