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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Barrie v J Barrie (Plant Hire) Ltd [2001] EWCA Civ 614 (14 February, 2001) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/614.html Cite as: [2001] EWCA Civ 614

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IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
CREWE DISTRICT REGISTRY
(His Honour Judge Edwards)

		Royal Courts of Justice Strand London WC2 Wednesday 14th February, 2001

1. LORD JUSTICE ALDOUS: On 27th March 2000 Deputy District Judge Ellington ordered that there be summary judgment for the claimant, Mr James Barrie, in the sum of £77,960.11, comprising the sum claimed of £62,700-odd and £4,400-odd of interest. He ordered that that sum be paid in 28 days. The defendants, J Barrie (Plant Hire) Ltd ("Plant Hire") appealed and their appeal was dismissed on 5th May 2000 by His Honour Judge Edwards QC, sitting as a deputy judge of the Queen's Bench Division. Against that order Plant Hire sought permission from this court to appeal. Their application was considered on the documents by Hale LJ who adjourned it for an oral hearing on notice with the appeal to follow if permission was to be granted. It is that adjourned hearing which was the subject of argument before us today.
2. Also before us is an appeal by Plant Hire against an order of Deputy District Judge Ellington of 25th September 2000. In that order he refused an application by Plant Hire to set aside or vary his order of 27th March 2000, but gave permission to appeal to this court.
3. In November 1998 Mr Barrie was negotiating to sell his house and his businesses in the Isle of Man to a company called Vendome Investments Ltd ("Vendome"). Those businesses consisted of a plant hire and quarry business carried on by himself, and a business carried on by Plant Hire. He instructed Mr Measures, a partner in the firm of Hibbert Durrand Davies, to act on his behalf. It was intended that the transaction would involve Mr Barrie selling his house and the plant hire business to Plant Hire, and that simultaneously Vendome would purchase the issued shares of Plant Hire.
4. The negotiations were protracted. There was a meeting on 4th December 1998 at Mr Measures' office to try and finalise the transaction. The meeting was attended by Mr Jameson, an accountant engaged by Vendome, Miss Barrie, the daughter of Mr Barrie and the company secretary of Plant Hire, and Mr Measures representing Mr Barrie under a sealed power of attorney.
5. The actual mechanics of the transfer of the business which were agreed on 4th December 1998 were not before the court. However agreement was reached. It included an agreement dated 4th December 1998 between Mr Barrie and Vendome which required Mr Barrie to transfer to Vendome all the shares in Plant Hire. At the same time there was produced a handwritten document signed by Miss Barrie on behalf of Plant Hire and by Mr Jameson on behalf all of Vendome. It stated:

"To Jim Barrie.

We Jim Barrie (Plant Hire) Limited promise to repay to you all monies loaned to us within 2 months of the date here of £55,000 payable on or before the 31.12.98 and the balance on or before 30.1.99.

We acknowledge that the debt is not less than £117,723.57 (subject to our auditors not finding any manifest errors in the figures produced to us)."

