Transview Properties Ltd v City Site Properties Ltd

On 3 June 2008 Briggs J handed down his reserved judgment in an action brought by Transview Properties Limited (Transview) against City Site Properties Limited (CSP). The trial, which lasted from 12 to 21 May 2008, turned largely on factual disputes about the parties’ negotiations for a sale agreement during the last week of November 2004. With painstaking attention to the details of the contested evidence the judge made firm findings of fact on Transview’s claim for rectification of overage provisions in Schedule 3 to a Sale Agreement dated 1 December 2004. This appeal, which was accompanied by two hard fought applications for permission to adduce fresh evidence, is against his findings of fact and his decision to dismiss the action with costs.

The sale was of CSP’s substantial office block in North London. An associated company of Transview, which is part of the Harris Trust group of companies, was the head lessee of the entire block. The sale price was £13.5m. There was a possibility that the use of the block would change from office to residential use. That explains the inclusion of an overage provision in the transaction. The parties agreed that, in certain events, Transview, as the buyer, would become liable to make to the seller, CSP, an overage payment of 50% of the increase in value of the property. Liability would be triggered by the re-sale of the property by Transview at a profit before the grant of planning permission, or by CSP obtaining planning permission for residential development of the property. It was anticipated that the overage when payable would amount to at least £2.5m.

Transview’s principal claim was for an order inserting into Schedule 3 to the Sale Agreement the following provision for the abatement of overage -

“2.3

If before the Seller makes the application for Planning Permission the Buyer pays all sums outstanding and due to the Seller under clause 12 of this contract [arrears of rent due under the head lease] and pays all sums due to Woodvale Estates Limited under the Financial Legal Charge the Buyer will not (sic) longer be obliged to pay the Overage.”

The rectification claim was based on an alleged unilateral mistake on the part of Transview when it executed the Sale Agreement. The judge found that in fact there was no mistake. The Sale Agreement correctly recorded what the parties had actually agreed should be recorded in it. In dismissing Transview’s action against CSP he said that it followed “from his findings of fact that Transview’s rectification claim wholly fails.”

The judgment at [2008] EWHC 1221 (Ch) sets out the evidence, the findings, the arguments and the conclusions fully and clearly. The reader who wants all the detail should go to that judgment rather than rely on pointless repetition here. The content of this judgment is confined to those aspects of the case which the reader probably needs to know for an understanding of Transview’s grounds of appeal, its applications for permission to adduce fresh evidence on the appeal and the reasons for this court’s decisions. This will involve detailed consideration of the findings and of the further evidence.

The grounds of appeal are very specific to the facts of the case. The only point of possible wider interest arises from the bold persistence of Transview’s efforts to introduce more evidence on the appeal in order to bolster its plea for another trial.

Briggs J also dismissed Transview’s alternative claim for a declaration that CSP’s overage rights had ceased. Transview contended that, in accordance with the agreed terms of a side letter to the Sale Agreement, it had paid, in advance of an application for planning permission by CSP, all the sums due to CSP under clause 12 of the Sale Agreement (arrears of rent) and all sums due under the Woodvale Estates’ charge (see paragraph 3 above).

The judge held that there was no abatement of overage or cesser of Transview’s liability to pay overage. Transview remained liable to CSP for full overage. It had not complied with the conditions which had in fact been orally agreed between the parties for releasing it from its contingent liability for overage. The judge found that the conditions ultimately agreed between the parties required Transview to make the payments in question within 6 months of the completion of the Sale Agreement, i.e by 1 June 2005, rather than before CSP’s application for planning permission as in paragraph 2.3 set out above (paragraph 3). Transview did not make the required payments within the agreed period of 6 months.

On both the rectification claim and the claim for a declaration Briggs J heard differing accounts from the witnesses about the negotiations for the Sale Agreement in the key period 25 November to 1 December 2004. He made findings about the credibility of individual witnesses. He had reservations about the reliability of some of the oral evidence given by both sides at trial. There were departures from the original pleaded case. The oral evidence had to be treated with caution. The documentary evidence was incomplete. That was partly due to a computer breakdown and partly due to physical files not having survived intact. In making his findings of fact the judge tested the reliability of the oral evidence against the contemporaneous documents and, applying the civil standard of proof, he drew inferences from the available evidential material.

Both before Briggs J and in this court there was agreement about the general legal principles governing the court’s power to order rectification of documents. The claimant must have convincing proof that the legal requirements for rectification are satisfied, though, as will be seen, Transview argues that, in the unusual circumstances of this case, “convincing proof” is not in fact required.

Transview’s claim is advanced under the “exceptional jurisdiction to rectify for unilateral mistake”: George Wimpey UK Ltd v. VIC Construction Ltd [2005] EWCA Civ 77; [2005] BLR 135 per Peter Gibson LJ at paragraph 51. It is a species of equitable estoppel. It precludes a person, who knows that the other party is mistaken about the document in question or its contents, from taking unfair advantage of the other’s mistake.

Transview’s case is put as high as of one of “sharp practice” on the part of CSP, which is accused of deliberately and unilaterally removing an agreed paragraph 2.3 from Schedule 3 to the draft Sale Agreement. That allegation is very serious, akin to one of fraud.

