Roberts v Roberts

LORD JUSTICE LLOYD: This is a second appeal. Directly it is an appeal from an order of HHJ Overend, sitting in the Torquay and Newton Abbot County Court, but his order was itself on an appeal from an order of District Judge Meredith in the same court. Her order was made on 9 September 2004. Judge Overend gave permission for an appeal from that order on 25 February 2005 and allowed the appeal on 26 May 2005. The order that he made was to set aside the district judge’s order and to remit the matter for a re-hearing. Strictly the application before us is an application for permission to appeal on notice, with the appeal to follow, if permission is granted. That was the course directed by Mummery LJ at a hearing attended by Mr Earley, who is the appellant. He appears in person. Mr Roberts, who is the respondent, appears by his solicitor, Mr Brand, who argued the case before Judge Overend and in relation to whom this court has made an order under Section 27(2)(c) of the Courts and Legal Services Act 1990, giving him permission to appear on his clients’ behalf at this hearing.

Unfortunately, the documents before the court are very far from complete, partly due to the county court’s file having been lost. One document we do have is an agreement between the claimants, Mr and Mrs Roberts, and the defendants, Mr and Mrs Earley, dated 1 August 2002. This was for the sale by the claimants to the defendants of the property known as the Lavender House Hotel, which was in the name of Mrs Roberts, and of the goodwill, fixtures and fittings, and stock in trade of the business carried on there, which was owned and sold by both claimants. The price was £475,000 for the property, £75,000 for the fixtures, fittings and goodwill, and stock at valuation, and completion was to take place on 23 September 2002.

The agreement included provisions about advance bookings at clause 12, the conduct of the business pending completion at clause 13, the novation of certain agreements, including an agreement for a telephone system, clause 14, and licences, clause 15. There was also a clause 27 under which, prior to completion, the sellers, the claimants, were to procure that the employment of one Hilaire Sylvester, was terminated. The clause refers to Hilaire Sylvester as being a woman, though references throughout the hearing seem to have been to that person being a male, but that is irrelevant. But at any rate whoever it was was to vacate the property before completion and the claimants were to indemnify the defendants in respect of any liability attaching to them arising out of Hilaire Sylvester’s employment, or the termination of that employment, or occupation.

So far as I am aware, completion took place on 23 September 2002, in accordance with the contract. On 10 October, Mr Roberts wrote to Mr Earley, following a phone call, in a letter which we have in our bundle. He said that Sylvester had no claim against Mr Earley, having never been employed by Mr Earley. He mentioned some compact discs in these terms, “I understand that you don’t want the CDs so please let me know when they can be collected”, and he made some reference to inventory issues suggesting that they had left more in addition to the inventory that may have been accidentally removed.

The defendants had received from Tesco’s a cheque for £2,015 and some pence, which had been earned by the claimants. Mr Earley had apparently said that he would hold this as security against, first of all, sums that unquestionably Mr Roberts did owe under the contract and secondly, against any claim by Hilaire Sylvester. Mr Roberts did not agree to that, apart from setting off the amount that he admitted that he owed, which he said was £760. The Tesco cheque by then had been presented and later in October, Mr Roberts asked for the difference, which he contended was £1,255. Some correspondence continued, partly involving solicitors who then acted for the defendants, particularly in relation to the claim on the part of Sylvester.

I should mention that that claim, which was ultimately made within the three months of the dismissal, got into a situation in which its progress was delayed considerably because it raised an issue which was already raised by test proceedings that had been under way for some time in employment tribunals and the Employment Appeal Tribunal. The point arose because Sylvester was over 65 when his (or her) employment was terminated and according to the legislation, no one over 65 is entitled to claim for redundancy or unfair dismissal. That proposition was being challenged in the courts with a possibility, as it was perceived, of a reference to the European Court of Justice. In the meantime, no progress was made with the Sylvester unfair dismissal or redundancy claim because if the point was decided in one way it was plain that he had no claim. Ultimately, the point was decided in that way by the House of Lords in May of this year, in Secretary of State for Trade and Industry v Rutherford and Mr Earley told us this morning that in the light of that, the Sylvester claim had been dropped.