6. According to Mr Measures that sum of £117,000-odd was made up of sums that had been loaned to Plant Hire by Mr Barrie since 3rd October of about £107,000, and the rest being the costs that the parties had agreed should be paid to him.
7. The first instalment of £55,000 was paid by Plant Hire but the remaining amount of about £62,000 was not.
8. By writ dated 6th April 1988 Mr Barrie claimed the second instalment of about £62,000 plus interest. He sought summary judgment. His application came before Deputy District Judge Ellington on 27th March 2000 who made an order for summary judgment for the amount claimed.
9. The application for summary judgment was vigorously defended by Plant Hire. Mr Lord, who was by then one of two directors of Plant Hire and also a director of Vendome, signed a witness statement in which he challenged the existence of the loan referred to in the written document. He was not aware of that relationship between Mr Barrie's personal business and that carried out by Plant Hire prior to 4th December 1998. He said that the present directors of Plant Hire had no control whatsoever over money coming into the company prior to 4th December, but thereafter all debtor monies received in respect of debts arising prior to 4th December 1998 were forwarded to Mr Barrie as and when the monies were received. He said that that was part of the arrangement provided for on completion. There was therefore no reason whatsoever for Plant Hire to take on responsibility post-completion to make payments to Mr Barrie for loans which Mr Barrie purported to have made to Plant Hire. Mr Lord said that Vendome paid the £55,000 on 12th January 1999 after receiving a letter from Mr Barrie's solicitors threatening to present a winding-up petition to the court. He said that he was told by his solicitor that the monies were due and he relied upon him entirely. Perhaps that advice was given upon the basis that the handwritten note was a promissory note. However, Mr Lord stated that he believed that a serious error had been made. He said that he had trusted his solicitor explicitly but had come to the conclusion that that trust was mistaken. He also indicated that Plant Hire would counterclaim for a sum far in excess of the sum claimed.
10. At the hearing before the District Judge, Plant Hire put forward a number of submissions to support their case that the obligation to pay, stated in the handwritten document, was not binding. The judge rejected those submissions. He said that he did not think he was assisted by looking behind the agreement between the parties to see if any loans were due or steps taken to repay loans to Mr Barrie personally. He said he had to consider the document as it stood in the context in which it was prepared. He rejected the view that the handwritten note was a promissory note, but concluded that it was a collateral agreement to be read alongside the main contract signed on 4th December. He drew attention to the fact that the obligation in the document had been partly performed and concluded that that was good evidence to indicate that both parties treated the agreement as binding on both of them. He was satisfied that Plant Hire had no real prospect of defending the claim and allowed the application for summary judgment.
11. On appeal His Honour Judge Edwards took a similar view. He recorded that the appellant's case was that the handwritten document could not be relied on as a promissory document or as a collateral contract. It also failed, according to Plant Hire, because of the terms of paragraph 4.2.4(b) of the main contract which required each director of the company to deliver to the company a letter resigning from office and also an acknowledgement under seal in terms approved by Vendome that he had no claim whatsoever against the company, nor that there was any agreement or arrangement under which he could have any such claim. Counsel for Plant Hire said that Vendome was entitled to rely upon that term even though they were not a party to the agreement.
12. The judge rejected those submissions. He concluded that the main contract showed that Mr Barrie would have had to agree to acknowledge that he had no debt owing to him and therefore the handwritten note was brought into existence. He concluded that the handwritten note was evidence of a contract collateral to the main agreement. It was an agreement to pay monies by instalments. He was prepared to accept that Plant Hire may have made the first payment under the mistaken impression that the document was a promissory note. However, he concluded that it was unlikely that the payment was obtained by some sort of misrepresentation or fraud. His conclusion was contained in this passage:

"My view is that the two documents, that is the Barrie Vendome contract and the purported promissory note of the same date, are quite easily readable together. The one intends, that is the main contract intends, that when all liabilities have been paid off under this ancillary agreement, there should then be a document under seal to show that there is no further payment due but I cannot ignore the existence of this handwritten agreement between the parties nor can I allow the defendants to hide behind a specious argument of estoppel when they have entered into an agreement like this perfectly validly and they knew what they were doing.

It follows that I entirely agree with the analysis of Deputy District Judge Ellington. His view was that this was not enforceable as a promissory note but that it was enforceable as a contract ancillary to the main agreement."

13. The judgment of His Honour Judge Edwards appeared to put an end to the proceedings as permission to appeal would only be given upon a point of principle or if there was some other compelling reason for such an appeal. This case did not appear at that stage to fall into that category. However, Mr Lord discovered fresh facts to which I will come later in this judgment. Those facts he believed showed that the judgment had been obtained by fraud. Plant Hire therefore applied for permission to appeal to this court and at the same time applied to introduce the fresh evidence to support the application. Plant Hire also applied to the District Judge for an order setting aside or varying the judgment that he had given. That application came before District Judge Ellington and in his judgment of 25th September 2000 he rejected it. He concluded that because of the pending appeal before the Court of Appeal it was duplicitous to have a pending appeal and an application to the original trial judge to set aside the very order that was the subject of appeal. He also concluded that he did not have power to accede to the application and therefore refused it. He gave permission to appeal to this court.
14. As the parties agreed to the admission of the fresh evidence, there is no need to decide whether the circumstances surrounding it were such as to satisfy the relevant rules. The fresh evidence although set out in different witness statements forms the basis for the application for permission to appeal the order of 5th May and the appeal against the order of 27th March 2000. I will therefore summarise its effect.
15. Following the sale of shares of Plant Hire to Vendome, Miss Barrie continued to work for Plant Hire, not as Company Secretary, but her duties included accounting and bookkeeping. With the knowledge of Mr Lord she made payments to her father of sums received by Plant Hire after 4th December 1998. Mr Lord accepts that he knew that the payments were being made. But he says in his third witness statement that he understood they would be set off against the loan account, effectively the judgment debt. Although he had requested from Miss Barrie details of the payments made, they had not been supplied. To extract them he threatened her with dismissal. She then produced to him on 17th May 2000 information which, according to Mr Lord, showed that the payments made to her father amounted to £79,492.26. It is Mr Lord's belief that the fact of the payments was deliberately withheld from the District Judge. If the judge had been told of them by Mr Barrie he would have realised that, instead of owing money, Plant Hire were owed around £16,000.
16. Miss Barrie also handed to Mr Lord on 17th May 2000 a document headed "Settlement plan as agreed". It is exhibit BHS/1. It shows as items (g) and (h) that Plant Hire was to "pay Jim Barrie for instalment of residual" £55,000 and £66,724 respectively. I will refer to those sums as the residuals.
17. With a view to finding out what had happened Mr Slater, the solicitor then acting for Plant Hire, spoke to Miss Barrie who told him that the amounts shown as "residuals" which were the sums referred to in the handwritten document were to be paid in addition to the payment of book debts owed to her father in respect of the business that had been carried on personally by him. According to Plant Hire such would be contrary to the evidence given by Mr Measures to establish Mr Barrie's right to summary judgment. In paragraphs 7 and 8 of his first witness statement he said:

"7. J Barrie (Plant Hire) Limited prior to October 1998 only had a very small turnover. From 3rd October 1998 - to facilitate and assist the cash flow of the Limited Company (which was now being run by Jameson and Vendome) Mr Barrie loaned to the Limited Company monies and further the Limited Company received monies which were due to Mr Barrie (as sole Proprietor) from debtors whose debts had arisen prior to 3rd October 1998.

8. The basis of Mr Barrie's claim against J Barrie (Plant Hire) Limited is that Mr Barrie seeks to recover monies loaned prior [after] to 3rd October and also monies had and received by J Barrie (Plant Hire) Limited in respect of debts due to Mr Barrie in person in contracts which occurred and were completed before 3rd October."

18. The case for Plant Hire is that the handwritten note of 4th December only records sums owed by Plant Hire to Mr Barrie. The fact that the sums to satisfy those book debts had been paid was concealed from the District Judge and from Plant Hire by Mr Barrie and his daughter.
19. In a witness statement in reply to the new evidence, Mr Measures clarifies what he said in paragraph 8 of his first witness statement. According to him the figures in the handwritten note do not include amounts loaned by Mr Barrie prior to 3rd October, only those loaned after that date. I have included that amendment in paragraph 8 which I have read.
20. Miss Barrie also signed a witness statement. She does not challenge Mr Lord's account of how he came to find out about the sums paid to her father. However, she states that the sums in the handwritten note were agreed between the parties at the 4th December meeting. She also accepts that payments were received by Plant Hire after completion of the sale of Plant Hire. Those payments were payments due to Mr Barrie as sole trader for contracts prior to 4th October. They were not paid to satisfy the debts agreed to be repaid as recorded in the handwritten note. To support her evidence she produced an account of what was included within the residuals.
21. The new evidence appears to show a dispute between Plant Hire and Mr Barrie as to what was agreed on 4th December. According to Mr Measures it was agreed that Mr Barrie should be paid what I called the residuals in instalments as recorded in the handwritten note. He would also receive debts which had arisen prior to 3rd October in respect of Mr Barrie's business as sole trader. Plant Hire believe that they acquired the business of Mr Barrie and that included the book debts that existed as of 4th December 1998.
22. Mr Berkley QC, who appeared for the appellants, drew to our attention the form of the Statement of Claim and the absence in the witness statement of Mr Measures of the statement, then required by Order 14, rule 2 of the Rules of the Supreme Court, that he, Mr Measures, believed that there was no defence to the action. Mr Berkley went on to submit that permission to appeal should be given on that basis.
23. I disagree. Neither of those points were taken before the District Judge or His Honour Judge Edwards. Further, this is a second-tier appeal. It follows that permission will only be given if the appeal would involve a point of principle or there was some other compelling reason. Neither of those matters raise a point of principle, nor do they amount to a compelling reason for an appeal.
24. Mr Berkley's second point was that this was a case in which a trial was necessary. That was demonstrated by the new evidence. It is therefore necessary to consider, at least in outline, the way that the evidence has been presented before this court.
25. As was made clear by Mr Lord in his first witness statement, the negotiations between Vendome and Mr Barrie concerned a proposed sale of a dwelling house, the business of Mr Barrie as sole trader and the shares of Plant Hire. According to Mr Measures:

"Following the completion of the acknowledgement/agreement, the completion of the sale of assets of Mr Barrie to J Barrie (Plant Hire) Limited was completed and simultaneously Mr Barrie transferred his shareholding in J Barrie (Plant Hire) Limited to Vendome Investments Limited."

