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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 >> Bhangu & Anor v Jagdev & Ors [2002] EWCA Civ 115 (28 January 2002) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2002/115.html Cite as: [2002] EWCA Civ 115

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IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CENTRAL LONDON COUNTY COURT
(Her Honour Judge Bevington)

		Royal Courts of Justice Strand London WC2 Monday, 28th January 2002

1. LORD JUSTICE MAY: This is an adjourned application by the first defendant, Mr. Jagdev, for permission to appeal against the decision of Her Honour Judge Bevington given in the Central London County Court on 30th November 2000, with the consequential judgment given on 23rd January 2001.
2. The single remaining ground of appeal is that the judge did not give sufficient reasons for factual findings in which she preferred the evidence of the claimants to that of the first defendant. Rix LJ gave permission to appeal on 9th November 2001 after an oral hearing, having previously refused permission on the papers. He said that he was doubtful that there was a realistic prospect of success for the appeal. He could see reasons why the first defendant's evidence was not acceptable and why the claimants' evidence was preferable, but he was left with a concern that the judge's reasoning did not go far enough in explaining the critical question which he had to decide on the evidence, with the help, it may be, of documents which Rix LJ did not have, as to whose version was to be preferred. He adjourned the application to be heard on notice, with the appeal to follow if permission is granted.
3. The parties are, I believe, Sikhs with strong Sikh community ties. The first defendant, Mr. Jagdev, was concerned with the second defendant, who had become bankrupt and did not feature in the proceedings, in two businesses called Unique Style Limited and First Shoes. First Shoes was a shoe shop in Union Street in Reading. Mr. Bhangu, the first claimant, had worked at Heathrow Airport and he and his wife had saved some money. In March 1991 Mr. and Mrs Bhangu made an agreement with Mr Jagdev and the second defendant to take over the shoe shop. This involved the assignment of the lease of the shop and the sale of its stock. The agreement was reached with the encouragement of the parties' religious leader, Mr. Baba Jaswant Singh. It was informal and not put into writing. The third defendant was a firm of solicitors in the person of Mr. Singh Virdi who acted for both parties in the transaction.
4. Before the proposed assignment was complete, the claimants made some payments and began running the shoe shop. It did not prosper, and in about March 1992 they handed it back to the first and second defendants. The legal position was that the assignment could not proceed because it needed the landlord's consent which was not forthcoming. The agreement was also unenforceable because it was not in writing.
5. The claimants brought proceedings against the first and second defendants for the return of the money that they had paid for the assignment of the lease and they brought proceedings against the third defendant for professional negligence in a number of respects. Their claim against the third defendant succeeded and is not the subject of this appeal. The claim against the first and second defendants also succeeded. They obtained a judgment for £58,345.91. This sum was calculated as the amount which the judge found they had paid for the lease with adjustments for stock, less an amount for their use and occupation of the shoe shop, plus interest.
6. There is no longer a challenge to the legal basis for the claim against the first and second defendants. The only remaining issue relates to the judge's findings of fact as to the amount which the claimants paid to the first and second defendants in 1991. The issue essentially turned on the judge's assessment of the parties' oral evidence, since, although there are some documents, the parties did not record in writing what they agreed or what payments they made.
7. Some facts are uncontentious. The agreed price for the assignment was £40,000. The agreed value for the stock taken over was £21,979.50. So it is agreed that the total amount which the claimants agreed to pay was just less than £62,000. A deposit of £2,500 was paid in February 1991. £27,705 was paid by the third defendant to Unique Style Limited on 9th April 1991. £10,500 was credited to the bank account of Unique Style on 24th September 1991 and the first defendant agreed that this money came from the claimants. In addition, I am satisfied that documents establish that the claimants borrowed £30,000 from the Northern Rock Building Society in April 1991 and a further £15,000 in September 1991 on the security of their home. They may or may not have been honest with the building society as to the purpose of these loans but that is by the way, other, importantly, than insofar as it might be relevant to their general credibility. The £30,000 was paid to the third defendant and was, with deductions, the source of the £27,705 paid on 9th April 1991. The £15,000 was paid to the claimants. The claimants' case was that they paid £21,979.60 in cash for the stock on a date not later than 5th April 1991 and that this was in addition to the £27,705, which it is agreed was paid on 9th April 1991. Then their case is that they paid another £10,000 in cash in September 1991. So their case is that, subject to uncontentious adjustments, in total they paid £2,500 plus £21,979, plus £27,705, plus £10,000, equals £62,184, which is £205 more than the agreed price. The first defendant's case was that the £21,797 was included in the £27,705 and not paid separately, and in addition that £10,000 was not paid in September. His case is that the claimants paid in total £2,500 plus £27,705, equals £30,205, which is over £31,000 less than the agreed price.
8. The first defendant's case, however, also was that the claimants had at his request paid £25,000 to a Mr. Ghatore in Coventry. If that were taken into account, it would mean that his case was that the claimants paid in total £55,205, which is something over £6,000 less than the agreed price.
9. However, the claimants took separate proceedings against Mr. Ghatore in the Coventry County Court, in which they were successful in recovering from him £25,000 which they agreed they had paid to him. This was as long ago as July 1995. The basis of that successful claim was that the £25,000 was a separate payment which did not involve the first defendant at all. The first defendant is not, I think, strictly bound by that decision, because he was not a party to the Coventry proceedings, but he did give evidence in support of his case that the £25,000 was paid at his request as part of the amount agreed for the assignment of the shoe shop. His evidence was not accepted by the judge in Coventry.
10. Mr. Cheetham of counsel tells us that there was no attempt in the present proceedings to go behind the Coventry judgment. That may be so forensically, although Mr Jagdev did give evidence in these proceedings to the same effect as the evidence that he gave in Coventry. On the basis that he does not seek to go behind the Coventry judgment, the first defendant's case has to be that the claimant paid more than £31,000 less than the agreed price. Against the claimants' position that is not in my view a credible case, in circumstances where, as I understand it, as Mr Cheetham has confirmed this morning, there was no evidence that the first defendant historically complained that the claimants still owed him a large sum of money.
11. So the factual issues were: (a) whether the claimants paid £21,797 in cash, in addition to the £27,705, and (b) whether they paid a further £10,000 in cash in September 1991. The judge accepted the claimants' evidence and rejected that of the first defendant.
12. As to documents, which Rix LJ did not have, there is general support for a payment in September 1991 from the fact that the claimants did borrow £15,000 from the Northern Rock Building Society. Bank statements of the third defendant and of Unique Style establish the payment of the £27,705 on 9th April and the payment of £10,500 on 24th September 1991. Payment of the £27,705 was effected by the third defendant, not the claimants themselves. The precise amount of £21,979 for the stock was not, I imagine, one which the parties actually remembered. It comes from a statement of First Shoes which contains that amount as a debit item for 28th March 1991 and a credit item for 5th April 1991. Against the credit item are the words "cheque/handover". This appears to support the claimants' case, to the extent that the date is different from that on which the £27,705 was paid and perhaps casts doubt on the claimants' case, and to that extent supports the first defendant's case to the extent that the reference is to a cheque, not to cash.
13. It was the first defendant's case that he had asked Mr. Bhangu to pay £25,000 for the purchase price for the shoe shop to Mr. Ghatore in Coventry. Of this the judge said in her judgment:

