Whalley v PF Developments & Anor [2013] EWCA Civ 306

Case No B2/2012/1357[2013] EWCA Civ 306
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM WARRINGTON COUNTY COURT
(DISTRICT JUDGE GILHAM)
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate Thursday 14 th February 2013
Before
LORD JUSTICE MUMMERYLORD JUSTICE RIMERLORD JUSTICE LEWISON
Between
WhalleyAppellantPF Developments and AnrRespondents
(DAR Transcript ofWordWave International LimitedA Merrill Communications Company165 Fleet Street, London EC4A 2DYTel No: 020 7404 1400 Fax No: 020 7831 8838Official Shorthand Writers to the Court)
Mr Lawrence McDonald (instructed by Gregory Abrams Davidson LLP) appeared for Appellant.Mr Nicholas Davis (instructed by Albinson Napier and Co) appeared for Respondents.
Judgment
[1]This is an appeal by the claimants, Stephen Whalley, Paul Whalley and Mary Bingham. The respondents, the defendants to the claim, are PF Developments Limited (“PFD”) and Christine Thomason.[2]The appeal is against an order made by District Judge Gilham in Warrington County Court on 1 May 2012 following an inquiry as to damages for trespass to the claimants’ property. The judge awarded the claimants £1,352.35 damages and the costs of the action. By the appeal, the claimants ask this court to reassess the damages in a substantially larger sum, in excess of £37,000; alternatively, they ask for a remission of the case to the county court for a re-assessment of the recoverable damages under the claimed heads of loss. In the event, it was only the alternative relief that Mr McDonald, for the claimants, sought to achieve.[3]The respondents’ position is that the judge was right not to award any more to the claimants than she did. They say that, to the extent that the claimants were asking for damages of a greater order, they were advancing an unpleaded claim for special damages and that is why the judge refused to consider the greater claim. In answer, the claimants confess and avoid. They admit the claims were not pleaded but they point out that they were fully explained in their evidence served in support of the inquiry in accordance with the court's directions. The defendants were in no sense taken by surprise with regard to the claims, indeed they had responded to them in their own evidence and there was therefore no sound reason why the judge should not have considered the claims on their merits.

The background

[4]The claimants are the owners of property at 355/357 Padgate Lane, Padgate, Warrington, Cheshire ("the property"). It consists of a house and land to the side, such land lying to the rear of adjoining property at 353 Padgate Lane. They bought the property on 2 June 2010 for £180,000 with the assistance of a mortgage from Lloyds TSB Bank Plc and other borrowings. Their title as proprietors was registered on 27 July 2010. PFD is the claimant's immediate neighbour, owning the property at No. 353. Following completion of the purchase, the claimants discovered that PFD had fenced off approximately half their land at the side of the property. That land is referred to in the Particulars of Claim as "the disputed land" and adjoins what is there referred to as "the garden", which is also part of the claimants’ property and is of roughly the same size as the disputed land.[5]The claimants received no response to their letter to PFD asking for the removal of the fence, and so they resorted to self-help and removed it themselves. They erected a new fence on what they say is the true rear boundary between the properties and took possession of the disputed land. That did not, however, mark the end of the war, because in about late October 2010 PFD removed the new fence, padlocked the gate which gave the claimants access to their land and took possession both of the disputed land and the garden.[6]By a letter dated 8 December 2010, largely written in upper case letters, which were presumably regarded as giving it greater emphasis, PFD "strongly refuted" the claimants’ request to restore the disputed land and garden to them and asserted that it was the claimants who were trespassers. That led to the issue by the claimants of a claim form in Warrington County Court on 21 February 2011. The only defendant was PFD. The Particulars of Claim set out the story whose essence I have just summarised.[7]I must refer to the nature of the relief claimed. By way of "Brief details of claim" on the claim form, the claim was said to be "for a declaration and other relief as set out in the Particulars of Claim served herewith", and under the "Value" part of the claim form the claimants said that:
"This claim is primarily for possession and for a declaration and other relief."
The claim form itself made no express reference to there being any claim for damages. The only such reference in the body of the Particulars of Claim is in paragraph 9, which asserts that:
"The Defendants' said actions have caused the Claimants loss and damage."
Paragraph 13 asks for statutory interest on "the sums found due" at a rate and for a period to be assessed by the court.[8]The prayer for relief seeks, in paragraphs 1 to 4, declarations as to the claimants' title to the disputed land, possession of that land and the garden, a declaration that the boundary between the properties is on the line where the claimants had erected their fence, and injunctions restraining trespass and interference with the claimants' fence and gate. Paragraph 5 asks for:
"Damages to include compensation both for time and effort spent in repairing the gates"
Paragraph 6 asks for statutory interest on any damages. Paragraph 7 asks for "further or other relief", and paragraph 8 for costs.[9]On 28 March 2011, the claimants issued an application notice asking for judgment on their claim and costs in default of the service by PFD of a defence. The application was made under CPR Part 12.4(2)(a). Part C of the application notice said that the claimants wished to rely on the claim form and Particulars of Claim, and repeated the heads of relief set out in the prayer to the Particulars. It asserted that PFD's defence had been due on 25 March 2011 but that none had been filed.[10]On 1 April 2011, District

