COURT REFUSES PERMISSION TO ADDUCE NEW EVIDENCE AFTER DRAFT JUDGMENT WAS CIRCULATED

July 6, 2021 · by · in Civil evidence, Civil Procedure, Relief from sanctions

In Karunia Holdings Ltd v Creativityetc Ltd [2021] EWHC 1864 (Ch) HHJ Halliwell considered, and refused, a claimant’s application to adduce new evidence after a draft judgment had been handed down in an application for summary judgment.

 

” The draft judgment was circulated in advance of the date appointed for handing it down so typographical corrections could be made and judgment would be available in its final form for publication when handed down in accordance with the practice identified by May LJ at [95] in Robinson v Fernsby (supra). It was certainly not intended to provide the parties with an opportunity to re-assess their evidence. As May LJ observed, the practice is intended to promote efficiency and economy not to enable the parties to re-open the substance of the judgment.”

THE CASE

The claimant brought a case alleging that certain deeds were forged. The defendant applied for summary judgment on the claim. The judge sent out a draft judgment granting the defendant’s application. Following receipt of the draft judgment the claimant applied for permission to adduce new evidence.

 

THE JUDGMENT ON THIS ISSUE

The judge considered, in detail, the principles relating to adducing new evidence after a draft judgment, but before judgment was formally handed down.  He refused the application to adduce new evidence.

