STATEMENTS OF CASE & THE STATEMENT OF TRUTH: CAN A PARTY ARGUE TWO DIFFERENT THINGS?

There are some interesting observations by Mr Justice Leggatt in ED&F Sugar ltd -v- T&L Sugar Ltd [2016] EWHC 272 (Comm).

KEY POINTS

  • A statement of truth which supported particulars of claim was a statement of fact. An assertion in relation to title was a matter of law.
  • An action would not be struck out because a different view as to title had been asserted in different proceedings.
  • It was open to a party to argue two contradictory points in different proceedings, resolution of these matters was for the trial judge.

THE CASE

The claimant was suing a number of defendants alleging a claim for conspiring to injure the claimant by unlawful means; inducing a breach of contract and conversion. The action related to a shipment of sugar. The defendants brought an application for summary judgment to dismiss the claim. One of the grounds for striking out was that the claimants could not properly have signed the statement of truth in the Particulars of claim.

THE ARGUMENTS IN RELATION TO CONVERSION: THE STATEMENT OF TRUTH AND INCONSISTENT STANCES

  1. The defendants do not on this application suggest that the claimant has failed to allege facts which disclose a valid cause of action in law for conversion; nor is it argued that the claimant has no real prospect of proving the relevant facts. T&L has pleaded a number of defences to the claim, but it is not suggested that any of those defences is capable of delivering a knock-out blow such that the claim should be summarily dismissed. The argument that the conversion claim should be struck out or summarily dismissed is based, and based solely, on the position which the claimant has taken in the arbitration proceedings against SRB in which it has sought to recover the contract price. The defendants say that in order to maintain a claim for the price the claimant has to allege – and has indeed alleged in its submissions in the arbitration – that title to the sugar passed to SRB under the Sale Contract. It was necessary in law, the defendants say, for the claimant to make that allegation because under s.49 of the Sale of Goods Act a seller may only maintain an action for the price once property in the goods has passed to the buyer, subject to an exception in s.49(2) which the defendants say is not applicable. At all events, the defendants contend that it is clear from the claimant’s submissions in the arbitration that the claimant has alleged that title passed to SRB. Furthermore, it appears that an award has been made in the claimant’s favour, although the award is said to be subject to a request for clarification and no attempt has yet been made to enforce it. Mr. Howe submits that in these circumstances the claimant cannot assert in these proceedings that title did not pass to SRB under the Sale Contract. It follows that the claimant cannot maintain a claim in conversion.
  2. The submission that the claimant cannot say, or cannot be heard to say, in these proceedings that title did not pass to SRB prompts the question, “Why not?” On what principle of law is it argued that the claimant cannot say, or cannot be heard to say, this? The defendants’ skeleton argument provided no answer to that question. Nor does the defence, which does not refer to the arbitration claim and takes no point based upon it in answer to the claim for conversion. Although I invited Mr. Howe in oral argument to identify a principle of law on which he relies, he did not identify any applicable legal principle.
  3. Two principles were mentioned on which Mr. Howe confirmed that he does not rely. One is the principle or doctrine of election of remedy that appeared to be relied on in the witness statement of Mr. Mukhi, which set out the grounds for the defendants’ summary judgment application. Mr. Young pointed out in one of the more useful parts of his skeleton argument, by reference to the advice of the Privy Council in Tang Man Sit v Capacious Investments Ltd [1996] AC 514, why that principle does not assist the defendants. Mr. Howe did not seek to argue the contrary.
  4. Another legal principle on which the defendants do not rely is that of issue estoppel. That principle also does not assist them, because it is well-established that a finding in arbitration or court proceedings between A and B is not binding on A in arbitration or court proceedings between A and C: see e.g. Lincoln National Life Insurance Co v Sun Life Assurance Co of Canada [2005] 1 Lloyd’s Rep 606. That being so, it seems to me that a fortiori A can not be bound in proceedings against C by assertions of fact or law which A has made in arbitration proceedings against B. Thus, the claimant is not bound in the present court proceedings against T&L by assertions made in the arbitration proceedings against SRB. That conclusion is reinforced by the consideration that arbitration is a private and confidential process – which militates against the notion that assertions made in arbitration proceedings may be taken to have a wider public significance.
