Sunrule Ltd v Avinue Ltd

LADY JUSTICE ARDEN: This is an adjourned application for permission to appeal, with the appeal to follow if permission is granted, pursuant to the order of Waller LJ dated 11 September 2003. The appellant ("Sunrule") seeks to appeal from the order of His Honour Judge Medawar QC dated 12 June 2003 dismissing the appellant's appeal from the order of District Judge Silverman dated 4 March 2003. The appellant seeks to adduce oral evidence on the appeal, but that part of the application has not been pursued.

By his order, District Judge Silverman entered judgment against Sunrule in favour of the respondent ("Avinue") in the sum of £3,963.97, with costs of £195, making a total of £4,058.97. He also dismissed Sunrule's counterclaim. The order was made following a trial on the fast track. This is a small claims case.

At the trial Mr Dimopoulos, the then sole director of Sunrule, sought permission for Mr John Boyd to represent Sunrule. The district judge refused permission on the grounds that in the fast track lay representatives can assist the court but cannot act as advocates. Mr Boyd was neither a director nor an employee of Sunrule. Avinue was also represented by Grossobel, a director of Avinue, assisted by a lay person, Mr Coy.

Avinue sold leather goods, in particular leather jackets, for men and women. Sunrule is a retailer. Avinue claimed that it had delivered leather goods to Sunrule for which they had not paid. Mr Dimopoulos was prepared to pay for any item for which there was a delivery note. Unfortunately for Avinue it did not have signed delivery notes in relation to all the goods it claimed were delivered to Sunrule. The actual deliveries were carried out by Mr Seymour Connor. It was his job to go to the warehouse, pick up racks of garments, put them into his van and deliver them to customers, such as Sunrule, obtaining payment on occasions. The judge held that Mr Connor was an honest witness.

The judge heard evidence as to Sunrule's accounting system. On the day of the trial Mr Dimopoulos produced Sunrule's stock list. It was Sunrule's practice to enter goods on to the stock list when they were delivered. This was normally carried out by Miss Esmaeili. If she was not available someone else would write the items into the book. Delivery notes were reconciled with the stock list at the end of every month.

The district judge does not in terms say, but presumably the goods for which delivery was disputed at the trial were not shown in the stock lists of Sunrule. In the event, the district judge found that it was highly probable that Avinue regularly cold called on Sunrule and saw Mr Dimopoulos or Miss Esmaeili. He concluded that the disputed goods were delivered. The problem in the district judge's judgment arose because Avinue lacked a system for properly recording the delivery of goods. He also held that the paper work supporting the deliveries was not up to date with the delivered items. He further held that there was a defect in the systems of Sunrule.

The judge said that in the case of Sunrule the shop was clearly very busy. There were times when everyone was working and selling. There was a good possibility that goods had arrived and been sold almost immediately and may not have been recorded by the defendant's staff.

Sunrule appealed to the judge and contended that, as Mr Dimopoulos could not properly write or speak English and he was a dyslexic, the district judge should have allowed Mr Boyd to represent Sunrule. Mr Boyd has confirmed that Mr Dimopoulos is dyslexic, but has not put his application on that basis.

The judge rejected Mr Boyd's argument. He held that at the time of the hearing before District Judge Silverman Mr Boyd was not an officer or employee of Sunrule and therefore could not present Sunrule's case. At the time of the appeal to the judge, Mr Boyd had been appointed a director of Sunrule and therefore he could, and did, present Sunrule's case on appeal, as he has done to this court.

The judge held that there was no basis on which the district judge's findings could be set aside. At one point at the hearing Mr Dimopoulos intervened and the judge observed that Mr Dimopoulos could express himself, but Mr Boyd disputed this.

