The Nottinghamshire and City of Nottingham Fire Authority v Gladman Commercial Properties (Defendant & Part 20 Claimant) Nottingham City Council (Part 20 Defendant)
| Jurisdiction | England & Wales |
| Judge | Peter Smith J |
| Judgment Date | 20 April 2011 |
| Neutral Citation | [2011] EWHC 1918 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC09C01661 |
| Date | 20 April 2011 |
[2011] EWHC 1918 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Peter Smith
Case No: HC09C01661
and
Mr J Seitler QC (instructed by Browne Jacobson LLP) for the Claimant
Mr W Horne & Mr A Gill (instructed by Knights Solicitors LLP) for the Defendant & Part 20 Claimant
Mr B Denyer-Green (instructed by Nottingham City Council in-house lawyers) for the Part 20 Defendant
Hearing dates: 8 – 11 March, 14 – 18 March and 11 April 2011
INTRODUCTION
This judgment arises out of a ruling I made during the course of this trial to permit the Part 20 Defendant (Nottingham City Council) ("NCC") and the Claimant The Nottinghamshire and City of Nottingham Fire Authority ("the Fire Authority") to rely upon the evidence in particular of Adrian Jones and Tim Render. I granted the Fire Authority and NCC permission to rely upon that evidence. I indicated that I would give reasons in a judgment subsequently handed down. This decision regrettably necessitated a further adjournment of this trial part heard until May. However in order for justice to be done that was necessary as I shall set out in this judgment.
BACKGROUND TO THE LITIGATION
In order to understand the decision it is important to set out the claim briefly. The Fire Authority and NCC seek specific performance of 2 sale agreements dated 19th September 2007 whereby the Fire Authority agreed to sell Dunkirk Fire Station ("the Fire Station") to the First Defendant Gladman Commercial Properties Ltd ("Gladman") for £4,200,000. Under a separate agreement on different terms NCC agreed to sell the adjoining land for £1,800,000.
The first agreement was subject to the Standard Commercial Property Conditions First Edition. Gladman failed to complete, a completion notice was served on it on 29th January 2009 and completion has not occurred. The Fire Authority therefore by this action seeks specific performance of that agreement.
Gladman deny that they are liable to complete and seek recision. The justification for recision is an allegation that both the Fire Authority and NCC by the selling agents made a fraudulent misrepresentation set out in the sales particulars dated 7th August 2006 where it was stated "the most appropriate use for this site would be the provision of additional key worker/student accommodation….The Fire Station site alone would accommodate approximately 600 bedrooms".
It is accepted that there were no grounds for stating that the Fire Station site alone would accommodate 600 bedrooms.
Gladman defend these proceedings by asserting that that statement was made fraudulently. They base their claim on internal documentation which they say shows that at the time of that representation it was impossible to hold that opinion honestly.
Under the first agreement the standard conditions of sale do not exclude liability for fraud that was the result of the decision of Dillon J (as he then was) in Walker v Boyle [1982] 1 All ER 634. In the second agreement the conditions are different but NCC acknowledge that the clause in their contract in order to be valid and effective has to satisfy the reasonableness test set out in section 3 of the Misrepresentation Act 1967. It had failed to adduce any evidence justifying the reasonableness and that was acknowledged by it at the start of the trial by Mr Denyer-Green who appears for them.
The trial has already run for 10 days. The trial was originally estimated for 10 days and at the end of the 10 days the trial had to be adjourned until 11th April 2011 with an estimate of a further 5 days. Between those dates Gladman issued an application against NCC to amend its Part 20 Claim to include a claim for negligent or non negligent misrepresentation in addition to the fraudulent one. That was opposed by NCC.
I directed that if such an application was to be made it should be heard first on 11th April 2011 when the trial resumed. The week before the resumed date for the trial Gladman withdrew their application. There are costs implications arising out of that.
FURTHER EVIDENCE
By 11th April 2011 the Fire Authority and NCC had called all of their respective evidence. The only evidence to be heard week commencing 11th April 2011 was that of Gladman's. Its evidence addresses in effect its reliance upon the alleged misrepresentation. Its evidence cannot of course be of significance as to whether or not the representations were made and whether they were made fraudulently. Their evidence will extend to the question of whether they relied upon any such misrepresentations.