"I find this assertion of the part payment to Mr Ghatore, to be implausible on Mr Jagdev's own case. He told me he was pressurised by Babaji into selling his shoe business in Reading to Mr Bhangu at an under value - that is, at cost, when he wanted to sell for £60,000. He agreed he was annoyed to have to do so. The Reading business he described as 'his baby' - a business which he and Mr Bhajwa had started up, and nurtured. I can think of no reason, and I was not given any, as to why Mr Jagdev should direct Mr Bhangu to pay £25,000 to Mr Ghatore, thus reducing his and Mr Bhajwa's receipt from a business worth £60,000 to even less than the £40,000 agreed - that is to £15,000."

14. The judge then related the history of the Coventry proceedings, considering herself to be bound by the decision in that case. I think that strictly she may have been wrong about this, but I do not think that this is material to the present appeal when Mr Jagdev's evidence was not accepted in Coventry and he does not seek to go behind the Coventry decision. The judge said that she need not consider the Coventry money further as having no direct impact on her decision. She said that she had been referred to a great many documents, the more important of which this court now has. The judge then said:

"A number of issues have been canvassed before me, all of which I have considered carefully in coming to my decision, but many of which do not require a definitive ruling within the overall claim; many have been concerned with the witnesses' credibility - I have weighed all the points made, in coming to my decision."

15. She then referred to the issue whether the £27,705 included the £21,979 for stock or not, and said:

"Having heard the evidence, and having looked again at the documentation, I accept Mr Banghu's evidence on this point - I find that the £27,705 was separate and distinct from the £21,979 and that it represents an advance payment for the lease."

16. Having made a deduction of £2,801.50 for pre-paid expenditure to reduce the £27,705 to £24,904.17, she said:

"I accept Mr. Banghu's evidence that he paid a further £10,000 on 21st September 1991 in respect of the lease making a total of £34,904.17 - plus the deposit of £2,500 which I am satisfied was paid by Mr Bhangu and was on account of the lease.

I find therefore that the grand total, after taking into account the apportionments, was £37,404.17 paid for the lease - not, I note, much short of the original - £40,000 agreed through Mr Baba Singh."

