England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE COUNTY COURT
SITTING AT CENTRAL LONDON
(HER HONOUR JUDGE BAUCHER)

		Royal Courts of Justice Strand London, WC2A 2LL
		16 June 2016

1. LORD JUSTICE CHRISTOPHER CLARKE: This is a renewed application for permission to appeal the decision of Her Honour Judge Baucher sitting at the Central London County Court to give judgment in favour of the Defendant on the counterclaim. This case concerns building works carried out by the Claimant, SA Builders and Contractors Ltd, for the Defendant, Yvonne Holm.
2. The sequence of events is as follows. The claim form was issued in the Romford County Court on 22 October 2013 claiming £12,000, which included VAT together with interest, as the balance said to be due and payable under an agreement to carry out works at a flat in Hampstead. The claim was later amended upwards.
3. On 19 November 2013 a defence and counterclaim was filed on the prescribed form. The defence disputed that the full amount claimed was due because the work had been defectively done. Considerable detail was provided. Reference was made to three reports detailing defects and estimates of the costs of repair. The counterclaim was for £49,716 which was said to be the cost of rectifying the substandard, amateurish and unprofessional work.
4. At that time both parties were litigants in person. By February 2014 Miss Holm had acquired solicitors who on 19 February 2014 sent the Claimant what was described as a defence and counterclaim and filed it with the court. That was later corrected so as to read an amended defence and counterclaim. That pleading asserts that items on the disputed invoice number 3214 of 6 September 2013 were substandard. It complains that the Claimant was guilty of delay despite having received extensions and that a number of defects were found when Miss Holm moved into the flat. It refers to an acceptance of a snagging list, the absence of a detailed work plan for working off the snagging, the assessment of poor workmanship by three professionals, mistakes in performing plumbing work, a never ending list of defects, incompetent staff, failures in supervision and absences of workmen from the site. The counterclaim referred to the report of three experts and claimed the amount which the builder expert said was necessary to put everything right.
5. Meanwhile, on 28 February 2014 Mr Gashi, a director of the Claimant, signed a witness statement which was filed at the Central London County Court. In it he joined issue with the complaints against the Claimant. He said that the Claimant had offered to complete the remaining works, but that the Defendant had rejected these offers and terminated their agreement without any written notice. The outstanding invoice was for works which were completed, agreed and payable. Only 5 per cent of the works remained unfinished and that amounted to snagging. The quotes presented by the Defendant for completion were said to be unrealistic. Mr Gashi complained that materials which the Defendant had supplied were never delivered on time, sometimes not at all and were not of good quality. It was said that professional advice was ignored. It was said that the staff did not work slowly and in fact worked weekends. The statement claimed that on 23 September 2013 the Claimant's staff were not allowed to complete the remaining works and ended by stating that the Claimant had performed very well. It included the words:

"We do not accept that there are or that there were any damages to the Defendant's property caused by our company."

6. It ended:

"We strongly object defence statement presented by Miss Holm's representatives and our claim remained valid for full sum of £22,192."

7. In due course the Claimant obtained solicitors and a notice of acting was filed on 9 May 2014. The case was allocated to the multi-track in September 2014 and a CMC appears to have taken place.
8. On 12 March 2015 the Claimant applied unsuccessfully for relief from sanction, it having failed to submit a costs budget, or within the time applicable, to apply to the court for leave to ask questions of the court appointed expert.
9. On 16 March 2015 the case began. Both sides had counsel. The judge asked why there was no defence to the counterclaim. Counsel for the Claimant referred the judge to the statement of 28 February 2014. The judge said that she was going to accede to counsel for the Defendant's application for judgment in default on the counterclaim. Counsel for the Claimant, who was not counsel appearing today, then sought to make orally an application for relief from sanction and referred to the statement.
10. The judge then gave judgment. She held that the Claimant's witness statement did not set out the basis upon which the counterclaim was resisted and self-evidently was not a pleading. She said that a proper pleading should have been filed and that had not happened even by that date. Accordingly, she acceded to the Defendant's application and gave judgment for £49,716.
11. The statement to which she appears to have been referring in paragraph 3 of her judgment was not in fact the statement of 28 February, but a later statement of 14 November 2014 which in paragraphs 15 and 36 contains in greater detail the statement that all that remained uncompleted was 5 per cent of the works and that the claim for £49,716 could not possibly be justified.
12. On the next day counsel for the Defendant drew the attention of the court to certain documents. The first was a letter of 1 February enclosing the defence and counterclaim. He then referred to a letter enclosing the statement of 28 February with the words:

"Please enclose a copy of the statement in relation to the above claim."

