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||Neutral Citation Number:  EWCA Civ 1184
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
(Mr E Murray)
||Royal Courts of Justice
London, WC2A 2LL
||7 October 2015
B e f o r e :
LADY JUSTICE MACUR
LORD JUSTICE VOS
SIR DAVID KEENE
||VLADIMAR KISHENIN t/a BEIDEBECKE'S HOTEL AND RESTAURANT
||(1) PETER VON KALSTEN BLEACH
||(2) SADIE ISABELLA SHARD
||(3) BEIDERBECKE'S LIMITED
||(4) SCARBOROUGH COCKTAILS LTD
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The Second Defendant/Appellant appeared in person
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HTML VERSION OF JUDGMENT
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LORD JUSTICE VOS:
- This is an appeal by Ms Sadie Shard, the second defendant, whom I shall call Ms Shard, against paragraphs 2 and 4 of the order of Mr Edward Murray sitting as a Deputy Judge of the Chancery Division, dated 28 July 2014. The appeal is only against those paragraphs insofar as they apply to her. The claimant has not appeared before us, since, as we understand the position, his solicitors are applying to come off the record as acting for him.
- Paragraphs 2 and 4 of the order appealed against are as follows:
"2. The Defendants do vacate and deliver up possession of the Hotel to the Claimant (or his duly appointed representative(s) by 4pm on 11 August 2014...
4. The Defendants do pay the Claimant his costs of this claim to date on a standard basis to be assessed if not agreed."
It is perhaps worth noting that the claimant's bill of costs for the action totalled some £118,207. I should say at this stage that there were in fact four defendants to the original claim to possession of the hotel and restaurant at 1-3 The Crescent, Scarborough, North Yorkshire Y011 2PW, which I shall call "the Hotel". The first defendant was a Peter Von Kalsten Bleach and the third was his company, Beiderbecke's Limited. The fourth defendant was Scarborough Cocktails Ltd, which is a company owned by Ms Shard and of which she is the only Director. There is no appeal by either of the companies or by Mr Bleach. The claimant, Mr Vladimir Kishenin, who lives in Moscow, is the freehold owner of the Hotel.
- When I say, however, that there is no appeal by either of the companies, Ms Shard has, this morning, indicated that she wishes to seek permission to appeal on behalf of Scarborough Cocktails Ltd on the grounds that precisely the same facts as apply to her appeal apply to her company's appeal but that company was omitted by accident from the appellant's notice and that she only noticed the error in failing to appeal on behalf of Scarborough Cocktails Ltd two days ago.
- This appeal is not about the substance of the dispute which was between the claimant and Mr Bleach and Beiderbecke's as to the terms on which the Hotel had or had not been let to one or other of them under an alleged oral agreement dated 27 May 2013. The appeal concerns instead whether or not Ms Shard should ever have been joined into the action at all and whether the orders I have already recited should have been made against her. Nonetheless, the resolution of Ms Shard's appeal does involve some understanding of the background involving the other defendants.
- On 25 March 2014 Mr Justice Nugee granted an injunction. We only have in the papers before us a partial copy of that order but it appears to have been made against all four defendants including Ms Shard. It restrained them from incurring any liabilities for the claimant's Hotel business save in the ordinary course of business and ordered them to pay an occupational rent of £200 per month. The judge also gave directions for a speedy trial for a 3-day hearing starting on the first open date after 19 May 2014, just two months after the injunction was applied for. Ultimately, the hearing came on with that time estimate before Mr Murray on 28 July 2015 and was finished in a day. Ms Shard did not attend and was not represented formally at that hearing. She was ill on that occasion but had hoped to attend on either the second or third day of the hearing but found, somewhat to her dismay, that the hearing had been completed before she could get down to London.
- Instead, however, the first defendant, appeared. He presented a "petition" to adjourn the trial which the judge rejected, and also something called a petition on Ms Shard's behalf and on behalf of Scarborough Cocktails Ltd, saying, in broad outline, that Ms Shard had read all the papers, that she was not a party to any of the contracts that were in issue between the parties, she was not a party to any of the discussions or other agreements, and that there was no basis whatsoever to have made her or Scarborough Cocktails Ltd a party to the proceedings. Ms Shard asked that the claims against her and against Scarborough Cocktails Ltd should be struck out. She made clear that it was entirely false to say that Scarborough Cocktails Ltd held the licence to the Hotel premises or that she was herself anything more than an employee at the Hotel running the cocktail bar. She said that she had started at the cocktail bar as an employee after the occupation agreement in question, on 25 June 2013. It is perhaps worthy of note that Ms Shard had said exactly the same things ever since the proceedings began, notably in a statement dated April 2014.
