Gilbart v Graham (A Firm)

This is the defendant’s appeal, we having granted permission this morning, against the decision of HHJ Milwyn Jarman QC on 6 June 2008, sitting in the Cardiff District Registry of the Chancery Division of the High Court. On Friday 6 June he refused to vacate the trial date of Monday 30 June, the estimated length of the trial in these proceedings being five days. This was a case management decision. The judge himself refused permission to appeal, pointing out that the trial date had been, if not agreed, at least confirmed, just four weeks before and he added:

“I was not satisfied that the specific discovery sought would, as a matter of course, result in the need to vacate the trial date.”

He said that his decision did not prevent a further application. Indeed there was a further application on Thursday 19 June and he again refused it. There is no appeal against that subsequent decision.

The claim is a solicitor’s negligence action. Liability has been resolved, with judgment agreed to be entered for the claimant with damages to be assessed on three identified issues and the claimant to have, following that assessment, a judgment in the amount assessed, less 15%.

Two of the three issues have been resolved. The third has been referred to as the Lloyd’s claim, it being alleged that because of the appellant’s negligence the claimant made reduced profits in his capacity as a Name at Lloyd’s. We have helpfully been provided with a full transcript of the proceedings before the judge on 6 June. The date had been fixed for the hearing by the High Court as long ago as 20 December 2007. The date was confirmed by order of the district judge on 9 June 2008, the parties raising no objection.

The judge, in refusing the application for an adjournment, pointed out that it was only in exceptional circumstances that a trial date would be vacated when it had been fixed and directions agreed to. He was, in my view, correct to say so, particularly when the trial date was only about three weeks away. There are other litigants who use the courts whose interests fall to be considered. The judge thought that there was a realistic prospect of the hearing going ahead without injustice to either party. In the result, events have proved his view wrong.

Mr Flenley submits that what has happened since 6 June is nothing to the point. The sole question is whether the decision the judge made on 6 June was within the proper ambit of the judge’s case management discretion. Strictly speaking, it seems to me that Mr Flenley is correct. Nevertheless, both sides have agreed, sensibly, that the court should be aware of all subsequent events that may be material, including the fact that the judge reiterated his refusal of an adjournment on the facts as they stood last Thursday, 19 June, leaving the position open again to a further application on the first day of trial, namely next Monday.

On 6 June the judge said this, and I quote from paragraph 8 of the transcript:

“It may be that certain aspects will not be ready for the trial but they can be hived off, as it were, can they not? It does seem to me that that is not a reason for not utilising these five days, which have now been set aside for some time, certainly since last December.”

The judge set a stringent timetable as to what was to be done between the 6 June and the start of the trial on 30 June. But before I come to that, let me say a word about what was happening in the period shortly before the hearing. At pages 116 and 117 of the bundle there are orders of District Judge North in the Cardiff District Registry. Page 116 is a consent order in the following terms:

“1.

The time for exchange of non-expert witness statements of oral evidence shall be extended to 16:00 on the 15^th of May 2008.

2.

The time for service of the Claimant’s expert report on property valuation be extended to 16:00 on the 23^rd of May 2008.

3.

The time for service of the Defendant’s expert report on the assessment of costs shall be extended to 16:00 on the 23^rd of May 2008.

4.

The time for service of the Defendant’s expert evidence (if any) in the field of practice at Lloyd’s of London shall be extended to 16:00 on the 29^th of May 2008.

5.

The time for service of the Claimant’s expert report on the assessment of costs shall be extended to 16:00 on the 6^th of June 2008.

6.

The time for service of the defendant’s expert report on property valuation be extended to 16:00 on the 6^th of June 2008.

7.

The experts on property valuation and the assessment of costs shall [by] 16:00 on 13^th of June 2008 i) hold a discussion for the purpose of identifying the issues, if any, between them and where possible reach an agreement on those issues; and ii) prepare and file a statement to the Court showing (a) those issues on which they are agreed and (b) those issues on which they disagree and summary of their reasons for disagreeing.

