Adams and Others v Ford and Others
| Jurisdiction | England & Wales |
| Judge | Lord Justice Toulson,Lady Justice Black,Lady Justice Arden |
| Judgment Date | 26 April 2012 |
| Neutral Citation | [2012] EWCA Civ 544 |
| Docket Number | Case No: A3/2011/2137 |
| Court | Court of Appeal (Civil Division) |
| Date | 26 April 2012 |
[2012] EWCA Civ 544
Lady Justice Arden
Lord Justice Toulson
and
Lady Justice Black
Case No: A3/2011/2137
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEENS BENCH DIVISION
COMMERCIAL COURT
David Steel J
2010 Folio 423
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justin Fenwick QC and Mr Ben Hubble QC (instructed by DAC Beachcroft LLP) for the Appellants
Mr Graham Chapman and Mr Shail Patel (instructed by Enyo Law LLP) for the Respondents
Hearing date: 19 April 2012
On 1 April 2010 a claim form was issued in the names of 273 claimants, whose names and addresses were listed in schedule 1 to the claim form. There were 19 defendants, whose names and addresses were listed in schedule 2. Brief details of the claim were given in schedule 3. In summary, the claimants were members of the public who had subscribed to three technology-based investment schemes collectively referred to as the Keydata-Innovator Schemes. The essence of the claim was that they were fraudulent schemes in their creation and in the way that the money obtained from the claimants was disbursed.
The solicitors who issued the claim form were Addleshaw Goddard LLP. The claim form contained a statement of truth signed by Michael Green, a partner in the firm, in the following terms:
"The claimants believe that the facts stated in this claim form are true. I am duly authorised by the claimants to sign this statement."
On 30 July 2010 the claim form was amended, prior to its service, so as to reduce the number of claimants in schedule 1 to 170 and the number of defendants in schedule 2 to 13. It was served shortly afterwards.
The defendants included two solicitors who were former partners in the firm of Collyer Bristow and the firm itself (as vicariously liable for the conduct of its partners). Notice of intention to serve the proceedings was given by Addleshaw Goddard to solicitors acting for Collyer Bristow in a letter dated 28 July 2010. The letter stated:
"We are instructed on behalf of a large number of individuals ("Subscribers"), who submitted subscription applications and paid subscription money with a view to becoming participants in Keydata Technology Partnership 1 LLP, Keydata Technology Partnership 2 LLP and/or Keydata Technology Partnership 3 LLP (collectively the "Keydata Technology Partnerships").
These Keydata Technology Partnerships were, inter alia, established to carry on a business consisting of the purchase and exploitation of information and communications technology ("ICT") software packages with a view to profit, with attendant tax advantages ("Keydata Technology Schemes") and promoted during the 03/04 tax year.
The purpose of this letter is to put you on notice that our clients intend, by the end of this week, to serve proceedings against Collyer Bristow (" C-B") – for whom you act in relation to litigation concerning the Innovator and GenTech Technology Schemes – in respect of its involvement in the Keydata Technology Schemes.
…
This is not intended to be a detailed letter of claim. However, again in brief outline, it will be the Subscribers' case that each of the Keydata Technology Schemes was in substance a sham and a sophisticated fraud…
…Although the number of subscribers who wish to participate in the proceedings is not finalised, we anticipate that the amount of subscription monies represented by the claimants across the Keydata Technology Schemes will be in the region of £5 million. …
It is our view that the Keydata Schemes and the reasons why they failed are similar to the Innovator and GenTech Technology Schemes and the reasons for their respective failure.
This view, at least in broad terms, was also expressed by Stewart Ford, a director and the owner…of Keydata Investment Services Limited ("KIS")…However, unlike the subscribers to the Innovator and GenTech Schemes, who…decided to instigate a legal investigation with a view to commencing legal proceedings, the Subscribers to the Keydata Technology Partnerships effectively decided to accept Mr Ford's advice not to do anything and, instead, to "wait and see" how the legal investigation of the Innovator and GenTech Schemes and any subsequent litigation played out. The Subscribers were, in our view, misadvised by Mr Ford in this regard, not least because of Mr Ford's serious conflict of interest in continuing purportedly to act as Managing Partner and in giving such advice.