13. That is what the transcript refers to, though I think what was meant was, "Please find enclosed a copy of the statement". He then referred to an order of 8 March and a letter from the Defendant's solicitors confirming that their clients had amended the defence and counterclaim. Counsel for the Claimant again sought to rely on the statement.
14. The judge then gave another short judgment. She referred to the requirements of CPR 16.5 as to the contents of a defence and in particular CPR 16.5(5), the notes in the White Book at 16.7.4 and CPR 15.4. The upshot was that she stood by her previous decision.
15. The Claimant now seeks to appeal on a basis which was not in terms put before the judge in that it is said to be entitled to rely upon CPR 12.3(2)(b) when taken with paragraph 1.1 of Practice Direction 12. That Practice Direction provides in paragraph 1.1 that:

"A default judgment is judgment without a trial where a defendant has failed to file either:

(1) an acknowledgment of service, or

(2) a defence.

i. For this purpose a defence includes any document purporting to be a defence."

16. Counsel for the Claimant submits that the 28 February statement or that statement taken together with the statement of 14 November 2014 was or were documents purporting to be a defence to the counterclaim.
17. Not without some reluctance, I have come to the conclusion that there is a realistic prospect of persuading the full court that a defence to the counterclaim had been filed because the statement of 28 February 2014, or that statement taken together with the statement of 14 November 2014, purported to be a defence to the counterclaim. That the documents were in the form of a statement is, as it seems to me, arguably not fatal because pleadings are nowadays accompanied by a statement of truth and thereby themselves constitute a statement of evidence.
18. The statements were not entitled in terms as a defence to the counterclaim, but their avowed purpose was to rebut the claims in the defence and counterclaim and say why they were ill founded. The statement of 28 February 2014 contained the contentions to which I have referred, including a contention that the work was not defective, that the Claimant was not to blame for the delay, that it was the Defendant who was at fault, that the Claimant had performed very well, that the Claimant had not been responsible for any damage to the Defendant's property and that the Claimant objected to the defence statement and maintained its entitlement to the full value of the claim.
19. I bear in mind also that this was a case in which the defence and the counterclaim could be said to be inexplicably linked. The basic case was that the work had been done badly and the counterclaim was the cost of remediation. The response was that the work had not been done badly and there was, therefore, no cause for a claim for damages, which were in any event far too high. The defence could be said to be defective in form, but not non-existent.
20. I am also persuaded that there is a significant and important question of practice here. The statement of 28 February 2014 was filed when the Claimants were unrepresented. The question arises as to the extent to which the court should be prepared to treat a document responsive to the defence and counterclaim as something that purports to be a defence to the counterclaim and whether, if it does so, the position changes if, as and when the self represented litigant obtains legal assistance.
21. The question arises in the context that no attempt appears to have been made to obtain judgment in default until shortly before or possibly only at the trial. The idea of judgment in default appears to have been floated in counsel for the Defendant's skeleton argument. Nor does any attempt seem to have been made to seek further information or to raise before the court the inadequacy of the statement as a defence document. When the application was made, the case was ready for trial. Indeed, it was the first day of the trial. It might be thought to have been wiser to continue with the trial rather than start with a strike out application on the footing that there was no defence pleaded to the counterclaim at all.
22. My reluctance arises because although the Claimant had the benefit of solicitors from May 2014, no attempt appears to have been made to file a pleading in the usual form responsive paragraph by paragraph to the counterclaim, the Claimant appears to have been guilty of several procedural mishaps and in the light of the judge's findings on the claim, the defence to the counterclaim does not look wholly promising. Above all, the point on the significance of the Practice Direction was not taken in terms either before the judge or before Elias LJ.
23. I propose, therefore, to grant permission to appeal. There is a question as to what precisely is the order which should fall to be appealed. I have before me in the papers an order dated 23 March 2015. That provides in paragraph 1 that:

"It is ordered that judgment on the counterclaim having been given by the court order dated 18 March 2015, interest thereon ordered in the sum of £2,237.22."

24. I do not, however, have before me any court order dated 18 March. Inquiries must be made as to whether the court made such an order. It seems to me that any permission should be a permission to appeal against the order dated 18 March 2015, if there was one, and paragraph 1 of the judgment of 23 March 2015.
25. There are outstanding interim orders which I am told are in the sum of £10,000 and £15,000 for the costs on the claim. I do not have those orders in front of me, but counsel for the Claimant accepted that it was appropriate to make permission to appeal conditional on the payment of those orders. It will, therefore, be necessary for the court to be supplied, in addition to any court order of 18 March 2015, with the interim orders referred to. I will order that permission be conditional on the satisfaction of those orders within a time scale that I will decide.
26. So far as costs are concerned, I contemplated making it a condition of permission to appeal that the Claimant should not seek any costs of the appeal and should pay the costs of the Defendant in any event, but I am persuaded that the appropriate course is to leave the question of costs to the Court of Appeal in due course.