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Cite as: [2015] CP Rep 26, [2015] EWCA Civ 24

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Neutral Citation Number: [2015] EWCA Civ 24
Case No: B2/2010/2072

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM
CENTRAL LONDON CIVIL JUSTICE CENTRE
HIS HONOUR JUDGE KNIGHT QC
8BT03638

Royal Courts of Justice
Strand, London, WC2A 2LL
30th January 2015

B e f o r e :

LORD JUSTICE AIKENS
LORD JUSTICE McCOMBE
and
LORD JUSTICE CHRISTOPHER CLARKE

____________________

Between:
ROBERT BISHOP
Appellant
- and -
RAVINDER CHHOKAR
Respondent

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(Transcript of the Handed Down Judgment of
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____________________

Edwin Buckett (instructed by Bark & Co) for the Appellants
Tim Buley (instructed by Treasury Solicitors) as Advocate to the court
The Respondent did not appear and was not represented
Hearing dates : 01/12/2014

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    Lord Justice Aikens :

  1. On 1 December 2014 we heard an application made on behalf of Mr Robert Bishop, (whom I will call the appellant), pursuant to CPR Pt 52.17, to set aside the order of Jacob LJ dated 30 November 2010, whereby he refused the appellant permission to appeal against the order and judgment of HHJ Knight QC dated 20 July 2010. I had previously given the appellants permission to make the application pursuant to CPR Pt 52.17(4). On 1 December 2014, having heard argument from Mr Edwin Buckett on behalf of the appellant and argument from Mr Tim Buley, who had been appointed amicus curiae (or "advocate to the court") at the court's request because Mr Ravinder Chhokar is bankrupt and he and his trustee in bankruptcy indicated that they would not take any part in the proceedings, we decided to grant the application. The effect of that decision was to reopen the application for permission to appeal the judgment of Judge Knight. On 1 December we also granted permission to appeal Judge Knight's order out of time and ordered that the appeal itself should be heard by a court comprising the three Lords Justices who had heard the application. We said that we would put in writing our reasons for making those orders.
  2. These are my reasons.
  3. The factual background: the case before HHJ Knight QC in 2010

