News & Media

Matters of Pleading

February 1, 2022 | Cases
Matters of Pleading

Date: 1st February 2022

Court: Court of Appeal EWCA Civ

Jian Jun (JJ) Liew summarises the key points to take away from a recent Court of Appeal decision (Ali v Dinc [2022] EWCA Civ 34) which concerns the approach to be taken in determining whether a court was entitled to reach its conclusions on the pleadings and evidence before it.

Practice Area: Property

Further Comment

The facts

It is not uncommon for a litigator, when making a submission, to face a retort from the judge that it was not properly pleaded. From the judge’s perspective, a case cannot be decided on matters which were not pleaded or raised. However, difficulties may arise where a judge accepts certain parts of each party’s factual allegations, where putting together the accepted allegations leads to a different conclusion from what either side had pleaded.

The Court of Appeal had to consider this point in Ali v Dinc [2022] EWCA Civ 34. In the pleadings, the Claimant contended that there was a contract of sale with the First Defendant for two properties for £1.35m, alternatively, the First Defendant held the properties on constructive or resulting trust. The First and Second Defendants contended that the transfer was an arrangement where the properties were gifted to the First Defendant absolutely, to be used to raise finance to give back to the Claimant.

At first instance, the judge concluded that while there was an agreement, neither party’s proposed arrangements were sufficiently borne out by the evidence. Instead, there was a clear intention between the parties that the properties would be transferred exclusively for the use of raising funds which were to be transferred to the Claimant. The effect of this was to create a Quistclose trust.

The decision

The First and Second Defendants appealed, contending that this was not pleaded by the Claimant and had in any event been expressly disavowed in cross-examination.

The Court of Appeal dismissed the appeal, holding that the judge was entitled to make those findings of fact, and that the alternative case had not been abandoned in cross-examination.

The Court of Appeal identified a three-stage approach to be taken: (i) the court first identifies what case or cases the parties were advancing; (ii) that is then compared with the decision the judge made; and (iii) if necessary, the court identifies what prejudice, if any, may have caused the unsuccessful party.

In reaching these conclusions, Birss LJ considered the following matters:

  • The pleading rule is concerned with the interests of justice, in particular, with circumstances which cause prejudice to the losing party. The modern approach to the definition of the issues requires judges to adopt a pragmatic approach in line with the overriding objective and not seek to be governed by unnecessary formality, provided always that it is just not to do so.
  • A judge is entitled to reach their conclusions as long as they are composed entirely of the acceptance or rejection of factual assertions which were pleaded by one or the other party.
  • The First and Second Defendants were on proper notice that they had to address the pleaded alternative trust case, despite the pleaded case being terse.
  • Just because a witness sticks to their primary case does not mean that they are formally abandoning the alternative case advanced on their behalf.
  • The case was argued fully by counsel before the judge in closing, and it could not be said that the First and Second Defendants were ambushed or precluded from advancing submissions or evidence which they might otherwise have done.

Comment

This case reaffirms the importance of fully pleading the facts which a party relies on, but also provides that the court will generally take a pragmatic approach. Where a factual assertion is raised by one party or the other, parties should be prepared to respond to it and for the judge to make findings of fact in respect of that assertion. The combination of the factual assertions accepted by the judge could be one which neither party had expressly pleaded, and the legal implications which follow could accordingly go beyond the express pleadings. The key question for the court would be whether that results in any prejudice, such that it is contrary to the interests of justice.

Practice areas: Property
Share this with your network
Menu