De Crittenden v Bayliss

LORD JUSTICE JONATHAN PARKER: This is an appeal by Robin De Crittenden, who appears in person, against an order made on 17th January 2005 by Her Honour Judge Kirkham, sitting as a High Court judge in the Chancery Division, Birmingham District Registry, following the trial of an action by Mr De Crittenden as claimant against the estate of Mr Charles Bayliss deceased and Mr Bayliss's daughter, Miss Leslie Anne Bayliss. Miss Bayliss also represents her father's estate. By her order the judge dismissed Mr De Crittenden's claim in the action.

On 25th April 2005 I granted Mr De Crittenden limited permission to appeal against the judge's order. I adjourned an application by him for permission to appeal against the refusal of the judge at the commencement of the trial to grant permission for him to re-amend his Particulars of Claim. I directed that the adjourned application for permission to appeal be listed for hearing at the same time as the substantive appeal, with the appeal on that issue to follow if permission granted. That application is now before us.

However, as Mr James Morgan (who appears for Miss Bayliss both in her representative capacity and in her personal capacity) has explained to us, the proposed amendment is in the event unnecessary, since he does not seek to raise the contention which it was designed to meet. Accordingly, that application falls away.

The matter has a long history which I will summarise as briefly as I may. Mr Bayliss was the directing mind of three companies, namely Dunsvale Investments Ltd ("Dunsvale"), Elston Investments Limited ("Elston") and Packers & Buyers Limited ("P & B"). Dunsvale and Elston were registered in the Isle of Man, P & B was registered in England. P & B had a bank account with Lloyds Bank. Its indebtedness on that account was secured by a charge over property owned by P & B, which included a house known as The Ryelands, Leominster, which was Mr Bayliss's home, and by a charge over adjacent land, referred to in the judge's judgment as "the Leominster land", which was owned by Elston.

In about 1992 Mr De Crittenden and Mr Bayliss became acquainted and Mr De Crittenden went to live with Mr Bayliss at The Ryelands. They entered into a joint venture arrangement whereby Mr De Crittenden would attempt to arrange contracts on the international market, with Mr Bayliss providing the funding. The proceeds of the venture were to be shared equally between them.

In March 1992 Lloyds Bank appointed Law of Property Act receivers over the mortgaged properties and set about realising them. By early 1993 Lloyds Bank was threatening proceedings against P & B. Mr De Crittenden was concerned that the sale of the properties by Lloyds Bank as mortgagee would mean the end of his business venture with Mr Bayliss, and he agreed with Mr Bayliss that he would assist him in defending any proceedings brought by Lloyds Bank in exchange for a payment equal to half the value of any property recovered or preserved in such proceedings.

In November 1993 Lloyds Bank duly issued proceedings against P & B ("the Lloyds action"). Thereafter, Mr De Crittenden actively assisted Mr Bayliss in defending the Lloyds action.

In February 1997 the Lloyds action was compromised by way of a Tomlin order (ie a consent order to which terms of agreement were scheduled). Under the terms of that order possession of the properties mortgaged by P & B was to be delivered up. In return, however, Lloyds Bank agreed to pay £75,000 as directed by P & B and to release its charge over the Leominster land owned by Elston. In the event, the £75,000 was paid to Mr Bayliss's solicitors and, as later became apparent, part of it was applied in the purchase by Mr Bayliss and a Mrs Worrall of a long lease of a house at 25 Carlton Mews, Wells, Somerset. A Declaration of Trust was apparently executed, which provided that Mr Bayliss and Mrs Worrall were beneficial tenants in common of the property in equal shares.

In April 1997 Mr De Crittenden brought an action against P & B and Elston (for reasons which will appear, I will call this action "the first action"). Mr De Crittenden was represented in the first action by solicitors and counsel. Initially Messrs Foster Baxter Cooksey were on the record for Mr De Crittenden but they were later replaced by Messrs Thursfields. Mr Andrew Charman of counsel signed the particulars of claim and appeared for Mr De Crittenden at the trial.