- The Judge proceeded then to deal with the matter in what must be described as a slightly unusual manner. First he declined the adjournment sought by Mr Bleach. In his judgment he recorded at paragraph 2 that Ms Shard and Scarborough Cocktails Ltd had not appeared and that it was his understanding that they did not assert any personal right to occupy the property. He then proceeded to decide the question of what right the first and third defendants had to occupy the Hotel. He did not, however, do so on the basis of oral evidence, as might have been expected, but instead was invited by counsel for the claimant to decide the matter on the basis of the first defendant's account in his statement and his pleadings of what had happened on 27 May 2013. The argument in outline was that all that had been agreed was a 1-year arrangement, and after that the arrangements were simply an agreement to agree, all too uncertain to be enforced.
- The Judge concluded at paragraph 15 of his judgment that the first and third defendants had no valid tenancy in respect of the Hotel and that they should be required to vacate it. At paragraph 16 the Judge set out some of the further history as to the business established by the claimant at the Hotel and the first defendant's involvement in it. He concluded that he should make the declaration requested by the claimant that he was the sole beneficial owner of the business. In paragraph 17, the Judge said this:
"In light of my conclusions, the appropriate order as to costs is that the defendants pay to the claimant his costs of this claim to date on a standard basis, to be assessed if not agreed."
The grounds of appeal
- On 7 August 2014 Mr Bleach and Ms Shard filed an appellant's notice against the order of 28 July 2014 seeking also a stay of execution. The grounds of appeal were quite lengthy, running to two closely typed pages, and mainly concerned Mr Bleach. But paragraphs 1 and 2 concerned Ms Shard. In outline those paragraphs contended that the Judge had been wrong not to decide the application by Ms Shard to strike out the claim since Ms Shard was a mere employee and that the claim should have been struck out against her. Secondly, the grounds said that the Judge had been wrong not to grant an adjournment when Ms Shard was ill on the day of the trial.
Permission to appeal
- Lewison LJ heard the matter on 29 October 2014. On that occasion both Mr Bleach and Ms Shard appeared in person and the claimant was represented by the same counsel as had appeared at trial, Mr Rupert D'Cruz. The Judge refused Mr Bleach permission to appeal for reasons that I need not go into here but gave Ms Shard permission, as I have said, on the basis that in the way the Judge had proceeded, namely assuming the truth of what Mr Bleach had said in his witness statement and pleadings, there was no factual basis for assuming that Ms Shard was in possession of the property, possession being indivisible, and therefore no order, and particularly no order as to costs, ought to have been made against her. Lewison LJ said that, as was the case, the Judge had never considered the separate position of Ms Shard and that had he done so he might well have come to a different conclusion about where the costs should lie.
- Mr D'Cruz had submitted that Ms Shard had been asked to leave so she had taken the risk of proceedings upon herself by failing to do so. Lewison LJ refused permission to appeal against the decision of the Judge to refuse an adjournment. He did that on the grounds that those matters were matters of case management for the Judge and there was no basis for supposing that he had gone wrong in principle. The Judge stayed the costs order in paragraph 4 of the Judge's order until determination of this appeal. It is to be noted that there was no mention on that occasion of a potential appeal by Scarborough Cocktails Ltd. As I have already said, Ms Shard submitted to us this morning that she only realised that Scarborough Cocktails Ltd was missing from this appeal two days ago.
The argument on this appeal
- In her written submissions to us, Ms Shard purports to make submissions on behalf of Scarborough Cocktails Ltd. This, as it seems to me, confirms that she thought, albeit quite wrongly, that her appeal encompassed that company as well as herself. That said, Ms Shard reiterates her complaint that the Judge ought to have dealt with her petition to strike out and failed to do so, saying that it was grossly unfair and unjust that she should be required to pay the claimant's costs. She repeats that the only allegation made against her in any of the documents is that Scarborough Cocktails Ltd was said to be the name on the liquor licence at the Hotel. She rejects that allegation as "false and fabricated" saying that the name on the licence was Beiderbecke's. She says that she was employed by Beiderbecke's and had no other status at the Hotel. Indeed there was no evidence before the Judge as to the name on the liquor licence since he proceeded on the evidence only of Mr Bleach.
