Evans v Tiger Investments Ltd. & Anor [2002] EWCA Civ 161 (20th February, 2002)

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England and Wales Court of Appeal (Civil Division) Decisions

You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Evans v Tiger Investments Ltd. & Anor [2002] EWCA Civ 161 (20th February, 2002)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2002/161.html
Cite as: [2002] EWCA Civ 161, [2002] 2 BCLC 185

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Evans v Tiger Investments Ltd. & Anor [2002] EWCA Civ 161 (20th February, 2002)

		Neutral Citation Number: [2002] EWCA Civ 161
		Case No: B2/2000/3192

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HASTINGS COUNTY
COURT (Mr Recorder Morris-Coole)

Royal Courts of Justice
Strand,
London, WC2A 2LL

20th February 2002

B e f o r e :

THE PRESIDENT
LORD JUSTICE POTTER
and
LORD JUSTICE KAY
____________________

	DENNIS PRITCHARD EVANS	Claimant
	- and -
	TIGER INVESTMENTS LIMITED - and – DAVID JOHN MOORE	First Defendant Second Defendant

____________________

(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)

____________________

Michael Fullerton Esquire (instructed by Nigel Weller & Co for the appellant)
Neil Vickery Esquire (instructed by Lawson Lewis & Co for the respondent)
____________________

HTML VERSION OF JUDGMENT
AS APPROVED BY THE COURT
____________________

Lord Justice Potter:

INTRODUCTION

The first defendants Tiger Investments Limited (“Tiger”) appeal from the decision of Mr Recorder Morris-Coole sitting in the Hastings County Court on 8 September 2000, whereby he gave judgment for the claimant against Tiger for the sum of Ј53,599.44 being principal and interest upon a loan made by the claimant in December 1994 which had not been repaid. That loan was secured by a form of legal charge ostensibly executed by Tiger over properties owned by Tiger and registered under title numbers ESX 184226 and ESX 195537 (“the Dalehurst Road properties”). By his judgment, the Recorder also ordered possession of those properties in favour of the claimant pursuant to the charge and he dismissed Tiger’s counterclaim against the claimant for a declaration that the charge was not executed by Tiger, or with its authority or approval, and was therefore not binding upon it.

The individual to whom the claimant had made the loan (which was in cash) was David Moore the second defendant. He was one of two equal shareholders in Tiger and was the signatory to the form of charge. He asserted that, in receiving the loan and executing the form of charge he was acting for Tiger. The claimant, as an alternative to his claim against Tiger under the form of charge, claimed against Mr Moore on the ground that he was personally liable. The judge, having held Tiger liable, dismissed the claim against Mr Moore.

By its Grounds of Appeal, Tiger complains that the judge’s decision was against the weight of the evidence in a number of respects and in particular that he erred in law in finding that, what would otherwise have been an invalid and unauthorised charge on the part Tiger, had nonetheless been validated by the sanction and acquiescence of its other joint shareholder, Mr Hill. In so asserting, Tiger seeks to adduce fresh evidence in the appeal, the burden of which is to confirm the thrust of Tiger’s case at trial (rejected by the judge) that Mr Moore received the loan of Ј40,000 for use in the purchase of a farm property as his own home, and that he acted in a personal capacity throughout and not, as he asserted before the judge, for the purpose of a purchase on behalf of Tiger.

THE FACTS

Tiger was incorporated in the Isle of Man on behalf of Mr Moore and Mr Hill, who divided its issued share capital equally between them and used the company for the purpose of furthering joint property acquisitions and building development enterprises. The company had two directors, Mr and Mrs Solly, one of whom was company secretary, and both living on the Isle of Man. Mr Moore and Mr Hill had strong family ties built up over years, Mr Hill living in a settled relationship with Mr Moore’s daughter. They spent much time in the company of each other in pursuing their business and as an extended family. Each would seek out business opportunities through extensive connections in the property world in the form of properties which were suitable for acquisition, development and sale, Moore conducting the building operations, whilst Hill was more concerned with the administrative side. Mr Moore also had property dealings on his own account from time to time. The judge observed that their close relationship was central to an overall understanding of the manner in which they conducted business and the mutual trust and reliance on which their continuing success was based. By the time of the trial, however, they had fallen out, their relationship was ‘solely business’ and they took opposing sides in the case.

