England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
ON APPEAL FROM
THE MAYORS AND CITY OF LONDON COUNTY COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		16 July 2002

Mr Justice Laddie:

1. This is an appeal from a judgment of His Honour Judge Marr-Johnson sitting in the Mayor's and City of London County Court. The appellant, who is the claimant in the action, is Dr Singh Saluja. He is a general practitioner whose practice is in Southall. The respondents are Mr Partap Singh Gill and Netlink Property Services Limited. The learned judge held that the latter company was the corporate alter ego of Mr Gill and he treated Mr Gill as the effective defendant. The same course was followed by the parties before me and I will do likewise in this judgment. The learned judge stated that Mr Gill's occupation is a matter of some contention. At all material times he was trading under various names including PSG Property Management Services and Property Services Guaranteed. Apparently he also trades as P Gill Estate Agents Property Management Services and, of course, he trades through the second respondent, Netlink Property Services Limited. How Mr Gill makes his living lies at the heart of the action and this appeal.

The issues and background facts

2. The facts giving rise to the dispute between the parties may be summarised as follows. Dr Saluja owns premises at 36A Northcote Avenue, Southall. Part of those premises are used as a surgery from which Dr Saluja carries on his practice. Above it are four self-contained flats. According to Dr Saluja, in late 1998 he decided to use the flats to house asylum seekers of whom there were large numbers in the London Borough of Hillingdon at the time. The Borough paid rental for each asylum seeker housed. The four flats were to be used to house up to 24 persons nightly at a rate of £15 per person for bed and breakfast. Apparently this produced an income stream of £10,080.00 per month. According to Dr Saluja, on 15 October he agreed to employ Mr Gill as his managing agent to get in the rent from Hillingdon and manage the property in return for a fixed management charge of 10% of the rents received net of certain costs to be incurred in making the flats suitable for their intended purpose. He says that he dispensed with Mr Gill's services on 4 December for a number of reasons including alleged failure to account for moneys received and a demand to increase the management fee to 25%.
3. Mr Gill's version of events was and is rather different. He agrees that he became involved with Dr Saluja in relation to the Northcote Avenue property in October 1998 and that an oral agreement was reached on the 15^th of that month. However he says that he did not offer management services, at least in any normal use of that expression. Rather he took a tenancy of the flats in his own name for a period of one year certain starting on 19 October. He says that he then housed asylum seekers in the flats. The payments from Hillingdon should have gone to him. His liability to Dr Saluja was only for the rental of £800 per flat per month, that is to say a total of £3,200 per month. The balance was his. He says that the dispute with Dr Saluja did not occur on 4 December. Although there may have been a meeting between the parties on that day, the real dispute took place on 16 December. The nature of the dispute on that day was described by the judge:

"The defendant's account of that meeting was as follows. He said that he had asked for the meeting with the claimant because he had learned from Hillingdon that the claimant had contacted them and asked for all future payments to be made direct to him and not to the defendant. At the meeting the claimant, he said, was angry because he had discovered how much profit the defendant was making from the transaction.

There was, according to the defendant, a conversation between them along the following lines. The claimant explained that he had interviewed one of the occupants at Trinity Road and had elicited details of the payments which were being made by Hillingdon on his behalf. He told the defendant that he had worked out how much he was making, and was prepared to offer him 10% of the gross sums received. The defendant replied to the effect that he did not get out of bed for 10% and said that he wished to adhere to the existing agreement whereby he paid a fixed rent of £3,200 per month. After further discussion the claimant told him that he could either accept an offer of an increased fee of 25% or "bugger off out of my office and I will have the police called". There was then an acrimonious conversation which resulted in the claimant indeed summoning the police and the defendant returning to his office to obtain all the keys to the property held by him which he then handed over to the claimant. The defendant said he felt he had no choice in the matter because he was anxious to preserve his existing warm relationship with the London Borough of Hillingdon."

4. Since the agreement between the parties was oral, the issue of which version of events was correct depended to some extent upon the credibility of the witnesses. The learned judge said that there was one document which was critical to the issues before the court, namely a letter allegedly written and signed by Mr Gill and addressed to the manager of Dr Saluja's bank. It bears a date of 10 November 1998, that is to say nearly one month after the agreement was entered into and three weeks after the tenants moved in. It reads as follows:

"Mr J Bedale

Lloyds Bank

Bussiness (sic) Centre

Hounslow

Middx

Dear Mr Bedale

This is to confirm that I have an agreement with Dr Saluja to pay him a four weekly rent of £10080.00 minus 10% and electric and heating charges into Saluja Corporation Account at Lloyds Bank, Whitton High Street Branch.

Yours sincerely

[manuscript signature]

Mr Gill"

5. Tippex has been used and the document has been overprinted in three places. Mr Bedale's name appears twice and each is in manuscript written over Tippex. The words "Mr Gill" at the bottom of the page have been typed over another area of Tippex. The learned judge summarised Dr Saluja's case on this document as follows:

"In [Dr Saluja's] witness statement he said that he telephoned the defendant on 10 November and pointed out that almost three weeks had elapsed since the flats were occupied, but the defendant had still not signed any form of written agreement. The defendant replied that he would bring to the claimant's office "his letterhead", in other words a sheet of his usual headed writing paper, and would sign an agreement which would be written out on that sheet of paper. The defendant then came round to the claimant's office bringing with him a sheet of headed paper. A suitable letter recording the terms of the agreement and addressed to the claimant's bank manager was then dictated by the claimant to his secretary, Mrs Bansal, in the presence of the defendant. The letter was then typed out by Mrs Bansal and signed by the defendant in her presence.

