Gateley Manchester LLP v Rose & Anor

A preliminary issue is unsuitable where the issues cannot be separated from their factual matrix, or where the facts relevant to the preliminary determination cannot be separated from those required for the final trial. If that procedure produces a confused and unjust determination, the appellate court should make the order needed for a just resolution, which may include remitting the whole dispute for further directions and trial rather than dismissing the claim. The party responsible for an inappropriate preliminary-issue application may be ordered to pay the costs below and on appeal.

Halliwells LLP entered administration and assigned certain receivables and work in progress to Gateley Manchester LLP. Gateley sued former Halliwells clients for unpaid invoices. The county court ordered three preliminary issues concerning the assignment, counsel’s fees and agreements with Halliwells. District Judge Smith made a conditional ruling, leaving material factual questions for the final trial and ordering costs in the cause.

The clients appealed. Gateley did not oppose the appeal but reserved its position on costs. The central issue was whether the preliminary-issue procedure had been appropriate and, if not, what order would produce a just resolution.

1. Appeal allowed. The preliminary-issue procedure had been inappropriate. The issues could not be extracted as issues of law from their factual matrix, and the relevant facts could not be separated from those required for determination of the remaining issues at trial. The resulting hearing was therefore unable properly to resolve the dispute.
2. The county court’s conditional ruling did not justify dismissing the claim. The claims had not been dealt with justly, and it would be wrong either to treat the preliminary hearing as a final determination of the parties’ rights or to allow the applicant to re-argue matters by adducing evidence that should have been available at the preliminary hearing.
3. The proper course was to remit the whole matter to Manchester County Court for further and additional case-management directions and trial. The Court of Appeal expressed no view on whether Halliwells or its administrators were necessary parties to any declaratory relief concerning the Deed of Assignment; that was for the county court to decide.
4. Gateley had initiated the inappropriate preliminary-issue process and had not opposed the appeal. It was ordered to pay £3,508 plus recalculated VAT for the costs below and £8,000 inclusive of VAT as the assessed costs of the appeal.

• Court of Appeal (Civil Division): Appeal from Manchester County Court allowed. The matter was remitted to the Manchester County Court for further directions and trial.
• Manchester County Court: District Judge Smith made a conditional ruling on the preliminary issues on 8 May 2012 and ordered costs in the cause.