The Judicial Committee of the Privy Council Decisions

JUDGMENT OF THE LORDS OF THE JUDICIAL

COMMITTEE OF THE PRIVY COUNCIL,

Delivered the 13th December 1999

------------------

Lord Browne-Wilkinson

[Delivered by Lord Clyde]

------------------

1. The appellant is a Guernsey registered company ("Vekaplast") which in 1983 and 1984 was engaged in the manufacture and sale of UPVC windows. The managing director of Vekaplast was and is a Mr. Picot. He has represented the company throughout the litigation which led up to this appeal and he appeared before the Board and presented the appeal on behalf of the company. The respondents, Mr. and Mrs. Jehan, were respectively a director and the company secretary of Vekaplast and were authorised to sign cheques on behalf of that company. They also carried on a business in Guernsey which included the fitting of windows made by Vekaplast. That business traded under the name Aquacraft.

 

2. Early in 1984 the respondents went on holiday for three weeks. As soon as they returned Mr. Jehan was called to a meeting with Mr. Picot and his accountant in Jersey. This took place on 24th March 1984. Mr. Picot then asked Mr. Jehan to explain a number of payments which had been made by cheques drawn on Vekaplast. Mr. Picot said that he had discovered these payments while looking at the company’s records in Guernsey during the absence of the respondents. He regarded them as unauthorised and unjustified. An agreement was then made in settlement of the matter whereby, among other provisions, Mr. Jehan was to resign as a director and general manager of Vekaplast and as a director of its parent company T.A. Picot (C.I.) Ltd., was to sell to Mr. Picot his whole shareholding in T.A. Picot (C.I.) Ltd., and was also to come under a restrictive covenant preventing his being involved in any business of the manufacturing, selling, fixing or otherwise of UPVC windows in Guernsey for five years. Mr. Jehan later claimed that the agreement had been entered into under duress and on that ground he successfully defended enforcement proceedings brought against him by Mr. Picot. That action was dismissed by the Royal Court on 25th February 1986. Mr. Picot then appealed against that decision. That appeal eventually failed but on 12th November 1987 while that process of appeal was under way he commenced proceedings against both the present respondents. That action was adjourned sine die on 10th December 1987. On 11th October 1990 Mr. Picot commenced a second action against the respondents and eventually in 1992 these two actions were consolidated into the proceedings which have now come before the Board.

 

3. These proceedings relate to nine cheques which the respondents had signed between April 1983 and January 1984. The cheques were drawn on Vekaplast and were in some cases in favour of Aquacraft and in others in favour of persons to whom the respondents were indebted. Mr. Picot alleged that the respondents had falsely and fraudulently represented that these cheques had been issued for debts and services. The payments were irregular and unauthorised and he claimed from the respondents payment of a sum of £23,958.09 as monies had and received or converted for their own use. The present action came to trial before the Deputy Bailiff sitting with three Jurats in 1994. In the course of the hearing Mr. Picot modified his original claim to a figure of £16,720. The hearing lasted for a considerable number of days between June and August of that year and involved a detailed investigation of the records of work done by Aquacraft over the relevant period. The Deputy Bailiff gave a full and careful summing up to the Jurats. The Jurats retired to consider the matter and decided to dismiss Mr. Picot’s claim. He appealed unsuccessfully to the Court of Appeal and it is from the decision of that court that he now appeals to Her Majesty.

 

4. Mr. Picot was both clear and courteous in the presentation of his appeal. He is plainly aggrieved by the decision of the Royal Court and regretted that the Court of Appeal had not explored the whole facts and evidence afresh. The Jurats had of course not given reasons for the decision which they had reached. That was in accordance with the practice of the Royal Court. But Mr. Picot expressed some bewilderment at how they could have reached a decision adverse to himself. He regarded the decision as perverse. His criticisms were advanced with restraint but his concerns were clearly sincerely felt. Since he has had so close and personal an interest in the matter and has lived with it through the successive stages of the litigations it is easy to understand the reality and depth of his concern. But his intimacy with the problem may also carry with it the very real difficulty of adopting a more objective view of it.

 

5. Mr. Picot made no criticism of the summing up by the Deputy Bailiff in the Royal Court. It was balanced and comprehensive. Copies of it were made available to the parties at the time and the opportunity was afforded to them to raise comments on it. That opportunity they took and the Jurats were recalled and given further directions in light of these comments. The Deputy Bailiff was careful to secure, particularly where the case was being presented by a lay person, that the hearing was fairly conducted. The main thrust of Mr. Picot’s attack was upon the factual evidence which had been led at the hearing before the Royal Court. But it is convenient to deal first with what were presented as two points of law.