In his written statement the claimant did not provide any explanation for the tippex corrections which were made. In oral evidence however the claimant said that when Mrs Bansal typed out the letter she had typed the claimant's name below the space for a signature from force of habit, and it had therefore become necessary to tippex over the claimant's name and substitute the words "Mr Gill". The claimant said that the letter was then faxed to his bank from his office. However the bank manager rang up to say that his name had not been spelt correctly, so the letter was subjected to a further application of tippex in the places where his name appeared; his name was correctly spelt in manuscript over the tippex; and the letter was then faxed for a second time to the bank, this time with the manager's name spelt correctly."

6. The contents of the letter are impossible to reconcile with Mr Gill's assertion that he was the tenant of the flats and that Dr Saluja was only to receive the £800 per month per flat rental. Mr Gill's case was and is that the letter is a forgery although he accepts that it is written on his own headed notepaper. As the learned judge noted, Mr Gill was unable to explain how a sheet of his paper had come into the claimant's possession.
7. Two types of evidence were produced at the trial in relation to the issue of which version of the oral agreement was correct. First there was evidence directed to the authenticity or otherwise of the 10 November letter. That was given by three witnesses, Mr Gill, Dr Saluja and Mrs Bansal. There was also a forensic report produced by a Dr Audrey Giles on instructions from Mr Gill. This was produced, on request from Dr Saluja's solicitors, only some two weeks before the trial. I will explain its contents later in this judgment. The second category of evidence was from two witnesses, Ms Garcia and Ms Talbot, who are or had been officers of the London Borough of Hillingdon. Their witness statements were in common form as follows:

"I, ….., know that Dr Saluja had agreed to let the 4 flats above his surgery known as 36a Northcote Avenue to Netlink Property Services Ltd, of which Mr P GILL is the director. On the basis of a one year tenancy for the period of 19^th October 98 to 18^th October 99, and accordingly we dealt with Mr P Gill &/or Netlink in the knowledge that they were the tenants of the said properties & therefore the landlords, as far as we were concerned."

8. It will be noticed that this evidence does not indicate the basis of these two witnesses' knowledge that Dr Saluja had agreed to let the flats. In particular it does not suggest that Dr Saluja had made any such admission to them. However, once the trial had started, Mr Jenkins, who appeared there and appears before me as counsel for Mr Gill, gave notice that additional statements from these two witnesses would be produced. Those witness statements were in essentially identical language. Ms Garcia's reads as follows:

"A meeting took place in early October 1998 in the flat known as 36^A Northcote Ave Southall. Present were Mr Saluja, Mr Gill, Dee Talbot + myself. Mr Saluja informed us that he had let the 4 flats at 36^A Northcote Ave to Mr Gill for a period of 1 year from 19/10/98."

9. As I understand it, this was the first time that it had been alleged that Dr Saluja had admitted to any third party that he had granted Mr Gill a tenancy and, as noted above, this only occurred in the course of the trial.
10. The learned judge heard the evidence and then found for Mr Gill. In particular he held that Dr Saluja had forged the 10 November letter. He does not say whether or when it was sent to the bank manager, although it appears that he may have thought that it was sent some months after the date it bore and, in particular, after December 1998 and therefore after the date on which the dispute between the parties arose. Thus in his judgment he noted:

"The original document was produced in evidence by the claimant. It is stamped as "Received", presumably by the bank, on 23 January in a year which I am unable to decipher from the copy in the court bundle, but which I take to be 1999."

11. Of course if the letter was received by the bank on 23 January, more than two months after the date on which it purported to have been written, this would have been significant and supportive of a finding of forgery. In fact it is agreed that the received stamp has nothing to do with the bank. It is, I understand, a mark affixed in a solicitors' office. The date on it is 23 January 2000, that is to say six months after these proceedings were commenced. Although the learned judge referred to the date when he thought that this document was received by the bank, it is not clear to what extent, if at all, that played a part in his decision that Dr Saluja had forged it. Furthermore he dismissed Dr Giles' forensic report concerning the signature as equivocal.
12. The judge's reasons for coming to the conclusion he did in relation to the 10 November letter is largely based on his assessment of the three main witnesses. He was clearly impressed by the way in which Mr Gill gave his evidence. He said of him that

"… he did not strike me as the sort of person who would be likely to advance a false claim against an older person of higher professional status, against the weight of a written document which on its face clearly supports the claimant."

13. He said that Mrs Bansal appeared an uncomfortable and reluctant witness who seemed glad to escape from the witness box at the conclusion of her evidence. He also was not impressed by Dr Saluja, who appeared to him to be devious and evasive.
14. This assessment was backed up by a number of other factors which the judge identified under four heads. First he referred to the probabilities of the matter:

"It is difficult in my view to see why the defendant should ever have taken a single sheet of his own headed paper round to the claimant's surgery as was suggested. It might be thought that the defendant could quite easily have had a copy of the agreement typed out in his own office in the ordinary course of business and sent round to the claimant for signature. What in fact was typed out was not, in the event, an agreement between the parties as such but a letter of comfort to the claimant's bank manager. As the defendant pointed out, if such a document were truly required one might expect it to be executed and despatched in a reasonably pristine condition, and he could easily have had the document retyped in his office if asked or, if the matter were very urgent, he could have returned to his office and fetched another piece of paper."