  4. In 2008 the appellant and his wife began proceedings in the Barnet County Court claiming £2,666.99 from the respondent, Mr Chhokar. The sum was claimed to be due under an oral agreement between Mr and Mrs Bishop (together "the Bishops") and the respondent, made in about 1999, whereby the Bishops became periodic tenants on a monthly basis of premises at 95 Pickford Lane, Bexleyheath, Kent.
  5. The Bishops' case, as put at the trial which was held before HHJ Knight QC in July 2010, was that by a further agreement made in about 2004, the initial rent for the premises of £1,000 per month was increased to £2,000 a month with effect from 1 January 2005, but on condition that the respondent renovated and refurbished the premises (which were said to have been in poor condition before then) so that £2,000 a month would then represent a fair market rent. However, the Bishops asserted that the respondent then met financial difficulty so that he could not do the renovations and so the parties agreed that the Bishops would do them, treat the cost as a loan to the respondent, and recoup the sums loaned by way of a rebate of £1,000 a month in the rent until the loan was repaid. The total cost of the refurbishment works was about £48,000. In addition, the Bishops alleged that the respondent owed them a balance of £3,000 for fireworks supplied to him by them, which debt they "set off" against rent due for the period October to December 2004.
  6. The rental of the premises had continued at £2,000 a month until the tenancy ended in 2009. The actual monetary claim represented what the Bishops regarded as the accounting position when the proceedings were started in July 2008, viz. that a balance remained due to them of £3,852.80 in respect of the monies loaned to the respondent to fund the renovation and refurbishment work and taking into account the fireworks purchase. There were some ancillary claims.
  7. The defence to the claim was that the agreement made in 2004 was different and its effect was that there would be a waiver of half the rent of £2,000 a month for a period of 12 months during 2005, in order to allow the Bishops to refurbish the premises at their expense. So, effectively, Mr Chhokar asserted that there was a "cap" on the rent rebate of £12,000. Once that "cap" had been reached then rent should carry on at £2,000 a month.
  8. At the trial before Judge Knight both Mr and Mrs Bishop and Mr Chhokar gave oral evidence. There was in evidence also a "rent book" of the Bishops which stated that £1,000 rent per month had been paid during the months of October to December 2004. At paragraph 24 of Judge Knight's judgment he records:
  9. "This has been allocated from the £3,000 which was the balance of the alleged loan for the fireworks. What is said, as indeed is recorded in the rent book, is "£3,000 cash; took £3,000 out of fireworks money Blackfen". Blackfen was a shop which I understand the [respondent] operated from".
  10. Judge Knight concluded, at [25], that there had been no agreement between the parties to set-off the balance of £3,000 owing for the fireworks against rent due in the period October to December 2004 so that, during that period, the rent was paid at £1,000 a month. There was a dispute about the rent paid during the first four months of 2005.
  11. Judge Knight noted, at [36], that there were "substantial differences" in the evidence of the chief witnesses in the case, viz Mr and Mrs Bishop and Mr Chhokar. He said that "what had emerged as (sic) an acute issue of credibility". The judge recorded the differences in the evidence of the contending parties which I need not set out. Then, at [48], the judge identified the first issue that he had to decide: "what was the arrangement made between the parties in or about June – or perhaps a little later – in 2004 with regard to undertaking the work and how it was to be paid for?". He referred to the evidence of Mr Bishop on the work done and the cost. He commented that the matter should never have reached litigation. He then said, at [51]:
  12. "Having said that, I have to decide whether I accept the version of the Bishops or of Mr Chhokar. I indicated in argument that I have no reason to think that the parties gave false evidence. I believe that both gave it as honestly as they recollected, but that still leaves me with the difficult decision of deciding whether I prefer one to the other".
  13. The judge found, as a fact, that Mr Chhokar agreed to the refurbishment work being done by the Bishops, but he also concluded that there was no agreement that this cost could be set-off against rent due. He accepted Mr Chhokar's account that there was a "cap" or "ceiling" on the cost of the refurbishment work of £12,000: see [57]. He found it "implausible" that Mr Chhokar, "who is clearly an experienced businessman, would have agreed to reimburse a sum which turned out to be the equivalent of two years rent without any check on how the money was being expended and without any form of control on his part".
  14. Judge Knight said that he found support for that conclusion from two other matters. First, the continuation of the rent at the "old rate" of £1,000 at least up to the end of 2004. Secondly:
  15. "…the fact that I have rejected the attempt to load the rent from October to December [2004] with a further £1,000 from the £3,000 balance relating to the fireworks".

    That finding is somewhat equivocal. It could mean that the judge accepted that the respondent had purchased fireworks and he owed a balance of £3,000 but there had been no agreement to "set off" that balance against the rent; or it could mean that the judge rejected the Bishops' assertion that the respondent owed them £3,000 for fireworks purchased by him from them. In his evidence (of which we were shown the transcript) Mr Chhokar had insisted that he had not bought fireworks from the Bishops. He said that a reference to a cheque for £6,000 was not for the supply of fireworks but the sale of them: see transcript for 19 July 2010 at page 84F.

  16. The judge also noted that the Bishop's "rent book" was not an agreed document and that it was "not confirmed by Mr Chhokar": see [63]. Judge Knight therefore concluded:
  17. "That being the case, and with some reluctance because it might have turned out otherwise, I am forced to conclude that I have no satisfactory evidence that rent at the rate of £2,000 was paid up until June 2006. If that is right, that is consistent with Mr Chhokar's evidence that the arrangement in June 2004 was for a rent reduction of £1,000 from June 2004 to June 2005. It may be a small point, but the claimants reduced the rent payments for the whole of 2006 (that is for a period of 12 months) to £12,000".
  18. The result was that the Bishops' main claim was dismissed. They had an additional claim for damages because of an "abortive" re-entry by Mr Chhokar in 2008. The judge found that, as at July 2008 there would have been a balance due from the Bishops to Mr Chhokar so that the re-entry would, in fact, have been lawful. Mr Chhokar had a counterclaim and that was allowed in principal but the figures were to be agreed later.
  19. The Bishops sought permission to appeal the order that HHJ Knight QC made following that judgment. We were not shown the proposed grounds of appeal. However, it is clear from the reasons that Jacob LJ gave for rejecting the application (as being "totally without merit") that a key element was the judge's conclusion on the credibility of Mr Chhokar. Thus Jacob LJ commented that the proposed ground of appeal attacking the judge's assessment of the credibility of Mr Chhokar was "no more than an invitation to re-assess the evidence that he had. That the Court of Appeal will not do". Because Jacob LJ regarded the application as being "totally without merit" there could be no oral renewed application.
  20. The case before HHJ Hammerton