The unilateral mistake, on which the claim for rectification is based, is conventionally pleaded, i.e. when Transview executed the Sale Agreement, it acted in a mistaken belief about the contents of the Schedule; CSP knew of the mistake; and CSP has sought to take advantage of it. Transview’s mistake was in believing that the Sale Agreement included an express term in paragraph 2.3 of Schedule 3 to the Sale Agreement, which provided for the abatement of overage payments in agreed events. The provision had been foreshadowed in the earlier revised Heads of Terms recording an agreement reached at a meeting between the parties’ representatives at the end of July 2004. It was included by CSP’s solicitor in the second draft of the Sale Agreement which was circulated on 29 November 2004. It was then removed from later drafts, allegedly without Transview’s knowledge or consent, as was also alleged to be the case with its omission from the Sale Agreement as executed.

The judge found that the omission of an abatement term from the Sale Agreement was not the result of a trick or sharp practice by CSP. Its removal from the final drafts was at Transview’s request, as communicated to CSP directly and through its solicitors. In the negotiations the parties had agreed that the overage abatement provision should not be included in the Sale Agreement itself. Instead, abatement should be covered by a broadly equivalent provision to be included in a side letter. The judge held that

“147.

….There was in my judgment no intention by either party, at the time of its execution, that the Sale Agreement should contain an overage abatement clause. Even if there had been such an intention on the part of Transview, the evidence does not in my judgment begin to establish any sharp practice on the part of CSP, sufficient to ground a case of unilateral mistake rectification. On the contrary CSP took appropriate steps to draw the removal of paragraph 2.3 to the attention of Transview and its solicitors, in the manner which I have described.”

The judge added that, had there been a claim for it, he might have been disposed to rectify the contract, rather then the Sale Agreement, by some method which included an overage abatement clause on the basis of an oral agreement reached between the parties on 30 November, but no purpose would be served in doing so, as Transview did not repay the Woodvale Estates’ loan within the agreed period of 6 months of completion.

I should add that everyone involved in the transaction was a man of business. Solicitors were instructed to advise and to act for the parties during the relevant negotiations for the Sale Agreement and its execution. While those features of the case are not fatal to a rectification claim, they count when the court considers whether the claimant has discharged the burden of proof. As Lawrence Collins LJ said in Chartbrook Ltd v. Persimmon Homes Ltd [2008] EWCA Civ 183 at paragraph 135

“The burden is particularly onerous where there have been prolonged negotiations between the parties eventually assuming the shape of a formal instrument on which they have been advised by skilled lawyers…”

This case illustrates the Sisyphean aspects of an appeal by a party wanting another trial on the ground that, first time round, the judge got the facts wrong. In reviewing the decision of the lower court an appellate court will, as a general rule, leave alone the trial judge’s assessment of the credibility of the witnesses and his findings of primary fact when they are based on, or significantly influenced, by the oral evidence. The appellate court should only interfere with his findings if it is satisfied that the trial judge has not taken proper advantage of the opportunity, which is available only to him, to assess the soundness of the oral evidence, and that his findings of fact were plainly wrong: Assicurazioni Generali Spa v. Arab Insurance Group [2002] 1 WLR 577 at paragraphs 14-17; Datec Electronic Holdings Ltd v. UPS Ltd [2007] 1 WLR 1325 at paragraph 46.

A quest for a re-trial runs into severe difficulties if it is obvious from reading the judgment and the transcripts of evidence that the trial judge paid careful attention to detail both during the trial and in his reflective evaluation and treatment of all the evidence. Briggs J fully appreciated that the fact finding in this case would not be an easy exercise. The oral evidence given by the main witnesses on each side about the details of incompletely documented negotiations 4 years earlier was not, in his considered view, totally reliable. He described some of the oral evidence as “the product of reconstruction after the event rather than continuous recollection.” Unfortunately, that tiresome trend is an all-too familiar feature of over-prepared witness statements. The judge concluded that the contemporaneous documents were more reliable than the witnesses’ reconstructed evidence. In his opinion the documents could be used to test recollections of past events, even though neither party’s solicitors’ files relating to the transaction survived intact and neither side waived privilege in relation to legal advice in connection with the transaction.

Another significant aspect of the case, which was noted by the judge and should not be overlooked on his contested findings of fact, was that both sides’ pleaded case changed materially during the course of the litigation. That occurred after the discovery of highly relevant documents, which had been unavailable as aids to recollection by those involved when the statements of case were first exchanged. The case originally pleaded by Transview was not the same as the case as it unfolded in the evidence given by its witnesses at trial.

Mr Michael Crane QC, in his moderate and careful submissions on behalf of Transview, skilfully attempted to turn to Transview’s advantage the judge’s cautious approach to the reliability of the witnesses’ powers of recall. He said that in this case an appeal court was as well placed as the trial judge to make inferences from the incomplete documentary evidence. This was not, he commented, a case in which the findings of fact depended entirely on the judge’s assessment of the credibility of witnesses seen and heard by him. Mr Crane QC said that he could show, if necessary and provided that he was permitted by the court to do so, with the help of fresh evidence, that the judge had probably made wrong inferences from the materials. He accepted that, if this court granted permission to adduce fresh evidence, another trial would be necessary for a proper consideration of all the evidence, including the fresh evidence.

In particular, Mr Crane QC contended that new evidence would show that a key document relied on by the judge as genuine (the Goodman Letter dated 1 December 2004 and described later) was probably not genuine at all. Signed statements from two new witnesses would, if admitted by the court, show that the Goodman Letter was probably produced and signed after the litigation had begun and so could not be safely relied on to make findings of fact adverse to Transview.