Be that as it may, during the second half 2009 a group of Keydata Technology Schemes Subscribers became concerned that Mr Ford's "wait and see" approach was seriously flawed…and the Innovator and GenTech litigation, which by then had been commenced, was unlikely to conclude before limitation issues could potentially become an issue in relation to any pursuit of legal redress by the Keydata Technology Schemes Subscribers. As to limitation, and as your client will be aware, it appears that the relevant subscription monies had been paid out of C-B's client account in early April 2004 such that early April 2010 is a potential limitation deadline for certain causes of action.
In the circumstances, we were asked to contact each of the Keydata Technology Schemes Subscribers, using whatever contact details were available, to ascertain whether they were prepared to fund a detailed legal analysis of the prospects for a recovery of their respective losses.
Thereafter, and as you will imagine it took some months to contact and hear back from the Subscribers who were interested in pursuing their individual losses on a collective basis, and collect from them the funds necessary to commence and undertake the legal analysis.
…
However, before the analysis was completed, and given the potential limitation issues beyond early April 2010, it was necessary to issue a claim form on 1 April 2010 to stop time running."
On receipt of the amended claim form, the defendants took steps to examine the original claim form. The claimants' solicitors were asked in correspondence to explain the reduction in the number of claimants from 273 to 170. In particular, they were asked to confirm whether the claimants whose names had been deleted had ever given instructions to the firm to issue the proceedings in their names; and also to confirm that all the claimants whose names continued to appear in the amended claim form had given instructions to issue proceedings on their behalf before the claim form had been issued.
On 23 November 2010 Addleshaw Goddard sent to the defendants a proposed re-amended schedule 1 to the claim form. The letter explained that the reason for the amendment was that 12 of the named claimants wished to discontinue their claims against all the defendants. The letter also stated that the solicitors did not have "subscription information" for 3 identified claimants, and that this information would be provided once the position was known. The inference was that the solicitors had instructions from those clients but were still waiting for certain information.
The disclosure that 12 of the claimants named in the amended claim form no longer wished to pursue those claims led to further questions from the defendants' solicitors. The claimants' solicitors declined to be drawn into disclosing details of the communications between the firm and individuals who had been named in the original claim form, but stated that the firm had instructions authorising it to act on behalf of all of the claimants named in the amended claim form except the 12 who wished to discontinue. This, the firm suggested, was all that it was relevant for the defendants to know.
The defendants were dissatisfied and applied to strike out the amended claim form pursuant to CPR 3.4(2)(b) and/or (c) and/or the inherent jurisdiction of the court on the ground that the claim form was issued on 1 April 2010 without the authority of all of the individuals identified as claimants. (The applicants were the two former partners and the firm of Collyer Bristow, but I will refer to them as the defendants. No formal application has been made by other defendants, but the court was told on the appeal that one of them, Mr Ford, has reserved his position.) By the time of the hearing the defendants had adduced uncontradicted evidence that 7 of the original claimants had been approached by Addleshaw Goddard but had given the firm no instructions to act on their behalf.
The application was heard by David Steel J on 20 July 2011 and dismissed. On the evidence before him, he drew these conclusions (or they are implicit in his judgment):
1. At the time of the issue of the original claim form Addleshaw Goddard had instructions to issue it from some, but not all, of the 273 named claimants.
2. There is considerable doubt whether at the time of the service of the amended claim form all of the 170 named claimants had given instructions authorising the firm to act for them. (The terms of the letter dated 28 July 2010 and later correspondence suggested that they had not.)
3. By the date of the hearing, the firm had instructions to prosecute the action from 158 complainants, i.e. the 170 named in the amended claim form less the 12 named in the letter dated 23 November 2010. (That letter is the best indication of the date by which the firm had received such instructions from all of those...
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