Lloyds Bank Plc & Ors v Cassidy

J U D G M E N T

LORD JUSTICE AULD: Lord Justice Clarke will give the first judgment.

LORD JUSTICE CLARKE:

INTRODUCTION:

1. This application came before me on 21st July 2004. Partly because of a problem which was said to have arisen at the trial about transcripts, and partly because of the complexity of the matter, I adjourned the application to be heard on notice to the respondents. I also directed that, subject to any directions given by the court hearing the application, the appeal should follow if permission to appeal was granted. As I indicated in the judgment which I gave on 21 July the applicant, Michael Cassidy, seeks permission to appeal against an order of His Honour Judge Langan ("the judge") made on 19 March 2004 in which, save as to damages of £9,147.90 the judge dismissed the applicant's counterclaim and gave various directions in respect of the issue of the amount of the judgment debt arising out of the counterclaim of the first defendant ("the bank") to the applicant's counterclaim.

2. The factual history of the claim, and indeed the proceedings, is complex. It is set out by the judge in the introduction to his judgment. The applicant owned agricultural land in North Humberside, land which had previously been owned, either wholly or in part, by his father, Mr Bernard Cassidy. Substantial sums of money were borrowed from the bank and the loans were not repaid. The bank was a mortgagee of a number of properties. Under the mortgages it had power to appoint receivers, which it did on 7 August 1991. The receivers were partners in Touche Ross. After the receivers, who were also parties to the action, and are respondents to this application, had been appointed they entered into possession of the land. They harvested the 1991 crop and sowed for 1992. After the 1992 harvest they ceased to farm the land and put it on the market.

3. At various dates between 1991 and 1993 the land was sold in various parcels, some by the applicant, some by the bank and some by the Agricultural Mortgage Corporation ("the AMC"), which had also lent money and was the first mortgagee in relation to some of the property.

4. The action was commenced by writ issued on 1 May 1992. The claim is no longer relevant. The issues determined by the judge arose on the applicant's counterclaim, the bank's claim being brought by way of counterclaim to the counterclaim.

5. In his counterclaim ("the claim") the applicant claimed damages under three main heads. First, it was said that in September 1991 the receivers and/or the bank should have accepted proposals for the purchase of parts of the land which were put forward by the applicant and a Mr John Black ("the Black offer"). Secondly, it was said that the receivers mismanaged the farm. Those allegations related principally to the harvest of the Summers of 1991 and 1992. Thirdly, it was said that the receivers sold part of the land in breach of their duty to obtain a proper price.

6. The judge rejected all those claims except one. That one related to the 1992 harvest, in respect of which it was held that the receivers were in breach of duty and the damages were assessed by the judge in the sum of £9,147.90 which he held to be payable to the applicant. That was half of the amount of the loss. The judge held, as I read the judgment, that the applicant was not entitled to the whole figure, since his father, or his trustee in bankruptcy, was entitled to the other half.

7. The claim was at one stage struck out, but an appeal against that decision was allowed by this court comprising Mance LJ and Hale LJ on 8th November 2002. In the course of his judgment in that appeal Mance LJ, with whom Hale LJ agreed, said that the way in which the applicant formulated the duty owed by the receivers was arguable.

8. As a result of that decision the issues came to trial before the judge. The trial was a substantial trial and involved a large number of documents. It began in October 2003 and proceeded for some 12 days or so when it was adjourned until February 2004. In the end the whole trial lasted something like 21 days.

9. A large number of witnesses were called on either side. The judge's judgment runs to 172 closely-typed paragraphs which span some 45 pages in the bundle. The applicant seeks to challenge almost all the judge's conclusions and produced a skeleton argument in support of his proposed appeal which ran to 120 pages and which referred extensively to some of the documentation which was before the judge.

10. In paragraph 19 of my judgment I expressed the hope that the court would have the assistance of counsel on both sides and, in particular, that Mr Cassidy would have the assistance of counsel. We are much obliged to Mr Haines who has appeared on behalf of the applicant on this application for his submissions made both in his skeleton argument and orally yesterday on behalf of the applicant.

11. The grounds of appeal prepared by the applicant himself are many and various. Very many of them were always plainly doomed to failure. Mr Haines has focussed the application under four heads: the Black offer, the failure to sow in 1993, damages and procedural irregularities. I will consider the application under those heads, although before doing so, I shall say a word about the properties with which the case is concerned.

12. The judge identified the relevant parcels of land in paragraph 17 and following of his judgment. It is not necessary to refer to them in detail. Bursea Lodge Farm was the principal holding. It consisted of the farmhouse and approximately 200 acres and had been bought by Bernard Cassidy in 1959. Johnson's Field was acquired many years later. It was near the farm and ran to some 27.75 acres. It was bought jointly by Bernard Cassidy and the applicant in 1981. Bursea Lane Farm consisted of a farmhouse and about 37 acres. It was bought by Bernard Cassidy in the early 1960s. Two storage barns were erected on it. Dial House was bought by Mrs Cassidy in 1978. It comprised about 80 acres of land, but, despite its name, no house. Some of that land had planning permission for industrial use. It was a matter of dispute whether the permission covered 5.76 acres, which was the applicant's case, or 2.67 acres, which was the respondents' case.

13. Sober Hill extended to 67.92 acres. It was bought by Bernard Cassidy in 1966. In 1988 all the land, apart from the farmhouse at Bursea Lodge Farm and about ten acres around the house, was transferred into the sole name of the applicant. It is common ground that receivers were appointed in respect of all the property, although it is not absolutely clear pursuant to which mortgages.

THE BLACK OFFER:

14. The judge considered this part of the case between paragraphs 53 and 92 of his judgment. On 11 September 1991 an offer, the Black offer, was made on behalf of the applicant at a meeting at which he and his father, Bernard Cassidy, was represented by Mr Black, who was a consultant who gave advice to people whose businesses were in financial difficulties, and Mr Brown, a solicitor who specialised in insolvency and in advising businessmen with financial problems. Also present were one of the receivers, Mr Johal, and a Mr Whitwam, who was a senior manager in the corporate recovery department of Touche Ross.

