The Court of Appeal has ruled in favour of the state-owned Grenada National Lottery Authority (GNLA) not to pay EC$540, 000.00 which the popular “Stew Man” whose real name is Jerome De Roche had claimed that he won in one of its games.
A high court judge had earlier ruled in favour of “Stew Man” who was born in St Vincent but grew up on the small island of Petite Martinique.
However, a 3-member panel of Court of Appeal Justices decided Wednesday to set aside the ruling on the grounds that the judge had erred in the interpretation of the applicable law in the case.
The matter before the court was argued for “Stew Man” by attorney-at-law Ruggles Ferguson while the National Lottery brought in a senior lawyer from Barbados, Leslie Haynes, KC.
Following is an edited version of the judgment handed down by the Justices of Appeal – Mario Michel, Mde. Gertel Thom and Trevor Ward:
Grounds 2 & 3
Mr. Haynes did not expend much energy on grounds 2 & 3 during oral submissions. Mr. Haynes submitted that when the central issue in the case is viewed in totality, findings in relation to whether the lottery machine was manipulated or whether there was an announcement by the appellant that the winning ticket was sold at Parris Pharmacy, while matters of fact for the judge, have no bearing on whether the respondent presented the winning ticket, and are therefore irrelevant.
Ground 4
In relation to ground 4, Mr. Haynes submitted that the ticket was a bearer instrument and that as a matter of law it had to be presented and signed within 90 days by the respondent for him to be paid the prize money, pursuant to the terms of the contract. The written ground of appeal contends that the judge erred in law in ruling that the Super 6 lotto ticket was not a bearer instrument and in failing to find that it was a term of the contract that the ticket be presented and signed within 90 days.
The respondent’s submissions Ground 1
On behalf of the respondent, learned counsel Mr. Ruggles Ferguson, readily conceded at the outset that the statement of claim did not plead that the respondent presented the winning ticket to an agent of the appellant on 7th November 2017 or on any other day.
Nonetheless, submitted Mr. Ferguson, three issues arose in the case. The first was whether the respondent purchased the winning ticket. This, he submitted, was answered in the respondent’s pleadings and witness statement, and the judge accepted the respondent’s evidence in relation to this issue.
The second issue was said to be whether the ticket was presented to an agent of the appellant. Mr. Ferguson argued that the judge found on the evidence that the ticket was presented to an agent of the NLA and that evidence was never challenged in cross examination.
Mr. Ferguson submitted that the judge was plainly alive to the rule that all facts on which a party intends to rely should be pleaded given that, at paragraphs 32 and 33 of the judgment, she addressed that issue as a preliminary objection taken by the respondent – invoking CPR 10.7 – in relation to evidence of the time when the winning ticket was purchased being adduced by the appellant which it had not pleaded.
Mr. Ferguson further submitted that the fact that the pleadings were not amended to plead presentation of the ticket was not fatal, and the appellant cannot complain about ambush since it was in possession of the respondent’s witness statement some eighteen months before trial and that witness statement provided the details of what was pleaded in the statement of claim.
The statement of claim contained a genuine error in relation to the date when the ticket was lost, which was corrected in the witness statement, argued Mr. Ferguson.
It was his further submission that though pleadings may be deficient, a witness statement can flesh out the details since the purpose of pleadings is to inform the other side of the case it has to meet.
Mr. Ferguson submitted that the respondent’s basic case, as pleaded at paragraph 8 of the statement of claim, was that he had purchased the winning ticket, he had notified the appellant that he had done so and he was claiming the winnings despite the fact that he was unable to produce the ticket because he had inadvertently disposed of it.
Mr. Ferguson invited the court to find that, viewed that way, the respondent’s witness statement is not necessarily inconsistent with paragraph 8 of his statement of claim.
Further, submitted Mr. Ferguson, the conflict between the pleadings and the witness statement was not taken as an issue by the appellant at trial, even though it was open to them to apply to strike out or call evidence to rebut the respondent’s evidence, or to cross-examine the respondent on the issue.
In any event, submitted Mr. Ferguson, even accepting that there is a conflict between the pleaded case and the respondent’s witness statement, this does not render the evidence inadmissible as a matter of law.
Mr. Ferguson posited that this is to be deduced from the terms of CPR 8.7A which provides that the claimant may not rely on any allegation or factual argument which is not set out in the claim, but which could have been set out there, unless the court gives permission, or the parties agree.