The relevant facts and issues as found and dealt with by the judge at trial are as follows. Mr Moore met the claimant in December 1994 and, after taking him on a tour of various properties, including the Dalehurst Road properties the subject of the eventual charge, persuaded Evans to lend him Ј40,000 for the purchase of a farm property (“Cowbeech”) which he said he was anxious to acquire. On 20 December 1994 the claimant went to Mr Moore’s office where he met him and Mr Robinson, who acted as the conveyancing solicitor both for Tiger and Mr Moore in relation to their property dealings. Mr Robinson drove the claimant to a building society where he collected Ј40,000 in cash, returning to Mr Moore’s office where the claimant handed over the money. The loan was to be a short-term loan to be repaid by the end of February 1995 and it was agreed that interest would be paid upon it at the rate of 6%. Although the claimant made no request for security, the provision of security was discussed in front of him between Mr Moore and Mr Robinson, during which the name of Tiger was mentioned. Mr Robinson left briefly and returned having prepared a charge document in the name of Tiger, the material part of which read as follows:

“In consideration of Forty thousand pounds (Ј40,000.00) receipt of which is acknowledged Tiger Investments Limited whose registered office is at National House, Santon, Isle of Man as beneficial owner hereby charge the land comprised in the title above referred to with the payment to Dennis Pritchard Evans of 5, Meads Road, Seaford, Sussex of the principal sum of Ј40,000 on or before 28^th February 1995 together with interest at 6% per annum.”

It was “signed as a deed by Tiger Investments Limited acting by” Mr Moore. Having signed the charge, Mr Moore gave it to the claimant and asked Mr Robinson to drive the claimant to Mr Moore's home to collect the land certificates for the Dalehurst Road properties covered by the charge which were kept there. That was done

It was the evidence of Mr Moore at trial that it was his intention throughout to purchase Cowbeech for Tiger, although he would sign the purchase contract in his own name for lack of time. The judge accepted that evidence and held that Mr Robinson was also aware of that intention at the time when he produced the charge document which Mr Moore signed. He rejected the evidence of Mr Robinson (who was called as a witness by the defendants) that he believed himself to be acting throughout for Mr Moore personally, Mr Moore being anxious to purchase Cowbeech as his own home. The judge did so because he preferred Mr Moore’s evidence on that point holding that it was consistent with the way that Mr Moore had previously acquired properties for Tiger, passing over to Mr Hill the question of attendance to the formalities by the Isle of Man directors. The judge also found that it was consistent with the behaviour of Mr Robinson in relation to the preparation of the security. In that respect, Mr Robinson, having discussed and prepared the form of charge, made no comment or reservation concerning Mr Moore’s signature on behalf of Tiger, although he knew that, for the charge to be formally valid, it had to be signed by the director and secretary, Moore being simply a 50% shareholder. Mr Robinson stated in evidence that he had had no qualms about the execution of the charge and the handing over of the deeds to the claimant. In this respect the judge said that he found it “inconceivable” that a solicitor who had acted for both Mr Moore and Tiger as separate clients in the past would lend himself to the purported charging of Tiger’s properties as security for a personal loan made to Mr Moore unless satisfied that the purchase of the property was for the benefit of Tiger and not Mr Moore. In that respect the judge stated that his finding was not undermined by the fact that the receipt of the Ј40,000 was entered on the ledger card kept by Mr Robinson in the name of Mr Moore because it appeared that there was no separate card kept for Tiger and the judge was satisfied that at least one other transaction entered upon that card related to Tiger rather than to Mr Moore personally.

Mr Moore stated in evidence that, although he had not asked for Mr Hill’s prior consent to Tiger’s entry into the Cowbeech transaction, each trusted the other and each had the general authority of the other to negotiate transactions. Normally he, Mr Moore, would find the property and tell Mr Hill who would then confirm the transaction and the Isle of Man directors would sign the necessary documents on request. In respect of Cowbeech, Mr Moore said he had told Mr Hill immediately he had arranged the purchase of Cowbeech with the aid of the charge on Dalehurst Road and that Mr Hill raised no objection. Mr Moore said that, after exchange of the contract, they were unable to complete by the new date because of Mr Robinson’s failure to arrange long-term mortgage finance, and, in those circumstances, Mr Hill went to see the vendor of Cowbeech in order to seek more time to complete. When the vendor declined, the Ј40,000 deposit on Cowbeech was forfeited. Mr Hill stated that, some time later, he and Mr Hill fell out over money matters unrelated to the Cowbeech transaction. He suggested that that was the reason why Mr Hill was contesting Tiger’s liability rather than accepting the position.

Mr Hill denied that he had any knowledge of the signing of the charge until the claimant later sought to register and thus to enforce it. He said he knew of Mr Moore’s proposed purchase of Cowbeech, but said that it was a personal deal and denied that his contact with the vendor was other than to assist Mr Moore in his personal capacity. He said there had been no discussion of the purchase because he and Mr Moore did not discuss their personal affairs.

THE DECISION BELOW

Having heard the witnesses the judge found as follows:

“I prefer the version of Moore. Such was the closeness of the relationship between the two, I find that it would have been inevitable that they would have talked about Cowbeech in detail, regardless of whether it was Moore or Tiger who was buying it. The finding is further supported by the fact that, when there were difficulties in meeting the completion date, Hill went back to speak to the vendor to try and persuade him to give an extension of time. I find that this was not because he was a “better” contact man than Moore, but because he was the one who understood the financing and might have been better able to persuade the vendor to give them more time.

