England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(MR JUSTICE EADY)

		Royal Courts of Justice Strand, London, WC2A 2LL
		9 December 2011

Lord Justice Richards:

1. On 24 November Sir Richard Buxton, on consideration of the papers, granted permission to appeal on two grounds against an order of Eady J by which he found that Cherrilow's claim in deceit against Mr Butler-Creagh had succeeded and he entered judgment for Cherrilow in the sum of over £7 million. The application for permission was dealt with at the request of the applicant, Mr Butler-Creagh, on an expedited basis and Sir Richard's order was made without sight of a letter of 24 November from Cherrilow's solicitors setting out extensive Jolly v Jay submissions as to why permission should not be granted. They included submissions that the application for permission contained material inaccuracies. Following receipt of Sir Richard's order, Cherrilow's solicitors wrote a further letter dated 1 December in which they focussed their attention on the second ground of appeal and again argued that the threshold for the grant of permission had not been met and that the application for permission contained material inaccuracies. In particular, paragraph 9 of the letter made submissions in 12 sub-paragraphs as to the alleged inaccuracies.
2. This prompted Sir Richard to direct a hearing to be listed for this morning to consider "whether the permission to appeal granted on 25 November 2011 in relation to the second ground of appeal should be set aside". He stated in his directions that the hearing was to be a resumed consideration of the original application, that is in effect an extension of the paper stage of the process. He stated that, accordingly, in the event of the original permission being set aside it would still be open to the applicant to renew the application orally. He directed that Cherrilow attend the hearing.
3. Very unfortunately Sir Richard is unwell and is unable to hear the matter today, but he has indicated that it should, if at all possible, proceed; and in order to avoid a delay of uncertain length, and having regard to the indication he has given, I have taken the matter over for the purposes of today's hearing. I am of course at a relative disadvantage in that I do not know the considerations that carried particular weight with Sir Richard when granting permission to appeal on ground 2, but his directions give guidance by referring to two specific matters on which he said the court would in particular be assisted.
4. I do not intend to set out the background beyond saying that the relevant part of the case before Eady J concerned Cherrilow's claim that it was induced by Mr Butler-Creagh's fraud to purchase a property known as Fawley Court, on the basis of dishonest representations as to its value and development potential. Cherrilow was a company set up by a Mrs Hersham as the vehicle for the purchase. The relevant dealings took place principally between Mrs Hersham and Mr Butler-Creagh.
5. The section of Eady J's judgment relating to the quantification of loss runs from paragraph 103 to paragraph 128. It deals first with the difference between the sale price and the value of Fawley Court, which is the subject of ground 1 and with which I am not here concerned. It then deals with Cherrilow's consequential loss, which is the subject of ground 2. It is contended in ground 2 that the judge was wrong to accept the figures he did and that his decision to do so constituted a serious procedural irregularity. The relevant part of the applicant's original skeleton argument runs from paragraphs 59 to 68.
6. As to other material before me, in addition to the files lodged in support of the application for permission, I should mention in particular the letters of 24 November and 1 December from Cherrilow's solicitors and subsequent correspondence. By an email of 5 December the applicant's solicitors requested Cherrilow's solicitors to provide copies of various documents. That relates to an issue to which I will come in a moment. That led to a reply of 6 December from Cherrilow's solicitors making further detailed submissions. There is a further letter of today's date from Cherrilow's solicitors repeating earlier submissions and adding to them.
7. I have also received a supplemental skeleton argument from Mr Weale on behalf of the applicant, and he has made oral submission today in support of the applicant's case. I have heard, in addition, oral submissions from Mr Auld QC on behalf of Cherrilow. He has taken me back to the grounds of appeal and has contrasted the actual grounds with what one finds in the original supplemental skeleton argument on behalf of the applicant. He has also taken me to the judgment of Eady J, making comments in the process on what is said to have been the highly tactical way in which the trial was conducted on the applicant's behalf and what is submitted to be itself a tactical appeal designed to delay payment of monies found due to Cherrilow.
8. Before I turn to specific issues I think it right to stress that the court will be very slow to set aside a grant of permission in whole or in part. By CPR 52.9(2) it will exercise the power to do so only where there is a compelling reason. It seems to me that the only proper basis upon which permission could be set aside in this case is if the applicant's submissions did contain material inaccuracies capable of misleading the court in reaching the decision whether to grant permission to appeal. Although that has been the principal focus of the attack mounted by Cherrilow, there is a wider point that Mr Auld has pressed upon me, that because of the fact that, through no fault of their own, the Cherrilow's solicitors' Jolly v Jay submissions were not received in time for the original submission on the grant of permission, one should adopt a more relaxed approach and review the question of permission as a whole, taking into account for that purpose whether there is a real prospect of success.
9. A concern I have about the way the written and oral submissions have developed is that there is a very serious risk of getting caught up in the substance of the appeal itself. Plainly for a set-aside application to become a dummy run of the issues on the appeal is unacceptable, and it is unacceptable in any event for it to be in itself a substantial piece of satellite litigation. I do not think that I should be concerned at this stage, or that Sir Richard's directions require me to be concerned at this stage, with a re-run of arguments as to whether ground 2 has a real prospect of success. Sir Richard concluded that it did. I am concerned only with whether the material placed before him by the applicant, in particular the original skeleton argument, contained material inaccuracies that could have caused him to be materially misled when reaching the decision he did. I do not accept that I should adopt a different approach because, through no fault of their own, Cherrilow's submissions were received by the court only after the decision on permission was taken.
10. In the circumstances it seems to me entirely appropriate to concentrate attention on the two matters specifically identified by Sir Richard in his directions. The first concerns paragraph 62.14 of the applicant's original skeleton argument. Referring to a schedule of loss which Cherrilow adduced on the last day of the hearing (a point mentioned by the judge at paragraph 112 of his judgment), the skeleton states,

