England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CHESTER COUNTY COURT
TECHNOLOGY AND CONSTRUCITON COURT LIST
His Honour Judge Halbert
(6NU01980)

		Royal Courts of Justice Strand, London, WC2A 2LL
		12/07/2012

Lord Justice Richards :

1. In these proceedings the claimant, Mr Stephen Preece, claims damages from the defendant, Mr Dafydd Edwards, for alleged breach of contract in relation to a project of renovation of a property in Anglesey. The claim was transferred to the Technology and Construction Court list at Chester County Court, where it was heard by His Honour Judge Halbert. By a judgment handed down on 16 March 211 and an order of the same date, the judge dismissed the claim. Mr Preece's appeal against the judge's order was heard by us at Cardiff Civil Justice Centre on 28 June 2012. At that hearing Mr Preece was represented by counsel, Mr Soofi Din, acting pro bono, whilst Mr Edwards appeared in person. At the conclusion of the hearing we announced our decision to allow the appeal and we made the necessary consequential orders, indicating that we would give our reasons later in writing. These are my reasons for the decision and the orders made.

The factual background

2. The judge described this as "a decidedly unusual case" and provided the following factual introduction (I can leave aside some immaterial criticisms of it by Mr Preece):

"1. … Stephen James Preece owns a house in Anglesey, near Trearddur Bay. Trearddur Bay is a local beauty spot and is very popular with summer visitors. The House is called Penrhyn Lodge. It is high on [a] hillside near South Stack Light House, it is built on split levels and it has magnificent views over the Coast and Sea. It is in a very exposed location. Somewhat surprisingly, when it was originally built in 1972 it was built with flat roofs.

2. The house is on multiple levels and has substantial accommodation. For three years up to 1997 the house had been let to MacDonalds, the restaurant chain. They used it for staff accommodation. Towards the end of the letting period, some of the staff held a party on the roof. They caused damage to the covering and the roof began to leak. By the early 2000s the leaks had worsened and the roof was in any event close to the end of its useful life. As a result, the property was very damp and damage was beginning to result. Mr Preece is a single parent and he was informed by an official of Anglesey County Council that the house was not fit for human habitation and could not be used as a home for him and his son.

3. He therefore decided to replace the roofs with pitched roof designs, to replace many of the windows, to re-render the walls and to make some internal alterations to enable him either to live in one part of the house and let the remainder for holiday lettings or alternatively live somewhere else and let two separate areas for holiday lettings.

4. Like many single parents he had very little money and he needed grant assistance in order to carry out the works. There were therefore four stages required in order to complete the project:

(i) Obtain Planning consent

(ii) Obtain Building Regulations Approval

(iii) Make an application for a grant and have it approved

(iv) Identify and employ a suitable builder and arrange suitable supervision.

5. It is the case for Mr Preece that he employed Mr Edwards (who is an architectural technician) to do all these things, that he paid Mr Edwards over £1000 for his services, but that Mr Edwards did not do the job. As a result, he says:

(i) The house deteriorated because of the roof leaks with the result that repairs cost very much more than they would otherwise have done.

(ii) Rental income which would otherwise have been obtained from holiday lettings was lost and the grant was lost because during the period of delay the rules for grants were changed so that most of the works are no longer eligible for grant assistance.

6. Mr Edwards' defence to the claim is that he was never retained or paid to do any of the four jobs. His role was solely to draw the plans required for [a] planning permission application to be made, he was paid only £400 and he was never employed or authorised to do anything else; the reason why the other jobs were not done was that he was not required to do them."

3. Central to the evidence were two typed documents purporting to be receipted invoices in respect of the agreed work, signed by Mr Edwards. One was dated 23 September 2000 ("document 1"), the other was dated 23 January 2002 ("document 2"). Their format was identical. They each started with the name and address of Mr Edwards (misspelling the name of his house as "Goterydd" rather than "Goferydd"). The date came next (in each case with a comma after the month, e.g. "23 September, 2000"). There followed the "Reference", namely the name and address of Mr Preece. There was then a description of the work, which differed in its detail between the two documents. Document 1 described it as follows:

"For carrying out a detailed survey of the property and producing a full set of plans.