In the event, finance could not be raised in time, and the deposit of Ј40,000 was forfeit under the terms of Moore’s contract. Once again, I find this must have been discussed between Moore and Hill, and that Hill would have known from Moore at the outset that the loan from Evans was secured on the Dalehurst Road properties.

After spasmodic payments of Ј200 totalling Ј2,200, had been made to Evans, they dried up with the loss of the Cowbeech purchase, and difficulties with Hamptons. Hill had countersigned two of the cheques for Ј200 on the Hamptons’ account (B19) and it is submitted that this is evidence of his knowledge of the Evans loan and acquiescence in it. In itself, this evidence would not be persuasive but taken in the overall context, it gives credence to the version by Moore…

Hill claims that the first he knew of the charge was when Mr Solly, the Isle of Man director, telephoned him and queried that someone (Evans) was trying to charge the properties. The Dalehurst Road properties were still on the market, and Moore and Hill probably intended to repay Evans from the proceeds since they would need to get the deeds back from him to complete the transaction. They did not expect him to charge the property at HM Land Registry and, to this extent, they were taken by surprise. For the reasons given earlier in this judgment, I reject Hill’s claim that he was in ignorance of the charging of the property and passing of the deeds to Evans.”

Having made those findings, the judge considered the liability of Tiger on the basis that the signing of the charge by Mr Moore did not satisfy the requirements of Isle of Man law equivalent to s.36A of the Companies Act 1985. He found that Mr Moore had no express authority to execute documents such as a charge on behalf of Tiger; nor did he consider that Mr Moore’s past dealings on behalf of Tiger and the ratification of those dealings by Isle of Man directors was sufficient to invest him with any implied authority in relation to future transactions. He therefore concluded that Mr Moore was acting without authority. Nonetheless, he found that the giving of the charge was the subject of sanction and acquiescence by the only two shareholders in Tiger, namely Mr Moore and Mr Hill and hence that the borrowing and charge were lawful and binding upon Tiger.

Having referred to the judgment of Astbury J in Parker and Cooper Limited –v- Reading [1926] 1 Chancery 975 which establishes that the unauthorised act of an agent of the company may be ratified by that company by the consent or acquiescence of all its shareholders the judge observed that:

“Acquiescence with knowledge, including by silence, may also amount to consent. The knowledge of the acquiescing party need not be total in all respects, provided it is sufficiently informed on all material considerations …..”

He than stated:

“The findings which I have recited earlier in the judgment leave me completely satisfied that Hill knew what was intended with regard to the purchase of Cowbeech and the pledging of the security, and he endorsed the course of action being taken by Moore. Even if I am wrong as to whether that knowledge was sufficient or contemporaneous when the acts were performed, I would have no hesitation in finding that Hill would have had all requisite knowledge when the purchase fell through and the deposit was forfeit. Measuring his conduct from that time onwards, I would still come to the same conclusion but that he had sanctioned Moore’s acts by acquiescence. Besides those findings of fact which I have made, it is not insignificant that the two cheques for Ј200 to Evans drawn on the Hamptons’ account and countersigned by Hill were on dates subsequent to the failure to complete the purchase of Cowbeech. In the result, I conclude that the unauthorised acts of Moore have been validated by the sanctioning of them by the only two shareholders in Tiger, and hence the borrowing and charge on the properties are lawful and binding on Tiger.”

THE GROUNDS OF APPEAL

Grounds 1-3 allege in general terms that the judge’s findings were contrary to the weight of the evidence, that he failed to take into account relevant and admissible evidence and gave undue weight to uncorroborated or irrelevant evidence. Ground 5 asserts that the only proper inference which could be drawn upon the evidence was that Mr Moore was solely responsible for the debt to the claimant. Ground 4 alleges that the judge erred in law in finding that the Tiger charge which was otherwise invalid was nonetheless validated by the sanction or acquiescence of the shareholders of Tiger. Ground 6 relies upon fresh evidence which it is sought to adduce on this appeal in relation to a number of matters which it is said would have driven the judge to the conclusion that Mr Moore was purchasing Cowbeech solely on his own account as his home and would have fatally undermined the suggestion that Mr Hill knew of, or acquiesced in, the giving of the charge.

THE JUDGE’S DECISION ON THE EVIDENCE BEFORE HIM

For the purposes of this judgment, it is convenient first to consider whether or not the decision of the judge can be demonstrated to be incorrect without regard to the additional evidence sought to be adduced. So far as the judge’s findings on the facts are concerned, grounds of appeal 1-3 and 5 amount simply to the assertion that the weight of the evidence called before the judge pointed overwhelmingly to the purchase of Cowbeech being a private purchase for Mr Moore as opposed to a purchase for the benefit of Tiger and that there was no evidence on which the judge could legitimately find Mr Hill knew, at or shortly after the giving of the Tiger charge, that it was given in relation to a purchase by Mr Moore for the benefit of Tiger rather than as his own home. Mr Fullerton’s argument for Tiger has essentially depended upon the submission that the judge should have accepted the evidence of Mr Hill and Mr Robinson rather than that of Mr Moore.

