Case No: PTA/1999/5898/B2
CCRTF/1999/7185/B2
FC2/2000/6306/B2
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM SHOREDITCH COUNTY COURT
His Honour Judge Graham
Royal Courts of Justice
Strand, London, WC2A 2LL

Tuesday 20 June 2000
B e f o r e :

LORD JUSTICE PETER GIBSON
LORD JUSTICE MAY

	field	Respondent	
	- and -		
	TIBBS	Appellant	

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(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 180 Fleet Street
London EC4A 2HD
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Mr. Hilton Harrop-Griffiths (instructed by  Messrs Amery Parks of London for the Respondent)
Mr. Nicholas Yell (instructed by  Messrs Stunt Palmer and Robinson of London for the Appellant)
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Judgment
As Approved by the Court

Crown Copyright ©

Lord Justice Peter Gibson:

	1  The Defendant, Ronald Tibbs, seeks permission to appeal out of time from the order of His Honour Judge Graham Q.C. in the Shoreditch County Court on 28 October 1998 whereby he gave judgment for the Claimant, Alexander Field, in the sum of £29,745.16.  The application to this court was not made until 22 March 1999.  If permission is given, we are asked to determine the appeal itself.

	2  Mr. Field is the uncle of Mr. Tibbs.  On 29 February 1992 Mr. Field lent Mr. Tibbs’ sister, Doreen Tibbs (“Doreen”), £15,000 interest-free.  On 30 April 1993 Mr. Field Lent Mr. Tibbs £105,000 on terms whereby Mr. Tibbs promised to repay that sum with £6,000 interest by 6 monthly payments of £18,500 each, the first payment to be made after one month.  Mr. Tibbs also agreed to pay interest on overdue payments at the rate of interest applicable for the capital, that is to say at 11.4%.

	3  Unfortunately Mr. Tibbs was found shortly afterwards to be suffering from cancer and was unable to make repayments in accordance with his obligations.  Three payments were made to Mr. Field, £10,000 on 18 July 1995, £20,000 on 10 April 1996 and £50,000 on 12 July 1996.  But Mr. Field treated the £10,000 payment as reducing Doreen’s £15,000 debt and £5,000 of the £50,000 payment as extinguishing the remainder of her debt, whereas Mr. Tibbs claimed that all the payments were made by or on his behalf and that his debt was thereby reduced by £80,000.

	4  On 1 May 1997 Mr. Field commenced proceedings against Mr. Tibbs.  He pleaded that only £65,000 had been paid to him by Mr. Tibbs and he claimed £90,096.04 as due.  He applied for summary judgment.  On 10 December 1997 District Judge Silverman gave Mr. Field judgment for £84,452.63 and gave Mr. Tibbs unconditional leave to defend the remainder of the claim.  Mr. Tibbs appealed.  There were two issues arising out of the District Judge’s order:  (1) whether Mr. Tibbs had agreed to pay interest on the outstanding instalments of the £105,000 loan at the annual rate of 11.4%; (2) whether Mr. Tibbs had repaid £80,000 or £65,000.  The Judge decided against Mr. Tibbs on the first issue on 16 February 1998.  He held that Mr. Tibbs was liable to pay interest at 11.4%.  However he reduced the sum payable by way of summary judgment to £65,083.24 and gave Mr. Tibbs unconditional leave to defend the balance.

	5  The second issue was tried by the Judge on October 1998 over two days.  Mr. Field was represented by Mr. Harrop-Griffiths, who has appeared on this appeal.  Mr. Tibbs represented himself.  I fear that by doing so he did himself a disservice, and it must have made the task of the Judge considerably more difficult.  Mr. Field and Mr. Tibbs each gave oral evidence.  We do not have a transcript of that evidence, but we have been supplied with notes which were taken by a para-legal in the firm of solicitors acting for Mr. Field and those notes have been seen and approved by the Judge subject to his judgment.  The Judge accepted the evidence of Mr. Field, not because of the impression made on him by the oral evidence but because of certain documentary evidence in Mr. Field’s favour.

	6  Mr. Tibbs sought permission from this court to appeal from the Judge’s order of 16 February 1998 relating to interest.  But this court (Brooke and Clarke L.JJ.) on 10 February 1999 refused that application.  At the end of that hearing Mr. Tibbs told the court that the Judge had decided the second issue relating to the amount of payments made, and Mr. Tibbs was advised to lodge the application for permission to appeal without delay.  Hence the application to this court which is now before us.

