Andreas Read v Eastern Counties Leather Group Ltd
| Jurisdiction | England & Wales |
| Judge | Russen |
| Judgment Date | 11 January 2022 |
| Neutral Citation | [2022] EWHC 31 (Ch) |
| Docket Number | Claim No: CC-2021-BRS-000011 |
| Court | Chancery Division |
[2022] EWHC 31 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS & PROPERTY COURTS AT BRISTOL
BUSINESS LIST (Ch D)
Bristol Civil & Family Justice Centre
2 Redcliff Street
Bristol
BS1 6GR
HH JUDGE Russen QC
(Sitting as a Judge of the High Court)
Claim No: CC-2021-BRS-000011
Zoë Barton QC and Olivia Chaffin-Laird (instructed by Gunner Cooke LLP) for the Claimant/Respondent
Matthew Gillett (instructed by Lester Aldridge LLP) for the Defendant/Applicant
Hearing date: 15 th December 2021
Approved Judgment
This judgment was handed down by the judge remotely by circulation to the parties' legal representatives by email and its release to Bailii at 09:00 on 11 January 2022.
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.
HH JUDGE Russen QC
HHJ Russen QC:
Introduction
This is my judgment on the Defendant's application made by an Application Notice dated 23 July 2021 and issued on 1 August 2021 (“ the Application”) which seeks the striking out of the Claim issued on 23 June 2021 (“ the Claim”). The length of this judgment is an inevitable reflection of the relative procedural complexity of the earlier proceedings between the parties in Truro County Court and the issues they have generated for the purposes of the Application.
In this judgment I refer to the Claimant as Mr Read and to the Defendant as ECLG.
The Application was heard remotely on 15 December 2021. Ms Barton QC and Ms Chaffin-Laird represented Mr Read and Mr Gillett represented ECLG. I am grateful to counsel for their concise and helpful submissions.
The Claim brought by Mr Read seeks the setting aside of a settlement embodied in a Tomlin order made by Deputy District Judge Thomas, sitting in the Truro County Court, on 15 August 2018 (“ the Tomlin Order”). The Tomlin Order was made at the first hearing in a claim for possession of Mr Read's property (and home) at Valhalla, Droskyn Point, Perranport, TR6 0GS (“ the Property”). That claim (“ the Possession Proceedings”) was issued by ECLG on 25 June 2018. The Possession Proceedings were based upon ECLG having mortgages over the Property to secure two loans totalling £895,796.51. The first loan was advanced on 23 September 2011 in the sum of £679,669.51 and the terms of it were later varied (including agreement upon the principal amount outstanding as £590,000) on 20 May 2016. The second loan was advanced on 24 October 2013 in the sum of £216,127. At the commencement of the Possession Proceedings the redemption figure for the loans (including £932,640 of legal costs and administration fees) was said by ECLG to be over £2.3m.
The Claim was issued the day before the date set for Mr Read's eviction from the Property pursuant to a warrant for possession obtained by ECLG in the Possession Proceedings. It was due to be enforced on 24 June 2021. That was the second warrant for possession which ECLG had obtained in the Possession Proceedings (after the making of the Tomlin Order) and it was issued after ECLG had in July 2020 obtained “summary judgment” against Mr Read's application to set aside the Tomlin Order.
In the light of the Claim being issued in the face of the appointment of bailiffs, on 24 June 2021 Deputy District Judge Doman suspended the warrant for possession and transferred the Possession Proceedings to this court.
This Court is therefore now seized of both the Claim and the Possession Proceedings.
I should also now mention one further set of proceedings between the parties, which Ms Barton QC described as “ the JV Claim”. The JV Claim is another High Court claim which Mr Read has brought in the Bristol Circuit Commercial Court against ECLG and its director, Mr Ian Moore. The JV Claim is listed for a CCMC before me next month.
Mr Read is a property developer and has carried on business both as a sole trader and through at least one company. Mr Moore owns land neighbouring the Property. In one of the applications made by Mr Read in the Possession Proceedings (made in November 2019) Mr Read said he had known Mr Moore for over 10 years. Mr Read's position is that the lending which resulted in the Possession Proceedings was part and parcel of a wider joint venture between himself and Mr Moore which the bringing of those proceedings served artificially to ignore. He says that by bringing the Possession Proceedings ECLG has created a divide between the lending behind them and these litigious joint venture issues; and that, if the Tomlin Order is set aside, matters should proceed with one stream-lined set of statements of case being served in the Claim and the JV Claim.
