Lloyds Investment (Scandinavia) Ltd v Christen Ager-Hanssen
| Jurisdiction | England & Wales |
| Judge | Mr Justice Patten |
| Judgment Date | 15 July 2003 |
| Neutral Citation | [2003] EWHC 1740 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: IHC 29/03 |
| Date | 15 July 2003 |
[2003] EWHC 1740 (Ch)
The Honourable Mr Justice Patten
Case No: IHC 29/03
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
John Martin QC and Richard Evans (instructed by Peachey & Co) for the Claimant
Mr Ager-Hanssen in person
Hearing dates: 14th —15th July 2003
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This is an application by the Defendant, Mr Ager-Hanssen, for an order that he be permitted to defend this action and that further execution of the judgment obtained against him be stayed in the meantime. In substance the application seeks a variation of an order made by Mr Simon Berry QC (sitting as a Deputy Judge of the High Court) on 7th November 2001 by which he set aside an earlier judgment of 5th October obtained in default of defence, on terms that the Defendant should pay into Court the sum of £1.175m within 28 days. Time for compliance with this condition was later extended by Lloyd J on 5th December until 10th December 2001. That condition was not complied with and since then the Claimant has taken steps in England to execute the judgment by obtaining a charging order and subsequently an order for sale in respect of the Defendant's flat in London. There has also been a sale of various chattels, including the contents of the flat and various motor cars. These sales have realised something over £650,000 in satisfaction of the judgment debt.
This application was issued on 23rd December 2002 and served the following day. It was therefore brought almost a year after the order of the Deputy Judge and has taken a very considerable time to be progressed to a hearing. On 20th January 2003 the Claimant itself issued its own application, inviting the Court to strike out the Defendant's application as an abuse of process. Lightman J made an order on 27th January 2003 for both applications to be heard as applications by order on a date to be fixed and gave directions for evidence. The timetable he laid down provided for the service of evidence by early March 2003 and this was complied with. The application and the witness statements of the Defendant were professionally prepared by solicitors (Messrs S J Berwin), but they have now ceased to act for the Defendant because they are no longer in funds. Mr Ager-Hanssen says that the funding of the litigation has been a major problem for him, because he now has limited resources and most (if not all) of his assets are subject to freezing orders here and in Sweden and Norway. These were obtained early in 2001, when the proceedings commenced, and are still in force. The orders obtained in Sweden and Norway are ancillary to, and in support of, the English proceedings. This lack of funds and the absence of legal representation for the Defendant is said to be the explanation for the delay in bringing this application and in progressing it to a hearing. Mr Ager-Hanssen has appeared before me in person to present his case and has produced a skeleton argument containing a list of the main points he wishes to make. In broad terms they are as follows:
i) The order made by the Deputy Judge was disproportionate and has stifled a genuine defence to the claim, as well as a substantial counterclaim. It was wrong in principle;
ii) He has no free funds with which to make up the balance of the payment due under Mr Berry's order. He has made every effort to comply, but has been unable to do so within the time limits allowed or at all;
iii) His failure to raise finance is in large part due to the actions of the Claimant and its sister company, Olympia Holding AS ("Olympia"), which has itself obtained freezing orders in Norway and Sweden in support of a claim against the Defendant and has also interfered in his attempts to conclude two possible deals in December 2001, which would have netted sufficient funds with which to meet the £1.175m payment condition;
iv) The Claimant has obtained (in particular) a freezing order in Sweden in support of its judgment in this claim, which embraces assets valued by the Swedish Court in February 2001 at SEK 78.7m (about £4m). Mr Berr was not informed of the value put upon these assets by the Swedish Court officials, but he did have evidence before him from Mr Ashton, the Claimant's English solicitor who has conduct of these proceedings, stating that the assets were worth only £700,000. Subsequently, in a letter dated 11th February 2002, Mr Ashton has admitted that he was not aware of the value of SEK 78.7m at the time of making his witness statement and has accepted that his estimate of value was apparently not factually correct.
