England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CHANCERY DIVISION
Ms Susan Prevezer (sitting as a Deputy High Court Judge)
CH2011/0112

		Royal Courts of Justice Strand, London, WC2A 2LL
		15 June 2012

LORD JUSTICE LEWISON :

1. On 29 September 2011 Ms Susan Prevezer QC, sitting as a deputy judge of the Chancery Division, dismissed an appeal from Master Bragge giving summary judgment against Messrs Anthony and Terence Page, the claimants, on the ground that their claim was statute barred and therefore bound to fail. With the permission of Lloyd LJ Messrs Page appeal.
2. No facts have yet been found, so the following narrative summarises what is to be assumed for the purposes of this appeal. At the relevant time Mr Anthony Page ("Mr Page") was the executor of his late parents' estates following their deaths in 1997. Their principal asset had been their home at 262 Kidmore Road, Caversham. In about early 1998 Mr Page retained Hewetts, a firm of solicitors, to advise and act for him in the administration of the estates. His case was handled by Mr Christopher Fuller, a legal executive employed by Hewetts. Mr Page owned some land immediately adjacent to 262 Kidmore Road. In about late 1998, Mr Page asked Mr Fuller to arrange for the marketing and sale of the property and his neighbouring land. Mr Fuller instructed Philip Baker, who were local estate agents.
3. Mr Fuller had his own business on the side, trading as Exnine Developments. It is some kind of property or development company, although whether it is actually incorporated or only a trading name, and exactly what its business is is unclear. At any rate, it has been treated for the purposes of this appeal as the alter ego of Mr Fuller. One of Mr Fuller's contacts was Sahana Enterprises Ltd ("Sahana"). At some stage Sahana made an offer to buy the property for £190,000, which was accepted on Mr Fuller's recommendation. On 17 February 1999 Sahana wrote to Mr Fuller in the following terms:

"Dear Chris

RE 284b KIDMORE ROAD READING (SITE 1)

262 KIDMORE ROAD READING (SITE 2)

Further to our recent meetings, I would confirm the terms agreed between Sahana Enterprises Limited and Exnine as follows:

1. Sahana had made an unconditional offer as follows via the Estate Agents of £190,000 to buy site 2 as it stands, which I understand has been accepted and legal matters are proceedings.

2. Once the purchase of site 2 has been completed, Sahana hereby irrecoverably agree to pay the sum of £5,000 to Mr Tony Page for a three month option on site 1 to purchase site 1 at its market value plus 15%.

3. In the event that Sahana obtain Planning Permission for three dwellings on site 2, then we confirm a joint venture profit of £6,000 will be paid to Exnine Developments, in the event that Sahana obtain Planning Permission for four units, the joint venture profit will be £10,000.

4. Sahana acknowledge the introduction of these two sites via Exnine Developments and confirm that the introduction fee will be paid at a rate of £5,000.00 in respect of each dwelling unit, for which Planning Consent is granted on sites 1 and 2. Such payment to be paid to Exnine Developments within twenty-eight days of the grant of such Planning Permission.

…

7. If Sahana sells the land before Planning Permission is obtained then we agree to pay Exnine Developments the sum of £10,000.00 within 28 days of completion.

8. If Sahana fail to obtain Planning Permission and sell the site on we agree to pay Exnine Developments 25% of the Nett profit within 28 Days of completion."

4. It is to be assumed (although it is disputed) that Mr Page was unaware at the time of this agreement between Mr Fuller and Sahana. Mr Page says that Mr Fuller recommended the offer; advised him that Sahana's offer was the best; advised him not to market the property any further, and not to pursue an enquiry from another developer and to accept Sahana's offer of £190,000. Mr Page accepted Mr Fuller's advice. Mr Fuller drafted a contract of sale of the property by the executor. Mr Fuller himself signed the contract on Mr Page's behalf and exchanged contracts for the sale of the property to Sahana for £190,000. The sale was completed on about 12 March 1999 and the purchase price was paid.
5. Later that year Mr Page and his family made enquiries; and were advised that the market price for the property was substantially more than £190,000 (probably about £350,000). They also heard rumours that Mr Fuller and Philip Baker 'had common interests in' Sahana. It took some time for Mr Page to make a formal complaint; but he complained to the Office for the Supervision of Solicitors ("the OSS") in November 2000. In his letter to the OSS Mr Page made the following allegations:

i) Mr Fuller was guilty of professional misconduct due to a conflict of interest because "he acted for me and someone else on related matters";

ii) He has been negligent "because he has not acted with my best interests at heart";

iii) Mr Fuller appointed Philip Baker to market 262 Kidmore Road. "We have since been advised that Mr Fuller and Philip Baker have common interests in the developer, Sahana Homes, who subsequently purchased the property";

iv) Sahana purchased the property for £190,000 but "we have since been advised … that the real value of the site was closer to £350,000."

6. It was not until November 2002 that the OSS put the complaints to Hewetts. Shortly after the complaint was put to Hewetts, on 5 December 2002 Mr Fuller wrote to Mr Page. He enclosed a cheque for £6,000 explaining that it was 'overage' due to Mr Page from Sahana pursuant to an agreement which he said he had made on Mr Page's behalf. He repeated this explanation in subsequent correspondence.
7. Eventually Mr Page received a copy of the agreement between Sahana and Mr Fuller under cover of a letter from the OSS which was sent to him on 30 January 2003. It is common ground that Mr Page must have read that letter by 5 February 2003, at the latest.
8. Some years later Mr Page (now joined by his brother as joint administrators of their parents' estates) began these proceedings. The claim form bears the date stamp 17 February 2009; but I will come back to the precise date on which the proceedings were begun for the purposes of the Limitation Act 1980.
9. The Particulars of Claim set out the facts I have summarised. Paragraph 9 of the Particulars of Claim alleges that the retainer of Hewetts and Mr Fuller contained implied terms to act with reasonable skill and care, and a tortious duty to like effect. Paragraph 10 alleged that they owed the estates fiduciary duties. Paragraph 13 alleged that:

"… in breach of the duties set out at paragraph 9 above and in breach of fiduciary duty … [Mr Fuller] … introduced Sahana … to 262 … in return for payment … as evidenced by a letter dated 17.2.99…"

10. Paragraph 15 alleged that:

"In further breach of the duties set out in paragraph 9 above and in breach of fiduciary duty, [Mr Fuller] recommended and advised Anthony Page that Sahana's offer was the best, not to market 262 any further, not to pursue an enquiry from another developer and to accept Sahana's offer of £190,000."

11. The Particulars of Claim go on to allege in paragraph 21 that:

i) Mr Fuller dishonestly assisted Mr Page to commit that breach of trust;

ii) Hewetts and Mr Fuller are accountable to the estates for such profits as Mr Fuller made from the sale of 262 Kidmore Road and

iii) Hewetts and Mr Fuller are liable to compensate the estates for the loss of the difference between £190,000 and the open market value of 262 Kidmore Road in about February 1999.

12. Paragraph 22 pleads that further or alternatively the defendants "were in breach of the duties set out at paragraph 9 above" and give particulars of the breaches. Then paragraph 24 alleges:

"As a result of those breaches of duty, the estate suffered loss and damage."

13. The first head of relief claimed is "an account of profits made by the Defendants from and as a result of their retainer by Anthony Page in about early 1998". There are additional claims for compensation for breach of fiduciary duty, compensation for dishonestly assisting in a breach of trust and common law damages.
14. The Master held that Mr Page's letter to the OSS showed that he knew enough to start time running "in respect of the breach of retainer/negligence claim… in other words at least the gist of the claim for damages for causing the property to be sold [at] an undervalue…"
15. Thus he held that time began to run for the purposes of those claims on about 23 November 2000; and his finding was upheld by the judge. She said (§ 33):

"As regards the common law claims, in my judgment the Master was correct in holding that the breach of retainer/negligence claim was known to the Claimants by or after 25 November 2000 and that both this claim and the breach of fiduciary duty claim are both statute barred. I agree with the Master, at Paragraph 14 of the Judgment, that the Claimants' letter to the OSS of 25 November 2000 shows that the Claimants knew sufficient facts to start time running in respect of these claims. At least the gist of the claim for damages for causing the Property to be sold at an undervalue appears to have been known to the Claimants by this date."

