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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 >> Alderson & Anor v Stillorgan Sales Ltd [2001] EWCA Civ 1060 (13 June 2001) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/1060.html Cite as: [2001] EWCA Civ 1060

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IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT AT WINCHESTER
(MR JUSTICE LANGLEY)

		Royal Courts of Justice Strand London WC2 Wednesday, 13th June 2001

Wednesday, 13th June 2001

1. LORD JUSTICE SCHIEMANN: Lord Justice Kay will deliver the first judgment.
2. LORD JUSTICE KAY: On 2nd October 2000 counsel on behalf of the claimants, Keith Christopher Alderson and Carol Susan Alderson, applied to Langley J, siting in the High Court at Winchester, to adjourn the hearing of their claim against the defendant which was set down to be heard on 3rd and 4th October. That application was refused. The following day Mrs Alderson, now acting in person, renewed her application for an adjournment. Langley J again refused it and the claimants concluded that they could no longer pursue their action with any prospect of success and elected not to proceed with the case which was then dismissed. They now appeal against the refusal to grant an adjournment with permission from Mantell LJ.
3. The claim arose out of the purchase by the claimants of a confectionary tobacco and news agency business at West Moors, Dorset. Mr Alderson had returned to this country following a lengthy spell working abroad and had only been able to find a job working in London. The claimants decided that they wanted to find a small business near a home in which Mr Alderson could earn a comparable living but avoid the daily rigours of travelling to London.
4. In due course their attention was focused on the shop business to which I have referred. For the business to be viable from their point of view it needed to provide a comparable income to that enjoyed by Mr Alderson in his employment. The profit made by the business were therefore, not unnaturally, of importance to them. It was their pleaded case that the defendant as vendor of the business through its financial director, Peter Humphreys, and its agent Messrs Dowling Kerr, made representations to the claimants relating to the annual gross profit made by the business which were not true. There was an allegation of negligence in the making of the statements but none of fraud.
5. In August 1998 the claimants proceeded with the purchase. Put simply, the business venture was a disaster, and by the beginning of May 1999 they were obliged to close. The consequences of the closure were serious from their point of view. Their financial position had deteriorated considerably and they were forced to sell their house to repay the borrowing to their banker and to pay all outstanding debts. They brought this action to recover their losses.
6. The case was pleaded by Mrs Alderson in person. It alleged misrepresentation, negligent misstatement, breach of contract and breach of fiduciary duties. The sum claimed totalled approximately £80,000. Clearly elements of the pleaded case such as the alleged breach of fiduciary duty were without the slightest prospect of success. The heart of the matter which could be pursued, and which they wanted to pursue, was the allegation of misrepresentation. In particular they relied on the particulars drawn by the agents for the sale of the business. In those particulars, figures were given for the accounts to the year end 26th January 1997 showing sales of £285,893, a gross profit of £78,707 with a gross profit percentage calculated from those two figures of 27.5 per cent. Other details of the business were given including details of the weekly sales.
7. The particulars did include a specific warning that the particulars had been supplied without any acceptance of liability in respect of them and specifically warned any purchaser that their verification was a matter for them.
8. The contract for the purchase included a term relied upon subsequently by the defendants as excluding liability for any representation. As far as the claimants were concerned they countered that answer by saying that that was a term which from its wording applied to the property but not to the business.
9. The proceedings were commenced on 28th August 1999. A defence was served dated 20th September 1999 and a reply followed dated 25th October 1999. On 10th March 2000 directions were given. This included permission to either party to apply to rely on expert evidence.
10. On 26th July 2000 the matter came before District Judge Hurley for a case management conference and the claimants sought permission to adduce expert evidence from their own accountant. That request was denied and the court made an order that the significant parts for this appeal were as follows:

"4. The parties do jointly instruct a chartered accountant to prepare a report on the issues of:

(a) how the gross profit margin can be calculated for a business such as this;

(b) whether the Defendant's method of calculating the gross profit is an acceptable method;

(c) whether the accounts for the year ending 26 January 1997 and such documents as are produced to the accountant for that year do show a 27.5% gross profit as calculated on an acceptable basis.