15. Thus the judge thought it was improbable that Mr Gill would have taken (or had) a single sheet of paper with him to Dr Saluja. By implication, he thought it was more probable that Dr Saluja would have visited Mr Gill's office and stolen a single sheet of paper. Further, he thought it was improbable that Mr Gill would have allowed such a scruffy document to be sent to the bank.
16. Second, the judge was impressed by the difference between Mrs Bansal's written evidence and her oral testimony. In fact what he appears to have been impressed with was the difference between Dr Saluja's evidence that the 10 November letter was dictated and signed in the presence of Mrs Bansal and the latter's evidence that it was merely signed in her presence.
17. Third, he thought that Mr Gill's account of events had a clear ring of truth about it. This appears to me to be a repetition of the judge's assessment of the demeanour of the witnesses and the point he had made earlier about the inherent probabilities of the parties' respective version of events.
18. The fourth point was expressed as follows:

"I am satisfied that on about 12 October the claimant told Valerie Garcia and Deirdre Talbot, two officers from the London Borough of Hillingdon Asylum Team, that he had let the flats to the defendant for a period of one year which they understood to run from 19 October 1998 to 18 October 1999."

19. I will have to analyse each of these matters later in this judgment. However it is convenient to note in relation to the latter passage from the judgment that Mr Mayes QC, who appears for Dr Saluja, says that the judge appears to have over-stated the impact of these two witnesses' evidence. Valerie Garcia confessed her lack of knowledge about the legal definitions about which she was being asked and Mrs Talbot admitted in cross-examination that the word tenancy had not been used because it would have stuck in her mind if it had been. I do not understand Mr Jenkins to dispute Mr Mayes' summary of the evidence on this point.
20. It will be appreciated that the learned judge made two findings against Dr Saluja namely that he forged a document and, by implication, that he stole a piece of Mr Gill's headed notepaper to do so. On the other hand Mr Gill was telling the truth when he denied that he had signed the 10 November letter which, as the judge rightly said, on its face clearly supports Dr Saluja' case.

The legal principles involved

21. Mr Mayes says that there has been a miscarriage of justice. Serious findings of dishonesty have been made against his client whereas it can be seen, not least from new evidence from Mr Bedale, the bank manager, on which his client wishes to rely, that he has been telling the truth throughout. Rather it is Mr Gill who is clearly guilty of perjury. For this reason he asks for an order for a retrial. Mr Jenkins resists this application. He says that in accordance with the triple test set out in Ladd v Marshall [1954] 1 WLR 1489, the court should not allow new evidence to be adduced at this stage. On the other hand Mr Mayes argues that, although the approach in Ladd v Marshall continues to be relevant to the exercise of the discretion to allow new evidence to be adduced, it is not to be enforced with the rigidity favoured by Mr Jenkins.
22. The test in Ladd v Marshall is well known; before new evidence will be allowed to be adduced on an appeal, three conditions "must" be fulfilled namely (i) it must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial, (ii) it must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive and (iii) it must be such as is presumably to be believed, or in other words, it must be apparently credible. Little turns on the third of these.
23. Mr Jenkins says that the triple test is like a three legged stool. If you knock away one of the legs, the stool falls over. Similarly, if one of the requirements is not made out, the new evidence is inadmissible. That, after all, is why the Court of Appeal expressed the test in mandatory terms. It follows that even if the new evidence is compelling and clearly truthful, it will not be admissible if it could have been obtained with reasonable diligence for use at the trial. Thus, in a case like this, even if it were shown that the finding of theft and forgery made against Dr Saluja are likely to be unsound and that, in truth, it was Mr Gill who was telling untruths, nevertheless the court cannot allow in the new evidence and, in practice, the judgment must stand if, as Mr Jenkins says is the case here, the new evidence could have been adduced earlier. On the other hand, Mr Mayes argues that historically Ladd v Marshall was not applied as rigidly as Mr Jenkins alleges and that, even if it was, a more flexible approach applies under the CPR.
24. It seems to me that the logical starting point is to consider how Ladd v Marshall was applied before the CPR. I have already noted that the Court of Appeal in that case talked of the triple test in mandatory terms, but this does not mean that it was always applied irrespective of the justice of the case. On the contrary it can be said that normally the justice of the case required the triple test to be applied strictly. Litigants should be disciplined into ensuring that they only fight an action once. For that reason in most cases it will be unfair to a litigant to subject him to a retrial, for example, because his opponent culpably failed to put all the best relevant evidence before the court at the first trial. The rule in Ladd v Marshall was applied so as to achieve justice.
25. However, achieving justice might occasionally require that the test be applied less strictly. This can be illustrated by reference to two cases. The first is Meek v Fleming [1961] 2 QB 366. The facts were quite unlike those in issue here. The plaintiff had brought and lost and action for damages for assault against a defendant who was, or was represented as being, a chief inspector in the Metropolitan Police. What the defence had not disclosed to the judge and jury who had heard the trial was that the defendant was no longer a senior officer, having been reduced in rank to a station sergeant as a result of a previous incident in which he had deceived a court. After judgment and on finding out the true status of the defendant, the plaintiff applied for an order that the judgment be set aside and a new trial ordered. He argued that the new evidence as to the status of the defendant went to credit rather than to any direct issue in the case. The Court of Appeal categorised the case as exceptional and ordered a retrial. In his judgment Holroyd Pearce LJ said:

"The court is rightly loth to order a new trial on the ground of fresh evidence. Interest reipublicae ut sit finis litium. The cases show that this court has given great weight to that maxim. There would be a constant succession of retrials if judgments were to be set aside merely because something fresh that might have been material has come to light." (p 377)

and

"Where a party deliberately misleads the court in a material matter, and that deception has probably tipped the scale in his favour (or even, as I think, where it may reasonably have done so), it would be wrong to allow him to retain the judgment thus unfairly procured. Finis litium is a desirable object, but it must not be sought by so great a sacrifice of justice which is and must remain the supreme object. Moreover, to allow the victor to keep the spoils so unworthily obtained would be an encouragement to such behaviour, and do even greater harm than the multiplication of trials." (p 379)