16. Despite Mr Platford's attempt to persuade us to the contrary, in my judgment there is no appeal about that concurrent finding of fact. It is not mentioned either in the grounds of appeal or in the skeleton argument. Mr Platford also argued that although the Master had dealt only with the common law claims (i.e. damages for breach of contract or negligence) the judge had impermissibly widened the scope of her finding to include fiduciary claims. It is possible that, as a matter of semantics, the judge (and indeed the Particulars of Claim) should have referred to "equitable" rather than "fiduciary" duties and claims, but the thrust of the Master's finding was clear. Mr Page knew sufficient about the sale at an undervalue to start time running in November 2000. It was that finding that the judge upheld. The Particulars of Claim rely on the same facts in support of the claims for breach of common law and equitable duties, in particular in relation to the advice given by Mr Fuller not to continue to market 262 Kidmore Road, and his advice to accept the Sahana offer.
17. In my judgment therefore, irrespective of the outcome of this appeal, those parts of the Particulars of Claim that rely on these claims must be struck out.
18. The Master held, and again his finding was upheld by the judge, that time began to run for the claim relating to the secret profit on 6 February 2003. There is no challenge to that concurrent finding either by way of appeal or by way of Respondent's Notice.
19. Section 23 of the Limitation Act 1980 ("the Act") provides;

"An action for an account shall not be brought after the expiration of any time limit under this Act which is applicable to the claim which is the basis of the duty to account."

20. The next question for us is when the action was "brought".
21. CPR Part 7.2 provides:

"(1) Proceedings are started when the court issues a claim form at the request of the claimant.

(2) A claim form is issued on the date entered on the form by the court."

22. CPR Part 7 is supplemented by a Practice Direction. PD 7 para 5 says:

"5.1 Proceedings are started when the court issues a claim form at the request of the claimant (see rule 7.2) but where the claim form as issued was received in the court office on a date earlier than the date on which it was issued by the court, the claim is 'brought' for the purposes of the Limitation Act 1980 and any other relevant statute on that earlier date.

5.2 The date on which the claim form was received by the court will be recorded by a date stamp either on the claim form held on the court file or on the letter that accompanied the claim form when it was received by the court.

5.3 An inquiry as to the date on which the claim form was received by the court should be directed to a court officer.

5.4 Parties proposing to start a claim which is approaching the expiry of the limitation period should recognise the potential importance of establishing the date the claim form was received by the court and should themselves make arrangements to record the date."

23. The evidence about when and how the claim was brought is principally that of Messrs Page's solicitor, Mr Last. His evidence is, in summary, as follows. He says that the drafting of the Claim Form and the Particulars of Claim was not completed until 3 December 2008, and that four bundles of documents were then sent to the Court by DX on that date. Mr Last did not personally take the documents to the DX box and his firm keeps no positive record of committal to the DX, but he says that if the documents had not been committed to the DX, they would have remained in the firm's offices, and they did not. Accordingly, he believes that the Claim Form and letter of request to issue were most probably received in the Court Office on Thursday 4 December 2008 and certainly no later than Friday 5 December 2008. However, the date shown on the Claim Form is 17 February 2009. Mr Last says that this is because the Claim Form and the Particulars of Claim were either lost or mislaid by the Court Office and a fresh Claim Form had to be sent to the Court for issue. Mr Last says that when he heard nothing from the Court about the documents he had put into the DX on 3 December, he made enquiries of the Court office. This was in mid January 2009, and the answer from the Court was that the Court had no trace of the documents. A check was then made with Mr Last's accounts department and it appeared that the cheque sent with the papers had never been presented. Accordingly, Mr Last's firm cancelled that cheque and issued a fresh cheque along with a further four bundles of documents. Those documents were copies of the documents sent on 3 December 2008, and the Court eventually sealed and issued the Claim on 17 February 2009. None of the missing documents have ever been returned to Mr Last's office, which Mr Last says would normally occur if documents are not delivered by the DX system.
24. The Master said (§ 48):

"In any event I am not satisfied on a balance of probabilities that the claim form did reach the Post Room (EB04/EB05) or the Chancery Registry; if it had reached the Registry then in particular the accompanying cheque would have been logged."

