England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Claim No HC10CO1711 7 Rolls Building Fetter Lane London EC4A 1NL
		23 July 2012

1. JUDGE PURLE: I now have a further application to rule upon, which, given the fact that the time for serving a notice to appeal bites in, in a few days, requires me to give judgment now.
2. I have already dismissed the claim, though the order has not yet been entered, for rectification. During the course of the hearing I raised with Mr Trace in his closing submissions whether or not this was more a case of estoppel by convention, and he said it was not, and made detailed submissions to me as to why his case on rectification was good, eventually concluding in his peroration that the bank had put forward the clearest possible case and asserting that they had proved their case beyond a reasonable doubt.
3. He also said, towards the end of his speech, at the beginning of his peroration, that the case possibly could have been pleaded another way, but it had been pleaded in the way it had, which was perfectly good enough for the bank. No application for permission to amend was made.
4. The impression I had was that Mr Trace had decided to stick to his guns, no doubt confident that he could persuade me on the basis of the case he had, and not wishing to be forced to make an application for permission to amend towards the end of the case.
5. It is also evident from what has been said to me today, and I intend this as no criticism whatever, that the fine details of estoppel by convention had not been considered by Mr Trace and his team. Unsurprisingly, as that was not the way in which the case was pleaded.
6. When I gave judgment I reached the conclusion, with considerable unease, that the claim should be dismissed because it seemed to me, rightly or wrongly, that the common assumption that was made, which was that all the properties were in fact charged, in support of the bank's indebtedness, and not just the individuals' indebtedness, did not gave rise to a right of rectification. No other case based, for example, on estoppel having been pleaded, I did not have to consider any such alternative case. Mr Trace has urged me to re-open the argument today, and I have heard his arguments. He has taken me through all the authorities, and he suggests that, on the facts that I have found, a case of estoppel by convention is made out. Alternatively, given that we are concerned with rights over land, namely a charge, he says this is the clearest possible case of proprietary estoppel arising directly out of my findings.
7. Against that it is said that the time for finality at first instance has passed, irrespective of what may happen in the Court of Appeal hereafter, and that the bank, whilst not expressly given the opportunity of amending, never actually asked for permission to amend at the trial, but decided to stick to the guns of its main case. In those circumstances, it should not be allowed to re-open the matter after judgment.
8. There is one matter I can deal with straight away. Mr Trace was very concerned to emphasise that because this was a speedy trial, with a consequentially speedy judgment following, the fact that the application was made after judgment should not put him in a worse position than if the application had been made between the circulation of a draft judgment and the subsequent handing down of an approved judgment.
9. I agree with Mr Trace on that point. He would however have been, at least provisionally in trouble, even if there had been a draft judgment. But he is in no worse position because the judgment has now actually been orally delivered, the order not yet having been entered.
10. There are a number of cases in which the jurisdiction of the court to amend after judgment is recognised, but it is a jurisdiction which has to be applied sparingly. As was said by Lord Justice May in Robinson v Bird [2003] EWCA Civ 1820 at para 94-8:

"Re-opening contentious matters or permitting one or more of the parties to add to their case or make a new case should rarely be allowed. Any attempt to do this is likely to receive summary rejection in most cases. It will only very rarely be appropriate for parties to attempt to do so. This necessarily means that the court would only be prepared to do so in 'exceptional circumstances', but that expression by itself is no more than a relatively uninformative label. It is not profitable to debate what it means in isolation from the facts of a particular case."

11. Later on he said:

"The question whether to exercise the jurisdiction can only depend upon the circumstances of the particular case."

12. It is clear from that and other authorities that once judgment is given, whether by circulation of a draft or by delivery of an oral judgment, the court's jurisdiction to amend the pleadings and to allow a new argument to be run is not to be as liberally applied as it is during the course of the trial itself.
13. As Mr Justice Neuberger put it in Charlesworth v Relay Roads Limited [2000] 1 WLR 230, where he considered the earlier decision of the Court of Appeal in Barrell Enterprises [1973] 1 WLR 19:

"The general rules relating to amendment apply so that:

(a) While it is no doubt desirable in general that litigants should be permitted to take any reasonably arguable point, it should by no means be assumed that the court will accede to an application merely because the other party can, in financial terms, be compensated in costs;

(b) As with any other application for leave to amend, consideration must be given to anxieties and legitimate expectations of the other party, the efficient conduct of litigation, and the inconvenience caused to other litigants;

Quite apart from, and over and above, those principles, because it is inherently contrary to the public interest and unfair on the other side that an unsuccessful party should be able to raise new points or call fresh evidence after a full and final judgment has been given against him, it would generally require an exceptional case before the court was prepared to accede to an application where the applicant could not satisfy the three requirements in Ladd -v- Marshall".