8.

There be no order in respect of the Claimant’s application for further information heard on the 28^th of April 2008 and for the avoidance of doubt no order as to costs in respect of the Claimant’s application for further information.”

The district judge directed costs in the case.

Then at page 117 there is an order, not expressly made by consent, but in these terms:

“The timetable having been raised by consent and approved by the court on 9 May, the action shall remain in the list for a contested hearing before HHJ Jarman QC for five days commencing 30 June 2008.”

As I have already mentioned, that date had been fixed the previous December, and although the order is not formally made by consent, neither side was suggesting on 9 May that that date should be vacated. It will be apparent that the consent order that I have just recited is silent as to discovery. But that is not to be interpreted as meaning that completed disclosure had been given and that the parties were content with it.

It is important to point out that a mediation meeting took place on 12 May and that during that mediation meeting outstanding issues were settled, with the exception of the Lloyd’s claim. In summary, this is a loss-of-profits claim, which is put, and I recite it very briefly, in these terms: that but for the appellant’s negligence in failing to tie up more tightly a compromise agreement between the claimant and Mr Cruttenden, who went bankrupt, the claimant’s wasted legal fees and the security of certain properties would have been committed to Lloyd’s and his Lloyd’s membership would have given him, accordingly, greater exposure and also significantly have earned him greater profits. By a later amendment, the claimant also claims that underwriting capacity is something that has an asset value and is marketable and that he has been deprived of this also.

Following the mediation meeting on 12 May, the very next day the appellant’s solicitors sought specific discovery of documents relating to the Lloyd’s claim. This was followed within days by an application enclosing a draft order. At the date of the application, 16 May, some 21 categories of document were still said to be live. On 22 May the claimant’s solicitors wrote offering some disclosure but there remained an issue of principle. The matter came before HHJ Jarman on 6 June and he dealt with all outstanding matters in terms that I shall refer to in a moment.

The claimant’s position as to the appellant’s application for an adjournment was essentially neutral. He did not oppose the application if the judge thought that a fair trial was not possible. The case was far from ready for trial, as the judge’s order illustrates. The extensive schedule to the judge’s order, which counsel drafted and agreed, shows the documentary material that was still being sought. I do not recite the whole of it but I refer by example to paragraphs 19 and 20. Paragraph 19 asks for:

“Documents relating to the claimant’s applications for capacity at Lloyd’s from 2001 onwards, including but not limited to any applications he made to banks for guarantees to support such applications, and applications to Lloyd’s on the basis of those guarantees, and all auction details together with copies of guarantees, insofar as such copy guarantees have not already been disclosed.”

Paragraph 20:

“In relation to the period 2001 to 2007, documents showing the level of the claimant’s assets, liabilities, income, property and shareholdings.”

Since this schedule was drafted and agreed by counsel, it may be that the judge did not have immediately in mind the enormity of the task that still remained to get the documents in order for the forthcoming trial.

The claim is a seven-figure claim, which in my judgment is a matter that ought to be borne in mind on the issue of proportionality. It is perhaps pertinent to point out that the judge, in exercising his discretion, had to have in mind the overriding objective in the Rules. That provides:

This was a five-day case, involving a very substantial sum of money, and on the face of it the issues on quantum that remained were not entirely straightforward. Furthermore, although I have not been into the matter in any detail, the chronology which has been helpfully provided by Mr McPherson QC for the appellant shows a history of a lamentable failure on the part of the claimant to meet the timetable that had been set down by the judge at the end of 2007. The terms of the judge’s order were, in summary, these:

Mr McPherson submits that the judge should have asked himself two questions but in the result only asked himself one. The two questions are: one,
is it feasible to get documentation completed by the trial? Two, if so, can there be a fair trial? The judge was, in my view, entitled to conclude that it might just about be possible to achieve disclosure by the trial date, although at that stage he was unaware what the disclosure would amount to. In the result, disclosure has not been completed or at least it has not been completed so far as the appellant’s contentions are concerned, and events have proved the judge wrong. The fault is indisputably that of the claimants. The judge would not, it is submitted, had he asked himself the second question, have been entitled to conclude that a fair trial was possible in the event that disclosure was completed. In my judgment that submission is well-founded and, accordingly, the judge was in error in that regard in the way in which he exercised his discretion. Had he asked himself that question in the context of part 1(1) of the Rules, in my judgment he could only have come to the conclusion that an adjournment was necessary.

