THE CURRENT IMPORTANCE OF PLEADINGS 1: FAILURE TO SERVE A REPLY ALLEGING FORGERY LEADS TO JUDGMENT AT TRIAL BEING SET ASIDE

For some time now I have been meaning to write a series on the numerous issues that arise when cases are not pleaded properly.  There are a catalogue of cases where the parties come to court, normally shortly before (sometimes even after) trial and ask for permission to amend.  There are cases where a party has failed to plead a fundamental issue.    There is probably no better place to start than the judgment of Mr Justice Rajah yesterday in  Kang v Freshacre Properties Ltd & Anor [2025] EWHC 487 (Ch). The judge set aside the result of a civil trial because the claimants had failed to plead that their case was that documents the defendant was relying on were forgeries. It serves as a reminded that a Reply is not mandatory, but sometimes essential.

(You have to let the parties know if your case is that something is forged)

“In the end, one cannot get away from the fact that the doubt which has arisen is of the Claimants’ making. Had they pleaded forgery in a Reply, as they should have done, there would be no room for doubt that Purdeep knew the case she had to meet and had the opportunity to properly prepare for trial. It does not lie in their mouth to say that Purdeep, a litigant in person, should have worked out their change of position. I am just not satisfied in the events which have happened that the trial was fair and the judgment is safe. I will set aside the order of HHJ Johns and order a re-trial.”

WEBINAR ON STATEMENTS OF CASE, DRAFTING, DANGERS AND PITFALLS 2025: BOOKING DETAILS AVAILABLE HERE

This webinar takes a close look at the rules relating to drafting statements of case.  It looks at recent cases relating to pleadings and identifies where parties have gone wrong.

• What should be on the claim form?
• What must the particulars of claim contain?
• Problem areas in drafting the particulars
• What must the claimant plead?
• What should the defence contain?
• When do you need to file a reply or a defence to counterclaim?
• Part 18 requests – what can, and what can’t, they contain?
• Amending statements of case
• Statements of case at trial
• Avoiding the pitfalls of pleading

THE CASE

The claimants brought an action against the defendant for breach of duty whilst she was a director.  She denied the allegations and, at trial, relied upon two key documents a Joint Venture Agreement and a Letter of Gift.   These documents were expressly referred to in her written Defence.  The claimants never filed a reply to that defence, nor did they put in any notice disputing the authenticity of those documents.

At trial, however, they argued that the documents were forged.  The trial judge accepted that proposition and was critical of the claimant’s failure to deal with this issue in her evidence.  The judge found for the claimants.

THE DEFENDANT’S SUCCESSFUL APPEAL

The defendant appealed and was successful. Mr Justice Rajah only considered one issue – the claimants had not filed a Reply stating that the documents were referred to in the Defence were forged. Nor had they served a notice under CPR 32.19. The defendant did not know, until the claimants served their evidence, that the authenticity of the documents was to be in issue. Further the trial judge had expressly referred to the allegations of forgery being made in “a Reply” when no Reply had, in fact, been served.

THE JUDGMENT ON THE ABSENCE OF REPLY

17. If there is a point in this Ground of Appeal it is that no Reply was served expressly pleading the Claimants’ contention that the JVA was a forgery and that the Letter of Gift was a forgery. There was therefore no reference in any statement of case, to there being a dispute as to the authenticity or validity of those documents.

1. 1. Statements of case are required to mark out the parameters of the case that is being advanced by each party and the extent of the matters in dispute between them; McPhilemy v Times Newspapers Ltd [1999] 3 All ER 775 per Lord Woolf MR. The purpose of a statement of case is that (i) it enables the other side to know the case it has to meet (ii) it ensures parties can properly prepare for trial and (iii) the process of preparing the statement of case operates (or should operate) as a critical audit for claimant or defendant and its legal team that it has a complete cause of action or defence; see King v Stiefel [2021] EWHC 1045 (Comm).

1. 1. CPR 15.8 makes clear that a Reply is not required or appropriate in every case, but that does not mean that a failure to file a Reply does not have consequences. The effect of not filing a Reply is that the Defendant is required to prove the matters raised in the Defence; CPR 16.7. However, a party who wishes to deny what is asserted and advance a positive case must plead it. The Chancery Guide at paragraph 4.2(g) (which applies to all statements of case including a Reply) states: “A party wishing to advance a positive case must set out that case; and reasons must be set out for any denial of an allegation”. This guidance recognises that the overriding objective makes it unacceptable for a party to fail to plead a positive case in respect of an important matter which is within their own knowledge. A fair trial and equality of arms means that the other party should not be taken by surprise.

