Daly & Anor v Sheikh [2004] EWCA Civ 119

Case No A2/2003/0997 & A[2004] EWCA Civ 119
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN’S BENCH DIVISION
Mr Justice Pitchers
Venue Royal Courts of JusticeDate Friday 13 th February 2004
Strand,
London, WC2A 2LL
Before
LORD JUSTICE WARDLORD JUSTICE MUMMERYLORD JUSTICE RIX
Between
HOWARD DALYClaimants/MARILYN DALYRespondentsNOMAAN SHEIKHDefendant/Appellant
(Transcript of the Handed Down Judgment ofSmith Bernal Wordwave Limited, 190 Fleet StreetLondon EC4A 2AGTel No: 020 7421 4040, Fax No: 020 7831 8838Official Shorthand Writers to the Court)
Mr Robert Denman (instructed by Messrs Richard Rooney & Co) for AppellantMr Iain Daniels (instructed by Messrs Stock Fraser Cukier) for Respondent
Judgment
[1]This appeal seeks, with the aid of new evidence for whose admission leave is sought, a second retrial of a preliminary issue. This has therefore proved to be an unfortunate piece of litigation for both parties, and perhaps more unfortunate than was necessary. Although there is the obvious danger of hindsight, it might be as well to see if there are any lessons to be learned from it.[2]Mr and Mrs Howard Daly, the claimants, bought a home at 6 Ashdale Grove, Stanmore, in January 2000. They wanted to build a substantial extension, for which they obtained planning permission. That permission alerted Mr Nomaan Sheikh, the defendant, who was the sole director of Middlesex Design and Build Limited (“MDB”), to their need for a builder, and so he wrote to them soliciting the work. He quoted a price of £125,000 which was satisfactory to Mr Daly, and MDB and Mr Daly (on behalf of himself and his wife) entered into a contract, which Mr Daly signed. There is uncertainty whether Mr Daly signed a slightly earlier version of the contract, on a form dated 19 May 2000, or whether he signed a later version of the contract, in identical terms save for incorporating a reference to agreed drawings, on a form dated 26 May 2000, but it is common ground that he signed a contract with MDB. The contract provided for a start date of 30 May 2000 and for 16 stage payments, of which the first, in the sum of £15,000, was to be paid on commencement, and the second, in the sum of £10,000, was to be paid on “demolition/excavations/preparation work for piling”. The work started on either 30 May or one or two days later. In the event, the first two instalments were paid together, on 9 June 2000, and Mr Sheikh signed an informal receipt in Mr Daly’s cheque book by reference to that date.[3]That payment of £25,000, as well as other stage payments which Mr Daly made thereafter, were in cash. It is Mr Daly’s case that very shortly after the signing of this contract, he would say the very next day, Mr Sheikh rang up to ask if he rather than MDB could be paid in cash, on the basis that he wished to perform the contract in his own name rather than for his company. Mr Daly was somewhat non-plussed at this change in stance and agreed to meet Mr Sheikh on the next day to discuss it. Mr Daly brought to that meeting an old friend of his, a Mr Hamilton, whom he trusted as an experienced property developer to give him good advice. Mr Daly says that at that meeting Mr Sheikh’s request was discussed and agreed. The novation was not, however, reduced to writing, and, as will appear below, the contractor continued to be referred to as MDB in certain contexts.[4]Over the course of the next few months Mr Daly made further stage payments, in cash, for which Mr Sheikh also signed in Mr Daly’s cheque-book. In all Mr Daly paid Mr Sheikh £70,000. However, the quality and extent of the work performed at the Dalys’ home is in dispute. Matters came to a head in September 2000, when the local authority’s senior building surveyor wrote to Mr Daly to express his concern at the state of the works and Mr Sheikh responded by threatening to walk off the site unless he was immediately paid a further sum of £13,496 for what he claimed were additional works. Mr Daly did not pay, and Mr Sheikh carried out his threat. Shortly afterwards there was a partial collapse of the work at the site, which led to an insurance claim on MDB’s insurance policy. It is possible that MDB may have been paid about £1,600 on the basis of this claim, but if so the Dalys received nothing. Mr Daly claimed that the cost of rectifying the collapse, which he put in the hands of other contractors, was nearly £20,000. Completion of the contracted extension cost still more, and the Dalys were kept out of their new home for a substantial period.[5]In the event the Dalys commenced these proceedings to recover their losses, which they quantify at £65,250 plus damages for loss of the amenity of their home. They had difficulty in tracking Mr Sheikh down, and it was only a chance sighting in the street which enabled Mr Daly to find out where he lived and to establish that he had a valuable asset in his house. These proceedings commenced on 26 July 2001, on which day the Dalys also obtained a freezing order against him. The Dalys’ claim was based on the alleged oral novation of the contract with MDB into Mr Sheikh’s own name. It is fair to say that, subject to the disputed meeting on which Mr Daly relies for proving the novation, that was the first, clear, public reliance by Mr Daly on that novation.[6]Mr Sheikh entered a defence which was limited to denying any contract with him, as distinct from MDB, and otherwise raised no alternative defence, although it did say that “Money is actually owed by the Claimants to the Limited Company”. Mr Sheikh also made an affidavit, dated 3 August 2000, for the purpose of seeking to discharge the freezing order. In that affidavit he deposed that he had never asked Mr Daly for cash, let alone suggested that he wanted to perform the contract himself. On the contrary Mr Daly had insisted on paying in cash. Mr Sheikh annexed to that affidavit a copy of a signed contract which he relied on as the contract between MDB and Mr Daly. The freezing order was nevertheless confirmed and extended on 13 August 2000.

The critical issue

[7]Thus a critical issue had emerged: with whom had the Dalys (ultimately) contracted? With MDB, or with Mr Sheikh? Mr Daly accepted that his original contract had been with MDB. But had it been novated into one with Mr Sheikh at a meeting subsequent to the occasion on which Mr Daly had signed a contract with MDB?[8]At a case management conference on 8 November 2001 a preliminary issue was ordered 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.”
[9]The first alternative had never been in dispute, for in his original affidavit for the purpose of obtaining the freezing order Mr Daly had acknowledged that his original contract had been with MDB. He said:
“I was happy with his quotation and agreed for him to proceed. Mr Sheikh and I then signed the same copy of the contract which Mr Sheikh took away. I retained the unsigned copy…”
[10]The “unsigned copy” which Mr Daly then exhibited, and the only copy he disclosed, was the contract form dated 19 May 2000.

