Andrew Brown and Others v Innovatorone Plc and Others
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE ANDREW SMITH |
| Judgment Date | 19 June 2009 |
| Neutral Citation | [2009] EWHC 1376 (Comm) |
| Docket Number | Case No: 2008 FOLIO 1082 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 19 June 2009 |
[2009] EWHC 1376 (Comm)
IN THE HIGH COURT OF JUSTICE
COMMERCIAL COURT
QUEEN'S BENCH DIVISION
Mr Justice Andrew Smith
Case No: 2008 FOLIO 1082
Graham Chapman and Shail Patel (instructed by Addleshaw Goddard LLP) for the Claimants
Andrew Hunter (instructed by Byrne & Partners) for Mr. Bailey
Ben Hubble QC (instructed by Beachcroft LLP) for Collyer Bristow
Hearing dates: 15 and 21 May 2009
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.
Approved Judgment
Mr. Justice Andrew Smith:
These applications concern the service of the claim form in these proceedings on the seventh defendant, Mr. John Bailey, and the eighth defendants, Collyer Bristow. On 17 February 2009 it was sent by fax to Mr. Bailey's solicitors, Byrne & Partners, and to Collyer Bristow's solicitors, Beachcroft LLP (“Beachcrofts”), by the claimants' solicitors, Addleshaw Goddard (“AG”). The claimants contend that this constituted valid service, but Mr. Bailey and Collyer Bristow deny it. In the alternative the claimants apply for orders that the intended service on 17 February 2009 should stand as good service by an alternative method.
The nature of the claim in these proceedings need be described only in outline. This action is part of major litigation brought in this court by investors in so-called “Innovator” schemes. The schemes were promoted during the 2002/03, 2003/04 and 2004/05 tax years, and were presented to investors as offering fiscally efficient investments in information technology and communications technology through either limited liability or ordinary partnerships; investors hoped to claim tax relief on sums invested by them (including leveraged amounts) for participation in the partnerships, and the partnerships would use the investment to buy and exploit technology. The claimants' case is that the schemes were shams and a fraud upon those investing in them, and that conditions for them to become members of the partnerships and for their subscription money to be paid to the partnership vehicles were never fulfilled. Nine claim forms concerning these schemes have been issued to date, and I understand that more are likely to be issued. I am told that, in all, over 700 investors subscribed to 19 investment schemes: there are 54 claimants in this action.
The claimants contend that the schemes were promoted by the first defendant, Innovatorone Plc, “Innovator”, which is now in liquidation, or in some cases by Moneygrowth Financial Services Limited or Capital Planning UK Limited. The fourth defendant in this action, Mr. Paul Carter, is said to have been the managing director of Innovator, and the fifth defendant, Mr. Bjorn Stiedl, is described by the claimants as “the controlling mind and driving force behind Innovator and the establishment, promotion and operation of the Innovator Schemes”. The second and third defendants, The YTC Medical Learning System Partnership LLP and The Agent Mole Technology Medical Partnership LLP, were, as the claimants were led to understand, to have been the vehicles for two of the schemes, described as the “YTC scheme” and the “Agent Mole” scheme, with which this action is concerned. Collyer Bristow, a firm of solicitors which is now dissolved, are said to have received from claimants money intended for investment in the schemes, which was misappropriated and lost. Mr. Bailey was an equity partner in Collyer Bristow and is said to have been a director of Innovator. The sixth defendant, Mr Jonathan Roper, was a salaried partner in Collyer Bristow. I have not been given an assessment of the total amounts claimed in this litigation, but the claimants say that over £40 million was paid to Collyer Bristow and has been misappropriated.
Dishonesty is alleged against Mr. Carter, Mr. Steidl, Mr. Roper and Mr. Bailey. Collyer Bristow are said to be liable for the dishonest conduct of Mr. Bailey and Mr. Roper in assisting Innovator and Mr. Carter to act in breach of trust and fiduciary duties owed to the claimants, and also liable to account for subscription monies paid by claimants, as well as for claims in negligence, breach of contact and breach of fiduciary duty and for other relief.