26. Willmer LJ, referred to Ladd v Marshall and noted that, where the fresh evidence sought to be adduced is directed solely to credit – as it did in Meek, the rule in that case was normally applied even more stringently. Nevertheless, said:

"These rules are based upon the maxim that it is in the public interest that there should be an end to litigation. But in my judgment the application of this maxim cannot be pressed to the extent of allowing a miscarriage of justice to go uncorrected." (p 381)

27. The second case is Hamilton v Brodie Brittain Racing Ltd (unreported) – Court of Appeal 13 December 1995 – in which the plaintiff had won an action in which he had claimed, amongst other things, for the hire of a Jaguar motor car while his car was retained by the defendants. In support of his case he had relied on certain invoices which showed how much he had spent on hiring the car. It appears that at the trial the defendant had disputed the authenticity of the invoices but had no hard evidence to support that challenge. The trial judge had accepted the invoices as authentic. The defendant subsequently adduced evidence which strongly suggested that the invoices were forgeries. Nevertheless the trial judge refused to order a new trial on the basis that the defendant failed to overcome the first requirement of Ladd v Marshall, that is to say it failed to demonstrate that it could not have obtained the new evidence in time for the trial. In her judgment allowing the appeal Butler-Sloss LJ said:

"Fraud goes to the root of the issue. If allegations are relevant and comply with conditions 2 and 3 of Ladd v Marshall, unless the Appellant has not acted in good faith, the court will look most carefully at whether there has been a miscarriage of justice and the plaintiff is prevented from the case being heard.

Two cases are of importance: Skone v Skone [1971] 1 WLR 812 in which the House of Lords approved the three conditions in Ladd v Marshall and said in relation to that case (Lord Hodson at p 817), and I paraphrase, that where a strong prima facie case of wilful deception is disclosed, a new trial will be ordered. That is strictly outside the very strict adherence to Ladd v Marshall.

In an unreported case, Linton v Ministry of Defence, decided by the House of Lords on 3^rd December 1983, Lord Scarman set out the Ladd v Marshall conditions as approved by Skone v Skone, and said "I would add that the conditions are not exclusive of other grounds. Deception and impropriety may provide special grounds for admitting evidence." Again at p 10. "had the other party deceived and been guilty of impropriety, the discretion would be exercised to allow fresh evidence."

Mr Barlow said quite rightly that the passages referred to in Skone v Skone and Linton v MoD are obiter. He sought to distinguish the facts from the present case. In my judgment, the speeches of Lord Hodson and Lord Scarman support my view that in case of fraud, condition one is considered with a greater degree of flexibility. Too strict an adherence to Ladd v Marshall should not inhibit a consideration by the court of the justice of the case."

28. These cases illustrate the point that the three legged stool analogy drawn by Mr Jenkins does not accurately represent the way in which the Ladd v Marshall principles were applied before the CPR. In most cases the application of those principles achieved justice to both parties by ensuring that none of them were subjected to unnecessary repeat litigation. However there were rare cases in which the application of the rules might give rise to injustice and, where that was the case, the courts had the power to exercise their wide discretion so as to permit new evidence to be adduced.
29. The impact of the CPR upon the Ladd v Marshall principles has been considered a number of times recently. It is only necessary to refer to two decisions of the Court of Appeal. The first is Hertfordshire Investments Ltd v Bubb [2000] 1 WLR 2318 in which an important passage from the judgment of Morritt LJ in Banks v Cox (unreported) – 17 July 2000 – was cited with approval:

"The position governing applications to adduce fresh evidence on appeal is now governed by CPR r 52.11(2). The court will not consider evidence which was not before the court below unless it has given permission for it to be used. It is no longer necessary to show "special grounds." The discretion must also be exercised in accordance with the overriding objective of doing justice. However, in Banks v Cox … Morritt LJ said:

"In my view principles reflected in the rules in Ladd v Marshall remain relevant to any application for permission to rely on further evidence, not as rules but as matters which must necessarily be considered in an exercise of the discretion whether or not to permit an appellant to rely on evidence not before the court below."

… It follows from all of this that it cannot be a simple balancing exercise as the judge in this case seemed to think. He had to approach it on the basis that strong grounds were required. The Ladd v Marshall criteria are principles rather than rules but, nevertheless, they should be looked at with considerable care …" (p 2325)

30. The second case is Hamilton v Fayed [2001] EMLR 15 in which Hertfordshire Investments v. Bubb was cited with approval. For present purposes it is only necessary to refer to two brief passages in Phillips MR's judgment:

"We consider that under the new, as under the old, procedure special grounds must be shown to justify the introduction of fresh evidence on appeal. In a case such as this, which is governed by the transitional provisions, we do not consider that we are placed in the straitjacket of previous authority when considering whether such special grounds have been demonstrated. That question must be considered in the light of the overriding objective of the new CPR. The old cases will, nonetheless, remain powerful persuasive authority, for they illustrate the attempts of the courts to strike a fair balance between the need for concluded litigation to be determinative of disputes and the desirability that the judicial process should achieve the right result. That task is one which accords with the overriding objective." (paragraph 11)

"In particular it will not normally be in the interests of justice to reopen a concluded trial in order to introduce fresh evidence unless that evidence will probably influence the result." (paragraph 13)