15. The applicant's case was that Mr Brown and Mr Black put forward an offer or proposal which contained these elements: (1) Mr Black would purchase the 5.76 acres at Dial House for £150,000 (2) the applicant would pay £250,000 for the release of "the remaining land" which was charged to the bank. (I will return to the meaning of "the remaining land" in a moment.) (3) The receivers would apply the proceeds of the 1991 harvest, which were estimated to be about £80,000, to discharge the balance of the receivership debt and costs. (4) 14 acres of land at Sober Hill would be acquired, as the judge said, apparently by Mrs Cassidy, at a price of £14,000 and placed in the applicant's individual voluntary arrangement for the benefit of his unsecured creditors.

16. The judge said in paragraph 58 of his judgment that there was an issue at the trial as to what was "the remaining land" for the release of which the applicant was offering to pay £250,000. The applicant's case was that it was Bursea Lodge Farm, that is the farmhouse and the 200 acres of land to which I have already referred. The judge accepted that that was indeed the position.

17. The applicant's case at the trial was that the bank and/or the receivers were in breach of a duty or duties owed to the applicant in failing to accept that offer and that, as a result, the applicant suffered substantial loss. The duty alleged by the applicant before the judge as being owed by both the bank and the receivers was put in various ways. In summary it was that having regard to all the circumstances of the case each owed a duty to be fair to the applicant, and/or to accept an obviously favourable offer, and/or not to act in such a way as substantially to increase the burden on him.

18. The particular circumstances relied upon were pleaded in this way, so far as relevant by the time of the judgment:

"At all material times the [respondents] knew

(i) That the offer would result in the mortgage debt being repaid.

(ii) That there would be no loss to the [bank] if the offer was accepted.

(iii) That the offer of Mr Black of £150,000 for the industrial land at Dial House ... should be accepted.

(iv) That there was likely to be a substantial shortfall between the amount of the debt and the proceeds of sale of the land in respect of which the receiver[s] had been appointed if the receivership continued.

(v) That there was a real risk of financial harm to the [applicants] in that

(a) there was a declining market in agricultural property ...

(b) that the above shortfall would increase

(c) that the receivership fees would increase to the detriment of the [applicant]."

19. The specific points made by Mr Haines, on behalf of the applicant, before the judge, and indeed before us, were these: (1) given that by 11 September 1991 the bank and the receivers had decided to put the land on the market, they were under an obligation not to reject an obviously favourable offer; and (2) the bank and the receivers were under an obligation not to exercise their rights in a way which would substantially increase the burden on the borrower.

20. The judge referred to the various formulations of the duty between paragraphs 62 and 74 of his judgment. The alleged duties were derived from two sources. The first duty derives from the judgment of Mance LJ, to which I have already referred. In the course of his judgment he said this:

"It seems to me that there may be some scope for further examination of the borderline between the supposed area of freedom, which exists when a mortgagee or receiver decides not to sell, and the area of duty, which exists in relation to the exercise of the power to sell. Once a mortgagee or receiver has decided to sell, he or she cannot, presumably, avoid liability if he or she fails to accept or follow up an obviously favourable proposal. It cannot be an answer to any claim to say that a decision was taken not to sell pursuant to that particular proposal. The question then becomes, what is meant by deciding to exercise the power to sell or deciding, per contra, to manage the property for a period before selling ..."

21. The second duty derives from a dictum of Sir Donald Nicholls V.C. in Palk v Mortgage Services Funding PLC [1993] Chancery 330. In that case this court did not have to decide what was the extent of a mortgagee's duty in circumstances like these. The courts were simply exercising the jurisdiction of the court to order a sale of mortgaged property conferred on the court by section 91(2) of the Law of Property Act 1925. The court ordered the sale of a house at the instance of the mortgagors and against the wishes of the mortgagee which wanted to postpone sale and let the house in the meantime. Sir Donald Nicholls V.C. said this at page 338D-G:

"I have given two examples where the law imposes a duty on a mortgagee when he is exercising his powers: if he lets the property he must obtain a proper market rent, and if he sells he must obtain a proper market price. I confess I have difficulty in seeing why a mortgagee's duties in and about the exercise of his powers of letting and sale should be regarded as narrowly confined to these two duties. In addition to the mortgaged property, a mortgagee normally has a right of recourse against the borrower personally. He may also have the benefit of a guarantee from a third party. There is no problem when the borrower or guarantor can raise the necessary money, or the security available is adequate and readily realisable. Then the borrower should arrange to pay off his debt in full. The difficulty arises when that is not possible. Then the borrower is in the mortgagee's hands. Whether in that situation a mortgagee is at liberty to exercise his rights of leasing and sale in a way that in all likelihood will substantially increase the burden on the borrower or guarantor beyond what otherwise would be the case is not a question I need to decide on this appeal ... That he should act in such a cavalier fashion is not a proposition I find attractive. That is a question which may call for careful examination on another occasion ..."

22. It was in the light of that dictum that Mance LJ added this in his judgment to which I have referred:

"Apart from the considerations mentioned in the previous paragraph [the one quoted earlier] I consider that the facts [alleged in Mr Cassidy's evidence and in a proposed re-amended pleading] could, if established, arguably involve a duty on the bank or the receivers. Whether a mortgagee (or receiver) is, in law or equity, at liberty to exercise his rights in a way that in all likelihood will substantially increase the burden on a borrower or guarantor beyond what otherwise would be the case is, as Sir Donald Nicholls V.C. said, a question that may need careful examination."

23. The judge recognised that the duties identified by Mance LJ in the two passages quoted were arguable, but said that he had come to the conclusion that they could not be sustained.