So far as the purchase of Cowbeech is concerned, Mr Moore was quite clear in his evidence that it was purchased for Tiger. That was made clear both in his witness statement and in passages of the transcript before us in which he stated that he considered that it was a good deal for Tiger and that it was his intention to purchase it for the company to develop and sell on. He expressly denied that there was any truth in the suggestion that he wished to live in it. Elsewhere in evidence he made plain that, although at the time of the Cowbeech transaction, his own 100-acre farm had been on the market, he had been looking to buy larger premises with equestrian potential and that Cowbeech was not suitable for such use. He stated that in 1998 he had in fact purchased a 207-acre equestrian property which it was common ground he had been pursuing since 1994 and in which he had been interested at the time of the Cowbeech purchase. The judge made a considered finding as follows:

“Whilst I do not accept the evidence of Moore in every respect, he struck me as a man who personified the expression “You get what you see”. His description of himself accords with my appreciation of him. I accept his evidence that he was intending to purchase Cowbeech for Tiger, although he would sign the purchase contract in his own name.”

Later the judge went on to say:

“There is no dispute that Moore and Hill visited Cowbeech and talked to the owner before contracts were exchanged. Whilst Moore claims that they went here to view the property and assess the deal, Hill says it was no more on his part than a visit to reminisce with the owner whom he had known as a child, some thirty years before. Hill knew that Moore was buying Cowbeech, but said that they had no discussion about it since they did not discuss personal affairs. As against that, Moore claims that Hill was in agreement with him trying to buy for Tiger after the visit but they would have to raise finance. I prefer the version of Moore. Such was the closeness of the relationship between the two, I find that it would have been inevitable that they would have talked about Cowbeech in detail …”

When dealing specifically with the question whether or not Mr Hill assented to the charge the judge said:

“Once again I find this must have been discussed between Moore and Hill and that Hill would have known from Moore at the outset that the loan from Evans was secured on the Dalehurst Road properties.”

Later, he stated that he was:

“Completely satisfied that Hill knew what was intended with regard to the purchase of Cowbeech [i.e. that it was a Tiger purchase] and the pledging of the security, and endorsed the course of action being taken by Moore.”

These findings were based upon the judge’s assessment of the evidence before him and in particular his view of the credibility of the witnesses. Mr Fullerton has urged upon us that the judge should have accepted the evidence of Mr Robinson as an obviously ‘independent’ witness with no reason to misstate the position. However, Mr Robinson was obviously in a highly embarrassing position. He stated that he had previously undertaken various conveyancing matters both for Mr Moore and Mr Hill ‘sometimes under their own names and otherwise for their companies’. He confirmed that he had undertaken conveyancing transactions for Tiger, but that he had no Tiger documents in his possession by the time of trial. He said (though the judge did not accept) that, when Mr Moore had signed the charge and the deeds had been handed over to the claimant, he pointed out to Mr Moore (later that day or the next day) that the charge had to be executed by the company and Mr Moore's response was “don't worry I'll sort it out”. His assertion in evidence that his understanding was that Mr Moore was purchasing Cowbeech as his own did not appear in his witness statement (as he believed that it was legally privileged), although it is true to say that, in that statement, he stated that he had no instructions from Tiger or Mr Hill at the time. In those circumstances, the finding of the judge that, at the time, Mr Robinson was aware of Mr Moore’s intention and purpose being purchase of Cowbeech for the benefit of Tiger is readily comprehensible. So far as Mr Hill’s denial of knowledge was concerned, as someone who had subsequently fallen out with Mr Moore and who, as the 50% shareholder in Tiger, had every motive to repudiate the loan on Tiger’s behalf, he was plainly a witness whose evidence called for careful assessment before it was accepted. In my view, on the evidence before him, the judge was entitled to make the findings of fact which he did and they are not reasonably open to challenge in this court, short of the admission of further evidence in support of Tiger’s case.

On this appeal Mr Fullerton has not sought to argue before us that, on the basis of the findings of fact made by the judge, he erred in law in holding that the form of charge was binding upon Tiger by reason of the approval or acquiescence of all its shareholders. Accordingly, the success of this appeal depends entirely upon Ground 6, that is to say whether or not the additional evidence now sought to be relied upon by Tiger should be admitted before this court.

THE NEW EVIDENCE

The evidence now sought to be adduced before the court is evidence directed to establishing that, in truth, as contended by Tiger at trial, Mr Moore was intending to buy Cowbeech for his own personal use, namely as his own home, thus supporting the assertions of Mr Robinson and Mr Hill in that regard and rendering a finding to that effect inevitable. The consequence of that would be that the purported granting of a charge by Tiger over one its assets, namely the Dalehurst Road properties would have been ultra vires the powers of Tiger and thus not amenable to subsequent validation by acquiescence of Mr Hill as the other 50% shareholder.