(10) Karunia’s subsequent application for an order permitting it to rely on new evidence
    1. The hearing of Creativityetc’s application for summary judgment took place on 17th May 2021. At the end of the hearing, I reserved judgment. On 25th June 2021, I emailed a draft judgment to counsel on a confidential basis in advance of the date listed for it to be handed down, inviting them to submit a list of typing corrections and other obvious errors. The draft judgment was essentially as set out in [1] –[2] and [4] – [43] above. By emails timed at 13:02 and 13:06 on 29th June 2021, Mr Pickering and Mr Jones responded with corrections. At this stage, judgment was due to be handed down at 10am on 30th June 2021 and Fieldfisher were on the record as Karunia’s solicitors.
    1. However, later on 29th June 2021, RHF Solicitors, filed an Application Notice on behalf of Karunia seeking “an order to introduce new evidence post trial on the basis of material non-disclosure”. The Application Notice contained the following statement.
“The new evidence has come to the Claimant’s attention post hearing of the Defendant’s application for summary judgement heard on 27th May 2021. The evidence was discovered following the delivery up of solicitors’ files in relation to a claim brought by the Claimant against Abbey Solicitors who had originally acted in relation to the transaction which forms the subject matter of the dispute presently before the Court. The new evidence discovered is fundamental to the Claimant’s case and ought to have been in the Defendant’s possession and control and should have been brought to the Court’s attention”.
    1. The Application Notice was supported by a witness statement from Mr Rose stating that he was seeking to adduce e-mail communications and letters between Mr Nick Henesy and Mr Zrihan and himself and Mr Zrihan together with a copy of the Original Deed of Priority and the Facility Letter. He stated that the documentation shows Creativityetc “asked for execution of all of the original loan documents in August 2015 whereas the Defendant’s pleaded case states that all of the documentation was executed in January 2015”. Later, in the witness statement, he confirmed his “…belief that [Creativityetc] has failed to disclose several original wet ink loan documents purported to have been received in January 2015”. He also stated that Ms Agathagelou “has been unwell for some time due to contracting Covid 19” but, following perusal of the Amended Deed of Priority, he understands “she said that…she has never seen this document nor has she ever been provided with a copy of this nor is it held on record of the offices of [Karunia]”. Documentation was exhibited to Mr Rose’s witness statement and a draft order was appended with provision for “judgment [to] be deferred in order to afford [the judge] the opportunity to consider the additional evidence”.
    1. Karunia thus invited me to admit the new evidence and re-open the draft judgment. Under a consent order dated 11th May 2021, the deadline for delivery of its evidence expired well before the hearing on 27th May 2021. It filed a witness statement in compliance with the deadline but did not seek to file further evidence before or, indeed, at the hearing of the application for summary judgment. Karunia’s application for permission to introduce new evidence was thus issued out of time. It was also at odds with the principle of finality under which, on analogy with a full trial, the respondent to an application for summary judgment can generally be expected to present its full case in opposition to the application at the hearing itself, supported by the evidence on which it is based.
    1. However, I have jurisdiction to extend time, give relief from sanction, admit new evidence and, under the Barrell principle, re-open judgment at any time before the court order has been perfected. The Court’s judgment to re-open a judgment in this way has been authoritatively confirmed by the Supreme Court in re L and another (Children) (Preliminary Finding: Power to Reverse) [2013] UKSC 8, [2013] 1 WLR 634. For these purposes, the discovery of new facts following judgment is capable of amounting to a good reason for doing so, see re Blenheim Leisure (Restaurants) Ltd (No 3) The Times 9 November 1999 (implicitly endorsed by the Supreme Court in re L and another (supra) at [27]), Charlesworth v Relay Roads Ltd [2000] 1 WLR 230 and Vringo Infrastructure Inc v ZTE (UK) Ltd [2015] RPC 23.
    1. In these circumstances, once my attention was drawn to the Application Notice, I postponed the date for judgment to be handed down and, by an email on 29th June 2021, invited counsel to respond with their observations. In response, Mr Pickering and Mr Jones each provided me with their written submissions.
    1. Mr Pickering submitted that the Application was too late and should not be entertained in the absence of an application for relief from sanction. In doing so, he observed that the new evidence was in the possession of Mr Rose in advance of the deadline for filing evidence on 7th May 2021. Mr Pickering also submitted that the new evidence was irrelevant since it did not show the original loan documents were not executed in January 2015. Relying on Robinson v Fernsby [2003] EWCA Civ 1820, he submitted that there were no exceptional circumstances to warrant an order altering the judgment. Moreover, considerable court resources had already been expended on the claim and prejudice would be caused to his client and other court users if Karunia was permitted to rely on the new evidence at this stage.
    1. In his written submissions, Mr Jones relied on the observation of Norris J in Swift Advances plc v Ahmed [2015] EWHC 3265 at [26] that, whilst, “the principle that there must be finality in litigation must of course weigh heavily” fresh evidence could be admitted where “it would be an affront to common sense and to any sense of justice to exclude” it (citing dicta of Lord Wilberforce in Mulholland v Mitchell [1971] AC 666 (HL) at 679-680). He submitted that Mr Rose’s evidence about Ms Agathagelou was significant on the basis she had confirmed that she did not sign the Original Deed of Priority but did sign an undated version of the document which she had kept on file. He also submitted that it could be seen from the documentation that Mr Zrihan “was no more in reality than a postbox who did as was bid” and that the security documentation could be seen to have been finalised in August rather than January 2015.
    1. In re L and another (Children) (Preliminary Finding: Power to Reverse) [2013] UKSC 8, [2013] 1 WLR 634, the Supreme Court confirmed that the Barrell principle is not confined to “exceptional circumstances” and, following the CPR, the outcome of any application to re-open a judgment will be guided by the Overriding Objective. In endorsing the dissenting view of Clarke LJ in Stewart v Engel [2000] 1 WLR 2268, the Supreme Court specifically referred to the Overriding Objective of dealing with the case justly. However, they can be taken to have envisaged, more generally, that the courts would apply CPR 1.1(1) in full so as to include dealing with cases at proportionate cost and import each of the considerations in CPR 1.1(2).
    1. The threefold test in Ladd v Marshall [1954] 1 WLR 1489 for the reception of fresh evidence on appeal is at least an important cross reference, namely whether (1) it could have been obtained with reasonable diligence, (2) if given, it would probably have an important influence on the outcome; and (3) it is apparently credible, though not necessarily incontrovertible.