He would, in my judgment, have reached that conclusion, not only because of the fact, if it took place, that complete disclosure could only be achieved very late indeed in the day, but also on the ground that the appellant had an order entitling him to instruct an expert. It was not realistic for an expert to be instructed until the documentation was complete and the expert could see the whole picture, and it simply is not realistic to expect to find an expert on Lloyd’s matters at short notice who can give expert opinion on the workings of Lloyd’s, insofar as they are relevant to the claims in this case. The appellant was entitled to an expert, albeit it is now argued by Mr Flenley on the part of the claimant that, since his side is not instructing an expert (they are relying on factual evidence), there is no need for the appellant to have an expert and the case could perfectly properly be disposed of without one. That is not the way that the case has been prepared and not what the unchallenged pre-existing order has to say. It was made clear that there was great difficulty in finding an expert at short notice who had time to read the documents and, anyway, until the documents were available the ambit of the job necessarily remained unclear.

Let me say next a brief word about what has happened with regard to the documents since the judge’s order on 6 June. On Friday 13 June late in the day, two CD-ROMs arrived in the hands of the appellant’s solicitors. The claimant’s solicitors had passed them straight over from their client without even looking at them. One of the ROMs had 1500 files on it, the other one a great deal less, and those 1500 files contained a vast number of documents. But some of those documents were unopenable. On Sunday 15, Monday 16 and Tuesday 17 June, the appellant’s solicitors viewed what they could of the documentation. They then received a fax from the claimant’s solicitors telling them to stop, because it was plain that some of the documents were privileged and should not be looked at. Moving on two days to Thursday 19 June, two lever arch files then arrived in the hands of the appellant’s solicitors. But, more significantly, there came to light on 19 June a letter from the claimant’s previous accountants, Adey Fitzgerald and Walker, dated 22 November 2005. That letter refers to the claimant and says:

“We are writing as requested by our above client to advise you that documentation is available to confirm that Mr Gilbart has net assets in excess of £5,000,000.”

Not surprisingly, Mr McPherson says: “Well, that is very interesting. We would like to see that documentation.” But there is no indication when that documentation might be available, and all we have been told thus far by Mr Flenley is that the request related to something entirely unconnected with this case. On any view, there are issues arising out of this letter that will require careful investigation and resolution. There is another exchange of letters received by the appellant’s solicitors a few days earlier on 13 June. The first letter is dated 9 June from the claimant’s solicitors to his present accountants, asking for any documents falling into any of a number of categories, which I need not recite, and a response in these terms:

“In relation to point two, i.e., Statement of Assets and Liabilities, income, property and shareholdings for the period 2001 to 2007, at present we have not completed our work on this particular aspect but if you wish I can forward it to you when it has been completed. I would estimate that to be within the next 6-8 weeks.”

Again Mr McPherson says: “Well I would like to know what the answer is that cannot be forthcoming until six or eight weeks from now.” And that, it seems to me, is an entirely fair view to take. On the face of it, disclosure has not yet been completed. It is very important from the appellant’s point of view that there is as complete as possible a documentary picture of the claimant’s financial position at the material time. It seems to me now patently obvious that this trial cannot go ahead on Monday. We have the whole picture of what has happened since 6 June. We are invited by Mr Flenley to concentrate as a matter of law on the judge’s decision on 6 June and we are only entitled to interfere with that decision if we are satisfied that it was unreasonable in the Wednesbury sense.

For the reasons I have explained, I am satisfied that that decision was unreasonable and for my part I would allow the appeal.

I agree.