	7  Although the application for permission was made some three months out of time, I need not say much about Mr. Tibbs’ tardiness as Mr. Harrop-Griffiths has taken no point on the delay.  Mr. Tibbs is a litigant in person with serious health problems.  Whilst I doubt if his explanation of the delay excuses his non-compliance with the Rules, on such applications the consideration which weighs most with this court is whether there is substance in the proposed appeal.  To this I turn.

	8  The Judge had a number of documents before him to indicate the way the parties put their cases.  To Mr. Field’s pleading that only £65,000 had been repaid, Mr. Tibbs’ formal Defence which was settled by Counsel was that Mr. Tibbs had repaid £80,000 in the three tranches of £10,000, £20,000 and £50,000.  Mr. Field in an Affidavit sworn on 8 October 1997 in support of the application for summary judgment said that in or around 18 July 1995 he had received a letter from Doreen enclosing a cheque for £10,000 made payable on the account of Mrs. C. West.  He said “I used this money to repay part of the first loan of £15,000 .... which had been made in February 1992.”  That was the loan to Doreen.  Of the £50,000 payment he said that he received that from Doreen.  He said “I used £5,000 of this money to discharge the monies which remained due to me from the loan in February 1992 and the remaining £45,000 was used to repay part of the monies which remained due to me under my Agreement with the Defendant.”  It is to be noted that this account is simply of Mr. Field acting unilaterally and appropriating those monies paid by Doreen to discharge the loan which had been made to her.  There is no suggestion that he did that with the agreement of Mr. Tibbs.

	9  The response of Mr. Tibbs was in an Affidavit of 23 October 1997 which he appears to have drawn himself.  In it he said that Doreen did most of his business for him as he was under a lot of medication and that she arranged for the three separate payments of £10,000, £20,000 and £50,000, leaving a balance of only £25,000 unpaid.  Mr. Tibbs set out in greater detail his version of the relevant events in an Affidavit of 11 February 1998 which appears to be professionally drawn and which responds more fully to Mr. Field’s Affidavit of 8 October 1997.  In it he said that whilst he had been ill Doreen had assisted him in dealing with his affairs and that she further assisted in dealing with his elderly mother’s affairs.  He said that there was a discussion of the repayment of £10,000 when his mother, Doreen and Mr. Field were all present.  Mr. Field asked Mr. Tibbs to repay part of the loan.  Mr. Tibbs said that he was not in a financial position to do so, but it was agreed that his mother would lend Mr. Tibbs £10,000 to make a part repayment to reduce his debt and release some money for Mr. Field.  The mother, he said, needed to establish whether she had sufficient monies in her account before writing out a cheque and so did not write it out there and then.  Once she was satisfied she had sufficient funds she asked Doreen to write out a cheque for the mother which the mother signed and Doreen then delivered it to Mr. Field’s address.  He said:  “It was always understood that this payment of £10,000 was being made against my outstanding liability and I do not know on what basis my uncle has tried to suggest that it was on behalf of my sister.”  Mr. Tibbs further said that at the time of the payment of £50,000 he had agreed with Mr. Field that he would reduce the debt further by making a payment of that amount.  He said that those monies were paid through his mother’s solicitors, and he added:  “We had organised this payment by obtaining finance from Allied Irish Bank secured against the property I had purchased and was now held in the name of my mother’s company.  My uncle was well aware that the £50,000 was paid in reduction of my liability but for some unexplained reason he states in his affidavit that he used £5,000 of the money to discharge what he considered to be the balance of my sister’s debt of £15,000.  He had no grounds for doing this and that money should have been credited against my liability as that was on whose behalf it was paid.”

	10  Mr. Field on 13 February 1998 responded by Affidavit to that Affidavit (and an Affidavit to similar effect by Doreen).  He said that the payment of £10,000 was always understood to be a part repayment of the loan to Doreen and denied that there was ever any understanding regarding the payment of £50,000 as claimed by Mr. Tibbs.  He said that the true details of this payment were explained in the Affidavit of 8 October 1997.  He exhibited copies of two letters dated 9 August 1995 sent to Mr. Tibbs and Doreen respectively by a solicitor acting for Mr. Field (I will refer to these later, but it is sufficient to say at this stage that it is accepted that they may not have been received) and said that the letters showed that they were both aware of how the £10,000 had been applied.  He further said that there was no reply to the letters but he said that he had discussions with Mr. Tibbs and Doreen which confirmed the fact that the £10,000 had been used in part payment of Doreen’s debt.  Again it is to be noted that Mr. Field was not alleging any agreement with Mr. Tibbs for the repayment of Doreen’s debt. 