  5. The closest that Mr. Howe came to putting forward anything in the way of legal reasoning in support of this limb of the application was to point out that the particulars of claim, as with any statement of case, are supported by a statement of truth attesting to the claimant’s belief that the facts stated in them are true. Mr. Howe argued that such a statement of truth could not honestly have been made in circumstances where the claimant was asserting in the arbitration against SRB that title to the sugar had passed to SRB.
  6. Mr. Howe did not spell out what the legal consequence would be if the statement of truth was in fact false. I shall assume in his favour, although no attempt was made to demonstrate this, that it could have the consequence of rendering the statement of case, or a relevant part of it, liable to be struck out. Even on that assumption, however, I cannot see how reference to the statement of truth advances the defendants’ case. That is so for at least two reasons. First, a statement of truth is confined to the party’s belief in the truth of facts stated in the pleading. An assertion that title to the cargo of sugar did not pass to SRB is not a statement of fact. It is a conclusion of law arrived at by applying rules of law to the facts alleged. The defendants have not identified any underlying fact averred in the particulars of claim, which is denied in the claimant’s arbitration submissions (or vice-versa).
  7. Second, even if the assertion that title to the sugar did not pass to SRB were to be regarded as a statement of fact, it cannot be inferred from the fact that an inconsistent assertion has been made in the arbitration proceedings that the claimant did not, or does not, believe the statement made in these proceedings to be true. Inconsistency – assuming, as I do, for this purpose that there is an inconsistency – can always operate in either of two directions. It could perfectly well be that the statement of truth accurately reflects the claimant’s belief and that what was stated in the arbitration proceedings did not. That would be a matter for SRB to complain about.
  8. After Mr. Howe had completed his submissions, when the court adjourned overnight during Mr. Young’s submissions in response, Mr. Howe and Ms. Powell produced a further written note citing four further authorities in a belated attempt to come up with some legal basis for this limb of the defendant’s application. It was said in this note that:
“The defendants rely upon the simple proposition that a claimant should not be permitted to pursue a case which is based on mutually inconsistent allegations of fact.”
The authorities relied on in support of this proposition are all examples of a party attempting simultaneously to advance two inconsistent cases in the same legal proceedings. None of them is an example of a claimant being prevented from pursuing mutually inconsistent cases against different parties in different proceedings. The authorities are therefore dealing with a different situation and are nothing to the point in this case.
  1. I understood Mr. Howe in his reply submissions to attempt to suggest that the claimant is making mutually inconsistent allegations in the particulars of claim because of a reference made to the arbitration in paragraph 8. It is said there that the present proceedings are being pursued in parallel with the arbitration and that, to the extent that the claimant succeeds in recovering any money from SRB, it will give credit for that sum in reduction of its claim for damages in these proceedings. It cannot sensibly be suggested, however, that paragraph 8 of the particulars of claim somehow incorporates into the particulars of claim all the assertions made in the claimant’s submissions in its arbitration with SRB. It plainly does nothing of the sort. That paragraph is, in any event, an expendable part of the pleading which could be removed without having any effect on the claim. I cannot but regard these last submissions made by counsel for the defendants as a final scraping of the barrel.
  2. I conclude that the defendants’ objection to the conversion claim is itself lacking in any reasonable foundation. It is wholly incapable of demonstrating that the claim has no real prospect of success.”

CAN A PARTY PLEAD IN THE ALTERNATIVE

It is always worth looking at the judgment in Binks -v- Securicor [2003] EWCA Civ 993. A claimant in a personal injury case wanted to advance and plead an alternative case in relation to liability based on the defendant’s account of how the accident occurred.  This was rejected by the trial judge on the basis that the claimant could not sign a statement of truth verifying that this was correct.

The Court of Appeal, however, allowed the claimant to plead the case in the alternative.