It is convenient to begin by saying something about the issues in the action. In the Amended Claim Form dated 12th July 2001 the Claimant alleges (and the Defendant accepts) that on 30th March 2000 the parties entered into a written agreement under which the Defendant agreed to sell to the Claimant 105,460 B shares in a Swedish company called Cognition AB ("Cognition"). For purposes of the agreement, Cognition was valued at £500m, subject to a provision for adjustment if the value of the company declined prior to the share purchase. Cognition was a venture capital company with a significant portfolio of stocks in IT companies. It had an issued share capital of 13,182,480 shares, with a nominal value of 0.20 SEK each. In his witness statement made in support of this application the Defendant says that he needed to raise between £200m and £250m for the company and therefore decided to float it on the London Stock Exchange. This was due to take place in spring 2000. In February 2000 the Defendant says he was approached by a Mr Haakon Korsgaard, who seems to be the leading figure behind both the Claimant and Olympia, and who wanted to invest some £25m in Cognition. This led to the agreement of 30th March 2000, under which the investment was to be made in two stages. Two separate agreements were entered into. Under the first there was to be an initial purchase of £4m worth of shares, the consideration to be paid by 19th April 2000. Under a second agreement of the same date the Claimant agreed to buy a further £553,664 B shares (valued at some £21m) with completion to take place on 5th April 2000, but with the price to be paid, at the latest, by 31st December of that year. The first agreement differs from the second in that it contains in clause 5 a put option enabling the Claimant to transfer the shares back to the Defendant. Mr Ager-Hanssen says that the inclusion of this clause was a mistake and that it formed no part of the agreement with Mr Korsgaard. On 3rd April 2000 the two men signed a further document headed "Points of Clarification". The Defendant says that he signed it without really studying its terms and regarded it as no more than a discussion document. However, it states that the two agreements of 30th March assume a flotation of Cognition and records in terms that it was agreed that, if no flotation took place, then the Defendant would repurchase the shares on the same terms, provided that the Claimant gave notice to exercise this option by 31st December 2000.
The Claim Form then pleads that on 8th May 2000 the Claimant arranged for the transfer of the sum of £2.35m to Barclays Bank in Jersey for the benefit of the Defendant. It is alleged that, prior to then, the Defendant had asked for the remaining £l.65m of the £4m due on 19th April to be used to acquire 25% of the shares in a company called Strand Property Holding Limited, which was an SPV used by a number of investors (including Olympia) to purchase an interest in a commercial building at 336 Strand in London for the sum of £6.6m. This transaction was completed on 28th April, and Olympia is said to have paid for its own share and also to have contributed £1.65m on account of the Defendant's proposed acquisition of shares in the SPV. Subsequently the Defendant is alleged to have decided not to take up this interest and on 11th May to have asked Mr Korsgaard for a loan from Olympia of £1.65m to enable him to discharge a liability to Barclays Bank. It is pleaded that Olympia agreed to make the loan and remitted the £1.65m to Barclays in Jersey. The Claimant says that the loan was not repaid and that on 9th June 2000 there was an agreement between the Claimant and the Defendant that the Defendant would retain a greater share in Cognition by reducing the consideration under the first agreement to £2m. As a result of this, the Defendant was to repay the £350,000 excess (of the £2.35m paid on 8th May) by 31st December 2000.
No flotation of Cognition took place, and on 29th December 2000 the Claimant is alleged to have exercised the put option in respect of the shares it had already purchased. On this basis the claim is for repayment of the £2.35m paid in May. The Defendant denies the existence or enforceability of the option, or its valid exercise, and alleges that he has a counterclaim for the £21m due in respect of the second tranche of shares under the second agreement of 30th March. This is on the basis that the £1.65m advanced to him in May to pay off his liability to Barclays Bank falls to be treated as having been disbursed by Olympia (like the initial payment of £2.35m) in part-payment of the sum of £4m due under the first agreement and not by way of loan.
It is neither necessary nor appropriate for me to express any views about the strength or weaknesses of these rival claims. The Deputy Judge in his judgment, when addressing the question whether there were real prospects of success on the intended defence, said that the...
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