17. It is to be noted that that calculation is essentially the same calculation as that which I undertook earlier in the judgment to reach the conclusion that, on the claimants' case, they paid £205 more than the agreed price. The judge was not including the £21,979 in her calculations since it was common ground that it had been paid, and it was not part of the claimants' claim in the proceedings. She also made a deduction of £2,801.50 for pre-paid expenditure.
18. The succeeding parts of the judge's judgment were substantial. She dealt at some length with the legal basis of the claim against the first and second defendants and with the entire case against the third defendant. It is not necessary to refer to these parts of the judgment in detail, but not doing so tends to give a distorted impression of the judgment as a whole.
19. Mr Cheetham submits that the judge's findings of fact as to the parties' credibility as to the payment of money were inconsistent with oral and documentary evidence, and that she gave insufficient reasons. In support of the latter submission he refers to Flannery v Halifax Estate Agencies [2001] WLR 277, to the effect that judges need to explain sufficiently why they reach their decisions. Where the issues turn mainly on the assessment of the credibility of the witnesses it was, he submits, essential that the judge gave explicit reasons for preferring one witness rather than another. It is not fair to the defendant, who was involved in a three day trial, to be left without proper reasons to explain why the judge reached the adverse conclusions that she did. Mr Cheetham submits that it is implicit in the judge's findings that she found the first defendant dishonest. That may be right. It was implicit in the nature of the issues that one or other of the parties was probably not telling the truth. It is unlikely that one or other of them had just forgotten that so large amounts of money had or had not been paid. Yet, says Mr. Cheetham, the judge did not criticize the first defendant beyond what she said in relation to the Coventry judgment. Mr Cheetham submits that the claimants' evidence was repeatedly challenged and undermined and yet the judge made no reference to this. He refers us to passages in the transcript of evidence in which Mr Bhangu is asked to explain the source of a cash sum of more than £21,000 and gives what Mr Cheetham suggests were implausible and incredible answers; secondly, where he says that a letter was forged to enable him to obtain a further mortgage; thirdly, where he says that he bought the shop without even visiting it; fourthly, where he denies that he was influenced by Baba Singh and explains the transaction in Coventry, and, fifthly, where he denied the calculations produced by counsel of how the Northern Rock's £30,000 was reduced to £27,705 but could not himself explain how it was reached.
20. As to this, the documents seem to me to show that the third defendant, not the claimants, did the calculations which may have included his own charges. Counsel's calculations were intrinsically unsupported. They depended on two undocumented amounts for electricity and legal fees. Without these no precise amount could be reached.
21. Mr. Cheetham also referred to Mrs Bhangu's cross-examination. He submits that the judge's findings that the £21,797 was paid separately and that the £10,000 was paid were inconsistent with the evidence. I do not myself find this by itself persuasive. The findings were consistent with the claimants' evidence and inconsistent with the first defendant's evidence. That was the issue. I do not consider that the judge's findings were inconsistent with the documents, as I shall briefly explain in a moment. I do think that the judge's explanation of her decision here was fairly brief. It amounted to (a) an analysis of the evidence which showed that the amounts which the claimants said had been paid were quite close to the amount which had been agreed; (b) a reasoned finding that the first defendant's evidence about the Coventry transaction was not credible; (c) unparticularised references to the documents. She had referred to documents in her exposition of the facts; (d) a bare assertion that she had taken into account all the submissions which had been made, and (d) a bare preference for the claimants' evidence.
22. Mr. Giles on behalf of the claimants submitted in writing that there was sufficient material to support the judge's findings of fact. She had heard all the witnesses being cross-examined. She had detailed written submissions from counsel. Counsel points out that the amended statement of claim alleged that the third defendant had paid £30,000 to the first and second defendants on 5th April 1991. It transpired that the amount was £27,705, but the defence simply denied the payment instead of pleading the amount that was paid and to whom. There was no reference to the £27,705 in the first defendant's witness statement. The first time that anything was said was when his counsel put the suggested breakdown of it to Mr. Bhangu in cross-examination. The first time the first defendant spoke of it, or of the £21,979, was when he gave evidence-in-chief. The case that the £27,705 was paid on 5th April, and that most of it related to stock, was unsupported by anything in writing. Page 235, which was referred to, does not support the first defendant's case. A letter from the third defendant of 5th April does not refer to any payment in respect of stock. The bank statements show that the £27,705 was paid on 9th April. A document that records the £21,979 has it for the 28th March as a debit on 5th April, not 9th April, as a credit. As to the September payment, Mr Giles submits that Unique Style did receive £10,500 from the claimants on 24th September 1991. The claimants' evidence was that the additional £500 was for stock. There is no entry in the stock account for anything like £10,500 at that period.
