(1) HOWARD DALY v (2) LYNDA MARILYN DALY [2002] EWCA Civ 1630

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

(Mr Justice Gray)

[2002] EWCA Civ 1630

Case No A2/2002/0567

Venue Royal Courts of Justice, Strand, London WC2, Thursday 24 October 2002

Between

(1) HOWARD DALY

(2) LYNDA MARILYN DALYClaimants/Applicants

NOMAAN SHEIKHDefendant/Respondent

Before

Lord Justice Chadwick

Lord Justice Longmore

Mr I Daniels (instructed by Messrs Stock Fraser Cukier, Edgware, Middlesex) appeared on behalf of the Applicant Claimants.

Mr R Denman (instructed by Messrs Mills Chody, Harrow, Middlesex) appeared on behalf of the Respondent Defendant.

Date 24 October 2002

LORD JUSTICE CHADWICK:

This

[1]is an adjourned application for permission to appeal against an order made on 7 March 2002 by Mr Justice Gray at a hearing of a preliminary issue in proceedings brought by the applicants, Mr Howard Daly and his wife, Mrs Lynda Daly, against Mr Nomaan Sheikh. The adjourned application has been listed for hearing with the appeal to follow if permission is granted. Accordingly, we have heard argument from counsel on behalf of Mr Sheikh as well as argument on behalf of the applicants.

[2]The claim in the proceedings is for damages and repayment of money under a building contract. The defence - or the primary defence - is that the relevant contract was made with a company, Middlesex Design and Build Limited, of which Mr Sheikh is a director. It is said that the claim (if there is a claim) should be made against that company and not against Mr Sheikh personally.

[3]On 13 November 2001 Master Leslie ordered the trial of a preliminary issue in these terms:

"whether or not the contract, the subject matter of the Claim, was entered into between the Claimants or either of them and the Defendant or between the Claimants or either of them and Middlesex Design and Build Limited and/or whether at any stage the Defendant became a party by novation or otherwise to such contract."

As the judge pointed out, the first part of that issue was uncontentious. It was common ground that the contract was originally made between the applicants and the company. The question he had to decide was whether there had been a subsequent agreement to substitute Mr Sheikh for his company as the contracting party. That was a question of fact.

[4]It was common ground also that the original contract was made in writing in a document signed by Mr Daly and by Mr Sheikh on behalf of the company, Middlesex Design and Build Limited. Mr Daly's evidence was that that document was signed by the parties on Thursday 25 May 2000, but that it was not then dated on the signature page - see the answer which he gave to the judge at p.63D of the transcript of his evidence. He told the judge that Mr Sheikh had taken the signed (but undated) contract away with him on that day. Mr Sheikh's evidence was that the contract was signed by both parties on Tuesday 30 May 2000 and that, on that occasion, it was dated with that date by Mr Daly in his own handwriting.

[5]The document which was before the judge bore two dates. At the top of the first page it is dated, in typescript, "26TH MAY 2000". On the fourth page, immediately below what appear to be the signatures of Mr Sheikh and Mr Daly, there is the date "30TH MAY 2000". Mr Daly's evidence, when that was put to him in cross-examination, was that that date (30 May 2000) must have been written in by Mr Sheikh after they had both signed the document - see the transcript of his evidence at p.47A. That answer was not challenged at that stage.

[6]When Mr Sheikh gave evidence he asserted - it seems for the first time - that the date "30TH MAY 2000" had been written in by Mr Daly on 30 May, at the time when (as he was asserting) the document had been signed. When I say "for the first time", I do not intend to suggest that Mr Sheikh had previously put forward a case which was inconsistent with what he was asserting in the course of his oral evidence. But the point that Mr Daly had written the date of 30 May had not previously been made; and that point could not have been in counsel's mind when he accepted, without challenge, the answer which Mr Daly had given to the question at p.47A of the transcript, to which I have just referred.

[7]In those circumstances, Mr Daly was recalled so that the new point could be put to him. He was taken to the relevant page in the trial bundle. The transcript of his evidence (at page 62A) reads:

"Q.You will see on that page there is a date at the bottom of it in handwriting, 30 May. A.Yes. Q.That I suggest is your writing, is it not? A.Definitely I do not write like that. Q.Is it not your writing? A.That is correct."

The significance of that answer was not lost on the judge. He intervened to say this:

"As the point is fairly crucial, I am going to ask, if I may, a few questions of my own."

In the course of that questioning by the judge Mr Daly confirmed the answer that he had just given, explaining that he knew from the writing that it was not his. He pointed out that he did not join his "A"s and "Y"s together and that he did not curl his "3"s like that.

