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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 >> Capital Bank Plc v McDiarmid [2006] EWCA Civ 226 (07 February 2006) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2006/226.html Cite as: [2006] EWCA Civ 226

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IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM EXETER COUNTY COURT
MR RECORDER DENNYS QC

		Royal Courts of Justice Strand London, WC2
		7 February 2006

1. LORD JUSTICE DYSON: By a purchase plan agreement in writing dated 31 May 2001, between Capital Bank Plc, ("the bank") and West Somerset Logistics Ltd ("WSLL"), the bank agreed to lease to WSLL on hire purchase terms a Ford Iveco, registration number P317 NNB ("the truck"). On 22 May 2001, Mr McDiarmid had purportedly entered into a written guarantee and indemnity with the bank in respect of the hire purchase agreement whereby he purported to guarantee, inter alia, the due and punctual payment of any sums from time to time due from WSLL under the hire purchase agreement. WSLL failed to pay instalments in accordance with the agreement which was duly terminated by the bank on 27 November 2001. The truck was never recovered.
2. On 19 December 2001, WSLL went into insolvent liquidation. On 1 October 2002, the bank wrote to Mr McDiarmid requesting all monies due to them from WSLL under the hire purchase agreement. The sum claimed was £20,287.05. Mr McDiarmid has at all material times claimed that his signature on the guarantee had been forged, that the document was therefore void so that he was not liable to pay the bank the sum claimed or indeed any sum. The bank started these proceedings in the Milton Keynes County Court. The only issue was whether the signature on the guarantee was the genuine signature of Mr McDiarmid. In a careful judgment given on 8 June 2005, Mr Recorder Dennys QC found that it was Mr McDiarmid's signature and he ordered that there be judgment for the bank in the sum of £20,287.05 plus interest of £5,731.55. He also ordered Mr McDiarmid to pay the bank's costs, which he assessed at £14,110. Mr McDiarmid seeks permission to appeal. His application was referred to the full court by Moore-Bick LJ to be heard on notice.
3. Mr McDiarmid had worked for some time as a truck salesman. By 2000 he had met and become friendly with Mr Gordon Ainsby. WSLL was incorporated in December 2000. At that time, its directors were Mr Ainsby and a Mr Wills. Mr Wills had at one time been the owner of the truck and had then transferred it to IR Euro Continental, an Irish company operated by Mr Ainsby, before it was transferred to WSLL in May 2001. WSLL started to trade in about March 2001. Mr Ainsby resigned as a director of the company on 23 April 2001 and was replaced by Mr McDiarmid the following day.
4. In May 2001, following a request by Mr Ainsby that he should do so, Mr McDiarmid caused WSLL to purchase the truck. It is not in issue that Mr McDiarmid signed the hire purchase agreement on behalf of WSLL. The first contact between WSLL and the bank was on 11 May. The Recorder found that the bank was told by someone that Mr McDiarmid was prepared to guarantee the hire purchase agreement, but it was not possible, said the Recorder, to know who had the conversation with the bank's representative at the time. The Recorder admitted the witness statement of Karen Webster as hearsay evidence. Hers was the only direct evidence given at the trial, apart from that of Mr McDiarmid himself, of the signature of the guarantee. She could not be called to give evidence because the bank could not locate her. She said:


"Although I cannot remember witnessing this exact document, whenever I witnessed Mr McDiarmid's signature he was always in my presence when he signed the documentation. Having considered the document I confirm that the witness signature is mine and I have no reason to believe that the signature is not that of Mr McDiarmid."

5. Of this evidence, the Recorder said at paragraph 11:

"There are two reasons why Miss Webster's witness statement is not as compelling as otherwise it might be, quite apart from its brevity. The first and obvious reason is that she was not available to give evidence and therefore her evidence was not tested in cross-examination, but secondly, she was involved in the general running of this company as Company Secretary, and it is perfectly clear that the manner in which the company was run left a great deal to be desired. More particularly, however, she was prepared to sign the letter of dismissal of Mr McDiarmid as a director, which she was not, in circumstances where the allegations in that letter which were made against Mr McDiarmid subsequently proved to be unfounded. Her witness statement is therefore of less assistance in my judgment than otherwise it might be."

6. The Recorder then turned to consider the evidence of Mr McDiarmid. He described him as "an unsatisfactory witness". He explained in detail why he was of that opinion. He said at paragraph 12:


"He seemed to me to be prepared to tailor his evidence to suit what he considered to be the requirements of his case. His evidence contained numerous inconsistencies, some of them not important in themselves but the cumulative effect of which certainly distracted, in my estimation, from his evidence."

