England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM DERBY COUNTY COURT
(HIS HONOUR JUDGE ORRELL)

		Royal Courts of Justice The Strand London Thursday 28 June 2002

Thursday 28 June 2002

1. LORD JUSTICE WALLER: I will ask Lord Justice Sedley to give the first judgment.
2. LORD JUSTICE SEDLEY: This appeal comes before the court by permission of Laws LJ and Morland J given on renewal of the defendant's application. They considered, having heard counsel for the defendant, that the judge might arguably have erred by overlooking relevant factors in deciding that it was not unjust to the defendant to order him to pay the whole of £27,647.69 which the claimant had paid him on a consideration which in the judge's view had wholly failed.
3. The case came before His Honour Judge Orrell on 25 May 2001 in the Derby County Court. It had been listed for two days. It was not reached until mid-afternoon on the first day, but was nevertheless concluded by the end of the second. In brief, the claimant had sued the defendant for damages or for the return of the money he had paid for the goodwill and the stock of the defendant's off-licence. The judge summarised the facts as follows:

"Reduced to its simplest terms, the facts are these. The claimant lives in Jarrow and has an off-licence shop there and is a shopkeeper. He had an acquaintance called Gurdev Singh Bassra. His son is called Inderjit Singh Bassra. They also knew the defendant, Santokh Singh. Santokh, with his son Harjit, ran an off-licence at 30 Overton Road in Leicester. Gurdev, according to the claimant, was a go-between who introduced the claimant to the defendant, because the claimant was interested in purchasing a twenty-year lease in respect of the defendant's shop and buying the goodwill and the stock. There was some talk of either Gurdev or, more likely, Inderjit acting as the claimant's manager, but the claimant says he was to be the purchaser of the assignment of the lease; he was to be the owner of the business. But as he was a licence holder for the sale of alcohol in Jarrow, he would need a manager and that manager would have to have the licence in Leicester from the Leicester Justices. He says that he entered into an agreement on 28th June [1997] with the defendant that he should have the assignment of the lease. Following that, he took steps to ascertain the viability of the business and paid in three tranches the sums totalling the claim.

The defendant's account is that he was approached by Gurdev Singh Bassra, who said that he wished to purchase the goodwill and take a lease of six years from the defendant, so that his son, Inderjit, could run the business. The defendant said he had no business dealings whatsoever with the claimant, he scarcely knew him and was taken completely by surprise when the claim was launched. It is not absolutely clear what happened, save this, that no lease was ever assigned to the claimant. A lease appears to have been prepared in the term of six years in favour of Inderjit, but it is by no means clear that the defendant received any payment from Inderjit and, in due course, the property was repossessed and the defendant, having received the monies from the claimant, is also in possession of the shop and its business."

4. For clarity it should be said that the lease which appears from the correspondence (though not from the documents) to have been executed to Inderjit was a lease at no premium, but at a rent of £6,000 a year. It was not assigned to him but was executed for the purposes of the present arrangement. Nothing was therefore paid for it. All the payment was for the stock and the goodwill of the business.
5. At the mid-point of his judgment the judge said:

"Now, I have to ask myself: on the balance of probabilities, did the defendant receive the money?"

6. Towards the conclusion of his judgment he reached the following findings:

"In the end, I greatly prefer the evidence of the claimant where it is in conflict with that of the defendant's and, as this case turns really on questions of fact, it follows that I find the facts in the way they have been described by the claimant. At all material times, the claimant believed he was about to purchase the lease. He had personal dealings face to face with Santokh, who knew exactly who he was, where he came from and why he was there in Leicester. Santokh, I find, knew that Chinda was the person who was going to buy the business. I find that he paid all the monies he said he did and that, on the balance of probabilities, through solicitors, all those monies, including the £3,147.69 found their way to the defendant, Santokh. I find that the agreement was entered into orally on 28th June in exactly the way the claimant has described, and that Santokh induced those payments through the promise that the lease should be made out in the name of the claimant, and he made that promise and that inducement took place on 28th June."

7. The judge then turned to the question of restitution. He had posed this question earlier in his judgment:

"The question is: why is it not unjust for the defendant to retain those monies and indeed the business?"

8. At a much earlier point in the judgment the judge had held as follows:

".... on 8th September, the claimant saw that the draft lease was in the name of Inderjit and not himself. He saw this at the offices of Mr Parmar, the solicitor, who gave evidence. He said that his name ought to be on the lease. As I understand his evidence and that of Mr Parmar, he did not say that his should be the only name on the lease, but that his name ought to be there and Mr Parmar said not; that was not his instruction. Notwithstanding that, the claimant handed over the first cheque, which would make its way in due course to the defendant through solicitors, of £12,500. Indeed, on 15th September, he, the claimant, had a telephone conversation with Mr Parmar in which Mr Parmar said that his name was not on the lease; he could not put it on, but he added that the claimant must sort it out with the others to avoid he, Mr Parmar, having a conflict of interest. It does appear that is what the claimant tried to do, sort it out with the others."