The two contract forms

[11]Although the critical issue was whether the written contract had been novated at a meeting subsequent to its signing, the two contract forms, with the dates that they bear, have played a significant role in this litigation. The unsigned form disclosed by Mr Daly was dated, in print, 19 May 2000. The signed form disclosed by Mr Sheikh was dated 26 May, in print at its top in the place where the earlier form had read 19 May: however, it was also dated “30th May 2000” in manuscript, at the foot of its last page, beneath the two signatures of the contracting parties. There is an issue as to whether that manuscript date of 30 May is correct. I shall therefore refer to the second, signed, contract form as that of 26 May. Both forms were drawn up as contracts between MDB and Mr Daly.

The first trial

[12]There have now been two trials on the preliminary question, and Mr Sheikh’s present appeal seeks a third trial on the basis of new evidence; alternatively he seeks to reverse the result below even without the benefit of his new evidence.[13]The first trial was heard by Gray J over three days in February 2002. At that trial Mr Daly accepted that the signature on the contract of 26 May was his, but he disputed the manuscript date of 30 May as being in his handwriting. The significance of 30 May only became clear in the course of the trial as a result of the combination of two factors. The first was that Mr Daly gave evidence that he had signed the contract on Thursday, 25 May and that the meeting at which payment in cash (and the novation) had been discussed had taken place on Saturday, 27 May. It was common ground that such a meeting at which payment in cash had been discussed had taken place: the dispute was as to the accurate and complete context of the agreement for payment in cash. The precise date of that meeting had not previously been identified in the pleadings and statements that had been exchanged prior to trial, other than of course that it had been Mr Daly’s case and evidence that the meeting had taken place after he had signed the contract, and it had been Mr Sheikh’s case and evidence that the meeting had taken place on 30 May itself at about the same time as the contract had been signed. The second factor was that Mr Sheikh gave evidence that the date of 30 May had been written by Mr Daly himself after both parties had signed the contract on 30 May, that being he said the day when work commenced at 6 Ashdale Grove, and also being the date and occasion of Mr Daly’s insistence that he pay in cash. The importance of that evidence was that in combination with Mr Daly’s evidence that the vital meeting had taken place on 27 May it meant that, if the signatures of the contract were correctly dated, the contract had been made, or at any rate confirmed by such signatures, after (or on Mr Sheikh’s evidence at any rate contemporaneously with) the agreement for payment in cash. That contract, however, was with MDB: it followed that the earlier (or contemporaneous) meeting could not also have led to an agreement that the contractor would be Mr Sheikh personally and not MDB. It was in these circumstances that Mr Daly was recalled to say that the handwriting of the date of 30 May was not his.[14]Gray J was critically influenced by the dating of the 26 May contract form’s signing to 30 May. He did not attempt to resolve the issue whether that date had been put there by Mr Daly or by someone else, presumably Mr Sheikh, but he considered that – “If the contract was, as Mr Daly asserts, signed on 25 May, it is puzzling 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” (at para 35).[15]Gray J returned to this theme in his final paragraph (at para 40):
“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.”
[16]Ultimately, therefore, Gray J took the manuscript date of 30 May at face value and regarded that as fatal to Mr Daly.[17]The balance of Gray J’s reasoning was much more evenly balanced, and so far as basic credibility was concerned he favoured Mr Daly over Mr Sheikh. Thus he rejected Mr Sheikh’s evidence that the payment of cash had been proposed by Mr Daly. He said (at para 37):
“He deserves no sympathy. I am satisfied that, contrary to his evidence, the proposal for payment in cash came from him and that the reason he made it was because he wanted to evade tax. The evidence demonstrated clearly that Mr Sheikh habitually evades paying corporation tax, VAT and personal income tax. His evidence as to the financial aspects of the contract with Mr Daly struck me as evasive and untruthful. But I cannot decide this case on sympathy or by reference to lack of financial probity.”
[18]Despite that ringing condemnation of Mr Sheikh’s honesty and evidence, the judge found that he was telling the truth as to the sequence of events in the disputed period between 25 and 30 May, and as to the absence of any discussion of novation. He was therefore compelled to conclude that “on the claimants’ side the lily was gilded” in that they had converted Mr Sheikh’s original proposal that he should be paid personally in cash into a proposal which Mr Sheikh never made. This was even though he had not otherwise criticised the claimants’ evidence, had expressed great sympathy with the Dalys (“they had been let down appallingly by Mr Sheikh”, another condemnation of Mr Sheikh, at para 37), and had also heard evidence from their friend, Mr Hamilton, which had completely supported the Dalys’ case. Why did he do so? He explained (at para 40):
“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.”
And then he referred to the fatal finding based on the date of 30 May.[19]Two matters there mentioned by the judge need further explanation. Mr Hamilton’s original statement had been dated 1 July 2001, and was in fact the very earliest statement made for the purposes of these proceedings, predating them by over three weeks. It is a brief document of less than five lines, written on his personal stationery:
“I confirm herewith that I was present at a meeting between Mr Howard Daly and Mr Nomaan Sheikh when Mr Sheikh requested that although Mr Daly had signed the written contract he requested Mr Daly pay him personally in cash and not Middlesex Design & Build Ltd but the same terms would apply as the written Contract.”
[20]The judge had already commented (at para 38) that it was “highly significant” that in his initial statement Mr Hamilton had said nothing at that stage to the effect that Mr Sheikh had said that he would run the contract personally.[21]The other matter is that the judge had also looked at the conduct of Mr Daly and Mr Sheikh subsequent to 30 May 2000 respectively to consider whether it was more consistent with the contractor having been Mr Sheikh or his company. As for Mr Daly’s conduct, the judge appears to have been influenced by the fact that in his dealings with both a firm of surveyors which he had instructed after work at the site had stopped (Alexander & Associates) and with Mr Sheikh’s insurance brokers (Mr Stapleton of Flint Insurance) and the loss adjusters instructed by MDB’s insurers (Cunningham Lindsey) Mr Daly had given the impression that his contract was with MDB. However, this evidence as described by the judge was somewhat equivocal. Mr Daly gave the surveyors his unsigned copy of the MDB contract, and he also supplied this to his solicitors who passed it to the loss adjusters as “the relevant contract”. However, this is not altogether surprising since both recipients would have been regarded as interested in the terms of the contract, rather than in the contract party, and the unsigned form was the only document which Mr Daly had which contained the terms of the contract. As for MDB’s insurance, Mr Daly gave evidence that he was concerned, when asked to novate the contract, about the insurance situation and had been assured by Mr Sheikh that the insurance which MDB carried would cover Mr Sheikh as well if he performed the contract. Moreover, Mr Stapleton (of the brokers) accepted that what Mr Daly had told him was that he wanted to claim against MDB’s insurers and not that the contractors were MDB. Ultimately this conduct comes to little more than that the first time Mr Daly publicly asserted that his contract was with Mr Sheikh personally was when he brought claim in July 2001.[22]The judge also made findings about Mr Sheikh’s subsequent conduct, but did not revert to them in his conclusions. In favour of MDB as contractor were a number of invoices totalling some £15,500 rendered to MDB by sub-contractors and suppliers and which can be seen to relate to 6 Ashdale Grove. Even so, the judge referred to these as “relatively few” (at para 26). Moreover, Mr Sheikh was unable to give a proper account of what he had done with the £70,000 in cash that he had received. He did not even claim to identify more than some £7,750 of cash entering MDB’s bank account. There were a number of substantial cash payments from his wife’s account to his personal account which Mr Sheikh “found difficult to explain”. The judge did not say what inference he drew from this evidence, but he might well have concluded that Mr Sheikh, whom he regarded as having lied to the court on the issue of who had requested payment in cash and whom he also referred to as a habitual tax evader, was treating the money as his own to disburse as he chose.