The effect of this provision is said to be to make unpleaded facts, not inadmissible, but undeployable, unless the parties agree or the court grants permission. The court’s case management powers under CPR 26.2(1) empowered the judge to exercise her discretion to grant permission to deploy the unpleaded facts in evidence of her own motion.
Though conceding that no application was made to amend the pleadings nor permission sought to deploy the unpleaded facts, Mr. Ferguson sought to get around this by submitting that, by implication, the judge gave permission and allowed the evidence of her own motion, and without objection by the appellant.
In answer to a question from the court about whether such a course was permissible in light of CPR 26.2 which required the judge to invite the other side to make representations where she intended to act on her own initiative, Mr. Ferguson submitted that the requirements of that rule were satisfied because the appellant did not object to the evidence.
Mr. Ferguson submitted that in exercising her power to admit the unpleaded facts, the judge acted in furtherance of the overriding objective.
Grounds 2 & 3
In relation to grounds 2 and 3, Mr. Ferguson submitted that these were issues of fact within the province of the judge and reminded the court of the well-settled constraints upon the appellate jurisdiction when asked to interfere with findings of fact by trial judges.
Ground 4
In relation to ground 4, Mr. Ferguson submitted that the appellant’s contention that the judge erred in law in ruling that the Super 6 lotto ticket was not a bearer instrument and in failing to find that it was a term of the contract that the ticket be presented and signed within 90 days, betrayed an improper understanding of the judgment since the judge made no finding that the ticket was not a bearer instrument.
On the contrary, she found, that on the evidence, the respondent had fulfilled the conditions stipulated on the back of the ticket for claiming the winning prize as articulated at paragraphs 52 and 53 of the judgment. For these reasons, Mr. Ferguson submitted that ground 4 lacks merit.
Mr. Ferguson’s final submission was that should the court determine the appeal in the appellant’s favour, then it should make no order as to costs.
Appellant’s reply submissions
By way of brief reply, Mr. Haynes submitted that the respondent advanced no authority or precedent to support the proposition that a case could be conducted on the basis of facts contained in a witness statement which were not pleaded, and which were necessary to establish the cause of action.
As it relates to the issue of costs, Mr. Haynes conceded that, to a certain extent, the appellant’s trial counsel’s failure to challenge the evidence and, thus, to properly assist the court, may sound in costs. While the appellant had a duty to assist the court, however, this did not extend to assisting the respondent with his claim. The judge had a duty to review the pleadings in order to set the parameters of the case but appears not to have noticed that an essential element of the cause of action, namely the presentation of the ticket, was not pleaded, and failed to note that paragraph 8 of the statement of claim actually pleaded that the winning ticket was not presented at all.
Accordingly, submitted Mr. Haynes, in any apportionment of costs the respondent should bear the greater part of it because it was its responsibility to draft its pleadings properly.
Discussion
The resolution of this appeal turns on whether the judge erred in law in permitting the respondent to adduce evidence that he had presented the winning ticket to the appellant’s agent when this fact was essential to the cause of action but was never pleaded in the statement of claim.
The failure to present the winning ticket lay at the heart of the appellant’s defence and was critical because, as was common ground, the respondent could not claim the prize unless he presented and signed the winning ticket.
It was also common ground before this court that the pleadings contained no such allegation of fact, and no application was made to amend the statement of case at any stage.
The case therefore raises for consideration important issues relating to the proper interpretation of CPR 8.7 and 8.7A, the purpose of pleadings and witness statements, and the relationship between the two. Before doing so, however, the relevant provisions of the CPR will be considered briefly.
Rule 8.7 is headed: “Claimant’s duty to set out case”. CPR 8.7 provides, so far as is relevant:
“(1) The claimant must include in the claim form or in the statement of claim a statement of all the facts on which the claimant relies.
(2) The statement must be as short as practicable…”.
Rule 8.7A is captioned: “Permission to rely on allegation or factual argument” and provides:
“The claimant may not rely on any allegation or factual argument which is not set out in the claim, but which could have been set out there, unless the court gives permission or the parties agree.”
The purpose of pleadings
The purpose that pleadings are intended to serve has been articulated by this court on numerous occasions.
In short, therefore, the claimant must plead the essential facts that constitute its case, and those facts must be sufficient to establish a cause of action and to enable the other side to know the case it has to meet in sufficient detail.