For liaising with various builders and producing three detailed sets of costings for the required internal and external building works to provide a self contained living accommodation at the top of the property (the intention being to rent out the ground floor accommodation).

For liaising with the County Council in respect to submitting the grant application and the required planning permission application for the new roofs and extension together with building regulations requirements and to act as agent in all respects to the completion of the works."

Document 2 had the same first paragraph, an abbreviated version of the second paragraph, and a third paragraph which omitted reference to the submission of the grant application and the required planning permission application. After the description of the work, the last typed line in each document read: "The agreed fixed price due ….. £995". In each case the words "Paid in Full" were then written in manuscript, followed by a signature purporting to be that of Mr Edwards.

4. Mr Preece's case was that Mr Edwards had produced both documents. He said that document 1 was produced at his request shortly after they had entered into the alleged agreement. Mr Edwards signed the document while leaning it on his knee on the doorstep of Mr Preece's property. Mr Preece said that he gave a copy of the document at an early stage to the solicitors then acting for him.
5. On Mr Preece's account, document 2 was prepared in January 2002 against the background of his concern about the damage to Penrhyn Lodge resulting from the delays. He explained to us (though I do not think that this was made clear to the judge) that there were two versions of the document, produced at the same time and in identical terms but signed separately. He said that one of the versions was given at the time to the solicitors then acting for him and that the other version was given to the council. In response to a request by Mr Preece, the council supplied a copy to him in July 2008, having found it (misfiled) in their files. I note in passing that although the judge referred to document 2 as having been in the council's files since about January 2002, I do not think that there is any evidence to that effect beyond the testimony of Mr Preece himself.
6. Mr Edwards denied having prepared or signed the documents. His case was that the documents were forgeries.
7. Each party obtained a report from a handwriting expert:

i) Mr Derek Aves, on behalf of Mr Edwards, was asked for his opinion on document 1, which he examined at the offices of Mr Preece's solicitors and compared with specimens of signatures supplied to him. His opinion was that "there is strong evidence … to suggest that the Disputed Signature is not genuine and is a freehand copy of Mr Edwards' signature". Mr Aves was not told the circumstances in which document 1 was alleged to have been signed. Nor was he shown document 2, which was not available to Mr Edwards at the time when Mr Aves's report was commissioned.

ii) Dr Audrey Giles, on behalf of Mr Preece, was asked for her opinion on document 1 and one version of document 2, both of which she examined under laboratory conditions. Her opinion with regard to document 2 was that "the balance of similarities and differences observed in this signature … suggests that it is an unusual but genuine signature". She considered that the signature on document 1 was "either a genuine signature constructed awkwardly or an attempt to simulate a signature similar to that on [document 2]" but that it was not possible, on the basis of the restricted comparison material provided, to reach any conclusion as to which of these possibilities was the more likely.

8. There had been no meeting between the experts to discuss the issues and to seek to narrow the area of disagreement between them. More fundamentally, neither expert attended to give oral evidence at the trial. That was because Mr Edwards, who represented himself before the judge, was unable to pay for Mr Aves to attend court; and although Mr Preece had the benefit of a public funding certificate and was represented by counsel, the Legal Services Commission would not agree the rates claimed by Dr Giles or pay for her travel to court.

The judgment below

9. The non-attendance of the expert witnesses, on the central question of whether the signatures on the two documents were forged, placed the judge in an extremely difficult position. He referred to the guidance in Loveday v Renton [1990] 1 Med LR 117 as to the assessment of expert evidence, but observed that almost none of that process could be conducted in the absence of the witnesses. He said that he was forced to deal with the situation as best he could on the data available but that the risks of injustice were all too apparent. He continued:

"15. I am forced therefore to compare the two experts' reports as reports. I have also to factor in the other evidence in the case insofar as it is relevant to the issue of the authenticity of document [1].