- Ms Shard refers to the letter from the claimant's solicitors, dated 11 December 2014, which says that the claimant has no intention of enforcing the costs order against her or against Scarborough Cocktails Ltd. She relies, or can rely, on that latter point as supporting the proposition that if she were permitted to appeal on behalf of Scarborough Cocktails Ltd there would be less prejudice to the claimant who does not appear today.
- I do not need to read out the entirety of the letter upon which Ms Shard relies but it does conclude by saying:
"In the alternative if you were to make an application to remove [Ms Shard] and Scarborough Cocktails Ltd from the High Court Proceedings resulting in the Order of 28 July 2014, our client will not oppose such an application. For the avoidance of doubt our client would reserve the right to oppose any associated costs application and any application to vary the Order in any other way."
- The first question is whether Ms Shard should be permitted to pursue an appeal on behalf of Scarborough Cocktails Ltd. She has sought to do so only this morning. In the course of argument I explained to her that in order to pursue an appeal on behalf of Scarborough Cocktails Ltd it would be necessary for her to make and succeed in an application for permission to extend time for the filing of an appellant's notice. That appellant's notice was well out of time, the judgment being appealed having taken place as long ago as 28 July 2014.
- I explained to her also what the tests that the court should consider in considering an extension of time were. In broad outline the first test is to ask whether the delay was serious or significant. Ms Shard did not dispute that such a long delay was obviously both serious and significant. The second test, as adumbrated in the recent case of Denton v T H White Ltd  EWCA Civ 906, is to ask what the excuse for the delay was and whether such an excuse was reasonable. In this case Ms Shard's excuse for failing to file an appellant's notice is simply that she as a litigant in person, assisted partially by Mr Bleach at the time, made an error in failing to file their appellant's notice on behalf of Scarborough Cocktails Ltd. A simple error is not always a reasonable excuse for delay, particularly delay of this magnitude. But it seems to me here that Ms Shard having told us, and I accept, that she did not realise such an error had been made until two days ago, may be able successfully to contend that she has a reasonable excuse for her delay. Moreover, it is clear from the papers, as I have already indicated, that she certainly thought, albeit wrongly, right up until the time she filed her submissions to this court, that she had mounted an appeal on behalf of Scarborough Cocktails Ltd. The third part of the test for relief from sanctions is to ask, bearing in mind all the circumstances of the case, whether it is just and appropriate to extend time. The court has to take into account factor A and factor B relating to the need for litigation to be conducted efficiently and at proportionate costs and the need to enforce compliance with rules and orders. Such factors should not be underestimated and are extremely important, and permission will not normally be granted where there has been any flouting of the court's orders or rules. But in this case, in my judgment, the circumstances are truly exceptional. Ms Shard did not realise that she had not appealed on behalf of her company Scarborough Cocktails Ltd. The effects for her of having a judgment against a company of which she is the sole director could, in theory, result in proceedings against her under the disqualification of directors legislation. The facts as they relate to Scarborough Cocktail Ltd are exactly the same as the facts as they relate to her personally and there is no doubt that the claimant who is not present in court today, as I have said, is fully aware that Ms Shard and Scarborough Cocktails Ltd are, for the purposes of this litigation, to be regarded very much as one and the same.
- In all those circumstances it seems to me that it would be unjust if we were not to extend time for Scarborough Cocktails Ltd's permission to appeal albeit that that course is exceptional bearing in mind the length of the delay, and I for my part would be prepared to extend time for filing an appellant's notice on behalf of the company Scarborough Cocktails Ltd.
- As regards the substantive appeal, that only relates to the possession order and the costs order that was made against Ms Shard. The first thing that we have to consider then is whether, having extended time for the filing of an appellant's notice on behalf of Scarborough Cocktails Ltd, we should grant permission to appeal also against those two orders to Scarborough Cocktails Ltd. In my judgment we should do so for the same reasons that were given by Lewison LJ in granting Ms Shard permission to appeal.
- I will therefore turn to consider each of the two orders made against both Ms Shard and Scarborough Cocktails Ltd together.