CPR 8.7A prohibits reliance on allegations or facts not pleaded unless the judge gives permission, or the parties agree. CPR 10.5 and 10.7 place similar strictures on the defendant by providing respectively that the defence must set out all the facts on which the defendant relies to dispute the claim and that a defendant may not rely on any allegation or factual argument which is not set out in the defence, but which could have been set out there, unless the court gives permission or the parties agree.
The purpose of witness statements
A witness statement constitutes the evidence to prove an allegation of fact made in the statement of claim. It provides the details or particulars of the issues that arise from the pleader’s case. Its contents must, on analysis, be capable of being properly regarded as particulars or details of allegations already made in the pleadings.
Once the case is sufficiently pleaded, then a witness statement may furnish the particulars and details of the allegations or facts contained in the pleadings.
The respondent’s pleadings
The respondent’s pleaded case is that he first discovered that he had played the winning numbers when he visited a lottery outlet in St. George’s to purchase additional tickets on Saturday, 4th November 2017.
He became aware that draw #1761 had occurred, and immediately recognised that he had drawn the winning numbers. He searched frantically for his ticket but realised that he had inadvertently disposed of it in the garbage that morning.
The respondent pleaded that, at the first opportunity, he notified the appellant that he had purchased the winning ticket and was claiming the winnings, despite being unable to produce the ticket.
The appellant informed the respondent that it would not be able to consider his claim unless the winning ticket was produced within three months. The respondent was unable to produce the ticket and the appellant refused to pay him the winning prize.
It is evident from the statement of claim that the respondent never alleged that he signed and presented the winning ticket, and that the agent rejected it.[2] He pleaded that he had disposed of it in the garbage that morning, prior to making the discovery that he had won. He nonetheless sought to claim the prize ‘despite being unable to present the ticket.’
The assertion that the respondent signed and presented the winning ticket is really the factual basis underpinning the claim for breach of contract. It is the alleged failure to pay the prize money to the respondent, despite him having signed and presented it to the appellant’s agent that grounds his claim for breach of contract.
In his pre-trial memorandum, the respondent frames the issue thus: ‘[w]hether the defendant breached the contract by rejecting the ticket when it was first presented to the defendant by the claimant.’[3] The respondent also recognised in his pre-trial memorandum that the factual contention being advanced by the appellant was that ‘the claimant failed to present the winning ticket within the 90-day period from the date of the draw.’[4]
Indeed, in its pre-trial memorandum, the appellant framed the issue this way: ‘[w]hether the defendant is required to pay the winning prize in the absence of the Claimant producing the winning ticket.’[5]
It was therefore obvious to both sides that the allegation that the respondent had presented and signed the winning ticket was a critical element of the cause of action.
It was the most critical fact on which the respondent relied in support of his claim, and the central issue in dispute. CPR 8.7 required it to have been pleaded. Instead, the respondent’s pleaded case rested simply on his having purchased the winning ticket.
Based on the pleadings, the appellant was not required to meet a case that the respondent had presented the winning ticket, which its agent failed to honour. On the contrary, the alleged failure of the respondent to sign and present the ticket constituted the appellant’s defence to the claim, to which there was no reply.
The respondent’s witness statement
The case on the respondent’s witness statement, filed over a year after the pleadings, represents a fundamental shift from the pleaded case in several respects. The respondent’s discovery that he had drawn the winning numbers is stated to have occurred on Tuesday, 7th November 2017 and not Saturday, 4th November 2017.
More significantly, and contrary to his pleadings, the respondent asserts for the first time that he signed and presented the winning ticket to the appellant’s agent, who told him it had been cancelled.
Additionally, the ticket is now said to have been lost on Saturday, 11th November 2017. At the time of filing his witness statement, the respondent would have been served with the defence since on or about 12th November 2018 and would have known since then that the appellant was denying his claim on the grounds that he had not signed and presented the winning ticket.
Notwithstanding this, the respondent never sough to amend his statement of case. When therefore the respondent asserted for the first time in his witness statement that he had signed and presented the winning ticket, this was not a case of furnishing particulars of an allegation already pleaded; it was a new allegation.
To be permitted to rely on it, the respondent would have had to obtain leave to amend the statement of case or obtain the court’s permission or the agreement of the appellant.
The respondent attempts to salvage the situation created by his failure to plead presentation of the winning ticket by contending that an inference may be drawn that the judge granted permission to adduce that evidence of her own initiative pursuant to CPR 26.2 – no application having been made. This attempt is futile. If the judge were acting of her own initiative to permit reliance on facts not pleaded, she would first have had to acknowledge that the pleadings were deficient.