16. As to the expert reports themselves, taken in isolation, Mr Aves' report better satisfies the criteria in Loveday v Renton. It is much more directly argued. Every proposition is carefully linked to the evidence in support and the reader's logical progression throughout the document is clear and appears to be justified at every stage. In particular the report identifies six or seven clear differences between the signature on [1] and the known signatures of Mr Edwards. If the reports stood alone, therefore, I would prefer the evidence of Mr Aves to that of Dr Giles.

17. However, the expert evidence does not stand alone; it has to be considered in the light of all the other evidence. The following factors seem to me to be relevant:

(a) I watched both Claimant and Defendant with very great care as they gave oral evidence and I detected no sign in their body language or demeanour that either was lying. Nevertheless, the nature of the conflict between them is such that one of them must be.

(b) Both parties have been guilty of considerable levels of inconsistency in their utterances about this case, e.g. Mr Edwards is inconsistent as to when the MacDonalds' employees were at the premises. However, Mr Preece is guilty of rather more serious inconsistencies in relation to whether he was resident at the property and when in relation to his applications for grants. Mr Preece was investigated for council Tax fraud because of his inconsistencies over whether he was or was not resident at the property (see page 768). What he told the council in relation to the tax is wholly inconsistent with what he says now.

(c) At page 581 is an email from Mr Preece to a builder which is clearly an attempt to persuade the builder to provide fictitious second and third quotations for works in the context of an application for a grant. It is difficult to see any interpretation to be placed on this email except that he was trying to obtain two forged quotations for use in support of a grant application. There is also a large degree of inconsistency about the ongoing state of the property.

(d) In the two disputed documents there is a comma between the month and the year in the date line. This is grammatically incorrect and quite an unusual feature. It is not unique, it occurs in several letters written by Council Officers in this case …. However, it occurs in almost every letter written by Mr Preece but I have not seen a single document written by Mr Edwards which contains this peculiarity.

(e) In both disputed documents the name of Mr Edwards' house is misspelt. The correct spelling is 'Goferydd'. This is a normal Welsh construction, the word Gofer means worry or concern. The misspelling is 'Goterydd'. This is not a normal Welsh construction. It does not make sense in Welsh and thus if Mr Edwards typed these two documents, not only did he twice misspell the name of his own house in exactly the same way but he did so in a way which any Welsh speaker would have spotted instantaneously. Mr Edwards is a fluent Welsh speaker, Mr Preece is not.

(f) If Mr Preece forged these documents he must have done so very early on because the document dated January 2002 has been in the Council files since about that time. This is inherently unlikely.

(g) Mr Preece must have known that he needed planning permission, building regulations approval, grant approval and work supervision yet on Mr Edwards' account of the facts he obtained the plans for planning permission but did nothing about the other three stages of the project at all. Mr Preece is a former Senior Naval Officer and Airline Pilot, he is certainly not stupid and it is difficult to understand why anyone with any intelligence would have failed to obtain professional help to deal with the other three aspects of the case.

(h) When Mr Edwards was asked by Mr Preece to make the planning application he did in fact do so as Mr Preece's agent. His account that this was a gratuitous favour for a man he scarcely knew when there was no benefit to Mr Edwards for doing it is not very convincing and when he was pressed by solicitors rather later on he supplied additional plans. At no stage did he ever say 'I am not going to do this, I have not been employed to do it'.

(i) It is common ground that Mr Preece was chasing Mr Edwards trying to get him to do the work during 2001/2002. This is rather strange if he had not employed him to do it. It requires either that he must have formed an intention to fabricate a case against Mr Edwards at that very early stage.

17. As can be seen not only have I inadequate material on which to deal with the handwriting evidence but the surrounding factors are highly equivocal …."

