Westoak Holdings Ltd. v Waltham Forest

LORD JUSTICE THORPE: Lord Justice Rix will give the first judgment.

LORD JUSTICE RIX: This is an appeal from the judgment of His Honour Judge Simpson given on 25 May 2004 by which he held that an assignment on which the claimants in these proceedings were relying had not been proved to his satisfaction, with the result that the action failed and was dismissed in limine.

The assignment under which the claimants (in this court the appellants) Westoak Holdings Ltd ("Westoak") were relying was dated 10 October 2001. It was made as a deed by the assignors, Station Estates Ltd ("Station Estates"), in favour of Westoak. The assignment recited as follows:

The assigned debts were in respect of payments due from the London Borough of Waltham Forest ("the Borough") in respect of cost of bed and breakfast accommodation for asylum-seekers. The debts had been invoiced to the Borough under a number of invoices which had been raised. All the invoices in question raised by Station Estates against the Borough were dated within 2001, and they were also to be identified by invoice numbers which typically began with letters beginning with SE in every case, no doubt standing for Station Estates, but also going on with one or two further letters and then a series of numbers.

A dispute arose at the trial of the claim out of which this appeal arises as to precisely which debts had been assigned to Westoak pursuant to that assignment. The deed itself merely referred to a total figure of not less than £560,592 and otherwise referred for particulars of the debt to a "schedule."

At trial, evidence was given on behalf of Westoak by three of the four signatories to the deed that at the time of execution on 10 October 2001 the parties and the persons executing the deed had before them on the table, as the schedule referred to in the assignment, four documents each headed "Station Estates", each of which contained in boxed columns a series of invoices referred to in column 1 by their date, in column 2 by their invoice number and in column 3 by their amount due. These four pieces of paper may not at that time have had written on to them the words which are now to be found in them, namely appendix 1, 2, 3 and 4 respectively, but be that as it may for ease of identification the documents can be and have been referred to as appendices 1, 2, 3 and 4. Appendix 1 relates to a series of invoices all beginning with the letters SEWF, all dated 25 September 2001 and totalling £299,539.02. Appendix 2 likewise deals with invoices all within the series SEWF, all dated 22 September 2001 and totalling £199,812.04. Appendix 3 deals with a variety of dates beginning on 8 January 2001 and ending on 19 April 2001, and also refers to invoices with various lettered references. The total of invoices on that page amounts to £33,809.53. Appendices 4 deals with a number of invoices dated between 25 April 2001 and 2 May 2001, the invoice numbers also cover a range of lettered prefixes and the total of invoices scheduled on that page amount to £27,431.55. It will suffice for the purposes of this judgment if I remark that the total of all the invoices scheduled on those four documents amount to £560,592.68, that is to say precisely, so far as whole pounds are concerned, the figure of £560,592 to be found in the deed of assignment itself, and that appendices 1 and 2 combined amount to just over £499,000 within that total and appendices 3 and 4 amount to some £61,000 within that total.

The following facts are undisputed in relation to the litigation which has arisen out of this assignment and the payment of various invoices by the Borough either to the assignor or to the assignee.

Prior to the claim out of which this appeal arises, which I will call the second proceedings, commenced on 1 April 2003, there were earlier proceedings, which I will call the first proceedings, which had been commenced on 12 September 2001. That, of course, was before the assignment, and so it was that the first proceedings were commenced in the name of Station Estates alone. The claim in the first proceedings was for a net invoiced sum of £126,000. The invoices sued on in the first proceedings were all scheduled to that claim by date and invoice number. Thus there is no doubt about what invoices were being sued on in those proceedings.

On 19 March 2002, in the spring following the October 2001 assignment, a letter giving notice of the assignment was sent by solicitors acting for Westoak to the treasurer of the Borough. It reads as follows:

That letter purported to have enclosed with it the schedule of invoices making up the assigned debt sum of £560,592. It cannot now be positively established by documentary material that the schedule of invoices referred to in the letter was sent with the letter, but prima facie there is an inference to be drawn that it was. Prima facie, quite apart from the evidence given at the trial below as to appendices 1 to 4 being on the table at the time the deed of assignment was signed, it could well be inferred that those four appendices amounting to the assigned debt of £560,000-odd were the schedule enclosed with that letter.