"Of greater concern, the schedule asserted (at paragraph 9) that Cherrilow had 'disclosed three files of invoices and documents evidencing the costs incurred suggesting that the losses were supported by documentary evidence' when that was not in fact the case."

11. In his directions Sir Richard says this,

"It is asserted in para 62.14 of the skeleton argument that the statement as to disclosure in para 9 of Cherrilow's schedule of 28 July 2011 was untrue. The court proceeded on that basis, in the context of the applicant's case [skeleton paragraph 68] that the judge's acceptance of the figures in the schedule amounted to a serious procedural irregularity. Submissions are required as to the matters set out in paragraphs 9 (2)-(4) of Messrs Grosvenor Law's letter of 1 December 2011."

12. The matters set out in those sub-paragraphs of the letter of 1 December from Cherrilow's solicitors begin with the assertion that the applicant has falsely claimed in the skeleton argument that Cherrilow provided no disclosure to support the claim for consequential losses. Reference is made to Cherrilow's disclosure statement, which refers to a large number of documents which are said to have been relevant to the issue and which it is said were provided in hard copy to the applicant's solicitors, although the applicant's solicitors chose to include only some of them in the trial bundle.
13. Mr Weale's supplementary skeleton argument on this issue begins with a correction to paragraph 62.14 of the original skeleton argument. The italicised words "suggesting that the losses were supported by documentary evidence" in that paragraph should not have been italicised and should not have been included within the internal quotation. They were part of the submission being made in paragraph 62.14 about a passage in the schedule. Mr Weale has apologised for the confusion caused by the typographical error. For my part I do not think that anything turns on the error. The bundles contain the schedule from which the quoted passage was taken and the wording of the schedule is set out in the original material. In any event, Sir Richard could not, in my view, have been misled simply by the particular error to which I have referred.
14. Much more important is whether what was said about the nature or extent of disclosure itself was materially inaccurate. As to that, Mr Weale has made clear that his case is not that Cherrilow failed to disclose the files of documents referred to at paragraph 9 of the letter of 1 December, but that the documents disclosed failed to substantiate the figures alleged by Cherrilow in its schedule of loss. He has gone on to elaborate the point by a further analysis of what happened at the trial, taking me in the course of his submissions to parts of the relevant material. He concludes this part of his supplementary skeleton argument with the submission that the judge was wrong in the circumstances to have had any regard to Cherrilow's disclosure of what is submitted to have been "a general assortment of unexplained invoices".
15. Cherrilow's response to all of this can be taken first from the letter of 9 December. There is a summary at paragraphs 7-10 of that letter, from which I think it right to quote because it sets the scene for the whole of Cherrilow's approach to the issue under ground 2:

"7 There has been no procedural irregularity or unfairness whatsoever. On the contrary, Cherrilow's claim for consequential loss was pleaded and dealt with properly in Mrs Hersham's witness statement. The items of loss and specific figures were clearly identified. Full and very substantial disclosure was given, including hundreds of documents relating to the vast expenditure at Fawley Court. Mrs Hersham gave evidence on oath at trial in accordance with her witness statement and the applicant's counsel specifically took Mrs Hersham to the relevant part of her witness statement and expressly said he would return to deal with it in detail later but then, for reasons which have never been explained, chose not to do so. Mr Sewell who had signed a statement of truth on the particulars of claim also gave evidence on oath; the applicant chose not to cross-examine him about this aspect either.

8 The suggestion that the applicant was unable to cross-examine Mrs Hersham about these matters is complete nonsense. There were literally hundreds of documents in the trial bundles and many more which the applicant's solicitors had chosen not to put into the court bundles to which the witnesses could have been taken. It is perfectly clear that the applicant, for his own tactical purposes, chose not to cross-examine.

9 Cherrilow produced a schedule as part of closing submissions which removed some of the consequential loss claims. It did so in the circumstances where the evidence on oath as to these aspects was unchallenged. The applicant then asked the learned judge for permission to put in further written submissions after the trial. This was granted and the applicant did so. No application was made to recall Mrs Hersham, even though she was there throughout. No application was made for further disclosure. There was no unfairness whatsoever. The position was entirely the applicant's own making.