5. The following directions do apply to the joint instructions

(a) the joint instructions be delivered by 4pm on 25 August 2000

(b) the report to be filed by the Claimant by 4pm on 15th September 2000.

7. Both parties do file and serve by 4pm on 28 September 2000 a skeleton argument.

8. Both parties or either of them do have leave to call the joint expert."

11. It is to be noted that counsel, who appeared for the claimant at the case management conference, endorsed his brief that the permission to call the expert was granted so that he could be cross-examined.
12. The final matter in the order of any relevance and importance is that there was a specific direction that the hearing would take place on 3rd October 2000 at 10.30am at Winchester.
13. The report from the jointly instructed accountant was not available, as had been intended, by 15th September 2000. By agreement between the parties the period was extended to 25th September. It is fair to say that this no doubt was not what the claimants would have chosen but they felt it was inevitable since they could not file a document that had not been produced. The report was not as it transpired signed until 28th September and did not arrive at the claimant's solicitor's office until 29th September. They forwarded a copy that day to counsel who was briefed to appear at the hearing of the action on 3rd October. On the same day the court required a written report from counsel as to why he had been unable to comply with the requirement that he should produce a skeleton argument and also to deal with the question of whether there needed to be an adjournment. Counsel produced such a report that day. It revealed that he had first received any documentation on 25th September, that it had then consisted simply of counsel's brief for the 26th July hearing. The next day further papers had arrived followed by the expert's report on 29th September.
14. Counsel in his report referred to the issues which were the subject of the joint expert accountant's report as being "the crucial issues on liability." He explained in that report that without that document it had been wholly impossible to produce a skeleton argument. He also made clear that he had not seen any documentation to support quantum. He indicated that the claimants needed time to consider two options: one, reapplying for permission to instruct their own accountant, and/or; two, amendment of the pleadings.
15. The matter for consideration in respect of possible amendment is set out in paragraph 11 of counsel's report. He referred to new information having emerged from the report relating to a profitability during the last period before the purchase was completed.
16. This report from counsel resulted in the first application to Langley J to adjourn the proceedings. Proposed trial counsel could not attend but the claimants were represented by other counsel. It is quite clear that at that hearing Langley J was under the mistaken impression that the order of 26th July had been made with the consent of the claimants. Looking at the order it is understandable why that impression was given, and it may be that it was a lack of familiarity with all the circumstances of the case induced by the hearing at short notice that caused counsel, who was not immediately involved in the run up to trial, not to correct that impression.
17. Langley J gave his reasons for refusing the application in the following terms:

"Mr Anderson, you have said everything that can possibly be said in support of this application, but as it seems clearly to me the parties agreed in this case that a joint expert's report was appropriate and did so as regards its timing on a basis which has to indicate that they were both prepared to hold the trial date, and indeed no application to vacate it was made at the time, to hold the trial date against the report coming forward. The report has, in fact, come forward some three days later, but I cannot see for my part that that makes any difference to the reality of the situation, particularly so as the claimants have asserted on at least two occasions that they do have their own expert who is well able, one must assume, to advise them on any questions which if necessary they should put in cross-examination of the expert if he is to give evidence in the trial. In those circumstances it seems to me it is neither appropriate nor proportionate that this case should be adjourned and I shall refuse the application."