	11  In his witness statement Mr. Field stated his belief that Doreen had used the name of Mrs. West as a trading name for many years.  He referred to the receipt by him of a letter from Doreen enclosing a cheque drawn on Mrs. West’s account in the sum of £10,000 which he had used to repay part of the first loan of £15,000.  He referred to the letters dated 9 August 1995 and said that later he had “discussions with the Defendant and his sister which confirmed the fact that the £10,000 received had been used in part payment of the earlier debt.”  He repeated what he had said in the Affidavit of 8 October 1997 about his use of the payment of £50,000.  Again I make the comment that Mr. Field was not alleging any agreement with Mr. Tibbs.

	12  The notes of the hearing before the Judge record that Mr. Tibbs was relying on his two Affidavits and Doreen’s two Affidavits, but that Mr. Tibbs later decided not to call Doreen.  Mr. Field is recorded as saying in his evidence in chief about the £10,000 cheque:  “Put it in bank for [Doreen’s] loan as [outstanding] the longest”.  He said later, that he could not remember if he spoke to her about it and that his accountants never said he had done it wrong.  When asked in cross-examination by Mr. Tibbs why he took the £10,000 off Doreen’s debt, Mr. Field answered:  “Cos hers was the debt outstanding the longest.”  On the payment of £50,000 he is recorded as saying that he appropriated £5,000 to clear Doreen’s balance.  The notes add:  “He told them both what he was doing and that they agreed.”  This is the sole reference to an agreement in the notes of Mr. Field’s evidence.

	13  In the notes of Mr. Tibbs’ evidence he is recorded as saying that his mother used the name of Catherine West for business.  In cross-examination he denied any agreement with Mr. Field that monies paid were to extinguish Doreen’s debt.

	14  The Judge summarised Mr. Field’s evidence in this way:
“Mr. Field stated that such appropriation of the sum of £15,000 was with the agreement of the defendant and Miss Tibbs.  He said that before and after the cheque for £10,000 was sent, the matter was discussed with Mr. and Miss Tibbs and it was agreed that the £10,000 was to be allotted to fund partially Miss Tibbs’ indebtedness.  Likewise, when the £50,000 was paid in July 1996, it was agreed that the £5,000 was for the unpaid balance of Miss Tibbs’ loan.  Accordingly, the only sum remaining to benefit the defendant was the balance of £80,000, namely £65,000.”
I pause there to observe that the Judge’s summary of the evidence goes well beyond what appears in the notes of evidence to which I have referred, where there is the single reference to an agreement, which I have noted, and that appears to have related to the £50,000 payment.  Further, the Judge has ignored the primary reason twice given by Mr. Field for the appropriation of Doreen’s loan, viz. that it was outstanding the longest.  Nor does the judge make any reference whatever to the Affidavit evidence or the Witness Statement of Mr. Field which might be said to cast further doubt on whether Mr. Field’s evidence was that the appropriation was by agreement.

	15  The Judge then summarised Mr. Tibbs’ evidence as being that which I have summarised from  his Affidavit of 11 February 1998.

	16  The Judge then expressed his conclusion in this way:
“I have been initially in a state of mind of hesitation as to whose account of the payment of the £10,000 and £50,000 should be credited.  I could not decide, on either impression or inherent probability, which of the parties’ evidence I prefer.  I have finally come to the conclusion that on balance I should accept the evidence of the plaintiff.  The reason for so doing is that the documentary evidence is in his favour.”
	
	17  Pausing there, I would comment that the Judge has expressly disavowed deciding the case on the basis of the impression which the witnesses, whom he had had the advantage of seeing and hearing, has made on him, nor on inherent probability.  Thus the Judge has either not noticed or chosen to ignore that Mr. Field’s evidence might be taken to be that he appropriated the payments to Doreen’s loan either because they were payments made by her or because her loan was outstanding longest, and that the belated assertion of any agreement with Mr. Tibbs and Doreen appears to be something of an afterthought relating to the £50,000 payment.  Further, the Judge makes no comment on what at first sight might be thought to be the inherent improbability of Mr. Tibbs agreeing to the monies, which the Judge appears to accept were paid by or on behalf of Mr. Tibbs, being used to pay off the interest-free debt of Doreen, who was about to be made bankrupt, leaving outstanding substantial sums on the interest-bearing loan of Mr. Tibbs.  I find it disquieting that the Judge has avoided making any finding on the evidence of Mr. Field and Mr. Tibbs on the central issue in the case without comment on what are surely obvious points against Mr. Field’s credibility.

