Cindy Royce Creations Inc. and Another v Murray Arnold Campbell
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE STOCKER,LORD JUSTICE FARQUHARSON |
| Judgment Date | 03 March 1992 |
| Judgment citation (vLex) | [1992] EWCA Civ J0303-2 |
| Docket Number | 92/0200 |
| Court | Court of Appeal (Civil Division) |
| Date | 03 March 1992 |
[1992] EWCA Civ J0303-2
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION (COMMERCIAL COURT
(MR. JUSTICE WALLER)
Royal Courts of Justice
The Master of The Rolls
(Lord Donaldson)
Lord Justice Stocker
Lord Justice Farquharson
92/0200
MR. ANDREW LONGMORE Q.C. and MR. ANDREW ONSLOW (instructed by Messrs. D. J. Freeman) appeared for the Appellants.
MR. JUSTIN FENWICK (instructed by Messrs. Fishburn Boxer) appeared for the Respondent.
The court has been concerned today with two separate but related matters: first, an application for leave to appeal against the refusal of an application for leave to discontinue an action on the 31st or the 30th day of the hearing; secondly, an appeal against the award of costs on an indemnity basis when, on the following day, the plaintiffs, having been refused leave to discontinue, decided not to continue with the action, but instead to abandon their claim. Both decisions were by Mr. Justice Waller and both were in the context of insurance claims.
In relation to the second point it has to be said that leave to appeal was sought from the learned judge but, owing to the peculiar characteristics of section 18 (1) (f) of the Supreme Court Act, there is no possibility of reapplying to this court for leave to appeal as is the normal position. On the other hand, although anyone reading the paragraph might think it was an absolute bar to such an appeal, on the cases and in particular Scherer v. Counting Instruments Ltd. [1986] 1 W. L. R. 615, if the would-be appellant can establish that the judge failed to exercise his discretion at all or failed to exercise that discretion judicially, then an appeal as of right is available to him.
I take the facts from the skeleton argument most helpfully prepared by Mr. Onslow for the plaintiffs, beginning with his statement of facts at paragraph 2:
"2. The Plaintiffs are New York companies trading in the manufacture and sale of jewellery. Their premises are on the 5th floor at 501 Madison Avenue, New York. In 1989 (as now) the premises contained a factory and a vault for storing jewellery. Within the vault were a number of safes. The premises were (as now) protected by an alarm system designed to record the entry and presence of intruders by registering an alarm at a central station of industries by the alarm company.
3. The Plaintiffs' stock had, for many years, been insured at Lloyd's. From July 1989 the Plaintiffs were insured with the Defendants under a primary and an excess policy providing cover up to $5 million less a $25,000 deductible.
4. On the evening of Friday 18th August 1989 there was a burglary at the Plaintiffs' premises. It was the Plaintiffs' case that stock to a total value in excess of $7 million was stolen. The bulk of this stock had been stored in a safe within the vault. Following the burglary, the vault and safe were found with their locks cut out by use of oxy-acetylene equipment. The alarm system had not recorded any unusual activity at the premises until (probably) the alarm control panels within the premises were removed on the departure of the thieves.
5. The circumstances of the burglary and of the Plaintiffs' loss were investigated by the police and by loss adjusters acting for the Defendants. On submission of the Plaintiffs' proof of loss, the Defendants refused to pay. On the 29th January 1990, the Plaintiffs issued proceedings against the Defendants claiming $4.75 million.
6. By the beginning of the trial, on 22nd April 1990, following amendments made by Underwriters, their defences to the Plaintiffs' claim were as follows (in summary):
(a) that a principal or employee of the Plaintiffs had been dishonestly involved in the burglary, entitling the Defendants to refuse to make payment on the grounds that the loss fell within an exception to the policies;
(b) specifically, that Mr. Scheiner, a principal of both Plaintiffs, had been fraudulently involved in the burglary;
(c) that the Plaintiffs had fraudulently inflated the amount of their claim;
(d) that the Plaintiffs had committed a breach of condition in keeping inadequate records of stock;
(e) that there had been a variety of breaches of warranty, misrepresentations and non-disclosures entitling the Defendants to avoid the policies ab initio.