[8]The importance of the date on which the contract was actually signed lay in the fact that it was the Dalys' case that the novation which they alleged had been agreed orally at a meeting at the property which was the subject of the building contract - their home, 6 Ashdale Grove, Stanmore - on Saturday 27 May 2002, at which Mr Daly, Mr Sheikh and a Mr Hamilton, a friend and adviser to Mr Daly, were present. Mr Daly and Mr Hamilton gave evidence, which the judge accepted, that, at that meeting, Mr Sheikh had asked to be paid in cash. They also gave evidence, which the judge did not accept, that, at that meeting, Mr Sheikh had asked that the contract be treated as a contract to be carried out by him personally; and that Mr Daly, after consulting Mr Hamilton, had agreed. That is the basis of the novation alleged. Mr Sheikh denied that conversation. His evidence was that it had been Mr Daly who had made the suggestion that payments be in cash and that there had been no suggestion that he take over personal responsibility for the contract. As he put it:

"I do not do contracts personally."

If the conversation on which the Dalys relied had taken place on 27 May, a Saturday, it would have been remarkable for the parties to have signed and dated a written contract between the Dalys and the company on the following Tuesday, 30 May. The Dalys' case depended upon that contract having been signed before the novation which, as they alleged, had been agreed on 27 May.

[9]The trial ended on Thursday 28 February 2002. The judge reserved his judgment. Over the weekend, between the end of the trial and the delivery of judgment, Mr Daly gave further thought to the document which had been produced to him and which he was said to have signed and dated. In a witness statement signed on 14 March 2002 he said this:

"5.On the Friday after the trial had been heard but before the judgment had been given I was reviewing the bundle of papers and on closer examination of `my signature' on the said contract I realised that it was not actually `my signature'. 6.I telephoned my solicitors on the Saturday morning (before the judgment had been made) and was told that it was too late to do anything about the fact that the signature on the said contract was not mine. 7.After the judgment I went to my solicitors' office to collect the papers and discovered that somehow they had the original copy of the said contract. 8.On examining the original copy I became even more convinced that this was not my signature ..."

[10]Before Mr Daly took any further steps, the judge delivered his judgment on 7 March 2002. It is unfortunate that the judge was not told before delivering judgment that Mr Daly was questioning the authenticity of the signature on the document which was said to be the contract; and particularly unfortunate in the circumstances that in the course of his own evidence (indeed, at the very outset, when being examined in chief) Mr Daly had accepted from his counsel that the signature was his. Mr Daniels (who appeared for Mr and Mrs Daly at the trial, as he does in this court) has accepted, frankly, that he knew by Monday 4 March 2002 that Mr Daly was challenging the authenticity of the signature; but that, in the absence of any evidence to support that challenge other than Mr Daly's own assertion, he took the view that it was inappropriate to raise it with the judge; or even to ask that the judge defer giving judgment until such time as investigations could be made. The result was that the judge never had the opportunity to deal with the point (in whatever manner he might have thought just); but gave judgment on 7 March 2002 on the basis (as he was entitled to believe) that the signature on the document was not in issue.

[11]The judge had to examine in some detail the events which had occurred between 25 and 30 May 2002. At paragraph 35 of his judgment he said this:

"The contract bears the manuscript date of 30 May beneath the parties' signature. If the contract was, as Mr Daly asserts, signed on 25 May, it is puzzling why it should not have been dated there and then and why the date should have been added five days later. I consider that, judged purely by the contemporaneous documents, it is more probable that the contract was signed and dated on 30 May. If that is right, it is impossible that a novation was proposed and agreed earlier, as Mr Daly claims."

[12]That might be thought to have been a conclusive answer to the Dalys' case. But it is pertinent to note that the judge, after a careful consideration of the events that had taken place after the end of May 2000, reached the conclusion that those events were more consistent with Mr Daly's belief that his contract was with the company than with a belief that his contract was with Mr Sheikh personally. It was on that basis that he accepted Mr Sheikh's version of the sequence of events over the period 25 to 30 May. He expressed himself satisfied that Mr Sheikh did not say, or intend, that he should assume personal responsibility for the performance of the contract. He said this, at paragraph 40 of his judgment:

"What I believe happened over the months following the repudiation of the building contract was that on the Claimants' side the lily was gilded. By that I mean that the Claimants converted the original proposal by Mr Sheikh that he should be paid personally in cash into a proposal which Mr Sheikh never made, namely that he be substituted as the contractor. That conclusion is consistent with Mr Sheikh's evidence, Mr Hamilton's original statement and with much of the conduct of Mr Daly after 30 May."