9. When considering the question of restitution, the judge also will have had in mind his earlier finding to this effect:

"He [the claimant] says all the way through that he had personal face to face dealings with Santokh Singh, and indeed with his wife, and indeed with Harjit, Santokh's son; and that he went with Harjit to the protection order proceedings in front of the Licensing Justices and, at the appropriate time, when invited by the solicitor, he stood up not as the prospective licensee but as the purchaser of the business, and that Santokh stood up as the vendor of the business."

10. In the light of the judge's conclusions, it is clear that that was among the claimant's evidence which he accepted. On the next page the judge said:

"I find it quite unbelievable that a man should travel all the way from Jarrow to Leicester, thinking that he was the purchaser of the business -- and, clearly, he did think he was the purchaser, because he said that to Mr Parmar -- that he would sit in the back room and not be introduced with some explanation of where he came from and why he was there to the vendor and to the vendor's son, who was present."

11. It is already evident that the defendant had put up an entirely contradictory story.
12. In relation to restitution, the judge concluded:

"I find it would be unjust for the defendant to retain the sum of £27,647.69 paid to him by the claimant as the result of being induced into thinking that he was going to take a lease of twenty years on that property and that he was buying the stock and goodwill of the business on that understanding."

13. Mr Rory Clarke, who appeared today (though not below) for the defendant/appellant submits that this conclusion of Judge Orrell omits at least three things which it was his obligation to consider. First, on 8 September (that was before he had paid the bulk of the money) the claimant had become well aware that the draft transfer was in Inderjit's name and not in his own. Secondly, in the two and more years after September 1997, the claimant seemed untroubled by the fact that he was getting no return on the business he claimed to have bought. All that Inderjit had apparently done was pocket whatever proceeds of the off-licence came his way and pay a little rent, but by the end of 1999 the lease had been forfeited by the defendant. Third, if restitution were to be ordered, the defendant would have parted first with his off-licence business and stock, and then with the money he had received for it.
14. The difficulty with these points, attractive and interesting as they are, is that none of them was argued below. Moreover, it was not by oversight that they were not argued. It was because the defendant's case was not that the return of the money would be unjust, but that the entire case against him was a fabrication by a man he had never met or dealt with, because his only dealing had been with Inderjit.
15. The issues before the judge, as Mr Hardwick (who appeared below) has told us without dissent from Mr Clarke, were these: First, had the three lots of money been received by the defendant from the claimant? Secondly, if they had been, in the circumstances in which the defendant had received the money, ought he to retain it? This involved three sub-questions:

(a)had the claimant and the defendant ever met at all?

(b)had they reached any agreement on 28 June?

(c)were there any circumstances making it unjust that the defendant should repay the money?

16. The first question, and (a) and (b) of the second question were all answered by the judge in the claimant's favour, as I have already indicated.
17. Before us, and accepting that this is so, Mr Clarke has sought to make a fresh start, accepting all the adverse fact findings and seeking ingeniously and attractively to erect a new case upon the ruins of the old one. I do not say that this can never be done, but here it is by no means clear what the judge would have decided if these points had been put to him put to him. Thus, in relation to the first of Mr Clarke's new points, the judge did not in his fact-finding overlook the matter. He said:

"It is also pointed out that at a comparatively early stage, on 8th September, the claimant saw that the draft lease was in the name of Inderjit and not himself."