25. It is, in my judgment, plain that the Master applied the wrong test. The question was not whether he was satisfied on the balance of probabilities: the question was whether Messrs Pages had no real prospect of showing that the documents arrived at the court office. The Master also assumed that the systems that should have been followed were in fact followed. It is, alas, not unknown for the court to fail to follow the systems that should have been followed; and to mislay important documents.
26. The judge upheld the Master on this question. She was critical of an evidential gap in Messrs Page's case on this issue. She said (§ 44):

"There is a real `gap' in the evidence one would expect from the Claimants' solicitors in defence of a summary judgment application. Mr Last does not in his witness statement deal with the procedure by which the Claim Form was put in the DX (in particular, who would have done this, in circumstances where Mr Last says that it was not him), nor whether or not there is any record of documents logged by the firm. Indeed, Mr Last gives no evidence of any searches undertaken to find the documents. The Master carefully analysed the evidence that was before him- including the text of the Chancery Operations Manager's Note (set out at Paragraph 48) and rightly, in my view, concluded that it was unlikely that any loss of the document occurred in the Registry. The evidence put in by the Defendants was that the Chancery Registry had no record of receipt of any documents in relation to the Claim during December 2008, and I agree with Mr Stacey, that no good explanation has been given by the Claimants for the failure to inquire as to whether the Claim Form had been received by the Court. The Claimants were perilously close to the limitation deadline in December 2008, and it appears that no inquiry whatsoever was made for over 6 weeks from early December 2008 to mid January 2009, even though the sealed Claim Form had not been returned to the Claimants' solicitors and the solicitors' cheque had not been cashed. As mentioned above, the Practice Direction makes clear that the burden is on a claimant to ensure that the date of receipt of a Claim Form is established, and in this case, the Claimants' solicitors manifestly failed to do this."

27. These are all cogent matters for submission at trial. But this application is an application for summary judgment. On such an application the court must consider not merely the current state of the evidence but also what evidence might reasonably be expected to be adduced at trial. Mr Stacey says that this is no more than Micawberism. But it must not be forgotten that something did turn up for Mr Micawber, who by the end of David Copperfield had emigrated to Australia where he became a successful magistrate. On this application we must approach the question on the footing that there is a real prospect that the claimants will show that documents put into the DX were delivered at least as far as the court's post room, and perhaps as far as the Registry.
28. The main area of debate before the judge (as it had been before the Master) was whether "the claim form as issued" referred to in PD7 para 5.1 must be the same piece of paper as the piece of paper received in the court office within the statutory limitation period. Both the Master and the judge held that it must, with the consequence that Messrs Page could not rely on the "lost" claim form as bringing forward the date on which the action was brought.
29. In my judgment this was the wrong subject matter to debate. When an action is "brought" for the purpose of the Limitation Act 1980 is, in my judgment, a question of construction of the Act. It is not a question of construction of the CPR, let alone a question of construction of a Practice Direction. The CPR (and perhaps the Practice Direction) may inform the construction, but the question remains: what does the Act mean?
30. In Barnes v St Helens Metropolitan Borough Council [2006] EWCA Civ 1372 [2007] 1 WLR 879 Tuckey LJ (with whom Arden and Lloyd LJJ agreed) said:

"I start simply by looking at the words used in the statute and the Rules. I approach them by expecting to find the expiry of a limitation period fixed by reference to something which the claimant has to do, rather than something which someone else such as the court has to do. The time at which a claimant "brings" his claim form to the court with a request that it be issued is something he has to do; the time at which his request is complied with is not because it is done by the court and is something over which he has no real control. Put another way one act is unilateral and the other is transactional. Looked at in this way I do not agree with the judge or Mr Norman that in this context the verb "to bring" has the same meaning as the verb "to start". The 1980 Act can perfectly properly be construed so that in the context of the CPR a claim is brought when the claimant's request for the issue of a claim form (together with the court fee) is delivered to the court office. Paragraph 5 of the Practice Direction gives sensible guidance to ensure that the actual date of delivery is readily ascertainable by recording the date of receipt." (Emphasis added)