10. The judge said that in that context it was as well to return to the burden and standard of proof. The burden of proof in the case as a whole rested upon Mr Preece, whereas the burden on the allegation of forgery rested upon Mr Edwards. The judge cited Re H [1996] AC 563 for the proposition that the standard of proof in each case was balance of probability, subject to the proviso that when assessing the probabilities the court would have in mind that the more serious the allegation, the less likely it was that the event occurred and hence the stronger should be the evidence before the court concluded that the allegation was established on the balance of probability. He went on to observe that the allegation that Mr Preece, a former Naval Officer, had forged documents to support an entirely fictitious claim was a very serious allegation and required cogent evidence to meet the requisite standard of proof.
11. He proceeded nevertheless to find in summary terms that the allegation had indeed been proved:

"19. Having regard to:

(a) My preference for Mr Aves over Dr Giles

(b) The clear inconsistencies by Mr Preece in relation to grants and taxation

(c) The obvious attempt to provide false documents in support of the grant application

(d) The spelling error

(e) The comma

I find as a fact on the balance of probability that the two documents relied upon are both forgeries. If I had to take this decision against the criminal Burden of Proof I would be completely unable to do so but on the 'sliding scale' balance of probabilities I consider this to be the correct answer on the evidence I have. Given that circumstance I find as a fact that on the balance of probability Mr Edward was employed to draw the plans and nothing more. I accept his explanation about his presentation of the planning application."

12. He therefore dismissed the claim, whilst noting that the quantum of the claim was established without very much controversy at a total of £154,800.

The issues in the appeal

13. Mr Preece acted in person in filing grounds of appeal and a skeleton argument, which referred in turn to a written advice by Mr Richard Hedley, his counsel at the trial. A supplemental skeleton argument was subsequently filed by Mr Hedley following his instruction by the Bar Pro Bono Unit for the purposes of the appeal. Mr Preece added further written submissions of his own in the run-up to the hearing of the appeal, but at the hearing itself Mr Din (who had taken the case over at short notice as a result of Mr Hedley's unavailability) focused on the matters set out in Mr Hedley's supplementary skeleton argument.
14. Ground 1(a) is that the judge reached the wrong conclusion on the facts as to the authenticity of document 1. Although expressed as a challenge to the finding of fact, the ground is in substance a challenge to the adequacy of the judge's analysis, in particular his failure to deal with the implications of Dr Giles's uncontradicted expert evidence that the signature on document 2 was probably genuine.
15. Ground 1(b) contends that the judge was wrong to draw adverse inferences against Mr Preece from the "clear inconsistencies in relation to grants and taxation" and the "obvious attempt to provide false documents in support of the grant application". These matters were not put to Mr Preece in the course of his evidence, and Mr Preece had an explanation for each of them which he was given no opportunity to provide.
16. Ground 1(c) is that the judge was wrong to draw adverse inferences against Mr Preece from the misspelling of the name of Mr Edwards's house and from the format of the date on the two documents.
17. Permission to appeal on ground 1(a), (b) and (c) was granted by Aikens LJ on consideration of the papers. He adjourned the remaining two grounds for decision by the full court on the hearing of the appeal; but in the event, as explained below, it was not necessary for us to deal with either of them.
18. Ground 2 concerned fresh evidence upon which Mr Preece sought to rely in support of the appeal, in particular by way of further specimens of Mr Edwards's handwriting obtained since the time of the experts' reports. Mr Edwards, for his part, sought to rely on a report he had commissioned for the purposes of the appeal from a forensic linguist, Dr John Olsson. It was apparent from this material that both parties mistakenly viewed the appeal as an opportunity for further argument on the substantive merits of their respective cases on the authenticity or otherwise of the signatures on documents 1 and 2. Plainly, however, none of this additional material met the conditions for the admissibility of fresh evidence on an appeal; and in the circumstances Mr Din, very sensibly, did not press ground 2. The appeal proceeded in the normal way as a review of the decision reached by the judge on the material before him. I need therefore say nothing further about this ground.
19. Ground 3 raised a concern that the judge's ill-health may have affected his consideration of the case. The skeleton argument made clear, however, that it was not pursued as a free-standing ground of appeal, and it was not touched on at all by Mr Din in his oral submissions. Again I need say nothing further about it, save to note that the transcript of the hearing reveals no reason for concern about the judge's conduct of the case.