Transview has to obtain this court’s permission to adduce fresh evidence on the appeal and to make consequential amendments to its grounds of appeal: see CPR 52.11(2). That permission should only be granted if, in accordance with the overriding objective, it is just to admit evidence on appeal which was not produced at trial. The party bringing forward more evidence on an appeal must have a very good reason for not having obtained it in time to use at the trial. It is usually too late, after the trial is over, to produce evidence to an appellate court, which is not itself equipped to try or to re-try cases.

In the exercise of its discretion to admit fresh evidence the court has to consider carefully all the relevant factors, such as whether the evidence could, by reasonable efforts, have been obtained for use at the trial; whether the fresh evidence is apparently credible; and whether, if given, it would probably have an important influence on the outcome of the case. The interests of the parties and of the public in fostering finality in litigation are significant. The parties have suffered the considerable stress and expense of one trial. The reception of new evidence on appeal usually leads to a re-trial, which should only be allowed if imperative in the interests of justice. As Hale LJ said in Hertfordshire Investments Ltd v. Bubb [2000] 1 WLR 2318 at 2324C

“….It is in the interests of every litigant and the system as a whole that there should be an end to litigation. People should put their full case before the court at trial and should not be allowed to have a second bite at the cherry without a very good reason indeed.”

Transview made two applications for permission to adduce evidence which was not given to the court below. CSP had a related cross-application to compel the attendance of the new witnesses in this court and itself sought to cross examine Transview’s new witnesses and to rely on its witness statements to refute the fresh evidence. All the applications were adjourned by the court to the hearing of the appeal. The result was that most of the time set aside for the hearing of the substantive appeal was taken up with Transview’s applications, which CSP strenuously opposed.

As for the appeal itself, I do not find it surprising that, when Transview sought to appeal against his findings of fact, the judge refused permission (noting that “Case turned entirely on facts. No real prospects of success”), as did Sir John Chadwick on a paper application to this court on 16 September 2008 (“No prospect of Court of Appeal differing from the judge on the inferences to be drawn”).

On a renewed application on 26 February 2009 Rix and Lawrence Collins LJJ granted permission to appeal. I do not find that surprising either: for the first time Transview put before the court an application dated 29 October 2008 for permission to adduce fresh evidence on the appeal. The further evidence took the form of statements and supplemental statements from two witnesses.

The first new witness was Miss Marie Falconer. She was formerly, for four to five years, personal assistant to Mr Louis Goodman, managing director of CSP. She made two statements, one on 1 October 2008, the other on 11 November 2008. She did so “with great reluctance.” She did not, and still does not, want to be involved in the case.

The second witness was Mr Charles Fussell, one of Transview’s former solicitors. He acted for it at the time of the trial. His statements are dated 29 October 2008 and 20 April 2009.

The fresh evidence was mainly about the disputed authenticity of the Goodman Letter on which the judge relied in making his factual findings about the negotiations for, and agreement reached on, abatement of overage. The provenance of the Goodman Letter and its “re-discovery” in 2007 were challenged. Transview argued that the Goodman Letter was the “cornerstone” of CSP’s case and of the judge’s key factual conclusions and that it could now show that it was not a genuine document.

As the application was opposed, an inter partes hearing in some form was inevitable. The court took the convenient course of adjourning the application to the hearing of the appeal and gave permission to appeal. What else could the court have sensibly done without spending, and probably wasting, time hearing half an appeal in order to decide whether to hear a whole appeal?

That is a dilemma this court often faces in appeals on fact. The inter partes procedures adopted by the court on applications for fresh evidence are irksome to respondents, who do not want the case to go any further, or to cost any more. Trial judges are baffled by the amount of time spent by this court hearing contested applications for further evidence, which are usually refused, and entertaining appeals against fact, which rarely succeed. The reality is that, when this court is faced with a submission by responsible professional advisers that new evidence has come to light which undermines the judge’s findings of fact, there is no real alternative to an inter partes hearing of some kind. It is a sensible use of over-stretched resources to hear the application and the full appeal at the same time.

Unfortunately, the court’s order on the renewed application in this case sparked off an unforeseen spate of interlocutory activity. A consequential cross-application was made by CSP on 7 May 2009 for an order that the two witnesses proffered by Transview should attend the hearing of the appeal so that they could be cross examined, should the court consider that necessary. I adjourned that application to the combined hearing of the application and the appeal. In opposition to the application CSP served statements from its employees Mr Gladwinfield (dealing with CSP’s IT systems), Ms Louise Wadsworth (Miss Falconer’s successor as Mr Goodman’s PA), Mr McCain and a director, Mr Louis Goldman. Transview then sought to use those statements to support its own application by, for example, pointing to contradictions apparent from a comparison with the evidence given by CSP witnesses at the trial, thus throwing that evidence into doubt.

The appeal was already beginning to turn into another trial when, on 11 May 2009, Transview issued a second application for permission to adduce yet more evidence on the appeal, this time witness statements by Mr Andrew Osman and Ms Penny Haskins, plus exhibited photographs. That evidence related to an issue of fact at trial about the alleged delivery by hand, on 1 December 2004 to the then offices of CSP’s solicitors, by Mr Aaron Gershfield of a side letter from Transview. The letter was alleged by Transview to contain agreed terms about abatement of overage broadly equivalent to the paragraph 2.3 missing from Schedule 3 to the Sale Agreement as executed. No copy of that letter has ever been produced, nor has any evidence been produced that it was received by CSP’s solicitors, or that it ever existed.