31. Tuckey LJ makes it clear that the legal question is the meaning of the word "brought" in the Limitation Act. The Practice Direction is no more than sensible guidance. In addition one must not forget that proceedings can be started on line, and that the Practice Direction cannot apply to such cases.
32. Taken literally, the ratio of Barnes v St Helens Metropolitan Borough Council is that once the claimant has delivered his request for the issue of a claim form to the court office, he has "brought" his action. If Mr Last's evidence is correct, Messrs Page did that in the present case.
33. However, literalism is not fashionable, so it is also necessary to consider the policy that underpins the decision. Tuckey LJ dealt with this too. He pointed out that this meant that a claimant had the full period of limitation within which to "bring" his claim; and that it would be unjust if he had to take the risk that the court would fail to process it in time. It does not seem to me that the reason why the court fails to process the request in time alters the justice of the case. If it is unjust for the claimant to take the risk that the court staff are on strike, it seems to me to be equally unjust for him to have to take the risk that a member of the court staff might erroneously put his request in the shredder or the confidential waste, or that his request is destroyed by flood or fire in the court office, or is taken in a burglary. Each of these might be reasons why the court failed to process the request in time. Essentially the construction of the Act that this court favoured in Barnes v St Helens Metropolitan Borough Council is based on risk allocation. The claimant's risk stops once he has delivered his request (accompanied by the claim form and fee) to the court office. PD 7 cannot, in my judgment, alter the correct construction of the Act.
34. This is not a new approach. In Aly v Aly (1 January 1984), which also concerned time limits in the context of limitation periods, Eveleigh LJ said:

"It would be indeed surprising and harsh if a party who had done all that was required of him, should find himself unable to obtain the assistance of the court because the court itself had failed in some matter of procedure. Furthermore, when the rules lay down a time limit which has to be observed by a party to the litigation, their aim is to achieve whatever particular purpose is in mind by controlling the action of the party, and where on the reading of the appropriate rule that seems to be its intention it would be quite ridiculous, as I see it, to make the party responsible for anything that has subsequently to be done by the court. "

35. Thus the Court of Appeal held that:

"… one can only treat the words "apply to the Court" as meaning doing all that is in your power to do to set the wheels of justice in motion according to the procedure that is laid down for the pursuit of the relief which you are asking."

36. Likewise in Riniker v University College London (31 March 1999) the Court of Appeal held that when a draft writ was in the custody of a proper court officer and in proper form the court had an inherent jurisdiction to treat it as issued on the day on which it was received. The underlying theme is, in my judgment, that a would-be litigant is not responsible for any shortcomings of the court.
37. Mr Stacey has referred us to a number of cases in which it has been said that proceedings are begun when the originating process is issued by the court. Under normal circumstances that is, of course, right. But those cases do not touch upon the circumstances that the court is itself responsible for delay in issuing or loss of the originating process.
38. If, therefore, the claimants establish that the claim form was delivered in due time to the court office, accompanied by a request to issue and the appropriate fee, the action would not, in my judgment, be statute barred. In my judgment both the Master and the judge were wrong to hold the contrary. On the facts, I consider that the Master and the judge were wrong summarily to reject Mr Last's evidence. Indeed it seems to me that the Master applied the "balance of probability" test on what was, after all, a summary application, rather than the trial of a preliminary issue.
39. Subject to striking out the claim for the undervalue, I would allow the appeal on that ground. This means that we have not heard argument on the more difficult question of whether the Limitation Act applies at all. Since I would set aside the judge's order, there can be no question of any issue estoppel on the question whether section 21 (1) of the Act is engaged. Nothing I say should be taken as expressing a view on that question one way or the other. Whether the judge was right or wrong must wait for a case in which it matters.

DAME JANET SMITH :

40. I agree.

LORD JUSTICE LAWS :

41. I also agree.