18. The passage continues as I have already quoted it earlier in this judgment.
19. Had the judge returned to this in relation to the question of restitution, he would have had to decide whether, for example, the defendant had been innocently drawn into somebody else's machination or had been, as the claimant felt, party to a fraud on the claimant. He would also have had to decide whether the claimant had acquiesced by neglecting his own interests or had been actively gulled into thinking that his interests were being properly taken care of.
20. In relation to Mr Clarke's second new argument, Mr Hardwick is able to point out that long before December 1999 the claimant had complained, first of all orally to the defendant and then to the Office for the Supervision of Solicitors, about Mr Parmar's role. He had then sued Inderjit in effect as trustee, but that action had run into the sand when the lease was forfeited. He had then sued the present defendant. All of this would have had to be evaluated.
21. As to Mr Clarke's third new point, the possibility that restitution would operate oppressively on the defendant, the defendant had largely cut off his own retreat by denying any legal relationship at all with the claimant. No doubt there might have been a good deal to say about the hardship of parting first with the stock and the business and then with the money if the point had been taken. Once again, it was not, and for intelligible reasons.
22. My reluctance, which by now will be apparent, to give this case a new lease of life is not, I stress, based on technical questions of what was pleaded and what was not. The principle that a party must bring his entire case forward at the first reasonable opportunity, even if that case is couched in the alternative, is an important principle of substantive justice. Beyond this, under the new Civil Procedure Rules' regime, this court can and should look at the question of cost and proportionality. There are already the costs of a two-day hearing in the Derby County Court to be paid. Given the contested character of the new points there is, in my judgment, no way in which we could dispose of them here in the defendant's favour, as Mr Clarke has optimistically invited us to do. Unless we were prepared -- and I certainly would not be -- to rob the claimant of the findings so far made in his favour by the County Court judge by ordering a complete retrial, the new issue would have to go back to His Honour Judge Orrell for hearing perhaps eighteen months after he tried the case. He would then have the invidious task of re-opening his own conclusion and deciding whether to admit further evidence before re-fashioning his conclusion. The total costs by then would almost certainly exceed the sum at issue, possibly by a considerable margin.
23. In deciding whether to allow this new set of arguments to be advanced we are, in my view, entitled to consider such consequences. They would, in my view, entail a very serious risk of fresh injustice to which this court should not be a party.
24. For all these reasons I would dismiss this appeal. I would hold that whether or not these were in theory viable issues at trial, having been left on one side because of the way the defence was run at trial, it would be wrong and unjust to allow them to be raised now.
25. LORD JUSTICE WALLER: I agree entirely with the judgment of my Lord for the reasons he gives, but in deference to the fact that powerful arguments were put forward by Mr Clarke, and indeed in response by Mr Hardwick, I will say a word or two of my own.
26. There seemed to me, at least at first, some force in Mr Clarke's starting point so far as the appellant is concerned, that the judge's conclusion at page 12 could not stand with the finding on page 3. Indeed, at first, it seemed to me that there was some force in the further points he made about it being unfair to order repayment. Those were the points adumbrated by my Lord, which in brief were that the claimant knew on 8 September that the lease was to be in the name of Inderjit, that he did nothing over a period of time while the property was occupied by Inderjit, and that by being ordered to repay he had both lost the business and was now being ordered to re-pay the money. As was clear from the judgment, and as Mr Clarke submitted, those were points which were not dealt with by the judge.
27. So far as the judge's finding on page 12 is concerned, put simply it is the 8th September point, ie that the claimant knew from that time onwards that Inderjit was to be a party to the lease and therefore, says Mr Clarke, when the claimant paid over the money he could not be being induced to think that he was going to take the lease.
28. On reflection, I am not convinced that the judge was clearly wrong about that conclusion when one understands what in reality was the claimant's case. His case was that, although he knew that the lease was in the name of Inderjit, he was still of the view that he was entitled to be a party to the lease and that he was paying over the money because he had already paid part of the purchase price, and he was continuing to pay on that basis. Therefore my starting point is not that the judge must be wrong in that conclusion.
29. Furthermore, in my view, when one appreciates the reasons why the unfairness points are not dealt with by the judge in his judgment, it seems to me unfair that those points should be entitled to be taken now. One must examine how the case was run, as my Lord has done. When that is examined, one sees that the defendant here chose to run a case not on the basis that he admitted he had agreed to sell the property to the claimant and understood that his dealings with Inderjit were simply the mechanics for carrying that out, but he chose to run a case on the basis that he had never had any dealings with the claimant and in effect hardly knew who the claimant was. Even on that case it would have been possible to say in the alternative: "But if I did have an agreement with the claimant, and even if I did not transfer the goodwill and might prima facie be liable to return the money, it is unfair that I should have to repay it because of the three reasons already adumbrated".
30. Tactically it may have been difficult to run that alternative case because any recognition of the possibility that there had been an agreement made in June might have weakened the chance of the judge holding that there never was such an agreement.
31. But by not raising the points, never mind by a pleading but at all, it seems to me that the claimant was deprived of any opportunity of dealing with them by evidence or in any other way, and deprived of obtaining findings by the judge.
32. My Lord has already explained the sort of factors which would have had to have been the subject of evidence and the sort of matters on which the judge would have had to make findings. It seems to me that, having chosen to conduct the case in one way, the defendant should not be entitled to come to the Court of Appeal and put it another way when the findings of the judge might have been different if it had been raised in the court below.
33. Furthermore, in agreement with my Lord, even if one had contemplated that this was a case where a second bite of the cherry might have been possible, ie by returning the case to the judge and asking him to reconsider the matter, this is clearly a case which in my view, on principle, should not be returned to the judge. But even if I am wrong about principle, certainly the factors relating to proportionality, which my Lord has explained, suggest that it would be quite wrong to return the case to the judge and ask him to start looking at the matter again by reference to those points. Thus for these reasons also I agree that this appeal must be dismissed.
ORDER: Appeal dismissed; the appellant to pay the respondent's costs in the sum of £7,200.