31. These cases make it clear that under the CPR the rule in Ladd v Marshall is not to be applied rigidly, if, which I doubt, it had ever been. In most cases fairness to both parties includes requiring them to conduct litigation in a manner which gives rise to finality without the need for two or more bites at the cherry. The existence and application of the rule in Ladd v Marshall is a discipline applied to the parties which is both in the interests of the administration of justice as a whole and in the interests of the parties. It follows that although I do not accept Mr Jenkins' three-legged stool analogy, it is undoubtedly true that the courts must continue to consider the impact of Ladd v Marshall when considering applications for permission to adduce new evidence. If the circumstances fall squarely within the rule, the application will be successful. If they do not, in the great majority of cases it will not. That is the approach I shall adopt in this case.
32. There is, however, one additional point arising in relation to the application of Ladd v Marshall which has to be considered. It will be recalled that the first requirement is that it be shown that the evidence could not have been obtained with "reasonable diligence" for use at the trial. Mr Mayes argues that it is not enough for the party resisting admission of the late evidence to show that it was available before the trial, he must also demonstrate that it would have been adduced and relied on from the outset if the other party had prepared its case with reasonable diligence. For this proposition he relies on Crook v Derbyshire [1961] 3 All E R 786. That was a case in which the plaintiff worked for the defendants in their restaurant. She fell down some steps and brought proceedings for negligence against the defendants alleging that the wooden hand rail was in a dangerous state. Besides giving evidence on her own behalf on this issue, she was supported by the evidence of her husband and three other visitors to the premises. The defendants called the previous owner occupiers of the premises who gave evidence that a particular type of repair had been carried out on the handrail four or five years before the accident. Accordingly the handrail could not have been dangerous. The trial judge accepted the defendants' evidence and dismissed the action. In asking for a retrial, the plaintiff wished to rely on new evidence, including evidence from the joiner who had carried out the work for the previous owner occupiers and who was prepared to say that the particular repair which would have rendered the handrail had not been made. The Court of Appeal unanimously allowed the new evidence to be adduced.
33. Ormerod LJ, having recited the defendants' arguments against admission, said:

"But this must be borne in mind, and I think it is important: that at that time the plaintiff's solicitors had the evidence of the plaintiff herself and of Mr Crook, her husband, to whom these premises were well known, and in addition the evidence of three other witnesses – a newsvendor, a window cleaner and, perhaps more important than any other, one who delivered potatoes regularly at the premises – all of whom spoke as to the condition of the hand-rail, not before the accident and in the time of Mr Harley's occupation, but in the time of the defendant's occupation. All of these witnesses said – and Mr Bromilow, the man who delivered potatoes, said it with greater particularity – that this hand-rail was in an unsound condition, and that the controversial plank, the groove board, had been put in after the accident had happened. That is the case which we have to consider. I should have thought that it was not unreasonable, in those circumstances, for the plaintiff's solicitors to come to the conclusion that the case was well established and the evidence was sufficient to obtain a verdict for the plaintiff on the grounds of breach of duty of the defendant and to go no further." (p 789)

And

"But having regard to the evidence which was in the possession of the plaintiff's solicitors at the time of trial … it does not appear to me that there was anything unreasonable in the conduct of the plaintiff or those advising her in not searching so diligently that this evidence might possibly be discovered." (p 790)

34. It is apparent that the trial judge did not believe the direct evidence given by the plaintiff and her four witnesses. Further, in an earlier passage Ormerod LJ cites an extract from the trial judge's judgment where the latter concludes that either the defendant was deliberately lying or was telling the truth. He preferred the latter conclusion.
35. It appears to me that Ormerod LJ's judgment is consistent with Mr Mayes' submission. The discipline imposed on parties by the application of the Ladd v Marshall principles, requires them to conduct litigation fairly and as thoroughly as reasonable. Even before the entry into force of the CPR it did not require them to turn every stone in the search for evidence. Nor did it require them to guard against the most remote and unlikely turn of events.
36. Much the same approach was adopted in the other two judgments. Harman LJ started by emphasising how important it was to apply Ladd v Marshall and not to relax their application "out of sympathy or out of suspicion that perhaps justice may not have been done" (see p 790). Nevertheless he said:

"The question is whether in not making that inquiry the plaintiff's solicitors failed in that standard of duty which a solicitor owes to his client and in respect of which, if he fails, no further opportunity will be given to call the evidence which he might well have procured, but failed to do so. My opinion of this matter is that there was no failure of diligence on the part of the solicitors here. There was no reason to think that this angle would be productive or that it was necessary to make inquiries of this sort of a man who, as must be concluded, was in the other camp. ... I do not think the solicitors fell in any way short of the duty which they owed to their client, and, therefore, I do not think the rule which Ormerod LJ has already read, and which forbids the calling subsequently of further evidence which could have been with reasonable diligence called at the trial, debars us from allowing that course in this case." (p. 791).

