Aldermore Bank Plc v Roderick John Lynch
| Jurisdiction | England & Wales |
| Judge | Mr Justice Fancourt |
| Judgment Date | 01 December 2022 |
| Neutral Citation | [2022] EWHC 3050 (Ch) |
| Docket Number | Case No: CH-2021-000082 |
| Court | Chancery Division |
[2022] EWHC 3050 (Ch)
Mr Justice Fancourt
Case No: CH-2021-000082
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
CHANCERY APPEAL (ChD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Ian Wilson KC and Sarah Parker (instructed by Pinsent Masons) for the Appellant
William McCormick KC and Oberon Kwok (instructed by Axiom DWFM) for the First Respondent
The Second Respondent played no active part in the appeal.
Hearing dates: 3, 4 November 2022
Approved Judgment
Remote hand-down: This judgment was handed down remotely at 10:00am on Thursday 1 December 2022 by circulation to the parties or their representatives by email and by release to The National Archives.
Introduction
This is an appeal against an order of Chief Insolvency and Companies Court Judge Briggs made on 23 February 2021. On that day, the Judge handed down judgment following a 6-day trial that took place fully remotely between 1 and 9 February 2021.
The trial was formally an appeal against the admission by Mr Lynch's trustee in bankruptcy of a proof of debt of Aldermore Bank (“the Bank”). The proof was based on a guarantee dated 12 September 2011 of debts of Mr Lynch's company, Ruskin Private Hire Limited (“Ruskin”), allegedly signed by Mr Lynch (“the Guarantee”). Mr Lynch disputed the Bank's debt on the basis that he did not sign the Guarantee. The Judge allowed the appeal and reversed the trustee's decision to admit the proof.
Ruskin had gone into creditors' voluntary liquidation on 12 February 2015, following a winding up petition of HMRC presented in August 2013. Mr Lynch was made bankrupt by order of 12 March 2015.
The Judge heard evidence from several witnesses over 5 days, including Mr Lynch himself and Ms Hughes, who appeared to have witnessed Mr Lynch's signature on the Guarantee but who disputed having done so. There were witnesses called by the Bank: Mr Broomhead and Mr Adcock of the Bank, and a Mr Bramwell, whose company had been involved in providing finance to Ruskin or Mr Lynch.
The Judge also read an unchallenged joint expert report of a handwriting expert, Dr Radley. Dr Radley's opinion was that the Guarantee was not signed by Mr Lynch but that it was signed by Ms Hughes, who appended her name and address to it.
The Judge found that documentary evidence from the Bank's records did not prove that the Guarantee was provided to Mr Lynch for him to sign. He ultimately accepted the evidence of Mr Lynch and Ms Hughes that they had not been given a guarantee to sign and did not sign it. Indeed, he found that the document had never left the Bank, so Mr Lynch and Ms Hughes could not have signed it. The Judge felt unable to accept Dr Radley's opinion that Ms Hughes had signed and appended her name and address to the Guarantee, but he accepted his evidence that Mr Lynch did not sign it.
Despite the proceedings being in the form of an appeal against a trustee in bankruptcy's admission of a proof, the court had previously directed that statements of case be exchanged. Mr Lynch filed Points of Claim in which he alleged that both his and Ms Hughes' signatures on the Guarantee were forgeries, and that it was to be inferred that the perpetrator of the forgery was an officer, employee or other agent of the Bank.
The Bank's case, in its Points of Defence, was that Mr Lynch or his agent had signed the Guarantee on 12 September 2011, which was the day that the documents were said to have been brought to Ruskin's offices; and that 3 days later Mr Lynch or his agent delivered the Guarantee to Tracey Court of the Bank when she visited Ruskin's offices. The Bank had alternative cases: first that, if Mr Lynch did not sign, he authorised someone else to sign and that person did so; second, that he was estopped from denying the validity of the Guarantee because he or his agent delivered the Guarantee to the Bank apparently bearing his signature.
Mr Ian Wilson KC and Ms Sarah Parker on behalf of the Appellant argued that, in view of the alternative cases pleaded by the Bank, the Judge had to decide not just whether Mr Lynch signed the Guarantee but also on which side (the Bank's side or the Ruskin side) the signatures had been appended, if Mr Lynch did not sign it. However, they criticise the Judge's finding that Mr Lynch's signature was signed by a person at the Bank.
