England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION )
ON APPEAL FROM THE LINCOLN COUNTY COURT
(HIS HONOUR JUDGE ROGERS)

		Royal Courts of Justice Strand, London, WC2A 2LL
		24th October 2012

Lord Justice Davis:

1. This is an appeal from the order of HHJ Rogers, sitting in the Lincoln County Court dated 5 January 2012. By his order he ordered that the defendant, Troy Foods Limited, pay to the claimant, J W Grant and Co., the sum of £67,260 including interest, which represented the entirety of what the claimant, Grants, had sought by its amended claim. There is also an application on the part of Troy to adduce fresh evidence.
2. The decision in question was reached after a three-day trial. It essentially depended on the judge's assessment of the witnesses who gave evidence before him and of the documentary evidence adduced before him. The judge's conclusion followed from his factual findings, as set out in a detailed, thorough and articulate judgment. In the ordinary way, of course, an appellant may have difficulty in showing that a decision is wrong when it is based on the trial judge's assessment of such evidence. In the present case leave to appeal was granted by Pitchford LJ.
3. The appellant is represented at the hearing before us by Mr Pipe, who did not appear below. The respondent is represented by Mr Dignum, who did appear below.
4. The essential background can be stated, I think, in this way. Grants carry on a very large commercial vegetable growing operation near Boston in Lincolnshire. Troy is a company engaged in the food processing business, specialising in particular in prepared vegetables and salads with two sites in Leeds.
5. For a period of around three years between 2005 and 2008 Grants supplied vegetables (cabbages and so on) to Troy's two sites in Leeds. The vegetables would be taken from the farming operation in Boston by way of lorry, the drivers being employees of Grants. The driver principally concerned in this particular transaction was a Mr Thurlby, who died in early 2009. On occasion, when Mr Thurlby proved not to be available, another driver called Mr Potter would undertake the deliveries. The vegetables themselves would be packed in yellow or blue containers called Dolavs and normally there would be between 66 and 72 Dolavs per lorry delivery. These Dolavs were high quality stackable ventilated containers of appropriate strength and size. They were reusable and were valuable: each one, depending on size, could cost in the region of some £100. We were told that the Dolavs here were specifically designed for use in this particular contractual arrangement. It is not in dispute that the Dolavs employed in these deliveries were the property of Grants. The numbers involved were quite significant: the judge found that at any particular time there might be as many as 700 Dolavs "in play" in the business relationship.
6. When the supply arrangements ended in 2008, Grants were in dispute with Troy about Dolavs which Grants said Troy had not returned to them. Troy said that they had none of them. Troy denied any responsibility. Although the claim could be variously formulated in contract or conversion, Grants' claim was essentially based on conversion. It was the judge's ultimate conclusion that 87 Dolavs in number of one size and 582 in number of another size had not been returned by Troy: so that represented the vast majority of Dolavs used. Oral evidence for Grants was given at trial by Mr Potter, the driver; Mr Orrey, the then operations manager of Grants; and by Mr Grant, their managing director. Oral evidence for Troy was given by Mr Roberson, a director of Troy, and Mr Gallagher, who had been with Troy at the relevant time.
7. The judge assessed Grants' witnesses as essentially honest and truthful and he generally accepted their evidence. He found that during the business relationship there had been repeated shortfalls in returns of Dolavs by Troy to Grants. This had been attested to by Mr Orrey, who spoke of frequent complaints he had made and indeed of his having to undertake a site visit to Leeds because of his concerns. The judge accepted that position, as spoken to by Mr Orrey, who spoke also of the constant diminution in the number of Dolavs available.
8. Mr Orrey also spoke of the need for Grants to set up a cleaning machine to clean the Dolavs when eventually they were returned by Troy, because they were heavily soiled or had mayonnaise or the like in them. It was clear that Troy had regularly used Dolavs belonging to Grants for its own purposes.
9. Amongst other things, the judge found, in assessing that evidence, that Mr Orrey was aware of the Dolav problem and that Mr Grant himself had been concerned. The judge went on to say that the only possible complaint, as it seemed to the judge, that could be levelled against Mr Orrey is that he did not act sooner. The judge then went on to assess other aspects of his evidence and then in paragraph 26 said this:

"Mr Orrey's direct evidence as to the diminishing number of Dolavs is also convincing. They were not, I find, therefore, simply caught in the cycle but had been used from time to time on Mr Orrey's evidence by Troy and its employees for other purposes."