Besides those matters, the correspondence between Mr Roberts and Mr Earley threw up a dispute about the assignment of the telephone system, and a dispute about holiday pay claimed by employees of the business, and other matters also arose. The position taken by Mr Earley in respect of the compact discs was that they could have been taken by Mr Roberts on a visit that he made to the hotel, but the fact that he did not take them suggested that he did not want them and that they were certainly not worth as much as he was contending. A good deal of bad feeling had been generated between the parties in not a great length of time in the course of this correspondence.

Eventually Mr Roberts, acting in person, issued proceedings in the Torquay and Newton Abbot County Court in the name of himself and his wife, as vendors under the business, though he told us that by then, he and his wife were separated, and although his wife was named as a party, she did not at that stage know anything about the proceedings. To that claim, Mr and Mrs Earley counterclaimed. We have not seen the statements of case, but it is possible to draw reasonable inferences as to what they said on either side, at any rate as to the nature of the claims, from what followed. Mr Roberts claimed the balance due to him from the cheque, and the dispute really was about how much that balance was, with Mr Roberts asserting that there was nothing more than £760 due from him and Mr Earley claiming a large number of other items. Issue was also joined on the compact discs, which was part of Mr Roberts’ claim.

On 9 September 2004, a hearing took place before District Judge Meredith, attended by Mr and Mrs Earley, but not by Mr Roberts, nor for that matter Mrs Roberts, who we were told knew nothing about it. In advance of that hearing, Mr Roberts had written to the court on 18 August 2004 from Malaga in Spain, where he then was. He explained that he would be unable to attend because of his poor state of health. He sent a medical report from a cardiologist in Exeter, who had seen him in June, and a clinical report from a hospital in Malaga, in Spanish, dating from July, which to an inexpert Spanish reading eye suggests that Mr Roberts’ condition was certainly serious but does not, I think, give any forecast as to when he might be in a position to travel. In his letter he said that he was having to be regularly checked by the cardiologists, having had extensive heart surgery in Spain in mid-July. He said he was unable to fly at the moment.

In the course of his letter, which stretches over four pages, he commented on the defence and counterclaim submitted by Mr and Mrs Earley, and he sought to comment on some of the documents submitted by the defendants, and it appears that he enclosed at least one letter from the defendants’ former solicitors by way of comment on the points arising. He then dealt with what he calls their summary of claim. He said that he had sent invoices to the court confirming the value of the compact discs and he queried some letters which the defendants had put forward, said to be relevant to the same issue. So far as Mr Hilaire Sylvester is concerned, he said:

Then he makes a number of other comments, and on the last page of the letter he says this:

We have a transcript of the hearing before District Judge Meredith, which is an advantage that Judge Overend in his hearings last year did not have. The issue that was faced by Judge Overend and that can arise on this appeal is whether it was right for the district judge to proceed in the circumstances that she was presented with, without the attendance of Mr Roberts. She started by reading quite a lot of the letter, and referring to medical reports. She referred to part of the claim being for the balance between the cheque of £2,300-odd and what the claimants admitted that they owed, plus the value of the compact discs, which was apparently put at £939. She referred to the inventory. She read some of the correspondence passing between the parties from October 2002 onwards. She referred to the defence and counterclaim, identifying the sum said to be set off against the Tesco cheque, the claim by Hilaire Sylvester and the missing inventory items.

She said, by way of comment on the letter, that the claimant appeared to be content for the matter to be dealt with on paper only, so far as his case is concerned. She then asked Mr and Mrs Earley about a number of matters including the compact discs, which they said were not on the inventory, were worth very little, and had in any event been offered back to Mr Roberts, who had not collected them. The defendants told her that the Hilaire Sylvester claim was still running and referred to the fact of his age, which gave rise to the legal issue to which I have referred.

The district judge read out clause 27 of the contract in the context of the indemnity that was sought against the costs and the liabilities on the Hilaire Sylvester claim. The defendants then referred to their claim that Mr Roberts was liable for holiday pay for the staff in respect of the period since 5April, and they referred to the missing inventory items, explaining why what should have happened on completion, namely an agreement between the two sides as to the state of the inventory, had not happened, because the relevant representative of Mr Roberts had been leaving as the defendants arrived for completion and would not stay to carry out a check with a view to an agreement of the inventory.

All of that took some time, and after she had gone through the various issues she gave judgment, of which there is a transcript, and her judgment was then reduced to a written summary, which was communicated eventually to Mr Roberts. Her order was that the claimants should pay the defendants £2,271.04 and £260 in court fees. She decided the compact disc issue in the defendant’s favour, on the basis that the matter was not covered by the inventory, that the figure for value was inflated, and that Mr Roberts had been offered the opportunity to take them back and had not taken it.