24. It is not to my mind necessary for us to consider the applicant's case that the judge was wrong to reject the duties asserted by Mr Haines. The judge held that however the duty was put neither the bank nor the receivers were in breach of duty. His reasoning was as follows:

"[75] There is no doubt that the Black offer was rejected. Even if the bank had been under a duty to be fair to Mr Cassidy, or to accept an obviously favourable offer, or not to act so as substantially to increase the burden on him, the rejection would not, in my judgment, have amounted to a breach of duty. The reason is very simple. As at 11 September 1991, the liability of Mr Cassidy to the bank was $410,960.75. The liability of Bernard Cassidy was £589,406.85. The difference is accounted for by the fact that, whilst both were liable for the farm overdraft and (as guarantors) for the overdraft and the loan account of B.M. Cassidy & Co Ltd, Bernard Cassidy alone was liable on the farm loan account. The farm loan account was secured on the farm house and the ten acres surrounding it which was owned by Bernard Cassidy. As I have already mentioned, the Black offer involved the purchase by Mr Cassidy of this house and land. In order to enable the offer to proceed, the bank would have had either to release its charge over Bernard Cassidy's land or to postpone that charge to whatever lender provided Mr Cassidy with finance for his purchase. This would have to be done in circumstances in which Bernard Cassidy was going bankrupt. No amount of fairness to Mr Cassidy could have required the bank to act in a manner so regardless of its own interests, even if refusal of the offer were to increase the burden on him. Put another way, the offer was a long way removed from being an 'obviously favourable' one.

[76] There was much debate, both in evidence and in submissions, about what has been called 'the receivership debt'. The letters of demand dated 2 August 1991 related to the farm overdraft and farm loan accounts, and did not mention the guarantees of the company indebtedness. Similarly the guarantees were not mentioned when, in their initial report to the bank dated 13 August 1991, the receivers set out the amount of the indebtedness of Mr Cassidy and Bernard Cassidy. So, it is said, the receivers did not have, or should not have had, regard to liability on the guarantees when they came to decide whether or not to recommend acceptance of the Black offer. As at 11 September 1991, £119,646.04 was due on the guarantees and this sum should be taken off the aggregate figures mentioned in the last paragraph, which would mean that the so-called receivership debt approximated to the amount comprehended in the Black offer.

[77] This point about the receivership debt seems to me to be a particularly barren one. I am not being asked to review the decision-making process in which the receivers engaged, but to say that their decision and that of the bank was wrong and constituted a breach of duty. Such a conclusion could only be reached on an objective basis. On such a basis, it cannot have been wrong for the bank to refuse to go along with a scheme which effectively ignored a substantial part of its customers' liability."

25. Unless the applicant can show that he has a real prospect of persuading this court that the judge's conclusion on this part of the case was wrong it would be wrong to grant permission to appeal in respect of it. As we have just seen, the judge said in paragraph 75 that the applicant's liability to the bank was £410,960.75 and that the aggregate figure including the liability of the applicant's father on the farm loan account was £589,406.85. The judge was plainly correct to take the larger figure because the farm loan account was secured on the farm house and the ten acre surrounding it, so that the bank could not be expected to release its security to the applicant, except on the basis that Bernard Cassidy repaid the amounts owing on the farm loan account.

26. Although there was some argument at the trial as to the total indebtedness, the judge said at footnote 61 to his judgment that the difference between those figures and the applicant's figures was not significant in the present context. For the sake of the argument Mr Haines used a figure of £441,000 as the amount of the indebtedness which prompted the appointment of the receivers and thus could be said, at any rate at that time, to be the amount of the receivership.

27. The thrust of Mr Haines' submission was that the Black offer was obviously favourable to the receivers and the bank, and that since it had been decided to market the properties, the offer should have been accepted. Alternatively, he submitted that to refuse the offer would substantially increase the burden on the borrower.

28. His key point, as I understood it, was that there was a substantial shortfall between the amount of the debt and the proceeds of sale in respect of which the receivers had been appointed and that, given the declining market in agricultural property, the shortfall would increase so that an offer of some £480,000, made up of £250,000 provided by the applicant, £150,000 provided by Mr Black and £80,000 provided from the harvest, was obviously attractive, and failure to accept it would unfairly increase the burden on the borrower.

29. There are, however, a number of serious problems with this argument. There is a substantial shortfall between that figure and the total indebtedness of nearly £590,000 referred to by the judge in paragraph 75 of his judgment. Why should the bank accept so much less than its indebtedness? It was, however, said before the judge that amounts due under guarantees of £119,646.04 should be disregarded because the letter of demand dated 2 August 1991 related to the farm overdraft and the farm loan account but did not mention the guarantees of the company indebtedness. It appears that they were first referred to in the receivers' second report dated 21 October 1991.

30. The judge, in my opinion plainly correctly, held that the question whether the bank or the receivers were in breach of duty depended not on their subjective state of mind at the time, but upon whether viewed objectively the refusal of the Black offer constituted a breach of duty. I agree with the judge that that must be judged against the true position. The question must therefore be judged on the basis that the total liabilities, including the company indebtedness which was guaranteed and secured, amounted to something in the order of £589,000. On that basis the Black offer represented a substantial shortfall since the total which the bank would receive, even if all went well, would be of the order of £480,000.

31. Mr Haines submitted, however, that the market conditions were so obviously favourable to the Black offer that it should have been accepted notwithstanding the shortfall. For my part I do not think that that point is sufficient to carry the day. One of the problems is that the applicant's argument does not sufficiently distinguish between the receivers and the bank. Mr Haines submitted that no proper consideration was given to the offer and that it was rejected by the receivers without consulting the bank. He submitted that the receivers rejected the offer out of hand and that the bank knew nothing about it. I am bound to say in this regard that if that is correct I do not see how the bank can possibly be in breach of duty in failing to accept an offer of which it was unaware, which on the applicant's case it was. The judge held in paragraph 75 that in order for the Black offer to proceed the bank would either have had to release its charge over Bernard Cassidy's land or to postpone that charge to whatever lender provided the applicant with finance for his purchase.