14. The reference to Ladd v Marshall is a reference to new evidence, but it is clear from that citation as a whole that calling fresh evidence (and none is sought to be adduced in this case) is only one reason for requiring great caution. When new points are raised, there is an inherent public policy against that being allowed after judgment. The court is instinctively inclined against any reopening of the case at that stage, but the jurisdiction undoubtedly exists.
15. I was also referred to the decision in Stewart v Engel [2000] 1 WLR 268, where Sir Christopher Slade, whilst acknowledging that a judge did retain a discretion to re-open issues after judgment before perfection of the order, said that the jurisdiction should be cautiously and sparingly exercised, but nonetheless it served a useful purpose in accord with the overriding objective of enabling the court to deal with cases justly. Exceptional circumstances were not made out in that case.
16. In the present case I have already found all the facts which in my judgment are relevant to an estoppel by convention claim. Ironically, the finding of those facts, on my understanding of the law, led me to conclude that the rectification claim was bad. The facts as found by me were not the facts which the defendants were asking me to find. They disputed those facts, and put forward an alternative version, but I did not accept that alternative version. Thus, the point upon which they succeeded was not a point they raised, but a point raised by me for the first time in Mr Trace's closing submissions.
17. Mr Trace, soon after I delivered judgment, raised the possibility of seeking permission to amend, and I indicated where I would be sitting in the ensuing period, without of course in any way acceding to the application.
18. Attempts were made immediately to fix a hearing, which was achieved with some difficulty because of my other commitments. Thus, the matter has been brought back before the court on the first possible occasion. Indeed, the defendants complain that they have not had three days' notice. I doubt very much whether an extra day's notice would have made that much difference. I suspect they would ideally wish to have had a considerably longer period of notice.
19. The defendants appear in person, and with the assistance of a McKenzie friend who I have allowed to address me and who has been conspicuously fair and moderate in all his addresses, and, at trial, in all his dealings with witnesses.
20. I asked him to explain the extent to which, if at all, the trial might have gone differently if the estoppel point had been raised earlier. He suggested that his approach to cross-examination may have differed because different questions would have been asked as to the bank's attitude to the guarantees and associated charges.
21. He also suggested, upon the basis of the evidence as it already stands, that a closer examination of the negotiations reveals several distinct stages and no common continuing assumption.
22. He did, however, question the bank's witnesses at trial on matters relevant to the common assumption, and subjective intentions are of very little weight in this case. The question of reliance also features in estoppel, but it is in my judgment obvious that the bank relied in this case upon the common continuing assumption that it already had a valid charge to secure the company's indebtedness over all the land. The bank nevertheless agreed to release the guarantees that had been given by the individuals, which inadvertently would have the effect of releasing the charges over the individuals' land. That release was plainly to the bank's detriment and defied the common assumption that had been made.
23. I am not persuaded that the course of the trial would or could have been significantly different. In my judgment this particular amendment is one which should exceptionally be allowed and the bank should be allowed to re-open its case.
24. I say that because the point that is now raised is a very technical one, designed to bring the pleadings in line with the facts as found by me. It is closer to a point of law in the light of the findings I have already made. As my decision was effectively that this was a case of estoppel by convention or nothing, it seems very unfair, if not perverse, for that conclusion to be used to defeat the claim as made, without enabling the bank to respond by saying, "Well, in that case, on reflection, let's have it as an estoppel by convention".
25. Had the defendants been legally represented -- and there is certainly no criticism to be made of them that they were not -- it may well be that this point would have emerged sooner in argument and the bank would have been alerted to the point in time to address the pleadings. The defendants did prepare written skeleton opening submissions, but this point was (unsurprisingly) not taken.
26. As it happens, I only raised the point myself in closing submissions. I can understand why at that stage of the proceedings Mr Trace, who had not had the opportunity to think it through, would wish to adhere to the case he had pleaded.
27. I did not myself offer Mr Trace the opportunity to amend, no doubt taking him at his word when he said that it was unnecessary. But once I found against him on that point, he more or less immediately said his clients wished now to consider whether in reality what I have found to be a gap in the pleaded case could be filled.
28. So far as the elements of estoppel are concerned, the common assumption that I have found seems to me to be a rather obvious example of the sort of common assumption that can found an estoppel by convention. I have been taken again through all the contemporaneous offers that were made to demonstrate the underlying assumption, which appear in the bundle.
29. Given the lateness of the hour -- it is now approaching 5.20 -- I am not going to go through them. But it is clear in my judgment that the underlying assumption was shared on both sides, and was communicated, not in as many words, but by the express making of offers which implicitly proceeded upon the basis that the bank had and would keep a charge in respect of the company's indebtedness over the whole site apart from one ransom strip which was separately dealt with.
30. Those included offers not just from or passing between the two counsel, but also (in one case) an offer emanating from Mr Olins who was the solicitor for the defendants.
31. It seems to me that the law on this point is adequately summarised by Lord Steyn in The Indian Endurance (No 2) [1998] AC 878:

"It is settled that an estoppel by convention may arise where parties to a transaction act on an assumed state of facts or law, the assumption being either shared by them both or made by one and acquiesced in by the other. The effect of an estoppel by convention is to preclude a party from denying the assumed facts or law if it would be unjust to allow him to go back on the assumption ... It is not enough that each of the two parties act on an assumption not communicated to the other. It was rightly accepted by counsel for both parties that a concluded agreement is not required for an estoppel by convention."

32. In my judgment there was constant communication throughout the negotiations on the implicit assumption that I have identified, and in those circumstances it seems to me that the bank is entitled to succeed on the estoppel by convention plea, the bank having plainly relied to its detriment upon that common assumption by entering into an agreement which committed it to give up its rights against the guarantors upon payment of a relatively small sum which thereby had the effect, unbeknown to the parties, because of the common assumption, of releasing many of the properties from charge.
33. I shall accordingly declare that the properties in question are to be treated as standing charged to secure the total indebtedness of the bank in respect of the judgment sum and any interest accrued since that date.