  21. In this second action Mr Bishop sought damages for conversion of goods, which comprised the contents of the shop premises at 95 Pickford Lane, Bexleyheath. The Bishops' tenancy of those premises ended on 24 September 2009 when the bailiffs executed a warrant for possession of the property on behalf of Mr Chhokar. The bailiffs were instructed not to recover any items of property. Mr Bishop could not get access to the property to recover what he said was his property. A small amount of property was sent to him but he alleged that this represented a fraction of what he said was his property, which Mr Bishop valued at £54,335.36. Mr Chhokar's defence was that all Mr Bishop's property had been returned to him. He also asserted that Mr Bishop should not be entitled to bring this claim as he should have included it in the litigation before Judge Knight.
  22. The trial was heard by HHJ Hammerton at the Dartford County Court on 15, 16 and 17 April 2013 and both sides were represented by counsel. Judgment was reserved and given on 23 June 2013. Judge Hammerton stated, at [3] of her judgment that the claim rested on the credibility of the parties. At the trial Judge Hammerton heard evidence from Mr and Mrs Bishop and Mr Chhokar. She also had before her the transcripts of the hearing before Judge Knight, amongst other things.
  23. At [19] of her judgment, Judge Hammerton recorded the submission of counsel for the defendant (Mr Chhokar) that the court could not rely on the evidence of either of the parties and should decide the case on the evidence of independent witnesses. The judge continued her judgment:
  24. "The submission as to the lack of credibility of the evidence given by the parties themselves is undoubtedly correct. In so far as the defendant is concerned, he admitted lying during the course of the evidence in the claim heard by HHJ Knight…".

    The judge also noted, at [20] that there were "question marks in respect of the credibility of the claimant Mr Bishop".

  25. The judge therefore held that she had to decide the case on the basis of the evidence of other witnesses in the context of the general background and the contemporaneous documents: [21]. Having done so she found for the claimant in the sum as claimed: [45].
  26. Judge Hammerton has supplied us with her notes of the evidence of Mr Chhokar. It is clear from these that Mr Chhokar accepted that he had lied in giving his evidence to Judge Knight on the issue of whether he had bought any fireworks from the Bishops. Judge Hammerton's note of Mr Chhokar's evidence is that he accepted that his witness statement for the case in front of her "directly contradicts what I told HHJ Knight". As already noted, the gist of Mr Chhokar's evidence before Judge Knight appears to be that he had not bought fireworks from the Bishops and a cheque for £6,000 that he made out was in respect of the sale of fireworks rather than their supply.
  27. The application under CPR Pt 52.17

  28. On 16 September 2013 the appellant made his application for permission to reopen the decision of Jacob LJ, pursuant to CPR Pt 52.17. The application form was prepared by Mr Bishop in person. It was put upon the basis that Mr Chhokar had admitted lying in giving his evidence to Judge Knight and that if "that had been known at the time then…HHJ Knight would not have found in favour of [Mr Chhokar] as he would not have been a credible witness".
  29. CPR Pt 52.17 provides:
  30. (1) The Court of Appeal…will not reopen a final determination of any appeal unless –
    (a) it is necessary to do so in order to avoid real injustice;
    (b) the circumstances are exceptional and make it appropriate to reopen the appeal; and
    (c) there is no alternative remedy.

    (2) In paragraphs (1), (3), (4) and (6) "appeal" includes an application for permission to appeal.
    …..
    (4) Permission is needed to make an application under this rule to reopen a final determination of an appeal….
    (5) There is no right to an oral hearing of an application for permission, unless, exceptionally, the judge so directs.
    (6) The judge will not grant permission without directing that the application to be served on the other party to the original appeal and giving him an opportunity to make representations.

