CA-2024-001949 & CA-2024-001935 - [2025] EWCA Civ 1212

Mr David Lewis KC for Hitex conceded grounds 1 and 6. That is to say, he accepted that Hitex had not advanced a case that it accepted Uniserve’s renunciation of the contract, and that the judgment could not be supported on that basis. He relied exclusively on the respondent’s notice as a basis on which Hitex could be awarded damages. He accepted also that Hitex had admitted that Mr Waller was authorised to make the representations contained in the Waller email.

It is a basic principle of our adversarial system of civil justice that the parties identify in their pleadings the case which they seek to advance so that the issues for decision are clear, that evidence and submissions are directed to those issues and need not be concerned with other matters, and that the judge decides the issues thus identified and gives judgment accordingly. The principle was explained by Lord Justice Dyson in Al-Medenni v Mars UK Ltd [2005] EWCA Civ 1041, para 21, in a passage applied in Satyam Enterprises Ltd v Burton [2021] EWCA Civ 287, [2021] BCC 640:

‘In my view the judge was not entitled to find for the claimant on the basis of the third man theory. It is fundamental to our adversarial system of justice that the parties should clearly identify the issues that arise in the litigation, so that each has the opportunity of responding to the points made by the other. The function of the judge is to adjudicate on those issues alone. The parties may have their own reasons for limiting the issues or presenting them in a certain way. The judge can invite, and even encourage, the parties to recast or modify the issues. But if they refuse to do so, the judge must respect that decision. One consequence of this may be that the judge is compelled to reject a claim on the basis on which it is advanced, although he or she is of the opinion that it would have succeeded if it had been advanced on a different basis. Such an outcome may be unattractive, but any other approach leads to uncertainty and potentially real unfairness.’

In Satyam itself, Lord Justice Nugee added that:

‘38. In the present case, the possibility that the Croydon Properties were held on trust for Mr V Sharma does not appear to have been even canvassed by the Judge during the hearing, but, as far as we know, first emerged fully-formed in the Judgment. That, for the reasons given by Dyson LJ in Al-Medenni, was not a course that was open to him. Judges may sometimes think – and may even sometimes be right – that their own theory better fits the facts than that of either party, but if it is wholly outside the scope of the pleaded issues, that is nothing to the point, and to decide a case on a basis that has not been explored in evidence or addressed in submissions is likely to leave at least one, if not both, parties with a profound and justified sense of unfairness.’

A judge is of course entitled to raise with the parties a point which they appear to have missed, and to decide the case on that basis, provided that the parties are given a fair opportunity to deal with it, whether by adducing evidence or by making submissions, though sometimes it may be too late for further evidence to be adduced without unfairly disrupting the trial. But in the present case the judge gave no warning during the hearing that he was minded to dispose of the misrepresentation case on the basis that Mr Waller lacked authority to make the relevant statements. If the judge had raised this, it would have been pointed out to him that Mr Waller’s authority was admitted by Hitex on the pleadings. Similarly, if the judge had warned the parties that he was minded to hold that Hitex had accepted Uniserve’s renunciation and was entitled to damages on that basis, even though Hitex had never communicated that acceptance to Uniserve, the difficulties in the way of that conclusion would no doubt have been pointed out to him. Indeed Mr Lewis did not contend before us that this was a tenable interpretation of events.

As it was, both these points made their first appearance in the draft judgment provided to the parties in advance of the formal hand down. We were told that the parties submitted a lengthy list of corrections which needed to be made to the draft, some but not all of a typographical nature, but nothing was said about these two points of substance. I would not wish to say anything to encourage further argument after a draft judgment has been circulated, and I can understand why counsel acting for Uniserve took the view that it was not appropriate to raise these points at that stage. However, when a judge makes a basic error, such as deciding a case without prior warning on a basis which has not been argued, or is contrary to common ground on the pleadings, it is legitimate and would be helpful for this to be pointed out before the judgment is handed down so that the judge can have an opportunity to reconsider, thereby potentially avoiding unnecessary appeals (cf. Egan v Motor Services (Bath) Ltd [2008] EWCA Civ 1002, [2008] 1 WLR 1589, para 51).

It is apparent from the judgment as handed down (and as I understand it, also from the draft) that the judge realised that he was deciding the case on a basis which had not been argued, at least so far as acceptance of repudiation was concerned. That is one reason why I would not criticise counsel for not raising the point in advance of hand down. The judge said when refusing permission to appeal that he had taken the view that neither side’s pleading or argument met the facts as he found them to be and that it was necessary for him to interpret those facts for himself. However, that was a mistake.