J N Dairies Ltd v Johal Dairies Ltd & Anor

A trial judge is not required to address every argument or item of evidence. An appellate challenge based on alleged lack of objectivity requires a substantial showing of unfairness, particularly where the judge gave adequate reasons, displayed no misconduct, and had no relevant relationship with a party.

Serious allegations of bribery, conspiracy, fraud or illegality on which a party relies must be pleaded. A party cannot adduce evidence of such matters while leaving them outside the pleaded case. A party who considers that the trial has become unfair must promptly seek appropriate interlocutory relief. Failure to do so will generally prevent an appeal based on procedural unfairness, unless the omission caused material prejudice.

J N Dairies Ltd and Johal Dairies Ltd were rival wholesale dairy distributors. J N Dairies alleged that Gurbir Singh, a former employee, stole customer invoices containing confidential pricing information and gave them to Johal Dairies, which then used the information to solicit customers.

On a preliminary issue ordered in the High Court, His Honour Judge David Cooke gave judgment for J N Dairies on liability for breach of confidence: [2009] EWHC 1331 (Ch). The evidence also raised unpleaded allegations that Johal Dairies had arranged the theft and bribed Singh, and that J N Dairies had orchestrated false evidence.

Johal Dairies appealed, alleging that the judge lacked objectivity and that the trial had been unfair because the serious allegations went beyond the pleadings. The central questions were whether the judge’s reasoning demonstrated unfairness and whether the unpleaded allegations invalidated the judgment.

1. Appeal dismissed. The judge’s failure to mention every argument or evidential point did not demonstrate bias or unfairness. There was no alleged prior relationship or trial misconduct, the judge gave adequate reasons, and the legal conclusions were not challenged. The appellant therefore failed to discharge the heavy onus required to show that the judgment was unfair.
2. The judge was entitled to assess the probabilities and credibility of the evidence. His treatment of the tachograph evidence without expert evidence was open to criticism, but that evidence played only a small part in the decision. His independent reasons for rejecting the relevant witness’s account meant that the error could not justify appellate interference.
3. J N Dairies should have pleaded the allegations of bribery and conspiracy. Civil Procedure Rules 1998, Part 16.4(1)(a), required a concise statement of the facts relied on, and paragraph 8.2 of the Practice Direction to CPR Part 16 required fraud and illegality to be specifically set out. Evidence of those matters should not have been adduced without amendment. The fact that liability might have been established without proving them was no answer.
4. Johal Dairies’ contention that the opposing witnesses had conspired to present a false case should also have been pleaded. Under RSC Part 16.5(2), a defendant putting forward a different version of events must state it, although a simple allegation that a witness is mistaken or lying need not be pleaded.
5. Both parties were at fault for proceeding on unamended pleadings. The proper course included an early review of pleadings, disclosure and directions, and potentially an order under Civil Procedure Rules 1998, Part 32.5(2), that witness statements should not stand as evidence in chief. The court could have required amendment and refused an adjournment. Johal Dairies, however, did not promptly object, seek an adjournment or seek to adduce the further evidence later suggested. It addressed the allegations at trial and showed no real prospect that the omitted evidence would have changed the result. The pleaded-case failure therefore caused no material procedural prejudice.
6. An appellant alleging that it was deprived of the opportunity to adduce relevant evidence must produce that evidence to the Court of Appeal and demonstrate a real prospect of a different conclusion, subject to the constraints identified in Ladd v Marshall [1954] 1 WLR 1489.

• Court of Appeal (Civil Division) — Appeal by Johal Dairies Ltd dismissed.
• High Court, Chancery Division, Birmingham District Registry — His Honour Judge David Cooke gave judgment for J N Dairies Ltd on the liability issue: [2009] EWHC 1331 (Ch).