The judge found that

“144.

…it is in my judgment most unlikely that Aaron Gershfield delivered the supposed side letter to Jeffrey Green Russell’s offices on 1^st December. Whether his recollection is completely imagined or reconstructed from a dim recollection of his having delivered or collected a relevant document shortly before 6pm on the previous day is now impossible to ascertain. Whatever its source I reject the evidence that he delivered a side letter on 1^st December.”

Mr Osman’s statement (with photographs) describes the layout of the office building Apollo House at 56, New Bond Street, London W1, formerly occupied by CSP’s solicitors, Jeffrey Green Russell. It describes the location of the firm’s reception desk, the visibility of the firm’s name plate and a letter box at the street entrance to Apollo House. His evidence is based on a recent inspection of the premises.

The statement by Ms Haskins, who was a secretary/receptionist with Jeffrey Green Russell at the time of the relevant events, is about her duties in the reception area. She says that it was manned till 6 pm. She describes the reception procedure and the position and use of the letterbox by people delivering post.

According to a supporting statement from Transview’s current solicitor, Miss Stephanie Kleyman, those two witness statements contain fresh evidence for which permission should be given. They are, she says, relevant to the judge’s findings about Transview’s case on the delivery of an agreed side letter. The evidence of Mr Aaron Gershfield at trial that he posted it through the firm’s letter box was not accepted by the judge, who commented adversely on “his lack of prima facie credibility as a witness”, on the inconsistency of his evidence with the documents and on his evidence as “essentially a construct rather then genuine recollection.”

Miss Kleyman says that the fresh evidence from the two new witnesses strongly supports the evidence of Mr Aaron Gershfield about his delivery of the side letter. As Mr Osman explains, the name plate of Jeffrey Green Russell above the letterbox of the building shown in photographs produced at the trial was obscured by black tape over it. Those photographs did not indicate that the building or the letter box had any connection with that firm. The name on the plate, obscured by the black tape, was, he said, not something which could have been discovered by Transview for use at the trial. The new evidence demonstrates the operation of the letter box below the firm’s nameplate which had been covered by black tape.

The arguments on the two applications merged into consideration of the appeal itself and tended to overshadow numerous other grounds of appeal advanced by Transview’s new legal team. They contended that, even without the fresh evidence, the substantive appeal should be allowed, as the judge had made many errors and wrong findings of fact.

At this point I must turn to consider in more detail the judge’s findings about the negotiations for the Sale Agreement and about abatement of overage in particular. Only then is it possible to understand the potential impact of the fresh evidence and to assess the arguments for its late admission.

Negotiations between the parties for the sale of the Property go back to 2002. The relevant negotiations leading to the Sale Agreement were renewed at a meeting at CSP’s offices in Glasgow on 30 July 2004 attended by Mr Ivor Gershfield and his son, Mr Aaron Gershfield (for Transview), and Mr Thomas McCain and Mr Louis Goodman (for CSP). Heads of Terms containing an overage clause were initially drafted by Mr McCain on behalf of CSP at the end of July 2004. They were sent by Mr McCain by email to Mr Ivor Gershfield, who was a consultant with Transview and conducted the day to day negotiations on its behalf. Revised Heads of Terms dated 3 August recorded an overage abatement provision, which had been agreed in principle at the meeting on 30 July, but was omitted by mistake from CSP’s first draft of the Heads of Terms. It was included in clause 5 of the revised terms after Mr Ivor Gershfield, on receipt of the first draft, protested at the omission of the abatement provision.

Solicitors were instructed. A draft Sale Agreement was produced. In it Transview agreed to buy from CSP the 13 storey freehold office block at Northway House, 1379 High Road, Whetstone, London N20 (the Property). Though not disclosed in the terms of the Sale Agreement itself, £2.5m of the £13.5m purchase price was provided to Transview by CSP’s ultimate parent company, Woodvale Estates Limited. That loan was secured by a second charge on the Property.

The balance of £10.98m of the purchase price was borrowed by Transview under a Loan Facility Agreement with its bankers, Barclay’s Bank plc. There was no mention in the Sale Agreement of any loan-back by CSP through Woodvale Estates. The judge found that the Gershfields were at pains to encourage the bank to assume that the full purchase price was £16m, being £13.5m with the addition of an expected overage payment of £2.5m. The judge also found that the transaction was presented to the bank, which was being invited to lend about £11m to Transview, as involving a £5m commitment by the Gershfield family.

The overage term was set out in Schedule 3 to the Sale Agreement. The background to it was the awareness of both parties that conversion or possible replacement of the Property for the purposes of residential use offered a more profitable exploitation of the Property. The local planning authority was in principle sympathetic to such a change of use. The overage provision appeared in the initial and revised Heads of Terms and in the succession of drafts of the Sale Agreement. CSP would be entitled to 50% of the increase in value obtained by disposal of the Property by Transview before planning permission, or attributable to the grant of planning permission to CSP. Clause 12 provided that Transview would pay off the arrears of rent due to CSP by 6 equal monthly instalments commencing on 25 December 2004.

