Charles Terence Estates Ltd v Cornwall Council
| Jurisdiction | England & Wales |
| Judge | Mr Justice Coulson,Mr Justice Cranston |
| Judgment Date | 07 October 2011 |
| Neutral Citation | [2011] EWHC 2542 (QB),[2011] EWHC 1683 (QB) |
| Docket Number | Case No: HQ10X03865,Case No: TLQ/11/0143 |
| Court | Queen's Bench Division |
| Date | 07 October 2011 |
The Honourable Mr Justice Coulson
Case No: HQ10X03865
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Martin Rodger QC (instructed by Charles Russell) for the Claimant
Mr Guy Adams (instructed by Cornwall Council Legal Dept) for the Defendants
Hearing date: 28 th June 2011
The Application
By an application dated 13 th June 2011, the defendant, Cornwall Council ("the Council"), seeks permission to rely on expert valuation evidence at the forthcoming trial on liability, due to start on 11 th July 2011. The valuation report, which deals with the open market rent for 24 individual properties and runs to 190 pages, was provided to the claimant yesterday, 27 th June. The claimant objects to the application on the basis that it is late, unjustified and goes to an issue of (at most) peripheral relevance. Both parties are plain that they wish the trial date, which is less than two weeks away, to be maintained.
The Issues in this Case
The claimant is claiming unpaid rent pursuant to a series of agreements between them and two district councils for whom the Council is now legally responsible. It is the claimant's case that:
a) The Council could not find any private landlord to provide accommodation for the homeless persons which the Council were obliged to house;
b) The Council therefore sought out the claimant and agreed a scheme whereby the Council charged each of those tenants £175 per week for a bedroom in accommodation provided by the claimant. Of that amount, the Council paid £120 to the claimant for each bedroom provided;
c) Houses were bought by the claimant and adapted for this purpose. The Council has not paid the rent as agreed, and in many cases has not paid any rent at all. Despite this, the Council's tenants remain in occupation of the claimant's properties.
In their defence, the Council put forward three separate reasons why the agreements into which they entered are not enforceable. Although that pleading is the subject of a separate application to amend, which is not completely agreed, these three elements also remain at the forefront of the Council's case in the new version.
The first reason is the suggestion that the agreements were entered into for an improper purpose. This takes up paragraphs 5–18 of the defence. The improper purpose is said to be "in order to implement a proposal made by [the claimant] which was contrived to take advantage of the housing benefit scheme". After setting out the detail of this alleged contrived scheme at paragraphs 6–14, the pleading then contains these important paragraphs:
"15 The effect of such proposal was to contrive a scheme whereby the liability of the person liable to make payments in respect of the property was not entered into on a commercial basis and/or was created to take advantage of the housing benefit scheme.
16 Though [the claimant] indicated that it would use some of the profits generated by such scheme in purchasing further properties, at no time did it ever enter into any agreement which obliged it to do so.
17 A summary of the purported leases granted by [the claimant] are set out in schedule 1 to the defence and counterclaim."
At paragraph 18 of the defence, after the allegations of improper purpose, there is this paragraph:
"In respect of the majority of the leases, no bona fide attempt was made to negotiate a commercial rent for the properties, rather the rent was calculated by multiplying the weekly sum of £120 by the number of proposed occupants, which rent greatly exceeded the true rental value of the properties. This was to the advantage of [the claimant] by improperly taking advantage of the Housing Benefit Scheme." (My emphasis)
The second reason why the Council say that the agreements were invalid or unenforceable is the suggestion that Penwith District Council had no authority to enter into the leases. That argument is set out at paragraphs 9–21 of the defence. There is nothing in that part of the defence which raises any question of rent or the true rental value of the properties.
The third and final reason why the agreements are said to be unenforceable is on the basis of mistake. That argument is set out at paragraphs 22–24 of the defence. It is alleged that there were at least two mistakes, one of fact and one of law. Again, neither of these allegations of mistake raises anything in connection with the rent or the true rental value of the properties.
