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 THE QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
(His Honour Judge Humphrey Lloyd QC)

		Royal Courts of Justice Strand London WC2 Monday, 1st July 2002

Monday, 1st July 2002

1. LORD JUSTICE POTTER: In this case the claimant, Mr Powell, is an arable farmer who largely, or at any rate to a considerable extent, grows potatoes. He sued the defendants, Pallisers of Hereford Ltd, in respect of alleged defects in agricultural equipment purchased from them: first, a potato harvesting machine which included a device known as a Clearflow Support Unit, second, a replacement harvesting machine which included something called a Wheel Drive Kit to prevent the claimant's tractor slipping as it used the harvesting machine - these were both bought for use in the 1999 potato harvest - and, finally, a special Cleanflow Support Unit, bought in the year 2000 to replace the original one which was found to be unsatisfactory during the 1999 harvest. The machinery was in fact manufactured by Reekie Manufacturing Ltd and Netagco Sales (UK) Ltd (to whom I shall refer as "Reekie"), against whom the defendants bring Part 20 proceedings. The claimant claims net losses of just over £200,000 said to have been incurred in the harvesting or loss of his crops as a result of the defective operation of the equipment.
2. The claimant notified the defendants in April 2001 of his claims. There were then extensive correspondence and meetings which preceded an exchange of experts' reports in September 2001. But despite severe financial pressure on the claimant, he did not succeed in securing any offer.
3. The action between the claimant and the defendants started in January 2002 and has proceeded expeditiously before Judge Humphrey Lloyd in the Technology & Construction Court, with a trial date fixed for 15th July at a case management conference ("CMC") which took place on 8th March 2002. At the CMC only the claimant and the defendants were parties to the proceedings, the defendants saying that they were finalising a claim against the manufacturers of the machinery (Reekie) which would be pursued in the form of Part 20 proceedings. However, they delayed in doing that and their position now is that they are not ready for trial in that respect.
4. An early date was sought and fixed for trial at the CMC because of the claimant's financial difficulties. Such a date would enable him to get the litigation over and done with, any damages to which he was entitled recovered, and his involvement in the worry and distractions of the case over, before the potato harvest which takes place each year between late September and early November. The judge was sympathetic to his position. He informed the defendants of the need for expedition in pursuing any Part 20 proceedings, and said that he took the view it could be done with a tight timetable which would leave the July trial date viable. He said that, should the defendants commence Part 20 proceedings quickly, he might be receptive to an application to vary the timetable. Unfortunately the defendants did not commence Part 20 proceedings quickly and the Part 20 particulars of claim were not served until 18th April 2002, almost six weeks later. However, it is noteworthy that in their application to serve the Part 20 proceedings dated 9th April 2002, the defendants asserted that Reekie had been aware of the dispute between the claimants and the defendants since August 2001, a request for indemnity having been made since December 2001, and, if the time for acknowledgement of service was abridged, as indeed it was, it should "prevent any delay to the existing procedural timetable".
5. The defendants received Reekie's Part 20 defence on 23rd May 2002, by which time they had failed to comply with the judge's order at the CMC that the claimant's and defendant's expert should meet no later than 10th May. Reports were due to be exchanged by 7th June. However, from 16th May onwards the defendants simply maintained the position to the claimant that they and Reekie considered it a futile exercise for experts to seek to meet "irrespective of the views of the judge" and that the whole question of expert evidence should be put on hold until they had applied for and obtained a stay from the court. Despite the objection and disagreement of the claimant, the defendants maintained that position and applied to restore the CMC in the main action to be heard with a CMC in the Part 20 proceedings, obtaining a hearing date for 14th June - that is to say, a further delay of some weeks. Save for agreement by the defendants of the issues and facts upon which expert evidence was required, which was reached in the face of an application by the claimant, that is how matters rested until the appointment before Judge Lloyd on 14th June. Furthermore, having consented to the claimant's application in relation to the issues and facts upon which expert evidence was required, the defendants then indicated that they would not be serving their witness statements or expert's report within the time previously directed.
6. At the hearing the judge heard argument from both the claimant, who wished to maintain the trial date, and the defendants, who sought an adjournment. He also had the benefit of a skeleton argument from Reekie, who associated themselves with the defendant's application. He refused the application for an adjournment of the trial date, save to the limited extent that enquiries were to be made to see whether it was feasible for the trial to take place in September, on 16th September 2002. He took the view that the defendants had brought the difficulty of maintaining the July date upon themselves and that, having a clear warning of the need for speed and the judge's determination to fix an early date so as to relieve the claimant of financial and other pressures before the next harvest, they could, and should, have acted more swiftly.
7. The essential passages in the judge's judgment were these. Of the delay he said:

"I am quite satisfied that had the defendant got on with it, then, even allowing for the fact that it did not issue the Part 20 proceeding before the case management conference on 8th March, had it done so immediately afterwards, we would not be in the position we are today. Had it then also applied for the case management conference in the Part 20 proceedings in accordance with TCC practice and the CPR, I have little doubt that that would have been heard in April. Looking at Miss Prandy's prospective timetable on behalf of the Part 20 defendants, I would have thought that it would have been possible, given the apparent co-operation of the Part 20 defendants, for a timetable to have been devised which would have ensured that the trial in July would have been feasible.

One cannot say that for certain, but, looking at the constructive attitude adopted by the Part 20 defendants as shown by their solicitors ... . It would have been tight - the timetable would always have been tight - but not so tight as to have been impractical.

Bearing in mind prejudice, it seems to me that any prejudice which the defendants have suffered has, in effect, been self-imposed as a result of its delay. It is said by Mr Hext that, in a sense, the timetable could not have been as I have suggested. I disagree. As I have indicated, the defendant was well aware of its position and of what it lacked and yet, surprisingly, Mr Hext or counsel previously instructed, Mr Turner, was only asked what was the information needed to plead a claim against the Part 20 defendants in March. [That should be 6th March.] One would have thought that step should have been taken in February: it was obvious that there was going to be a case against the Part 20 defendants. Had it been taken in February, then the proceedings in March could have been launched immediately after the case management conference on 8th March. So, too, obtaining any technical advice that might have been required: that could and should have been done much earlier if it had been really the defendant's intention to pursue with vigour the claim against the Part 20 defendants and to comply with what was acknowledged in the correspondence to be a stringent time table."

8. Having referred to the overriding objective, the judge went on:

"One of the factors in this case is the financial predicament in which the claimant finds himself. That financial predicament is, as it were, a given factor which underlines all the orders which I made on 8th March and which the defendant has necessarily to accept. It is not responsible for the claimant's financial problems, but it has to be accepted that that is the framework within which this trial and these proceedings have to be conducted.

As Mr Pilling pointed out, it is not good enough for a defendant to say, "I don't really like the timetable and I will get round to asking for a variation of it." The defendant is bound by the timetable and has to comply with that timetable unless and until it either obtains the agreement of the claimant, which it did on one occasion, or makes an application to the court for a variation. To leave the applications until, effectively, today is not good enough. The applications could and should have been made much earlier. This all seems to me to be indicative of the fact that the only prejudice which the defendants may suffer will be self-inflicted."

9. The judge then gave alternative directions based (a) on a trial date in September - that being a trial of both proceedings together - and (b) a trial of the claim only on 15th July, in which case he ordered that the Part 20 proceedings should not be heard at the same time. He finished:

"If it is not possible [that is referring to the September trial date], then I fear the trial will have to go ahead in July, for the alternative of putting it off until November does not seem to me to be something which I should ask the claimant to bear, having regard to the claimant's financial difficulties and to the legitimate expectation which the claimant had that he would have had a trial in July. He needs that, no doubt, to provide comfort for those providing him with finance; he is entitled to it; he is entitled to the benefit of the orders of the court so far made. As I have pointed out, he could have had a trial in July had the defendant acted, in my view, promptly and brought in the Part 20 defendant in time. I do not see why the claimant should suffer beyond that and therefore the order which I shall make is that the claimant is to notify the court by 4.00 p.m. on 18th June whether a trial commencing 16th September is feasible."