The solicitors acting for Transview were Evans Dodd. Mr Mahmood Ahmed, a partner in that firm, handled the matter. No one from that firm gave evidence at the trial. (The judge’s unwillingness to draw an adverse inference from the absence of such evidence was the subject of a respondent’s notice by CSP.) Mr Merter Hilmi, a salaried partner with Jeffrey Green Russell, acted for CSP. He gave evidence at the trial. He was found by the judge to be an impressive witness whose evidence he accepted, though it was not of decisive relevance on key issues.

The negotiations on behalf of CSP on a day to day basis were conducted mainly by Mr McCain. The judge regarded his evidence as clear and consistent about the key factual issues and generally consistent with the contemporary documents, though it also suffered from a degree of reconstruction. The negotiations on behalf of Transview were conducted by Mr Ivor Gershfield and his son and Transview director, Aaron. The company secretary of Transview, Mr Ian Harries, was also a director. He played no significant role in the negotiations, though he was involved in the documentation process leading to completion, including the checking, signing and delivery of the side letter. The judge found that he was not able to place “substantial reliance” on his evidence. Mr Louis Goodman, who was “the governing mind and will of CSP” in connection with the sale of the Property, signed various documents, including the Goodman Letter. Apart from that, he played no part in the events central to the dispute and the judge did not find it necessary to form any considered view about his reliability.

The parties discussed abatement of overage in certain events, in particular the repayment by Transview of the Woodvale Estates loan before the grant of planning permission. The first draft of the Sale Agreement (9 November 2004) prepared by CSP’s solicitors did not include any provision for the abatement of overage mentioned in clause 5 of the revised Heads of Terms. The judge found that, as at 25 November 2004, the common intention of the parties represented by Mr McCain and Mr Ivor Gershfield, was that provision for abatement of overage was to be dealt with not in the Sale Agreement itself, but in a side letter and that prior to that date there had never been any intention on either side that it should appear in the Sale Agreement. The judge also found that the initiative for the use of a side letter, as the sole means of recording the overage abatement provision, came from Mr Ivor Gershfield rather than from Mr McCain. These findings are challenged by Transview.

Inclusion of abatement of overage in the Sale Agreement itself would disclose to the bank the ability of Transview to reduce the price tag for the Property from the £16m, which had been confirmed to it, to £13.5 by Transview’s early repayment of the Woodvale loan of £2.5m which would trigger the abatement provision. The judge also found that Mr Ivor Gershfield wished to avoid drawing the bank’s attention to the possibility of overage abatement. That motive played a significant part in his wish to confine the overage abatement provision to a private side letter.

Those findings on Mr Gershfield’s motive are challenged by Transview. It is submitted that there was evidence that by 26 November the bank was aware of the loan from the CSP group to Transview. The bank was not kept in the dark about the loan back, as was alleged to be apparent from an email from Steve Goss, a representative of the bank. Further, the provision for abatement of overage had no effect on the value of the bank’s security. The judge was wrong to infer a motive for concealing that from the bank. It is also pointed out that the idea for the loan back came from CSP, which did not mention it in the draft Sale Agreement. It did not come from Transview. So it is submitted that this is not a case of Transview seeking to keep it from the bank or being reluctant to disclose it.

The second draft of the Sale Agreement circulated by CSP’s solicitors on 29 November, having been prepared by Mr Hilmi, did contain an express abatement provision in paragraph 2.3 of Schedule 3 as set out above (see paragraph 3). Transview alleged that it was later removed by CSP’s trick. The terms as to the trigger provisions differed somewhat from those in clause 5 of the revised Heads of Terms. The judge inferred that paragraph 2.3 was probably included in Schedule 3 to that draft of the Sale Agreement, rather than in a side letter, as the result of a mistake or misunderstanding on the part of CSP. The correctness of the judge’ inference is challenged by Transview, which complains that it was not explored in evidence, was not advanced by any witness or either party at the hearing and is “highly improbable.” According to Transview the real mistake by CSP was in omitting paragraph 2.3 from the first draft of the Sale Agreement. Its inclusion in the second draft was not, contrary to the judge’s finding, a mistake by CSP: it was inserted to remedy CSP’s earlier omission.

The provision then appeared with crossings out in the draft of 30 November 2004. It was omitted altogether from the draft of 1 December 2004, as well as from the Sale Agreement as executed.

In short, Transview’s case was that the Sale Agreement should be rectified to record the agreement between the parties on abatement by the insertion of paragraph 2.3 in Schedule 3 to the Sale Agreement as executed. The effect of that inserted term would be that Transview would not be obliged to pay overage to CSP, as it had paid all sums due to CSP under clause 12 and to Woodvale in advance of any application for planning permission. On Transview’s case CSP’s rights to overage had ceased.

In support of its case Transview relied mainly on the evidence of Mr Ivor Gershfield that, in addition to (not in place of) the overage abatement provisions in the second draft of the Sale Agreement, a side letter about the abatement of overage was requested by Mr McCain in a telephone call by him in the evening of 29 November. The side letter was for CSP to show to third parties, such as its auditors, without having to disclose the whole Sale Agreement. The side letter was to be delivered direct to CSP’s solicitors, Jeffrey Green Russell. The letter was to follow the wording of an e-mail sent by Mr McCain on 30 November to Mr Ivor Gershfield.

