England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(MR JUSTICE BARLING)

		Royal Courts of Justice Strand London, WC2A 2LL
		14 May 2015

1. LORD JUSTICE McCOMBE: This is an adjourned application for permission to appeal from the order of Barling J of 29 October 2014 striking out the Claimant's claim in this action.
2. The application for permission came before me in the ordinary course on the papers. By an earlier order, I adjourned it to this oral hearing to afford the Applicant, what I described, I think, as a final opportunity to persuade me that permission to appeal was appropriate and to give the Respondents the opportunity, if necessary, to argue to the contrary. I also directed the Respondents to lodge a short skeleton argument. As a result, Mr Tritton has appeared for the Applicant before me and Mr de la Mare QC has appeared for the Respondents.
3. The proceedings in the action began by a claim form issued on 4 October 2000 and concern events that had occurred between 1996 and 1999. Until the issue, in August 2013, of the applications giving rise to the judge's order from which it is now desired to appeal, the matter had not been before the court since 12 December 2001 at a case management conference before Park J.
4. While Mr Tritton criticises some of the account given by the judge of the history of the proceedings, I take the bare background of the facts and chronology from the judge's judgment, but take into account the criticisms that Mr Tritton has made, in particular this afternoon, of certain parts of that account.
5. The background to the dispute is between the Claimant, who is a sound engineer specialising in restoring historic classical music recordings, and two companies forming part of a classical music publishing group that trades, and it fairly well-known, under the name of "Naxos".
6. By a written agreement of 26 February 1997, the Claimant and the First Respondent entered into an agreement whereby certain opera recordings dating principally from the 1930s and 1940s were to be restored, reproduced and sold in CD form by the First Respondent under the Naxos label.
7. In short, the intention was that after technical work performed on the original recordings by the Claimant, his work product would be transferred to the Respondents, for further processing, to another company in which the principal owner of the Respondents, a Mr Klaus Heymann, had significant interest. Thereafter, no doubt, the intention was that the recordings, in restored form, would be released on to the market.
8. The arrangement sadly did not work and was terminated in October 1999 in an atmosphere of mutual recrimination.
9. By initial particulars of claim, the Claimant alleged a number of breaches of the agreement which included non-payment or underpayment of royalties, wrongful refusal to accept delivery of the Claimant's work product, wrongful interference with sound quality and wrongful repudiation of the agreements as a whole. In view of these features, before the issue of the proceedings the Claimant had purported to accept a wrongful repudiation of the written contract and sought damages under the heads that I have sought to summarise accordingly.
10. After exchange of statements of case and requests for further information, the case came for the case management conference before Park J, as I have said, on 12 December 2001 when the learned judge gave directions for the conduct of the proceedings in fairly short and basic form as follows.
11. The Claimant was to file an amended defence and counterclaim by note of no later than 11 January 2002. The parties were to agree by 21 December 2001 a procedure for the identification and copying for expert inspection of the relevant recordings. There should be disclosure of relevant tapes and recordings by 1 March 2002 with disclosure on the standard basis of all remaining materials by 1 April 2002. Witness statements should be exchanged by 7 June.
12. Each party was to have permission to call one expert witness in the field of sound recording, somewhat unusually those experts producing reports addressing different features of the dispute between the parties. Each party was to have permission to call one witness in the field of compilation, marketing and packaging of classical music recordings to be exchanged by 7 June. Expert evidence in reply by 28 June 2002. Trial of liability alone, not quantum, was to be set down with a time estimate of 20 days in the first available window after October 2002.
13. Mutual understanding between the parties as to the best method of complying with this process fell apart at a fairly early stage, in particular with regard to the process of preparing the expert evidence which Park J had directed. There were varying views on the subject. The Claimant instructed an expert witness by the name of Mr Watkinson who wished to set up a somewhat different procedure from that contemplated by the judge's order.
14. Mr Tritton has been at pains to show me the circumstances in which in the early period of the proceedings from about 2002 to 2003 the Defendants, the Respondents to this application, went along with the proposals of Mr Watkinson as to how the process should be continued, and to that extent, appeared to acquiesce in non-compliance with Park J's order thereafter.
15. Barling J's judgment on the present application recites a series of difficulties that arose between the parties on those issues. After an expert's meeting in August 2002, both parties experts noted extremely poor sound quality in respect of two recordings in the production master form emanating from the claim and it was proposed that the copying process be delayed until further recordings were examined.
16. In September 2002, the Respondents' solicitors proposed that the case be set down for trial in accordance with Park J's order, albeit by this stage late, a proposal that the Claimant's, the Applicant's, solicitors rejected as impractical until the experts' investigations were complete.
17. There then ensued a first period of what the judge was to characterise as "jousting" by correspondence between the solicitors. There was, the judge recites, an inconclusive experts' meeting on 12 and 13 February 2003.
18. Leading Counsel for the Respondents at that time, it is reported, was urging that the case should be brought back on track and that reports should be prepared in accordance with Park J's order. That, of course, was a matter possibly of some difficulty having regard to the departure from that exercise that had been begun in the period up to that time.
19. There was then, however, with that proposal from the Respondents' counsel through solicitors, a break of some 3 and a half years until May 2007. The Claimant's solicitors at that stage delivered a report from Mr Watkinson. From studying Barling J's judgment, it is from here that, in my judgment, the litigation began to get seriously out of hand.
20. Mr Watkinson's report made a number of very serious allegations of impropriety against the Respondents, including allegations of tampering with the evidence and other allegations (some well beyond his expertise) of documentary forgery, breaches of legal obligations by the Respondents, and by Mr Heymann's other company. It was alleged that tampering had been carried out to shift the blame, for the poor quality of the recordings that had been produced, on to the Claimant.
21. Some of these allegations are set out verbatim in Barling J's judgment at paragraph 31. There is no need to recite those, but it suffices to say that they are very serious allegations indeed, well beyond the ambit of the proceedings as originally served and must have come as a great surprise to the Defendants' solicitors and those others advising them.