On this appeal Mr Boyd again appears as lay representative for Sunrule. He makes the submissions which he made to the judge and a skeleton argument has been filed on behalf of Sunrule. This says:

Mr Boyd on this appeal has shown us a pamphlet entitled "The Small Claims Track" printed on behalf of the Court Service, which under the subheading "Can I take someone with me to the hearing?", says:

In his submissions Mr Boyd has explained that Mr Dimopoulos is Greek by origin and that his first language is Greek. He has lived in this country for 26 years. He does not read English well, his oratory is not good and his written English, in Mr Boyd's words, is "non existent". He has taken us to the transcript at which he made these points to Judge Silverman. He has also taken us to a further passage in the transcript at page 23 in which the judge asked Mr Dimopoulos to move closer to him and said:

Mr Boyd also pointed us to a question and answer at page 24 when the judge asked him:

In the course of the trial Mr Boyd points out that Mr Dimopoulos did not cross examine Mr Grossobel so no questions were put to him in support of the defendant's case. The defendant's case appears clearly from the letter dated 30 October 2002 sent to the county court and the schedule referred to in that letter which is a "List of all invoice numbers and explanation and reasons as to the disputed amounts." This document sets out the 19 invoices in issue, Against each invoice it states whether it is disputed and, if so, for how much and why. For instance, the first item was:

Mr Boyd tells us that this document was handed to the judge. As we know it was sent to the court in advance of the trial and must also have been available to the claimant. However, the judge does not refer to this document in the course of the hearing. At one point the judge complains that he had not been given a list showing clearly which invoices are disputed and why. For that reason he found it necessary to go through each and every invoice with Mr Connor or at least started on that track. I have not been able to check whether he dealt with every invoice.

Mr Boyd submits that, had there been a lay representative, the questions could have been put to Mr Grossobel with respect to the disputed matters. He submits that there was hard evidence that goods were not delivered. By way of example he has referred us to page 33 of the transcript which refers to invoice 1170. The practice was for there to be an invoice and, in most cases, an order form. There would then be a delivery note. In the case of invoice 1170 the invoice stated that there were a number of items delivered, whereas the delivery note said only one piece and that was the reason why there was a dispute as to that invoice.

Mr Boyd submits that the judge did not refer to that point in his judgment. It appears from the schedule that that same point would have applied to a number of the other invoices. Mr Boyd further submits that there had been an earlier abortive hearing on 7 January 2003 when he was permitted to act as lay representative by the district judge then hearing the matter, but the matter had to be adjourned. Mr Burgess' instructions are that on that occasion Mr Boyd acted simply as a translator not as a lay representative.

The respondents are represented by Mr Burgess of counsel. The first point Mr Burgess correctly makes is that this would be a second tier appeal and that, accordingly, the conditions in CPR 52.13 must be satisfied. Not only must there be a real prospect of success on appeal, but also that there must be important point of principle or practice or some other compelling reason for an appeal to be heard in a case such as this. Those conditions must be satisfied before permission is given. Mr Burgess then points to CPR 39.6 which makes it clear that a company can only be represented at trial by an employee if the employee has been duly authorised and, in addition, the court gives permission. He submits that Mr Burgess accepts that the district judge and the judge both overlooked the fact that this rule does not as such apply in small claims track hearings. The position is governed by paragraph 3 of the Practice Direction on the small claims track (see CPR 27.2(1)(h) which disapplies part 39 to small claims track hearings). Paragraph 3 of CPR 27PD states:

Mr Burgess submits that, as far as a company is concerned, it may only be represented by one of its officers or employees and that any other construction would render the previous subparagraphs of paragraph 3.2 otiose. Accordingly since Mr Boyd was not an officer and not an employee at the time of the trial, the judge was correct in his reading that he was not entitled to act as a lay representative.

Mr Burgess then argues that, even if he was is wrong on that point, there was, nonetheless, a fair trial and it would not have made the slightest difference if Mr Boyd had been a lay representative. In those circumstances, the judge was sound. Mr Burgess submits that Mr Dimopoulos could have done the trial himself. He did not at any point in the transcript say he could not understand what was being said to him or being said at the trial. He points, in particular, to page 9 of the transcript where the judge explains the procedure. At line 44 the judge starts to ask questions and Mr Dimopoulos has intervened. Judge Silverman said:

Mr Burgess submits that Mr Dimopoulos was content with the procedure and was therefore content with the position whereby he would have an opportunity to question the witness, Mr Grossobel, at the end of his examination. At the end of that examination the judge turned to him and said (page 13 line 4):

Mr Burgess further submits that the crucial witness before the judge was Mr Seymour Connor. The judge accepted him as a credible witness. Mr Burgess submits that the proper inference from the evidence of Mr Connor is that he delivered the amounts of the goods shown on the invoices even if there was a discrepancy between the invoice and the delivery note. Moreover, submits Mr Burgess, Mr Dimopoulos did not challenge Mr Connor's evidence. Mr Burgess submits that there was no contest at trial on any material issue and there was, in the circumstances, a fair trial.