Mr Ivor Gershfield’s evidence was that he reviewed Mr McCain’s draft with his son Aaron. He agreed it without amendment and he informed Mr McCain of this on the phone. CSP then prepared and sent a side letter by courier to Northway House. Transview’s case was that it was approved, signed and taken by hand by Mr Aaron Gershfield to the New Bond Street offices of Jeffrey Green Russell on the evening of 1 December 2004, as agreed, at about 6 pm. Finding no-one at the reception desk he said that he posted it through that firm’s letter box. Neither the letter nor any copy of it has ever been produced by either side in evidence. The Sale Agreement was executed later that evening.

The judge preferred the evidence of Mr McCain that Mr Gershfield had phoned him on 30 November and asked him if the overage abatement provisions in the Sale Agreement could be removed from it and dealt with in a side letter. Mr McCain agreed to this proposal. He asked Mr Hilmi to draft some wording, which was emailed to Mr Gershfield on 30 November at 11.53am. There were in evidence at the trial two draft letters bearing the reference MF (the initials of Miss Marie Falconer, the proposed new witness). One was timed 12.02 pm on 30 November (McCain Draft 1). The other was timed 12.30pm on that day (McCain Draft 2).

Mr McCain said that he asked Miss Falconer to convert the email into the form of a letter. Both the email sent to Mr Ivor Gershfield and the McCain Draft 1 used CSP’s making “an application for planning permission” as the trigger for the discharge of Transview’s liability to pay overage. The judge accepted Mr McCain’s evidence that, upon receipt of the email, Mr Ivor Gershfield telephoned him and that it was agreed over the telephone that the abatement provision should be amended so that Transview was no longer liable to pay overage if within 6 months after completion it paid to CSP all sums outstanding and due under clause 12 of the Sale Agreement and all sums due under the Woodvale Estates charge. Mr McCain amended the McCain Draft accordingly.

The judge’s findings that the provision for abatement was removed from the draft Sale Agreement to the side letter at the instigation of Transview is challenged, as is the finding that it was agreed that the payments referred to in paragraph 2.3 would be made within the period of 6 months. It is contended that the judge ought to have found that it was more likely that CSP initiated the transfer of the abatement provision to the side letter and that it was unlikely that Mr Gershfield would have asked for the abatement provision to be altered to require payment by Transview within 6 months.

The judge accepted the evidence of Mr McCain that he produced a final form of the side letter for Miss Falconer to type and for Mr Goodman to sign. Mr McCain said that he faxed the side letter signed by Mr Goodman (the Goodman Letter) to Mr Ivor Gershfield on 1 December immediately prior to completion. The judge found that the Goodman Letter was a genuine document. However, he went on to find that there was no satisfactory evidence that the Goodman Letter had been faxed to Transview. In a respondent’s notice CSP seeks to challenge that finding of the judge.

In summary, CSP’s response to Transview’s case for rectification was that paragraph 2.3 was, by mutual consent, deleted from Schedule 3 to the third draft and omitted from the next draft and from the Sale Agreement as executed. The explanation for its deletion in the draft and its omission from the Sale Agreement was that it was agreed that abatement of overage was to be covered by an agreed side letter from CSP instead of in the Sale Agreement itself. The terms of the McCain email were renegotiated in a telephone conversation on 30 November 2004 and the condition for the abatement of overage was agreed to be varied so that the payment of rent arrears and the monies due under the second charge to Woodvale had to be made within 6 months of the completion of the Sale Agreement rather than before any relevant application for planning permission by CSP. As Transview had not made the payments by 1 June 2005 CSP claimed still to be entitled to the benefit of the overage under the terms of the Sale Agreement.

As evidence of the final agreement on abatement of overage CSP relied on the Goodman Letter, signed by Mr Louis Goodman on 1 December 2004. The letter contained the following passage coupled with a request to Transview to acknowledge acceptance and agreement of the terms by receipting and returning a duplicate copy of the letter-

“If within 6 months after completion you pay us all sums outstanding and due under clause 12 of the Agreement and pay all sums due to Woodvale Estates Limited under the Financial Legal Charge entered into with them dated November 2004 then you will no longer be obliged to pay the overage.”

Transview denied that such an agreement was made and that it had ever received the Goodman Letter, which was not disclosed by CSP until 11 September 2007 after the first round of disclosure of documents. No electronic file for it was produced and there was no documentary record of it or a copy of it ever having been sent to Transview. Despite Transview’s challenge to the provenance of the Goodman Letter, the judge relied on it as a reason for finding facts on which he based his rejection of Transview’s claim. He treated the Goodman Letter as a genuine document produced contemporaneously with the Sale Agreement.

It is to that point that the further evidence obtained by Transview is directed. It applies to adduce evidence showing that the Goodman Letter was probably not a genuine contemporaneous document, but was produced and signed after the dispute arose and during the course of the litigation in order to bolster CSP’s defence. That undermined the credibility of Mr McCain’s evidence about the negotiations for the abatement provision in the side letter on 30 November 2004.

Transview submits that its attack on the genuineness of the signed Goodman Letter is supported by the witness statement dated 1 October 2008 from Miss Marie Falconer. She is “quite certain” that she did not prepare the signed version of the Goodman Letter: it had not been typed on her computer; it did not contain her reference; and it was not typed in the particular style in which she would have typed it. Thus the formatting of the Goodman Letter was such that it was not typed by her or on her computer.

Miss Falconer also casts doubt on the explanation offered by CSP (disposal of her personal computer and the network server) for its inability to disclose the electronic file for the Goodman Letter. A copy of the word document should have been saved when the word documents were copied to the new server, as the McCain drafts were. The electronic copy of the document would reveal the date of the creation of the Goodman Letter which Transview suspects post-dates the proceedings.