22. The letter enclosing the report indicated that in the light of that report, the defence and counterclaim that had been served by the Respondents should be struck out as a abuse of process and that Mr Heymann should be ordered to pay costs of the proceedings to date personally on a third party costs order basis.
23. On 25 May, very shortly thereafter, the Respondents' solicitors responded, not surprisingly, that they would need to investigate the very serious allegations that had been made.
24. There were some changes in representation on the part of the Claimant, the Applicant in this case. New solicitors replaced them in February 2008, although it seems that the individual solicitor who was responsible for the conduct of the proceedings followed the case throughout in the various firms in which he was engaged.
25. On 5 September 2008, the Respondents' solicitors delivered a concerted response to the allegations made in Mr Watkinson's report. This included some 12 or so witness statements seeking to refute, on the facts, the allegations of tampering and fraud that had been made.
26. On 27 January 2009, the Claimant's solicitors wrote to say that the claim was maintained and subject to investigation and work by the expert, a new statement from the Claimant was envisaged and that an application to court would be made "at the earliest possible moment". On 19 February 2009, the Claimant's solicitors wrote to say that their estimate of time for the Claimant's new draft statement had been over optimistic, but a summary judgment application could still be anticipated.
27. On 25 March 2009, the Respondents' solicitors wrote to say that summary judgment was entirely inappropriate in view of the significant conflict of evidence and said that a new case management conference should be arranged.
28. On 1 September 2009, the Claimant's solicitors wrote to say they were seeking a further extension of legal aid in order to amend the pleadings to reflect Mr Watkinson's new findings. There were significant difficulties for the Claimant in obtaining legal aid for the additional conduct of the action in the light, no doubt, of the turn which the proceedings had taken or at least the advice that had been received. I am told, by a witness statement of Mr Hutchinson that was before the learned judge, that the legal aid issue was under active debate with the legal aid authorities and went as far as the Administrative Court in judicial review proceedings which were eventually conceded, between November 2010 and May 2013 when legal aid was restored.
29. Following the long break, on 24 September 2013 the Claimant's solicitors, the Applicant's solicitors, wrote enclosing an application to amend the particulars of claim (which had been issued on 29 August) and seeking exchange of reports, disclosure in standard form and for directions as to witness statements.
30. The application notice referred to "a second report (by Mr Watkinson) which the Claimant maintains proves the said acts of sabotage by or through the direction of the Defendant". The report was not enclosed with the application. There was no draft amended pleading with the application and there was no witness statements delivered in support of it. The draft directions, as I say, referred to the amended pleading and to the report.
31. On 18 December 2013, the second report and the draft amended particulars of claim, intimated since May 2007, were served containing the fraud allegations. In the period prior to that, in October 2013 the Respondents' solicitors had written saying that they considered that any fraud allegations now sought to be made would in any event be statute barred.
32. On 30 January 2014, the Respondents' solicitors served the application to strike out.
33. Barling J records in his judgment further examples from Mr Watkinson's second report in which he strays far beyond the technical expertise which he was said to possess. Barling J concluded that Mr Watkinson had apparently lost sight of his role as an independent expert. On the extracts of the reports I have seen, that finding is well made out.
34. By its strike out application, the Respondents relied upon abuse of process or other conduct likely to obstruct the just disposal of the proceedings under Civil Procedure Rule 3.4(2)(b) and failure to comply with the order of Park J and/or the Civil Procedure Rules 1.3 relying on Rule 3.4(2)(c).
35. The hearing of the application came before the learned judge on 19 June of last year, 2014. The judge records that on the previous afternoon the Claimant informed the Respondents that the fraud allegations, initially intimated in March 2007 but not pleaded even in draft until December 2013, were no longer to be pursued and produced a further draft amended pleading with the allegations deleted.
36. In a letter to the judge of the same date, leading counsel for the Applicant Claimant stated that he and his junior considered that it was "not necessary" for the Claimant to advance a case of deliberate breach and that it might be said that the pleading would represent a new cause of action.
37. It was explained, the judge recites, in oral argument that the reason for abandonment of the fraud allegations were the obvious limitation period difficulties pointed out by the Respondents' solicitors in October 2013 even before the draft new pleading had been served: see paragraph 14 of Barling J's judgment.
38. In my judgment, taking into account the witness statements that I have read in some considerable detail in advance of this application and the points made by Mr Tritton in criticism of the judge's analysis, I consider the judge performed a meticulous examination of the applicable rules and a number of authorities that had been cited to him.
39. He recognised that under the Civil Procedure Rules that a mere delay might well not give rise to grounds for striking out a claim, if there was no other factor over and above the delay indicating that it was just in all the circumstances to strike the claim out essentially as abuse of process.
40. He analysed each stage of the litigation. He is accused by Mr Tritton (moderately) of having "cherry picked" the correspondence. Having studied the "best foot forward" put forward by both sides in this case through the witness statements, I do not consider that submission is made out.
41. The judge identified the following points as other factors transforming the delay which he found to be inexcusable as amounting to abuse of process. Mr Tritton criticises the premise that the delay was inordinate and inexcusable. He has this afternoon rested most of his submissions on the basis that the judge wrongly attributed the culpability for the delay to the Claimant Applicant when the Respondents were to a large degree themselves responsible for failure to comply with the order of Park J and therefore to also cause the delay.
42. I, for my part, do not accept that premise. It seems to me that there was an attempt, as the judge found, in 2002/2003 to accommodate the requirements suggested by Mr Watkinson when he became instructed and to proceed in a rather different way from that that had been suggested by Park J. However, when, if I may put it this way, the game changed fundamentally in 2007, there was no acquiescence by the Respondents in any of the subsequent delay that followed.
43. The judge identified the following points as other factors transforming the admittedly inordinate and inexcusable delay, as it was before him, into an abuse. At paragraph 112 of his judgment, the judge identified these features:

"• The claimant's reliance on Mr Watkinson's findings of fraud, forgery of documents and deliberate tampering with recordings, in order to threaten and make preparations for an inappropriate application for summary judgment, thereby wasting public funds and further delaying the progress of the claim;

• Adding considerably to the delay by allowing Mr Watkinson to carry out investigations, to make findings, and to report on matters (including allegations of fraud, forgery of documents and deliberate tampering with recordings) which are now said to be unnecessary for the claimant's claim."

44. The judge proceeded to examine the Respondents' further submissions that the delay had rendered the case so stale, in addition to the above matters, as to bring the litigation process into disrepute. The judge held that this submission by the Respondents overlapped with the question whether and, if so, what prejudice had been caused by the delay and whether it was such as to obstruct the just disposal of the proceedings for the purposes of sub rule (2)(b) of Rule 3.4 of the Civil Procedure Rules.
45. In paragraph 129, he concluded as follows:

"In all the circumstances of this case I consider that the prospect of a fair trial now, at a distance of nearly twenty years from the relevant events, is probably impossible and at the very least seriously impaired in the light of the inevitable problems of detailed recollection of many witnesses in the context of such a factually and technically complex case."

At paragraphs 130, he said as follows:

"130. I also accept that prejudice relevant to whether a trial can fairly go ahead has been suffered by HNH [that is the Respondents] in terms of additional irrecoverable costs caused by the claimant's culpable delay, and his disregard of the order of Park J and the CPR, and more prejudice will be suffered if the proceedings continue."

