A DRAFT JUDGMENT IS NOT AN OPEN INVITATION TO TAKE A SECOND BITE AT THE CHERRY: AN OVERUSED TACTIC

In Gosvenor London Ltd v Aygun Aluminium UK Ltd [2018] EWHC 227 (TCC) Mr Justice Fraser made it clear that draft judgments were not to be taken as an invitation to the parties to embark on a second round of submissions.

The distribution of a draft judgment under CPR Part 40 should not be seen (as it seems to be, by many legal advisers currently) simply as an open invitation to embark upon an additional round of the litigation, remedying lacunae in their own evidence and raising further arguments. If a matter could have been raised at the first hearing, then it should be.”

THE CASE

The claimant sought summary judgement for the amount following an adjudication. The defendant opposed it on the grounds that the claimant had been fraudulent. The claimant did not put in any evidence in response to the defendant’s evidence of fraud.  In a reserved judgment the judge held that the claimant was entitled to judgment, however there would be a stay pending resolution of the issues put forward by the defendant.   The judgment, in draft, was sent out to all the parties.

THE CLAIMANT’S RESPONSE

After receipt of the judgment the claimant lodged a document that sought.

  1. That the court should recall and reconsider its draft document.
  2. If the court was not willing to do that, the grant of permission to appeal.
  3. A stay of execution with the payment of the sum ordered by the ajudicator into court pending resolution of the proceedings.

THE JUDGE’S OBSERVATIONS ON THE ABSENCE OF EVIDENCE FROM THE CLAIMANT AT THE INITIAL HEARING

Three witness statements had been served on behalf of the defendant setting out serious allegations against the claimant.

“There was no evidence at all served by Gosvenor in response to these witness statements. After the first draft judgment was distributed under CPR Part 40 for clerical corrections and typographical errors to be identified by the parties, and as part of the two applications to which I have referred in paragraph 1 of this judgment, Ms White for Gosvenor sought to adduce evidence in different witness statements that addressed these substantive allegations, and others raised in the three witness statements to which I have referred. For the reasons that I provide in the section of the judgment headed “Events following distribution of the First Draft Judgment” it was far too late for Gosvenor to do so and I refused to admit such evidence. It could, and should, have been deployed for the hearing on 1 February 2018, and also should have been served in accordance with the order of Coulson J on 19 December 2017. Simply because Gosvenor did not like the conclusions reached by the court on the basis of the evidence relied upon at the hearing of 1 February 2018 (which, for Gosvenor’s part, consisted of the witness statement of Mr Skelton only), this did not entitle Gosvenor to serve evidence in response after the actual substantive hearing and after receiving the first draft judgment”