Paragraph 10 of the Re-amended Particulars of Claim in the first action read as follows:

In July 1998 the Leominster land was apparently conveyed by Elston to Miss Bayliss for a consideration of £1. In February 1999 Mr Bayliss bought out Mrs Worrall's half share in 25 Carlton Mews for £50,000. In May 1999 he transferred 25 Carlton Mews to Miss Bayliss by way of gift and she leased it back to him on a 20 year lease rent free. In January 2000 the claim in the first action was amended by substituting Mr Bayliss as defendant in place of P & B and Elston (which had by that time been dissolved).

On 3rd May 2000 Mr De Crittenden applied to the Land Registry to register a caution against dealings on the title of 25 Carlton Mews. In his declaration in support of that application Mr De Crittenden said this:

The trial of the first action took place in February 2001 in the Birmingham County Court before His Honour Judge Nicholl. At the trial counsel for Mr Bayliss took a preliminary point that the agreement alleged by Mr De Crittenden (if such an agreement was made, which was denied) was champertous. At the end of Mr De Crittenden's evidence counsel for Mr Bayliss made a submission of no case to answer, and elected to call no evidence. This proved to be a mistaken (if inevitable) tactic, for in his judgment the judge, accepting Mr De Crittenden's evidence, found in his favour that the original agreement between him and Mr Bayliss was varied so as to cover the Lloyds action and that it was not a champertous agreement. Judge Nicholl said this in the course of his judgment (paragraph 40 of the judgment):

By his order Judge Nicholl awarded Mr De Crittenden £37,500 (that is half of the £75,000 paid by Lloyds Bank), plus a further sum of £15,000, representing one half of the value of the Leominster land, together with interest and costs. Judge Nicholl refused Mr Bayliss permission to appeal but permission was subsequently granted by the Court of Appeal. However, in the event the appeal was dismissed. No part of the judgment debt was paid. On 13th February 2002 Mr De Crittenden applied for charging orders over 25 Carlton Mews and the Leominster land. Charging orders nisi were in due course made.

On 7th October 2002 Mr Bayliss was orally examined before District Judge Cardinal by Mr Farrer of counsel on behalf of Mr De Crittenden. In the course of the oral examination Mr Bayliss made a number of admissions, including an admission that part of the £75,000 paid by Lloyds Bank had been applied in the purchase of 25 Carlton Mews, something which he had previously steadfastly denied. He also admitted to having forged documents designed to show that Elston had no assets. In fact, by this time, as Judge Kirkham recorded at paragraph 35 of her judgment, Mr De Crittenden had already decided to commence a tracing action and his counsel had drafted Particulars of Claim.

On 4th November 2002 Mr De Crittenden commenced the present action in which he claims, amongst other things, declarations that Mr Bayliss held 25 Carlton Mews as a constructive trustee for the two of them; that the application of half the £75,000 in the purchase of 25 Carlton Mews represented a 40.55% contribution to its purchase, and that he is accordingly beneficially entitled to a proportionate share of the beneficial interest in that property. He did not allege that the entirety of the £75,000 was applied in purchasing 25 Carlton Mews, and at the commencement of the trial before Judge Kirkham his counsel applied to re-amend so as to raise that as an alternative case. That was the application which was refused by the judge and in respect of which Mr De Crittenden seeks permission to appeal. However, Mr Morgan, as I have indicated, accepts that in pursuing a tracing remedy (should he otherwise be entitled to such a remedy) Mr De Crittenden may "cherry pick" as to the assets into which he seeks to trace and is not debarred by his pleading from recovering the full amount of his beneficial entitlement (if any) from the proceeds of sale of 25 Carlton Mews. Thus the proposed amendment would serve no purpose.