In substance, the 6-day hearing proceeded as a trial of the issues identified in the pleadings. The skeleton arguments, list of issues and the transcript of the opening submissions at the trial establish that the Judge was not simply required to decide whether Mr Lynch signed the Guarantee, but also whether someone else authorised by Mr Lynch did so, by emulating his signature, and whether he knowingly caused a guarantee apparently bearing his signature to be delivered to the Bank.
However, as Mr Wilson accepted, as the evidence unfolded, the fundamental factual question in the trial was whether the guarantee document reached Ruskin at all. If it did not, it could not have been signed by Mr Lynch or anyone else on the Ruskin side on his behalf, which would dispose of the three ways in which the Bank put its case.
What was not for determination was who forged the signatures of Mr Lynch and Ms Hughes, if forgeries they were. Despite Mr Lynch's pleaded allegations of forgery, that question was unnecessary for the determination of any of the alternative cases on which the Bank relied to establish the validity of its proof. Mr Knight, representing Mr Lynch at trial, confirmed in opening that he was not asking the Judge to infer that the Bank forged the guarantee.
There was much written in the skeleton arguments for this appeal about where the burden of proof lay at trial. It seemed to be accepted at trial that the burden lay on Mr Lynch to prove, by cogent evidence, that his signature had been forged, and Mr Lynch was treated as the claimant at the trial. Mr McCormick KC and Mr Kwok, for Mr Lynch on this appeal, do not accept that the burden did lie on Mr Lynch. They say that the Bank had to prove the basis of its proof of debt and the Judge did not have to decide an allegation of forgery.
However, nothing in the Judge's judgment ultimately turned on where the legal or evidential burden of proof lay, despite the way that he expressed some of his conclusions being capable of being read as relating to burden of proof. Both sides called witnesses and relied on documents in the agreed bundles. The Judge was satisfied, having heard all the evidence and read the relevant documents, that neither Mr Lynch nor anyone else on the Ruskin side received or signed the Guarantee. Equally, the Bank does not suggest on this appeal that any reasonable judge would have decided the case in its favour by falling back on the burden or standard of proof when unable to decide the probabilities of the matter. It contends that any reasonable judge would have decided, when weighing all the evidence, that the Guarantee was probably signed by Mr Lynch and witnessed by Ms Hughes. The alternative way that it puts its case is that the Judge's analysis of parts of the evidence was so flawed that his conclusion cannot stand.
It is therefore unnecessary to dwell on who bore the burden of proof. The Judge did, however, have to have regard to the inherent probabilities of the matter, in the light of the undisputed facts, the evidence that he heard and the documents that stood as evidence of their contents (pursuant to CPR PD32, para 27.2).
The undisputed facts
Mr Lynch was at the relevant time a businessman, operating through Ruskin from 2004. He also owned another dormant company, Robust Training Ltd (“Robust”). Ruskin provided transport services to children and vulnerable adults with special needs, mainly under contracts with local authorities.
The Judge said that the business was seasonal, concentrated on school term times, and so Ruskin needed invoice financing services. These had been provided through the Royal Bank of Scotland's subsidiaries (“RBS”), but Ruskin got caught up in RBS's Global Recoveries Group's activities in 2008 and sought to find alternative funding. When an attempt to obtain funding from National Westminster Bank failed, Mr Lynch turned to two independent consultants, Mr Goodrich and Mr Dartford, who introduced Mr Bramwell of Inspiration Finance plc (“Inspiration”) to Ruskin in March 2011. Mr Bramwell liked the Ruskin business and considered investing himself. Inspiration did make loans to Ruskin (or Mr Lynch) in the summer of 2011. Mr Bramwell also set up meetings between Ms Hughes, who was the financial controller of Ruskin, and officers of the Bank.
The Bank did some due diligence in the summer of 2011 and its initial reaction to what it saw was unfavourable. However, Mr Clark met Mr Lynch on 29 July 2011, as a result of which the Bank started to look more favourably on Ruskin. What was said in that meeting in relation to a guarantee that the Bank would require from Mr Lynch was disputed at trial. Mr Lynch said that it was indicated that a limited guarantee of up to £150,000 might possibly be required; the Bank said that it would have required an unlimited guarantee. Mr Clark was not called to give evidence.
It is not disputed that the Bank itself contemplated that it would be obtaining an unlimited guarantee from Mr Lynch, though it was sceptical about the value of it, given Mr Lynch's other financial commitments. Credit committee approval was given on the basis of an unlimited guarantee. However there was in evidence no document sent by the Bank to Ruskin or Mr Lynch that states that an unlimited guarantee...
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