THE JUDGMENT:  A DRAFT JUDGMENT WAS NOT AN INVITATION TO RE-OPEN THE CASE

The judge noted that the claimant had filed a document which attempted to re-open the application.
    1. Aygun served its own document in response, opposing the application to recall and reconsider the draft judgment. At the hearing of 27 February 2018, which had been set for the handing down of the draft judgment, I heard submissions on this subject. Various witness statements were put before the court in relation to the evidence that would be adduced were permission given. I ruled that I would not admit such evidence, but also that I would not hand down the draft judgment and would have a further short hearing solely to deal with the addition to the Wimbledon v Vago principles as set out in [39] above. I also explained that I would provide my detailed reasons for this approach in the judgment that would follow that further hearing. That hearing took place on 20 March 2018.
    2. The principles that apply to such an application are as follows. It is within the powers of the judge to alter his or her judgment at any time before it is entered and perfected (per the Court of Appeal in Re Barrell Enterprises [1973] 1 WLR 19; Robinson v Fernsby [2003] EWCA Civ 1820). Given a judgment is simply in draft form until it is handed down, there is no doubt therefore that the jurisdiction exists.
    3. In Egan v Motor Services (Bath) Ltd [2007] EWCA Civ 1002[2008] 1 All ER 1156, the Court of Appeal noted and deprecated the growing practice of counsel writing to the judge upon receipt of draft judgment, asking for reconsideration of the conclusions contained within it. It is my experience that this occurs far more frequently than ought to be expected; it could be described as now being almost routine. Of course, there are very occasionally particular circumstances that warrant it. As a single example, in Energysolutions EU Ltd v Nuclear Development Authority (No.2)(Liability) [2016] EWHC 1988 (TCC), very shortly before the formal handing down of a very lengthy judgment concerned with public procurement, the NDA discovered that every single witness of fact called by the claimant had a contractual agreement in place with the claimant for payment of a cash bonus in the event of success in the litigation. This had only just come to the notice of the solicitors acting for the claimant, who acted very promptly and properly and disclosed this fact, and the agreements. This led to further hearings, cross-examination both of solicitors themselves (not previously called as witnesses) and of the factual witnesses themselves, and reconsideration of all the findings in that judgment.
    4. In Egan v Motor Services (Bath) Ltd the Court of Appeal made it clear that circulation of a draft is not intended to provide counsel with an opportunity to re-argue the issues in the case, and also it was only in the most exceptional circumstances that it was appropriate to ask the judge to reconsider a point of substance. Examples given were where counsel feels that the judge (i) had not given adequate reasons for some aspect of his decision, or (ii) had decided the case on a point which was not properly argued or has relied on an authority which was not considered. However, in the case of In re L (Children) (Preliminary Finding: Power to Reverse) [2013] UKSC 8[2013] 1 WLR 634 the Supreme Court held that a judge’s power to recall and reconsider his or her judgment is not restricted to “exceptional circumstances”. Whether a judge should exercise the discretion to recall a judgment will depend upon all the circumstances of the case. That is the approach that I adopted here.
    5. In Space Airconditioning Plc v Guy [2012] EWCA Civ 1664[2013] 1 WLR 1293, the Court of Appeal stated that: (1) a judgment should be an accurate record of the judge’s findings and of the reasons for the decision; (2) if a judgment contains what the judge acknowledges is an error when it is pointed out, the judgment should be corrected, unless there is some very good reason for not doing so; (3) it should not normally be necessary for a party to bring an appeal to correct an error, if it turns out that the parties and the judge agree that there is an error and that a correction should be made. In that case, the court directed a re-trial on the basis that the erroneous finding in the judgment could properly be described as an “irregularity in the proceedings” which made the decision an “unjust” one within the meaning of the old RSC r.52.11(3) – now CPR Part 52.21(3)(b).
    6. Further guidance is given in other cases, and a similar situation applies so far as review of findings of fact is concerned, even after handing down. The ability to ask the court to reconsider findings sits next to the ability of a disgruntled litigant to appeal. For example, in Kazakhstan Kagazy PLC and others v Baglan Abdullayevich Zhunus [2018] EWHC 369 (Comm) Picken J dealt with a similar situation where the defendant sought to adduce new evidence which was said at [22] as being “of central importance to the issue of quantum and which therefore must be taken account of when the Court is assessing quantum” and of which the defendant had no awareness at the trial. Picken J made the following statements in this respect:
“27. As I have explained, this is not a case where the Judgment left open any issue concerning Penalties and Interest other than the matter of calculation. It is not, therefore, a case where there can be said to be any error or misunderstanding which needs to be corrected and which it is appropriate to raise with the trial judge to allow him or her an opportunity address the point.
28. Mr Foxton cited in this context Spice Girls Limited v Aprilla World Service BV 20 July 2000, 2000 WL 1212985, in which Arden J (as she then was) had this to say at [9]:

“I now turn to set out my conclusions on these submissions. At the outset I observe that counsels’ submissions conflate two issues, first, whether the court can and should review its earlier finding of fact and second, whether the result of the case would be different if the admitted fact had been stated in substitution for the fact as found. As to the first issue, it is clear that the court has jurisdiction to correct an error of material fact before the order is drawn (see for example Stewart v Engel [2000] 3 All ER 518, The Times 26 May 2000; Pittalis and others v Sherefettin [1986] 1 QB 868; [1986] 2 All ER 227; Charlesworth v Relay Roads Ltd [2000] 1 WLR 230). It inevitably happens with complex cases that from time to time a fact which is material is overlooked. But the jurisdiction to correct an error is to be exercised cautiously and sparingly, and the question of review should be raised as promptly as possible. An application to the court to vary a finding of fact is not to be encouraged as it may lead to groundless applications. In this instance, as I have said, Mr Mill’s approach was not to apply to the court to review its finding of fact but rather to use it as a basis for seeking permission to appeal. In my judgment, an appeal is not the appropriate course where there are errors in judgments which can be corrected by the court which conducted the trial. To leave such matters to an appeal means further delay, uncertainty and costs, which is not in the interests of the litigants. The trial judge is in a strong position to consider the effect of the error in the context of the entire case. Moreover, since there is no doubt now that AWS intended to make the concession, in my judgment it would not be just (see Civil Procedure Rules 1998 r 1.1(1)) for me not to review the finding of fact and accordingly I propose so to do by substituting, for my finding that AWS did not sell Sonic scooters, a finding that AWS distributed and/or sold such scooters outside Italy pursuant to its standing arrangements with Aprilia. There is no evidence as to whether or not AWS made any profits from these activities.”

This was a case, however, as the passage makes clear, and as explained at [8], where there was an error on the part of the judge when preparing the judgment. It was not a case such as the present where the Court has made no error but one of the parties is seeking to re-open an issue based on evidence which has come to light after the judgment has been handed down. That is a very different situation.
29. Nor is this a case like Compagnie Noga D’Importation ET D’Expropriation SA v Abacha 2001 WL 606396, where Rix LJ (but sitting in his capacity as the trial judge) was faced with a request that he reconsider his judgment (a judgment arrived at after a trial lasting some six months) on the basis that he was said to have “got the answer wrong” (see [44]). As Rix LJ explained, the right course, in such circumstances, is to appeal. As he put it at [47]:

“I do not wish to say anything against the usefulness of the reconsideration jurisdiction, within its proper limits. I have made use of it myself. However, it is in the nature of the legal process that, once judgment has been rendered, analysis thereafter becomes clarified and refined, and citation of authority is applied to the findings made at first instance so as to illuminate that clarification and refinement of analysis of which I speak. But that is the function of the appeal process. In my judgment, to grant this application that I reconsider my judgment would subvert the appeal process itself. In doing so, it would not answer the interests of justice, but would be the antithesis of justice according to law. There are of course cases where an error of fact or law may be too clear for argument. The best test of that is perhaps – but not necessarily – where the judge himself identifies the error which concerns him. In such a case, it is better that the error is corrected without imposing on the parties the need for an appeal. But no parallel to Noga’s application has been cited to me. It is in my judgment wrong for a judge to be treated to an exposition such as would be presented to a court of appeal. If in such circumstances a judge should be tempted to open up reconsideration of his judgment, an appeal would not be avoided, it would be made inevitable. Every case would become subject to an unending process of reconsideration, followed by appeal, both on the issue of reconsideration and on the merits.”

30. As Rix LJ had earlier explained, when describing the circumstances in which it is appropriate to invite a judge to reconsider, the jurisdiction is limited to “exceptional circumstances”. He stated as follows at [41]-[43]:
“41. Nevertheless, in my judgment, I am bound by the decision in Stewart v. Engel, following the spirit, if not the letter, of the decision in Barrell in the light now of the requirements of the overriding principle, to regard the need for exceptional circumstances as a requirement for the proper exercise of the jurisdiction to reconsider a decision. If in Pittalis Dillon LJ is to be understood as saying by reference to Millensted that the discretion is a wide open one, unrestricted by the requirement of exceptional circumstances, then I would with respect feel bound to disagree. In my judgment the width or narrowness of the discretion was simply not in issue in Millensted. As for Pittalis, both Fox LJ and Dillon LJ accepted that the circumstances in that case were exceptional.
42. Of course, the reference to exceptional circumstances is not a statutory definition and the ultimate interests involved, whether before or after the introduction of the CPR, are the interests of justice. On the one hand the court is concerned with finality, and the very proper consideration that too wide a discretion would open the floodgates to attempts to ask the court to reconsider its decision in a large number and variety of cases, rather than to take the course of appealing to a higher court. On the other hand, there is a proper concern that courts should not be held by their own decisions in a straitjacket pending the formality of the drawing up of an order. As Jenkins LJ said in In Re Harrison’s Share (at 276):

‘Few judgments are reserved, and it would be unfortunate if once the words of a judgment were pronounced there were no locus poenitentiae.’