The first appeal and the second trial

[23]A few days after the end of the first trial, pending judgment, Mr Daly was reviewing the documents in the case when he became concerned that the signature on the signed contract was not in his handwriting. He immediately mentioned this to his solicitors and was told that it was too late to do anything about it. Judgment was handed down on 7 March 2002. Following judgment Mr Daly found the original document in his solicitors’ papers and became even more convinced that the signature was not his own. He sought the opinion of an expert, Ms Fiona Marsh who by 15 March had reported that after comparing the signature on the contract with other known signatures of Mr Daly she concluded that “there is absolutely no evidence whatsoever” to suggest that the signature was his. As for the manuscript date of 30 May, she came to the same conclusion that there was no evidence that the handwriting was his.[24]Armed with this additional evidence Mr Daly applied to the court of appeal for permission to adduce this new material and to appeal. The matter was adjourned to the full court (Chadwick and Longmore LJJ) with an appeal to follow if permission were given. On 24 October 2002 this court admitted the new evidence, allowed the appeal and ordered a new trial. Chadwick LJ said:
“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… “23…[Mr Daly’s] 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 same 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.”
[25]The retrial took place in April 2003 before Pitchers J. It is necessary to say something about the material used by the hand-writing experts at the retrial. Ms Marsh had 5 comparators for the contract signature. One was a page of request signatures; one a driving licence signature; one a passport signature; one a cheque signature; and one a signature taken from the formal litigation documents (the signature page of Mr Daly’s witness statement). There was also a sample of Mr Daly’s handwriting for the purposes of comparing the date of 30 May. On 25 March 2003, shortly before trial, Mr Sheikh’s then solicitors (also solicitors at the first trial), Messrs Mills Chody, wrote to Mr Daly’s solicitors as follows:
“We have changed our hand writing expert as our client was not satisfied with Mr Handy of FDS Limited. The main difficulty is that Mr Handy was not happy with the lack of documentation that had been supplied to him. He wanted your client’s signatures within six months either side of the date of signing the contract ie 30th May 2000, and these signatures were not forthcoming. “FDS Limited have confirmed that all the documentation has been sent back to you and we would now request that you now forward them to our new expert Graph-O-Logica Limited today.”
[26]Within a day Mr Fritz Cohen of Graph-O-Logica had produced a new report dated 26 March 2003. He used 11 comparators for the signature: the same five used by Ms Marsh, but also several other signatures taken from the formal litigation papers, as well as two further commercial documents which had been exhibited in the litigation. There was also the example of handwriting for the purpose of comparing the date of 30 May. Mr Cohen found both differences and similarities in the comparisons of the signature and concluded that the preponderances of similarities over differences made it probable to highly probable that the contract signature was genuine. Mr Cohen said he was unable to come to a conclusion about the date because he had insufficient writing for a comparative analysis.[27]At the retrial Pitchers J heard the parties and their witnesses all over again, this time assisted also by the experts, Ms Marsh and Mr Cohen. The judge directed himself that there were five important issues for him to consider, to which I will refer below. He began his discussion, however, with the hand-writing evidence. He concluded that he had no difficulty whatsoever in preferring Ms Marsh to Mr Cohen. His reasons were first that she had had a long and scientific training, and was an experienced document examiner, whereas Mr Cohen was a graphologist; secondly that her method was careful, scientific and evidence based and that she supported her conclusions with clear examples, whereas Mr Cohen, having found a modest number of similarities, brushed away the many clear differences on the basis that the signature was written hastily on an unsteady platform; and thirdly, that the principal differences, which he identified, were clear even to a non-expert observer. He considered that Mr Cohen’s conclusion was completely unsustainable. Having reminded himself that the burden of proof on an allegation of forgery is high, he was satisfied so that he was sure that it was established against Mr Sheikh. What was the consequence of that? The judge said they were twofold: first, Mr Daly had succeeded on a vital factual issue; and secondly, that Mr Sheikh had forged a crucial document and relied on it as genuine. However, that might be a foolish attempt to bolster a true defence, and therefore the evidence in the case had to be looked at as a whole.[28]I can now revert to the judge’s five important issues. First, when did the discussion about payment in cash take place and who initiated the discussion? As to that, the judge found, as had Gray J, that the proposal came from Mr Sheikh, and that his purpose was to evade tax. As for the date of the meeting, the judge did not discuss that separately, other than to say that he believed Mr Daly in his account of the meetings during the vital week and disbelieved Mr Sheikh. He had previously set out Mr Daly’s case to be (as it had been before Gray J) that he had signed the contract on 25 May, been telephoned by Mr Sheikh on 26 May with the proposal for cash payment and personal performance, and had met Mr Sheikh, with Mr Hamilton in attendance, on Saturday, 27 May. The judge also referred to Mr Hamilton’s evidence that the meeting had occurred on “the Saturday” and Mrs Daly’s evidence that she was told by Mr Daly after the meeting that they were now contracting with Mr Sheikh personally. I therefore infer that the judge found that the meeting had taken place on Saturday, 27 May.[29]Secondly, was the “first contract” signed on 25 or 26 May? That again was not addressed directly other than by the judge’s setting out of Mr Daly’s case and the comment that he believed Mr Daly in his account of the meetings and disbelieved the defendant. One possible answer therefore is that he accepted that Mr Daly had signed the contract on 25 May. That raises the question: What contract did Mr Daly sign on 25 May and what became of it? The judge does not say. Since Mr Daly’s evidence had always been, and continued before Pitchers J, that he was given an unsigned copy of the contract that he signed on the occasion of the signing, it would logically follow that that would be the 19 May version: for that was the only version which came forward on the Dalys’disclosure, and it was also the version that Mr Daly had provided to the surveyors and to his solicitors in the period between Mr Sheikh walking off site and the commencement of proceedings. The difficulty with that answer is that Mr Daly also said that he wanted the contract amended to refer to the agreed plans, which is why the 26 May contract form came into being: and that would suggest that Mr Daly would want to sign the 26 May form rather than the 19 May form. If, however, Mr Daly signed the 26 May form, whether on 25 or 26 May – and the former possibility would require the 26 May form to have been misdated one day early – then the question arises why Mr Sheikh would have needed to forge Mr Daly’s signature on that form; and also why Mr Daly did not retain an unsigned copy of the 26 May form in his possession. In any event, the question arises as to what happened to the form signed by Mr Daly: presumably it was suppressed by Mr Sheikh? There are no answers to these questions in the judgment, nor any discussion of them. They have been explored on this second appeal.[30]Thirdly, the judge asked who was present at the meeting on 27 May. Mr Daly and Mr Hamilton said that they met Mr Sheikh (and discussed the cash payment and novation). Mr Sheikh again said, as he had stated in his witness statement for the first trial and as he had presumably told Gray J, that on 27 May he had met Mr Daly and Mr Hamilton not at 6 Ashdale Grove (which is what Mr Daly and Mr Hamilton said) but at another of his building sites, so that Mr Daly and his friend could sample the quality of his work. Mr Daly and Mr Hamilton had put that meeting to an earlier period: Mr Daly said at the first trial that it had been on Saturday 13 May, but then corrected himself to say that it was the following Saturday, 20 May, the day after he had received the contract form of 19 May. Mr Sheikh’s case, on the other hand, remained that the meeting of 27 May was only concerned with the quality of his work, and that it was only at a subsequent meeting with Mr Daly alone, and not in the presence of Mr Hamilton, that Mr Daly had raised the question of cash payments: and that meeting had been on 30 May. The judge did not debate these issues at any length. He briefly found that the critical meeting was on 27 May, and that Mr Hamilton had been present at it. He said (at para 38):
“I do not believe that Mr Hamilton would have completely invented his presence at such a meeting. Equally I do not believe that he would tell deliberate lies to help Mr Daly who was not a particularly close friend. It is true that in the short statement he signed to support the Claimants’ application for a freezing order he does not in terms mention the personal contracting. However, this was a statement prepared for him by Mr Daly who had the distinction very clearly in mind.”
[31]Fifthly, the judge asked whether the contract was signed on 30 May. His conclusion, which followed from everything else, was that it was not. Mr Daly had signed on 25 (or possibly 26) May, the signature and date on the contract form of 26 May had been forged, the contract and its novation had already taken place by 27 May.[32]In considering these conclusions, Pitchers J, like Gray J before him, looked to the parties’ subsequent conduct to test their evidence about the crucial week in May 2000. He found that Mr Daly received no invoices or receipts in MDB’s name; that the only sums which could have been paid into the company’s account from the cash were the minimum to prevent the bank dishonouring the company’s cheques; that there was some, albeit not conclusive evidence that cash was paid into Mr Sheikh’s private account; that expenses booked in the company’s name carried no weight, since Mr Sheikh would in any event want to increase the company’s expenses; and that the contract was not reflected in the company’s records, for there were next to no records at all.[33]On the other hand, he acknowledged that in connection with the insurance claim that followed the collapse at the site Mr Daly regularly referred to MDB as the contracting party, and that Mr Daly conceded that he dealt with the claim as if it were properly made against the company. But that was simply because he thought that such a claim represented the best opportunity of some recovery (and also perhaps because, as Mr Stapleton said, it may have been that the insurance would have covered Mr Sheikh’s personal contract). Even if Mr Daly had been dishonest in this regard, it did not demonstrate that the contract was with MDB. As for the correspondence with the surveyors, they simply assumed from the 19 May contract supplied to them that the contract was with MDB. Pitchers J concluded (at para 46):
“It is undeniable that these various items of correspondence do not show consistency by the Claimants in the way that they have referred to the parties to the contract. I have considered whether they ought to make me change the conclusion that I have come to on the rest of the evidence namely that it provides compelling support for the Claimants’ case that the contract became one with the Defendant personally. I have concluded that the other support remains compelling. I believe Mr Daly in his account of the meetings during the vital week and I disbelieve the Defendant.”