1. 1. A separate point is that a party who alleges fraud, dishonesty, malice or illegality must state it in a Statement of Case and give full particulars; see the Chancery Guide at paragraph 4.8. Such allegations are serious, and it is particular important that the other party knows what is being alleged and can prepare accordingly for trial. It also secures that such allegations are treated with an appropriate measure of formality, and that an “audit” is made of whether there is credible material justifying such an allegation (see Chancery Guide at paragraph 4.9).

1. 1. There may be peripheral documents produced as part of disclosure, and to be relied on as evidence, where authenticity is disputed. In respect of such documents, CPR 32.19 requires the disputing party to serve a notice to prove such documents, so as to prevent a deemed admission of authenticity. As Norris J made clear in Redstone Mortgages Ltd v B Legal at [58], that procedure is not an alternative to pleading forgery where it is a necessary part of a party’s pleaded case, defence or reply:

“If a case of forgery is to be put then the challenge should be set out fairly and squarely on the pleadings (and appropriate directions can be given).”

In Lemos and others v Church Bay Trust Company Ltd and others [2023] EWHC 2384 (Ch), Joanne Wicks KC sitting as a Deputy High Court Judge considered what fairness required in cases where it was appropriate to serve a Notice under CPR 32.19 in respect of a peripheral document:

“If a party challenging the authenticity of a document wishes to make a positive case as to how the document came to be created, including any allegation that it has been forged, then if it is not appropriate to plead out the allegation, it seems to me to be incumbent on that party to set out the allegation clearly in correspondence, either at the time of serving the notice to prove or at least in sufficiently good time to ensure that the challenged party has a fair opportunity to deal with it.”

1. 1. Mr Bromilow states frankly that he does not know why a Reply was not served. He says that looking at in hindsight, one was not required. I do not accept that submission.

1. Mr Bromilow says that as no Reply was served, it was for Purdeep to prove her case on the JV Agreement and Letter of Gift. That is correct, but the Claimants should not have been allowed to raise a positive case that the documents were forgeries. If the Claimants wished to adduce evidence from Mrs Kang that she had not signed those documents, and that her signature had been forged, that positive case needed to be pleaded in a Statement of Case, the natural place being in a Reply. In principle, Purdeep was entitled to rely on the deemed admission of the JVA and LoG which arose under CPR 32.19.

1. 1. Mr Bromilow submitted that the JVA and Letter of Gift were mere evidence and did not need to be pleaded. I reject that submission. The alleged fact that the two documents were forgeries was an integral part of the Claimants positive case in answer to the Defence. They were required to plead their reasons for saying that there was no joint venture and no gift, and those reasons included, indeed were wholly based, on the JVA and LoG being forgeries. As has happened at trial, the question of the authenticity of those two documents has been treated as a dispositive of the issues in the case.

1. 1. There is no good explanation as to why no Reply was served stating that the LoG was a forgery. Mr Bromilow says that the assertion had been made in the Letter before Action, but that is not a pleading. Pleadings frame the issues for the court to decide.

1. 1. As for the JVA, Mr Bromilow says the Claimants cannot be criticised for not alleging the JVA was a forgery because the Defence did not make clear that the Defendant was relying on a written agreement. The Defence said there was “a joint venture agreement” which is ambiguous as to whether the agreement was oral or written. The Claimants did not ask for clarification and did not request further information. Any doubt should have disappeared when the document relied on was produced by Purdeep on disclosure. At that point the Claimant knew that “the joint venture agreement” referred to in the Defence, was a written agreement between Bright Star and Freshacre signed by Purdeep on behalf of Bright Star and by Mrs Kang on behalf of Freshacre. If the Claimants intended to say the document was a forgery, then a Reply should then have been filed saying so. At that point, the “audit” referred to by Cockerill J in King v Stiefel would have involved considering whether Bright Star needed to be a party to the proceedings – it seems to me that it did.