Miss Falconer was not called as a witness at the trial, though she had been approached by both sides about giving evidence. It is submitted that the evidence in her witness statements could not, with reasonable diligence, have been obtained for use at the trial, that it was credible evidence and that, if it had been available for use at the trial, it would have probably had a “dramatic” influence on the result of the case.

The application to adduce further evidence was opposed and countered by CSP’s seeking an order for the attendance of Miss Falconer and Mr Fussell so as to be available for cross examination, if the court so directed, and by putting in further witness statements itself.

The crucial findings by Briggs J related to the events of 30 November and 1 December 2004. His ultimate conclusion was that there was no intention by either side that, at the time of its execution, the Sale Agreement should contain an overage abatement provision. Even if that had been the intention of Transview, as it alleged, the evidence did not establish any sharp practice on the part of CSP sufficient to ground Transview’s case for rectification on the ground of unilateral mistake. CSP had taken appropriate steps before execution of the Sale Agreement to draw the attention of Transview and its solicitors to the removal of paragraph 2.3 from the Sale Agreement.

As already explained, the judge’s finding was that, as at 30 November, the common intention of the parties was that the provision for the abatement of overage was to be dealt with by a side letter rather than in the Sale Agreement itself. The initiative for the use of a side letter for that purpose came from Mr Ivor Gershfield, not from Mr McCain. The judge concluded that the appearance of the abatement provision in paragraph 2.3 of Schedule 3 of the second draft of the Sale Agreement, rather than in a side letter, was as a result of a mistake on the part of CSP’s solicitors.

At the end of oral argument the court stated that both applications to adduce further evidence would be refused for reasons to be given in the judgment on the appeal. In those circumstances it is not necessary to consider the further statements produced by CSP to challenge Transview’s fresh evidence and to show why it was probable that Miss Falconer typed the Goodman Letter on her computer.

As for the evidence sought to be adduced from Miss Marie Falconer, it turned out that it was not in substance fresh evidence first obtained from her after the trial. It is true that Transview obtained two signed statements from her after the trial, but for Miss Stephanie Kleyman to say in her witness statement of 29 October 2008 (paragraph 3) that “it was impossible for any witness statement to be prepared for her prior to the trial” gave the court less than the full picture about the information supplied by Miss Falconer to Transview’s then solicitors prior to the trial.

It became clear from the second and more illuminating witness statement of Mr Charles Fussell dated 20 April 2009 that Miss Falconer had, prior to the trial, supplied him with a considerable amount of relevant information, which might have significant value. He had made manuscript notes for a discussion with her. He had even drafted witness statements for her to explain why, as she now states in her signed witness statement, the Goodman Letter could not have been prepared by her. Transview had obtained contact details from an enquiry agent. Mr Fussell had telephoned her on her mobile on 28 March 2008. He called her again on the phone on 10 April 2008 when she expressed hesitation about becoming involved He made about 6 further attempts to contact her leaving voice mail messages, but it became clear, Mr Fussell said, that she did not wish to return his calls.

On the basis of the information supplied by her Mr Fussell was able to draft two successive witness statements for Miss Falconer to make, though they were never signed or even shown or sent to her. Mr Fussell’s explanation was that she declined to respond to any of his further telephone calls and was refusing to co-operate.

Although Miss Falconer was in Glasgow, there was a procedure through the Scottish courts to compel her attendance to give evidence at the trial. It was not invoked. Further, taking up a point put by Moore-Bick LJ in argument, it appears that Transview made no efforts to adduce her draft statement in evidence as hearsay.

In those circumstances this is not in truth an application to adduce fresh evidence, which could not have been obtained by reasonable efforts for use at the trial. It is an attempt to introduce evidence that was available to Transview before the trial, though not in the same finished form as now submitted. The signed witness statements are new. The substance of the evidence in them is not. The evidence available or reasonably available to Transview from Miss Falconer at the time of the trial was sufficient to justify attempts to introduce it at trial by adducing it as hearsay or by seeking an order compelling the attendance of Miss Falconer to give evidence. No such attempts were made then. It is too late to repair those omissions now.

Even if the fresh evidence of Miss Falconer about the Goodman Letter only became available after the trial, I am not satisfied that, if adduced at trial, it would have had an important influence on the outcome. Discounting the Goodman Letter would not necessarily lead to the conclusion that Transview had established that CSP had deliberately removed the abatement provision from the Sale Agreement without the knowledge or agreement of Transview. There was other evidence accepted by the judge, such as Transview’s motivation for the omission of the overage abatement provision from the Sale Agreement itself, which supported his conclusion. What really mattered was that there was sufficient evidential material to support the judge’s findings that, in a telephone call on 30 November 2004, Mr Ivor Gershfield agreed with Mr McCann that the condition for abatement of overage was to be payment of the stipulated sums within 6 months of completion; and that it was agreed that paragraph 2.3 of Schedule 3 should be omitted from the Sale Agreement and covered by a side letter instead.