The fresh evidence has been obtained since the trial from four sources. First, documents from the file of Engleharts originally instructed on Tiger’s behalf by Mr Moore on 2 December 1997 to defend the proceedings brought by the claimant against Tiger, at a time when no claim was made against Mr Moore on the basis that he was personally liable to repay the loan. Engleharts continued to act for Tiger until 14 March 2000, that is to say some five months before the matter was tried. Second, documents obtained from the solicitors of the vendor of Cowbeech, Mr Radcliffe. Third, a statement from Mr Radcliffe and his wife concerning their contact and conversations with Mr Moore and Mr Hill in connection with the proposed sale of Cowbeech. Fourth, Mr Robinson’s conveyancing file referring to Cowbeech which was not in his possession when he attended the trial, having at some earlier stage been handed over to Mr Moore.

It has not been in dispute before us that, in deciding whether or not to entertain upon an appeal evidence which was not before the lower court under the provisions of CPR 52.11(2) the principles embodied in cases such as Ladd –v- Marshall[1954] 1 WLR 1489 at 1491 still fall to be broadly applied, save that, in an appropriate case, relaxation may be called for in the light of the overriding objective: see for instance Banks –v Cox (Unreported) 17 July 2000, C.A. (Civil Division) Transcript No 1476 of 2000 per Morritt LJ and Hertfordshire Investments Limited –v- Bubb [2000] 1 WLR per Hale LJ at 2325P-H. The Ladd –v-Marshall principles are that (1) the evidence could not with reasonable diligence have been obtained for use at the trial; (2) the evidence must be such that, if given, it would probably have had an important influence on the result of the case (though it need not be decisive); (3) the evidence was apparently credible, although it need not be incontrovertible.

It is not necessary at this point to detail the evidence sought to be adduced from the four sources to which I have referred, save to say that documents now available from the second, third and fourth sources, whether considered separately or collectively, give strong support to the case advanced for Tiger at trial that Mr Moore was intending to buy Cowbeech for himself and not for Tiger. It does not assist directly on the question of whether Mr Hill (who was on the judge’s findings party to Mr Moore’s intentions), was nonetheless content at the time that a charge should be given by Tiger in respect of what was intended to be simply a short-term loan to Mr Moore pending the completion of the purchase. However, whether or not Mr Hill so appreciated or intended, the fact that Tiger could have had no interest in, nor derived any benefit from, the transaction would have rendered the giving of the charge ultra vires Tiger’s powers and thus not amenable to validation through Mr Hill’s acquiescence. That being so, despite the arguments to the contrary by Mr Vickery for the claimant, I approach the matter upon the basis that Tiger is able to satisfy ingredients (2) and (3) of the principle in Ladd –v- Marshall and that the issue of the admissibility of the new evidence turns upon the ability of Tiger to demonstrate that the evidence concerned could not have been obtained with reasonable diligence for use at the trial.

In my view insuperable difficulties beset Tiger in this respect. In order to demonstrate this, it is necessary to set out the history of the proceedings as it is now apparent, not only from matters known to the judge at trial but as they emerge from the files of Engleharts and Mr Robinson which form part of the additional evidence sought to be adduced.

By letter before action dated 21 February 1996 the claimant’s solicitors wrote to Mr Moore seeking repayment “in connection with the loan of Ј40,000.00 to Tiger Investments Limited on the 12^th December 1994” and referring to the “charge signed by you on behalf of the Company”. Following a further request for Tiger’s proposals as to payment, copies of the correspondence were sent by the claimant’s solicitors to Mr Hill on 16 March 1996. There is some question as to whether Mr Hill received the relevant letter at the address to which it was sent; however, more importantly, the copy correspondence was also sent to Mr Solly as secretary and director of Tiger in the Isle of Man. A reply was received from Island Resources Limited of the Isle of Man on behalf of Tiger stating they were taking instructions from the “beneficial owner of the above company” and that they would revert in due course. They did not do so. After further fruitless correspondence, in November 1997 the claimant’s summons for payment of the debt and possession of the Dalehurst Road properties under the charge was issued and served on Tiger in the Isle of Man.

On 2 December 1997 Engleharts, who had apparently been instructed orally from the Isle of Man on the previous day, wrote to Tiger’s company secretary in the Isle of Man confirming their instructions to act for Tiger in respect of the possession proceedings, asking for copies of the summons and correspondence and confirming their understanding that the directors of Tiger had not authorised the granting of the legal charge. On 15 January 1998, Engleharts also wrote to say that they had been requested by Mr Moore as a shareholder in Tiger to deal with the matter and seeking confirmation of Tiger’s instructions to act and contest the proceedings. It is clear from the letter in reply of 19 January 1998, that those instructions were confirmed, information being supplied which included the assertion that no legal charge had been executed by any officer of the company other than to the company’s bankers and there was no record of the company having received the sum of Ј40,000 from the claimant. On 4 February 1998, Engleharts filed a defence on behalf of Tiger denying receipt of the loan and execution of the charge. Tiger also counterclaimed for a declaration that the charge was not binding on them and sought an order directing cancellation of entries which had been made on the charges register in respect of the charge of properties under their title numbers.