10 Moreover, despite the careful and detailed correspondence from the respondents, including most recently the respondent's letter dated 6 December 2011 inviting the applicant to confirm the correct position with the Court of Appeal, the applicants completely failed to deal with the content of this correspondence or to deal properly or at all with the matters raised in the Court of Appeal's directions. The applicant has now expressly or impliedly admitted that its initial presentation to the Court of Appeal was false but has not corrected the inaccuracies and continues to try to advance this alleged ground on a false or misleading basis."

16. The letter then contains in paragraphs 20 and following further specific submissions about the disclosure issues where it is said, amongst other things, that the applicant's original skeleton argument at paragraph 62.14 and also 62.6 was simply incorrect and that the error was fundamental to the ground of appeal.
17. Although Mr Auld in his submissions put some of these points in a slightly different way, I think that the passages in the letter to which I have referred do provide the substance of what is said on Cherrilow's behalf in response to Mr Weale's submissions on this part of the case.
18. The conclusion I reach on it is that in my view Sir Richard cannot have been materially misled about the nature of the case being advanced by the applicant on the question of disclosure. On reading the original skeleton argument and the material referred to in it, coupled with the relevant passage of the judgment of Eady J, it is tolerably clear to my mind that the point was not that there had been no disclosure but that the documents disclosed did not support the losses claimed. Cherrilow of course takes issue with that contention and advances the wider submissions to which I have referred about the lack of substance to the applicant's case. It seems to me that the arguments as to whether the documents do or do not support the losses claimed is not one for determination on an application to set aside or what is equivalent to an application to set aside. They are for the substantive appeal. There is plainly a fundamental divide between the parties on this and Cherrilow has the judge's judgment in its favour. The point is not one for summary resolution at a hearing of the nature I am conducting this morning.
19. The other matter specifically identified by Sir Richard in his directions concerns paragraph 67 of the applicant's original skeleton argument which reads as follows:

"The claimant contends that the above finding was extraordinary in circumstances in which: (i) there was no documentary evidence from Mr Butler-Creagh to challenge; (ii) Ms Hersham qualified the figures she referred to both in her statement and in oral testimony and that she should not be held to those figures until the KPMG report was adduced (iii) the judge held that Mr Butler-Creagh was not given an opportunity to test the figures referred to in Cherrilow's revised schedule."

20. That was picked up by Sir Richard as follows:

"The complaint at paragraph 67.3 of the skeleton that the judge had held that Mr Butler-Creagh had had no opportunity to test the figures in the schedule appears to relate to the judge's observation in paragraph 112 of the judgment as to the position at the end of the oral process. Is it contended that the process thereafter ordered by the judge equally gave Mr Butler-Creagh no opportunity to test the figures."

21. The way Mr Weale puts the point in his supplemental skeleton argument and oral submissions is, in short, that if Cherrilow had adduced at trial any documentary evidence in support of the loss alleged in Mrs Hersham's witness statement, such documents would have been subjected to very close scrutiny. However, it was only after the evidence and submissions had closed that the schedule of loss was presented. Thus it was, as Eady J said at paragraph 112 of his judgment, that the applicant did not have the opportunity to test or challenge the schedule; that is, as Mr Weale has explained, that the applicant was deprived the normal opportunity within the trial process to test the figures or the evidence relied on. The exchange of written submissions that took place following the presentation of Cherrilow's schedule of loss was no substitute. At that stage the applicant could do little more than point out the unsatisfactory manner in which the figures and material had been adduced by Cherrilow.
22. Those are the submissions made. They seem to me to be substantially in line with the approach in the original skeleton argument, although put somewhat more clearly.
23. The response to them on behalf of Cherrilow is to be found in the general passage that I have already read, from paragraphs 7 to 10 of the letter of 9 December and from Cherrilow's submissions, with further submissions at paragraphs 33 and following to the effect that the applicant's contention that there was a lack of opportunity or fair opportunity to test Cherrilow's case on loss is manifestly wrong. Indeed, as Mr Auld has put it in his submission today, it is preposterous to suggest that the applicant could not cross-examine on the issue of quantum. In his submission it was highly misleading of the applicant not to accept in the skeleton argument that in fact a deliberate decision was taken not to cross-examine.
24. Again, however, I am not persuaded that Sir Richard can have been materially misled by the applicant's original submissions as to how its case was put or as to the basis for it or as to what was said about the way events occurred at trial. Sir Richard himself indicated in his reasons for granting permission that the case might not be as straightforward as suggested in the skeleton argument and he referred to what the judge said at paragraphs 121 and 122 of the judgment as to possibly indicating why the complaints now made by the applicant were ill founded. Nonetheless he granted permission. The submissions I have read and heard on behalf of Cherrilow underline the difficulties that the applicant's case may face. However, the extent to which the applicant did in reality have an opportunity to test the figures referred to in Cherrilow's schedule, whether it deliberately forbore from taking such an opportunity, the significance of the opportunity that the judge gave for submissions to be made after the hearing, and whether overall the judge approached the matter fairly correctly, are all matters for the substantive appeal. The submissions advanced on Cherrilow's behalf do not seem to me to provide a sufficient ground for setting aside the grant of permission already made.
25. Accordingly, I do not think that I should take the exceptional course of setting aside the grant of permission on ground 2. Sir Richard's order of 24 November stands.

Order: Application granted.