1. 1. In summary, the Claimants accepted in their Letter before Action that there was a joint venture, and having instructed the forensic accountant on that basis, have changed their position. The impact of the change in position was to put in issue some £605,000 that the forensic accountant had said was due to Bright Star under the JVA, and by implication to falsify Freshacre’s filed accounts for many years. The manner in which they have notified the Defendant of this change of position was by serving Mrs Kang’s witness statement. I have not been shown any other communication explaining this change of position. No notice under CPR 32.19 was served requiring Purdeep to prove the JVA. It was left for Purdeep, a litigant in person, to deduce from Mrs Kang’s witness statement that they had changed their position. By that stage, pleadings were closed, disclosure was complete, and Purdeep had prepared and exchanged the witness statements on which she intended to rely.

1. This is a serious procedural irregularity. The question for me is whether it makes the trial and judgment below unjust. It might not be unjust for the Court to determine at trial an unpleaded issue, even one as important as an allegation of forgery, particularly if both sides have come to court ready to deal with it.

THE JUDGE’S MISTAKE AT TRIAL

A retrial was ordered.

1. 1. The judgment itself raises further grounds for concern as to whether the judge fully appreciated that there was a real issue as to whether both sides knew that the issue of forgery of the JVA was an issue for trial, and whether Purdeep had had an opportunity to prepare for trial on that basis. The judgment shows that the assumption that she had, played a significant part in the judge’s reasoning that she was lying.

1. 1. Firstly, the judgment refers to the allegations of forgery being raised late and “so far as the statements of case are concerned, only in the Reply”. That was wrong. There was no Reply. It was raised, as I have said above, in Mrs Kang’s witness statement. On the face of the judgment, the judge did not appreciate that the point had not been raised in the pleadings at all, and not at a relatively early procedural stage. This sentence in the judgment could simply be a mistake (although an oddly specific one) because both Mr Bromilow and Mr Kelly had made submissions as to whether a Reply should have been filed alleging forgery (it should). I simply do not feel I can disregard it as a mistake. It would be surprising if the judge knew he was finding allegations of forgery were made out, even though they had not been pleaded, and did not refer to it at all in his judgment.

1. 1. Secondly, one of the reasons the judge gave for disbelieving Purdeep was that her witness statement did not deal with the circumstances in which the JVA had come to be signed and that her story had only emerged when she was cross examined after the other witnesses had all given their evidence. The implication was that she had waited to hear the evidence and then tailored her evidence accordingly. In fact, it was unsurprising that her story in relation to the JVA was not in her witness statement. The judge did not seem to appreciate that her witness statement had been prepared and served when there was no issue as to the joint venture. The judge refers elsewhere to a failure to file supplemental witness statements, but I cannot see from the transcript that there was any exploration as to why this had not occurred.

1. 1. Thirdly, the judge drew inferences from Mr Kelly’s failure to cross examine the Claimants’ witnesses about the matters on which Purdeep gave evidence, but if Purdeep and Mr Kelly were taken by surprise that this was an issue at trial that provides an innocent explanation, and not the fabrication by Purdeep which the judge inferred.

1. 1. The judge’s conclusion that the JVA was forged influenced his conclusion that the LoG was a forgery and that the £230,000 had been loaned – he referred to his finding in relation to the JVA as one of the reasons for his conclusions on the LoG.

1. 1. It may well be that Purdeep is open to criticism as to how this situation has come about. For example, it might be said that she should have appreciated the significance of Mrs Kang’s witness statement. She could have sought permission to serve supplemental witness statements (although she says she did not know this). She could have objected to the trial continuing once she had Mr Bromilow’s case summary and skeleton argument. Mr Kelly could have objected to Mrs Kang’s evidence being introduced on the issue of forgery, or a positive case being advanced. If it is the case that they were both taken by surprise then one would have expected that to have been made clear at the outset of the trial. However in circumstances where Purdeep was conducting the litigation and Mr Kelly was being instructed only for the hearing it may not have been clear initially where the responsibility for the confusion lay, which may explain why it features in closing submissions.

1. 1. In the end, one cannot get away from the fact that the doubt which has arisen is of the Claimants’ making. Had they pleaded forgery in a Reply, as they should have done, there would be no room for doubt that Purdeep knew the case she had to meet and had the opportunity to properly prepare for trial. It does not lie in their mouth to say that Purdeep, a litigant in person, should have worked out their change of position. I am just not satisfied in the events which have happened that the trial was fair and the judgment is safe. I will set aside the order of HHJ Johns and order a re-trial. I will also give directions for the service of a Reply and an exchange of further witness statements. The parties should consider whether Bright Star should be joined as a party.

1. In these circumstances, it is not necessary to consider the second ground of appeal (that the judge was plainly wrong in his findings of fact).