As to the cheque, she referred to an admitted set off of £760 and the net claim, but she accepted the defendants’ contention that the claimant owed a further £300 on various heads, and she accepted the counterclaim or set off in respect of holiday pay at some £550, and the counterclaim in respect of missing inventory items at £2,237. She also accepted that the defendants were entitled to an indemnity in respect of £430 legal costs incurred on the Hilaire Sylvester claim, and gave judgment for the sum that I have mentioned as the resulting balance in favour of the defendants. She also ordered that Mr Roberts indemnify Mr and Mrs Earley for any future claim or liability in respect of Mr Sylvester.

The next thing that seems to have happened, according to the incomplete documents we have, is that, upon the sum for which judgment was given not being paid, Mr and Mrs Earley applied for an interim Charging Order over a property in the name of, I think, Mr Roberts, and the district judge made an interim Charging Order, and at that stage notice was given to Mr Roberts. The interim Charging Order appears to have been made, the date is not entirely clear but I think possibly on 15 October 2004, with an appointment for a hearing on 15 December as to whether the order should be made final.

Mr Brand told us that it was only at that stage, or following that order, that it came to Mr Roberts’ notice that an order had been made against him, or indeed at all, on 9 September 2004. He then instructed Mr Brand, who on 29 November applied to the Torquay and Newton Abbott County Court for an order that the 9 September judgment be set aside on the grounds that the claimants were not given an opportunity to be heard, for an order adjourning the hearing of the application for the final Charging Order and for provision to costs. That application was shown to District Judge Meredith and she caused the court staff to respond on 2 December, by saying that:

The reference in the reading that “contrary to the solicitor’s belief that she did not read the documents and the contract” arises from Part C to Mr Brand’s notice of application in which, among other things, he said that the district judge cannot have read the contract because no reference was made to its terms in the district judge’s reasons for decision, and a number of other points were made.

The reference at paragraph one of that letter to the district judge having considered the application for an adjournment and refused it is puzzling, because there is no reference to that in the transcript of the hearing or the judgment on 9 September 2004, and indeed there was before her no application for an adjournment at that stage, nor have I been able to find, even with the assistance of Mr Brand, anything else in the history of the case that could have amounted to an application for an adjournment. It looks to me as if the district judge’s memory may have failed her when she said that there had been an application which had been refused.

At all events she declined to deal with it as an application to set aside the judgment, said that it ought to proceed by way of an appeal, and that is how it did proceed. Permission to appeal was refused without a hearing on 21 December 2004 but was renewed orally, and that is what came before HHJ Overend on 25 February 2005. On that occasion, Mr Brand appeared in support of the application for permission to appeal by Mr Roberts, and Mr and Mr Earley were out of the country and they had instructed solicitors, who in turn had instructed Mr Lane of counsel.

So the matter was argued on both sides rather than, as would be normally have been the case for a permission application, only for the appellant. We have a transcript of the judge’s judgment and of the discussion following his delivery of the judgment. He had clearly got a copy of the 18 August letter, and he read some of the early parts of it. He referred at the beginning of paragraph 3 of his judgment to the fact that having set out his medical condition in full, Mr Roberts does not either directly or indirectly apply for an adjournment, he just says that he regrets he will not be able to attend.

The judge described the case as, although being a small claim, giving rise to some fairly complex issues. He referred to the court as not being assisted by what he called a lopsided delivery of the evidence, with written material on one side and oral evidence on the other. He expressed his conclusion at paragraph 10 as follows:

He then asked Mr Lane if he could get instructions so that the matter could be dealt with at the substantive hearing of the appeal, but Mr Lane was unable to do that because Mr and Mrs Earley were abroad. The judge then invited him, Mr Lane, to pass what the judge had said back to his instructing solicitors, who were plainly not present, and the judge said, “If it has to come back it will be at your expense”, and he indicated that it could be dealt with on a 5-minute estimate before himself as designated civil judge, by telephone, wherever he happened to be sitting.