26. If that be correct, it follows that there was a sale by Mr Barrie to Plant Hire of the assets of his business as a sole trader. The whole transaction is clothed in mystery as the purchase price for the shares of Plant Hire, including within it at that time, as I understand it, the business of sole trader, was only £14,000. Further, there must be some record of the transfer to Plant Hire of the business of Mr Barrie as sole trader. Also Mr Measures, who was then Mr Barrie's solicitor, must have known how the whole transaction was carried out. I would also have expected Mr Lord to have more knowledge of what went on than is recorded.
27. Mr Holmes, who appeared on behalf of Mr Barrie, submitted that there was no need for a trial in this particular case for two reasons. He drew to our attention differences between Mr Lord's first witness statement and the evidence that he gave in his third. He submitted that that showed a complete lack of credibility in the case of the appellants, and that was bolstered by the fact that the appellants had not put forward the documents and basis for their case.
28. I accept that there are differences between the evidence given by Mr Lord in his first witness statement and that in his third. That no doubt will provide Mr Holmes with a good start in any cross-examination that may take place at a trial which I believe is necessary.
29. This dispute really concerns money, and in particular whether Plant Hire owe Mr Barrie money. To decide who owes what a trial was necessary with proper evidence. In my view it is even more necessary when the new evidence is taken into account. There is in my view a compelling reason for a court to consider the dispute between the parties against a background of all the facts. That can only be accomplished by the parties giving full disclosure before a trial in which cross-examination takes place.
30. The crucial question to be decided is whether, when the business of Mr Barrie was transferred to Plant Hire, the business that was transferred included the debts standing at 4th December. That particular question was not explicitly brought before the District Judge. His view was only sought upon the question as to whether the handwritten note was enforceable. Since then the new evidence has shown that the dispute goes very much wider, and in those circumstances a trial is necessary.
31. I therefore would give permission to appeal and allow the appeal.
32. I can shortly deal with the appeal against the order of the District Judge which refused to vary his order. The judge was correct to refuse to make the order sought, I think as Mr Berkley accepted. If there had been a fraud, then the Court of Appeal had the matter before it and could make the appropriate order. In any case I do not believe that the District Judge had jurisdiction to vary his order once made in the way that was suggested. The appropriate course on the facts of this case was an appeal to this court. That was potentially before the court as an application had been made for permission to appeal.
33. I would dismiss the appeal against the second order of the District Judge.
34. LORD JUSTICE CHADWICK: I agree.
35. This is an application for permission to appeal from an order made by a judge sitting in the High Court on an appeal from an order made by a District Judge. It is therefore an application to which section 55(1) of the Access to Justice Act 1999 applies. Permission to appeal cannot be given unless the Court is satisfied that the appeal would raise some important point of principle or practice, or that there is some other compelling reason why the appeal should be entertained in this Court. I have found it impossible to identify any point of principle or practice which would be raised in the proposed appeal; and certainly not any point of principle or practice which could be described as important.
36. I am satisfied, however, that there is a compelling reason why the appeal should be entertained by this Court. The reason, as it seems to me, is that in the light of the material which is now available, the District Judge was plainly and obviously wrong to take the view that this was a matter in which judgment could be given on a summary basis, without a trial.
37. There are two points which require investigation. The first is whether any, and if so what, monies were owing from Jim Barrie (Plant Hire) Ltd to Mr Jim Barrie on 4 December 1998. There is a plain contradiction between the manuscript note signed on behalf of the company by Miss Barrie, his daughter, on that day and the terms of the written share sale agreement also entered into by the company on that day. The share sale agreement provides, at paragraph 4.2.4(b) that:

"Each Director ... shall deliver to the Company ... an acknowledgement under seal ... that he has no claim whatsoever against the Company nor is there any agreement or arrangement under which he could have any such claim."

38. The manuscript note of the same date purports to acknowledge a debt of £117,000-odd; and to promise payment of that by two future instalments. That clear contradiction between written documents signed on the same day plainly requires explanation.
39. The second matter that requires explanation is how it came about that payments in respect of book debts which - prima facie, on the evidence produced before us - were owed to the company came to be made to Mr Barrie out of company funds after the date of the acquisition on 4 December 1998.
40. To give summary judgment without resolving those two issues was, in my view, so plainly and obviously wrong that this Court ought to interfere by giving permission to appeal; and by allowing the appeal.
41. LORD JUSTICE LAWS: I agree with both judgments. Upon the application for permission to appeal, Mr Berkley's pleading points, if I may so call them, are not in my judgment fit for a second-tier appeal. However in light not least of the new evidence the case plainly calls for a trial and that is a compelling reason why we should entertain the appeal.
42. I also would dismiss the appeal from the District Judge.
ORDER: Permission to appeal the order of 5th May of His Honour Judge Edwards granted; order of District Judge Ellington of 25th March 2000 set aside; appeal against the order of District Judge Ellington of 25th September 2000 dismissed; case remitted to Mercantile Court in Chester for directions; costs before the District Judge will be; the costs before Judge Edwards will be costs in the case and the costs of the appeal from His Honour Judge Edwards should be paid by the respondent; the costs of the appeal should be paid by the appellants; detailed assessment of costs if not agreed. (Order not part of approved judgment)