7. The Recorder then proceeded to give examples of the inconsistencies. It is not necessary to go through these in detail; one illustration will suffice. Mr McDiarmid insisted for the first time during his oral evidence that he did not sign the hire purchase agreement on 31 May. This assertion was inconsistent with paragraph 7 of his witness statement, where he said:


"After the Operator's Licence was granted, Mr Ainsby asked me to purchase from what he said was a friend of his a vehicle, registration number P317 NNB. This I did and after a couple of weeks the vehicle arrived. I signed for the above and, as far as I was concerned, that was that."

The judge said:

"This is in the context of the passage that I have already read, where he also was involved in the purchase of other articulated lorries for WSLL and it seems to me overwhelmingly likely that he signed the purchase plan agreement and I did not understand that his evidence was to the contrary."

8. Two witnesses were called on behalf of Mr McDiarmid. Mr Roy Spears gave evidence of at least two occasions when he witnessed Mr Ainsby sign Mr McDiarmid's name on documentation. Mr Spears said that this "bothered" him but that Mr Ainsby replied that he owned the company, so what did it matter. The Recorder said that the evidence of Mr Spears had to be treated with some reserve since he was a friend of Mr McDiarmid and was not well disposed to Mr Ainsby. He did not find the evidence of Mr Spears convincing. He could not say when or on what occasion he witnessed the false signatures being affixed.
9. Mr McDiarmid's second witness was Mr Coulthard. In his witness statement he said, "I witnessed Mr Ainsby sign documents on behalf of others", but in his oral evidence he said that he could not be sure what those documents actually were.
10. The Recorder next considered the expert evidence of Mr Hughes, who was a handwriting expert jointly called on behalf of the parties. In his written material, Mr Hughes said:


"As far as I can determine from the copy document, the signature appears to have been fluently written. The questioned signature is one that is simple in its foundation and lends itself more readily to simulation than many others. As a consequence I cannot reliably assess the significance of the similarities and the differences that I have found with confidence. However, on the basis of the documents currently available to me, there is in my view some limited evidence that the signature in question is a genuine signature of Mr McDiarmid as distinct from a simulation of his signature."

11. And then later:


"For various reasons an opinion cannot be expressed with confidence in this case but there is in my opinion some limited evidence that the questioned signature is a genuine signature of Mr McDiarmid."

The Recorder said that Mr Hughes came across as an experienced and balanced expert whose evidence he accepted, although he acknowledged that the expert evidence was not conclusive and had to be considered together with all the other evidence in the case.

12. He then turned to consider certain other matters relied on by Mr McDiarmid in support of his case that his signature had been forged. First, there were certain inaccuracies in his personal details as shown on the guarantee. For example, his date of birth was shown as 20 June 1966; in fact it is 24 September 1966. He was shown as having been the owner of his property for six months; his oral evidence was that he had been there for only two months. But the Recorder took the view that although they were relevant, these inaccuracies were not as significant as was contended on behalf of Mr McDiarmid.
13. Of greater potential significance, however, was the letter of 15 May 2001. This was written by Mr McDiarmid and addressed to Amanda Dunstan, a commercial vehicle specialist in the bank. It includes the following:


"Dear Amanda, I have today received a request from your company, for me to stand as personal guarantor on an Iveco Tractor unit Reg no. P317 NNB. Further to our conversation today about this document, please except[sic] this as confirmation that I David McDiarmid of 149 Gloucester Road, Exwick, Exeter, will not under any circumstances stand as personal guarantee for any vehicle that is requested by West Somerset Logistics Ltd or IR Euro Continental Ltd. This is done in the company of Mrs Karen Webster (the Company Secretary) and Mr Steve Hopkins (Company Tyre Fitter). Both companies are owned by Mr Gordon Edward Ainsby and I am only an employee, although Mr Ainsby has made me a director of West Somerset Logistics Ltd. I will not be held responsible for any financial dealings for either company."

14. The Recorder dealt with this document in detail. The bank had no record of having received it. There were a number of puzzling features of the letter. It was curious to address it to "Amanda", a person who Mr McDiarmid claimed not to know. The letter bore a different signature from Mr McDiarmid's usual signature. The Recorder found that the reason for this was so that Mr McDiarmid could distance himself from any suggestion that he had signed the guarantee in his normal signature. Far from supporting Mr McDiarmid's case, the Recorder found that the letter of 15 May undermined it because:

"It demonstrates as I have already found to be the fact, that Mr McDiarmid knew perfectly well that he was being asked to guarantee the hire of the tractor unit, and secondly because it impacts on the other matter that for some time troubled me, which was Mr McDiarmid's motive in signing the guarantee. The reason why I was troubled by this was that I was for a time impressed by Mr McDiarmid's evidence that he had no reason to sign the guarantee. He is not, on his evidence, a wealthy man and he is someone to whom the instalments on this hire agreement represent a significant amount of money. On the other hand, he was a director of the company. His relations with Gordon Ainsby at this time were good. He was receiving a good salary, and it seems to me that if as I have come to the conclusion that the document at page 209 was prepared retrospectively - in other words, the date that it bears is not the date it was prepared - the only explanation for that must be that Mr McDiarmid was well aware that he had entered into a guarantee which, because of subsequent events, he now regretted and was seeking to distance himself from that conclusion."