A few weeks later on 2 April 2002 a further letter was sent by Westoak's solicitors to the Borough similarly headed "By reference to notice of legal assignment of the relevant debts". The letter reads as follows:

Again it is to be inferred from that letter that it enclosed a copy of the assignment itself, and also that the schedules which the previous letter had stated had been enclosed with that previous letter had been received by the Borough and had been acted upon by the Borough. That is plain from the wording of the letter of 2 April 2002, which refers to a telephone conversation which had taken place between Westoak's solicitors and the Borough following the first letter.

In the meantime about half by value of the invoices upon which claim had been made in the first proceedings had been already paid to Station Estate, the assignors. These were invoices which had not been scheduled to the assignment. Full details of those invoices can be found marked on the Borough's own documents, on a schedule of the invoices particularised to the claim in the first proceedings that was sent under cover of the Borough's letter to Westoak's solicitors, dated 18 July 2002. That schedule indicated that the invoices paid to Station Estate had been paid back in 2001. It will be recalled that the first proceedings had been commenced by Station Estate alone on 12 September 2001 and that the arrangement was only made on 10 October 2001.

The letter of 18 July 2002 also dealt with the balance of the invoices in respect of which the first proceedings claimed, as follows:

By 25 October 2002 the smaller sum of around £3,000 referred to as having been still disputed and outstanding in the solicitors' reply of 18 July was dealt with by a further order, this time expressly said to be by consent, giving judgment in favour of the claimants against the Borough for the further sum of £3,854.83. The effect of those two orders was to regulate the payment to Westoak as assignee under the assignment of 10 October 2001 the sum net of interest of £61,000-odd, being the total of all the invoices scheduled to appendices 3/4 to the deed. Thus the first proceedings led to the payment by the Borough of two series on invoices: (1) a number of invoices not included in the arrangement which were settled directly between the Borough and Station Estates; and (2) the balance of that claim, being the invoices totalling £61,000 scheduled to appendices 3/4, which had been assigned, and were settled between the Borough and Westoak.

At the same time as dealing with the balance of unpaid invoices in respect of which claim had been made under the first proceedings, the Borough and Westoak also got to grips with the majority of the other outstanding invoices scheduled under appendices 1 and 2. So it was that on 17 July 2002, the day before exchange of correspondence on 18 July, a letter was sent by the Borough to Westoak's solicitors enclosing a cheque for £301,496.77 to cover payment of the invoices on an attached list, and those were some, but not all, of the SEWF series scheduled in appendices 1 and 2. The balance remained in dispute at that time.

That continuing dispute led in due course to the commencement of the second proceedings on 1 April 2003. The total sum claimed, including interest, was £252,000-odd. The particulars of claim do not themselves identify the outstanding invoices and inaccurately refer to the sum outstanding at the time relevant to the assignment as being only £499,000 being the total of appendices 1 and 2, those being the appendices annexed to the particulars of claim. Paragraph 4 recites the deed of 10 October 2001 and compounds the error by saying that that assigned all the rights and interests in the "agreement" to Westoak, agreement having been defined by reference only to the total of £499,000 scheduled in appendices 1 and 2, thereby understating the full amount that was the subject of the assignment. Nevertheless, since all the outstanding invoices were contained within the invoices scheduled to appendices 1 and 2, one can understand how the error came to be made. Paragraph 5 of the particulars of claim plead:

The defence to those particulars of claim made no admission as to paragraph 4 of the particulars of claim which had pleaded the deed of assignment of 4 October 2001. But it did admit paragraph 5 of the particulars of claim in which notice of "the said assignment" had been pleaded, as indeed had the Borough's own acknowledgment of that notice. The defence went on to deny that the full sum of £198,000 claimed in the particulars of claim was due but to admit as due the sum of just under £96,000 in respect of invoices which were detailed in a schedule to the defence. Explanations of the detailed disputes on the outstanding invoices were the subject matter of the rest of the defence. Paragraph 20 of the defence again admitted that part of the claim, in the sum of just under £96,000, remained outstanding and would be paid to the claimant, and that all the invoices making up that figure of just under £96,000 were scheduled to the defence.

It seems that on the first day of trial, 24 May 2004, a point was taken by the Borough that there had not been disclosure of the deed of assignment, and it was made clear to the judge that in those circumstances the Borough had wanted to put the claimant to proof of the assignment. Why that should have occurred on 24 May is hard to understand. After all, it had been pleaded that notice of the assignment had been received and acknowledged, and it had also been accepted that hundreds of thousands of pounds had been paid to Westoak pursuant to the assignment. It had also been pleaded that a further £96,000-odd was due to Westoak pursuant to the assignment. Judgment had also of course been accepted as detailed above in respect of the invoices on appendices 3 to 4 in the first proceedings. Nevertheless, a point was taken that the assignment had yet to be proved in the second set of proceedings.