    1. In Charlesworth v Relay Roads Ltd (supra), Neuberger J stated that, on an application to admit new evidence after judgment has been handed down but before the order has been drawn up, such factors should be “in the forefront of the mind of the court” albeit not to be applied “on the strict basis that each of these conditions always has to be fully satisfied before fresh evidence can be admitted before judgment”. Later in his judgment, he stated that “it would generally require an exceptional case before the court was prepared to accede to an application where the applicant could not satisfy the three requirements in Ladd v Marshall”. This observation was taken up by Birss J (as he was) in Vringo Infrastructure Inc v ZTE [2015] EWHC 214 (Pat) at [29] when stating that “the point which Neuberger J in Charlesworth was seeking to express was that in a case like the one before him, with an application to raise a new point, call new evidence and have a new trial, that if the applicant does not meet the Ladd v Marshall test, it is hard to see how, in most cases, it would be permitted. I respectfully agree with that sentiment although I think it is right to say that to characterise any element of the test by using the word ‘exceptional’ is not now correct in the light of in re L”. No doubt, Birss J’s observation about the use of the word ‘exceptional’ applies also to the observation in Clarke LJ’s dissenting judgment in Stewart v Engel (supra), Clarke LJ that “after a full trial, the application of the overriding objective would be unlikely to lead to the conclusion that the losing party should be permitted to reopen the matter save in an exceptional case where the requirements of Ladd v Marshall [1954] 1 WLR 1489 were not met. However it will all depend on the circumstances”.
    1. In Swift Advances v Ahmed (supra), Norris J did not apply the Ladd v Marshall test when admitting a transfer deed following the trial of an application to set aside two deeds of trust as transactions at an undervalue under the provisions of Section 423 of the Insolvency Act 1986. However, there was an overwhelmingly strong case for him to do so because the transfer deed was being admitted in evidence by the applicant to clarify an ambiguity arising from the respondents’ oral evidence. Once it was admitted, it simplified the issues before the Court and entirely dispensed with the need for the applicant to seek an order setting aside one of the deeds.
    1. In determining whether to permit Karunia to admit further evidence and re-open the draft judgment, I must thus apply the Overriding Objective. As a cross reference, I shall also take into consideration the Ladd v Marshall test mindful that it is not an essential requirement for each part of the test to be fully satisfied before fresh evidence can be admitted. I am also satisfied that I should apply the three-fold test in Denton v TH White Ltd [2014] EWCA Civ 906.
    1. I am mindful that Karunia invites me to re-open judgment on an application under CPR 24 only, not judgment following trial. Whilst, in my judgment, there is no material difference between the applicable principles for such cases, it is relevant that, to succeed in its Defence it was and is only necessary for Karunia to show that it has a real prospect of success and, if not, summary judgment should not be given if these is some compelling reason why the case should be disposed of at trial. I have borne this in mind in considering the overall merits of the application. I am also mindful, when applying the Overriding Objective, including the requirement for the case to be dealt with at proportionate cost, that there has not yet been a full trial of the proceedings only an application for summary judgment.
    1. Nevertheless, I am satisfied that Karunia’s application to introduce the new evidence at this stage of the proceedings should be dismissed and I should decline to re-open the conclusions in my draft judgment.
    1. Although it is not necessary to apply the “exceptional circumstances” test, it is highly unusual for a party to seek to introduce new evidence at this stage and Karunia must thus show it has a good case for doing so. The draft judgment was circulated in advance of the date appointed for handing it down so typographical corrections could be made and judgment would be available in its final form for publication when handed down in accordance with the practice identified by May LJ at [95] in Robinson v Fernsby (supra). It was certainly not intended to provide the parties with an opportunity to re-assess their evidence. As May LJ observed, the practice is intended to promote efficiency and economy not to enable the parties to re-open the substance of the judgment.
    1. In the present case, Karunia has provided no explanation for the timing of its application. It can thus be inferred the application was prompted by the circulation of the draft judgment itself and, having seen the draft judgment, Karunia is thus seeking to exploit the practice to obtain a tactical advantage.
    1. In any event, the Overriding Objective requires the courts to deal with cases so as to save expense, to allot them an appropriate share of the court’s resources and enforce compliance with rules and orders. The courts should also seek to ensure that such cases are dealt with expeditiously and fairly, and in a way proportionate to the amounts of money involved, the importance of the case, the complexity of the issues and the financial position of the parties. To allow Karunia’s application would plainly lead to additional expense, delay and the consumption of court resources. It would also require relief from sanction and a retrospective extension of the time allowed for delivery of Karunia’s evidence under my court order dated 11th May 2021.
    1. Measured against these considerations, Karunia has not demonstrated a strong or persuasive rationale for admitting the new evidence in support of the claim. On the hypothesis such evidence is admitted, there would remain no convincing explanation for the alleged forgery. It would remain the case that Ms Agathagelou has not provided a witness statement. Although it is suggested Mr Zrihan “was no more in reality than a postbox who did as was bid”, Mr Zrihan was instructed as Karunia’s solicitor and, on that basis, issued the Solicitors’ Undertakings. Whilst there are now additional allegations about the execution of loan documents in August 2015, these post-date completion. The Particulars of Claim is based on allegations of forgery in respect of the Original Deed of Priority. This had been executed in its original form by the time it was emailed to Creativityetc’s solicitors on 22nd January 2015. Moreover, for the reasons I have given in [36] – [40] above, it remains the case that, on the hypothesis the Original Deed of Priority and thus the Amended Deed of Priority could be shown to have been forged, nothing substantial will be established by Karunia’s claim for declaratory relief.
    1. If I apply the Ladd v Marshall test, the same outcome is achieved. Karunia maintains that the new evidence was discovered following the delivery of solicitors’ files in relation to a claim against Abbey solicitors. However, it has failed to show that the new evidence could not have been obtained with reasonable diligence for use at the hearing on 27th May 2021. Moreover, for the reasons I have given, I am not satisfied that, if the new evidence were to be adduced, it would have an important influence on the outcome of Creativityetc’s application for summary judgment. Nor, indeed, am I satisfied that, in the hypothetical event Karunia makes an application for relief from sanction in respect of its failure to file the new evidence within the time required, it would satisfy the three-stage test in Denton v TH White (supra). The breach was plainly serous and significant, no explanation has been given for the default and there is no convincing case for relief based on the overall circumstances of the case.
(11) Disposal
    1. I shall thus dismiss Karunia’s application to adduce new evidence and allow Creativityetc’s application for summary judgment. In these circumstances, no case for substantive relief arises on Creativtivityetc’s application for security for costs and Mr Pickering has accepted that the Counterclaim can be dismissed. I shall hear submissions from counsel on all further and consequential issues.

 

 

 

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