There is no such acknowledgment. Rather, the judge appears to have misconstrued the respondent’s pleaded case. The basis for saying this appears from the judge’s summary of the claimant’s pleaded case as set out at paragraph 2 of the judgment, which is captioned: “The Claimant’s Case”. The judge states:
“The claimant, (Mr. De Roche) in his statement of claim filed on 12th October 2018 says that on Friday 3rd November 2017 he purchased a Super 6 Lotto ticket from an agent of the National Lotteries Authority (Lotteries Authority) at Parris Pharmacy in Grenville, Saint Andrew for a draw on that same date. The draw instead took place on Saturday, 4th November 2017 and the winning prize of $540,000.00 was announced. Mr. De Roche visited the Lotteries Authority outlet in St. George’s and recognised that the numbers drawn for the Saturday draw were the numbers he had played. He presented his ticket but was informed by the Lotteries Authority Agent that the Friday ticket was invalid as the draw was cancelled. Upon further enquiries Mr. De Roche discovered that the information given by the agent was misleading, but by then he had lost his ticket.”
To the extent that the judge’s summary states that the respondent pleaded that he had presented the winning ticket but was informed by the agent that it was invalid because the draw was cancelled, she fell into error as no such allegation is made in his statement of claim.
In circumstances where the judge never apprehended that the pleadings did not in fact contain an allegation that the respondent had presented the winning ticket, there can be no question of her implicitly exercising her discretion to permit the respondent to rely on facts in his witness statement which he had not pleaded.
As far as the judge was concerned, the discrepancy related to the date when the respondent lost the ticket, which he had previously presented to the appellant’s agent. This is evident from paragraph 8 of the judgment in which the judge states:
The court notes the inconsistent statement of Mr. Dr Roche in his pleadings where he stated that he lost the Super 6 ticket on Saturday 4th November 2017 when he visited the Lotteries Authority’s Office in St. George’s. However, Mr. De Roche in his witness statement and in his evidence at trial clarified that inconsistency and stated that he lost the ticket on Saturday, 11th November 2017. This inconsistency was not specifically challenged by the defence and in the court’s view, it is also not fatal to his claim since it is not in dispute that Mr. De Roche lost or misplaced the physical Super 6 lotto ticket.”
In this passage, the only inconsistency between the respondent’s pleadings and the witness statement recognised by the judge is the date when the ticket was said to have been lost.
The judge seems to have missed the more egregious and fundamental inconsistency; namely, the fact that the respondent never pleaded that he had presented the winning ticket but had in fact pleaded that when he discovered that he had purchased the winning ticket, he had already lost the ticket, but – inconsistent with that pleading – he had asserted in his witness statement that he had presented the winning ticket but was told it was cancelled. These are contradictory positions.
Plainly, in circumstances where the judge seems not to have been alive to the inconsistency, it cannot be said that she impliedly exercised her discretion to give permission for that fact (presentation of the ticket) to be relied on.
Accordingly, those authorities deployed by the respondent relating to the need for appellate restraint when reviewing the exercise of a trial judge’s discretion are not at play here.[6]
Moreover, if the judge were minded to exercise her power to make orders of her own initiative, she was mandated to give the other party a reasonable opportunity to make representations.
This requirement is imposed by CPR 26.2, which provides:
“26.2 (1) Except where a rule or other enactment provides otherwise, the court may exercise its powers on an application or of its own initiative.
(2) If the court proposes to make an order of its own initiative, it must give any party likely to be affected a reasonable opportunity to make representations.
(3) The opportunity may be to make representations orally, in writing, telephonically or by any other means as the court considers reasonable.”
There is no indication on the record that this was done, and there is no contention otherwise.
As to the argument that the appellant impliedly consented to the evidence being adduced by its failure to object to the evidence, this is problematic for two reasons. In the first place, it would be surprising if this concession were made by the appellant, given that their pleaded defence was that the ticket is a bearer instrument and constitutes the only proof that a bet was placed and, as such, in order to claim the prize, the bearer was required to present the ticket with a valid signature and a form of identification within 90 days.
The appellant’s pleadings averred that the respondent did not satisfy the contractual terms for claiming the prize money because he did not sign and present the winning ticket. This formed the major plank of the appellant’s defence.
The cross-examination of the respondent sought to expose the implausibility of the respondent’s account that he had presented the ticket. It was elicited from him that though he said he did not believe the agent’s assertion that the ticket was invalid and intended to pursue the matter with the NLA, he nonetheless threw it out in the garbage at some point after he had unsuccessfully sought to see the appellant’s manager on the afternoon of 7th November 2017, and on at least two occasions subsequently, to query the agent’s claim that the ticket had been cancelled.