The judge then went on to assess Mr Grant's evidence, which he did so in favourable terms, describing him as an honest man and almost entirely accurate.

10. The judge dwelt on the question of delay before the complaint was formally raised and pursued and the judge then said this after further assessing the evidence :

"The delay, therefore, whilst unfortunate, does not significantly undermine the case in my judgment. I accept Mr Grant's direct evidence and take account of his deductive analysis, although of course the decision on that matter is ultimately mine. I reject any suggestion that he exaggerated the claim or dishonestly inflated it. There is no evidence, I find, that the Dolavs have been lost or stolen from Grants site.

29. Relying upon all of the evidence, therefore, called by the claimant I find that the raw documents, together with the lost control sheet, when taken alongside the direct evidence of Mr Potter and Mr Orrey demonstrate a gradual diminution of stock. That was as a result of Troy's failure to return the items promptly. The master sheet is, in my judgment, the best evidence of the precise numbers involved."

It will be necessary to deal in due course with this master sheet.

11. It should be added that the evidence was that the late Mr Thurlby was considered a thoroughly honest and decent man, albeit not particularly well educated or sophisticated in paperwork; likewise, it seems, Mr Potter. Certainly the judge rejected any suggestion that the drivers themselves had had anything to do with anything untoward happening to the Dolavs.
12. As the judge said, the evidence came not only from the oral testimony but also from the documents and the witnesses' analyses of those documents. One such document prepared by Grants was called at trial "the master control sheet" and that is the one the judge had mentioned in the passages already cited.
13. This was a five-page document purporting to be a manuscript record of deliveries and also including reference to Dolavs sent out and returned. In addition, there were available before the judge numerous delivery notes assembled in the court bundle, being delivery notes both of Grants and of Troy. The judge went through very fully the position relating to the documentation and how it came to be prepared.
14. Dealing specifically with the master control sheet, the judge amongst other things said this. In paragraph 15 he put it this way:

"The document itself, at its lowest, is simply an in and out ledger. It is quite scruffy, it is quite basic. The key to the case, however, is its reliability."

15. And then, after dealing with points about entries made by Mr Thurlby and others and reminding himself of the need to be cautious about the document given the absence of cross examination of a number of the individuals involved in preparing it, the judge said this at paragraph 17:

"As a matter of common sense I find that it is unlikely that this document is 100 per cent accurate. Human error in a busy office with other documents floating around means 100 per cent accuracy would be impossible. Messrs Grant and Orrey did not themselves make any of the original entries, but I accept their evidence as to the provenance of the document and I find that it was completely contemporaneous so far at least as the return of the Dolavs was entered when the lorry was back and unloaded, habitually by the lorry driver himself or by the fork lift operative unloading. The key question is reliability."

It may be noted that towards the end of the trial the judge permitted Grants to amend their Particulars of Claim to increase the number of Dolavs said to be missing; and that was done by reference to the master control sheet itself.

16. The judge then went on to consider carefully the details of the five-page master control sheet. He also summarised the oral evidence given with regard to it. He made clear that it was accepted that there were some endorsements on the sheet and some notes added after the event by Mr Grant, as indeed Mr Grant had accepted in evidence and as is recorded in the judge's judgment. As I have said, the judge found Mr Grant to be an honest and essentially accurate witness.
17. The judge then found the master control sheet, whilst obviously allowing for room for human error, to be a "reliable and near accurate contemporaneous document which does what it purports to do". He rejected in due course Troy's argument that the Dolavs must have been lost or stolen at Grants' site. The judge then went on to make his finding in paragraph 29 of his judgment as set out above.
18. Dealing with Troy's evidence, the judge found that Troy in effect regarded incoming Dolavs from a source other than its own operations as available to it to use for its own purposes if its own Dolavs were not available. He recorded Mr Roberson of Troy, in effect, conceding as much in his oral evidence. Mr Roberson also conceded that Troy itself had no system of monitoring the return of Dolavs other than its own. The judge found Troy's approach to other people's Dolavs to be "somewhat casual". As to Troy's own documents, the judge analysed them at some length. He gave one particular example, fully set out in his judgment, which showed, as he indicated, a highly suspicious entry, to put it at its lowest, indicating after-the-event adjustment to try and give advantage to Troy's case. There were other examples also. The judge said that overall he had no hesitation in finding that Grants' system of recording was more reliable and that Grants' entries on the documents and on the master sheet were to be preferred where there was disparity or inconsistency with Troy's documents.
19. His ultimate conclusion after assessing all the evidence was framed in this way at paragraph 41 of his judgment:

"Overall, therefore, I find that, if anything, the oral testimony and the documents produced by the defendant in the end came to support rather than undermine the claimant's case. In short I am satisfied that Grants stock of Dolavs for exclusive use of Troy did diminish over time because of Troy's failure to comply with its duties as bailee to return those goods. I am unable to find where they have ended up. That in the end does not matter; but they are not, I find, at Grants and they have not been disposed of by Mr Grant or anyone there. Accordingly, primary liability is established."

20. He then went on to assess the numbers involved and noted that in accepting Mr Grant's calculation he considered that Mr Grant had :

"...made allowances time and time again in favour of Troy when completing the schedule. If there was an area of doubt he gave the benefit of the doubt to Troy."

21. Notwithstanding these findings made by the judge after a thorough and careful appraisal of the oral and documentary evidence, Mr Pipe advances three grounds of appeal on behalf of Troy. The first, and described by Mr Pipe as the principal, ground is that the master control sheet could not properly be assessed as reliable. He emphasised that the judge himself had described its reliability as potentially "key" to the case. Mr Pipe's submission was that this was a wholly unreliable hearsay document, prepared at unknown times and by various unknown people, a number of whom are not available to be cross-examined, and when one of the major protagonists, that is to say Mr Thurlby, was dead. Further, Mr Pipe drew attention to a number of matters which he said told against the reliability of this master control sheet. He emphasised in particular the delay before this claim was properly raised and formulated and the very large numbers of Dolavs alleged to have gone missing; furthermore he drew attention to other aspects of the evidence, including certain concessions by Mr Potter in cross-examination as to inaccuracy of some of his entries on the master control sheet. Mr Pipe submitted that these matters gravely undermined the reliability properly to be attached to the master control sheet. He complained that the judge had failed to have proper regard to the considerations set out in section 4 of the Civil Evidence Act 1995 in assessing the matter. Those are the essential pointers of Mr Pipe's arguments, although he fully elaborated them.
22. In my view there is nothing in this point. No notice had been given by Troy itself seeking to challenge the authenticity of the master control sheet under CPR Part 32.19. It is true that no hearsay notice had itself been put in by Grants for this master control sheet as deployed at trial. But it was made clear, realistically, by counsel then appearing for Troy at trial that he took no point on that; and there is no doubt that the master control sheet was admissible as a document notwithstanding the dispute there might be as to the reliability and accuracy of its contents.
23. It is quite correct that the judge did not in terms refer to the provisions of the Civil Evidence Act 1995. But it is impossible to think that he did not have them in mind. What might be called the spirit of the provisions of that statute are fully reflected in aspects of the judge's judgment, not least in the way he directed himself in paragraph 7 of his judgment where he noted all the contentions made by counsel for Troy about the hearsay aspects of the document and the difficulties in gauging the evidence, lack of witnesses to be cross-examined and so on. The judge expressly reminded himself that he need to be "extremely cautious" in assessing the document. Overall, it is plain, to my way of thinking, that the judge properly directed himself in this regard: and thereafter it was a matter for him to evaluate just how reliable that document was and how much weight to give it set in the context of all the other evidence. In my view this ground has no sustainable force to it.
24. The second ground with respect is even more nebulous, and it may be that Mr Pipe was very realistic in relying solely on the written argument prepared by his predecessor on the point without seeking to amplify it in oral argument. It is said that the judge failed properly to apply the law of conversion or have proper regard to section 2(2) of the Torts (Interference with Goods) Act 1977.
25. Section 2(2) reads in these terms:

An action lies in conversion for loss or destruction of goods which a bailee has allowed to happen in breach of his duty to his bailor (that is to say it lies in a case which is not otherwise conversion, but would have been detinue before detinue was abolished)."

That subsection, with respect, gains no prizes for clear draftsmanship, but one can see what it means.