 

6. The first related to the failure by the Royal Court to admit and to listen to a tape recording which had been made of part of the meeting on 24th March 1984. Mr. Picot submitted that the Jurats should have been allowed to hear the recording. He said that the recording included certain important statements made by the first respondent. He would have wished that the Jurats could have heard the recording of what was actually said. He described the words as ringing in his head, and he plainly regarded the aural reproduction of them as significant for the presentation of his case. The question of the admission of the tape was raised at the outset of the hearing before the Royal Court. It appeared that the tape had disappeared for some period and had not been available, and may not even have been mentioned, at the time of the hearing in 1986 when the first respondent was submitting that he had been under duress at the meeting. It had reappeared later. Mr. Picot explained to the Board that he had thought it had been disposed of but had then subsequently located it. Questions were also raised about the quality of the recording and the accuracy of such transcripts as there were. Furthermore the recording only covered the first 13 minutes or so of what was a meeting of some four hours. After some discussion the Deputy Bailiff deferred a final decision on the admission of the tape and the trial started. At a later stage during the course of the cross-examination of Mr. Picot there was further discussion on the point and the decision was then reached by the Deputy Bailiff that the tape should be used to counter any denial by Mr. Jehan of his having said any of the things which, in accordance with the transcript which Mr. Picot had, were recorded on the tape. Mr. Picot stated that he did not wish to complicate the case, accepted that the recording might be referred to if his evidence about what had been said at the meeting was challenged, and expressly agreed with the observation of the Deputy Bailiff (at p. 575G of Vol. 2 of the Record of Proceedings, described in this case as the Appellant’s Volume 2) that that was "a much neater way of dealing with it". In the event, when the first respondent came to give evidence, he accepted in answer to Mr. Picot that he had or must have said the words in question. Mr. Picot made no further request to have the tape played and although on at least one occasion the Deputy Bailiff began to think that the tape would have to be played (p. 1244D of the Appellant’s Volume 3) there was a sufficient acceptance by the first respondent of what had been said as to make that step unnecessary. The recording was potentially real evidence of an incident in the history involving two of the parties to the action and might well have been admissible on that basis, but in the circumstances of the case the decision of the Deputy Bailiff provided a reasonable and practical solution and cannot be seriously challenged, particularly when it was with the clear agreement of Mr. Picot that the solution proposed by the Deputy Bailiff was adopted.

 

7. The second point of law relates to what Mr. Picot referred to as a new claim. His complaint here was that while the respondents in their pleadings had indicated that by agreement with Mr. Picot they were entitled to charge for delivery costs the evidence moved on from delivery work to work of a manufacturing character, work on finishes to the windows. Mr. Picot argued that this was entirely different from the case of which he had notice on the pleadings, that, particularly in light of his own lack of legal skill and knowledge, the evidence should not have been admitted, and he should have been given an opportunity to lead evidence to counter it. When the point arose in the course of Mr. Jehan’s evidence the Deputy Bailiff observed (at p. 894D of the Appellant’s Volume 2) "This is something totally new". That might have prompted an intervention by Mr. Picot, but no objection was raised by him to the evidence and, as the Court of Appeal pointed out, he was able to cross-examine on the matter without any evident difficulty. It is not easy to see that he was taken by surprise or prejudiced. While the pleadings did refer to delivery work they also referred to the fact that some remedial work was done by Aquacraft and that Aquacraft employees assisted Vekaplast employees with backlogs of orders in the factory. In any event the Deputy Bailiff (p. 1421 of the Appellant’s Volume 3) reminded the Jurats that finishing work had not been mentioned in the pleadings, so that in so far as the point related to credibility it was put clearly before them for consideration. The Court of Appeal also made the point that if there had been objection to the evidence an amendment to the pleadings would doubtless have been granted. Their Lordships do not consider that there is substance in this second point of law.

 

8. It was in relation to the facts that Mr. Picot put the greatest emphasis in the presentation of his appeal. In this connection he pointed out that there were a number of inconsistencies and contradictions which could be found in the evidence led by the respondents. There were time sheets which did not tally with invoices, and invoices which were not supported by any clear record. There were doubts and difficulties surrounding many of the various documentary records which were before the court. But at the heart of his argument lay the proposition that the respondents had tendered three explanations for the payments to which they claimed to be entitled, that the three explanations were inconsistent with each other, and that any such acceptance as the Jurats may have made of the respondents’ defence must be perverse. The other criticisms which he was able to offer of the documentation, including an attack relating to one particular account concerned with work on the Notre Dame convent, were subsidiary to this principal attack, and indeed he accepted that without success on this main line of attack his case would not be sufficient.

