AN ABSOLUTE CAR CRASH OF AN APPEAL: KNOW WHAT DOCUMENTS WERE BEFORE THE THE JUDGE – A BASIC ISSUE FOR ALL WOULD BE APPELLANTS
Appeals are always difficult. The appellate court has to be persuaded that the first-instance judge was “wrong”, and this is a fairly rigorous test. It is made far more difficult if the appellate court is given the wrong documents. Particularly when those documents are highly material to the central issue of the appeal. The problems that occur can be seen in the judgment of Mr Justice Sweeney in Acquisition 395445638 Ltd v Sicovs & Anor  EWHC 2320 (QB). The claimant/appellant based its appeal, and strong criticism of the circuit judge, on a version of the proposed amended particulars of claim that had never been placed before the judge. This is not the strongest basis on which to ground an appeal.
“It is, to say the least, unfortunate that, in seeking to advance its proposed appeal, the Appellant sought, until eventually challenged by the Respondent, to rely upon the third APOC and (based upon it) to advance strong criticism of the judge – when it had never sought, by any route, to rely upon that version of the APOC before the Judge”
The claimant had acquired the rights of an Accident Management Company. The 1st defendant had an accident and instructed the accident management company to act on his behalf. The accident management company instructed solicitors (the second defendant in this action) to act on the claimant’s behalf. There were various agreements between the claimant and the second defendant. The first defendant’s action was settled for £10,000 and payment made directly to him without any payment to the accident management company. The claimant then issued proceedings against both defendants claiming up to £10,000 in damages.
The second defendant made an application to strike out the particulars of claim on the grounds that they were defective and did not disclose a cause of action and the claim was without merit. The claimant made a counter-application to amend its Particulars of Claim. The Circuit Judge struck the action out.
THE VARIOUS VERSIONS OF THE AMENDED PARTICULARS OF CLAIM
The remarkable thing about this appeal is that there were various versions of the amended Particulars of Claim. The appeal was conducted by the claimant without any degree of clarity as to which version of the amended Particulars had been placed before the Circuit Judge. Mr Justice Sweeney observed:
Shortly before the hearing before me, there was some controversy as to which of three versions of the Amended Particulars of Claim was the one which accompanied Mr Ahmed’s statement. In the end , I have no doubt that it was the version ultimately produced by both the Appellant (in Tab 3 of its Supplemental Bundle) and by Rachel Barber (a Consultant Solicitor with the firm representing the Respondent) in her second witness statement (dated 27 March 2019) at pp.12 – 21 of exhibit RAB2. It is that version to which l shall refer hereafter as “the second APOC”.
THE APPEAL AND THE DIFFERENT VERSIONS OF THE PARTICULARS OF CLAIM
The remarkable thing about the appeal, and the appeal bundle, was that it relied on and referred to a version of the Particulars of Claim that had never been before the Circuit Judge.
On 14 November 2018 the Appellant filed Notice of its application for permission to appeal. The Appellant filed an appeal bundle, but it did not contain a copy of the sealed Order of the lower court, nor a transcript of the judgment of HHJ Boucher. Sir Alistair MacDuff’s Order of 8 January 2019 (above) required the Appellant to provide both within 28 days.
On 12 February 2019 the Appellant filed and served a new appeal bundle (albeit that, according to the QB Appeals Office, it did not contain a copy of the sealed Order – which was later remedied). The index indicated that, at Tab 6, the file contained the “Application of Claimant to amend Particulars of Claim”. Ms Rachel Barber, the solicitor at Keystone Law acting for the Respondent, agreed the index to the bundle but did not otherwise consider the content of the bundle.
In fact, there were significant differences between the version of the proposed Amended Particulars of Claim (dated 6 August 2018 and unsigned) which was behind Tab 6 in the Appellant’s appeal bundle (“the third APOC”) and both the first and second APOCs. There were also significant differences between the third APOC and the proposed Amended Particulars of Claim in the UKSG litigation – not least because, in the third APOC, all references to the written Referral and Introducer Agreements had been removed and instead there was reliance on an alleged oral Referral Agreement between Mr Ahmed (for SM and the Appellant) and Eamonn Dunne (for the Respondent) namely, as relevant to the Appellant and set out in paragraph 8 (iii) of the third APOC, that:
“…the [Respondent] would comply with the instructions of the Client contained in his Form of Authority and with the client instructions contained in paragraph 28 of the Hire agreement and account to the [Appellant] for any liability of the client to the [Appellant] for hire charges and to St Martin’s for any liability of St Martin’s for recovery and storage charges”.