The Claim
The Claim is made on the basis that the settlement embodied in the Tomlin Order (being a contract) was procured by misrepresentation and should be declared to be “ void and of no effect” or, alternatively, should be rescinded. Further, Mr Read also seeks to set aside the Possession Proceedings on the basis that they were an abuse of process. On that basis he says that the Possession Order made by Deputy District Judge Rutherford on 27 February 2020 (“ the Possession Order”) and subsequent warrants for possession should be set aside as having been “ fraudulently obtained”.
The Particulars of Claim (“ PoC”) in support of the Claim set out diverse grounds which are said to affect the validity of the agreement to enter into the two loans, the terms of those loans, and the propriety and validity of the steps taken in the Possession Proceedings on the basis of the purported indebtedness created by them.
Some of these matters appear at first sight to be legally innovative when viewed against the contractual documentation evidencing the two loans. They include alleged implied terms that “ business interest rates would not apply” (though the PoC also state that a rate of 0.5% above base and a default rate of base plus 4% was agreed), that ECLG would exercise reasonable care and skill in providing the loan, and also to the effect that, as director, Mr Moore was acting in compliance with his general and fiduciary duties to ECLG. Rectification of the express terms of the first loan is sought to the extent that those terms do not reflect those allegedly implied. An assignment of existing security held by Clydesdale Bank Plc (“ Clydesdale”) to ECLG as part of the first loan (see further below) and to which Mr Read was a party is alleged by the PoC to not have been possible or, if possible, not to have occurred.
So far as the post-lending wrongdoing alleged against ECLG is concerned, the PoC allege that it was agreed that the first loan would be repaid from the rent received from ten commercial units at Porth, Newquay, Cornwall (“ Porth Beach”) falling within the joint venture mentioned above. Mr Read says that he transferred that property to a limited company as further security for the loan and it was then immediately transferred to Mr Moore, who failed to ensure the rental income was so applied. Along with the allegedly ineffective assignment of the Clydesdale security, this is a matter upon which Mr Read relies in alleging that ECLG made false representations to him and to the court in procuring the Tomlin Order. Another allegedly false representation relates to ECGL's competency to lawfully enter into the loans.
Before exploring the case of fraudulent misrepresentation further I should highlight that Mr Read also seeks to lay the blame for the Tomlin Order at the door of the legal representative (to whom I refer as “ X”)) who represented him at the time (at least so far as far as ECGL was concerned). Although the PoC say X was Mr Read's trusted friend and adviser, and that Mr Read believed X to be a practising barrister, it is alleged that this was not in fact the case. The PoC also allege that X drafted the Tomlin Order at the direction of Mr Moore and failed to act in accordance with Mr Read's instructions. They allege that:
“ At all material times [X] acted with Mr Moore and/or ECGL to conspire with [sic], encourage and/or facilitate the Tomlin Orders. For the avoidance of doubt, it is averred [X] and/or Mr Moore and/or ECLG knowingly and/or intentionally and/or acting with reckless disregard procured and/or induced Mr Read to enter into the Tomlin Orders in breach of their duties/equitable obligations to the Court.”
These are very serious allegations (and some of them echo what was said by Mr Read in the Possession Proceedings) and they are yet to be established. X has not been joined as a party to the Claim and therefore has no voice in these proceedings. The PoC say that the alleged lack of authorisation to practise is currently the subject of investigation by the Bar Standards Board. In these circumstances I do not think it is fair to identify X by name in this judgment when it is not necessary to do so.
Ms Barton QC did not draft the PoC. In her submissions against the validity of the Tomlin Order she focussed upon two of the representations alleged in paragraph 44 of the PoC. These were described as:
i) the “ FSMA Point” which was based upon ECLG's alleged inability to lawfully enter into the loans by reason of the company's lack of authorisation by the Financial Conduct Authority to conclude a regulated mortgage contract (or to make arrangements in that regard or administer such a contract) so that ECLG was in breach of the general prohibition imposed by section 19 the Financial Services and Markets Act 2000 (“ FSMA”). The effect of that would be that the loans were unenforceable against Mr Read, though this would be subject to him repaying the balance of any advances received, unless ECLG were to succeed in an application to the court that they nevertheless be...
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