The first point concerns whether or not the additional conditions in CPR 52.13 are satisfied. Is there an important point of principle or practice here? Mr Boyd submits that the question of who can be a lay representative for a company at a hearing in the small claims track is a question which is likely to be of importance to many cases beyond this appeal. I agree. I am satisfied that the point on representation is a question which satisfies the conditions in CPR 52.13.

I therefore turn to the question of construction. As Mr Burgess says, at trials normally an employee must have the permission of the court before he can represent a company (see CPR 39.6), but there is a separate provision in relation to small claims track, as I have already explained. In CPR 27PD 3.1(2) a lay representative is defined in very wide terms as meaning any other person, that is a person other than a person mentioned in paragraph (1), being a barrister, solicitor or legal executive. Therefore it is clear that the word "lay representative" has a very wide meaning.

In paragraph 3.2(1) the general rule appears:

In paragraph (2) there is a restriction on the circumstances in which a lay representative may act for the party. Paragraph (2), in terms, refers to the 1999 Order which was made by the Lord Chancellor in pursuance of his powers under section 11 of the Courts and Legal Services Act 1990 which, in subsection (1) provides that:

So paragraph (2) has cut down the rights to have a lay representative in certain specific cases such as at any stage after judgment. Paragraph (3) of paragraph 3.2 qualifies that exclusion by enabling the court to give permission for a lay representative to exercise a right of audience even though the circumstances are excluded by the Act.

Paragraph (4) deals with corporate parties. The essence of Mr Burgess' construction is that the rules relating to representatives of corporate parties are contained in this paragraph alone. As I see it, that is not consistent with the very wide meaning of lay representative given in paragraph 3.1(2).

Why then is it necessary to have paragraph (4)? The force of Mr Burgess' point is that it is unnecessary to have paragraph (4) if the construction placed on the term "legal representative" by the appellant is correct. On Mr Burgess' submission paragraph (4) deals exclusively with corporations. However, the position in relation to lay representatives, other than with respect to companies, is that the right of audience is cut down by the 1999 Order unless the court gives leave otherwise. The effect of paragraph (4) is that, whatever the circumstances, an officer or employee can always represent a corporate party. That, to my mind, gives an explanation for why paragraph (4) is there despite the previous provisions of the Order. It constitutes a provision which extends rather than leads to a cutting down of the meaning of lay representative.

If it had been the intention of the rule to exclude lay representatives where companies were parties, the wording would have made that clear by saying, "A lay representative means any other person except in the case of a corporate party". In that event, if Mr Burgess' construction was correct, only paragraph (4) would apply. In my judgment, that is not the correct construction. Paragraph (4) constitutes words of extension. It means that an officer or an employee can represent a corporate party even if, in the case of another lay representative, the right would be cut down under paragraph (2).

I need not deal with the previous occasion referred to by Mr Boyd because my conclusion is that the company was entitled to a lay representative at the hearing before District Judge Silverman. Therefore it is not necessary to decide whether the company was in any way misled by what happened on the previous occasion, as to which there is a dispute.

In those circumstances the question is what relief should now be given? The Court of Appeal does not overturn a judgment of the court below in this situation unless there is a serious procedural or other irregularity; it is not enough to show simply an irregularity. The respondent has submitted that there has been a fair trial for the reasons I have given. I also accept that this court should not readily accede to an application to set aside a trial which has taken place when the parties have participated.

The particular passage to which Mr Burgess referred us shows that at least at one point Mr Dimopoulos was content with the procedure. But there are other factors which it seems to me ought to be taken into account. The first point is that Mr Boyd had prepared the schedule at page 174 of the bundle. It was Mr Boyd who would have acted as lay representative and it is clear that he was familiar with this case and that he would have sought to cross-examine Mr Grossobel on these matters if he had been the lay representative.