 

9. The first of the three explanations was one which appeared to emerge at the meeting in March 1984. This was to the effect that Mr. Jehan had added some surcharge on to the price for the windows as charged to Vekaplast in order to help his current financial difficulties. The second was that the respondents had with the agreement of Mr. Picot charged Vekaplast in respect of the cost of delivery of the windows. This explanation can be found in the pleadings in defence. The third was that the respondents had charged Vekaplast for doing finishing work to the windows, work which Mr. Picot regarded as manufacturing. This is the claim which Mr. Picot regarded as a new case and which has already been considered in the context of its admissibility. Some consideration is required initially of the strength of each of these propositions.

 

10. The evidence as a whole does not lead inevitably to the conclusion that the first explanation was true or indeed complete. Mr. Jehan denied in the answers on affidavit which he made to the interrogatories served upon him by Mr. Picot at an early stage of the proceedings that he had said the words attributed to him on Mr. Picot’s transcript of the tape recording on the matter of a surcharge. In the course of his evidence at the hearing he accepted that he must have said the words if the transcript so recorded them. But the weight to be put on this suggested explanation is open to question. Mr. Jehan had just returned to Guernsey from three weeks holiday abroad. He had been summoned to Jersey without warning and immediately questioned by Mr. Picot and his accountant Mr. Richardson about entries in his records relating to the previous year. His books and records were in Guernsey. It was his wife rather than he himself who worked on the books. His skill lay essentially in his work as a craftsman. According to Mr. Sharman, a former member of Mr. Picot’s staff who was led as a witness for the respondents, Mr. Picot had so arranged the meeting in order to get Mr. Jehan on his own in the hope that he would confess to what Mr. Picot believed to have been a fraud. While the meeting may at the outset have been somewhat relaxed, it plainly must have developed into a far less comfortable occasion, ending in the making of a settlement later found to have been forced upon Mr. Jehan under duress. When cross-examined on the point Mr. Jehan, in a passage which is not altogether easy to follow (at pp. 1201-1207 of the Appellant’s Volume 3), first indicated that when the questions were asked at the meeting he was put "into a bit of a spin" and then appears to be saying that there had been no surcharges but that they had been thinking of making surcharges. Mr. Jehan’s evidence seems to be confused, but he does not appear to have been a particularly articulate witness and the assessment of his credibility from the written record of the evidence is not easy. It certainly does not appear that the explanation for the charges made against Vekaplast as set out in the transcript of the tape-recording is necessarily correct.

 

11. As regards the charges for delivery two distinct questions have arisen. One is whether there was, as Mr. Jehan claims, an agreement with Mr. Picot to make such charges. Here again Mr. Picot points to the transcript of the tape recording where Mr. Jehan evidently stated that "we don’t charge anything at all for delivering the units". Mr. Picot in presenting his appeal to their Lordships’ Board submitted that Mr. Jehan’s subsequent assertions that there had been an agreement to charge for deliveries constituted perjury in the Royal Court and that the claim was unsustainable. In Mr. Jehan’s evidence in the present proceedings he explained that while at the outset of the enterprise Aquacraft had not made charges for delivery it had become necessary to do so since Vekaplast was unable to provide sufficient transport in Guernsey and Aquacraft were using their own means. Mr. Jehan said that Mr. Picot had agreed to the charging for deliveries. The agreement had been made while they were in a van together in Jersey in January or February 1983 (pp 893-4 of the Appellant’s Volume 2). His wife, who was principally concerned with the making up of the books and making the charges, said that she was aware that an agreement had been made, although she was not present at the time when it was made. Mr. Picot on the other hand denied that any agreement had ever been made. There was thus a straight conflict on the facts which had to be left for the Jurats to resolve.

 

12. The second question concerns the evidential support for the charging for delivery. The various records and in particular the time sheets which were available at the hearing were clearly insufficient to vouch the whole of the alleged expenditure, and there were variations in the figures involved which called for explanations. But it can be taken from Mr. Jehan’s evidence that the charges were based upon rates relative to the items being delivered, qualified either upwards or downwards by considerations of the time involved in the work. On that approach the time sheets alone would not provide a complete analysis of the costs in question and it would remain a matter of fact whether the Jurats would be satisfied with the explanation which was offered.

 

13. The third explanation was that of the so-called new claim whereby Mr. Jehan explained that he had charged for finishing work on the windows. Here again there was no clear or specific record from the time sheets to identify the finishing work as distinct from the other work which was being done. Mr. Picot submitted that the respondents could not have created credible invoices from the records. But on the other hand in 1983 and 1984 with the records then available it may well have been possible to prepare reliable invoices. Reconstruction of the detail at the hearing so many years after the event from such records as were produced could well be difficult or impractical.