- In relation to the possession order, it seems to me that the Judge was not justified in making that order on the evidence before him. He only relied on what Mr Bleach had said in his statement and in his pleadings as evidence. None of that supported the contention that either Ms Shard or Scarborough Cocktails Ltd was or had been in possession of the Hotel. Had he dealt with Ms Shard's application and Scarborough Cocktail Ltd's application to strike out the claims against them, as I think he ought, he would have had to have decided what evidence was adduced in answer to it. But we do not need to decide what the outcome would have been of that application to strike out the proceedings. It is sufficient for this appeal to say that the Judge made an order against Ms Shard and against Scarborough Cocktails Ltd on the basis of no evidence supporting it so that those orders cannot stand.
- As regards the costs orders, I agree with Lewison LJ that the Judge appears to have given no consideration as to whether Ms Shard ought to have been ordered to pay the costs. Likewise, the Judge appears to have given no consideration as to whether Scarborough Cocktails Ltd ought to have been ordered to pay the costs. On the basis that no evidence against either of them was adduced before the Judge, it seems to me that there can have been no basis either for ordering Ms Shard or Scarborough Cocktails Ltd to pay the coast of the proceedings. Those costs were, as I have indicated, very substantial. The proper order would have been that the claimant should have paid the costs of both Ms Shard and Scarborough Cocktails Ltd since they had been joined into the proceedings and no evidence had been adduced against them. It is true that the claimant could have adduced evidence that a demand had been made against Ms Shard and probably against Scarborough Cocktails Ltd to give up possession of the Hotel and that they had failed to quit the Hotel in response to that demand. Had that been done, that might, as Mr D'Cruz submitted on an earlier occasion, have put a different complexion on matters. But it was not done. That was not how counsel for the claimants chose to present his case at the trial. In those circumstances it seems to me that the Judge was wrong in making the orders for costs that he did against both Ms Shard and against Scarborough Cocktails Ltd.
- The final matter that needs to be considered is what is the position of the claimant, now that we will have granted permission to Scarborough Cocktails Ltd to appeal the judgment, and are inclined to allow that appeal and reverse both the order for possession and the order for costs against that company. In my judgment it is pretty clear from the letter of 11 December 2014 that the claimant would have been unlikely to attend these proceedings just because Scarborough Cocktails Ltd was making an application for permission to appeal. That is not to say that the claimant actually knew that Scarborough Cocktails Ltd was doing that, but it has not appeared to defend the appeal against Ms Shard and it is likely to be aware that there are little or no assets in Scarborough Cocktails Ltd that would make the position any different.
- In those circumstances it seems in my judgment to be appropriate that we should make the orders that I have already indicated but allow a period of 14 days after service of the order and a copy of this judgment on the claimant in which the claimant has liberty to apply to set aside the orders that we have made relating to Scarborough Cocktails Ltd. I should say, however, that I would not encourage the claimant to make any such application since it seems to me that the factors that apply to Ms Shard apply equally to the case of Scarborough Cocktails Ltd.
- For the reasons that I have sought shortly to give, in my judgment we should extend the time for Scarborough Cocktails to file an appellant's notice. We should direct that the appellant's notice filed on behalf of Ms Shard should stand also as an appellant's notice on behalf of Scarborough Cocktails Ltd, citing the same grounds. We should give Scarborough Cocktails Ltd permission to appeal paragraphs 2 and 4 of the order of Mr Murray. And we should allow the appeals both by Ms Shard and by Scarborough Cocktails Ltd.
- The result of allowing the appeals is that we should order the claimant to pay Ms Shard's costs of both the action here and below. Ms Shard has asked us to assess the costs that the claimant ought to pay in respect of the entirety of the proceedings. She has put in a schedule entitled "Estimate of Costs" of which is, if I may be permitted to say so, somewhat exaggerated in places and presents rounded figures for items which cannot be entirely accurate. Doing the best I can, and having considered the various items in some detail, it seems to me that the claimant should be ordered to pay her costs of the entire action, including this appeal, assessed in the sum of £2,000, that payment to be made within 28 days of today's order. I should also say that Ms Shard has sought to claim certain expenses in her schedule entitled "Estimate of Costs". Those expenses and losses cannot be claimed by way of costs and indeed are in themselves somewhat doubtful to say the least in that they are very high rounded figures. It might have been better if she had limited her schedule to expenses properly and fully incurred.
- For those reasons, therefore, I would allow this appeal.
SIR DAVID KEENE: I agree.
LADY JUSTICE MACUR: I also agree.
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