	18  I turn next to the documentary evidence which the Judge found determinative, bearing in mind that this is what led the Judge to accept the evidence of Mr. Field, as summarised by the judge, viz. that Mr. Field appropriated the £10,000 cheque and £5,000 of the £50,000 payment with the agreement of Mr. Tibbs and Doreen.  I would emphasise that if the appropriation of what was paid by or on behalf of Mr. Tibbs was made other than with the agreement of Mr. Tibbs, that appropriation in law would be invalid.  Mr. Harrop-Griffiths had submitted otherwise to the Judge, but he now concedes, as he must, that that submission was wrong.  The notes of the hearing record the Judge in discussion as not accepting Mr. Harrop-Griffiths’ submission, but the Judge does not set out in his judgment what legal principle he was applying.  It is not in dispute before us that it was for Mr. Field to establish his case that he was entitled to make the appropriation that he did.

	19  The first document relied on by the Judge is the County Court form in which Mr. Tibbs indicated that he wished to dispute the claim against him in the summons and Particulars of Claim of Mr. Field.  Those Particulars of Claim were professionally drawn.  Yet they assert that by the agreement of 30 April 1993 Mr. Field agreed to lend Mr. Tibbs £110,000 although in the particulars of the loss and damage claimed £105,000 is rightly said to be the original loan.  It was also claimed that any repayment instalments not made would carry interest at 11.4% per annum.  The particulars also included the figure of £65,000 as a deduction for payments made.  Mr. Tibbs ticked the box in section 1 to indicate that he disputed the full amount claimed, when in truth he only disputed part of that amount.  To the question in section 3, “Do you dispute this claim because you have already paid it?”, he ticked the box marked “No”.  He started completing, but then deleted his answer to a question as to what he had paid.  In section 4, in answer to the question “If you dispute the claim for reasons other that payment what are your reasons?” he wrote:  “The figures are wrong as I have highlighted and also the interest amount are wrong on this summons  I am suffering from cancer  Please find the enclose medical certificate  Many thanks
PS Enclose copy of particular which is highlighted.”
On the copy of the Particulars of Claim were highlighted the two figures of £110,000 and £105,000, but not the figure of £65,000.

	20  I accept that the failure to refer to the £65,000 is of some significance.  But I bear in mind that Mr. Tibbs was acting in person and seriously ill, and that he had highlighted the obvious discrepancy in the Particulars of Claim.  Further, whilst it provides a cross-examination point (and Mr. Tibbs in cross-examination could not explain why he had not highlighted the figure of £65,000), it in no way went to establish what Mr. Field had to prove, that is to say his right to appropriation.

	21  The second piece of documentary evidence relied on by the Judge is the two letters sent by Mr. Field’s solicitors to Mr. Tibbs and Doreen which the Judge described as “contemporaneous documents which lend some support to Mr. Field’s evidence.”  But the Judge did not find that the letters were received by Mr. Tibbs and Doreen, and the highest this evidence can be put is that they show that the assertion which Mr. Field   was making in August 1995 is consistent with his case at the trial that he was entitled to appropriate the £10,000 cheque to Doreen’s debt.  But crucially the letters do not assist on the point whether he was making that appropriation by reason of an agreement with Mr. Tibbs.  They are equally consistent with the view that that appropriation was made because Mr. Field believed that Doreen paid the cheque or because he believed that he had the right to appropriate it to whatever debt he chose or to Doreen’s debt because it had been outstanding longer than Mr. Tibbs’ debt.  Those alternative views, all of which accorded with evidence put forward by Mr. Field, were not commented on by the Judge though impliedly rejected by him in accepting that the appropriation by Mr. Field was of monies paid by or on behalf of Mr. Tibbs but was made with Mr. Tibbs’ agreement.

	22  The third piece of documentary evidence is a statement by Mr. Yelland, an insolvency practitioner dealing with the insolvency of Doreen, to the effect that Doreen, in completing a list of creditors, did not state that she owed Mr. Field £15,000.  That is consistent, as the Judge said, with her debt having been paid.  In fact Doreen only told the Official Receiver of one creditor and that not even her petitioning creditor who made her bankrupt.  We do not know why Doreen did not refer to her debt to Mr. Field or why she twice sought to have the bankruptcy petition annulled on the basis that she had no creditors.  That does not go to Mr. Tibbs’ credibility, still less does it support Mr. Field’s case that it was with the agreement of Mr. Tibbs that Mr. Field appropriated to Doreen’s debt £15,000 of the monies paid to him.

	23  To sum up the position as I see it, the Judge made no finding on the evidence of Mr. Field or of Mr. Tibbs on the central issue in the case as to whether or not it was with the agreement of Mr. Tibbs that Mr. Field appropriated to Doreen’s debt £15,000 of the monies paid to him by or on behalf of Mr. Tibbs, nor did he say anything about the evidence before him of Mr. Field himself inconsistent with his case, but decided the case on the basis that three pieces of documentary evidence were in Mr. Field’s favour even though none of them supported, still less established, that it was with Mr. Tibbs’ agreement that the appropriation was made.  I have to say that that does not seem to me to be a proper exercise of the trial judge’s function in determining the case.