By the time that the Plaintiffs abandoned the action, defence (e) had been narrowed to allegations relating to non-disclosure of a series of false alarms in the months before the burglary.
7. Shortly before the start of the trial, the parties agreed that the evidence should be divided into three stages:
(1) evidence relating to the physical circumstances of the burglary;
(2) evidence relating to the quantum of loss and the state of the Plaintiffs' books and records;
(3) evidence relating to issues of misrepresentation and non-disclosure.
It was agreed that final submissions and judgment should not take place until all the evidence in the action had been given.
8. The trial began on 22nd April 1991. It continued for 21 hearing days and then adjourned until September. Between May and September written submissions in relation to Part 1 of the trial were exchanged and put before the Judge, the Judge visited New York and viewed the Plaintiffs' premises and the vault and safe doors, and metallurgical evidence was obtained in order to complete the evidence in relation to Part 1.
9. The trial resumed on 16th September 1991. It continued (haltingly) until 3rd October 1991 in the manner described by the Judge at pages 3C to 4E of the judgment on the application for leave to discontinue."
I do not think for present purposes one need refer to that.
"10. On the 2nd October 1991 the Plaintiffs, who did not wish to continue with the action, applied for leave to discontinue the action on terms that they would undertake not to bring fresh proceedings against the Defendants and that they should pay the Defendants' costs of the action. Leave to discontinue was refused by the Judge.
11. On the 3rd October 1991 the Plaintiffs submitted to judgment. Having heard argument, the Judge awarded the Defendants their costs on an indemnity basis (with the exception of certain costs arising from the Defendants' abandonment of certain defences, which costs were awarded to Plaintiffs on a standard basis."
What is omitted from this statement of facts, and I make no complaint about that, is that the plaintiffs' counsel on instructions accused three of the defendants' witnesses of what I think it is common ground can fairly be described as a conspiracy to defraud—that is to say a conspiracy by underwriters' servants and agents to defraud an innocent assured. This is dealt with by the learned judge in two different places. At page 333H of his judgment on discontinuance he said this:
"I have come to the conclusion that the defendants are entitled to have this application dismissed. My reason for that is two-fold. First of all it is right that the defendants could not resist to the plaintiff accepting dismissal on the claim and a judgment if that is the way the plaintiff wanted the matter to be, but the fact of the matter is at the moment these are not alternatives which the plaintiffs are offering. What the plaintiffs are offering is the alternative of the discontinuance or continuance. In my judgment the defendants are entitled to opt when they are offered those two alternatives for continuance. That is because, as I see it, very serious allegations have been made during the currency of this trial against their witnesses, and if those are the alternatives which are being offered then it seems to me they are entitled to have the case decided rather than allow the case simply to be discontinued."
He also adverted to the same matter at page 371D in the judgment on costs when he said:
"I should stress that at one stage during his submission Mr. Hallgarten made submissions about witnesses for the defendants. I mentioned yesterday that very serious allegations were made against Mr. Alizade, Mr. Coyne and, I should have mentioned yesterday, Detective McNicholas. I make it absolutely clear that I am in no way making my order in relation to indemnity costs because of a submission made by Mr. Hallgarten today or because allegations of that kind were made. But I do not think that I would be being fair to those witnesses, having regard to the observations made, if I did not say that as far as the case had gone—and I have not heard all submissions—it seemed to me that those witnesses were witnesses of truth. I do not think it is right, the submission having been made in open court as it was, that I should not express that view. It can only be a preliminary view but it seemed right to make it."
This is an application for leave to appeal with, of course, an appeal to follow if we grant leave. I have already indicated the first of the learned judge's reasons for refusing to allow a discontinuance. The second reason is expressed on page 334, where he said this:
"The second reason is that it does not seem to me that there is a distinction between a plaintiff in a pre-trial position and a plaintiff who is, as in this case, 30 days into the trial. It is certainly true that in one sense the matter is taken out of the plaintiffs' hands by the rules of court once 15 days have gone by for delivery of the defence, so prima facie it might be said that one should be looking at the plaintiffs' position from that date right through until just before the Judge delivers judgment at the end of the trial, but in my judgment...
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