The second appeal – the new evidence

[34]The essential basis of the second appeal is that still further evidence has come to light which reverses the probabilities of the forgery issue. Mr Sheikh submits that he ought to be entitled to adduce the report of a new handwriting expert, that of Mr Michael Ansell dated 6 May 2003, to the effect that Mr Daly’s signature on the contract form dated 30 May 2000 was not a forgery. On behalf of Mr Sheikh, Mr Robert Denman acknowledges that if it were simply that a new expert had been instructed, albeit an expert who, unlike Mr Cohen, had shared the specialist scientific expertise of Ms Marsh, there could be no justification in granting permission to admit a fresh report. Mr Sheikh states that Mr Ansell was chosen “because he has a similar background and training in document analysis to that of the expert which the Judge preferred at the second trial…Fiona Marsh”. What, however, made all the difference was that Mr Ansell’s new report was written on the basis of new examples of Mr Daly’s signatures which had come to light post trial in disclosure which Mr Daly had given (albeit pre trial) in another claim which he had brought against another contractor, Joseph Drain. It so happened that Mr Drain had instructed Mr Sheikh’s former solicitors, Mills Chody, and the relevant documents were with them. This gave Mr Sheikh the opportunity to scrutinise Mr Daly’s disclosure in those proceedings for other signatures.[35]The question immediately arises: Why could not Mr Sheikh or his solicitors have done this for the purposes of the second trial? (Of course, the court’s permission would have been required to search this disclosure in the Drain proceedings for the purpose of these proceedings, but that requirement could if necessary have been overcome – and the absence of the necessary permission did not stop in any event Mr Sheikh’s scrutiny of the documents after judgment in the retrial.) The only evidence before the court in answer to that question is contained in Mr Sheikh’s witness statement dated 29 April 2003, in which he states – “Whilst the product of that disclosure was with my solicitors as solicitors for Mr Drain, and they had noticed at least one document which should have been disclosed in this action, they had not made a thorough examination of those documents for the purposes of this action. However, since the trial before Mr Justice Pitchers, those documents have been looked at again, specifically to see if they contain any signatures.”[36]Thus Mr Daly’s disclosure in the Drain proceedings had been with Mr Sheikh’s solicitors prior to the retrial. Mr Denman, responding to questions from the court, fleshed out by further explanation some of what Mr Sheikh had there written. Thus the document of which it is said that it ought to have been disclosed in the present proceedings was concerned not with signatures – it contained no signature – but with the issue of the identity of the party performing the contract at 6 Ashdale Grove. However, there was simply no evidence about why the search for further examples of Mr Daly’s signature was not undertaken earlier, or made the subject-matter of a timeous request to Mr Daly, who must have had many further examples of his signature on which he could have put his hands. Indeed, Mr Denman did suggest, on instructions, that Mr Daly had been requested for further examples of his signature for the purpose of the second trial: but when the court asked to see where the matter had been dealt with in correspondence, a blank was drawn.[37]Mr Ansell relied on seven new items, of which five were signatures on credit card slips and two were mere initials. There would in all probability have existed still other examples of Mr Daly’s signature in the Drain proceedings, to be found – as in the present proceedings – on formal documents. It is not clear why these were not used as well. Nor is it prima facie obvious why these few further examples should alter the position from that which obtained at the retrial, at which a total of 11 comparators were used.[38]As it happened, the new comparators were first sent by Mrs Sheikh to Ms Marsh. As the expert instructed on behalf of the Dalys she was embarrassed to be approached directly in this way on behalf of Mr Sheikh: but in the end she agreed to give her opinion on the new comparators, which was that they took matters no further. She explained that – “…although some of the differences I had found in my original examination were accounted for by examining these additional signatures I had been shown a number of additional signatures whilst at court [sc those used by Mr Cohen] and these were similar to some of the signatures [Mrs Sheikh] had sent me. I had already acknowledged when giving my evidence that some of the differences I found during my initial examination were accounted for when I examined further known signatures but that a large number of significant differences still existed.”[39]However, Mr Ansell was also instructed by Mr Sheikh, and in his report he concluded that the contract signature was “probably genuine”. Mr Ansell did not consider any of the comparators used at the retrial, with the exception of the request signatures, but only the new material from the disclosure in the Drain proceedings.[40]It is highly significant that there is nothing in Mr Ansell’s report or in Mr Sheikh’s appeal which bears on the issue of whether the manuscript date of 30 May 2000 on the contract form is in Mr Daly’s hand. Thus there is nothing in the new evidence to affect Ms Marsh’s undisputed evidence and Pitchers J’s finding that that date was not written by Mr Daly.[41]The other new evidence for the admission of which Mr Sheikh applies is a report dated 12 May 2003 by Mr David Greetham, an expert in computer forensics. Mr Greetham investigated Mr Sheikh’s computer for the purpose of seeing if he could identify when the contract forms of 19 and 26 May 2000 had been produced. Unfortunately he conducted his investigation in such a way that there can now be no further analysis of the computer’s hard drive. In any event, his conclusion is merely that the contract file was created on 19 May and “last modified” on 26 May. That tells us nothing further of any relevance.