For all these, and other reasons too, the Recorder concluded that on a balance of probabilities the signature on the guarantee was that of Mr McDiarmid.

15. The Notice of Appeal raises a number of points. In summary, they are all attempts to challenge the Recorder's findings of fact and his evaluation of the evidence before him. It is said that the Recorder erred in finding that Mr McDiarmid lacked credibility. The Recorder gave full reasons for concluding that Mr McDiarmid's evidence was unreliable and, in a number of respects, untruthful.
16. Having reached this conclusion as to Mr McDiarmid's credibility, the Recorder took this into account, as well as all the other evidence in the case, including the expert evidence, in reaching the conclusion that Mr McDiarmid did sign the guarantee. In my judgment, he was amply entitled to take this course. It is said that the Recorder placed too much weight on the evidence of Miss Webster, but the Recorder made it clear at paragraph 21 of his judgment that her evidence gave "strictly limited support for the bank's case". There is nothing in this point.
17. Next, it is said that the Recorder placed too much weight on the expert evidence of Mr Hughes, but it is clear that the Recorder accurately summarised this evidence and, as I have already said, acknowledged that the evidence was not conclusive and had to be considered with the other evidence in the case. That was an entirely correct approach to Mr Hughes' evidence.
18. Finally, it is said that the bank failed to act with due diligence and failed to make proper checks before entering into the legal guarantee with Mr McDiarmid. If there had not been a failure to perfect due diligence, it is said that the transaction would not have taken place at all. The foundation for this argument was an exchange between Dr Thomas, who appeared for Mr McDiarmid below and Miss Williams, a legal liaison specialist employed by the bank. But the question of whether the bank had failed to act with due diligence was not raised by Mr McDiarmid's pleaded case, and no suggestion was made in the pleadings that the bank's failure to act with due diligence had caused Mr McDiarmid to enter into the guarantee.
19. The Recorder summarised the issue before him crisply at paragraph 2 of his judgment in these terms:


"The only issue in these proceedings is whether the claimant can demonstrate on the balance of probabilities that the signature on the guarantee is the genuine signature of the defendant, Mr McDiarmid. It if is, Capital Bank are entitled to judgment. If it is not shown to be genuine - and the defendant maintains that the signature is a forgery - then the action must fail."

In my judgment the Recorder was well justified in concluding that the signature was genuine for the reasons that he gave. I would not grant permission to appeal in relation to the original grounds of appeal.

20. Application to adduce fresh evidence: this court has on a number of occasions stated in what circumstances it will receive fresh evidence on an appeal. In the unreported case of Banks v Cox Transcript No. 1476 of 2000, Morritt LJ said:

"In my view the principles reflecting in the rules in Ladd v Marshall [1954] 1 WLR 1489 remain relevant to any application for permission to rely on further evidence, not as rules, but as matters which must necessarily be considered in an exercise of the discretion whether or not to permit an appellant to rely on evidence not before the court below."

This was approved by Lord Phillips MR, in Hamilton v Al Fayad (Joint Party) The Times 13 October 2000. At paragraph 11 of the transcript the Master of the Rolls said:


"We consider that under the new, as under the old, procedure special grounds must be shown to justify the introduction of fresh evidence on appeal … That question must be considered in light of the overriding objective of the new CPR. The old cases will nonetheless remain powerful persuasive authority, for they illustrate the attempts of the courts to strike a fair balance between the need for concluded litigation to be determinative of disputes and the desirability that the judicial process should achieve the right result. The task is one which accords with the overriding objective."

21. The principles stated in Ladd v Marshall, which are very well known, are these:


"Leave to adduce further evidence on appeal will only be granted (1) if it is shown that the evidence could not have been obtained with reasonable diligence for use at the trial, (2) if the further evidence is such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive, and (3) if the evidence is such as is presumably to be believed."