The burden of proving fraudulent misrepresentation is on the alleger i.e. Gladman. During the course of the trial the agents were subject to extensive cross examination by Mr Horne who represents Gladman along with Mr Gill. Significant parts of that cross examination centred on meetings that took place between the 2 agents (a Mr Hargreaves and Mr Bishop) and NCC's planning officials a Mr Percival, a Mrs Dudley and most significantly a Mr Adrian Jones. At the time of those meetings Mr Jones was NCC's Director of Planning and Transport. It is said on behalf of NCC (and adopted by the Fire Authority for whom the agents were acting as well) that statements made by Mr Jones at a meeting on 1st August 2005 and a later letter dated 18th May 2006 referring to a conversation that Mr Hargreaves had with Mr Percival and Mr Jones show that the statement made in the sales particulars was in the light of Mr Jones' statement on those occasions a belief which was clearly honestly made.
Surprisingly in my view NCC did not originally include Mr Jones as one of their witnesses. I say surprising because there were (for example) at least 2 notes of the vital meeting of 1st August 2005 and those notes were different. Mr Hargreaves' note referred to Mr Jones speaking "speaking off the record".
It is undoubtedly the case that no sufficient reason had been given for Mr Jones not being a witness. Given the importance of his evidence his continued absence from the trial would undoubtedly have led to a submission by Gladman that the reason he was not called (absent a proper explanation and there was none) is that he would not support NCC's case see for example Lennox Lewis v Eliades (No. 4) [2005] EWHC 488; Court of Appeal [2005] EWCA Civ 1627.
It ought to have been obvious to those representing NCC from an early start of the cross examination in the trial that Mr Jones' evidence was going to be vital and his unexplained absence would be the subject matter of criticism by Gladman. In my view that ought to have been blindingly obvious before the trial. I cannot see realistically how NCC were going to run this case based on an honest belief created by Mr Jones without calling him as a witness.
I am therefore unconvinced with the reasons given by NCC as to why he was not initially called and their change of stance as set out in the second witness statement of Richard Murphy dated 8th April 2011.
RELEVANT FACTORS
By the time a case comes to trial in an ideal world it is hoped that all the material necessary to hear and adjudicate on the dispute is complete and put forward in an ordered way for the Judge to be able to consider it. However trials are often untidy affairs. Rightly or wrongly lawyers involved in litigation sometimes miss or fail to spot the significance of particular issues and this only becomes alive either shortly before the trial or during the trial when everyone's minds are concentrated on the issues. A trial necessarily focuses parties on the issues. By the trial or during the trial matters which appeared to be relevant before often fall away and issues are crystallised. Equally new unforeseen or not sufficiently foreseen issues arise. This is the category into which I would put Mr Jones' evidence. As I have said for my part I would have thought he ought to have been always considered as a vital witness.
However the most important duty of a trial Judge is to enable "that all parties to a trial have the fullest opportunity to present their cases provided they are presented in a way which is not unfair to the other side". ( Mason & Ors v Mills & Reeves (A Firm) [2010] EWHC 3198 at paragraph 38. It is necessary to weigh all the facts in making a decision as to whether to exercise a discretion to allow this late evidence to be produced.
The case for NCC is straightforward. It accepts the evidence is late but puts forward (inadequate) reasons for the decision not to call Mr Jones beforehand. Nevertheless it submits that if Mr Jones' evidence is not allowed into trial it might suffer a serious injustice. This is particularly important when NCC (and the Fire Authority public authorities) face allegations of fraud. In addition of course it is alleged that the frauds were made by 2 professionals in carrying out their business. Equally various officers are said to be implicated in the fraud. A finding of fraud therefore will have very serious consequences. It goes without saying in my view that it is essential that they be given the fullest opportunity properly and fairly to present their case to challenge such a serious allegation.
Gladman's attitude is as follows. First the application to adduce the evidence is made late. The trial has already run for 10 days and all of the Fire Authority and NCC evidence has been led. I should say that that is slightly artificial because it was agreed that NCC which is the Third Party Defendant led its evidence before that of Gladman. This was considered sensible so that all of the allegations of fraud could be put against...
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