The Ladd v. Marshall tests

[42]The power of this court to receive new evidence is now governed by CPR 52.11(2). No special grounds are needed, however the influence of the three tests propounded in Ladd v. Marshall [1954] 1 WLR 1489 still remains powerful, because they reflect the guidance of a common-sense caution on the question whether a trial result should be permitted to be affected by fresh evidence not previously relied on. As Lord Phillips of Worth Matravers MR said in Hamilton v. Al Fayed (21 December 2000, unreported) at para 11 – “The old cases will, nevertheless, 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.”[43]The first test in Ladd v. Marshall is that the new evidence could not have been obtained with reasonable diligence for use at the trial. Mr Sheikh wholly fails to meet that test. The new signature comparators could have been obtained for the retrial. They were in the possession of Mr Sheikh’s solicitors. The possible relevance of documents in the Drain papers was apparent to the mind of his solicitors, as the example of the document referred to in Mr Sheikh’s new witness statement makes clear. It was obvious on a moment’s thought that those papers could contain examples of Mr Daly’s signature: indeed, two documents from them bearing Mr Daly’s signature were in fact used by Mr Cohen as comparators at the retrial, albeit these had been annexed by Mr Daly himself to his affidavit in these proceedings rather than obtained directly from the disclosure given to Mr Drain.[44]The second test in Ladd v. Marshall is that the new evidence would probably have had an important influence on the result of the case; and the third test is that the new evidence is presumably to be believed. I can take those two tests together. The new material is the further signatures. There is no dispute that in themselves they are examples of Mr Daly’s signature. However, their only relevance is as material for Mr Ansell’s report: by themselves they say nothing. Mr Denman has not taken the court to them to seek to demonstrate that even to the layman’s eye the contract signature is plainly similar and lacking any of the relevant dissimilarities which Pitchers J could see for himself. Nor has he sought to demonstrate that the new material has revealed any particular new features which had not already been the subject of consideration at the retrial. Mr Denman acknowledges that he cannot rely on Mr Ansell’s report in itself as amounting to new evidence. As for the further signatures, however, there is no reason whatsoever to think that if they had been added to the examples considered at the retrial they would have had any influence at all on Pitchers J’s conclusions. They would not have affected Ms Marsh’s opinion, for she had considered other similar signatures at the retrial. And it is impossible to think that they would have assisted Mr Cohen to persuade the judge that his opinion should have been preferred to that of Ms Marsh. In effect, Mr Sheikh is seeking to use fresh examples, very similar to examples already before the court below, to replace Mr Cohen’s expert evidence, which did not satisfy the judge in large part because his expertise did not match that of Ms Marsh, with the evidence of a different expert. This in my judgment is not so much the deployment of newly discovered evidence, but the misuse of an opportunity to instruct a new expert.[45]In any event, the new evidence does not affect the judge’s conclusion that the date of 30 May 2000 was not in Mr Daly’s manuscript. Once that dating of the document, which is otherwise dated 26 May, cannot be tied to Mr Daly, despite Mr Sheikh’s evidence that Mr Daly had written it, the value of the document for concluding that its signing by Mr Daly post-dated the meeting at which cash payment had been discussed has to be seriously discounted. The date of 30 May, which was the nominal starting date for the contract, could have been written on the contract at any time up to its annexure to Mr Sheikh’s affidavit of August 2001.[46]The new forensic computer evidence could similarly have been obtained for the retrial. There is no evidence at all before the court to explain Mr Sheikh’s failure to deploy such evidence at the retrial. It is possible in any event to take judicial notice of the widespread knowledge that computer use can be reconstructed from the hard drive, even after files have been wiped off the computer. Furthermore, Mr Greetham’s report adds nothing to the issues.[47]I would also add to these reasons those which are given below as to the general merits of Mr Sheikh’s appeal. In my judgment those reasons demonstrate that, even if it were to be assumed in Mr Sheikh’s favour that Mr Daly’s signature was genuine, it would be unjust to disturb the judgment below.