Service (or purported service)
This action, 2008 folio 1082, was originally brought on 17 October 2008 against eight defendants. The claim form has been served upon the first six defendants: Innovator, The YTC Medical Learning Partnership LLP, The Agent Mole Technology Medical Partnership LLP, Mr. Carter, Mr. Stiedl and Mr. Roper. On 17 February 2009, before AG served or purported to serve the claim form on Mr. Bailey and Collyer Bristow, it was amended to add two further defendants, Ellsburgh Technology Limited, a company incorporated in the British Virgin Islands, and HBI Software Private Limited, a company incorporated in India. They are said to have sold information and communications technology to the second and third defendants as part of the YTC scheme and the Agent Mole scheme.
On 23 December 2008 AG wrote to Beachcrofts as Collyer Bristow's solicitors, advising them that it was intended to bring proceedings in respect of the 19 Innovator schemes. They enclosed copies of the (then unamended) claim form in this action and of the claim form in action 2008 folio 1282 that concerns two other schemes, but stated that “we do not at this stage serve these documents on you. They are for information only and to illustrate the bases or some of the bases of our clients' claims”. AG said that they needed to issue claim forms in respect of the other 15 Innovator schemes “in due course”, explaining that the two claim forms had been issued “To forestall any limitation arguments”. (The claimants do not accept that the defendants would in fact have had a defence of limitation.) They proposed a procedure based on pre-action protocols, suggesting: “We will serve the 2 Claim Forms issued to date upon the defendants thereto (or their respective professional advisers if so elected). We will do this within the 4 months validity period of the Claim Forms. These proceedings are then stayed pending the protocol process” that they set out.
At the request of Beachcrofts, AG sent a similar letter and the enclosures to Byrne & Partners: they understood from Beachcrofts that Mr Bailey was to be separately represented by them. Other defendants were also sent the letter.
On 12 January 2009 Beachcrofts wrote to AG confirming that they acted “for Collyer Bristow and their professional insurers”, but stating that Mr. Bailey and Mr. Roper were “separately represented”, Mr. Bailey by Byrne & Partners. On 26 January 2009 Byrne & Partners wrote to AG that they had been formally instructed by Mr. Bailey on 2 January 2009. They asked that correspondence be sent to them, but they did not say that they had been authorised to accept service of proceedings on his behalf, and indeed they had not been so instructed. On 12 February 2009 Byrne & Partners wrote to AG a short letter in relation to case management. Before February 2009 both Byrne & Partners and Beachcrofts had written to AG on writing paper that set out their respective fax numbers.
On 17 February 2009 AG sent the amended claim form in these proceedings by fax to Beachcrofts at 21.48hrs and to Byrne & Partners at 21.53hrs, about two hours before the end of the period of four months from being issued within which it had to be served under rule 7.5(1) of the Civil Procedure Rules (“CPR”). It is not in dispute that the transmission of both faxes was completed before midnight on 17 February 2009. When it was sent, Byrne & Partners had not been instructed to accept service for Mr Bailey. Beachcrofts had in fact been so instructed by Collyer Bristow. Neither Byrne & Partners nor Beachcrofts nor their respective clients had been asked by AG whether the solicitors were instructed to accept service, and AG had not been advised (either in writing or otherwise) by either Mr. Bailey or Collyer Bristow or by their solicitors that the solicitors were instructed to accept service. Neither Byrne & Partners nor Beachcrofts, as I conclude, forwarded the faxed claim form to their client on 17 February 2009, and neither Mr. Bailey nor any of the other partners of Collyer Bristow saw on 17 February 2009 the amended claim form that AG purported to serve.
On 20 February 2009 Beachcrofts sent AG a letter questioning why the claim form had been sent to them rather than served on their clients. On 25 February 2009 AG wrote that Beachcrofts had confirmed to them that they were instructed to act on behalf of Collyer Bristow.
On 24 February 2009 Byrne & Partners wrote to AG that AG had neither sought nor obtained their confirmation that they were instructed to accept service on Mr Bailey's behalf, and said that the claim form had not been effectively served on Mr Bailey. On 12 March 2009 AG replied that they had served the claim form on Byrne & Partners because they had confirmed that they were instructed to act for Mr Bailey, and contended that the service upon them was valid service upon Mr Bailey, and that alternatively they would rely upon rule 6.15 of the CPR.
Mr. Bailey and Collyer Bristow
Before coming to the applications that are before me, I should say something about the fact that the named defendants to these proceedings include both Collyer Bristow, a firm, and Mr. Bailey, who was at all potentially relevant times a partner of the firm of Collyer Bristow. This might be said to constitute an irregularity in that Mr. Bailey is, effectively, twice included as a defendant in the action. None of the parties takes any point...
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