On 6th January 2003 District Judge Cardinal ordered that the charging orders nisi over 25 Carlton Mews and the Leominster land should continue until further order and that unless Mr Bayliss paid a sum of £76,000 or thereabouts to Mr De Crittenden by 27th January the charging orders should become absolute. On the same day District Judge Cardinal made an order in the present action that the action be struck out without further order unless by 28th April 2003 Mr De Crittenden applied to amend the claim or for directions.

On or about 27th January 2003 the full amount of the judgment debt was paid to Mr De Crittenden by Miss Bayliss.

In November 2003 25 Carlton Mews was sold for £225,000. Shortly thereafter £185,000 of the net proceeds of sale was paid into court to await the outcome of the action. In May 2004 Mr Bayliss died. The action has since continued against his estate, represented by Miss Bayliss. Subsequently a Re-Amended Defence signed by Mr Morgan was served, earlier versions of the Defence having been drafted by Miss Bayliss herself. By paragraph 14 of that pleading it is denied that any trust of 25 Carlton Mews was created. By paragraph 17 of the pleading it is alleged that the claims made in the present action represent an abuse of process since they could and should have been made in the first action. Paragraph 20 of the pleading asserts that the present action amounts to unjust harassment of the defendants and should be struck out.

I turn to the judgment of Judge Kirkham in the present action. In paragraph 10 of her judgment she formulated the three issues which fell for decision as follows:

At paragraph 25 of her judgment the judge returned to Miss Bayliss's evidence, saying this:

On 25th April 2005 I granted permission to appeal on the three issues which the judge addressed in her judgment, taking the view that each of the issues was properly arguable before the full court. In doing so, however, I emphasised the difficulties which Mr de Crittenden would face at any substantive appeal pursuant to that permission, and in that connection I specifically referred to the judge's finding that by May 2000 at the latest Mr De Crittenden knew that all or part of the £75,000 had been used to purchase 25 Carlton Mews.

We invited argument first on the associated issues of election and abuse of process, since, if Mr De Crittenden were to be unsuccessful on those issues, the appeal must fail, and no issue as to the existence of fiduciary duties and any proprietary right to trace could arise. This was a position which Mr De Crittenden accepted. Mr De Crittenden accordingly proceeded to address us on those two issues, viz. election and abuse of process. I would like (if I may) to compliment him on the manner in which he did so. He wasted no time. He framed his submissions with moderation and with skill.

In his oral submissions, which were supported by written material which he handed in and which we have read and considered, Mr De Crittenden in effect repeats the submissions which he made to the judge. He contends that although he believed in May 2000 that part of the £75,000 had been used in the purchase of 25 Carlton Mews (see his declaration in support of the application for a charging order) he was far from certain that he could prove it, and that at that stage he took the view, on advice (as he has told us), that his safest course was to continue with his claim to half the £75,000 and half the value of the Leominster land. At that stage, he told us, he would have been content with the order, which, in the result, Judge Nicholl made. As he put it in the course of his submissions, had the judgment debt been paid promptly he would have taken the money and run. But as time passed and it became apparent that the defendants were doing their best, by deceitful means, including forgery, to ensure that he never saw a penny of it, he took the decision to proceed with his proprietary claim.

Mr De Crittenden naturally also relies heavily on the merits of the case and in particular the deceitful conduct of Mr Bayliss and Miss Bayliss. He points out that they persisted in advancing a case for as long as they could, and that it was only at the conclusion of Miss Bayliss's lengthy cross-examination before Judge Kirkham that she finally admitted that part of the £75,000 had been used in the purchase of 25 Carlton Mews, that being an admission which was, as I pointed out earlier, in direct contradiction of an allegation in her pleading. Mr De Crittenden further submits that the prosecution of a tracing claim against them can have come as no surprise to them. He asks rhetorically: Why should he be shut out from advancing his claim by reason of the deceitful conduct of the Baylisses? They had the use of money which was rightfully his and they used that money in the purchase of that property, which proved in the event to be an extremely good investment.