Nevertheless,

the judge went on to say:

"The conclusion is, moreover, buttressed by the evidence of Mr Daly that the written contract with MDB was signed by both himself and Mr Sheikh on the same occasion. I cannot see any reason why both parties should have signed a contract on the same occasion and then waited five days before dating it. That is the reason for my finding that the contract was signed on 30 May. That finding is fatal to the Claimants' case. In the result there must be judgment for the Defendant."

[13]It is clear from the judge's judgment that - whatever view he would have reached in the absence of a finding that the contract was signed and dated 30 May 2000 - the fact that (as he found) the contract between the Dalys and the company was signed and dated on that day was a hurdle which the Dalys could not overcome.

[14]Following the judgment, Mr Daly sought the opinion of a questioned document examiner, Fiona Marsh M.Sc. She was well qualified to give an opinion on a questioned document. She had served for some eight years in the Metropolitan Police Forensic Science Laboratory and had worked as an independent forensic document examiner since she left that laboratory in 1988. She gave her report on 15th March 2002. That is just over a week after the judgment had been delivered. After comparing the questioned signature on the contract which was before

the judge with other known signatures of Mr Daly, she concluded that:

"... assuming the known signatures that I have examined are truly representative of the normal signature of Mr Daly, and there is no reason to suggest otherwise, there is absolutely no evidence whatsoever to suggest that he signed the contract dated 30TH MAY 2000."

She expressed a similar view in relation to the written date "30TH MAY" on that document. She said this:

"Where a valid comparison can be made between the known and the questioned writings I found significant differences in the shape and proportions of some of the number and letters. I also found differences in layout. I have concluded that there is no evidence, whatsoever, to suggest that Mr Daly wrote the date i.e. 30TH MAY on the disputed contract."

[15]That evidence has not been tested. Mr Sheikh has not put in evidence to controvert it; but the occasion for him to do so has not yet arisen. What can be said, however, is that that evidence is - at least prima facie - credible and clear on the question whether or not Mr Daly signed and dated the document that was put before the judge. If the judge had had that evidence before him he might well have reached the conclusion that Mr Daly had not signed and dated the document that was put before the court. If he had reached that conclusion he could not have expressed himself in the terms that he did in paragraphs 35 and 40.

[16]The application for permission to appeal is coupled with an application to adduce the new evidence in Fiona Marsh's report, to which I have just referred.

[17]The power of this Court to receive evidence which was not before the lower court is now conferred by CPR 52.11(2). The significant feature of that rule is that it no longer imposes, in express terms, the hurdle of "special grounds" formerly found in the Rules of the Supreme Court Order 59, rule 10(2). The authority of Ladd v Marshall

[1954] 1 WLR 1489

, a decision on the former rule, is not strictly in point. But this Court has indicated, in at least two decisions since the introduction of the Civil Procedure Rules - Hertfordshire Investments Ltd v Bubb

[2001] 1 WLR 2318

and Hamilton v Al Fayed (unreported) 21 December 2000 - that the principles in Ladd v Marshall must still be considered. In giving judgment in Hamilton v Al Fayed , Lord Phillips MR said this at paragraph 11:

"We consider that under the new, as under the old, procedure special grounds must be shown to justify the introduction of fresh evidence on appeal. In a case such as this, which is governed by the transitional provisions, we do not consider that we are placed in the straitjacket of previous authority when considering whether such special grounds have been demonstrated. That question must be considered in the light of the overriding objective of the new CPR. The old cases will, nonetheless, remain powerful persuasive authority, for they illustrate the attempts of the courts to strike a fair balance between the need for concluded litigation to be determinative of disputes and the desirability that the judicial process should achieve the right result. That task is one which accords with the overriding objective."

The overriding objective, in the light of which this Court must exercise its power under CPR 52.11(2), is, of course, the need to deal with cases justly.

[18]The Ladd v Marshall conditions are well known. In a pre-CPR case, Hamilton v Brodie Brittain Racing Ltd (unreported) CA, 13 December 1995, Butler-Sloss LJ had observed that, in a case of alleged fraud, the first of those conditions should be approached with a greater degree of flexibility. She said this:

"Too strict an adherence to Ladd v Marshall should not inhibit a consideration by the court of the justice of the case."