Discussion

20. I have referred already to the extremely difficult position in which the judge was placed by the fact that the experts did not attend to give oral evidence. He had to decide on the basis of their written reports and the other evidence in the case whether the signatures on the two documents were genuine or forged and whether it was Mr Preece or Mr Edwards who was lying about them (as one of them must have been). This called for a careful, balanced analysis. Although the judge set about the task by identifying a number of potentially relevant factors in paragraphs 16 and 17, some of them telling in favour of Mr Edwards and some of them in favour of Mr Preece, his conclusion in paragraph 19 appears to me to be very thinly reasoned and to provide an inadequate basis for a finding which, as he said in paragraph 18, required cogent evidence to support it. More importantly, the specific reasons relied on in paragraph 19 suffer, in my judgment, from the serious problems identified in ground 1(a) and (b) of the grounds of appeal.
21. The judge referred first to his preference for Mr Aves over Dr Giles. As appears from his paragraph 16, that preference was based on the way in which their respective reports were argued. In itself this was a legitimate consideration for him to take into account, but it was far from being the only relevant consideration. Other relevant factors were that Mr Aves was unaware of the circumstances in which document 1 was signed and that Dr Giles, unlike Mr Aves, had inspected the documents in laboratory conditions. Of particular significance, however, was that Dr Giles had inspected document 2 as well as document 1 and had expressed the uncontradicted expert opinion that document 2 was probably genuine. If document 2 was genuine, it had obvious implications for the question whether document 1 was genuine. In any event, it was manifestly unsatisfactory to express a preference for Mr Aves over Dr Giles on the basis of their examination of document 1 alone, without consideration of what Dr Giles said about document 2 or the basis of Dr Giles's opinion about that document. To go on to find as a fact that both documents were probably forgeries without addressing Dr Giles's opinion that document 2 was probably genuine involved an even more serious deficiency in the judge's reasoning process.
22. The judge relied next on serious inconsistencies by Mr Preece in relation to grants and taxation. This was a reference back to paragraph 17(b), which states that Mr Preece was guilty of inconsistencies in relation to whether and when he was resident at the property in relation to his applications for grants. The one specific matter referred to is that Mr Preece was investigated for council tax fraud because of his inconsistencies over whether he was or was not resident at the property; and it is said that what he told the council in relation to the tax was wholly inconsistent with what he said before the judge. This alleged inconsistency was not put to Mr Preece in cross-examination or in questioning by the judge, and it is difficult to see quite what point the judge is making. The letter to which the judge refers at paragraph 17(b) exonerates Mr Preece of any fraud. It records the council's decision that Penrhyn Lodge "is your sole residence in the UK" and that he was therefore liable to pay council tax, and to claim council tax benefit, in respect of the property. Mr Preece's case is that he had informed the council that he was unable to live in the property because of the deterioration in its condition and that he had found temporary alternative accommodation, commuting to the property every weekend, but that the property remained his sole residence for council tax purposes; and the council accepted that position. There is no obvious inconsistency between that account and the evidence he gave the judge. In any event, it was wrong of the judge to draw the adverse inference he did without putting the point to Mr Preece and without receiving or taking into account Mr Preece's explanation.
23. The next point relied on by the judge was an alleged attempt by Mr Preece to provide false documents in support of the grant claim. This was a reference back to paragraph 17(c), which states that an email from Mr Preece to a builder was clearly an attempt to persuade the builder to provide fictitious quotations in the context of a grant application. By the email in question, dated 10 August 2003, Mr Preece asked the builder to "complete the two sets of quotes" while he was away on holiday: "The schedule of works can be exactly the same for each quote, only the prices need to be different and of course the letterhead for the second quote". Mr Preece's explanation for the email is that he was asking the builder, who was acting as his project manager, to obtain two quotations based