Mr Morgan, rightly and understandably, does not seek in any way to excuse his clients' conduct in this matter. He submits, however, that the well-established rules in relation to the closely associated concepts of election and abuse of process are applicable in the instant case, for the reasons which the judge gave. He stresses the difficulties which a court would face in attempting to try a proprietary claim deriving from the business relationship between Mr De Crittenden and Mr Bayliss in circumstances where that relationship has already been the subject of an earlier action in which no such claim was made, and where one of the protagonists, Mr Bayliss, has since died. Mr Morgan relies on the fact that Mr De Crittenden accepted payment of the judgment sum.

As a fallback position, he relies on the much cited observations of Clarke LJ (as he then was) in Assicurazioni Generali SpA v Arab Insurance Group [2003] 1 WLR 577, to the effect that an evaluative judgment made at first instance should be treated in the same way as the exercise of a discretion. Mr Morgan submits that the decision which the judge reached was in any event a legitimate decision, in the sense that it represented an evaluation which she was entitled to make, and that in consequence this court should not interfere with it.

There are two general rules of public policy in play in relation to the issues of election and abuse of process. First, there is the so-called rule in Henderson v Henderson 3 Hare 100 that in the ordinary way a claimant must bring forward his entire case in a single action. That is a rule based on the need for finality in litigation. However, as Lord Millett made clear in Johnson v Gore Wood, the effect of that rule is not to raise a presumption against the bringing of successive actions. Rather, as he said at page 59H, "the burden should always rest upon the defendant to establish that it is oppressive or an abuse of process for him to be subjected to the second action." Second, there is what I may call the rule in Tang Man Sit, that in the ordinary way a claimant who claims inconsistent remedies must elect before judgment is entered as to which remedy he wishes to pursue. That rule is based upon the need for fairness in the conduct of litigation. Once again it is not an absolute rule. As Lord Nicholls said in Tang Man Sit:

The question for the judge was whether, in all the circumstances, the instant case should be treated as an exception to those general rules. Having heard the evidence, including evidence of gross deceit and forgery by Mr Bayliss, assisted by his daughter, and having considered all the circumstances of the case in her admirably detailed and lucid judgment, the judge concluded that it should not and that the general rule should apply and the action should be dismissed.

In my judgment that was a conclusion which the judge was fully entitled to reach, having regard to all the circumstances of the instant case. She made no error of principle in doing so. Her conclusion was in the nature of an evaluative judgment, with which this court should be slow to interfere. Moreover, there are in my judgment weighty factors pointing to the correctness of the judge's conclusion. In the first place, Mr de Crittenden was represented by counsel and solicitors throughout the first action, and I can for my part see no basis for challenging the judge's conclusion that Mr De Crittenden could and should have amended his pleading in the first action so as to plead a proprietary claim. Secondly, there is the issue of Mr De Crittenden's knowledge. True it is that in May 2000 he did not have documentary proof that part of the £75,000 was used to purchase 25 Carlton Mews, but his declaration in support of the application for a charging order makes it clear that he knew enough to plead a proprietary remedy in relation to that property, as the judge found. Nor is it the case that by that time he retained any trust in Mr Bayliss's good faith and veracity, such that he was under any illusion that a judgment debt would be promptly paid. As he put it in the course of submissions, he did not believe a word that Mr Bayliss said. Indeed, one can understand why. But the key factor to my mind concerns the practicality of attempting to revisit the parties' business relationship in the absence of Mr Bayliss and in circumstances where, as is common ground, the findings made by Judge Nicholl in a different pleaded context are binding on the parties.

At issue in the first action was the business relationship which forms the basis of Mr De Crittenden's claim in the present action. As the judge rightly pointed out, it would be highly unsatisfactory, to put it no higher, for the court in the present action, in a different pleaded context, to attempt to revisit the business relationship on which Judge Nicholl made findings, the more so since Mr Bayliss is now dead. Quite apart from the difficulties which any court would face in attempting to try such a claim, the defendants could fairly claim that by not bringing his proprietary claim in the first action Mr De Crittenden had placed them at a substantial disadvantage.