10. As I have already indicated, that did not prove feasible.
11. This was, of course, a case management decision involving the exercise of the judge's discretion of a kind with which this court has repeatedly expressed reluctance to interfere; indeed it has been emphasised that it is wrong to do so unless it can be clearly demonstrated that the overriding objective will not be observed or maintained if the decision is permitted to stand.
12. The position as to adjournments is clearly set out in the Practice Direction annexed to CPR Part 29, but it is not necessary to read it into this judgment.
13. The defendants and Reekie have before us broadly made common cause to assert that the judge was plainly wrong in his decision having regard to the overriding objective, and that, if it be necessary to point out an error on the face of his judgment, it lies in his failure to mention or have regard to the interests not only of the defendants, who plainly did not act with sufficient speed, but also those of Reekie as Part 20 defendants.
14. So far as Reekie are concerned, they point to the fact that they have neither delayed nor been in breach of any order of the court. Yet, they say, prejudice may arise to them in three particular ways. First, they say there will be prejudice to Reekie's position on liability. It is submitted by Mr McClaren QC for Reekie that, were the trial of the claim and the Part 20 claim to be separate, findings of fact made at the trial of the claim, although not giving rise to any issue estoppel on the Part 20 claim, would in practice be of some weight at the trial of the Part 20 claim, particularly if the same judge were to be trying the Part 20 claim as tried the claim; and, particularly if the evidence on any key issues of the trial of the Part 20 claim were finally balanced, the judge would be naturally disinclined to reach different conclusions in the second trial, even if there were justification for him so doing (e.g. hearing further or different cross-examination of the same witnesses or evidence from different witnesses or experts).
15. In particular, it is complained that Reekie's employees - and I think they are three in number and have been identified to us as Mr Harper, Mr Scott and Mr Baxter - are likely to be required to give evidence at the trial of the claim. (I pause there to say that in the light of the degree of cooperation between the parties prior to this hearing, that may well be on subpoena by the defendants.) Yet, as a non-party, Reekie would have no right to participate in or be present at the trial of the claim and so would be powerless to mitigate any damage done to their case by hostile examination of their employees.
16. Second, it is said that there would be prejudice to Reekie's position on quantum. Were the claim to be settled between the claimant and the defendants on the basis that the defendants pay the claim in a certain sum, in order to establish the quantum of their Part 20 claim, the defendants will only need to prove as against Reekie that the settlement was reasonable in all the circumstances. So, even if Reekie were able at the date of trial of the Part 20 claim to show that the true level of the claimant's claim was less than the amount of the settlement, Reekie would be faced with the additional issue as to whether the amount of the settlement was unreasonably high.
17. Finally, in relation to costs and inconvenience for Reekie, it is said in respect of Reekie's own costs that, since much of the technical information about the harvester is in the hands of Reekie, whose employees will be key witnesses, Reekie anticipates that they will have to incur considerable costs trying to assist the defendant to defeat the claim and that these costs will be in addition to, and will duplicate to some extent, their own costs of subsequently defending the Part 20 claim. Reekie's costs of assisting the defendant in its defence of the claim are likely to be irrecoverable. Also Reekie would need to obtain a transcript of the trial of the claim and/or would need to engage an observer to attend the trial. It is also said that Reekie has potential liability for the greater costs of others. On any view two trials will require the defendants to incur substantially greater costs than the defendants would incur if the claim and the Part 20 claim are to be heard together. It will also involve other costs to be incurred which would otherwise be unnecessary, such as the costs of requiring the attendance of the claimant's witnesses to attend the trial of the Part 20 claim. Were the defendants to lose the claim but succeed on the Part 20 claim, Reekie would be at risk of having to pay greater costs than they would have been at risk of paying had there been only one trial.
18. In relation to inconvenience, it is pointed out that Reekie's witnesses would have to give evidence at the trials of both the claim and the Part 20 claim, and that Reekie, who are based at Forfar in Scotland, would clearly suffer inconvenience and disruption to their business in that respect.
19. So far as the defendants are concerned, for their own part - and it is right to say that Mr Marrin QC who appears for the defendants left to it Mr McClaren to make most of the points to which I have just referred - they limit themselves to submitting that essentially the order made by the judge was a punitive order in respect of delay (which they do not admit, though they only lightly defend) in a situation where the balance is wholly in favour of all matters being heard together. They say that the avoidance of difficulties for the defendants in obtaining evidence from witnesses who are employees of Reekie and the greater convenience of a single hearing, should outweigh any disadvantage to the plaintiff, who will be able to secure compensation for being kept out of his money by a suitable award for interest and whose natural worry and concerns over litigation of this kind will not be unduly prolonged.
20. I do not propose to go into any very great detail so far as this matter is concerned. As to the submission that the judge overlooked the position of the Part 20 defendants when reaching his decision, I am not satisfied that he did so. He certainly referred to the Part 20 defendants' skeleton argument in his judgment, as I have already quoted. It is true that he did not expressly deal with the detail of the objections advanced by Mr McClaren at this hearing in the course of what was a fairly short judgment. However, following the hearing, the Part 20 defendants' solicitors wrote a letter to the court expressing concern that the interests of the Part 20 defendants had been overlooked and asking for reconsideration of the matter. A reply was received as follows. Under the signature of the clerk to the judge, having said that the judge had considered the letter carefully, the essential passage reads as follows:

"He accepted that, for the reasons set out in your letter, including the fact that the defendant now intends to adopt most, if not the whole, of your client's case merits as its defence, the Part 20 proceedings would normally be tried at the same time as the main action. However he had to take account of the particular interests and expectations of the claimant in having a trial on the date fixed which had been set with those factors uppermost and which made it therefore imperative that the defendant should act swiftly after the CMC if it intended to make your clients a party. He concluded that the defendant could have done so but it did not. Had it done so then your own skeleton showed that a trial in July would almost certainly have been feasible without prejudicing the interests of your client. Accordingly balancing the competing interests (which included the factors set out in your letter) he came to the conclusion that those of the claimant prevailed, unless a trial in September were possible (which it is not).

As the judge pointed out, your clients will not be bound by findings of fact in the main action. Should the claimant succeed and should the defendant pursue its claim over against your clients they will be entitled to have that claim (and any contested issue of fact or opinion) decided afresh in the Part 20 proceedings. If the defendant, having adopted your case, succeeds then your clients will presumably not have to face a trial of the Part 20 proceedings."

21. I do not think, therefore, that the judge's exercise of discretion can be attacked on the basis that he failed to take account of the interests of the third party. But can it be said, as a matter of balance, that his decision was so clearly wrong that we should interfere? I do not think that it can.
22. Although one inevitably starts with the proposition, as the judge recognised, that in a case of this kind it is both appropriate and desirable that the claim and Part 20 proceedings be heard together for the avoidance of duplication in costs, the emphasis may readily change where a claimant takes all reasonable steps to bring his claim speedily to court in a case where the outcome is vital to both his fortunes and peace of mind and, having obtained a date for trial which suits himself and his witnesses, he is faced with an application to adjourn by the only party against whom his remedy lies, on grounds which were both avoidable and raised in clear terms with that party at a time when he had both the opportunity and the duty to comply. In such a case, so far as the claimant is concerned, he is entitled to say `let the question of increased cost and difficulty be worked out as an issue between defendant and the proposed Part 20 defendant and not be laid at my door'.
23. Furthermore, leaving aside for a moment the question of costs, it seems to me that the issues and difficulties involved in Reekie being obliged to participate in two sets of proceedings have been somewhat overstated. It has been acknowledged before us, and these appellate proceedings have been useful to that extent, that both the defendants and Reekie propose to make common cause and to co-operate in resisting the claim of the claimant against the defendants which is to be heard in July; and following an exchange with counsel, it is apparent that the evidence of Mr Harper, Mr Scott and Mr Baxter, who appear to be the essential factual, as opposed to expert, witnesses, can be available for that trial date without insuperable difficulty. It also seems quite clear that some form of statement of information has for some time been available from them for the purposes of settling the Part 20 defence, and it is not suggested that they are not available as witnesses whom, if obliged to do so, the defendants will be able to call to give evidence under subpoena. However, it now appears that Reekie have no objection to cooperating in respect of these witnesses and that proper witness statements should be available before they are called to give evidence.
24. It seems clear to me that it should not be difficult to devise some procedure whereby, despite the order of the judge, which in my view he was fully entitled to make at the time that he made it, opportunity is afforded to Reekie to allay their concerns at the fact that their employee witnesses may be called in the main action without their having a sufficient opportunity either to call them themselves, or at least to ask questions of them, so as to ensure elucidation of all matters of fact relevant to liability between all the parties.
25. In those circumstances, having been asked by the court whether there was any objection (subject, of course, to the approval of the trial judge) to arrangements being made to that effect, and a proposal being put to the judge as to the machinery for the examination of the witnesses and the opportunity for both the defendant and the Part 20 defendant to ask questions of them, all counsel indicated that they would see no objection to such a course and indeed would seek to agree a procedure (subject to his approval) to avoid the need for conflict before him.
26. I pause now to refer to the question of the claimant's financial position.
27. As I have indicated, I consider that the judge was entirely right to come to the decision which he did, in relation to which he put very much to the fore the difficult financial position faced by the claimant, at a time when he had incurred losses not merely as a result, it seems, of the events the subject of these proceedings, but also through other difficulties which could not be laid at the door of the defendant and third party.