37. Pearson LJ put it as follows:

"If it was proved that the hand-rail was firm and secure at that moment, then the plaintiff might well fail. The plaintiff's solicitors had, or appeared to have, very strong evidence on that point. … Therefore, the plaintiff's solicitors might well feel that they had clear and direct evidence on the material point and that it was not necessary or desirable to incur further expense by investigating past history, even if they were able to do so." (p 792)

38. Crook v Derbyshire is a decision under the old Rules of the Supreme Court. However it seems to me that it must apply with at least as much force now under the CPR. The overriding objective includes the necessity to save expense, to deal with cases in ways which are proportionate to the amount involved and the complexity of the issues and to ensure each case is allotted an appropriate share of the court's resources. Litigants are required to help the court to further the overriding objective (CPR Part 1.3). The principle of proportionality finds expression throughout the CPR. It applies, for example, when the court has to decide what order for costs to make at a trial. As Judge LJ said in Ford v GKR Construction Ltd [2000] 1 All ER 802:

"Civil litigation is now developing into a system designed to enable the parties involved to know where they stand in reality at the earliest possible stage, and at the lowest practicable cost, so that they make may make informed decisions about their prospects and the sensible conduct of their cases. Among other factors the judge exercising his discretion about costs should consider is whether one side or the other has, or has not, conducted litigation with those principles in mind." (p 807, emphasis added)

39. The pressure to conduct litigation in a manner proportionate to what is at stake would be undermined if the effect of Ladd v Marshall were to impose on litigants an obligation to search for and produce at trial all evidence which might prove beneficial even when, on a reasonable assessment, it is unnecessary. This does not mean that a party can take a substantial risk by putting forward the bare minimum which he thinks will just carry him past the winning post in the hope or expectation that, if his gamble does not pay off, he will be allowed to put more evidence before the court on appeal or at a retrial. On the other hand, particularly under the CPR, a party should not be required to engage in overkill. The significance of this to the instant case is that Mr Mayes argues that, even if the new evidence he wants to adduce at a new trial could have been found prior to the trial before His Honour Judge Marr-Johnson, it was reasonable for Dr Saluja and his lawyers to believe that it was not necessary. The claimant's case was so strong without that evidence that it would have been disproportionate and wasteful to have added it.
40. In the light of the above principles, I can turn to the two issues which are live before me, namely whether Dr Saluja has made out the first and second requirements of Ladd v Marshall. It is convenient to start with the second requirement.

Is the proposed new evidence likely to have an important influence on any retrial?

41. Mr Mayes argues that the evidence his client wishes to rely on would probably have an important influence on the result of the case. Although it is not necessary to show that it will be decisive, he says that it is likely to result in Dr Saluja winning the action.
42. It consists of two witness statements from Mr Bedale, the bank manager to whom the alleged forged letter of 10 November 1998 was sent, together with some contemporaneous documents found in his files. The first statement includes the following: (1) Dr Saluja told him, Mr Bedale, that he intended to enter into an agreement with Mr Gill to rent out the rooms in the flats over the surgery to refugees, (2) he did receive the letter of 10^th November by fax, (3) Dr Saluja often spelt his name incorrectly, he may have informed him accordingly and that, in any event, the copy of the letter he received included the manuscript amendments, (4) shortly after receiving the letter of 10^th November, Mr Bedale telephoned Mr Gill - it was the only time he did so, (5) "the only reason for telephoning Mr Gill was to seek confirmation of the contents of the letter of 10^th November" and "the fact that there is no note on the file and that there was no follow up letter indicates that Mr Gill verbally confirmed the contents of the letter" and (6) the stamp bearing the words "Received 23^rd January 2000" is not the bank's.
43. The second witness statement was produced after Mr Bedale had read, amongst other things, Mr Gill's skeleton argument. Mr Bedale noted that the latter document suggested that in his first statement he had not identified when the letter of 10^th November had been received by him. He therefore confirms that he is almost certain that he received the letter on either the 10^th or 11^th November 1998. He also states expressly that he needed confirmation from Mr Gill of the contents of the letter and he says that he received it from him. Finally he exhibits a letter dated 11^th November from a Shelly Jeffries of Hillingdon Social Services to him which states as follows:

"Dear Mr Biddell,

Dr Saluja has asked me to confirm that we presently have an agreement with Mr Gill re the above properties – who is Dr Saluja's agent. The agreement is on a night to night basis for B&B accommodation at the cost of £15 per night per person."

44. In my view, if this evidence is accurate, it adds credence to Dr Saluja's version of events. It meets the learned judge's possible misconception that the crucial letter of 10 November was not received until months later than its date, and well after the parties had fallen out. It undermines Mr Gill's case that Dr Saluja became angry when he found out about the income to be obtained from housing asylum seekers and tried to change the terms of their arrangement. It will be recalled on this point that, according to Mr Gill, that anger was expressed on 16 December, yet the 10 November letter and Mr Bedale's evidence that it was received on that or the next day must mean that Dr Saluja knew of the income at least a month before the alleged expression of anger. The new evidence, if accurate, means that Mr Bedale discussed the contents of this letter with Mr Gill almost immediately after it was sent. That is impossible to reconcile with Mr Gill's assertion that it is a forgery which he had nothing to do with and knew nothing about. If it had been a forgery, Mr Gill would have protested his ignorance of it to Mr Bedale. He did not do so. I should add on this point that Mr Jenkins did not suggest any other reason for Mr Bedale having telephoned Mr Gill other than to confirm the contents of the letter. Finally, the letter from Ms Jeffries exhibited to Mr Bedale's second statement strongly suggests that, far from Dr Saluja admitting that he had granted a tenancy to Mr Gill, he said that he had appointed him as his agent. This does not sit happily with the second round of evidence from Valerie Garcia and Deirdre Talbot produced during the course of the trial and upon which the learned judge appears to have placed considerable weight.
45. Mr Jenkins attacks the new evidence. In particular he argues that Mr Bedale does not say that he actually remembers the conversation with Mr Gill. He says that he has merely drawn inferences from the documents on his files. Mr Jenkins is a formidable advocate and I have no doubt that he will be able to subject Mr Bedale to formidable cross examination. However, at this stage it is not necessary for Mr Mayes to prove that Mr Bedale and all the new evidence will definitely withstand cross-examination. As Lord Denning said in Ladd v Marshall, it is sufficient if the new evidence is apparently credible. I have no hesitation in coming to the conclusion that the new evidence here meets that requirement. Indeed, it appears to me to ring true. There is a substantial possibility that it will prove reliable and accurate. If so, it substantially undermines Mr Gill's case. The second test in Ladd v Marshall has been made out.