As against those factors I take full account (as did the judge) of the deceitful conduct of Mr Bayliss and his daughter. As to that, I have considerable sympathy with Mr De Crittenden, as I would have for any successful litigant whose enjoyment of the fruits of a judgment is delayed by the deceitful conduct of the defendant. However, the fact remains that on the judge's findings (and as Mr De Crittenden effectively acknowledged in the course of his oral submissions) the deceitful conduct of Mr Bayliss and his daughter did not in any way prevent him from bringing a tracing claim in the first action, had he chosen to do so. By May 2000 at the latest he had sufficient knowledge of the relevant facts to enable him to plead such a claim, and he had solicitors and counsel acting for him throughout.

In all the circumstances I conclude that, evaluating and balancing all the relevant factors, the judge reached the right conclusion. At the very least, her conclusion was in my judgment a legitimate conclusion and thus, on the authority of the Assicurazioni case, not one with which this court should interfere. In paragraph 16 of his judgment in that case Clarke LJ said this:

Accordingly, for those reasons I conclude that this appeal fails on the linked issues of election and abuse of process. That being so, and if my Lords agree, it becomes unnecessary for us to proceed to hear argument on the issues as to the existence of fiduciary duties and a tracing claim. I would therefore dismiss the appeal.

LORD JUSTICE MOSES: I agree. I add a few words of my own out of the sympathy I feel for Mr De Crittenden. Mr De Crittenden complains that, by reason of what he describes as deceptions practised by the respondents across a total period of no less than seven years, he has been deprived of his entitlement to the fruits of his work on behalf of Mr Bayliss. I should note that the deceptions did not prevent him from bringing his claim (see paragraph 41 of the judge's conclusions). But I would not have regarded the mere fact of his knowledge in May 2000 as by itself a sufficient reason to hold him to his election. Nor would I have regarded it as an abuse to bring his proprietary claim.

Had I believed that a fair trial of the issues raised in the proprietary claim was a realistic possibility, I would have felt little inhibition in reversing the decision of the judge, despite the principles set out by Clarke LJ in Assicurazioni Generali SpA v Arab Insurance Group [2003] 1 WLR 577. The respondents could hardly have asserted that it was unfair and unjust to expose them to a late assertion of a proprietary claim when they had done their utmost to deprive the appellant of any of the money to which he was entitled; nor would I have regarded them as the victims of unjust harassment, as the judge said in dealing with the abuse issue at paragraph 52. Nor is there any public interest in allowing the respondents to retain the fruits of their efforts to resist paying the appellant his due. But the one point which persuades me that the judge was right, and, certainly, prevents me from interfering with her views, is that the appellant's action has deprived the court of the means of properly and fairly trying the issues raised in the proprietary claim. For that reason it would have been wrong to permit the action to proceed, as the judge herself identified. In those circumstances I too would dismiss this appeal.

SIR CHRISTOPHER STAUGHTON: I also would dismiss this appeal. There is a Latin maxim -- Interest res publicae ut sit finis litium - it is in the interest of the state that there be an end of lawsuits. That is in my opinion a sound principle, but it is not the whole story. The state has an obligation to provide the apparatus of civil litigation so that citizens may make use of it. That can be found in Magna Carta. Nulli vendemus, nulli negabimus, aut differemus -- to no one will we sell or deny or delay right and justice. I made some comment to that effect in the case of Assicurazioni Generali SpA v Arab Insurance Group [2003] 1 WLR para 192. Our task is to hold the balance between those principles.

It is regrettable but unavoidable that we have to decide this appeal against Mr de Crittenden. It may well be that pure justice would require us to entertain the further claims that he wishes to put forward; but, as Parker LJ has said, a litigant is obliged to bring forward the whole of his claim at one time. That is not always an absolute rule, but here the effect of embarking on Mr De Crittenden's further claim would require an extensive inquiry which would be difficult or even impossible now to conduct. I fear that the appeal must be dismissed.