18. The following morning, as indicated, the claimants attended for the trial of their action. They had dispensed with the services of counsel no doubt because he had advised them he was not in a position to put forward the matter in the light of his having no evidence to counteract the expert opinion and the application for adjournment having failed.
19. Mrs Alderson, as I have already indicated, thought it right and sensible to renew her application to the judge. She had a good basis for thinking that it was worth trying again, because it is accepted now that the view taken by the judge, and clearly material to his initial decision, that the case management order had been made by consent was wrong. That was pointed out to the judge, and various other matters about the circumstances in which the claimants then found themselves were also pointed out by Mrs Alderson. As a result, the judge did reconsider the matter and gave a short ruling at the conclusion which again refused the adjournment. He made it clear in the course of giving that decision that he was dealing with a matter which was substantially one of discretion. He said that he was not at all persuaded that there was any basis on which any realistic prospect could exist of upsetting the discretion which he had exercised the day before.
20. He went on to consider the fresh matters concerning the adjournment of the hearing. He concluded also that to allow the making of amendments to the claim at that stage was inappropriate, that it would be unfair because it was too late, and that the consequences would be wholly disproportionate to the quantum of the case and its likely outcome. He dealt with other matters but at the end concluded that the matter must proceed.
21. The claimants then considered their position and, as I have indicated, concluded that without such evidence their position was hopeless and wisely and sensibly in those circumstances did not pursue the matter then. The question of their subsequently appealing the refusal of the adjournment had been raised before Langley J.
22. Those are the circumstances in which this matter comes before the court. The grounds of appeal essentially raise three separate matters. First, that the dismissal of the claim resulted from the refusal of the application to adjourn, and that that refusal had been wrong or unjust because, the claimants should have been given the opportunity of instructing their own expert accountant to comment on the joint report. Reliance was placed on the decision of this court this Daniels v Walker [2001] 1 WLR 1382. In the grounds, complaint was made that the judge, having considered that authority had been wrong in reaching his conclusions because they had been based upon an assumption the order was indeed a consent order.
23. The other matter raised in the grounds, although not pursued orally, was that the claimants should have been granted an adjournment to consider amending the pleadings to add an allegation to the effect that, if the representations in the sales particulars about the shop's gross profits were correct the defendants impliedly represented prior to completion of the sale on 17th August 1998 that the shop continued to be profitable, whereas in fact the shop made a loss from 31st January 1998 to 17th August 1998.
24. One can deal with that last matter very quickly. The proposed amendment was totally hopeless. There was no prospect at all of succeeding. There was no implied representation of that kind at all, and no questions had been asked which could lead to an inference such as that suggested. Even if the matter had been pursued before us I for one would have found it to be without merit.
25. It is necessary therefore to consider the central question, namely whether the adjournment should have been granted in order that an expert accountant could have considered the joint expert's report. In so far as the initial decision was based upon the judge's misapprehension that the order had been made by consent it is accepted that that was indeed wrong and that the decision of 2nd October on that basis cannot be right. However, the respondents contend that in so far as the judge reconsidered the matter knowing then that it had not been a consent order on 3rd October that decision was a perfectly proper one which the judge, in the exercise of his discretion, could reach.
26. Mr Shay, on behalf of the claimant, has argued before us today that the whole circumstances were such that the claimants had, against their wishes, thrust upon them an expert report that turned out to be totally damaging to their case without any opportunity to take instructions from an accountant of their own choice either so that he could be called to rebut the joint report or so that the basis of what he said could be utilised by way of cross-examination of the joint expert. They contend that it is not fanciful to suggest that contradictory expert evidence would be forthcoming because appended to the particulars of claim was a report from the claimants' accountant dealing with the profitability of the business in very short terms. That concluded that for a different period the maximum profitability that could have been achieved was 19.58 per cent. The accountant also went on to express the opinion (although it was an opinion unsupported by explanation) that a figure of 27.5 per cent as quoted in the particulars was "totally unobtainable taking into account the nature of the business and the split of sales as detailed in the particulars." The claimants argue that there was therefore a genuine basis for thinking that the joint report might be wrong and that the way in which these proceedings continued deprived them of any opportunity of exploring that possibility.
27. The claimants point to the fact that they received the report later even than the district judge had contemplated. It had been contemplated at the time of the making of the order that it would be available by 15th September, it did not become available until 29th September, in working terms two days before the hearing was due to take place. An attempt had been made to contact their own accountant in that short period to see whether he could express a view about the reliability of the joint expert's report but he was away at the time and so that course simply was not possible. In those circumstances it is argued that the judge was bound in the exercise of his discretion to come to the conclusion that justice did require that further time was given even though that meant the adjournment of the hearing which was listed before him.