Mr Sheikh’s appeal on grounds other than those which rested on the new evidence

[48]I therefore turn to Mr Sheikh’s general appeal from the retrial before Pitchers J on the material which was before the judge. On this basis there is nothing whatsoever to undermine the judge’s finding, based on the experts whom he heard, that neither Mr Daly’s name nor the date of 30 May 2000 on the 26 May contract form are in Mr Daly’s hand. It must follow, as the judge went on to find, that they were put there by Mr Sheikh but falsely relied on by him as having been written by Mr Daly. It also follows that, whatever might be said about the rest of the evidence in the case, the document in question becomes wholly worthless to support in any way Mr Sheikh’s case or to damage Mr Daly’s. That is to put the matter at its very lowest. In fact, of course, the false use of a document which tells lies about itself because it has been forged is extremely damaging to the party who has forged it and seeks to rely on it. However, I will ignore that further consideration and simply regard the document as one which has ceased to assist Mr Sheikh to date the making of the original contract with MDB to 30 May.[49]In that case, what is there in the evidence which should lead this court to overturn the judge’s conclusion that Mr Daly was right to say that he signed the contract with MDB before his discussion with Mr Sheikh about payment in cash? In my judgment there is nothing. Mr Daly and Mr Hamilton both ascribe their meeting with Mr Sheikh to a period after Mr Daly signed the contract. There is no reason for Mr Sheikh to be believed in his evidence that the discussion took place on the same day as signing the contract, a fortiori when he ascribes that day to 30 May on the basis that the contract was signed on that day, for which he is again reliant on the manuscript dating of the 26 May contract form. He also identified 30 May as the day on which the works commenced: that was the plan, but there was evidence that work in fact began a day or so later.[50]Quite apart from the findings of both judges that Mr Sheikh was a dishonest man and an untruthful witness, there is nothing in the detail of his evidence about the discussion of payment in cash which could or should leave this or any court to have any confidence in his evidence. That evidence was that the proposal of payment in cash came from Mr Daly and not from himself. He was not believed on that, but in any event the evidence was plainly false. He sought to bolster that evidence by the sly remark in his affidavit (to discharge the freezing order) that Mr Daly said he had large amounts of cash available and it would be easier for him. However, the evidence was that all payments of cash came quite legitimately out of or through Mr Daly’s bank account. Mr Sheikh was not to be believed as to that part of the conversation either. He also said that the proposal came at a meeting at which Mr Hamilton was not present. He was not believed on that, and it was plainly contradicted not only by Mr Daly but also by Mr Hamilton, a friend but an independent witness who had no reason to be involved save as a witness of truth. The evidence demonstrated that the reason why Mr Hamilton was brought along by Mr Daly was so that he could give advice about Mr Sheikh’s new proposals. In the circumstances Mr Sheikh could not merely have forgotten about Mr Hamilton’s presence and must in my judgment have been lying about that as well.[51]I recognise that Mr Sheikh had a reason other than the ultimate issue in the case to cause him to lie in order to disguise his interest in cash payment (so that it might not be said against him that he had any improper motive so far as his tax responsibilities were concerned). But if he lied about the origin of the proposal and about the absence of Mr Hamilton, I can see no reason for believing him on any other aspect of the meeting – and that brings me directly to the ultimately critical question of whether Mr Sheikh also proposed, in the context of his request for payment in cash, that he would be performing the contract himself rather than through MDB.[52]Unless there is something else in the evidence that fatally undermined the claimants’ case, it would simply make no sense to reject every other aspect of Mr Sheikh’s evidence about the meeting but accept his denial about that; or to accept every other aspect of Mr Daly’s and Mr Hamilton’s evidence in this regard but reject their account about that. It is true that once the works got under way MDB was referred to as the contractor in correspondence involving Mr Daly’s new surveyors, Mr Sheikh’s insurance brokers and the insurers’ loss adjusters. Neither judge below, however, regarded those matters as powerful indicators, even if Gray J understandably thought that they were in line with what he in any event regarded as a “fatal” flaw in Mr Daly’s case. I think however that it was inevitable that the contract form would be proffered as evidence of the works contracted for; the identity of the contractor was not at that time in issue; and although it would have been wrong for Mr Daly to have sought to recover on MDB’s insurance in respect of Mr Sheikh’s liability if he had known that the latter’s liability was not covered, Mr Daly’s evidence was that Mr Sheikh had assured him that he was also personally covered on MDB’s policy and Mr Stapleton, the broker, was inclined to agree with that view of things. In my judgment, therefore, there was nothing in the overall evidence which seriously undermined Mr Daly’s and Mr Hamilton’s case as to what was agreed at the meeting.[53]On the contrary, Mr Sheikh signed for the cash with his personal signature (contrary to Mr Sheikh’s evidence which was that MDB had given receipts for the payments); and the money was treated by Mr Sheikh for him to do with what he wanted. The money for the most part simply disappeared. If Mr Sheikh obtained the benefit of the contract in the form of the cash, it is hard in any event to see how he could disavow personal liability for the burden of the contract. Otherwise he would simply be misappropriating the money from his company and its creditors. It is therefore entirely natural that he should have proposed, or explained, to Mr Daly and Mr Hamilton, in the context of stating that he wished to be paid in cash, that he would be performing the contract himself.[54]In this connection it seems to me highly relevant that Mr Hamilton, the independent witness, supported Mr Daly’s account of the meeting. The judges at both trials commented that Mr Hamilton’s first statement did not mention the factor of Mr Sheikh’s personal performance of the contract and, in the case of Gray J, this was a significant part of the reasoning in his judgment. However, to my mind Mr Hamilton’s first statement (which I have quoted in its entirety at para 19 above) is wholly premised on Mr Sheikh’s personal responsibility: the money was to be paid to Mr Sheikh “personally and not Middlesex Design & Build Ltd” (in other words the cash was not received by Mr Sheikh on behalf of MDB but on his own behalf) and this was contrasted twice with the position under the contract, viz “although Mr Daly had signed the written contract….but the same terms would apply as the written Contract”. I find nothing inconsistent between this very brief statement and Mr Hamilton’s later and fuller witness statement prepared for trial or his evidence in court, when he said that he specifically advised Mr Daly, who was rather hesitant to accept Mr Sheikh’s proposals, that he would be better off having Mr Sheikh as his contract partner, because the latter would have more incentive to make a good job of the contract.