 

14. The critical strength of Mr. Picot’s attack rests upon the assumption that these three explanations were advanced successively and independently as explanations for the whole of the expenditure which was charged to Vekaplast. Presented in that way it can be seen as potentially a powerful argument against the credibility and the reliability of the respondents’ case. But on investigation that does not seem to be necessarily the proper approach. It is not evident that any of the three explanations was ever put forward as an alternative explanation relating to the same expenditure. Moreover the explanations are not necessarily mutually inconsistent. Charges could be made for both delivery and finishes with or without any alleged surcharge. The Jurats may well not have been persuaded that the first explanation was sound. Without it, there only remains a question of fact whether the charges in issue were attributable to authorised work of one or other of the kinds claimed by the respondents. Moreover, even if the effect of contrary explanations was to destroy the credibility and reliability of the respondents, Mr. Picot had still to establish the allegations in his own case of wrongful appropriation. That task might well be easier if the evidence of the respondents was discarded, but the rejection of their evidence would not necessarily lead to the establishment of his own case.

 

15. There was plainly evidence on which the view could be taken that Mr. Picot had not made out his claim. There was evidence to support the respondents’ contention that the money which they charged to Vekaplast had been employed for legitimate work carried out by Aquacraft’s employees and that the payments had been authorised expressly or by implication by Mr. Picot. The records, including the time sheets, were open to criticism for their relative inadequacy and obscurity. But that the charges represented work properly chargeable to Vekaplast was supported by the oral evidence not only of Mr. Jehan but also his wife who, as has already been noticed, was primarily responsible for keeping the books and records. In addition evidence was given by Rodney Jehan, who was actively engaged on the work done for Vekaplast, which supported the respondents’ case, although open to criticism on the detail of the records to which he referred. Mr. Sharman also gave evidence generally about Aquacraft’s work. Against the evidence from these sources which was led by the respondents Mr. Picot only tendered himself as a witness for his own case. He was endeavouring to build up a case of appropriation and fraud on the part of the respondents essentially upon his own observations about the records which were before the court.

 

16. It was certainly open to the Jurats to accept the broad thrust of the respondents’ oral evidence that the charges had been fairly and honestly made, even if the written support was in some respects deficient. As for the authorisation of the work three issues arose. First, there was the evidence about the agreement to charge for the delivery work, which was a matter of factual dispute which they would require to resolve. Secondly, there was another factual problem in that Mr. Picot stated that he had told the Jehans that Aquacraft was not to undertake work for Vekaplast without his approval. But that was denied by Mr. Jehan. Thirdly, there was also a further factual dispute about the knowledge which Mr. Picot may have had about the making of the charges during the course of the critical period. Mrs. Jehan said that Mr. Picot had made frequent visits to Guernsey, had spent considerable time with her, had always asked questions about all the accounts and had never questioned the invoices received from Aquacraft. The evidence of Mr. Picot’s regular examination of the books and records was also supported by Mr. Sharman. Mr. Picot on the other hand denied the frequency of his visits and the detail of his inquiries. Mrs. Jehan regarded her husband as looking after the practical side of the business while Mr. Picot looked after the financial side. It was at least open to the Jurats to conclude that the charges must have been authorised.

 

17. On one view of the case it could be resolved into a question of the credibility of the opposing parties. The Deputy Bailiff put the case in this way to the Jurats early in his summing-up. He observed that the one side or the other must be telling lies, echoing an observation which he had made during the course of the evidence. He then told them that their first task was to consider whether they could accept any of the evidence given by Mr. Picot. Only if they were satisfied that he had not agreed or condoned the payments would they require to move on to consider the justification put forward by the respondents for the payments which they had made from Vekaplast. He then stated (p. 1416 of the Appellant’s Volume 2) "If you conclude at this stage that the whole thrust of Mr Picot’s evidence is not credible and that there is no foundation for his complaint of the Jehans having drawn money from the company unjustifiably and without authority, you will find for the Defendants". The task for the Jurats was plainly a difficult one in assessing the quantity of material before them, guided by recollections of the witnesses who were speaking to events some twelve years before. It may be that without the necessity of a detailed analysis of every record the Jurats were satisfied that the charges made represented work done for Vekaplast by Aquacraft and were not persuaded that Mr. Picot had made out his case.

18. Their Lordships have explored the case in order to identify some of the grounds on which the Jurats may well have proceeded, so as to be satisfied that there has been no miscarriage of justice. But such an exercise goes beyond the bounds of what is necessary for the disposal of the case. On a more strict view of the appeal their Lordships consider that the Court of Appeal was correct to hold that the assessment of the factual evidence was a matter for the Jurats and that there was sufficient material before them to support the conclusion which they reached. So far as their Lordships’ Board is concerned it is evident that concurrent findings of fact have been reached in the Royal Court and the Court of Appeal. No circumstances have been demonstrated which would entitle the Board to depart from what is recognised as an established practice to decline to review the evidence for a third time (Devi v. Roy [1946] AC 508).

 

19. On the whole matter their Lordships will humbly advise Her Majesty that the appeal should be dismissed with costs.