Could the evidence have been obtained with reasonable diligence for use at the trial?

46. This is the point on which most of the argument has focused. Mr Jenkins says that it is apparent that Dr Saluja had talked to Mr Bedale about the case before the matter came on for trial. His evidence could therefore have been adduced in good time and a retrial could have been avoided. Therefore, even if the new evidence is accurate and shows that Dr Saluja was not guilty of theft and forgery, it should be excluded.
47. The arguments in relation to this fall under three heads. First, even were Mr Jenkins' correct in his submission that some of this evidence could have been adduced before the trial, that does not hold true for all of it. In particular, there is no suggestion that Dr Saluja or his lawyers could have known of the existence of Ms Jeffries' letter to the bank. Furthermore, that document relates to the evidence given by the two other Hillingdon employees who suggested, but only after the trial had commenced, that Dr Saluja had admitted that he had granted a tenancy to Mr Gill. In those circumstances, that letter and Mr Bedale's evidence relating to it could not have been obtained earlier. Similarly, it does not appear that anyone suggested that the Received stamp on the 10 November letter referred to the date on which the letter was received by the bank. This appears to have been a misconception which only came to light in the judgment. I am not persuaded that anyone would have sought Mr Bedale's evidence on this issue before the trial. It follows that at least those pieces of evidence come within the Ladd v Marshall principles.
48. It seems to me that there are strong arguments that, in view of the strong findings made against Dr Saluja, it would be just to order a retrial in which these limited items of evidence are allowed to be adduced. However, if that were an appropriate course to adopt, I think there are also good arguments for allowing all the proposed new evidence to be adduced. If there were to be a new trial it would be unappealing to allow the claimant to adduce some but not all the evidence which should be put before the court, particularly where, as here, the excluded matter is obviously highly material. However, for the reasons set out below, there are other grounds on which it is appropriate to allow a retrial with all the new evidence so it is not necessary to decide the case on this basis.
49. The position relating to the rest of Mr Bedale's evidence is somewhat different. At the trial Dr Saluja gave evidence which shows that he was aware that Mr Gill had spoken to the bank manager. Mr Jenkins relies on the following passage of the transcript:

"Q. Let me put this to you straightaway Mr Gill's case about that letter. It is not a point I particularly want to address at the moment, but whilst we are talking about the letter, it is his case that he did not sign that letter nor did he dictate it?

A. Well I was there, my secretary who is also present in the court now was there. She is willing to vouch for it. My bank manager will vouch for it.

Q. Your bank manger was not there, was he?

A. No, but in the next letter he has written he has taken Mr Gill's telephone number which I have given to him and he spoke to Mr Gill. My chartered accountant Petty Boosters (?), they will vouch for it. He has spoken to him as well.

Q. Indeed, I am sure, but none of these people were present when this letter was written, were they?

A. No, but this letter was faxed to him first and then the letter follows in the next pile. You will see it is dated later on." (Transcript Day 1 p 43)

50. It appears that the only point being considered was whether Mr Bedale had witnessed the creation of the 15 November letter. It is not clear that Dr Saluja knew that Mr Bedale had discussed the contents of it with, and received confirmation from, Mr Gill or knew that he was prepared to give evidence on this subject. Nevertheless it is not disputed by Mr Mayes that the evidence which Dr Saluja wishes to adduce now from Mr Bedale could have been obtained prior to the trial. The issue is whether he should be penalised now for having failed to do so.
51. Mr Mayes argues that Dr Saluja and his lawyers were entitled to conclude that there was no need to produce any more evidence than was already before the court. They had every reason to be very confident of the outcome of the trial. First, there was the inherent improbability of Mr Gill's version of events. If one assumes that Dr Saluja wanted to forge Mr Gill's signature on a document showing falsely that he had entered into a management agreement, the simplest and obvious course would have been to recite all of the alleged terms on a false agreement and to attach the forged signature to it. It would have been dated at the time the agreement was entered into. It would not have had to be on a piece of headed notepaper. Therefore it would not have required Dr Saluja to steal the paper from Mr Gill. By comparison, the letter of 10 November 1998, seems an unnecessarily round about way of using a forged signature. It is dated a month after the agreement was entered into. Since it is clear that Dr Saluja knew in advance that the premises were to be let to asylum seekers, one has to ask why he did not produce this letter earlier. Furthermore, it does not record all the terms of the agreement between the parties.
52. Second, Dr Saluja and his lawyers would undoubtedly be comforted by the knowledge that there is not a single document which supports Mr Gill's version of events. Indeed, there are two which seem to support Dr Saluja. One is the alleged forgery of 10 November. However this is not the only document. There is another one which Mr Gill handed to Dr Saluja very shortly after they entered into their agreement. Insofar as relevant it reads as follows:

"AGREEMENT BETWEEN

DR R.S. SALUJA & MR P.S. GILL

RE: FLATS 1,2,3,4,

36A NORTHCOTE AVENUE

SOUTHALL

UB1 2AY

C/O DR R.S. SALUJA

As per conversation today dated Thursday 15 October 1998, please accept this letter as an agreement to accepting the four flats above your clinic. I have listed below all costs involved in our discussion. I hope not to have missed any expense out that was agreed. Please accept my apologies if I have, and if you could inform me as soon as possible so as I can make the necessary amendments. I thank you for your business in advance and will in no doubt speak to you soon.

