Heather v Griffiths

J U D G M E N T

1. LORD JUSTICE CHADWICK: This is an application for permission to appeal from orders dated 2nd and 9th October 2003 made by HHJ Metcalf in the Northhampton County Court in proceedings brought by the applicant, Mr James Heather, against Mr Wilfred Greenacre and Mr George Griffiths.

2. The claim in the proceedings was for damages for breach of a contract made between the three individuals, Mr Heather, Mr Greenacre and Mr Griffiths, as long ago as 1994. They agreed to set up a packaging business through the corporate vehicle of a company, Nene Packaging Ltd. The terms agreed included the employment of the applicant, Mr Heather, in the business at a salary of £22,000 a year and the issue to him of 30 per cent of shares in the company. The company was incorporated in May 1994, but by June of that year it seems that the parties had fallen out, and in the event the applicant never was employed and never did receive any shares.

3. The applicant commenced these proceedings on 5th January 2000. Directions were given for a split trial; the trial on liability to commence in June 2001. Shortly before that trial, Mr Heather reached a settlement with Mr Greenacre, one of the defendants, under which Mr Greenacre was to pay him £15,000. Thereafter, the proceedings were discontinued against Mr Greenacre but they continued against Mr Griffiths.

4. The trial was adjourned and, for reasons which are not clear, the adjourned hearing on liability was not refixed for hearing until 23rd May 2002, with an estimate of two days. Both parties were acting in person. On those two days, Mr Griffiths was not able to appear. It seems that he was not able to appear because he was, at the time, in hospital. Judgment was entered for the claimant for damages to be assessed. Mr Griffiths sought to have that judgment set aside on the basis that it was made in his absence; but that application was refused in May 2003 and an appeal against that refusal was dismissed in June 2003. So it was that the proceedings on quantum came before HHJ Metcalf on 2nd October 2003.

5. In a judgment delivered on that day, he awarded the applicant, Mr Heather, £6,758 with interest in respect of the lost salary; but he made no award in relation to the failure to issue shares. He took the view that it was a matter of speculation as to whether Mr Heather would have retained the shares during the period of six or more years from the incorporation of the company; that is to say over a period when its fortunes were fluctuating and its management was changing. In effect, he took the view that Mr Heather had not established his loss in relation to the shares or, put another way, had not established that not having the shares had given rise to any loss.

6. The order reflecting that decision was sealed by the Northhampton County Court on 3rd October 2003. Paragraph 1 of that order is in these terms:

"There be Judgment for the Claimant for £6758.00 plus interest at 8% per annum from the date of the claim to today."

7. A few days thereafter the judge realised that, in awarding £6,758 as damages, he had failed to take into account the £15,000 which Mr Heather had already received from Mr Greenacre. Accordingly, he directed that the order already sealed and issued on 3rd October 2003 be corrected by reducing the amount of the damages to nil. The Northhampton County Court sought to give effect to that direction by sealing and entering a new order on 9th October 2003 in which paragraph 1 was replaced by this sentence:

"The Claimant's damages are assessed at £00.00."

8. The explanation for that change appears in a letter sent to Mr Heather by the County Court on 10th October 2003:

"Please note that as neither party was legally represented the Judge has directed that this covering letter is sent with the corrected order. The Judge has corrected the order of 2nd October 2003 by reducing the level of damages awarded to the Claimant to £00.00. The original order was incorrect as it did not take account of the £15,000.00 sum which the Claimant had received from Mr Roger Greenacre by way of settlement in respect of the claim.

"All parties and the Judge agreed that any award against Mr Griffiths would have to take account of the fact that the Claimant had already received £15,000.00 from Mr Greenacre. It was by way of an accidental slip in the judgment and order that this deduction of £15,000.00 was not made. The order has now been corrected to reflect the intention of the Judge. It does not reflect a change of mind by the Judge in relation to any of the other findings made or reasons for them."

9. That explanation is reflected in a note which the judge himself caused to be inserted at the beginning of the corrected transcript of his judgment of 2nd October 2003. The note is headed "The correction of the judgment of 2nd October 2003 under the slip rule", I need read only one paragraph:

"I failed, however, to take into account in my judgment the £15,000 settlement, which Mr Heather had reached with Mr Greenacre. This sum ought to have been deducted from the value of the judgment against Mr Griffiths. This was entirely my mistake and was not, unsurprisingly, picked up by either of the parties. When I realised my mistake (some two or three days later) I sought to correct the order before it was issued. In the event, the claimant had attended at the court office the day after the hearing, and asked for a copy of the order. The court staff, therefore, drew up the order and give it to him that day. I corrected the order of 2nd October 2003 under the slip rule and pursuant to the overriding objective of the CPR. The corrected order was issued on 9th October 2003, and sent to both parties with an explanatory letter dated 10th October 2003. That corrected order awarded the claimant £00.00, (the £15,000 settlement sum having been deducted)."

10. The applicant seeks permission to appeal against both orders; that is to say against the two orders which bear the dates 2nd and 9th October 2003.