22. It is contended by Mr McDiarmid that since the hearing before the Recorder, fresh evidence has become available which he wishes to adduce before this court. The evidence consists principally of an affidavit by Mr Wills, sworn on 29 June 2005. Mr Wills states that he was contacted by Mr McDiarmid in mid-June 2005. They had not spoken for more than three or four years before that. At paragraph 3 of his affidavit, Mr Wills says apropos of the transfer of the truck from IR Euro Continental Ltd to WSLL that Mr Ainsby and he, Mr Wills:

"… went together to the top office at his yard and he pulled out a Finance Agreement form with Capital Bank. I recall him putting a signature on the document and together we went back downstairs where his secretary, whose name escapes me, signed the form as a witness. I specifically recall the events in question because as far as the finance company was concerned I was still liable to make payments under the lease. I needed to dispose of it so as not to be liable for any more payments, and also he, Mr Ainsby, had trouble finding the right cheque book. I assumed he needed this to supply direct debit particulars."

23. This is the only part of Mr Wills' affidavit which, in my judgment, even arguably bears on the question whether Mr McDiarmid's signature on the guarantee was forged by Mr Ainsby. In my judgment, even if this evidence is credible, it is not such as would have an important influence on the result of this case. Mr Wills does not identify with any particularity what the document was that Mr Ainsby produced. I accept the submission of Mr John in his helpful skeleton argument that Mr Wills' description of the document as a "Finance Agreement form with Capital Bank" and a requirement for "direct debit particulars" suggests that it cannot have been the guarantee. Nor can Mr Wills say from what he saw of the document that it related to the truck with which these proceedings are concerned. For this and the other reasons given by Mr John in his skeleton argument, I consider that the more likely explanation of Mr Wills' evidence is that he witnessed Mr Ainsby completing the hire purchase agreement with direct debit details.
24. That is a sufficient reason for refusing to accede to the application for permission to adduce the evidence of Mr Wills. I do not find it necessary to consider whether the other two elements of the Ladd v Marshall test are satisfied. Mr McDiarmid also seeks to rely on other fresh material, of which he gave notice only last week. There is no reason why, assuming any of this material is of some relevance, it could not with reasonable diligence have been obtained in time for the trial. But the material is of little or no relevance to the only issue in the case. None of it would probably have an important influence on the result.
25. There is a letter from Crowe Insurance Group which confirms that an insurance certificate purportedly issued by Crowe to Euro Continental Ireland Limited was not, in the opinion of the writer, in fact issued by Crowe, but there is no evidence establishing that even if the document is false, Mr Ainsby was the person responsible for the forgery. More importantly, even if there is such a link, this does not prove that Mr Ainsby forged Mr McDiarmid's signature on the guarantee. Mr Rees, who has assisted Mr McDiarmid before us, frankly acknowledges that the Crowe material is relied on to show no more than that Mr Ainsby is a dishonest man. That is not sufficient for the present purposes of Mr McDiarmid.
26. Then there is an e-mail from a Mr Self of the Royal Bank of Scotland who expresses an opinion on the issues of fact which the Recorder had to determine; such opinion evidence is inadmissible in law. It follows that, in my judgment, the fresh evidence ought not to be admitted. The exacting requirements for the admission of fresh evidence on an appeal come nowhere near to being satisfied in this case. For all these reasons, I would dismiss this application.
27. LORD JUSTICE WALL: I agree with my Lord that both the application for permission to appeal and the application to adduce fresh evidence should be refused. I add a very short judgment of my own for two reasons. The first is that I have some sympathy for Mr McDiarmid and for the plight in which he finds himself. Secondly, because he is acting in person, albeit with the able assistance of Mr Rees, his Mackenzie friend. As my Lord has pointed out, the only issue before the Recorder was whether or not on the balance of probabilities the claimant could demonstrate that the signature on the guarantee was the genuine signature of Mr McDiarmid. That was a pure issue of fact. This court is not the court of trial. This court reviews the decision below. Had I or any of my Lords been sitting in the County Court, I do not know how I would have resolved the matter. But the responsibility for resolving it was the Recorder's, and providing the Recorder did his job properly, providing he examined the evidence, listened to the witnesses, conducted a fair hearing and then gave careful reasons for the conclusions he reached, there is no possible way that this court can interfere with findings of fact.
28. As my Lord has clearly demonstrated, the Recorder, in a careful and thoughtful judgment, went through all the evidence with great care and reached a conclusion on the facts on material which was plainly open to him. In these circumstances it simply is not open to this court to interfere. Equally, my Lord has dealt fully with the application to adduce fresh evidence, to which I can add nothing. That application, in my judgment, has no prospect of success; neither does the application for permission to appeal and like my Lord, I would refuse both.
29. LORD JUSTICE BUXTON: I would also refuse both applications for the reasons given by both of my Lords.

Order: Applications refused.