  31. Paragraph 7.4 of Practice Direction 52A stipulates that an application for permission to make an application to reopen an appeal, or a refusal of permission to appeal, will be made on paper by a single lord justice. However, pursuant to CPR Pt 52.17(5) I ordered that there should be an oral hearing, which took place on 31 March 2014. Mr Buckett represented the appellant at that hearing but the respondent did not appear and was not represented.
  32. I ordered that permission to make the application to re-open the order of Jacob LJ dated 30 November 2010 be granted. I also ordered that the application itself should be listed before three judges. Subsequently, a request was made for an amicus curiae or "advocate to the court" to be appointed and Mr Buley fulfilled that role with excellent written submissions and helpful oral argument.
  33. The requirements for re-opening the order refusing permission to appeal and the scope of CPR Pt 52.17, in particular the requirement that there be "no alternative effective remedy".

  34. The three requirements for re-opening a final appeal, or a final refusal of permission to appeal are set out in CPR Pt 52.17(1). They are cumulative. In the context of a request to reopen an application for permission to appeal, the tests are that the court has to be satisfied that (a) it is necessary to do so to avoid real injustice; (b) the circumstances are exceptional and make it appropriate to reopen the application for permission to appeal; and (c) there is no alternative effective remedy. The first two tests are not controversial although the court has to examine carefully the facts of the application before it before being satisfied that those tests are passed.
  35. In this case I am quite satisfied, on the basis of the admission of the respondent in the hearing before HHJ Hammerton that he had lied before HHJ Knight and the basis on which Judge Knight came to his decision in that case, viz on the credibility of the witnesses, that it is necessary to reopen the application for permission to appeal in order to avoid real injustice. Moreover, I regard the circumstances which I have set out above as exceptional and they make it appropriate to reopen the application for permission to appeal.
  36. It is the third test that causes difficulty. It has given rise to debate since CPR Pt 52.17 came into force in 2003. The question is: when it is asserted that the appeal (or permission to appeal) should be reopened because the original decision had been obtained by a fraud, is there an "alternative effective remedy" because the proper course, in circumstances where a party asserts that the original judgement was obtained by fraud, is that the party should start a fresh action to set aside the original judgment. If that is right, then the CPR Pt 52.17 procedure cannot be used to reopen an appeal where the original decision (or appeal) had been obtained by fraud.
  37. There was no provision in the original CPR for reopening a final appeal or an application for permission to appeal that had been finally refused. The lack of such a remedy was recognised as a being an important omission in the new CPR in the judgment of a five judge Court of Appeal in Taylor v Lawrence [2003] QB 528. That judgment laid down guidance as to when an appeal could be re-opened. The new CPR Pt 52.17 came into force in October 2003 and was based on the principles set out in Taylor v Lawrence. Since CPR Pt 52.17 was brought into force there has been some debate as to the scope of this remedy. In two cases where CPR Pt 52.17 was invoked, the Court of Appeal permitted appeals to be reopened on the ground that the original decision had been obtained by deceit, perverting the course of justice or just "untrue evidence": see Couwenbergh v Valkova [2005] EWCA Civ 145 and Feakins v DEFRA [2006] EWCA Civ 699. However, in Sir William Jaffray v The Society of Lloyd's [2008] 1 WLR 75, a two judge division of the Court of Appeal doubted whether what had become known as "the Taylor v Lawrence jurisdiction" was available in cases where it was alleged that the original decision had been obtained by fraud. Buxton LJ, giving the judgment of the court, pointed out that there was binding authority, in particular Flower v Lloyd (1877) 6 Ch D 297 (a decision of the Court of Appeal) and Jonesco v Beard [1930] AC 298 (a decision of the House of Lords on an English appeal), which had held that where a judgment is obtained by a fraud on the court then the correct remedy was not an appeal, but a new action to set aside the original judgment. However, in the light of various decisions of the Court of Appeal since Taylor v Lawrence, Buxton LJ reluctantly accepted that there was a jurisdiction to reopen a determined appeal on the ground of fraud under CPR Pt 52.17, but only if certain strict conditions were fulfilled.
  38. The issue was reconsidered by the Court of Appeal in Noble v Owens [2010] 1 WLR 2491. The allegation there was that the claimant had been fraudulent in giving his evidence about the extent of continuing disabilities following a motor accident. After the claimant, Mr Noble, had obtained substantial damages at the trial, the insurers of the defendant driver obtained video evidence of his activities. The insurers asserted that this evidence put in doubt the claimant's evidence at the trial as to the extent of his disabilities. The defendant appealed against the award of damages and sought an order for a retrial on the ground that the new evidence demonstrated that the judgment had been obtained by fraud.
  39. Noble v Owens is not, therefore, a case that directly involved CPR Pt 52.17. However, the court considered the relevant authorities including Flower v Lloyd, Jonesco v Beard, Taylor v Lawrence and Sir William Jaffray v Society of Lloyd's as well as others, including the House of Lords' decision of Kuwait Airways Corporation v Iraqi Airways Co (No 2) [2001] 1 WLR 429. That case had followed Jonesco v Beard and held that where it was asserted that a decision had been obtained by fraud, then a challenge had to be made by a fresh action alleging and proving the fraud.
  40. In Noble v Owens Smith LJ gave the first judgment. She held, at [27] that the "true principle of law" (to be derived from Jonesco v Beard) is that:
  41. "…where fresh evidence is adduced in the Court of Appeal tending to show that the judge at first instance was deliberately misled, the court will only allow the appeal and order a retrial where the fraud is either admitted or the evidence of it is incontrovertible. In any other case the fraud must be determined before the judgement of the court below can be set aside".
  42. As Mr Buley pointed out in his written submissions, that statement of principle does not say that fraud cannot be relied upon as a ground of appeal. Rather it sets out a substantive rule of law on what has to be established before an appeal will be allowed and a retrial ordered on the basis of an allegation of fraud. Elias LJ gave a separate judgment where he considered the principles and the cases and reached the same conclusion of principle.
  43. Both he and Smith LJ concluded on the facts of that case that the new evidence raised a serious question of fraud which had to be reconsidered and the only question was how that should be done. They concluded that it was, in the circumstances, not necessary to start a fresh action; instead the issue of the fraud should be referred to a High Court judge pursuant to CPR Pt 52.10(2)(b). If the judge found the fraud proved then he would reassess the damages to be awarded.
  44. Sedley LJ's judgment arrived at the same result but by a slightly different route. He emphasised that it was not the judgment itself that was being attacked in that case, but the level of the award of damages for disability. He agreed with the course proposed.
  45. The question that arises, therefore, is whether there is a bar to invoking the CPR Pt 52.17 procedure in a case where it is alleged that the original decision was obtained by fraud, because there is another "effective remedy", viz. the remedy of starting a new action to set aside the original decision as having been obtained by fraud. Mr Buley made three submissions on this issue with which I agree. The first concerns the jurisdiction being exercised when, in a second action between the same two parties, a court sets aside the earlier decision between those parties on the ground that it was obtained by fraud. It would appear from the judgment of Sir George Jessel MR in Flower v Lloyd (No 1) (1877) 6 Ch D 297 at 299-300 that if such a remedy were to be granted, the court (then the recently established High Court of Judicature) would be exercising an "inherent jurisdiction" to grant such a remedy and this jurisdiction is based upon the law as previously established in the old Court of Chancery. Jessel MR quoted this law from the "well known treatise of Lord Redesdale".[1] The treatise stated that if a decree in chancery had been obtained by fraud, it could be impeached by an original bill in chancery. That jurisdiction and that remedy was transferred to the High Court by the Judicature Acts. Mr Buley pointed out that in the subsequent case of Flower v Lloyd (No 2) (1878) 10 Ch D 327, the Court of Appeal doubted whether an action to impeach a previous judgment between the same parties on the ground of fraud could be maintained. It would appear that those doubts have not persisted. Indeed the availability of the remedy to set aside a previous judgment on the ground that it was obtained by fraud was reaffirmed in the recent decision of this court in RBS v Highland Financial Partners [2013] 1 CLC 596 at [106].
  46. Mr Buley' second submission followed on from his analysis of the nature of the jurisdiction and remedy to set aside a previous decision which had been obtained by fraud. He pointed out, first of all, that the County Court is the creation of statute. Unlike the High Court which inherited the powers of the old Court of Chancery, the County Court has no inherent jurisdiction to set aside its own final orders. Moreover, he submitted, there must be some doubt as to whether it has jurisdiction to determine a free-standing claim to set aside a previous decision of the County Court, which second claim is based on an allegation that the first judgment was obtained by fraud. Mr Buley submitted that it is not clear that this kind of action comes within the scope of Part II of the County Courts Act 1984 which sets out the statutory basis for that court's jurisdiction. Mr Buley's also submitted that, although in principle a fresh action could be brought in the County Court on the original cause of action and any defence of issue estoppel or res judicata could be defeated by relying on the alleged fraud, but that does not cover every case. Lastly he noted that CPR Pt 3.1(7) (power to vary or revoke an order made), cannot provide the original jurisdiction: see Roult v NW Strategic HA [2010] 1 WLR 487 at [15] per Hughes LJ.
  47. Given these difficulties of mounting a second action in the County Court to set aside or rescind the first judgment, in his third main submission Mr Buley addressed us on the question of whether there could be an "effective alternative remedy" in the form of an action in the High Court to impeach the original County Court decision. He argued that it is seriously open to doubt whether the High Court has any such jurisdiction. Challenges to decisions of the County Court are normally dealt with by appeal. The High Court does have the power to quash an order of an inferior tribunal such as the County Court, pursuant to CPR Pt 54.2(c), but I agree with Mr Buley that it is very much open to doubt that this procedural power was intended to be used in fresh proceedings to set aside or rescind a judgment in circumstances where it is alleged that the original order was obtained by fraud. We were not shown any example of that jurisdiction being used in such a manner.
  48. In the course of the hearing we did not fully investigate all these points. It seemed to us that there was sufficient in all the points that Mr Buley brought to our attention to conclude that, in this case, there was not an effective alternative remedy in a collateral action of the kind envisaged in Flower v Lloyd (No1) and Jonesco v Beard. Any possible alternative remedy had such jurisdictional and procedural difficulties that meant it could not be regarded as "effective".
  49. Why the court decided to allow the CPR Pt 52.17 application and grant permission to appeal.