(1) The Judge had wrongly failed to take into account the fact that Mr Ahmed was the controlling shareholder of SM, of its assignee company UKSG, and also of the Appellant, and that the Referral Agreement referred to in paragraph 8 of the proposed Amended Particulars of Claim was oral and intended to benefit SM and the Appellant. Without hearing the oral evidence of Mr Ahmed and Mr Dunne the court could not make any determination concerning the Referral Agreement.
(2) The Judge had been wrong not to take into account the modus operandi of the companies controlled by Mr Ahmed on the one hand and of the Respondent on the other hand.
(3) The Judge failed to take into account the fact that the Referral Agreement referred to in paragraph 8 of the proposed Amended Particulars of Claim was made by Mr Ahmed both on behalf of SM and of the Appellant, with Eamon Dunne (the senior partner of the Respondent) on behalf of the Respondent. As pleaded in paragraph 8 (iii) of the proposed Amended Particulars of Claim, it had been agreed by the Appellant that it would comply with the instructions of each client contained in his / her Form of Authority, and with the client’s instructions contained in paragraph 28 of the Hire Agreement.
(4) The Judge wrongly determined that there was no contractual nexus between the Appellant and the Respondent despite the Respondent’s oral acceptance in the Referral Agreement that it would accept and act upon the irrevocable authorisations contained in paragraph 28 of the Hire Agreement. Further the acceptance of the irrevocable instructions of the client also amounted to a contract on the part of the Respondent to carry the client’s instructions into effect, of which the intended beneficiary was the Appellant.
(5) The Judge was wrong to determine that:
(i) The fact that the Respondent had already accounted to the Appellant in respect of 101 clients who had hired replacement vehicles from the Appellant on hire agreements containing paragraph 28 was not material.
(ii) It was not relevant and did not support the Appellant’s claim that the Respondent had referred all offers made by Third Party Insurers to the Appellant, for the Appellant to accept or reject.
(iii) It was not relevant to and did not support the Appellant’s Claim that the Respondent had offered to commence proceedings against the Third Party in the instant Claim, if the Appellant did not accept the offer made by insurers in respect of hire charges.
(1) What had been agreed between the Appellant and the Respondent was that the Respondent would comply with the irrevocable instructions of the client and account to the Appellant for any liability of the client to the Appellant for hire charges, and that in order to substantiate the (oral) Referral Agreement oral evidence would be required at trial, together with evidence that the Respondent had accounted to the Appellant in 103 other cases.
(2) If the (oral) Referral Agreement was upheld at trial there was very good prospect of success for the Appellant – whereas the judge had focused on the fact that SM was not a Claimant and had wrongly concluded that the Referral Agreement was only an agreement between SM and the Respondent, and had failed to take into account that Mr Ahmed was the controlling shareholder and director of both SM and the Appellant and had been negotiating the Referral Agreement for both companies.
(3) In any event, the acceptance by the Respondent of the irrevocable instructions of the client would entitle the Appellant to enforce the contract under the Contracts (Rights of Third Parties) Act.
(4) The Judge had been pre-occupied with finding a written contract between the Appellant and the Respondent, had been told that there was a written agreement between a “front company” (namely Excel) and SM, and had appeared to then have taken that example of a written contract as being the contract upon which the Appellant was relying – whereas “…This was clearly not the case as the contract with Excel Law Limited is not referred to in the Amended PoC………In the submission of the [Appellant], the manner in which [the Respondent] conducted the claim process demonstrates that the Referral Agreement was as pleaded in the Amended PoC and included a direct contract as between [the Respondent] and the [Appellant] as set out in paragraph 8 (iii) [of the Amended PoC]…..the Amended PoC set out a clear right of action and claim by [the Appellant] against [the Respondent] and the Judge should not have struck out the Amended PoC“.
The skeleton argument went on to underline authorities to the effect that a strike out claim should be considered very carefully and that if oral evidence was required to test the contentions of the Claimant then a strike out would be inappropriate as oral evidence cannot be given at a strike out stage. As to the criteria for allowing an amendment to a pleading, reliance was placed on the judgment of Hamblen J (as he then was) in Brown v Innovatorone PLC  EWHC 3221 (Comm) to the effect that:
“As the authorities make clear, it is a question of striking a fair balance. The factors relevant to doing so cannot be exhaustively listed since much will depend on the facts of each case. However, they are likely to include:
(1) the history as regards the amendment and the explanation as to why it is being made late;
(2) the prejudice which will be caused to the applicant if the amendment is refused;
(3) the prejudice which will be caused to the residing party if the amendment is allowed:
(4) whether the text of the amendment is satisfactory in terms of clarity and particularity”.