The claimants deny all three grounds of the defence. The point that they have repeatedly made, both in their pleaded reply and in their submissions today, is that the negotiations for these agreements took place against the background that the claimant was the only organisation prepared to negotiate with the Council about providing accommodation for these particular tenants. There was therefore no open market; indeed they say that, beyond that which they themselves were prepared to negotiate and agree, there was no market at all.
Relevant Principles
The late application to adduce expert evidence falls to be considered by reference to CPR Part 35 and the overriding objective.Rule 35.1 provides that "expert evidence shall be restricted to that which is reasonably required to resolve the proceedings".
As to the interplay between the overriding objective and interlocutory applications made late and close to an imminent trial, there has recently been important guidance from the Court of Appeal in Claire Swain-Mason and Others v Mills and Reeve (a firm)[2011] EWCA Civ 14. In that case, Lloyd LJ noted two different strands of authority on this topic. One, epitomised by the decision of the Court of Appeal in ( Cobbold v Greenwich LBC August 1999, unreported, but regularly referred to in the commentary in the White Book), took a relatively relaxed view of such late applications, in that case a late application to amend. It was said by Peter Gibson LJ that:
"Amendments in general ought to be allowed so that the real disputes between the parties can be adjudicated upon, provided any prejudice to the other party caused by the amendment can be compensated for in costs and the public interest in the administration of justice is not significantly harmed."
The other line of authority, which might be said to have begun in the case of Worldwide Corporation v GPT Limited[1998] EWCA Civ 1894, took a more rigorous line. In that case Waller LJ observed:
"In the modern era it is more readily recognised that, in truth, the payment of the costs of an adjournment may well not adequately compensate someone who is desirous of being rid of a piece of litigation which has been hanging over his head for some time and may not adequately compensate him for being totally (and we are afraid there are no better words for it) 'mucked about' at the last moment. Furthermore, the courts are now much more conscious that in assessing the justice of a particular case, the disruption caused to other litigants by last minute adjournments and last minute applications have also to be brought into the scales."
This latter approach is, so it seems to me, in accordance with both the CPR generally and the overriding objective in particular. It is also the approach adopted by Lloyd LJ in Swain-Mason when, having set out other parts of Waller LJ's judgment in Worldwide Corporation, he said at paragraph 72:
"As the court said, it is always a question of striking a balance. I would not accept that the court in that case sought to lay down an inflexible rule that a very late amendment to plead a new case, not resulting from some late disclosure or new evidence, can only be justified on the basis that the existing case cannot succeed and the new case is the only arguable way of putting forward the claim. That would be too dogmatic an approach to a question which is always one of balancing the relevant factors. However, I do accept that the court is, and should be, less ready to allow a very late amendment than it used to be in former times, and that a heavy onus lies on a party seeking to make a very late amendment to justify it, as regards his own position, that of the other parties to the litigation, and that of other litigants in other cases before the court."
It seems to me that there is no reason in principle why these authorities, and that passage in particular, although expressly dealing with late amendments, are not equally applicable to any applications made late, such as this one to serve and rely on expert evidence less than two weeks before trial.
In my view, having regard to the cases, the following matters are of particular relevance to any application, whether to amend or rely on late evidence, made close to the trial date:
a) How important is the subject matter of the application, in the context of the case as a whole?
b) What is the justification, if any, for the delay?
c) What would be the consequences if the application were allowed?
d) What would be the consequences if the application were refused?
I set out below my answers to those four questions in this case.
Significance of the Valuation Evidence
In my judgment, Mr Rodger is right to submit that any expert evidence relating to the open market rent (which is the thrust of the report prepared by Mr Humphries of King Sturge, now trading as Jones Lang LaSalle) is, at best, peripheral to the issues in this case. As I have demonstrated in paragraphs 6 and 7 above, issues of rent are wholly irrelevant to two of the three ways in which the Council puts its case as to the non-enforceability of the agreements. And although rent is raised, albeit faintly, in relation to the improper purpose allegation, it comes right at the end of the relevant...
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