In paragraph 131, the judge goes on to detail more prejudice caused by wasted costs in the circumstances of the case which I do not need to quote.

46. The judge considered whether there was any alternative sanction to the strike out, which he eventually ordered, and he held that there was not. In his penultimate paragraph of his judgment, paragraph 137, he says this:

"As I said towards the beginning of this judgment, the proceedings are not much further advanced than they were when the matter came before Park J in 2001. To say that they are stale would be a considerable understatement. Significant public funding has been wasted, not to mention costs incurred by HNH [i.e. the Respondents]. For the matter to reach trial would require expenditure of very substantial further funds on both sides, including further significant public funding on behalf of the claimant. All costs incurred by HNH are likely to be irrecoverable whatever the result. The court would have to accommodate a lengthy trial some fourteen years after the time when it should have taken place, and in circumstances where the passage of so much time would probably preclude the process amounting to a fair trial. Justice and the overriding objective require that the proceedings should be stopped now."

47. In written and oral argument, Mr Nathan QC, in writing with Mr Tritton, and now Mr Tritton orally have sought to challenge a very significant number of the conclusions drawn by the judge and submit that there is a real prospect of success for the proposed appeal by the Claimant.
48. I remind myself that any appeal would be limited to a review of the judge's decision: see CPR rule 52.11(1). It would not be a rehearing.
49. I refer, without quoting from it, to the nature of a rehearing given in the judgment of May LJ, as he then was, in the case of EI Du Pont Nemours v ST Du Pont [2003] EWCA Civ 1368 at paragraph 24. He considered the implications of that distinction between a full rehearing and a review.
50. This is a case which, while leading to a strike out of the Claimant's claim, was one where the judge was reviewing the procedural consequences of 13 years' delay and reaching discretionary conclusions, having performed, as I have said before, a meticulous analysis of the extensive witness statements and solicitors' correspondence, statements of case and so-called experts' reports. That is a process, in my judgment, singularly appropriate for first instance judges exercising the case management functions which are entrusted to the High Court under the Civil Procedure Rules Part 3 in the light of the overriding objective in Part 1.
51. Unless serious or a real error of principle or analysis is detected on an appeal, the appeal would, in my judgment, be bound to fail. Having considered the various submissions made, as I did when the matters came before me on the papers, I consider there is not the remotest prospect of any appeal against the judge's conclusions succeeding.
52. In short, the conduct of the Claimant's case since 2007 has been characterised by serial and continuing abuse of process by maintaining impossible allegations of the most serious character, based upon highly deficient reports of a so-called expert, coupled with threats of quite inappropriate summary judgment applications which had not the remotest of chances of success and should never have been made by any professional adviser. Those allegations were made and persisted in from 2007 to 2013 without even being dignified by a draft pleading.
53. It was not surprising that the Respondents, faced with a threat of summary judgment, could concentrate efforts on meeting the anticipated attack, even though in the end it did not come, by producing witness statements which consumed a large amount of preparation time and no doubt cost. The delay and expense that was caused thereby were beyond anything I have experienced before in the whole of my time in the law.
54. These serious allegations, maintained over a period of 7 years, were then summarily withdrawn with the briefest explanation that they were not thought to be "necessary" for the Claimant's case. The delay must clearly have caused the prejudice to the just disposal of the case which the judge found.
55. In comparison, the complaint on behalf the Claimant that the Respondents "let sleeping dogs lie" without bringing the matter back to court, as they correctly acknowledge that they perhaps should have done, pales into complete insignificance.
56. I said in my order adjourning this application into court that I had been inclined to refuse permission and indeed I was inclined to do so on the basis the application was wholly without merit. I hoped that this might, even at the 11th hour, persuade the Claimant that further costs should not be wasted by pursuing the matter. I am very pleased to say that the legal aid authorities have seen fit not to waste further public money on the case.
57. However, as I correctly surmised, a simple refusal of permission would merely have resulted in the renewed application. I pulled back from a "totally without merit" determination essentially out of respect for the Claimant's advisers who seemingly were prepared to advance the case with the benefit of public funding.
58. In the end, having considered the arguments and having heard Mr Tritton in his careful submissions, I conclude that my initial impression was correct. I should have refused permission at that stage and I should have refused it on a "totally without merit" basis. I do so now and refuse this application.