Judge Cahill entered judgment for the claimants:

"for a sum to be decided by the Court and such further relief as the Court may consider appropriate."
[11]On 15 June 2011, on an application at which the claimants were represented by Mr McDonald and PFD was represented by its sole director and shareholder, Christine Thomason, District Judge Little refused PFD's application to set the judgment aside and allocated the claim to the multi-track. The transcript of the hearing on that day discloses that in so allocating the claim, he was in part influenced by the fact that Mr McDonald informed him that it was likely that the claimants would be claiming damages to compensate them for the interest incurred in respect of the borrowings made to buy the property, being interest which it was said was wasted by reason of the bar on the prompt development of the property caused by PFD's trespass. Mr McDonald was therefore indicating that the damages that the claimants would be claiming would go beyond the limits of the damages claimed in the prayer to the Particulars of Claim.[12]District Judge Little directed that the claimants should, by 22 June 2011, serve any further witness statements "in relation to the damages and other relief sought”. The "further" reflected that by then Stephen Whalley had already made a witness statement on 7 June 2011 in support of the claim for possession. The judge directed that PFD should, by 13 July 2011, serve any witness statements in answer. He directed that the witness statements should stand as the evidence in chief at the trial and gave further directions for such trial.[13]Stephen Whalley served a second witness statement in compliance with those directions on 21 June 2011. No evidence in answer was served by PFD by 13 July, and on 31 August 2011, by which stage PFD was represented by solicitors, as they thereafter continued to be, District Judge Gilham made an order debarring PFD from adducing "any evidence as to quantum at the hearing of this claim" unless it served evidence in answer by 21 September 2011. The judge also fixed 14 November 2011 as the day of the trial and directed that it was to start with a site visit. The result of that "unless" order was that Ms Thomason made a witness statement on 19 September 2011.[14]On 4 November 2011, His Honour Judge Hodge QC, sitting as a judge of the Chancery Division, ordered that Ms Thomason be added as a second defendant to the proceedings (he did so in a separate claim brought by the claimants in the High Court against PFD) and granted a freezing order against both defendants with an upper limit of £50,000. Those proceedings were issued in aid of the county court proceedings but were brought in the High Court as the county court had no jurisdiction to grant a freezing order. The £50,000 limit was justified by reference to the claims for damages set out in Mr Whalley's second statement, which was incorporated by reference into the evidence in support of the freezing order, and also by reference to the costs the claimants had incurred, and that evidence was served on the defendants following the making of the order but before the trial of the quantum claim.[15]The freezing order had been sought because the claimants had discovered that Ms Thomason had transferred PFD's land to herself on 11 August 2011 leaving PFD, so it was said, as a dormant company with no assets. The claimants' assertion was that she had done that so as to prevent any judgment in the county court proceedings being enforceable against PFD.[16]On 11 November 2011 District Judge Gilham cancelled the site visit fixed for 14 November but left standing the hearing of the trial that was fixed for that day.[17]The trial as to quantum and other claims came on for hearing before District Judge Gilham on 14 November. Mr McDonald appeared, as today, for the claimants and Mr Davis appeared, as today, for PFD. There was no oral evidence but the witness statements were relied upon. The judge dealt with the hearing in two stages. First, by an order dated 14 November, and so far as material, she:(1) accepted undertakings from the defendants not, in short, to trespass on the claimants' property;(2) dismissed Ms Thomason's application to adjourn the hearing and file a defence; and(3) declared that the claimants were the registered proprietors of and entitled to possession of the property, which was identified on an annexed plan, and she ordered the defendants forthwith to give them possession of the property. Secondly, having read the evidence and heard submissions on the question of quantum, she reserved her judgment on that to a date to be fixed.[18]The judge delivered her reserved judgment on 18 April 2012. The net effect of it was that the claimants were entitled to recover damages "for fencing costs and removal of fences”, as claimed in paragraphs 1(iii) and (v) of Stephen Whalley's second statement, but that they were not entitled to recover any of their other three claimed heads of damages. She assessed the recoverable damages at £1,352.35. She refused the claimants permission to appeal against her damages award, but Lloyd LJ granted permission on 21 September 2012.