43. Provided that the formula of ‘exceptional circumstances’ is not turned into a straitjacket of its own, and the interests of justice and its constituents as laid down in the overriding principle are held closely to mind, I do not think that the proper balance will be lost. Clearly, it cannot be in every case that a litigant should be entitled to ask the judge to think again. Therefore, on one ground or another, the case must raise considerations, in the interests of justice, which are out of the ordinary, extraordinary, or exceptional. An exceptional case does not have to be uniquely special. ‘Strong reasons’ is perhaps an acceptable alternative to ‘exceptional circumstances’. It will necessarily be in an exceptional case that strong reasons are shown for reconsideration.”
31. Clearly, in view of these authorities, there is no justification in the present case to permit Mr Arip and Ms Dikhanbayeva to re-open the Penalties and Interest issue. There needs to be finality in litigation. This applies as much to high-value and complex litigation as it does to low-value and simple litigation…..I repeat that this litigation, like other cases in every court in the country, must have some finality about it. Were it otherwise, the courts system could potentially descend into chaos.”
    1. Similar statements to those in the last quoted passage of Picken J concerning the requirement for finality in litigation have been made at appellate level too. In Ogale Community and others v Royal Dutch Shell and another [2018] EWCA Civ 191, a lengthy appeal was heard in November 2017 from a first instance decision striking out a claim against the defendants in relation to oil pollution in the Niger Delta in Africa. In January 2018 the (ultimately unsuccessful) appellants made an application to the Court of Appeal that giving judgment should be postponed until after the appellants had the opportunity to consider “a whole raft of yet further Shell documentation” that had come into their possession and which could be potentially relevant. In stating why this application was refused, the Chancellor of the High Court stated at [178] “In my judgment, there has to be finality to litigation determining jurisdictional questions within a reasonable timescale and, for that reason alone, proceedings cannot be delayed to allow for unlimited attempts to gather evidence that might be said to support the claim.” I would only add to those observations that it is equally, if not more important, that resolution of disputes concerning enforcement of adjudication decisions (and any stay upon enforcement) be dealt with in a reasonable timescale too. Indeed, a reasonable timescale in terms of adjudication business is likely to be far shorter than in other spheres of litigation. The intention of Parliament, as has been stated many times in a wide number of judgments, both at first instance and appellate level, is for adjudication to provide a speedy mechanism for the resolution of disputes, but only in an interim manner. Adjudicators’ decisions do not determine the parties’ substantive rights in a final and binding way. That is done by litigation or arbitration. It is therefore entirely counter-productive, in proceedings for adjudication enforcement, to permit those proceedings to be re-opened in the way Gosvenor seeks in this case, so that further evidence and argument can be deployed on issues that were already before the court, and in my judgment clearly before the court, on the last occasion.
    2. In my judgment, all these statements point in the same direction. Very careful consideration must be given to such applications, and litigants should not be given the ability to have a second bite at the cherry. The distribution of a draft judgment under CPR Part 40 should not be seen (as it seems to be, by many legal advisers currently) simply as an open invitation to embark upon an additional round of the litigation, remedying lacunae in their own evidence and raising further arguments. If a matter could have been raised at the first hearing, then it should be. If time is needed to deal with something, then the court must be asked for time – this will not always be given, but the matter must be dealt with then. It is against those principles that I consider Gosvenor’s applications.