  50. Given the analysis above, we concluded that we had jurisdiction to grant the application to re-open the refusal of Jacob LJ to grant permission to appeal the judgment and order of HHJ Knight. In my view, if the requirements of CPR Pt 52.17(1) are fulfilled, the Court of Appeal is almost bound to conclude that in the particular case in hand it should grant the application to re-open an appeal or a final refusal to grant leave to appeal, although I would accept that there may be a residual discretion to refuse to do so even if the requirements are fulfilled.
  51. On the facts of this case, however, I concluded that we must, in the circumstances, grant the application.
  52. It also seemed to me (and to McCombe and Christopher Clarke LJJ) that there is a reasonable prospect that the appeal would succeed, although success is not certain. There is a reasonable argument that HHJ Knight found against the Bishops and in Mr Chhokar's favour because he found Mr Chhokar a more credible witness than Mr Bishop and that if Mr Chhokar had told the truth about the fireworks his view overall might well have been different. Even if that is the final conclusion of the appeal, the consequence of that conclusion will need debate. Should there be a retrial so many years after the original trial, when Mr Chhokar is now a bankrupt, his trustee in bankruptcy has shown no interest in the matter and the sum at stake (although not the costs) is comparatively small?
  53. Those are all matters for the court to decide at the appeal itself and I should say no more now.
  54. Disposal

  55. For these reasons we decided to grant the application to re-open Jacob LJ's order of 30 November 2010 and to set it aside; to grant permission to appeal the judgment and order of HHJ Knight QC dated 20 July 2010; and, make orders as to the appeal hearing itself.
  56. Lord Justice McCombe

  57. I agree.
  58. Lord Justice Christopher Clarke

  59. I also agree.

Note 1   Lord Redesdale, as John Mitford, had been a distinguished Chancery practitioner and, in 1780, had published a book entitled: “Treatise on the pleadings in suits in the Court of Chancery by English Bill”. Mitford became Lord Redesdale in 1803 and was Lord Chancellor of Ireland from 1802 – 1806. His treatise was in its 5th edition at the time of Flower v Lloyd.    [Back]


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