32. Mr Haines has not persuaded me that the judge was wrong so to hold. I agree with the judge that no amount of fairness to the applicant could have required the bank to act in a manner so regardless of its own interests, even if refusal of the offer would increase the burden on the applicant. I also agree with the judge that the offer was a long way from being an obviously favourable one.

33. So far as the receivers are concerned, the highest it can be put is that they should have communicated the offer to the bank. There is no clear finding that they did not. In any event it appears to me to be very difficult to say that either the receivers or indeed the bank were in breach of duty in failing to accept an offer which was at best a proposal or invitation to treat and not an offer which was capable of acceptance so as to create legal relations between the parties. At best the "offer" was no more than an outline proposal. It was not supported by any specific financing proposals. I do not see how the receivers or the bank could be even arguably in breach of duty for failing to accept a proposal of the kind advanced. It does not seem to me that the moment ever came when it could properly be said that the receivers or the bank were in breach of a duty owed to the applicant, whatever that duty might be.

34. This brings me to some aspects of causation which the judge held were in any event fatal to the applicant's case based on the Black offer. When he was opening the case Mr Haines told the judge that the applicant's case was that if the Black offer had been accepted the scheme embodied in it would on the balance of probabilities, have been carried through to completion (see day one pages 70-71). Mr Haines expressly accepted that it was not sufficient for the applicant to show that he had lost merely the chance of completion. In the course of his final submissions Mr Haines sought to withdraw that concession, if concession it was, and to be permitted to advance the case on the basis of the loss of a chance. The judge said that he would finally determine that question in the course of his judgment.

35. In his judgment the judge declined to permit Mr Haines to withdraw the concession on the footing that it would have been unjust to allow him to do so, given the fact that cross-examination of the relevant witnesses would or might have been different and more rigorous.

36. Mr Haines submitted to this court that that reasoning is fallacious given the extreme rigor with which the cross-examination was in fact carried out. To my mind there is considerable force in that submission. However, on the facts the judge also considered causation on two alternative bases: first, that the test was balance of probabilities; and, second, that the test was loss of a chance. I propose to focus on those conclusions of the fact.

37. The judge observed first that the Black offer could only have been carried through to completion if three things happened as follows: (1) that the applicant obtained finance in order to pay £250,000 in order to acquire the Bursea Farm; (2) that Mr Black obtained finance to pay £150,000 for the 5.76 acres of land at Dial House; and (3) that AMC was persuaded to release the 5.76 acres at Dial House, and indeed 14 acres at Sober Hill, from its first charge on terms that the purchase money would go to the bank and not to AMC. The judge held that none of those things would have occurred and further that if loss of a chance was the test the applicant had failed to show that he had lost a real or significant chance of all those events taking place.

38. As to the applicant, the judge said this at paragraphs 83 to 85:

"[83] As to Mr Cassidy, Mr Haines submitted that he had on offer in place from a prospective lender in Manchester, and that Mr Brown could have found a secondary lender to bridge any gap in funding until Mr Cassidy's position stabilised. I find this wholly unrealistic.

[84] I do not believe that there ever was an offer from a lender in Manchester or anyone else. Mr Cassidy, when being cross-examined on the subject, appeared to me to be at his most devious. Notwithstanding the wealth of documents in this case, there is not one piece of paper which supports the assertion that money could have been obtained from a lender in Manchester. More significant is the fact that, although there are said to have been two meetings and one important telephone conversation with the prospective lender, all in late August or early September 1991, there is no record of these in the diary of significant events which Mr Cassidy was maintaining at the time. Further, given that Mr Cassidy's overall liabilities at the time were of the order of £1,000,000, his ability to find a lender (even to discharge "the receivership debt") and to fund borrowing at what would inevitably be a high rate of interest must be exceedingly doubtful.

[85] Mr Brown's approach to the case was markedly different from Mr Cassidy's. Mr Cassidy wanted, as I can readily accept, to preserve the family farming business. As Mr Brown made clear, his 'sole purpose' was 'to save people's homes' by keeping creditors at bay by a short-term high-interest borrowing, selling their assets in an orderly fashion, and leaving them with a roof over their heads and (hopefully) a few acres. I do not see how Mr Brown could have been of any meaningful assistance to Mr Cassidy."

39. I am bound to say that I see no realistic basis upon which this court might interfere with those conclusions. In his skeleton argument prepared for this application Mr Haines focussed not upon those points referred to by the judge, but upon two other aspects of the case on which the judge reached an adverse conclusion as to the credibility of the applicant. The first related to the applicant's belief as to whether there was planning permission for industrial use in respect of 5.76 acres at Dial House or only in respect of 2.7 acres. The judge concluded in paragraph 172 of his judgment that planning permission was limited to 2.7 acres and that, contrary to his evidence, the applicant knew that that was so. The second matter arose out of the judge's conclusion in paragraph 108 of his judgment that the applicant removed grain which he had no right to do. Mr Haines submitted that the judges in effect concluded that the applicant stole the corn. In his skeleton argument Mr Haines made detailed submissions designed to convince this court that the judge was not justified in reaching those conclusions. In his oral argument he focussed on the first of the two points.

40. In the context of his present application it is important to note that, right or wrong, justified or unjustified, the judge does not relate those findings to the issue of whether the applicant would or might have been able to raise sufficient funds to finance the purchase required to put the terms of the Black offer into effect. In this regard Mr Haines submitted that the judge's finding that the applicant was at his most devious was harsh and not justified by the evidence as a whole. Mr Haines noted that there is no reference in any of the documents showing that the bank or receivers were concerned about the applicant's ability to raise the funds. He submitted that that was not altogether surprising since (a) on the evidence it was unlikely that the bank was told of the offer and (b) the receivers had refused the offer not because the applicant could not raise the funds, but because they wrongly thought that the offer could be bettered.