    3. In my judgment, the factual correction sought by Gosvenor to [8] of the draft judgment is a factual error and I am grateful to Ms White for drawing it to my attention. The passage that had stated “Further, by 15 May 2017 (the date of the Completion Agreement) the works were 97% completed. The sums claimed in the adjudication were for the period after that” was factually incorrect and upon closer analysis the sums claimed in the adjudication were for the period from 12 November 2016, not 15 May 2017. I have therefore corrected that passage in this judgment which makes it clear from what date the sums sought in the adjudication related. However, this does not make any difference to the analysis that Gosvenor was entitled to summary judgment on the decision, nor does it make any difference to the analysis concerning the stay of execution. Adjudication is a temporarily binding dispute resolution process that is always subject to the final resolution of the dispute in litigation or arbitration. The details of the underlying substantive claim, resolved on that basis by an adjudicator, and to which date range that dispute relates, are not relevant to the matters before me. I have found that the allegations of fraud by Aygun could and should have been raised in the adjudication.
    4. Also, I recited in my first draft judgment that the parties had not been given an opportunity fully to address the addition of the new principle (g) to the Wimbledon v Vago principles. Although the issue of fraud impacting upon a stay of execution was argued – indeed, it was a mainstay of Mr Sampson’s approach, and it is not accurate to submit as Ms White does that the point was not argued – I did not provide the parties with any opportunity to make submissions on the addition of principle (g) as drafted. In my judgment therefore, both parties should have such an opportunity, and that was why I re-listed the matter for a hearing on 21 March 2018 to address that one issue.
    5. I should also add, as pointed out already at [18] above, that the issue of fraud being potentially relevant to an application for a stay of execution is expressly referred to in Akenhead J’s proposition (b) in SG South with which Jackson LJ agreed. The submission by Ms White that the only case that Gosvenor had to meet on 1 February 2018 was on the basis of “existing law”, that this explained why no evidence was put in by Gosvenor to rebut the fraud allegations, and that I have now applied different or “new” law, is simply wrong. I would go further. CPR Part 83.7(4) identifies “special circumstances” in respect of the grant of a stay. It was clear from the evidence served on 15 January 2018 by Aygun that the fraud allegations were being relied upon in this respect; indeed, given the terms of that evidence, I do not see how that can be sensibly argued to the contrary. As a single example only, Mr Amucer’s witness statement stated in paragraph 25 “in addition to the question of fraud Aygun is also extremely concerned about the financial viability of Gosvenor” before going on to deal with the Companies House information then available.
    6. I do not consider that any of the requirements for either party to put in new evidence are satisfied in these circumstances, and I am not prepared to allow them to do so. Gosvenor argued that no stay should be granted, and if the approach of new (g) was to be similar to the approach taken on the grant of a Freezing Order, then Aygun should be required to obtain such an order instead. I reject those submissions, which again are misconceived. The overriding objective does not require such an artificial, expensive and convoluted approach. In the case of Bouygues v Dahl-Jensen itself, not only had a formal application for a stay not been issued, it had not even been argued below before Dyson J (as he then was). This is clear from [36] of the judgment of Chadwick LJ:
“But the point was not taken before the judge and his attention was not, it seems, drawn to the provisions of the Insolvency Rules 1986. Nor was the point taken in the notice of appeal. Nor was it embraced by counsel for the appellant with any enthusiasm when it was drawn to his attention by this court.”
A stay was ordered in that case, nevertheless.
  1. Gosvenor also argued that Aygun should be required to pay the sum into court instead of being allowed to retain it. That is sometimes done, but I see no reason to make such an order in this case. In any event, the submissions that any conditions should be attached to the imposition of a stay, such as a requirement upon Aygun to commence substantive proceedings, are in my judgment misconceived. Gosvenor is as entitled as Aygun to issue substantive proceedings in relation to the substantive dispute, regardless of the outcome on either of these applications. Although Mr Sampson for Aygun has submitted that Aygun is anxious to issue proceedings itself and will do so, I am not prepared to make an order compelling Aygun to that effect. If Gosvenor wishes to do so it can issue proceedings itself, regardless of the outcome concerning the adjudicator’s decision. Nor am I prepared to order Aygun to pay the sum the subject of the adjudicator’s decision into court.