Against that background it was submitted that the proposed amendments were not late, as the case had not even reached the Case Management Conference stage, and that the need for the Respondent to amend its Defence could be compensated in costs. It was underlined that the Judge had refused the amendment on the basis that there was no realistic prospect of success at trial on the basis of the amended pleading, and that it was difficult to understand how she had reached that conclusion as she had not addressed the detail of the (oral) Referral Agreement pleaded in paragraph 8 of the Amended Particulars. If the Judge had considered that pleading an oral agreement was not convincing to her (which she did not state) she should have allowed the amendment because it would be unfair to shut out the Appellant on the basis of a conclusion reached by the Judge on an alleged oral agreement without allowing the issue to be tested at trial on oral evidence.
In the Appellant’s supplemental skeleton argument, which was drafted after the provision of transcripts in relation to the hearing on 26 October 2018, reliance continued to be placed on the third APOC and it was asserted (amongst other things) that, without the contractual structure for which the Appellant contended SM and its sister companies would not have been prepared to provide services without payment from the client. Further, it was submitted that the fact that the arrangements contended for by the Appellant were operative was demonstrated in documents that had been put before the court, and that the court could not resolve any contest about the oral Referral Agreement without hearing the oral evidence of the parties.
Mr Simms replied to the effect that, at the hearing on 26 October 2018, he had been anticipating working from the Appellant’s bundle, only to find that the lodged version had been lost. He had not seen the Respondent’s bundles prior to the hearing and, in using them at the hearing, he had been trying to find relevant documents and had not focused on any differences between what had been in the Respondent’s bundle and what had been in the Appellant’s bundle. He had believed that the version of the proposed Amended Particulars in the appeal bundle was the version that had been filed for the hearing below but had yet to hear from someone on the Appellant’s side who could explain what had happened. If the proposed Amended Particulars served on 7 August 2018 was the document before the Court, he would paginate a new Tab 6 and include the application and exhibits from the Respondent’s bundle that was used at that hearing.
On 26 March 2019 the Respondent filed and served Ms Barber’s first witness statement, in which she explained that the third APOC was different to the first APOC (which had been served on 7 August 2018 and which she exhibited). She also produced, amongst other things, an accurate schedule of all the differences between the first and third APOCs, and continued that she had also reviewed the second APOC (which had been served on 22 August 2018) and had noted that whilst it had a number of differences when compared to the first APOC, it had retained reference to the written Referral and Introducer Agreements and had exhibited them.
“8.…it was orally agreed, and a Referral Agreement was signed between the parties in March 2012 (“the Referral Agreement”) that on the referral of a client by St Martin’s or [the Appellant] or other company controlled by MKA directly, or by the client instructing the [Appellant] directly, or by the client instructing the [Appellant] direct on the recommendation of St Martin’s, the [Appellant] or other company controlled by KMA,(sic) to the [Respondent]:
(i) the [Respondent] would pay the referring party a referral fee of £750 plus VAT.
(ii) the [Respondent] would pay to the [Appellant] a final payment of £250 plus VAT per client to St Martin’s, the [Appellant] or other referring company of MKA;
(iii) The [Appellant] would comply with the instructions of the client contained in his form of authority and with the client instructions contained in paragraph 28 of the Hire Agreement and account to the Claimant for any liability of the client to the [Appellant] for hire charges and to St Martin’s for any liability of the client to St Martin’s for recovery and storage charges.
9. After the introduction of the Jackson Reforms of 2013, the [Respondent] requested and St Martin’s and the [Appellant] agreed that the initial referral fee would be reduced from £750 plus VAT per referral to £500 plus VAT per referral.
10. Pursuant to the Referral Agreement approximately 300 clients were referred to the [Respondent].
21. Accordingly in the premises:
(ii) The [Respondent] is liable to the [Appellant] for the said sum of £10,000 paid by the Third Party Insurers and in respect of which the [Respondent] was liable to account to the [Appellant] pursuant to the Referral Agreement and its knowledge and acceptance of paragraph 28 of the Hire Agreement, and the notification by the Claimant of the incurring of such hire charges and the daily rate thereof.
(1) At the beginning of August 2018 Mr Simms had been requested by Mr Ahmed to consider the then existing Particulars of Claim, and (based on the instructions that he had received) had advised on wholesale changes, and had drafted Amended Particulars of Claim which had been signed by Nataliia Fox and which had been filed and served on 7 August 2018.
(2) At the hearing before DJ Manners on 8 August 2018 it had been agreed between counsel on both sides that the Respondent had not had time to consider the Amended Particulars that had been served by the Appellant the day before, and that the Appellant wanted more time to consider whether those Particulars were adequate and correct as they had been prepared in a hurry. Thus it was by agreement (as reflected in the Order) that the DJ had ordered that the case be transferred to the Central London County Court, and paragraph 2 of the Order had provided that the Appellant serve any additional evidence or pleadings in this Claim on or before 4pm on 22 August 2018.