41. That may or may not be so, but this part of the judgment depends essentially on the conclusions reached by the judge on the relevant part of the applicant's evidence. Mr Brown said in his statement that it would be relatively easy to obtain bridging finance to enable the applicant to refinance in time, but the judge appreciated that at best that would be a short term solution.

42. The problem faced by the applicant was that he said that he had obtained finance from a company called Manchester Mortgage Company, yet there was no documentary evidence to support such a claim. The judge took the view that the applicant had invented the Manchester Mortgage Company and, for my part, I see no prospect of this court saying that the judge was wrong so to hold. The credibility of witnesses is essentially a matter for the judge and not for this court, which has not of course seen the relevant witness or witnesses. Mr Haines can only submit that the judge attached excessive weight to the absence of documentary support, whether in documents emanating from the proposed letter or from his own diary or notes.

43. I see no basis upon which this court could properly reach a different conclusion in this regard even if the judge was wrong to reach the conclusion which he did as to the credibility of the applicant on the two aspects of the case identified earlier. In that regard I will only say a word about the planning permission at Dial House to which Mr Haines specifically referred in the course of his oral argument. The judge discussed the position in considerable detail between paragraphs 162 and 172 of his judgment. He concluded that outline planning permission was granted only for 2.67 acres and not the full 5.76 acres at Dial House. The key conclusions of the judge are set out in paragraphs 169 to 172 as follows:

"[169] The original application was made by Mr Cassidy to Boothferry Borough Council and related 5.76 acres. It was submitted on 8 January 1988. The acreage was clearly stated on the plan which formed part of the application. This application was refused in May 1988. A further, revised application was made on 25 November 1988, was considered by the relevant committee in February 1989, and was deferred so as to allow further discussions with the applicant. It looks as though further revisions were submitted in June 1989, and the application had still not been dealt with by October 1989. At some stage, in a report to committee dated 2 August, someone wrote what appears to be a record of a committee decision 'Defer for revised plan smaller area more detail'.

[170] Two events of importance occurred in October and November 1989. By 9 October, at latest, there had been submitted to the planning authority an amended plan, on which the original area of 5.76 acres is shown divided roughly into two halves by a black line. On 6 November Singleton Wright, who were specialist planning solicitors acting for Mr Cassidy, wrote to the authority in these terms: 'We refer to our letter of 5 October 1989 and we note that we did not indicate to you the area of the land comprised in the reduced application. The land in question amounts to 2.679 acres.' Unfortunately there is no trace of the letter of 5 October 1989 but, in my judgment, the strong probability must be that the amended plan was enclosed under cover of that letter.

[171] Planning permission was granted on 30 May 1990. The body of the consent contains no reference to area, but there is attached to the consent a plan in the form of the amended plan to which I have referred, with the following changes. The two parcels into which the original site was divided are now designated as 'Phase 1' and 'Phase 2', and some detail has been added: the position of roads on the whole site and of buildings on the part called 'Phase 1'.

[172] In my judgment on the papers thus far, there is no doubt as to the extent of the permission. In the light of the note endorsed on the report to committee, Singleton Wright's letter of 6 November and the amended plan, the consent must have extended only to the smaller area. None of the matters to which Mr Haines alluded in his closing written submissions appeared to me to point in the other direction. Further, I believe that the true position was known to Mr Cassidy and his father at the time. There is a minute of a meeting which they had with officers of the bank on 2 May 1990:

'Planning permission in unrestricted form, was at last received on Friday for 2.67 acres at Dial Farm.'

The consent was not, in fact, unrestricted (for example, parking of heavy goods vehicles and storage were prohibited), and the reference to the permission having actually been received was premature. The significance lies in the reference to acreage. In a further meeting on 25 June, according to the minute:

'The 20 acres at Dial House has planning permission for industrial development on 5 acres to be carried out in two phases. Phase 1 has about three acres and phase 2 has about two acres. Phase 2 will be granted assuming phase 1 is seen to be a good scheme.'

This is not very elegantly expressed, but the gravamen of the sentence is plain: about three acres have, and about two acres may obtain, planning consent. Mr Cassidy says that he did not tell the bank on 2 May that permission had been granted for 2.67 acres. I cannot accept this, because Mr Cassidy was the applicant for the planning consent and there was no one else (apart from his father) at the meeting who could possibly have known the result of the planning application. I regret to say that the notion, vigorously advanced by Mr Cassidy, that there has always been a consent for the larger area, can only be a fabrication which was advanced with a view to obstructing the sale."

44. The crucial points are that Singleton Wright, who are specialist planning solicitors, expressly stated that the planning permission was granted in respect of 2.679 acres. Moreover, the judge held that the applicant knew the true position based on the minutes of the meeting at which he was present on 2 May and a further minute of a meeting on 25 June 1990. On the basis of the materials reviewed by the judge I do not see any realistic basis upon which this court could interfere with the judge's conclusion expressed at the end of paragraph 172 of his judgment as follows:

"Mr Cassidy says that he did not tell the bank on 2 May that permission had been granted for 2.67 acres. I cannot accept this, because Mr Cassidy was the applicant for planning consent and there was no one else (apart from his father) at the meeting who could possibly have known the result of the planning application. I regret to say that the notion, vigorously advanced by Mr Cassidy, that there has always been a consent for the larger area, can only be a fabrication which was advanced with a view to obstructing the sale."

45. Mr Haines relied upon later documents apparently showing that Weatheralls and the planning officer Mr Bean proceeded on the basis that outline planning permission had been granted for five acres. While those points have some forensic force they do not detract from the judge's conclusion that the true position was that the planning permission was granted for 2.67 acres, which was phase 1, on the basis that planning permission for the remaining acres would be granted, ie for phase 2, as the note of 25 June 1990 put it: "assuming phase 1 is seen to be a good scheme". There is no evidence that the planning authorities made any decision in 1991 different from that made in 1990 and referred to by the judge.