In the light of Tiger’s defence, on 20 April 1998, the particulars of claim were amended to join Mr Moore as second defendant, claiming in the alternative against him for repayment of the loan and interest.

On 20 May 1998 Engleharts filed an amended defence on behalf of Tiger and a defence on behalf of Mr Moore, each being little more than an uninformative denial of every allegation made. In August 1998, Engleharts filed lists of documents on behalf of both defendants. It is plain that at that stage their instructions were such they appreciated that there was a potential conflict between Tiger and Mr Moore. Accordingly, Mr Moore, upon their advice instructed Michael Vine & Co, while Engleharts remained on the record for Tiger. In the face of the blank denials of both defendants in their pleaded defences, on 6 May 1999 the claimant obtained an order for disclosure of a range of documents relating to the charged land including minutes of meetings of the board of directors and all correspondence, attendance notes, etc, relating to the charging of the land. He also obtained an order that Mr Moore clarify his defence by filing and serving answers to a request for further information. Mr Moore did so on 14 May 1999. His answers made clear that he admitted that, purporting to act on behalf of Tiger, he had executed the charge to secure repayment of the sum loaned and specifically stated that it was done on the advice of Mr Robinson. He also admitted that “on his own behalf or as agent for the first defendant” he had paid or caused to be paid to the plaintiff’ Ј2,200 in repayment of the loan.

On 26 November 1999, an order was made by consent staying the action to enable discussions to take place between the parties. However, these proved unsuccessful and in January 2000 the stay was lifted. On 2 February Mr Moore gave notice that he was acting in person and on 14 March Engleharts ceased to act for Tiger whose directors specifically authorised a Mr Proctor of Needleman Treon, solicitors, to act on behalf of Tiger. On 15 March 2000 Mr Moore instructed a new firm of solicitors, Shaidy & Co. On 16 March 2000 an order was obtained by the claimant against Mr Moore, pursuant to the overriding objective, that Engleharts inform the court in writing what documents they held on behalf of the defendant in relation to the action.

On 12 April 2000 Engleharts replied as follows:

“We hold a file, on behalf of Tiger Investments Limited, in relation to the litigation action …. we supplied copies of all salient documents, to include copy pleadings in the file, to Mr Proctor of Messrs Needleman and Treon who now act for Tiger Investments Limited. We have never received a request from Neddleman Treon for further documents.

In addition we hold, on behalf of Tiger Investments Limited, a file relating to the proposed sale of [the Dalehurst Road properties].

We hold no other documents that appear to be relevant.

We are content to supply a copy of our entire files, to include correspondence as well as any documents. However, we have not received any request for such documents or correspondence from Needleman Treon.”

On 13 April 2000 the court made an order for standard disclosure by 4 May 2000 and exchange of witness statements by 1 June 2000 and that, in the event of either defendant failing to comply with the order, such defendant should be barred from calling oral evidence at the trial without leave of the trial judge. On 4 May, Moore and Tiger filed lists of documents.

In June 2000, Mr Hill supplied a short witness statement, in which he simply stated that all Tiger’s conveyancing was done by its solicitor, Mr Robinson, who retained the file; that he, Mr Hill, had been shown a form of charge to which he had never consented; that he had never authorised Mr Solly to execute the charge or to part with the deeds to the Dalehurst Road properties. He also stated that he had been told by Mr Solly that he had no knowledge of the claimant or the charge. However, no statements from Mr Robinson or Mr Solly were relied on.

Mr Moore did not serve a witness statement and, on 11 August 2000, Shaidy and Co ceased to act for him. On 16 August 2000 Tiger served notice on the claimant of intention to act ‘in person’. At this stage the trial was looming, having been fixed to start on Monday 21 August 2000 and it is clear that Tiger approached the trial ill-prepared and intending to rely for its defence solely upon the statement of Mr Hill, believing itself secure in the knowledge that Mr Moore had filed no statement and thus would have to obtain the leave of the court if he sought to appear and give evidence in his own defence.

Late in the week before the trial, there was a flurry of activity by both defendants. Tiger instructed Nigel Weller & Co to act on their behalf and Mr Moore instructed Rix & Kay to act for him, each on Friday 18 August, the trial date being Monday 21 August.

At the commencement of the trial. Mr Moore’s solicitor sought and obtained leave to rely upon a lengthy statement from Mr Moore presenting his case on the lines which have been set out at paragraphs 4-9 above. There was no objection from the claimant’s representative, who no doubt welcomed the confirmation of his primary case against Tiger. After full discussion and consideration of Tiger’s position with those acting for them, Mr Fullerton, who had himself been instructed as counsel for Tiger at the last minute, decided that Tiger would not object to Mr Moore’s statement being admitted or seek an admitted adjournment to deal with its content, intimating simply that Tiger reserved the right itself to seek to call further evidence to deal with the various issues raised. The court was so informed and the trial proceeded upon that basis.