26. This point is unsustainable. The judge at the outset of his judgment expressly made reference to section 2 of the 1977 Act. As he noted, the claim could in fact have been put in a number of different ways, although he indicated that this was a claim properly to be characterised as conversion of goods by a bailee. He also reminded himself of relevant passages taken from well known text books such as Chitty on Contracts and Clerk and Lindsell on Torts in the context of bailment. In truth, the issue here was whether Troy as bailee had returned the Dolavs to Grants as was its duty to do. No suggestion that there were matters outside Troy's control or that any loss was not owing to its fault was raised. As the judge himself crisply said by reference to the pleaded case, the whole issue was whether the return of the Dolavs happened, yes or no. That really says it all. In my view this ground is not sustainable.
27. The third and final ground of appeal is an assertion that the judge was wrong to find the master control sheet a reliable document. In many ways this is simply a variation on the first ground. Although we were taken to a substantial number of points said to bear on this particular issue, it is quite clear that counsel for Troy at the hearing below had deployed all these points before the judge and it is plain that the judge had regard to them. The reality is that these were jury points, if it may be put that way. They were for the judge to assess as matters of fact.
28. Mr Pipe frankly acknowledged that this third ground really could have no further strength in the absence of reliance on his application for fresh evidence, and it is perhaps convenient at this stage to turn to this application, which one suspects may have been intended to be at the heart of this proposed appeal.
29. It has to be said that this application is made in the most unsatisfactory of circumstances. It was flagged up in the initial skeleton argument of counsel (not Mr Pipe) dated 26 January 2012. Yet, and in spite of intervening queries by the solicitors for Grants in the meantime, no application notice seeking to rely on fresh evidence was issued until 3 October 2012. Such explanation as has been given for this delay -- for example that certain employees of Troy had left its employment, that the solicitor in charge of the defence case had left the defendant's solicitors' employ, muddles as to evidence gathering and so on -- is wholly inadequate to explain so long a delay in total. Moreover the scale of the proposed fresh evidence filed, comprising several lengthy witness statements with exhibits, has given Grants scant chance to respond fully: although they have sought to do so by a further witness statement from Mr Grant and from a witness statement of the solicitor appearing for Grants at the trial.
30. The essence of this application perhaps can be put this way. At trial, and as included in the trial bundle, the master control sheet as relied upon by Grants was in the form of the copy exhibited to Mr Grant's first witness statement. That has come to be known as "Version 1". That document had been available to be inspected by Troy and its solicitors for several months before trial.
31. A few weeks before trial Troy's solicitors asked for the original of the master control sheet to be brought to court, although the solicitors did not ask to inspect it before then. This was duly done, and on the first day of trial Troy's legal team together, it would appear, with Mr Kempley, its managing director, inspected the original so produced. They then noticed straightaway what appeared to them to be differences between that and the Version 1, which had been exhibited to Mr Grant's witness statement and was in the trial bundle. The explanation given by Grants at the time was that the original photocopying had been poor and had failed to reproduce properly some of the entries. So a fresh photocopying exercise was undertaken at court and this was made available to the trial judge. That has come to be called Version 2.
32. It is undoubtedly the case, and as I have already mentioned, that Mr Grant was cross-examined to some extent on what were said to be his own markings or figures on the master control sheet as produced in Version 1: and indeed he had accepted that he had in some respects made his own notations on the master control sheet when making his analysis.
33. In his written argument Mr Pipe had baldly asserted that Version 2 was "demonstrably different from Version 1". If that was so, then of course it was open to trial counsel to cross-examine accordingly. But in the result, before us Mr Pipe withdrew that assertion and he accepted that Version 1 could simply be taken to be a not very good copy of the control sheet as reflected in Version 2.
34. The trial then proceeded. As I understand it, Mr Kempley, the managing director, remained at the hearing throughout. After the trial was concluded and Troy had emphatically lost, there was, so we were told, a postmortem. At that stage, so it is said, it then was realised that Troy itself had a further version of the master control sheet in its own possession. That has been styled Version 3. In the light of the evidence recently filed, it is not in dispute that, when the dispute first broke out, Mr Grant himself had visited Troy's premises on two occasions during 2009 and given Troy a copy of this master control sheet in this form (that is to say Version 3), this being at a time when he was trying to sort things out with Troy amicably. Mr Dams, an employee of Troy, in his latest witness statement, says he discussed that version of the control sheet (that is to say Version 3) with Mr Gallagher, a colleague of his, and then he put it in his desk at the time to be dealt with as and when needed.
35. That version (that is to say Version 3) unquestionably has on it a significant number of writings and notations which are not on Version 1 or Version 2. In his latest witness statement Mr Grant, in effect, explains it in this way. Before he undertook his visits to Troy he had made his own notations in pencil on the original of the master control sheet and then had photocopies taken for him to use when he visited Troy. He left those versions with Troy on those visits. When, thereafter, litigation loomed he thought that he should not have marked up the original control sheet as he had just because it was an original: so, as he said, he then erased most, although not all, of the markings which he had made.
36. Mr Grant put it in this way:

"After I had been to see Troy, I realised I probably should not have written directly onto the original control sheet and I rubbed most of my pencil markings out. I now appreciate that, having made the marks, I should not have rubbed them out. However at the time I thought nothing more of it and I did explain to the judge at trial that I had tried to conduct a reconciliation exercise in 2009, and I informed the Judge that I had made some entries …

10. I did not intend to mislead anyone by rubbing out my entries, and I think that is clearly shown by the fact that I gave Troy a photocopy of the control sheet in 2009 with those markings on."

37. In this present application to adduce fresh evidence, Troy seeks to attach the greatest significance to these alterations and notations made by Mr Grant. It has undertaken a sustained comparison of Version 3 with Versions 1 and 2. It acknowledges that in fact Version 3 in a number of respects seems significantly more favourable to Grants than Versions 1 and 2, and so to that extent it benefited Troy that Grants did not seek to rely on Version 3 at trial. Indeed that would perhaps accord with the trial judge's own assessment, albeit in ignorance of Version 3, that Mr Grant had always sought to give Troy the benefit of the doubt where there was doubt.
38. But what Troy says is that the notations on Version 3 indicate that Mr Grant, and perhaps others as well, had not simply made comments but also added actual data or removed actual data or altered actual data; and that such changes and erasures of changes, it is suggested, showed doubt in the mind of Grants as to the accuracy of the master control sheet and generally cast real doubt on the reliability or credibility which could be given to the master control sheet itself, which Troy emphasises the judge himself had described as "key". But said that this all was not known to the trial judge and thus had not been explored in cross-examination with Mr Grant.
39. It is of course still conventional and appropriate to take account of the three criteria set out in the well-known case of Ladd v Marshall [1952] 1 WLR 1489 in assessing whether or not it is just to accede to an application to adduce fresh evidence on appeal. These criteria of course are not specifically stipulated for by CPR Part 52.11. But it is nevertheless generally accepted that it is very helpful to have regard to the criteria set out in Ladd v Marshall. Of course the court always must, in any event, have regard to the overriding objective.
40. The criteria can be framed in these ways: first that the fresh evidence could not have been obtained with reasonable diligence for use at trial; secondly that the proposed fresh evidence is such that, if given, it would probably have had an important influence on the result; and thirdly that the fresh evidence is, putting it shortly, capable of belief.
41. In my view Troy simply cannot satisfy the first criterion. It is not Grants which at the time of these proceedings had this document in their possession, that is to say Version 3, it was Troy itself, Troy having been given that document on two occasions by Mr Grant. Moreover Troy itself had considered Version 3 at the relevant times. Mr Kempley, in paragraph 11 of his witness statement of 24 September 2012, says this :

"At or around the date on which Grants subsequently issued proceedings, I started to review Version 3 which I understand Mr Grant had passed to Colin Dams who in turn had shown it to David Gallagher. The review involved me, my fellow director Lyndsey Ibbetson and Ian Roberson. We looked at Version 3 and Troy's delivery tickets (which recorded dolavs received and returned) and tried to reconcile both records. Where Troy did not have a record of dolavs received and returned, I used information on Version 3 to fill the gaps."