46. In these circumstances I am not persuaded that there is any realistic basis upon which this court could reach a different conclusion as to the applicant's credibility upon the Dial House land which might have had an effect on his view as to the applicant's credibility on the question whether he had a lender in place to support the Black offer.

47. As to Mr Black the judge said this in paragraph 86:

"As regards Mr Black, he had at first envisaged buying the land at Dial House with a Mr Noble. By September 1991, however, Mr Noble, who was heavily in debt, had left the scene. Mr Black's evidence about his own financial position at the time was unimpressive. What does emerge is that he would have had to borrow to purchase the Dial House land. As Mr Reed pointed out in his closing submissions, his ability to do so would have depended upon a high valuation (for which there is no support in the evidence given on the third strand in this case) being placed on that land. Mr Black went bankrupt in 1992, the petition debt being no more than £11,000, and this further undermines any confidence which could be placed in him as a prospective purchaser of the Dial House land."

48. Mr Haines submitted in his skeleton argument that the judge was wrong to say that Mr Noble was heavily in debt. That appears to be correct. It does not, however, seem to me to be of significance since the judge also held that Mr Noble had left the scene. In his skeleton argument Mr Haines criticised the judge's approach in paragraph 86 of his judgment, but it seems to me that there is a considerable element of speculation or wishful thinking in the points made by Mr Haines. The fact is that Mr Black was made bankrupt in 1992 and reading Mr Black's evidence, referred to in footnote 70 of the judgment to which we were referred in the course of the argument yesterday, it seems to me that the judge was fully entitled to hold that Mr Black's evidence about his own financial position at the time was unimpressive. It should also be noted in this regard that the judge noted in footnote 71 that Mr Black was unable to identify any bank at which his account was in credit.

49. The fact is that the judge did not believe that Mr Black could have found finance to provide £150,000 to buy the 5.76 acres at Dial House. In the light of the judge's conclusion that the planning permission only related to 2.76 acres, the prospects seem very bleak indeed. In any event, in the light of the financial problems which Mr Black had in 1992, including his bankruptcy, whatever its cause, and the absence of any available assets, I see no realistic basis on which this court might take another view.

50. A reading of the transcripts of Mr Black's evidence before HHJ McGonigal, which was put before the judge at the trial, demonstrates that HHJ McGonigal was unsympathetic to Mr Black. In my opinion the judge was entitled to be very sceptical about his evidence. It must be remembered that this court will very rarely interfere with the conclusions reached by a trial judge who has seen the relevant witnesses.

51. As to AMC, the judge accepted the evidence of AMC's customer service manager in 1999, Mr Martin Lawman, which included the following:

"So with all of these factors taken into account, I think it is highly unlikely that I would have done anything but call for the proceeds of sale, as I had done on the previous releases."

After quoting that passage the judge said this:

"The passage which I have I italicised [which was 'as I had done on the previous releases'] refers to the earlier or still current sales of land by Mr Cassidy. Mr Lawman was an impressive witness who gave his evidence in a careful and measured way. He maintained his stance under cross-examination by Mr Haines."

52. The judge added this in paragraphs 88 and 89:

"[88] I am unable, as Mr Haines invites me to do, to disregard this evidence as speculative. Mr Lawman's reasoning is coherent, and his view of what his attitude would have been in relation to the Black offer is consistent with the rest of the relevant history. Two other points are worth making. By 20 August 1991, Mr Noble AMC's field services manager, had concluded that Mr Cassidy was 'in a totally untenable position' and that 'at the end of the day all of their 415 acres will have to go'. Second, even Mr black who was of course a witness called on behalf of Mr Cassidy, expressed the view that after receivers had been appointed, AMC would insist on getting its money out of any land which was sold.

[89 Co-operation from the AMC, in the concrete form of allowing sale moneys from land charged to AMC to be paid to the bank notwithstanding AMC's prior rights, was vital if the Black offer were to be carried to completion. In my judgment, the prospect of such co-operation was simply non-existent. The Black offer was dead in the water from the moment it was made."

53. Mr Haines submitted, in essence, that the judge should not have accepted Mr Lawman's evidence, especially in the light of the evidence of Mr Black. However, as just indicated, the judge was plainly unimpressed by Mr Black as a witness and as a source of funds. It was a matter for the judge, and not for this court on an appeal, to assess the evidence of Mr Lawman. He reached a clear conclusion that his evidence was careful and measured and that his reasoning was coherent. Mr Haines submitted that AMC had other assets available to meet the outstanding indebtedness and stressed that AMC originally lent money against the security of the Dial House land when it was agricultural land.

54. However, it would have made sense for AMC, which knew that the Dial House land was subject to planning permission by this time, to call for the proceeds of sale "as I had done on the previous releases". As the judge observed and as indeed Mr Haines very properly accepted even Mr Black said that AMC would insist on getting its money out of any land that was sold now that the receivership was in place.

55. I can see that another view might have been and, no doubt, was pressed on the judge, but the question for us is whether there is any real prospect of this court holding that the judge's conclusion was wrong. In my judgment, there was not.

56. It follows that there is no real prospect of an appeal based on the Black offer succeeding and that permission to appeal on this point must, in my opinion, be refused. That leaves two points which Mr Haines advanced as minor points.

THE 1993 HARVEST:

57. The applicant says that the judge should have held that the receivers were in breach of duty in failing to plant for the harvest in 1993. The receiver's case was that in the light of their decision to sell the land and of the interference of the Cassidy family they were justified in not sowing for 1993. The argument proceeded on the basis that the sowing would have to be done in the Autumn of 1992, although there was at least some evidence that some crops, such as beet, could be drilled in the Spring of 1993.