[55]In my judgment, therefore, even putting on one side any inferences to be drawn from the finding of forgery, the evidence strongly supported Mr Daly’s case as soon as the fatal contrast between an earlier meeting on 27 May and a later signature on 30 May is undermined. In any event, and even if the signature on the 26 May contract form were to be Mr Daly’s, I would not have placed much stress on the 30 May dating of that form in the face of contrary evidence from witnesses who in other respects appeared to be credible. It is a common experience that the dating on documents can be unreliable, for reasons which are entirely innocent.[56]Indeed it is quite possible that the dating of the meeting itself, which Mr Daly ascribed to Saturday 27 May and Mr Sheikh to 30 May, is inaccurate. At the first trial in February 2002 nearly two years after the events Mr Daly was sure that he had signed the contract on 25 May, had been telephoned by Mr Sheikh with his new proposals on the next day, and had met Mr Sheikh on the day after that, the 27th. However, that was the first time that he had put forward that precise chronology. In his affidavit for the purpose of obtaining the freezing order he did not date the meeting – other than relatively, ie it was after he had signed the contract and before his first payment (which can be dated to 9 June). His claim form similarly contained no precise chronology. In further information which he provided in late 2001 he said that the meeting took place “on or about the week of 26th May 2001 (being the day after the contract between the Claimants and Middlesex Design & Build had been signed by Mr Daly)”. However, his witness statement for trial (dated 15 January 2002) contained no chronology at all (other than a relative one). His wife’s witness statement (of the same date) simply recalled a conversation with her husband following a meeting that he had just held with Mr Sheikh and Mr Hamilton which she dated to “a Saturday afternoon at the end of May or the beginning of June 2000”. Mr Hamilton’s witness statement for trial (dated 14 January 2002) said the meeting was “at the end of May or beginning of June 2000”. I therefore see no very good reason for being stuck on 27 May as a date for the meeting. Even if, contrary to the findings of Pitchers J concerning the handwriting on the contract form of 26 May, that document was indeed signed by Mr Daly and correctly dated, it would be entirely consistent with the rest of the evidence (other than Mr Sheikh’s) that the whole event took place a week later than Mr Daly thought he remembered it, viz signing of the contract on 30 May, followed shortly by the telephone call and then by the meeting on Saturday 4 June. The first payment, it will be remembered, was only made on 9 June. What is important, and what would stick in the mind, is the relative chronology, rather than the precise dating of particular days.[57]In these circumstances I can deal fairly briefly with the grounds of appeal addressed by Mr Denman on behalf of Mr Sheikh. First, he submitted that Mr Sheikh had no reason to propose personal liability: it was counter-intuitive, it would not help him to evade tax, he was not personally covered by the company’s insurance and the contract remained in the name of the company. I do not think this submission has any weight. Of course, once facts are thoroughly investigated, it is never all that easy to evade detection of dishonest conduct. But it is useful to have the space and the flexibility to play the game as the moment may dictate. Until a signed contract had to be produced for the purposes of the litigation, the only person who held a copy of one was Mr Sheikh. Since the money was never intended to be seen in the company’s records, Mr Sheikh was always in a position to deny that the company had anything to do with the job. If, however, the client complained, then Mr Sheikh was always in a position to deny personal liability. If a misfortune occurred which was covered by the company’s insurance, the existence of the contract would still facilitate a claim on that cover. In the end, it is very difficult or even impossible to take up inconsistent positions or hide the truth successfully: but the end is a long road, as unfortunately this litigation goes to show.[58]Secondly, a submission closely allied to the first, Mr Denman submits that Mr Sheikh had no reason to forge the signature or date on the contract form; and that he could not have anticipated, if he put a false date on the form, the importance of that date in relation to the meeting at which cash payment was discussed. This was because the contract was produced in August 2001 at a time when Mr Daly’s chronology was still vague and Mr Sheikh was as yet not putting any stress on the date of 30 May in his affidavit which annexed it. In my judgment, however, this submission also lacks any cogency. First, Pitchers J found on the expert evidence that Mr Daly’s signature was forged: there is nothing to contradict that finding. Moreover, Ms Marsh’s opinion supports Mr Daly’s evidence that the handwriting of the date is not his, and there is no expert evidence to the contrary. Next, Mr Sheikh had to produce a signed contract if he was to defend the case. Mr Daly’s case was that he had signed a copy of the 19 May form, which on Mr Sheikh’s own case that the meeting occurred on 30 May would have been too early. It was necessary therefore to produce a signed contract dated as late as possible, and certainly no earlier than 30 May. 30 May was a convenient date, as it was the nominal date for the commencement of the works. Lastly, for the reasons explained above, the date is not critical in any event.[59]For his third point, Mr Denman relied on the post-contract correspondence with the surveyors, the brokers and the lost adjusters. I have already dealt with that submission. On the critical issue it could support the credibility of Mr Sheikh, if he were credible, or damage the credibility of Mr Daly and Mr Hamilton, if their credibility was vulnerable. As it is, however, this material is insubstantial.[60]Fourthly, Mr Hamilton’s first statement is again criticised. I have dealt with that. It strongly supports the Dalys’ case, as does his evidence as a whole.[61]Finally, Mr Denman relied on the problem as to which contract form Mr Daly signed. If he signed the 19 May form, why did he do so if he wanted the contract to refer to the drawings, and where has that signed version got to? If he signed the 26 May form, why not the document dated 30 May produced by Mr Sheikh, and why not on 30 May? And why in any event did he not require a new contract with Mr Sheikh personally? As for the last question, I suppose he thought that he had Mr Hamilton’s support, and he subsequently obtained Mr Sheikh’s signature to each payment of cash. As to the other questions, on the basis either that the document of 30 May was forged or that it was genuine but preceded a subsequent meeting, they hardly matter. But in any event I would be inclined to say that Mr Daly signed the 19 May form, for that was the only form of which he had an unsigned copy. Moreover, on the current hypothesis that the signature on the 26 May form was forged, one is again driven to the conclusion that the document signed by Mr Daly was the earlier version of the form.