As for the further evidence relating to the layout of the former premises of Jeffrey Green Russell, this was relied on as credible evidence giving strong support for Mr Aaron Gershfield’s account of the circumstances in which he delivered the side letter in the terms of the Mc Cain draft on 1 December and would have had an important influence on the result of case. I am, however, unpersuaded that that is fresh evidence or that it is just to grant permission to adduce it on the appeal. There was no good reason why, by using reasonable efforts, it could not have been investigated in time to use at the trial. Photos of the premises formerly occupied by Jeffrey Green Russell were produced at trial at which Mr Osman was present. Transview’s difficulty is that the photos did not show what, by further investigations at that time, could have been discovered and shown.

Quite apart from the fresh evidence Transview relied on numerous grounds of appeal challenging almost every aspect of the judgment and contending that the judge had made wrong inferences from the available documentation and against the inherent probabilities of the case.

Transview made general criticisms of the judge’s approach to the evidence: in treating the incomplete documentary material as providing a substantial basis for testing the differing recollections of the parties and their witnesses; for dismissing the evidence of Transview’s witnesses as an artificial reconstruction rather than recollection following refreshment of memory; for substituting his own artificial reasoning for that of the witnesses; and for rejecting the evidence of Mr Ivor Gershfield, having found it prima facie more credible than that of Mr McCain.

In particular, Transview challenged the inference by the judge that the abatement provisions were removed from the Sale Agreement and replaced by the side letter at the instigation of Mr Gershfield and that they had been included by mistake in the second draft Sale Agreement circulated by CSP’s solicitors on 29 November. It was common ground that both parties had agreed on the use of a side letter collateral to the Sale Agreement in order to deal with the abatement of overage. The side letter was to complement that provision in the Sale Agreement, not to replace it. The provision had been included in the revised Heads of Terms document drafted by Mr McCain following the protest by Mr Gershfield at its omission from the initial draft and it was included in the second draft of the Sale Agreement.

The judge then wrongly attributed to Transview a motive for initiating its removal from the draft Sale Agreement to a side letter instead, in order to conceal from Barclays Bank the abatement of overage and the loan back. Further, he should not have accepted the improbable evidence of Mr McCain that Mr Gershfield asked for the different abatement terms as set out in the Goodman Letter referring to payments within 6 months after completion instead of payments before CSP’s planning application. On the judge’s own findings the Goodman Letter had neither been faxed or sent by CSP to Transview.

Without the further evidence, which we have refused to admit on the appeal, Mr Crane QC was left with criticisms of the kind summarised above. Although they were well presented by reference to passages in the transcript of evidence, to selected documents and to parts of the judgment, at no point have I been persuaded that the judge’s decision was wrong. I will concentrate on three main areas.

First, the reiterated point that this court is as well placed as the trial judge to make inferences from the documents and that it should hold the judge made the wrong inferences from incomplete documentation. Mr Crane QC emphasised that this appeal was against secondary findings of fact, not against findings of primary fact by the trial judge.

In my judgment, the trial judge was better placed than this court to find the facts, even by the process of inferences from contemporaneous documents and the inherent probabilities of the case. In the process of making inferences of fact a trial judge may be properly influenced by the general views which he has formed about the evidence of the parties, the credibility of the witnesses whom he has heard and seen and the probabilities of the case presented by each side. The impact of the incomplete documentation on the judge cannot be separated from his experience of sitting through the trial and forming general impressions affecting his overall assessment of the evidence in the case.

Secondly, the standard of proof. On the materials before him, was the judge entitled to hold that Transview failed to meet the required standard of convincing proof appropriate to a rectification claim? Mr Crane QC submitted that convincing proof was not required in the circumstances of this case because the parties intended and were agreed that a collateral binding agreement for abatement of overage was concluded and that it should be contained in a side letter: the essence of the disagreement was about the terms of the collateral agreement, i.e. whether as in the McCain Draft or in the terms of the Goodman Letter.

In my judgment, the judge was plainly entitled to require convincing proof of the case pleaded for rectification and to hold that Transview failed to discharge the burden of proving that by sharp practice CSP had removed the abatement of overage provision from the Sale Agreement. The negotiations were conducted by men of business with the benefit of professional legal advice and drafting. The judge gave ample reasons for rejecting the evidence given by Transview’s witnesses and for preferring the evidence given by CSP’s witnesses about what was agreed in the negotiations. It followed from his clear findings of fact that Transview did not establish a case of unilateral mistake which would give the court jurisdiction to order rectification.

Thirdly, the important side letter. Was it intended to complement or to replace the Sale Agreement on abatement of overage? Was it agreed in the terms of the McCain Draft or the Goodman Letter? In my judgment, the judge was entitled to prefer the evidence of Mr McCain as to how an agreement on abatement was reached, what the terms of the agreement were (the 6 months time limit for payment or payment before planning permission) and their inclusion in a side letter. He gave adequate reasons for preferring that evidence to contrary evidence from Mr Gershfield. He was entitled to infer, on what has been described as “his own theory”, how the abatement provision came to be included by mistake in the second draft of the Sale Agreement rather than it being a case of a mistaken omission of the provision from the earlier draft, which had to be remedied.

It followed from the judge’s findings that there was no sharp practice, trick or mistake that would ground a claim for rectification and no contractual basis for the declaration of the release of Transview from the overage liability.

For the above reasons both of the applications for permission to adduce further evidence were refused in the course of the hearing. CSP’s cross application did not arise.

As for the substantive appeal, I would dismiss it. It has not been shown by Transview that there was any thing wrong in the judge’s findings of fact or in his decision to dismiss the rectification claim.

I agree.

I also agree.