Tiger then hastily made contact with Mr Robinson to attend as a witness which he did, supplying his own hand-written statement of evidence dated 22 August 2000 (i.e. the second day of the trial) which was also belatedly admitted and upon which he was duly cross-examined. Despite the fact that Mr Robinson was unable to produce his conveyancing file, no effort was apparently made either to call the Radcliffes as witnesses, or to subpoena or otherwise obtain the conveyancing file of their solicitors.

Following failure at trial, Nigel Weller and Co for Tiger immediately set about the task of seeking to find evidence which would assist them in demonstrating that Mr Moore had misled the court. The first thing they did was to attend at Engleharts and take copies of their files. Mr Weller was informed that their original file had been passed to Needleman Treon when they took over conduct of the action. However, Engleharts had retained a copy file which Mr Weller was in turn permitted to copy. Thereafter, Mr Weller located the original file at Rix and Kay (Mr Moore’s solicitors at the trial), they having apparently obtained it from Michael Vine and Co who had been Mr Moore’s solicitor between December 1998 and February 2000. It has been suggested by Mr Weller that the file had been tampered with because it contained no attendance notes, but the original file has not been placed before us to seek to make good that assertion; the court cannot act on the basis of material which it has not seen and the content of which is not known. We have no knowledge of any specific document of relevance which has not now been made available to Tiger. More importantly however, insofar as material was in the hands of Engleharts who acted as Tiger’s own solicitors between December 1997 and March 2000, and who had on 12 April 2000 specifically informed the court of the files and documents which they held, such documents were at all times fully available to Tiger.

In the course of his submissions, Mr Fullerton has sought to distinguish between the knowledge of Tiger by its directors and/or by Mr Hill on the one hand and the various solicitors who have acted for Tiger from time to time on the other. He has done so in order to explain why there appear to have been extraordinary gaps in Tiger’s appreciation of the situation and its preparation for trial. However, for the purposes of an application of this kind, no such distinction may be recognised. In deciding whether, as between a claimant and defendant, one of the parties has displayed reasonable diligence in obtaining evidence for the purpose of the proceedings, no distinction can properly be made between the knowledge of the lay client and that of his solicitor. Inadequacy of instructions or the breakdown of two-way communication between solicitor and client for the purposes of progressing the case are simply not matters which can be prayed in aid when the issue is whether reasonable diligence has been displayed in advancing the case of the client. So far as Engleharts’ file was of relevance in advancing Tiger’s case at trial it was notionally in Tiger’s hands throughout 1998 and 1999 when Engleharts were acting, during which period the divergence of interest and opposing stances of Tiger and Moore had become only too apparent.

Following the court order obtained by Tiger on 17 August 2001 (i.e. after the trial) requiring Mr Radcliffe’s solicitors, Rawlence and Hart, to produce all documents relating to the sale of Cowbeech from Mr Radcliffe’s company to Mr Moore, Tiger obtained a number of letters between Rawlence and Hart and Mr Robinson which refer throughout to Mr Moore as Mr Robinson’s client and make no mention of Tiger. In addition Mr Weller obtained Mr Robinson’s conveyancing file from Rix and Kay on or about 20 August 2001 which showed a similar position. Mr Robinson’s file contained a letter from Mr Moore’s accountant which stated inter; alia:

“I understand that Mr Moore is in the process of acquiring a new home and that he has a buyer for the property known as Little Meadow Stud.”

In respect of these documents, Mr Vickery submits that, once the opposing stances of Mr Moore and Tiger had become apparent (whether in December 1998 when Engleharts ceased to represent them both, or in May 1999 when Mr Moore made clear in the further information which he supplied that he purported to have acted on behalf of Tiger), it must also have been apparent to Tiger that clear evidence would be required to prove Mr Moore’s intention to purchase on his own behalf, the most obvious source for which would be the files of the solicitors involved on either side in the purchase of Cowbeech. Had Rawlence and Hart been approached at that stage and displayed unwillingness to assist, they, or Mr Robinson, could have been subpoenaed to produce their files. However, there is no evidence that they were even approached. Similarly, an order for specific discovery could have been sought against Mr Moore in respect of Mr Robinson’s conveyancing file relating to the Cowbeech transaction. It was not. In the statement of Mr Weller which is before us he states that, following the trial, he was advised by “those previously representing the company” (whom he did not identify), that they contacted Mr Robinson, who said that his file relating to the purchase of the property had been handed to Mr Moore; but that is no reason why it should not have been tracked down prior to trial.