23. I am reluctant to criticise the judge in this case for giving fairly brief reasons only for her main findings of fact on the issue which is the subject of the appeal. Decisions as to the credibility of oral evidence are not always susceptible of long elaboration and judges are not obliged to confront explicitly in their judgment every strand of evidence or submission that counsel or the witnesses may propound. Certainly the judgment should be sufficiently explained and reasoned. What is sufficient will vary from case to case.
24. In the present case the judge gave two explicit reasons which contributed to her conclusion that the claimants' evidence was to be preferred. Those were the incredibility of the first defendant's evidence about the Coventry transaction and the analysis which showed that the claimants' case as to what was paid closely approximated to what was agreed. I think perhaps that she should have referred to the claimants' evidence as to the source of the £21,979, and that further elaboration on the question of general credibility would have kept this matter out of the Court of Appeal.
25. I am not, however, in the least persuaded that the judge's conclusion was wrong. On the contrary, taking account of her shortly expressed judgment as to credibility generally, I consider that her decision was right. Mr. Cheetham accepts that there was material on which the judge could reach the conclusion which she did. It is entirely implicit that she must have rejected the important parts of the first defendant's evidence.
26. I reach this conclusion because, in my view, the claimants' case generally accords with such documents as there are and in addition is broadly credible, whereas the first defendant's case does not accord with the documents and in addition broadly lacks credibility. My reasons for this are as follows: (a) the claimants' case, once it is analysed, is that they paid in full the sums agreed. The first defendant's case had to be that they paid more than £31,000 less than the agreed price. In the absence of vigorous complaint or some other explanation which is lacking, the first defendant's case is not credible; (b) the claimants' case as to the payment of £10,000 in September 1991 is strongly supported by documents. They received £15,000 from the building society in that month and they paid £10,500 to Unique Style on 24th September. The first defendant's case that this was all for stock is not credible when, on his case, they still owed over £31,000 for what had been agreed in March. There is no documentary support for his case as to the September payment but there are some stock records; (c) £27,705 was paid on 9th April. It was paid by the third defendant who received £30,000 from the claimants from the building society, and there is no documentary support for that having any element for stock. It would have been necessary to convey the figure of £21,979 to the first defendant and there is no documentary evidence that this was done. Page 335 is consistent with the claimants' case and positively inconsistent with the first defendant's case. The first defendant's evidence was that he received a cheque from the third defendant on 5th April. He was cross-examined as to why he had not paid it into his bank, at least by 7th April; (d) the entries in the statement of First Shoes, which contains £21,979 as a debit item for 28th March 1991 and a credit item for 5th April 1991, are not consistent as to date with the first defendant's case that the £21,929 was included in the £27,705 when the £27,705 was paid in on 9th April 1991. I have already noted that the reference in the second entry to a cheque is inconsistent with the claimants' case that they paid cash; (e) the result of the Coventry case, which the first defendant does not seek to go behind, is inconsistent with his case or, if not strictly so, produces for his case the lack of credibility to which I have referred. Thus, the intellectual support for the claimants' case outweighs that for the first defendant. I have carefully read the passages in the evidence on which Mr. Cheetham relies. The passage of cross-examination of Mr. Bhangu about the source of the £21,979 cash, which he said he paid, has him saying that in February 1991 he received loans of £5,000 from his brother-in-law, £4,000 from his brother and £10,000 from his wife's uncle who had died by the time of trial. I note that Mrs Bhangu's evidence was not entirely consistent with these details. Mr. Bhangu had not mentioned the details before because the money related to the payment for stock which he was not claiming back. Mr Cheetham suggested to him that he was making this all up. He said that he was not. In the context of a case in which all parties relied on trust in the community and wrote very little down, and where they did on occasions have large sums of cash, I did not read the passage as intrinsically incredible. Whether it appeared incredible evidence as it was given, taken in the light of other evidence, was a matter for the judge.
27. In the knowledge that the judge preferred the claimants' evidence to that of the first defendant and therefore made a judgment as to credibility, in the light of all the evidence and arguments that she heard, I am not persuaded that her decision was wrong. In a case such as this it is not possible for this court to judge witness credibility on paper, but I can quite see that the judge, who had to decide the issue on all the material before her, came to the conclusion that she did, notwithstanding some powerful points as to credibility made by Mr. Cheetham. There is no basis for supposing that she did not take them into account. She positively states that she did. Taking the evidence as a whole, the matters as to credibility adverse to the first defendant, seem to me to outweigh those adverse to the claimants. For these reasons I do not consider that the proposed appeal has any real prospect of success, nor do I consider that there are other reasons why the appeal should proceed, and I would refuse permission to appeal.
28. SIR MURRAY STUART SMITH: I agree.
Order: Application refused with costs; detailed assessment of the claimants' costs.