The appeal duly came on for hearing with a 5-minute time estimate on 26 May. Mr Brand was on one end of the telephone to the court. Mr Earley, by then back in England, attended himself at court and we do not have a transcript of what the judge said, but we have a note from Mr Brand’s files. The judge referred back to what he had said in his earlier judgment, in particular to paragraph 10, and he continued:

He ordered a rehearing with a time estimate of half a day before a different district judge, and he also ordered that Mr Earley provide the disclosable details of the Employment Tribunal Claim to Mr Roberts’ solicitors by an early date. He discharged the Charging Orders and he ordered Mr Roberts to have his costs of the appeal assessed at £200.

Following that, Mr Earley wrote to the court on 10 June, saying he wished to appeal and complaining that the judge had made up his mind and saying that it was premature to order disclosure in respect of the Employment Tribunal case. In due course, he filled out an appellant’s notice, but addressed it in the first instance to the Bristol County Court, and it took some time before it got to the Civil Appeals Office.

In the meantime, the rehearing had been fixed for 9 August, but on 8 August Arden LJ considered the matter on paper and adjourned the application into open court, commenting on the absence of some important documents which needed to be obtained. Then the matter came, as I mentioned, before Mummery LJ on 11 October. He did not see the 18 August letter although he had, I think, the transcript of the hearing before District Judge Meredith and therefore some extensive quotations from it. He took the reference from the letter quoted in the transcript to Mr Roberts being content for the matter to be dealt with on paper, as possibly referring to the claim but not the counterclaim. He urged that the parties should enter into a mediation process but, subject to that, he directed a hearing on notice to decide, first of all, whether permission for appeal should be granted and if it was granted, to hear the appeal. That is this hearing, mediation not having been taken up by the parties.

As it is a second appeal, permission to appeal can only be granted if an important point of principle or practice is involved, which is not said to be the case here, or if there is some compelling reason for the appeal to be heard by the Court of Appeal. Of course the case is important to the parties, but that by itself is not a sufficient reason. In Uphill v BRB (Residuary) Ltd[2005] EWCA Civ 60 this court emphasised that truly exceptional circumstances were needed to come within this test, but identified as one possible example a case where the hearing of the first appeal was affected by procedural irregularity, for example, if the party seeking to appeal at the second stage was not allowed to present his case; see paragraph 24(3).

In the present case, it is clear that Judge Overend took and expressed a strong and clear view at the permission to appeal stage and did no more than adhere to it at the appeal stage. Of course at the permission stage the defendants were represented, so that his view was expressed after hearing representations on behalf of the respondent to the appeal, and he may have taken the view that nothing further could be said. Nevertheless, it seems to me that that was plainly not an appropriate manner in which a judge should conduct a hearing of a permission to appeal application, unless it had been directed that the appeal would follow immediately if permission is granted.

As regards the substance of the point, in effect the judge’s decision was that even though Mr Roberts had not asked for an adjournment by 18 August letter, the district judge should have granted one because of the circumstances disclosed by the letter. Looking at the letter it seems to me that Mummery LJ, who did of course not see it as such, was wrong to suppose that Mr Roberts may have been, as it were, agreeing only to the claim rather than the counterclaim as well, being dealt with in his absence. He plainly presented arguments directed at the counterclaim as well as to the claim, and to the defence mounted to it.

The medical information supplied with the letter gave no clue as to when Mr Roberts would or might be able to come back to this country for a hearing, but the question had not been raised. In fact, Mr Roberts did arrange to come back for the new hearing ordered by Judge Overend in August 2005, but that was vacated because of the application to this court. Judge Overend’s order was based on the proposition that the claim and counterclaim were really too complex for the district judge to deal with, despite the terms of the 18 August letter and in the absence of any request for an adjournment, and that the district judge knowing something of the claimant’s medical condition from the enclosures to the letter, should, of her own initiative, have ordered an adjournment at least once, so as to find out whether Mr Roberts could attend for a hearing within a reasonable time.

The issue on the appeal for which permission to appeal is sought is whether the judge’s order setting aside the district judge’s judgment and directing a new hearing should stand. Mr Earley’s first argument is that Judge Overend did not give him a fair hearing at the appeal stage, having already made up his mind and having said so at the permission to appeal stage. Judge Overend had to choose between allowing the district judge’s order to stand on the basis that it was not wrong for her to proceed, given the terms of the letter and the fact that no adjournment application had been made, and on the other hand setting it aside because, despite the letter and the absence of any application, she should have taken the initiative to order an adjournment, at least to find out whether Mr Roberts could come to England for a hearing in a reasonable time. There could be no question of Judge Overend deciding the issues himself, as Mr Roberts was still abroad at the time and the parties were not ready. If the case did have to be reheard, it was clearly correct to send it back for a rehearing before a district judge.