The final category of evidence since obtained in relation to Mr Moore’s purchase of Cowbeech is the statements of Mr and Mrs Radcliffe, which, indicate their clear understanding as a result of a conversations with Mr Moore that he was purchasing Cowbeech for use as his own home. In particular, it appears that Mrs Moore on one occasion sought to measure up for curtains. Again, there is no evidence of any attempt made to approach, or if necessary to subpoena, the Radcliffes prior to trial in order to find out whether they could assist, despite the obvious relevance of what they might say.

In the course of his submissions, Mr Fullerton submitted that it was reasonable upon the day of trial to come armed only with the evidence of Mr Hill in the light of the fact that Mr Moore had failed to serve a witness statement by 1 June 2000, and there was no reason to think that he would appear at the last moment and seek the permission of the court to serve a statement out of time. There is some force in that submission. However, that does not seem to me to be decisive of the question: could the evidence with reasonable diligence have been obtained for use at the trial, particularly if the trial date could have been adjourned for that purpose. When the day of trial arrived, Tiger had the clearest possible opportunity, in the light of the detailed statement sought to be put in by Mr Moore, to object to its admission save on terms that there be an adjournment in order to deal with the matters of detail raised in the statement. Had that opportunity been taken, there is every reason to suppose that the judge would have refused leave for the statement to be put in, save on the basis of an adjournment at Mr Moore’s expense. If, as undoubtedly happened in this case, Tiger accepted that the statement could come in and that the trial should proceed to a conclusion, without their making any effort to call potentially relevant evidence from sources of which they were well aware, then they should not be permitted a second bite at the cherry in the light of their miscalculation. As it was, they were content to seek to rely at the last minute on the oral evidence of Mr Robinson, a somewhat compromised witness, to support that of Mr Hill.

Mr Fullerton has urged upon us that, even if ingredient (1) of the principle in Ladd –v- Marshall cannot be made out in this case, it is one where, in the interests of the overriding objective, a more relaxed approach should be adopted to the admission of the new evidence, not least because, as Mr Fullerton submits, it is clear that Mr Moore deliberately misled the court. While superficially that is an attractive argument, it is not in my view one which should prevail. I consider that proper application of the overriding objective in this case requires the court to concentrate upon the justice of the position as between the claimant and the defendants (in particular Tiger), and not between the defendants inter se. On that basis it seems to me that considerations of justice and finality point entirely in one direction. This is a case in which the claimant has done nothing but seek fairly and properly to recover payment of a loan in respect of which a security was offered by the holder of 50% of the share capital of the company providing the security, in the presence and with the co-operation of the solicitor to that company who drew up the charge which was signed and handed over in his presence. It seems to me that, in these circumstances, the burden of proof that the loan was made to Mr Moore personally and that the charge was invalid effectively rested upon Tiger and depended entirely upon facts within its knowledge or ascertainable by it. Insofar as any suggestion of suppression or fraud arises as a result of the evidence now sought to be adduced, it is not that of the claimant but of Tiger’s co-defendant and 50% shareholder Mr Moore, each defendant seeking to cast liability on the other in an effort to avoid repayment of the claimant.

It may be that had Tiger, once sued, taken third party proceedings against Mr Moore in order to protect its position then justice could have been served by preserving the claimant’s judgment whilst setting aside any third party judgment in favour of Mr Moore on the basis of the new evidence. By this means the time and money of the claimant would not have been wasted and the eventual loss would be borne by the appropriate defendant. However, that was not a course which Tiger ever saw fit to take. At trial, it simply elected to stand firm as against the claimant upon the plea that Tiger had no liability for the loan or charge, and the strength of evidence which it wrongly deemed sufficient to meet the claimant’s case, which case was supported by the version of events advanced by Mr Moore in his witness statement. Tiger took a calculated risk to proceed with the trial without objection or application to adjourn, as a result of which it was held liable to the claimant on the evidence then available to the court.

CONCLUSION

For the reasons given above I would refuse to admit the fresh evidence and I would dismiss the appeal.

Lord Justice Kay: I agree.

Dame Elizabeth Butler-Sloss P. I also agree.

ORDER:

(1) Permission to adduce fresh evidence is refused.

(2) Appeal dismissed.

(3) Appellant to pay Mr Evans’ costs of the appeal to be the subject of a detailed assessment if not agreed.

(4) The costs below to be determined by the trial judge, if not agreed.

(5) Mr Evans be entitled to deduct from the net proceeds of sale being held by Lawson Lewis & Co Solicitors, the judgment sum and statutory interest thereon and, when the same are assessed or agreed, the costs of this appeal, the balance of the net proceeds of sale to be retained by Lawson Lewis & Co pending the assessment of, or agreement on, the costs below or further order.

(Order not part of approved judgment)

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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Evans v Tiger Investments Ltd. & Anor [2002] EWCA Civ 161 (20th February, 2002) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2002/161.html Cite as: [2002] EWCA Civ 161, [2002] 2 BCLC 185

		Royal Courts of Justice Strand, London, WC2A 2LL
		20th February 2002