28. The respondents argue that that is not right. They point to the fact that the judge did have a discretion and they argue that he was entitled to take a number of factors into account. First, they submit that the judge was entitled to have regard to the fact that the report prepared by an independent jointly appointed accountant was a very detailed and thorough report. Indeed, the delay in the production of the report resulted from his wanting to see extensive documentation before satisfying himself that the profit margin suggested was in fact a fair and proper one to be put forward. Counsel points to the fact that the defendant is a large organisation under an obligation to have its accounts audited regularly and that nothing of any significance had appeared during the audit. The defendant was liable to VAT and therefore of course there would be checks made by Customs & Excise. Accordingly it is submitted that if one looks at the whole picture it is unreal to think that even given extra time an accountant was likely to be able to challenge successfully the conclusions made in the joint report. Counsel points to the fact that this procedure for dealing with this case had been laid down in July. There had been no appeal against the order made at the case management conference. That order had clearly contemplated the possibility that one or other party might not agree with the joint report by making the order that the joint expert should attend and give evidence with a view to cross-examination. It is argued that in those circumstances the judge was entitled to have regard to the following factors that the matter had been allowed to proceed up to the stage when the trial was due to take place, and that the listing of any case is a significant matter not only for the parties but for other litigants who will be deprived of the opportunity of having their case heard because this case had been listed. The latter factor was one to which the judge had been specifically referred to in the course of argument on the day fixed for hearing of the action.
29. For those reasons it is submitted that this court should not interfere with the exercise by the judge of his discretion, and that there is nothing even at this late stage to suggest that if time was given there would be any realistic prospect of challenging the report of the joint expert.
30. In my judgment this was essentially a decision calling for the discretion of the judge. He was bound to take into account all the factors to which reference has been made including the strength of the case. The case, looking at all the material that is available including the witness statements, the expert report as it was prepared, and the short report prepared earlier by the claimant's account, has on any view to be seen as a relatively weak case without any great prospect of success. That was clearly the conclusion of the judge and that view was bound to colour his consideration of other matters.
31. The case had been allowed to proceed up to the stage when the matter was due to be heard on the following day. It must have been within the contemplation of the claimants that there was a possibility that the report would be an adverse one; they had taken no steps in any way to see whether their accountant would be in a position to look at the report and, if need be, advise as to how the report could be challenged. Simply to wait until that very late stage was, in the circumstances, inappropriate.
32. Those are all factors, in my judgment, properly to be considered as indeed is the position of other litigants who would be disadvantaged if this matter was put off and required further court time to be allocated to it at a later date. The injustice which the claimants suggested was no more than a very remote chance that they would have a good claim refused simply because they could seek further evidence. In those circumstances the judge was entitled to weigh the various factors as he did and, in the exercise of his discretion, decide that the matter must proceed.
33. For those reasons I would come to the conclusion that this appeal must be dismissed.
34. LORD JUSTICE SCHIEMANN:I agree and only add one further consideration. Given there was no agreement to appoint the joint expert the fact is that the district judge made such an order on 26th July 2000. There was no appeal from that order for reasons one can understand. They are difficult orders to appeal, and it was decided to live with it. That order provided for the expert's report to be available by 15th September. It was not. If the defendants had wanted to have further time to consider the expert's report that would have been a golden opportunity for them to object to an extension unless at the same time a correlative extension of the date of trial was ordered. If they had objected round about that time then the court would have been able to organise its business in such a way as to take that into account. But in fact what happened, as appears from the transcript of the proceedings on 3rd October, the claimants' lawyers, Footners, wrote to the court saying:

"Having spoken with the appointed expert's accountant we have been informed that he will not be able to successfully complete his report within the timelimit specified in the 26th July order. We have contacted ECD Lord & Co"

- the solicitors for the defendants -

"and have agreed for an extension of time for the filing of the said report. It has therefore been agreed that the expert report should be filed with the court no later than 25th September in time for the hearing on 3rd October."

35. So certainly at that stage there was agreement as between the parties' solicitors that if the expert's report was delivered on 25th September there would be sufficient time to carry on on 3rd October. There was no indication at all that any adjournment might be requested. True it is that in fact the report arrived three days later than that. But we are told that the claimants' accountant was on holiday that week; so he was, and I am perfectly happy to accept that, but there is absolutely no reason to suppose that the three days made a significant difference on the facts of this case.
36. For that additional reason and the reasons given by my Lord I also would dismiss this appeal.
(Appeal dismissed with costs subject to detailed assessment).