	24  In my judgment the reasons given by the Judge do not justify his conclusion and he has failed to deal with the difficulties in Mr. Field’s evidence.  The Judge’s decision cannot be allowed to stand.  In so deciding I have not found it necessary to consider the further evidence which the parties sought to adduce.  By r. 52 11 (2) of the Civil Procedure Rules evidence not before the lower court will not be received without this court so ordering.  This court has the power under r. 52 10 (2)(a) and (c) to set aside the order made below and to order a new trial.  I am uncomfortably aware that so to order will cause considerable further costs to be incurred as well as delay, when the fault cannot be laid at either party’s door.  These are matters to which regard should be paid when this court seeks, as it must, to give effect to the overriding objective in Part 1 of the Civil Procedure Rules.  But dealing with the case justly must, in my view, entail ensuring that there is a proper judicial determination of the dispute between the parties by a judge who sees and hears the witnesses.  In acceptance of the submissions of Mr. Yell for Mr. Tibbs, I would therefore give permission to Mr. Tibbs to appeal out of time, allow the appeal, set aside the Judge’s order and order a new trial before another judge.  That retrial should occur as soon as can be arranged.

	25  However, as this is a family dispute, I would hope that both parties would give serious consideration to resolving the dispute amicably without the stress, expense and delay of a retrial.  I am aware that both parties suffer from cancer.  Their professional advisers will be able to advise them of alternative dispute resolution procedures and the availability of mediation services.

Lord Justice May:

	26  I agree with Peter Gibson LJ, for the reasons which he has given, that this application for permission should succeed, and that the consequent appeal should be allowed and a fresh trial ordered.  I agree that the judge did not adequately address in his judgment the question of the credibility of the two main witnesses in the context of a clear analysis of the principal issue.

	27  It is very rare that a judge finds himself with literally nothing to say about the rival primary credibility of two or more witnesses who have given contradictory oral evidence.  In the present case, however, the judge apparently considered that Mr Field and Mr Tibbs gave equally credible oral evidence and that there was no material internal to their evidence or concerning the way in which they gave it to enable him to distinguish between them.  He decided the case by reference to three peripheral indications which he considered to be inferentially in favour of Mr Field’s version.  I agree with Peter Gibson LJ that these three matters did not themselves establish the agreement necessary for Mr Field’s case to succeed, and that as support for that case they were individually and cumulatively not particularly strong.  However, as Mr Yell has demonstrated and as Peter Gibson LJ has described, there were significant points to be considered about Mr Field’s primary credibility which the judge did not refer to at all.  There were passages in his written evidence which could be read, not as saying that there was an agreement between Mr Field, Mr Tibbs and Doreen Tibbs that the payments in issue should go to reduce her debt, but that Mr Field had himself unilaterally decided to make an appropriation to that effect.  His oral evidence, as recorded in the notes which the court has, also contained two passages which could bear substantially the same meaning.  In my judgment, it was necessary for the judge to deal with this material before he could conclude that there was an agreement in the terms which he found.  It was not perhaps in law impossible for the judge to conclude that, notwithstanding these points, he preferred Mr Field’s eventual oral evidence, but it was not, I think, in the circumstances of this case, properly open to him to do so without explaining why this material, which might be seen as undermining Mr Field’s credibility, did not do so.  I suspect that Mr Harrop-Griffiths saw that there was a risk that Mr Field’s primary factual case might not succeed, when he made submissions of law to the judge to the effect that Mr Field was entitled, in the absence of express instructions, to appropriate the money as he saw fit.  On the facts of the case, these submissions were not correct, as the judge indicated at the time.  But the fact that Mr Harrop-Griffiths made them indicates, I think, that he appreciated that there were evidential difficulties with Mr Field’s primary case, as I think there were.  The judge did not address these difficulties at all and I do not consider that a decision which fails to do so can stand.

	28  I only add that I am unhappy about a conclusion that there should be a retrial where the parties have already spent an undesirably large amount of time, energy and expense on this and related litigation.  In the circumstances, I do not see a formal alternative to ordering a retrial, but I really do hope that the parties may be able by cooperative negotiation to avoid it.

Order: Appeal allowed with costs; costs below to be in the discretion of the cout hearing the retrial; parties to obtain an appointment with the Central London Court Mediation Services; £29,000 costs held in court to be repaid out of court to the appellant.
(order does not form part of the approved judgment)