42. It is, to my mind, quite extraordinary and wholly unsatisfactorily explained as to why, if this Version 3 was indeed so important to Troy as is now said, that Troy did not itself adduce that version at trial. We were told that Troy had sought to disclose that document in somewhat generalised language as part of its standard disclosure list and had simply taken it to be the same as the document which Grants itself had disclosed by a generalised standard form of description in Grants' own list. Grants themselves, it might be added, had not sought to inspect such document as listed by Troy.
43. The explanation now given on behalf of Troy is that Troy had "assumed" that Version 1 (that is to say the version as disclosed by Grants and exhibited to Mr Grant's witness statement) was the same as Version 3, which was of course in Troy's possession. This really is remarkable. Troy had been sufficiently alive to the potential importance of the master control sheet to consider the implications of the accuracy of Version 1 and to insist on the original being brought to court at the day of trial. Further, when they inspected it on the first day of trial in the presence of Mr Kempley it was assessed that Version 1 was not necessarily the same as Version 2: as indeed transpired to so. But Troy itself had in its own possession Version 3, with far more differences on it, including, although not restricted to, Mr Grant's extensive pencilled manuscript notations. Even a cursory perusal shows that this Version 3 has a significant amount on it which simply is not on Version 1. Nevertheless the explanation given is that Troy as it is said "not unreasonably had assumed" that Version 3 and Version 1 had been the same. I do not regard that as an acceptable explanation.
44. Indeed what is said in part on the point in the witness statement of Mr Laycock, solicitor for Troy, is this:

"In summary, we did not identify that Version 1 was not the same version which Troy had obtained from Grant in the summer of 2009 and on 19^th October 2009, because...

b) The contents of the first two pages of versions 1 and 3 are almost identical (but for the asterisks on version 3) reinforcing our belief, when considering the statement and exhibits of Mr Grant dated 30th September 2011, that they were in fact the same document."

45. That language connotes that the matter was in fact considered at the time. But it should be emphasised that the two versions are demonstrably different. It is almost ludicrous to say that reliance was placed on pages 1 and 2 being the same. In fact there were differences even there, but then one only has to look at pages 3, 4 and 5 to see the very pronounced differences between Version 3 and Version 1, not least in all the manuscript annotations of Mr Grant contained on Version 3.
46. Mr Pipe, in the course of his argument, rather changed tack from the way in which he had put it in his written argument and suggested that Grants had been at fault in not disclosing in their disclosure list that they once had had Version 3 in their possession. I very much doubt whether such refinements as to listing documents formerly in the possession of parties get into standard disclosure in county court actions. But even if it can be said that it should have been disclosed by Grants as a document, once in their possession it makes no difference: because it is quite plain that Troy throughout were operating on the footing of their assumption that the documents were one and the same.
47. In my view given all those circumstances there has been, I regret to say no reasonable diligence on the part of Troy. To the contrary. Indeed if Mr Pipe's point were a good one, then that would on the face of it seem to require an order for a retrial. It has to be asked whether so unpalatable a consequence, especially when costs presumably are probably already way out of proportion to what is at stake, can justify a relaxation of the application of the first criterion of Ladd v Marshall.   In my view no relaxation of that criterion is called for in this case; indeed quite the contrary. I think it would be contrary to the overriding objective, moreover, to permit this application to succeed.
48. I might add that I am by no means necessarily to be taken as accepting Mr Pipe's further argument that this new version (Version 3) would probably have had an important influence on the outcome of the trial. Possibly it might have had some influence on the outcome: but that is not the test. Version 3 in a number of respects, as previously indicated, had points which could be deployed to favour Grants themselves. Further the fact of alterations or at least annotations had already been explored to some limited extent with Mr Grant at trial. It is not necessary or appropriate to express a concluded view on this point. All I would indicate is that in my view Mr Pipe might well have had significant problems on the second criterion of Ladd v Marshall  as well.
49. Accordingly, and as previously indicated by the court earlier in the hearing, I would unhesitatingly refuse this application to adduce fresh evidence. The short point is that the failure to produce Version 3 at trial was due to the default of Troy itself: quite simply because it now seeks to rely on a document which at all relevant times before and during the trial was in its own possession. It would not be just for Troy to rely on it now.
50. So in conclusion I would for those reasons refuse this application to adduce fresh evidence and I would dismiss the appeal.

Sir Andrew Morritt:

51. I agree.

Lord Justice Longmore:

52. I also agree.

Order: Application to adduce fresh evidence refused; appeal dismissed