11. In relation to the order dated 9th October 2003, the applicant says this in his skeleton argument in support of this application, under the heading "Slip rule":

"A Judge cannot change his mind about his original judgment without permission of the Court of Appeal.

"Judge Metcalf gave Judgment on 2nd October 2003 and changed his mind on 9th October 2003. Because the 2nd October 2003 order had already been issued he used the 'slip rule' to substantially change the 2nd October 2003 order. This was not correcting a slip but making a major alteration, which I believe can only be altered by the Defendant appealing the 2nd October 2003 order."

Then he goes on:

"The slip rule cannot be used to enable the Court to have second thoughts. A Judge does have the power to recall his Order before it is issued but not afterwards. Once the Order is drawn up Judicial mistakes have to be corrected by an Appeal Court.

"I am not saying the Order of 2nd October 2003 was not a mistake but I am submitting that even if it was a mistake it could not be corrected or varied by Judge Metcalf. It is not a slip rule case and the Order of 2nd October 2003 can only be altered by the Court of Appeal."

12. In a case where both parties and judge realise and accept that there has been a mistake in the order, it might be hoped that some agreement could be reached which would enable that mistake to be corrected without putting the parties to the expense of an application to the Court of Appeal. The resources of the Court of Appeal are limited and would be better employed in resolving disputes that are real rather than artificial. But, for whatever reason, there has not been such an arrangement and the applicant insists on having the matter dealt with in accordance with the rules, as he is entitled to do.

13. It is impossible, in my view, to say that the applicant would have no real prospect of success on an argument that what the judge did on 9th October 2003 fell outside the power conferred by CPR 40.12. The true ambit of that power, commonly known as the power to correct under the slip rule, has been a matter under consideration in this court recently, both in Bristol-Myers Squibb Company v Baker Norton Pharmaceuticals Inc[2001] EWCA Civ 414, and in Markos v Goodfellow[2002] EWCA Civ 1542. It is enough, I think, to say that this is one of those cases in which a decision might go either way. So I would grant permission to appeal from the order of 9th October 2003.

14. If permission to appeal is to be granted from the order of 9th October 2003, it cannot be satisfactory to refuse permission to appeal from the earlier order of 2nd October 2003. It is plain that that earlier order should not have been made in the form in which it was made; because it is plain that the judge failed to take account of £15,000 which had already been paid. So credit for the £15,000 which had already been paid to Mr Heather by Mr Greenacre had to be given against the loss which the judge assessed in respect of loss of salary and failure to issue shares. On an appeal from the order of 2nd October 2003 in the form in which it was drawn, the court would have power at the request of Mr Griffiths -- and probably of its own notion -- to correct that error. But of course, there is an application by Mr Heather for permission to appeal from both orders now before me, because he takes the view that the £6,758 figure is too low.

15. What, then, should now be done? It seems to me that, approaching the matter with the overriding objective in CPR 1.1 in mind, I should seek to avoid a situation in which both parties have to come before the Court of Appeal in order to put right what has plainly gone wrong; and that, in doing that, I should enable the county court to address what is the real question in these proceedings, namely whether the loss which Mr Heather has suffered exceeds the payment of £15,000 which he has already received from Mr Greenacre.

16. With that in mind, the order which I will make is this: I will give permission to appeal from the order of 2nd October 2003 and from the order of 9th October 2003. Without objection from Mr Heather, I will treat the appeals from those orders as now before the court. I will allow those appeals to the extent of setting aside the orders of 2nd October 2003 and 9th October 2003, with a direction that these proceedings be remitted to the Northhampton county court to be heard either by HHJ Metcalf; or by another judge in that court if that court so decides.

17. On the question whether the damages which Mr Heather can establish do exceed £15,000, and if so by how much, it will be open to the judge in the Northampton county court to revisit, if he is persuaded that it is appropriate to do so, the findings of fact made by HHJ Metcalf in the judgment of 2nd October 2003. But, of course, it will be open to that court to decline to do so if not persuaded that there is good reason to look again at this matter.

18. The opportunity to reconsider the matter will lead to an order of the county court which, it may be hoped, will have taken into account the £15,000 payment. It will be open to either party to seek permission to appeal from that order when it is made. That is not a course that I encourage. It is time that this old claim be put to rest one way or another.

19. Because I am making this unusual order in the absence of Mr Griffiths, I direct that a transcript of this judgment be sent, with a copy of the order, to Mr Griffiths and to the county court, and that those transcripts be provided at public expense. It would be fair, in those circumstances, to extend that direction to the provision of a transcript to Mr Heather at no cost to him.

20. I will direct that the costs of this application be costs in the proceedings, to be dealt with by the county court when it reaches a final conclusion.

Order: Permission to appeal against the orders of 2nd October 2003 and 9th October 2003 was granted. The appeals were dealt with and allowed. The orders of 2nd October 2003 and 9th October 2003 were set aside and the case remitted to Northampton County Court for re-hearing. Costs to be dealt with by Northampton County Court when it reaches a final conclusion.