Conclusion

[62]In sum, Mr Sheikh’s application to adduce fresh evidence is refused and his appeal is dismissed. The court announced its decisions during and at the close of the hearing, and also dealt with costs, which must follow the event. The freezing order must remain in place.[63]It is a relief that a third trial, on what still remains a preliminary issue, does not have to take place – although if the appeal had been well founded, justice would have demanded it. It must count as a misfortune for both parties that the litigation has been so protracted. The original sum in dispute has now been overshadowed by costs many times greater. It is often said that where parties’ testimony is in conflict the court should look at the contemporary documents, to the extent that they exist, and the probabilities of the thing, as a better guide to the truth than a mere preference for the oral testimony of one side rather than the other. There is clear wisdom in that view. Even so, this case to my mind demonstrates on its own facts a counter example. The documents in the case were not cogent. The signed contract form was only critical if its manuscript date was accurate and if the date of the meeting could also be accurately fixed in relation to it. Quite apart from forgery, which could not have been anticipated at the first trial, the relative chronology of events was not, as it sometimes is, securely based on documentary material: and it was the relative chronology which was vital. The probabilities of the matter were likewise not clear: but it was at least clear that the benefit of the contract had gone in the form of cash to Mr Sheikh, and, as Mr Hamilton had said from the first, had gone to him “and not” the company. Even Gray J accepted that evidence and found that “what Mr Sheikh proposed was that the payments should be made to him personally in cash and not to MDB” (at para 38). Thus Mr Sheikh was not simply the company’s cashier. If then the benefit of the contract had gone to Mr Sheikh, there was nothing improbable in the burden going as well. Ultimately, however, this was a case, like many others, where the court had to choose between the credibility of the witnesses on either side of the dispute. It is difficult to understand why, on the central issue, particularly in the light of Mr Hamilton’s support for the Dalys and also in the light of Mr Sheikh’s other lies about the critical meeting, Mr Sheikh’s evidence should at any time have been preferred.[64]I agree.[65]I also agree.

ORDER

1. Application for the admission of new evidence on the appeal refused. 2. The appeal dismissed. 3. Stay of execution granted by Longmore LJ on 22 July 2003 in respect of costs orders made by Pitchers J be lifted. 4. The freezing order granted by McCombe J on 26 July 2001, extended by Gray J on 9 August 2001, to continue until further order. 5. That the appellant do pay the respondents’ costs of the appeal such costs to be subject to detailed assessment if not agreed. 6. That the appellant do pay, on or before 27 February 2004, the respondents the sum of £10,000 by way of interim payment in respect of costs. (Order does not form part of the approved judgment)