58. The judge's conclusions in this regard are set out in some detail between paragraphs 114 and 120 of his judgment.

"[114] Over the weekend of 17 and 18 July 1992 there were confrontations between members of the Cassidy family and contractors who had been engaged by the receivers to combine the barley. Between 20 July and 1 August the Cassidys, without asking the receivers for their consent, themselves combined the barley. Between 7 and either 15 or 16 August they combined the wheat. I have no hesitation in rejecting Mr Cassidy's assertion that the wheat was harvested after he had informed the receivers of his intention and had received no objection. For the receivers to have adopted such a compliant attitude would have been wholly inconsistent with the fact that, as Mr Cassidy accepted, on 17 August a contractor engaged by the receivers turned up at the farm in order to do the very work that Mr Cassidy had done. As I have already mentioned, the barley and wheat were then stored by Mr Cassidy and the receivers could not obtain access to it.

[115] On 7 August 1992 Mr Patmore wrote to Mr Whitwam in these terms:

'I have also spoken the David Wright of your Nottingham office following the position Mr Cassidy has recently taken in relation to the harvesting of the crops. Bearing in mind the attitude Mr Cassidy has taken, Mr Wright and myself feel that it would be advisable to prepare for a sale of the land ... rather than risk having further interference in other works connected with the management of the crops. Ideally therefore we should be looking to have the land on the market during the latter part of the harvesting of the current crops and in order to hopefully conclude negotiations with purchasers enabling them to enter and drill the new seasons crops.'

The decision by the receivers to press ahead with the sale of the whole of the land (apart from the farm house and the surrounding area at Bursea Lodge, where Bernard Cassidy and his wife were resisting proceedings for possession) was made, at latest, on 13 August 1992. Mr Patmore had been looking to contracts being signed by the end of September and his recommendation that the land should be left for purchasers to sow was accepted.

[116] Mr Cassidy, through Mr Haines, attacks both the decision to sell and the decision not to sow for the 1993 season. In my judgment, these criticisms of the receivers are doomed to failure.

[117] As a matter of law, the receivers were, subject always to their duty to act in good faith, entitled to sell the land when they wished. In Silven Properties Limited V. Royal Bank of Scotland Plc Lightman J, delivering the decision of the Court of Appeal, set out the question for decision by the court in this way:

'The critical issue however is whether the receiver (unlike the mortgagee) is under a duty of care in regard to the date of sale and to ensure that steps are taken (in particular in respect of planning and the grant of leases) to realise the full potential of the secured property before sale by obtaining permission or granting the leases.'

The question thus formulated was answered in the negative:

'Having regard to the fact that the receiver's primary duty is to bring about a situation where the secured debt is repaid, as a matter of principle the receiver must be entitled (like the mortgagee) to sell the property in the condition in which it is in the same way as the mortgagee can and in particular without awaiting or effecting any increase in value or improvement in the property. This accords with repeated statements in the authorities that the duties in respect of the exercise of the power of sale by mortgagees or receivers are the same and with the holding in a series of decisions at first instance that receivers are not obliged before sale to spend money on repairs (see Meftah v Lloyds TSB Bank [2001] 2 All ER (Comm) 741 at 744 and 766 per Lawrence Collins J), to make the property more attractive before marketing it (Garland v Ralph Pay and Ransom[1984] 2 EGLR 147 at 151 per Nicholls J) or to 'work' an estate by refurbishing it (Routestone Limited v. Minories Finance Ltd[1997] 1 EGLR 123 AT 130D per Jacob J).'

[118] In the light of this authority, and in the absence of an allegation of bad faith, the decision of the receivers to sell is simply not open to review by the court. It cannot, in law have constituted a breach of any duty owed to Mr Cassidy. If the decision did require justification, ample justification would in any event be available. The decision to sell was made at the end of harvest, when farming operations could be wound down, upon advice from Mr Patmore, and in a situation in which the Cassidys had taken it upon themselves to combine and store the barley and wheat. Quite apart from the many other controversies surrounding the highly acrimonious relationship between Mr Cassidy and the receivers into which it is unnecessary for me to enter, Mr Cassidy's actions in relation to the 1992 harvest would by themselves warrant a decision to sell. By 21 August the receivers had found it necessary to obtain injunctions preventing the Cassidys from interfering with contractors engaged by the receivers. The state of affairs was such that the receivers could not be confident of their ability to manage the land unimpeded by Mr Cassidy.

[119] The decision not to sow is attacked on the basis that the receivers thereby deprived themselves of income from a 1993 harvest and that, by leaving the land untilled, it must have appeared less attractive to prospective purchasers. This criticism is, in my judgment, as ill-founded as the first, and for the same reasons. The receivers were in accordance with the decision in Silven Properties Limited v Royal Bank of Scotland Plc entitled to sell the property without spending money on planting for a further season. They acted in good faith. If their decision not to sow were open to review, it would be justified just for the same reasons as their decision to sell. In particular, they were acting upon Mr Patmore's advice that a position should be reached by the end of September in which purchasers could decide for themselves how to drill for the 1993 season. Bids had been accepted for all the parcels of land by 30 September 1992 and for the receivers thereafter to plant or sow the land would have been to run a serious risk of wasting their resources. There was no reason (indeed, none has been suggested, for the receivers at that stage to act on the basis that there might be long delays in completion. On the basis of the impressive evidence of the claimant's valuer, I am unable to say, as Mr Haines pressed me to do, that leaving the land untilled had a detrimental effect on the prices obtained on sales in 1992 and 1993.

[120] The claim in relation to the 1993 harvest therefore fails."

59. Mr Haines submitted that there is a distinction between sowing to increase the capital value and sowing to ensure a proper income until sale, however whether that is so or not, the decision to sell was made in the Summer of 1992 and indeed bids on the land were accepted by 30 September. I can see no basis upon which this court could interfere with the judge's conclusions in the passages which I have just quoted.