The purpose of this line of cross-examination was to challenge the respondent’s assertion that he had signed and presented the winning ticket.[7]
There is therefore no rational basis for drawing an inference that the appellant agreed to allow the respondent to adduce evidence that he had signed and presented the winning ticket, when to do so would completely undermine the foundation of its defence to the claim.
There is nothing in the appellant’s conduct of the case to suggest that any ground was ceded on the important issue of non-presentation of the ticket.
The respondent argued that the evidence was not inadmissible per se but was merely undeployable unless leave was obtained to amend the statement of claim or the court’s permission, or the agreement of the appellant was obtained to rely on it.
Even if it could be said that the evidence was not inadmissible per se, based on the foregoing discussion, the respondent had not met the conditions for the evidence to be deployed.
Furthermore, once it is accepted that the pleadings were deficient for the failure to plead that important factual detail, which was an essential element of the cause of action, that defect could not be cured by simply inserting the evidence into a witness statement.
The respondent was required to obtain the court’s permission or the agreement of the other side. This he failed to do. CPR 8.7A precluded him from relying on that evidence. The judge therefore erred in considering and placing reliance on facts that were never pleaded to determine the case in the respondent’s favour.
This was unfair to the appellant, who, in order to properly meet the case, would perhaps have had to call evidence from the agent to whom the respondent allegedly presented the winning ticket. No doubt, this course was not pursued because the respondent never pleaded that he had presented the winning ticket to the appellant’s agent.
As this Court has emphasised: ‘it is the duty of the court to firstly examine the pleadings and then to decide the case in view of, or more properly, on the basis of the pleadings.’[8] This the judge failed to do.
The appellant’s failure to object
There is some merit in the respondent’s complaint that for some eighteen months prior to trial the appellant was in possession of the witness statement, which alerted it to the evidence that the respondent intended to adduce at trial yet took no steps to object to that evidence.
The appellant could have applied to strike out the evidence. By the same token, however, the respondent was made aware of the nature of the defence since November 2018 and could have sought to amend his pleadings or sought the court’s permission to rely on the facts not pleaded. Neither course was pursued.
Parties must always be mindful that they are enjoined by CPR 1.3 to assist the court in furthering the overriding objective. This includes dealing with cases expeditiously and in a manner that saves time and costs.
In the Court’s view, the appellant’s failure to object to the evidence does not, in the circumstances of this case, afford a basis for overlooking what was an error of law on the part of the judge, who is the ultimate gatekeeper. Rather, it is a matter that is relevant in determining the appropriate costs order. Mr. Haynes, KC candidly conceded this.
The Court’s conclusion on ground 1 is sufficient to dispose of the appeal. In oral argument before this Court, both sides recognised that the appeal turned on this ground and that grounds 2 and 3 concerned questions of fact which were essentially matters within the province of the trial judge and would have no practical impact on the outcome of the appeal given the Court’s conclusion on ground 1.
Ground 4, while raising a point of law relating to whether the lottery ticket was a bearer instrument, is rendered academic given this Court’s conclusion on ground 1, and given that the judge seemed to accept that the signing and presentation of the ticket was a requirement to claim the winning prize.
Costs
The appellant has prevailed on the appeal. The general rule is that the unsuccessful party must pay the successful party’s costs. The Court, in its discretion, may depart from the general rule but must exercise its discretion judicially, having regard to all the circumstances of the case and considering, in particular, the factors set out at CPR 64.6(6).
The conduct of the parties before and during the proceedings is one such relevant consideration in the apportionment of costs. The appellant can rightly be criticised for not taking steps to strike out the respondent’s statement of case or the impugned evidence. This was an option available to it and would have resulted in considerable costs savings.
By the same token, the respondent failed to avail himself of the opportunity to amend his statement of case or to apply for permission to rely on the evidence pursuant to CPR 8.7A. Weighing matters in the round, the appellant is the successful party on this appeal, and while its conduct may have contributed to the costs in this matter, it cannot be right that it should be deprived entirely of its costs when a large measure of blame must be shouldered by the respondent.
Disposition
For the reasons discussed above, the appeal is allowed. The orders of the judge are accordingly set aside. The respondent shall pay two-thirds of the appellant’s prescribed costs in the court below and, on this appeal, two-thirds of that amount.