The damages claimed by the claimants

[19]Mr Whalley's first witness statement of 7 June 2011 set out the story of the claimant's purchase of the property and the events leading up to the issue of the proceedings. It went to the remedies sought by the claimants other than damages. It was in his second witness statement of 21 June that he explained the heads of damages that the claimants sought. His statement explained that the claimants had intended to split off the land at the side of the house on the property, to refurbish the house within a few weeks and then to sell it, the advice that they had received being that they could hope to sell it for around £170,000 which they would then have used for other development projects. Mr Whalley said that the defendants' actions had prevented the development of the site. In consequence, they claimed damages calculated, as at the end of June 2011, under five heads:(i) interest on the borrowings to buy the property, said to amount to £3,401.50;(ii) council tax of £695.28, which they say they would not have incurred if they had sold the house promptly;(iii) £761.40 for erecting fencing;(iv) lost profit by reason of the hold up in the sale of the house, assessed at £32,000; and(v) £500 being the cost of removing fences and barricades put up by PFD and repairing damage caused by PFD. The total is in excess of £37,000.[20]Ms Thomason's witness statement in answer dealt mainly with the claims other than the damages claim, which she only addressed in three paragraphs at the end. She said that she did not understand the "claim of loss", that the claimants had never applied for planning permission, that no efforts had been made to refurbish the house and that no expert valuation of the house had been adduced. No point was made by her that it was not in principle open to the claimants to claim damages beyond the compensation "for the time and effort spent in repairing gates" referred to in the prayer to the Particulars of Claim. The judge's judgment on quantum[21]As I have said, the judge confined her damages award to heads (iii) and (v) set out in Mr Whalley's statement. She said in paragraph 5 of her judgment that she had no doubt that the claimants had incurred losses of the broad nature also described under heads (i), (ii) and (iv) in that witness statement, but that the question was whether loss under such heads could be regarded as:
"6. … naturally flowing from the description of loss in the particulars of claim and that is for the reason that it is the pleaded case which the defendant has to answer. In a case where there is provision made for sequential filing of evidence and where neither party has sought a widening of the heads of claim, I have to be extremely careful that what appears to be coherent evidence by the claimant is not given unfair and undue consideration when it is borne in mind that the defendants have never had the opportunity to meet it, as it does not necessarily flow from the pleaded case as to the type of loss. 7. In my judgment, in the absence of amendments to the pleadings, the court is confined to considering those damages that can properly be said to relate to that description in the particulars of claim. When I look at the evidence, it appears that with regard to that schedule only the items of direct loss which fall within the category, 'Including compensation for the time and effort spent in repairing the gates' would be the appropriate damages."
[22]The last sentence of paragraph 6 that I have just read reads, in my view, a little oddly. In this case there had indeed been an order for the sequential service of evidence and so the defendants had every opportunity to answer the claimants' case and had, at least some extent, sought to answer it. In fact, as is apparent from paragraph 10 of her judgment and from the transcript of the post trial exchanges, the judge had misunderstood that and had thought that the directions had been for a simultaneous exchange. Had she used the word "simultaneous" in the last sentence to which I have just referred, the point she was apparently there seeking to make might have been a little clearer.[23]The essence of her decision was, however, that apart from the claims under items (iii) and (v) in Mr Whalley's list, which were for fencing work, none of the claimed heads of loss was recoverable. That was because they did not fall within the heads of special loss referred to in the Particulars of Claim, nor were they in the nature of general damages that did not have to be pleaded. They were in the nature of unpleaded special damage, and so irrecoverable.[24]It is clear that no positive point to this effect was ever raised by the defendants prior to the hearing on 14 November. No such point was raised in Ms Thomason's witness statement. The defendant's skeleton argument for the hearing before District Judge Gilham dealt with damages under paragraph 7. That paragraph opened by asserting that:
"It is not clear whether Cs [claimants] seek to go beyond that claimed in the particulars of claim."
But it did not take the point any further. Thereafter in the skeleton argument the defendants’ fire was directed at the merits of the heads of loss claimed and the extent to which the claim for them was or was not made good.[25]At the hearing itself, it is true that in his opening submissions to the judge Mr Davis, for the defendants, referred to the claim that was being made for damages and noted that: "There does seem to be an attempt by the claimant to go beyond what was there set out." and the second "there" is plainly a reference to the Particulars of Claim. Mr Davis did not, however, advance any clear submission to the judge that the shortcoming in the pleading precluded the making of the wider claims. Had he done so, no doubt Mr McDonald would have sought permission to amend, and Mr Davis candidly admitted to us that, had the matter got to that point, permission might well have been given. Thereafter in his submissions to the judge, Mr Davis dealt with the damages case on its merits. He at no point made an unambiguous submission to the judge that the case that was being advanced was barred by the limits of the pleaded case and Mr McDonald did not, therefore, have to meet any such submission. In the event, however, the judge decided the case on the pleading point. The appeal[26]The ground upon which the judge refused to award damages under heads (i), (ii) and (iv) and upon which Mr Davis, for the respondents, seeks to uphold her decision is, as I follow it, that all such heads of damage were in the nature of special damage that needed to be expressly pleaded if they were to be recoverable, whereas none of them was. Although the judge does not put it quite like this, that seems to me to have been the real basis of her decision. That such basis was in principle well founded can be said to be supported by the helpful guidance of this court in Perestrello E Companhia Limitada v United Paint CoLtd [1969] 1 WLR 570, 579 to 580.