In turn on this appeal, if permission to appeal were granted, this court could put itself in the position of hearing afresh the appeal by Mr Roberts against the district judge’s order and deciding what Judge Overend should have decided in that appeal, whether to allow the district judge’s order to stand or to direct a rehearing. The parties agree that if we were to get to that stage it would be better for the court to decide that, rather to remit it for a further appeal hearing before a second circuit judge.

On the first point, as regards to permission to appeal, it seems to me that it would be right to grant permission to appeal and to open up the question of what order should have been made on the first appeal, to the extent at least therefore of setting aside Judge Overend’s order, leaving it for this court to decide between the various courses that were open to Judge Overend on the first appeal. My reason for saying that is that the judge’s unequivocal words at the permission to appeal stage plainly did pre-judge the outcome of the appeal hearing, and resulted in the appeal hearing being a mere formality, as shown by the time estimate of five minutes allowed for it. Mr Earley did not have the benefit of a proper hearing of that appeal to which he was entitled, and that in my judgment is a serious irregularity which brings the case within the category of compelling reasons envisaged in the Uphill case to which I have referred.

If the judge had given an indication of a possible or even perhaps a likely result, while making it clear that he would hear argument and decide on the arguments put to him at the hearing of the appeal, and had made arrangements for the hearing of the appeal that allowed him to hear argument, the same objection may not have been capable of being mounted to his decision. There is nothing wrong in judges giving indications at a preliminary stage, such as a permission to appeal application, in the hope of influencing the parties so as to save time and cost, but it is wrong for a judge to do as Judge Overend did, namely to decide in advance what the result of the later hearing would be, and that is not altered by the fact that he had heard representations on behalf of the respondent.

Turning then to the issue that Judge Overend should have addressed at the appeal hearing without having pre-judged the matter, the essential question is whether the district judge was acting properly within a judge’s discretion as regards to the conduct of proceedings when she took Mr Roberts’ letter of 18 August at face value and did not investigate the question of an adjournment.

I can well understand Judge Overend’s comment about the lopsided delivery of evidence and I can see why he was unhappy about how it had happened, and his evident feeling that it would have been better for there to be a hearing with both parties present. But for my part, it seems to me that the district judge cannot be fairly criticised for not having taken the initiative herself to order an adjournment. Mr Brand, on behalf of Mr Roberts, said that the fact that she should have taken that course was borne out by an examination of a transcript of the hearing before her, in which he said that she referred to the letter at the outset but did not go back to it, or to the statements of case or, on most points, to the terms of the agreement, when dealing with individual points on the claim or the counterclaim to see what Mr Roberts would have said if he had been there. This is not an appeal on the basis that her substantive decision was wrong, nor was permission to appeal granted by Judge Overend on that basis. The appeal is only on the question of an adjournment or not and as to that it seems to me that the case begins and ends, in effect, with Mr Roberts’ letter of 18 August and its enclosures. In my judgment, the district judge acted well within her discretion by proceeding with the hearing on 9 September, in the light of what Mr Roberts had said in that letter.

A separate point might possibly be taken about her refusal of the application which Mr Brand made at the end of November to set aside the 9 September order, but as I said when setting out the history, the district judge did not deal with that on its merits. She said that the matter should go to appeal. It was on that basis that Judge Overend did grant permission to appeal. So it seems to me no separate point arises out of that part of the history of the litigation.

For my part, I would grant permission to appeal to Mr Earley. I would allow the appeal. I would discharge Judge Overend’s order and I would reinstate District Judge Meredith’s order as having been correctly made in the first place.

LORD JUSTICE BUXTON: I agree.

LORD JUSTICE CHADWICK: I agree. The application for permission to appeal is granted. The appeal is allowed. The order of 26 May 2005 is set aside. The appeal from District Judge Meredith to the County Court against the order of 9 September 2004 is dismissed.

That leaves a situation where, unless we do something about it, the Charging Orders of 15 December 2004 have not been discharged. Do they serve any useful purpose?

LORD JUSTICE CHADWICK: Very well, we will set aside the whole of the order of 26 May and if the parties cannot come to some sensible arrangement, then they will have to make an application in relation to the charging orders.