The next point is that Mr Connor's evidence does not go as far as to enable the court to infer that, if there was a discrepancy between the delivery note and the invoice, it was the amount of the invoice that he delivered. His evidence was completely bound up with delivery notes. He said at page 15 line 23 that the persons to whom he delivered always signed the delivery notes. The question was put to him at line 29:

He was then questioned about certain invoices and his answer is based on the delivery note (see, for example, page 16 line 4 and page 17 line 35). When he is questioned by the judge about one of the invoices, 1170, he refers to the delivery note 16 and says:

At page 22 he refers to "dockets" which, as I read the evidence, is the delivery note. He is asked by Mr Dimopoulos about an invoice, and at line 47 on page 22 he says:

The mere fact that Mr Connor was a credible witness and gave evidence about items he delivered, did not mean that he was saying that items were delivered which were shown by invoices but not by delivery notes.

The next point relates to the fact that there was in the circumstances no cross-examination of either Mr Grossobel or of Mr Connor. There was an attempt at cross-examination of Mr Connor but Mr Dimopoulos stopped when he found he could not speak to the discrepancies. There is also the factor that Mr Dimopoulos' English is clearly not good. It is apparent that Mr Boyd knows Mr Dimopoulos well. He has told the court that Mr Dimopoulous' English is not good.

There is also the further point that, for the judge's conclusion to be sustained, he has to reach the conclusion that the goods which the defendant says were not delivered are not shown either in delivery notes issued by the claimant or in the accounting records of the defendant. That, too, suggests that there were other avenues to be explored at the trial.

Taking all these factors into account, I have reached the conclusion that while the court should not readily accede to an application in these circumstances for a re-trial, if there is any doubt about whether there was a fair trial, I should give the benefit of that doubt to the appellant.

For the reasons which I have given, I am not satisfied that there was a fair trial given that Mr Dimopoulos' application for Mr Boyd to be the company's lay representative was refused in breach, as I see it, of Practice Direction 27.

In these circumstances I would grant permission and allow the appeal.

LORD JUSTICE DYSON: This appeal raises a point of some importance as to the rights of audience of lay representatives in small claims cases. For that reason I wish to add a few words of my own.

The question of who may have rights of audience is a matter of considerable importance for the fair and efficient conduct of proceedings in court. That question is determined in accordance with Part 3 of the provisions of the Access to Justice Act 1999 and Part 2 of the Courts and Legal Services Act 1990 as amended by the 1999 Act. Section 27 of the 1990 Act, as amended, contains a general statutory framework for defining and regulating rights of audience before any court. So far as the county court is concerned, section 11 is the relevant provision for the purposes of this appeal. Lady Justice Arden has already recited this, but I will repeat:

Pursuant to that section the Lord Chancellor made the Lay Representatives (Rights of Audience) Order 1999 which came into force on 18 May 1999. It provided:

The CPR were amended to reflect this statutory instrument. This came about in the shape of CPR 27PD 3, to which my Lady has already referred to and which I do not need to repeat. There is no doubt, therefore, that subject to CPR 27PD 3.2(2(a) to (c), a personal litigant may be represented by a lay representative. This right to be so represented is always subject to the court's power to refuse to hear the lay representative for reasons which apply to him as an individual (see section 27(4) of the 1990 Act and the provision in paragraph 3.2(3) of Practice Direction to Part 27). Subject to that it seems to me that the personal litigant is entitled to be so represented. It is not a matter of the court granting an indulgence.

Does it make any difference that in this case the defendant who wanted to be represented by lay representative was a company? Reference has been made to CPR 39.6 but that rule does not apply to small claims (see CPR 27.2(1)(h)). Reference has also been made to CPR 27PD 3.2(4):

That provision forms the essential plank of the submissions as to construction advanced by Mr Burgess. But in my judgment it is not possible to rely on this provision to cut down the broad scope of the statutory instrument or of the definition of legal representative in CPR 27PD 3.1(2) and the provisions of 3.2(1)(2)(3). If it had been intended to make a special and more limited provision for lay representation of a corporate party, then the Practice Direction at 3.2(4) would have said so. The Practice Direction could have provided that a corporate party may only be represented by a lay representative who is one of its officers or employees, but it does not so provide.

It has been suggested by Lady Justice Arden that the rationale for CPR 27 PD para 3.2(4) is that corporate parties may be represented by an officer or employee in any small claims case even where the circumstances in 27 PD para 3.2(2)(a) to (c), or any of them, applies.