60. We were referred to the evidence of Mr Denchfield, who gave evidence on behalf of the receivers, and indeed to the evidence of Mr Patmore. There was no doubt something, perhaps much, to be said for the view that, other things being equal, it would have been sensible to sow for 1993, but other things were not equal because of the attitude of the Cassidys referred to by the judge. As Mr Denchfield put it in paragraph 4.5 of his report:

"However, the receivers' decision not to plant must have been partly influenced by the attitude of the Cassidys at the time. The receivers had obtained on 26th August an injunction restraining them from interfering with farming operations but even this does not seem to have prevented them entirely. They clearly posed a threat to continuing farming operations."

61. In all the circumstances, including in particular the way in which the Cassidys had behaved in the Summer of 1992, I can see no basis upon which this court would hold that the judge was wrong in this regard.

62.

DAMAGES:

63. This is a discrete point, namely that the judge should have awarded twice as much damages as he did. Mr Haines put the point this way in his skeleton argument:

"The judge halved the damages on the basis that [the applicant] and his father traded in partnership. [That however] ignored the bankruptcy of [the applicant's] father, which brought an end to the partnership under section 33(1) of the Partnership Act 1890. Thereafter the receivers farmed the land as agent for the mortgagor [the applicant] with no obligation to account to the father."

64. The problem with that submission is that it disregards section 42(1) of the Partnership Act 1890, to which my Lord, Chadwick LJ, drew attention in the course of the argument. The effect of it is that Bernard Cassidy's trustee in bankruptcy would have been entitled to the other half of the damages, but that the applicant was only entitled to his half share. This point, therefore, cannot succeed.

CONCLUSION:

65. It follows that, leaving procedural unfairness on one side, the only points argued in support of an appeal by Mr~Haines do not justify permission to appeal being granted. None of the other points in the applicant's own written argument afford any ground for granting permission.

PROCEDURAL UNFAIRNESS:

66. I therefore return briefly to procedural unfairness. The applicant included a considerable number of points in his written material, but none of them has any prospect of success, with the possible exception of two which were referred to by Mr Haines in the course of his argument. The first relates to the transcripts, which was the point which gave me some concern when I was considering the matter in July.

67. The receivers and the bank decided to pay for a transcript so that their counsel could make use of the transcript in the course of the trial. The applicant was legally aided. On the first day of the trial there was some discussion about transcripts since Mr Haines was concerned that the receivers and the bank might make their transcripts available to the judge in circumstances where he did not have access to them. Mr Haines expressed his concern to the judge on the first day, on 13 October 2003. He said this:

"We on this side will not be having the benefit of those transcripts unless your Lordship gets them in which case we should obviously get them.

Judge: We shall see how we go."

68. It is right to say that the respondents offered to support an application on behalf of the applicant to the Legal Services Commission that it should contribute to the costs of the transcripts. It is also right to say, as counsel for both respondents observe, that no such application was made. Mr Haines subsequently explained the position in the course of day 17. It was that he appreciated, as he put it, "that we are tightly funded". He thought that as long as he and the judge did not have the transcripts he and his client, the applicant, would not be at a disadvantage. In fact copies of the transcripts had been made available to the judge at a comparatively early stage, but Mr Haines says that he did not appreciate that fact until day 17.

69. There has been some what one might call 'forensic astonishment' at that statement, but, for my part, I see no reason whatever not to accept Mr Haines' clear statement. I do so because it would be a very rare case indeed in which I would not accept a statement of that kind from counsel. In any event, the statement is supported by what Mr Haines said to the judge on day 17, part of which I quoted in July. It is not necessary to quote it again.

70. The position, as I see it in summary, is this: (1) Mr Haines put down a marker at the outset, namely that if the judge was supplied with transcripts he and his client should be provided with transcripts too. (2) Thereafter it came about that the judge was supplied with transcripts, although Mr Haines and the applicant were not. (3) Mr Haines was not aware of that fact until day 17 or just before. (4) Mr Haines then drew the matter to the attention of the court. (5) Subsequent arrangements were made for transcripts to be provided to Mr Haines at the expense of the bank and/or the receivers five days before he made his final speech, although it is fair to say that two of those days were a weekend. (6) Mr Haines was able to refer to the transcripts in the course of his final submissions.

71. This account of the position discloses a procedural irregularity. In my opinion a judge should not be provided with transcripts in circumstances where one of the parties is not, at any rate without informing the judge of the position and giving that party the opportunity to make submissions to the judge. There is an important general principle that, save in exceptional circumstances, no document or other material should be provided to a judge without the same material being provided to the other parties in the case. The respondents failed to adhere to that principle in this case. However, as Mr Haines properly accepted, the question is whether that procedural irregularity caused any prejudice or injustice to the applicant. Mr Haines again properly accepted that it did not unless he could show that the appeal should be allowed on the basis of material in the transcripts which he would have had regard to. He now has the transcripts. We have considered all the evidence before the judge which we have been invited to consider and, for the reasons I have tried to give earlier, I have reached the clear conclusion that the applicant has no arguable case that the judge's decision was wrong. It follows that, unsatisfactory though the position with regard to the transcripts was, it affords no separate ground of appeal.

72. I should add that I have already referred to the fact that a number of other procedural irregularities, including bias, were made in the written materials advanced by the applicant. None of them has any prospect of success and Mr Haines was, in my opinion, quite right not to rely upon them.

73. He advanced only one point in addition to the transcript point, namely the length of cross-examination of the applicant. While I can see the force of Mr Haines' point as to the length of that cross-examination, it affords no basis for saying that the decision of the judge was wrong.

74. For all these reasons I would refuse the application for permission to appeal.

75. LORD JUSTICE CHADWICK: I agree that it has not been shown that an appeal from the judge's order would have any real prospect of success on any of the grounds advanced. Accordingly, I too would refuse this application for permission.

76. LORD JUSTICE AULD: I also agree for the reasons given by my Lord, Clarke LJ, and Chadwick LJ, that the application should be refused.

Order: Applicant to pay respondents' costs. But in so far as they are covered by the certificate in no amount greater than the costs judge directs reasonable. Applicant to have detailed assessment.