Unfortunately, the judge who perhaps at that time did not know as much about the case as he would have come to know if the trial had proceeded on that day in the normal way, was impressed by this submission. He therefore adjourned the trial to the next day, 25 May, for proof of the assignment to be given. The following day three of the signatories to the deed of assignment turned up at court and gave unchallenged evidence as to the making of the assignment, to the effect that they had signed the assignment with the four appendices on the table scheduling the debts totalling £560,000-odd assigned under that assignment.

That evidence was not challenged, although Mr Lewis was challenged as to some of the detail of the first proceedings, which may or may not have troubled him because that was not what he had come to the court to deal with on that day. He answered those questions to the best of his recollection. Nor were those witnesses challenged as to notice of the assignment having been given to the Borough. Indeed it is hard to see how that could have been done on the state of the pleadings. It is indeed difficult to see how this point relating to proof of the assignment itself could have been taken on the state of pleadings, because although in form the paragraph which pleaded the assignment was dealt with by a non-admission, in substance the subsequent paragraphs of the defence, as I have pointed out, made it absolutely plain that the assignment, the giving of notice of the assignment and huge amounts of the scheduled invoices had been acknowledged as due and indeed paid.

Following that evidence submissions in favour of Westoak were made to the judge by Mr Henderson, who appears on this appeal for Westoak. Mr Swirsky, counsel for the Borough at trial and again on this appeal, made submissions in response to the effect that the assignment had not been proved.

It appears from the judgment of the judge that those submissions embraced the following points. First of all, that the assignment had not been properly pleaded; second, that the original of the deed had been produced very late; third, that there were uncertainties relating to the figurework; and fourth, that those uncertainties arose out of the claim made in the first proceedings.

The judge appears to have been persuaded that he should regard the first proceedings in the following way. The claim in the first proceedings was for a total of £126,000-odd. I have already explained how that total was dealt with essentially as to some 50 per cent being paid to the assignor in 2001 and a balance representing the invoices under appendices 3 and 4 being paid to the assignee under the two consent judgments in that case. Nevertheless, the judge seems to have been impressed by the fact that the application under which Westoak as assignee asked to be joined to those first proceedings referred in its evidence in support of the application to the effect that the benefit of the debt sued upon in the first proceedings and claimed by Westoak as assignee under 10th October 2001 assignment amounted to the whole of the amounts claimed in those proceedings rather than to the outstanding debt due as of the date of that, application being 4 July 2002.

If the word "now" had been inserted into the relevant paragraph of Westoak's evidence, that error would have been avoided and the true state of affairs made entirely clear. Mr Swirsky stands on the fact that the word "now" was not in that paragraph and appears to have submitted to the judge, as he has done again to this court today, that an application to be joined to the first proceedings as assignee in respect of the total amount of £126,000 there claimed destroyed the effectiveness of the assignment for the purposes of the second proceedings. It was put to the judge that if one added £126,000 relating to the first proceedings to appendices 1 and 2 totalling £499,000 annexed to the particulars of claim in the second proceedings, one has a total of some £626,000 which was in excess of the £560,000 referred to in the assignment. In the circumstances, the judge being apparently uncertain as to what the additional £60,000-odd related to, and not understanding, it would seem, at that time that it related to invoices already paid by the assignor prior to the assignment in 2001 and for this very reason not scheduled to the appendices to the assignment, was confused. Moreover, despite the correspondence and despite the fact that notice of the assignment was admitted in the pleadings, the judge appears to have been left with such uncertainty as to notice being given of the assignment of the debts in the scheduled appendices as to destroy Westoak's claim as a whole. Thus in the last two paragraphs of his judgment the judge concluded as follows:

On appeal Mr Henderson has explained to the court what I have sought to explain in this judgment about the assignment, how it was made, and how the first proceedings were dealt with; and how the amounts recovered under the first proceedings were divided between amounts paid to the assignor in respect of invoices paid before the assignment and the balance paid to the assignee in respect of invoices scheduled to the assignment. Mr Swirsky accepts that all the relevant documentary material was before the judge, albeit it may be that it was not explained as fully to the judge as it has been to us today. He also accepts that he is not in a position today to dispute the facts which I have set out in this judgment. That is why I have described them above as undisputed, although there obviously had been dispute before the judge. Mr Swirsky nevertheless says that the judge was right and was entitled to the findings that he made, that is to say to not being satisfied about the assignment relied upon in the second proceedings, and that his judgment should be upheld.