[27]I agree with the judge and with Mr Davis that strictly heads (i), (ii) and (iv) did need to be the subject of an express pleading. But I respectfully disagree with the judge as to the perhaps somewhat disciplinarian line that she took in this respect. We were not referred to any authority to the effect that in an inquiry as to damages under a judgment in default the ambit of the inquiry is limited by the ambit of the original pleading as to damages, nor was any such submission made to us. I understood Mr Davis to recognise that even after the default judgment, it would have been open to the claimants to seek to amend their Particulars so as to widen their claims for damages. In the event, they did not take that course. What instead happened is that the court gave directions for a trial as to quantum, including directions for the sequential service of evidence, and such evidence was sequentially served. Mr Whalley's second statement made crystal clear the heads of damage that the claimants were claiming and Ms Thomason in her evidence did not suggest that it was not open to the claimants to advance such claims. Nor, as I have said, was any such assertion clearly advanced at the trial itself. If it had been, the judge would have had to rule upon it, and no doubt it would have provoked an application by the claimants for permission to amend their Particulars of Claim so as formally to plead the case of which the defendants had had the clearest notice for nearly five months.[28]Mr Davis accepted, as I have said, that had such an application been made it could well have succeeded. The point is that, by their June 2011 evidence in support of the quantum claim, the claimants had given the respondents full notice of the nature of the heads of loss that they were asserting. The respondents were not taken by surprise, or at any rate no suggestion to that effect appears ever to have been raised. They took no steps to strike out those parts of Mr Whalley's evidence that were claiming to advance heads (i), (ii) and (iv), and the claims under those heads were argued on the merits before the judge. The judge, however, then dealt with the matter by a reserved judgment delivered over five months later by throwing the case out on a pleading point that had not been clearly articulated, let alone argued, following a trial at which the claims had been the subject of submissions from both sides on the merits.[29]With respect to the judge, I consider that she was wrong to decide the case on what was in effect an unargued point. Her decision was, as I understood her to have accepted in the post-judgment exchanges, in part influenced by the fact that she had either forgotten or misunderstood that there had been a direction for a sequential rather than a simultaneous exchange of evidence, so that in fact the defendants were in no manner disadvantaged in answering the claimants' case. This was, in the event, a trial in respect of which the state of the claimants' pleaded case reflected at most a formal shortcoming. What is clear is that by the time of the trial both sides knew exactly what case as to damages they were respectively making and meeting, and neither side was disadvantaged with regard to the presentation of their respective cases. That point is best supported perhaps by an observation that the judge herself made in response to an application by Ms Thomason for an adjournment of the trial on 14 November in order that an amended pleading could be served upon her and she could respond to it by way of a defence. The judge refused that application, saying, as is recorded in the transcript, that Ms Thomason was "fully aware of every detail of this claim".[30]I would allow the appeal and, if my Lords agree, would invite counsel to make representations as to the form of order that we should make.[31]The purpose of a statement of case is to define the issues and to warn each party what will be dealt with at the trial, but the flexibility of modern procedure is such that, provided the mechanics are fair, adequate notice of matters to be dealt with at trial can be given under the direction of the court otherwise than through the formal medium of a statement of case. Under CPR Part 12.7, when the court enters judgment for an amount to be assessed by the court it will give directions. The same point is made in the practice direction accompanying Part 26. In the present case the district judge directed sequential service of witness statements. He could have directed service of a pleaded schedule of loss, but he did not. It is plain in my judgment that the witness statement was to stand as a statement of loss. As Rimer LJ has explained, there was no prejudice to the defendants in responding to that witness evidence, and they did in fact do so. No objection to the evidence was taken at the assessment hearing apart from a half-hearted query raised in the skeleton argument. In fact, as my Lord has explained, the judge had refused to allow an adjournment to require the claimant to produce amended Particulars of Claim on the ground that the defendants knew every detail of the claim. It makes her subsequent decision to dismiss the greater claim all the more surprising. For the reasons given by Rimer LJ, I too would allow the appeal.[32]I agree with both judgments. The appeal is allowed.

Order

Appeal allowed