In that case the defendant had disputed at trial the authenticity of certain invoices, but had adduced no forensic evidence to support his challenge. The trial judge had accepted the invoices as authentic. The defendant subsequently adduced evidence which strongly suggested that the invoices were forgeries. The trial judge refused to order a new trial on the basis that the defendant had failed to show that it could not have obtained the new evidence in time for the trial. The Court of Appeal had allowed an appeal against that decision so as to admit new evidence; and directed a retrial.

[19]The parallel with the present case is not exact; but, in my view, the approach in Hamilton v Brodie Brittain Racing Ltd is instructive. Where the evidence of forgery which it is sought to adduce is credible and cogent, this Court is made aware that there may well have been an attempt by one party to deceive the other and the court; so that a trial which ought to have been a fair trial may well have been rendered an unfair trial by that party's conduct. In those circumstances the requirements of doing justice are likely to point strongly towards admitting that evidence. It would be a reproach to the administration of justice if a party who had set out to deceive the court and the other side were able to say, once his deception had been found out, that, if only the other side had been more astute, the deception would have been discovered earlier. The object of an attempt to deceive is that the deception should not be discovered.

[20]It is important to emphasise that this Court can reach no conclusion whether Mr Sheikh set out to deceive at the trial. All that can be said is that there is credible and cogent evidence which suggests that he may have done so.

[21]It is against that background that I turn to consider whether the second limb of Ladd v Marshall is satisfied. Had the evidence been before the court, is it probable that it would have had a strong influence on the result?

[22]In my view there is no real doubt in the present case that, had the evidence of the document examiner been before the trial judge, there is a strong probability that it would have affected the outcome of the trial. That is not to say that the judge would necessarily have held that there was a novation on 27th May 2000. But it is to say that, if the judge had accepted that evidence, he could not have rejected the Dalys' claim to a novation on the basis that Mr Daly signed a contract with the company some three days later.

[23]A striking feature of this case is that Mr Daly accepted in the course of his evidence in chief that the signature on the document before the judge was his. Should he be allowed to adduce evidence which contradicts the evidence which he has already given? In my view, in the particular circumstances of this case, he should be allowed to do so. In this case the need to examine his signature critically did not arise until Mr Sheikh had given evidence to the effect that he, Mr Daly, had signed and dated the document on 30th May. Before that, the position was that Mr Daly accepted - and had always accepted - that he had signed a contract which was in the form of the document that was put before him. His case was not that he had not signed a contract, but that he had not dated the document. Once it had been made clear that Mr Sheikh's case was that Mr Daly had signed and dated the document on the same occasion, the need to examine the authenticity of the signature arose in an acute form. Mr Daly took prompt steps to do so; and it was not his fault that the point was not raised with the judge before the judge gave his judgment.

[24]In those circumstances, it seems to me that the need to do justice in accordance with the overriding objective does require that this new evidence be admitted under CPR 52.11(2).

[25]If this new evidence is admitted, then there is really no question but that this appeal should be allowed and the matter be remitted for a new trial on all the evidence. A trial judge can then consider whether, in the light of the document examiner's report, the conclusion that no novation was agreed on 27th May 2000 is one that he or she should reach.

[26]In those circumstances, I would grant permission to appeal, admit the new evidence, allow the appeal and make the order that I have indicated.

LORD JUSTICE LONGMORE:

[27]I agree.

[28]Once it is accepted (as it has to be) that the evidence of Miss Fiona Marsh is apparently credible and that, if before the judge, it would probably have had an important influence on the result of the case, the only question remaining is whether that evidence could have been obtained with reasonable diligence at trial.

[29]As to that question, no one in the proceedings had given attention to the significance of the handwriting of the date "30 MAY 2000" on the document until Mr Sheikh said in his oral evidence for the first time - evidence that was given after Mr Daly's own evidence - that the handwriting of that date was Mr Daly's. Mr Daly had to be recalled to deal with that point, and he said that it was not his. It is not surprising that at that time Mr Daly did not focus on the actual signature on a document which, of course, he had, on any view, signed. It was thus natural that no evidence as to his signature was produced to the judge. In my view, therefore, there was no absence of reasonable diligence in failing to put the evidence of the forgery of Mr Daly's signature before the judge.

[30]I agree, therefore, that permission to appeal should be granted, that the appeal should be allowed and that a new trial be had. Order permission to appeal granted, new evidence admitted, appeal allowed and matter remitted for rehearing; costs here and below reserved to trial judge on rehearing; paragraph 2 of judge's order of 7 March 2002 set aside, with liberty to respondent to apply to discharge the freezing order of 13 August 2001.