The judge at first instance found

“Pleadings nowadays have to bear a statement of truth and it is quite clear that the Claimant is in no position to sign a statement of case which would advance wholly conflicting versions of his complaint against the Defendant.”
Mr Justice Maurice Kay observed:
8. In my judgment it was erroneous for the judge to express himself in that way. For one thing, rule 22.1 (2) enables the court to dispense with verification by a statement of truth when a statement of case is amended. It does not specify circumstances in which the power of dispensation might arise but I take the view that amendment to plead in the alternative a case derived from an opponent’s documents, pleadings or evidence is capable of being such a case. To the extent that the practice direction to part 17 suggests otherwise, I give precedence to the rule over the practice direction. Moreover, I do not accept that the purpose or effect of part 22 is to exclude the possibility of pleading inconsistent factual alternatives. In this, I take comfort from the judgment of Patten J in Clarke v. Marlborough Fine Art Limited 2002 1 WLR 1731 at paragraph 30. It is true that Patten J was not concerned with a dishonest claimant who was clinging to a false account and a defendant whose witnesses, at least on one view, were providing evidence for an alternative factual basis of liability. Nor was he concerned with other possible scenarios that readily spring to mind – for example, a claimant in a personal injury case who simply does not know what happened but relies on a independent witness who proves unreliable in circumstances where the defendant’s evidence nevertheless provides him with a positive case; or the claimant who honestly believes in, because he has wrongly convinced himself of, the truth of his case, but who can nevertheless advance a case on the basis of the defendant’s pleadings or evidence. Such scenarios and the history of the present case dispose me to the view that it is necessary to adopt a broader approach to Part 22. In my judgment, it does not in all cases prevent a party from submitting or amending a pleading which includes an allegation which he is not putting forward as the truth, provided that there is an evidential basis for it. If it is in the form of an amendment, then, as I have said, it may be appropriate for the court to permit it without requiring a statement of truth. Moreover, I do not consider it objectionable in principle for a claimant to advance an alternative case based on material put forward by his opponent. In such circumstances, it may be possible for him append a statement of truth, suitably drafted, making it clear that whilst his primary case is not an assertion of the truth of his opponent’s account, if the court find that to be the truth, he will seek to rely upon it as an alternative basis for liability. There is some support for this approach in Kelly v. Chief Constable of South Yorkshire Police [2001] EWCA Civ 1632. There, at the conclusion of the evidence, counsel for the claimant sought permission to amend particulars of claim so as to include an alternative factual basis of liability based not on her own evidence but on that of one of the police officers with whom she had been struggling in a car. Neither at first instance nor in the Court of Appeal does there appear to have been a discussion of Part 22. Nevertheless, May LJ concluded (paragraph 18) that the grounds for refusing permission were not sufficient to outweigh the justice of permitting the claimant to advance an alternative case based upon, or close to, the defendant’s evidence. Agreeing, Sedley LJ said (paragraph 21): “It is not uncommon for a version of the facts to emerge as a possible deduction from the evidence which has so far been neither side’s pleaded case but which one side wants now to plead as an alternative basis, either of liability or of defence. In my experience it is normal and proper practice in the County Courts, and in the High Court too, to allow an amendment to such effect at the conclusion of the evidence if, on any terms which are appropriate as to costs or recall of witnesses, this can be done without injustice to the other party or parties.” I acknowledge that the factual circumstances were different from those of the present case. On the other hand, if an unduly narrow view were taken of Part 22, it is difficult to see how the Court of Appeal could have come to the conclusion it reached. 9. Although I accept that the purpose of Part 22 is to deter or discourage claimants from advancing a case which is inherently untrue or wholly speculative (a purpose which will never be wholly achieved), I do not accept that its purpose extends to the possibility of relieving of liability a defendant whose own evidence may establish a cause of action against him. That would not be consistent with the overriding objective of dealing with a case justly (CPR 1.1(1)).

RELATED POSTS: THE IMPORTANCE OF PLEADINGS

RELATED POSTS ON SIGNING THE STATEMENT OF TRUTH

 

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