As discussed, costs to be taken out of rent: …

Council Tax at 285.78 (6 months) x 4n = 1143.12

Breakfast x 4 21.00 x 6 months …"

53. It will be noticed that this document refers to Dr Saluja giving Mr Gill his "business". It nowhere refers to Mr Gill being the tenant nor is there anything in it which suggests Mr Gill was to be a tenant either for a year certain, as he alleged, or any term. It does not say that Mr Gill was to pay rent. Furthermore it is common ground between the parties that, whatever the nature of the arrangement between them, Mr Gill was to carry out works on the property to make the four flats suitable for use by asylum seekers and to deduct the cost of those works from the income stream. However, if Mr Gill was to be believed, Dr Saluja was to receive rent but it was entirely a matter for Mr Gill how he filled the flats and it was he who was to make the money by providing bed and breakfast accommodation to Hillingdon. It follows that, on this version of events, Mr Gill would have to bear the cost of providing breakfasts to the occupants and would have to pay Council Tax. They would only be Dr Saluja's responsibility if he, not Mr Gill, was providing the accommodation to the local council. Although Mr Gill gave evidence that this document was produced by his secretary in his absence, he had to accept that it was a transcription of his own manuscript notes. As for the references in it to the deduction of breakfasts and Council Tax (that is to say that these costs would be borne by Dr Saluja), his evidence was that this was a mistake. Notwithstanding this, at the stage when Dr Saluja was preparing for the trial there existed a contemporaneous document, produced by Mr Gill which supported his case and was inconsistent with Mr Gill's. Unfortunately the learned judge made no reference to this document in the judgment.
54. Third, Dr Saluja could draw comfort from the fact that the only evidence to be given in support of Mr Gill's version of events was from Mr Gill himself. On the other hand Dr Saluja could rely not only on his own evidence of what happened but also the evidence of his secretary who had witnessed the 10 November letter being signed.
55. Finally, even if, Dr Saluja and his lawyers had entertained any worries about the outcome of the case, shortly before the trial they received further encouragement to believe that Mr Gill's story would not be upheld.
56. I have already mentioned that a forensic report was produced by Dr Giles. Mr Gill did not propose to rely on it. Dr Saluja's lawyers pressed for it to be released to them. Some two weeks before the trial the defendants waived their claim to privilege. The learned judge described the report as equivocal. In fact I think it goes rather further than that. Dr Giles is a handwriting expert. In her report she analysed the signature on the allegedly forged document against other authentic signatures of Mr Gill. Her conclusion is expressed as follows:

"It is extremely difficult to draw any conclusion from this examination. However, the balance of similarities and differences observed amount to positive evidence that the questioned signature is a genuine signature, although this evidence is only weak."

57. Perhaps, just as telling as this is her finding in the body of her report that the allegedly forged signature had not been traced and did "not follow the pattern most commonly observed in simulated signatures". Mr Jenkins accepts that there is nothing of substance in this report which indicates that the signature was forged. In other words Dr Giles did not have to carry out a balancing assessment of features which pointed towards and away from the authenticity of the signature. Such indicia as were present all seem to have pointed towards authenticity.
58. In my view, faced with this material, it was reasonable and proper for Dr Saluja and his lawyers to conclude that the expenditure of further time, resources and money on chasing up additional lines of enquiry and, in particular, seeking to obtain evidence from Mr Bedale was unnecessary and disproportionate. In coming to that conclusion I do not forget Mr Jenkins' argument that the allegation of forgery was serious and therefore demanded greater thoroughness on the claimant's part. I accept that submission. However it appears to me that Dr Saluja was faced with an implausible defence which was inconsistent with all the documents, including a contemporaneous one produced by the defendant, and it was reasonable to conclude that sufficient had been done to prove his case. In those circumstances, and in accordance with the approach adopted by the Court of Appeal in Crook v Derbyshire, I have come to the conclusion that the claimant's gathering of evidence for this trial was reasonably diligent and that he does not fail to meet the first requirement in Ladd v Marshall. In those circumstances, I have come to the conclusion that the proper course is to direct that there should be a retrial.
59. Finally I should say something about the gravity of the finding against Dr Saluja. It has not been suggested that, prior to the judgment in this case, there was any blemish on his character. Dr Saluja's loss goes far beyond the immediate financial consequences of losing a civil action. He has been branded a forger and, by implication, a thief by an impartial tribunal. On the other hand the new evidence, if maintained at a retrial, suggests that Mr Gill has dishonestly given evidence and has accused an honest man of having fabricated a document which, in reality, he produced himself. If the new evidence stands up, then the dishonesty of Mr Gill is certainly no less serious than that which persuaded the Court to order retrials in both Meek v Fleming and Hamilton v Brodie Brittain Racing Ltd. Thus, even if this case did not fall within the normal application of Ladd v Marshall principles, I would adopt the same approach as was adopted by the Court of Appeal in Meek and Hamilton. There is here a significant risk that Mr Gill's evidence was fraudulent and that a particularly harmful miscarriage of justice has been perpetrated. In those circumstances it is appropriate to order a retrial. There are no balancing factors which point away from taking this course. It is not suggested that a retrial would cause any grave hardship to the defendant. His evidence is that his management businesses are very lucrative. It is not suggested that the financial burden of a new trial would be beyond him. Furthermore, if there is a retrial and Dr Saluja loses again, there is no doubt that he will have to pay the costs. Again there is no suggestion that he is likely to be incapable of doing so.
60. For the above reasons, I will order a retrial.