(3) On 22 August 2018 the Appellant had emailed to the Court, with a copy to the Respondent, a revised version of the Amended Particulars of Claim and of all the exhibits referred to therein together with a witness statement by Mr Ahmed (summarised in  above). Mr Simms identified (as part of exhibit PS/1) the “final version” of the Amended Particulars of Claim “submitted in accordance with the Order of DJ Manners“. The “final version”, thus identified, was in fact a copy of the second APOC. Mr Ahmed’s statement was also identified as part of Exhibit PS/1.
(4) In  &  of the second APOC there was reference to a “working agreement” having been reached in March 2012 between SM, the Appellant and Mr Ahmed on the one hand and the Respondent and Excel on the other hand, and  referred to the Service Level (Referral) Agreement dated 4 October 2012 (which was produced in Schedule 3). The Introducer Agreement entered into on 1 April 2013 was referred to in , and an agreement was reached for the Respondent to pay £500 plus VAT as an Initial Admin Fee, plus a final payment of £250 plus VAT at the end of each successful claim. In  it was asserted that the working agreement had existed before the Referral and Introducer agreements, and that the direct relationship between the Respondent, SM and the Appellant was well illustrated by the communications produced in Schedule 5, and by Respondent’s consultations with the Appellant in relation to the offers made by the Third Party’s Insurers to the 1st Defendant. Further,  made clear that approximately 560 clients had been referred to the Respondent, and that the parties had operated under the working agreement – which included an obligation on the part of the Respondent to honour the irrevocable instructions of its client to pay the Appellant.
(5) Indeed, the signed agreement between the 1st Defendant and the Respondent had contained another irrevocable instruction on behalf of the 1st Defendant to “discharge my liabilities in relation to any credit repair, credit hire or storage and recovery charges from any damages received, direct to the appropriate party(s)” – which clearly established an additional right of the Appellant under s.1(1)(b) & (3) of the Contract (Rights of Third Parties) Act 1999 – as interpreted in Chudley v Clydesdale Bank PLC (2019) EWCA 344.
In response, in a second witness statement (which was dated 27 March 2019) Ms Barber explained that there now appeared to be four different versions of the proposed Amended Particulars of Claim – namely the first APOC (her “Version 1”) which had been attached to the Appellant’s application to amend dated 6 August 2018; the second APOC (her “Version 4”) which was filed and purportedly served by email on 22 August 2018; the third APOC (her “Version 2”) which was behind Tab 6 in the Appellant’s appeal bundle; and the fourth APOC (her “Version 3”) which had been forwarded to the Respondent by email on 27 March 2019.
(1)  of the second APOC, which referred to a “working agreement”, was identical to  of the first APOC (which was before HHJ Baucher).
(2) The reference to an alleged verbal agreement in  of the second APOC was a reference to the agreement alleged in [10(ii)], namely a verbal agreement that the Respondent would pay a final payment of £250 plus VAT per client to SM, the Appellant, or other referring company of Mr Ahmed.
(3) Save for a reference in , the second APOC did not appear to assert that there was a written or oral agreement between the parties to account to the Appellant for sums received in relation to the 1st Defendant. Unlike other versions, including the first APOC, it was not alleged that the Respondent had agreed, in the Referral Agreement, to “comply with the instructions of the client contained in the Form of Authority and with the client instructions contained in paragraph 28 of the Hire Agreement and account to the [Appellant] for hire charges“.
(4) For the avoidance of doubt the Client Questionnaire (produced at pp.69-73 of the exhibits to the second APOC) was the Respondent’s standard form Client Questionnaire (which appeared to be signed by the 1st Defendant, but not otherwise) and was not a contract between the 1st Defendant and the Respondent. The contract between them was the Conditional Fee Agreement (produced at pp.67-68 of the of the exhibits to the second APOC).
AN UNFORTUNATE TURN OF EVENTS
It is, to say the least, unfortunate that, in seeking to advance its proposed appeal, the Appellant sought, until eventually challenged by the Respondent, to rely upon the third APOC and (based upon it) to advance strong criticism of the judge – when it had never sought, by any route, to rely upon that version of the APOC before the Judge. It is the more unfortunate that reliance was placed on the third APOC even after the transcripts were to hand and it was, or should have been, obvious that the first APOC was the only version about which both sides had advanced argument at the hearing on 26 October 2018. To state the obvious, reliance should never have been placed on the third APOC in this appeal. Nor, for that matter, was the fourth APOC relevant either.
Mr Justice Sweeney refused permission to appeal.