In my judgment, however, that is simply an impossible submission. For whatever reason it may be, the judge was impressed by a submission by which he ought not to have been impressed and which probably ought not to have been made. There was no challenge to the relevant evidence before the judge that the assignment was duly made by reference to appendices 1 to 4. There was no challenge to notice of that assignment having been properly given. Even in the absence of challenge the judge should have found on the pleadings and on evidence before him and the correspondence to which I have referred, that proper notice was given.

The judge should have accepted that on the balance of probabilities the assignment was proved and that the content of the assignment, being the invoices scheduled to appendices 1 to 4, was also proved. In those circumstances, it seems to me that any uncertainty as to what went on in the first set of proceedings was quite beside the point. It might have been, although on the material which I have set out in this judgment it is not in fact the case, that in the first set of proceedings claims were made which were being claimed again in the second set of proceedings. That would be a point of detailed defence in the second set of proceedings. It may be that in the first set of proceedings at one time Westoak appeared to be alleging that it was the assignee of invoices which went outside appendices 1 to 4. It might even have been (although in fact it is not the case) that Westoak received judgment in the first set of proceedings in respect of invoices which in fact lay outside the assignment. That would simply be an error in the first set of proceedings which has not been corrected by any appeal in those first set of proceedings. On that hypothesis, that could again lead to a detailed point of defence by way of restitution or mistake or some other plea in the second set of proceedings. In fact none of that arises because as Mr Swirsky accepts he cannot gainsay the explanation which has been given by Mr Henderson today and which I have accepted in this judgment.

Nevertheless, as a final throw of the dice Mr Swirsky submits today that there is a technical estoppel which arises out of the form which the first set of proceedings took. He seeks to put it on two bases. First, he says that in its application to be joined to the first set of proceedings Westoak alleged itself to be an assignee in respect of the full £126,000 originally claimed in those proceedings: and he submits that that allegation led to the judgment or order by which Westoak was then joined as a claimant party. Alternatively, he submits that the estoppel arises out of the judgment for the two consent sums totalling some £61,000, albeit he has to accept that those only related to invoices within the assignment.

It seems to me that there is no merit whatsoever in those submissions. There never was a judgment in respect of anything outside the invoices properly assigned as part of the assignment. Inasmuch as Westoak was joined on an allegation that went broader than the basis on which judgment was ultimately given in Westoak's favour is not a matter of estoppel. That joinder was a mere procedural step in the proceedings, leading to no issue estoppel on the merits whatsoever. At that time Westoak's evidence was simply an allegation in respect of the full £126,000: but the order which joined Westoak to those proceedings was a judgment limited only to invoices properly scheduled to the assignment. There was at all times a full understanding as to the proper position between Westoak and the Borough.

Inasmuch as Mr Swirsky relies on Hoystead v Commissioner of Taxation [1926] AC 155 as supporting his alleged estoppel he, in my judgment, misunderstands the position. Hoystead was dealing with estoppel based upon a specific judgment in relation to answers given to specific questions on the case there stated. None of that has any relevance at all to the present circumstances.

In truth, however, although I have been happy to deal with Mr Swirsky's estoppel point on its merits, the fact is that the point is not properly within this appeal at all. An estoppel point was never raised in the pleadings. It was never raised before the judge by way of argument on 25 May 2004. That is why, of course, there is no reference to it in the judge's judgment. It is an entirely new point. It cannot be raised for the first time on this appeal. Mr Swirsky seeks to do so by a respondent's notice for which he needs permission because it is a day or two out of time. If there had been any merit in it at all, procedurally and in substance, the fact that it was a day or two out of time would probably be neither here nor there. However since it is an absolutely new point raised on material that was never adequately before the judge and raised in this court for the first time, and since permission is required for the respondent's notice, it is not a permission which, speaking for myself, I would be prepared to give. However, to have made the position entirely clear, I have dealt with it de bene esse on the merits in the preceding paragraphs of this judgment.

For these reasons, I would allow the appeal and find that the assignment has been proved to cover all the invoices as scheduled in appendices 1 and 2 and therefore all the invoices which remain at issue in these proceedings. The matter will then, as I understand it, have to be remitted to the judge for the trial to continue, if indeed the parties cannot with good sense and without further unnecessary expenditure in costs work out for themselves the ultimate liability in this case.

LADY JUSTICE ARDEN: I agree.

LORD JUSTICE THORPE: I also agree.