28. As a result of evidence which has been placed before us, it appears that the claimant has now refinanced his position to enable him to survive pending the completion of proceedings, and indeed there is no reason to suppose that would not be so even if the matter went over to a later date. Nonetheless, in my view, it is desirable that the trial date stand both because of his continuing operative financial difficulties but, more importantly, because of the consideration which the judge plainly had in his mind as to the legitimate expectation of the claimant and the desirability that his worrying litigation be resolved as soon as possible in a situation where what happens as between the defendant and Reekie is little concern of his.
29. In those circumstances, I would grant leave to the defendants to appeal the decision of the judge, but would nonetheless dismiss the appeal against his order upon the basis that the parties will, as they have indicated, co-operate for the purpose of ensuring that so far as the witnesses of fact in this case are concerned there will be an opportunity for all parties to ask questions of those witnesses on all factual matters relevant to the liability of the parties. That possibility was in fact canvassed in the proceedings before the judge after he had given his decision, when Miss Prandy (who was then it seems for Reekie) observed that she was not clear on the role which her clients might have to play should the trial go ahead in July. The judge indicated in an exchange at page 14 of the transcript before us that he did not regard as difficult the question of securing the participation of both the defendant and the Part 20 defendants in the examination of the factual witnesses. I am confident in those circumstances that, having dealt with the matter as I have in this judgment, any application made - it is to be hoped with the agreement of all parties, but, if not, which has to be resolved by the judge - will be dealt with in a way which permits the procedure I have mentioned to be followed.
30. I should also mention that it appears there is to be the evidence of an agronomist called in the action who has been jointly instructed by both the plaintiff and defendant. Concern was expressed as to whether or not such evidence as the agronomist gave should be regarded as binding in any subsequent Part 20 proceedings. I should make clear that, in my view, subject to any order which the judge may make in relation to the evidence of the factual witnesses on the application I have mentioned (and indeed subject to any further order which he makes on the application of the parties) the issues and evidence in the main proceedings will be at large so far as Reekie are concerned, given that the trial of the Part 20 proceedings is yet to take place.
31. Subject to those observations, I affirm the decision of the judge.
32. LORD JUSTICE CHADWICK: I agree with all that Potter LJ has said. I would add only that it is important to keep in mind that the judge's task was to deal with the application which was before him on 14th June 2002 in accordance with the overriding objective, upon which the CPR are based; and that where a judge has addressed himself properly to that task it is not open to this court to interfere. As this court has frequently emphasised, the overriding objective itself requires this court to exercise a proper degree of self-discipline by respecting case management decisions made by judges in cases which they are to try.
33. In my view this is not one of those rare occasions on which it can be said that an experienced trial judge has not addressed himself properly to the task with which he was entrusted. In essence, this was a case in which, when deciding whether to vacate a date, which had been fixed in March for the commencement of a trial on 15th July (then some four weeks away), the judge had to weigh competing factors. He identified the relevant consideration and gave to each the weight which he thought it merited. He recognised the obvious desirability of determining questions of fact at a single trial, so avoiding the risk of inconsistent decisions. But he recognised also the claimant's legitimate expectation in the light of the order which had been made on 8th March and the real hardship - a hardship not limited to matters capable of being compensated by a future payment of interest - which would be caused to the claimant by a delay of some four months. He reached the conclusion which he did.
34. For my part, I think I would have reached the same conclusion, but that is of little or no moment. The question for this court is not whether it would have taken the same view as the judge. The question is whether this court would be entitled to substitute its view for that of the judge. I have no doubt that the answer to that question is "No".
35. It follows that I also would dismiss this appeal. I share my Lord's view that the difficulties which the appellant and the Part 20 defendants have raised are more conceptual than real, and that such difficulties as there are can readily be avoided by orders at trial which would enable the Part 20 defendants, if they wish, to take such part in testing the evidence and on such terms as then appear appropriate. As the judge indicated in the proceedings after judgment - see at page 14 of the transcript between lines 8 and 28 - this was a possibility which he had well in mind.
Order: Appeal dismissed. We will award the costs of the appeal to the claimant summarily assessed in the sum of £10,280. The defendant will pay the claimant's costs of the appeal and their own costs in the Part 20 proceedings.