Tuesday, 28 June 2011

Nottinghamshire & City Of Nottingham Fire Authority v Gladman Commercial Properties & anor [2011] EWHC 1918 (Ch): late, late evidence

So.  You know the score for a trial.  You get your documents, then you get your witnesses, then you get your experts.  All the things you have are exchanged, piecemeal, but simultaneously.  There is no trial by ambush beloved of TV movies of a last-minute flourishing of the surprise witness.

At least in theory.

Not the practice in this case.  Gladman bought an old fire station to turn into student flats.  The fire service and the local council told Gladman that the station could provide 600 flats minimum.  Time for payment came, and Gladman refused.  Not enough room.  We are rejecting the contract, we are not bound to complete.  The fire service claimed that Gladman was obliged to pay; Gladman counterclaimed (and brought the council in for good measure).

The case revolves almost solely around whether the council’s reps got the number of flats so wrong that it amounted to fraud.  For that you would expect there to be serious witness evidence from the council.  Except there was not.  The number one witness not only did not turn up, he had not even provided a witness statement.

So when the fire service’s witnesses finished, Gladman thought it had an open goal.  All its witnesses needed to do was state that they relied on the misrepresentation.  Not much room for controversy there. 

Then came the TV movie twist.  The council provided a statement from its number one witness.  Gladman was quite understandably outraged.  This was trial by ambush.  Its submissions were ready – the council didn’t have anyone denying that the statement was made fraudulently – and suddenly it would have to change.  Or would it?  Why should the council be allowed to bring in this new witness?  Gladman therefore opposed the council’s application to add new evidence.

The judge reluctantly allowed the council’s application.  Reluctantly, because he had to give Gladman time to prepare for this new witness, which meant, given the court’s chock-a-blockness, the trial would have to be kicked over a couple of months.  However the judge weighed up his options.  What if he turned the evidence down?  You’d have a witness with valid things to say, hanging around at court, unable to say them.  And if the judge found that the would-be witness HAD behaved fraudulently, he would be making a finding of fact that would be disastrous for the witness.  “It  would be a gross injustice if having ruled that [the witness’] evidence could not be relied upon then to go on and decide the case against [the council] and the Fire Service by criticising their failure to call [him] despite the fact that he has been at all material times from 11th April 2011 available as a witness. I cannot conceive of a greater and justified complaint about a decision that would have been made that way.

The big penalty for the council is in costs.  The judge warned at the end that there would be serious consequences.  The hint is that if the witness’ evidence proves conclusive, the council might end up winning the case, but paying all of Gladman’s costs – on the basis that the trial may have been unnecessary had the evidence been made available.  We won’t know until the end of the case, if indeed it doesn’t settle, but the card has been marked.

So it is possible to get very late evidence in.  The court will consider it an injustice if valid evidence is kept out just because it is late.  The best way to do justice in these circumstances is to make the “guilty” party cough up all the wasted costs of the innocent.  That could well be such a serious penalty it might dissuade a party from chancing its arm.

Thursday, 9 June 2011

Araci v Fallon [2011] EWCA Civ 668: derby disaster

The biggest horse race on the flat was held over the weekend; a tight finish saw 19 year old Mickael Barzalona claim a thrilling victory, just ahead of Her Majesty’s Carlton House and comparative outsider Treasure House.

One jockey who was not involved in the finish was Kieran Fallon, six time Champion Jockey and three time Derby winner.  Definitely one to have on one of your horses, which is what the Araci family thought when they had a likely nag.  They accordingly paid Fallon ten grand to be the chosen rider for Native Khan, entered in the Derby on the back of three wins in five races.  Fallon rode it to two of those wins; he evidently knew the horse.

Trouble is, Fallon then agreed to ride a different horse, Recital.  The Aracis were not pleased; not only would they lose the services of a top rider, they would see him riding in opposition.  If it came to a head to head between Recital and Native Khan, Fallon’s knowledge might have been the difference maker.

So the Aracis sought an injunction to stop Fallon riding.  It was pretty much conceded that they could not force Fallon to ride Native Khan, indeed they probably wouldn’t want that – the trust had gone – but they could stop him taking advantage.

It’s a difficult thing to get.  The Court does not like a party stopping someone else from making a living, even if that living is a breach of contract.  Normally the Court would say that damages would be enough.  Indeed this is what the court decided first time of asking; Fallon was free to ride Recital.

But the law can’t half shift when it wants to.  An appeal was lodged, heard the same day and the result given the next morning.  The reason?  That morning happened to be Derby day.  And the Court of Appeal awarded an injunction.

The Court looked at the factors afresh.  The case was finely balanced, but there were a couple of key considerations.  Firstly, would damages be appropriate?  Even ignoring the kudos in owning a Derby winner, damages would be fiendishly difficult to calculate.  If Recital won, with Native Khan third, would Fallon’s breach of contract have caused NK to finish third rather than first?  Or would third have been the best it could have done even had I been riding Recital?  Secondly, let’s assume that the Aracis missed out on the huge stud fees a Derby winner could command.  Maybe millions of pounds.  Could Fallon afford it?  There was no evidence.

So the Court took the unusual step of awarding an injunction.  Only an interim one – stopping Fallon from riding in the Derby, the rest will be sussed out at a full trial – but the Court was pretty scathing of Fallon’s evidence, giving a pointer to an end result.  The injunction may yet be made permanent insofar as major races go, and damages will also, presumably, be awarded.  As best as can be assessed, at any rate.

Ironically, Native Khan came fifth – just ahead of Recital.  Maybe Fallon made the wrong choice anyway…