on a common schedule of works (to enable comparison of like with like); and he relies on a letter from the council dated 31 January 2006 as showing that an explanation along these lines was given to an employee of the council in 2003. The wording of the email is certainly suspicious and the explanation given by Mr Preece is not particularly convincing. But the problem about the judge's reliance on the email is that, here again, the point was not put to Mr Preece in cross-examination or in questioning by the judge, and Mr Preece's explanation for the email was therefore not received or taken into account by the judge. In fact the point was raised by Mr Edwards in the course of closing submissions. It prompted an intervention by counsel for Mr Preece, in response to which the judge appeared to accept that the point should have been put to Mr Preece in the course of his evidence and that it was too late to recall him as the evidence had closed. Contrary to the judge's observations, I think that Mr Preece could in principle have been recalled; but there was no application to recall him and he was not in fact recalled. The exchange ended with an observation by the judge that it was unfortunate that Mr Preece had not been given the opportunity to deal with the point. That appeared to be the end of the matter. In the circumstances the judge was in my view wrong to rely on the email as the basis for an adverse inference against Mr Preece.
24. The final two matters relied on by the judge were the misspelling of the name of Mr Edwards's house in both documents (covered in the judge's paragraph 17(e)) and the placing of a comma in the date line (covered in his paragraph 17(d)). Complaint is made about both aspects of the judge's reasoning. As to spelling, it is said to be plain from other documents that Mr Edwards is a poor speller. That may be so, but I see nothing wrong with the judge's reasons for thinking it improbable that Mr Edwards would have misspelt the Welsh name of his house (though I should note that, whilst Mr Preece asserts that Mr Edwards produced the documents, he says he does not know whether Mr Edwards prepared the documents himself or had someone type them for him). As to the comma in the date line, the judge himself notes that the same format appears in several letters written by council officers, and again I see nothing wrong with what he said about this point. The misspelling and the comma are of limited significance, however, in comparison with the other factors relied on by the judge for his conclusion that the documents were forgeries.
25. Taking everything together, I am satisfied that Judge Halbert's conclusion could not stand and that his order dismissing the claim had to be set aside.
26. On the other hand, the court was unable to accede to a suggestion on behalf of Mr Preece that judgment in the claim be entered in Mr Preece's favour. Where the truth lies in this case is very much an open question. We therefore ordered a fresh trial at which, subject to any case management directions and to the capacity of the parties to fund the litigation, the parties will be able to deploy all the material now available to them, including the material that we declined to receive as fresh evidence in the appeal. The trial is to be of liability only (with a current time estimate of 2 days), the parties having confirmed before us that they raise no challenge to the figure of £154,800 found by Judge Halbert as the quantum of the claim. We directed that the case be transferred to Birmingham County Court, as a location manageable by the parties themselves and best calculated to facilitate attendance by their expert witnesses. We also directed that the case be taken out of the Technology and Construction Court list: it requires a Circuit Judge but not one with particular TCC expertise. We directed Mr Preece to issue an application for a case management conference before a District Judge within 21 days of receipt of these written reasons: he will of course need to provide the District Judge with a copy of this judgment. We made no order as to the costs of the appeal. As to the trial below, we set aside the costs order made by Judge Halbert and directed that the costs of the trial before him be reserved to the judge hearing the retrial: it seems likely that the costs will follow the event of the retrial.
27. At the conclusion of the hearing, Longmore LJ urged Mr Preece and Mr Edwards to try to settle their differences by agreement rather than by the continuation of this litigation, which neither of them can afford to fund and which is likely to be ruinous to whichever of them loses at the end of the day. I end this judgment by repeating that message, in the hope that repetition will give it added emphasis.

Lord Justice Davis :

28. I agree.

Lord Justice Longmore :

29. I also agree.