Andrew McCarthy v William Allan Jones
| Jurisdiction | England & Wales |
| Judge | Lord Justice Lewison,Lord Justice Baker,Lady Justice Elisabeth Laing |
| Judgment Date | 25 May 2023 |
| Neutral Citation | [2023] EWCA Civ 589 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: CA-2022-001763 |
[2023] EWCA Civ 589
Lord Justice Lewison
Lord Justice Baker
and
Lady Justice Elisabeth Laing
Case No: CA-2022-001763
CA-2022-001995
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
HIS HONOUR JUDGE JARMAN KC
Royal Courts of Justice
Strand, London, WC2A 2LL
Hugh Sims KC and George McPherson (instructed by Blake Morgan LLP) for the Appellant
Richard Salter KC and Fraser Campbell (instructed by Burges Salmon LLP) for the Respondents
Hearing dates: 17&18/05/2023
Approved Judgment
This judgment was handed down remotely at 10.30am on 25/05/2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
Introduction
In a judgment handed down on 17 August 2022 following a two day trial, HHJ Jarman KC awarded Mr Jones the sum of €1,025,000 by way of damages for breach of contract. The contract in question was one which was made between Mr Jones and Mr McCarthy in 2008, by which Mr McCarthy was to obtain ownership of a yacht, and Mr Jones was to acquire the beneficial interest in a villa in Mallorca to which Mr McCarthy held the legal title, together with a mooring in mainland Spain. It was envisaged at the time that Mr Jones would sell the villa in due course. As part of the arrangements legal title was to remain with Mr McCarthy and he granted a power of attorney to Sr Serra, a Spanish lawyer, enabling the latter to sell the villa. The judge found at [71] that the reason why the power of attorney was signed was to enable Mr Jones to direct a sale of the villa at an optimal time.
The judge found that Mr McCarthy was in breach of that contract in a number of different ways which he summarised at [100]. First, in 2013 he revoked the power of attorney. Second, in 2014 he reinstated the power of attorney but in favour of a Mr Proctor rather than Mr Jones; and third, in 2016 he sold the villa to a third party.
It is common ground that the result of the 2008 agreement was that (looking at the matter through the eyes of the law of England and Wales) Mr Jones became entitled to the beneficial interest in the villa despite Mr McCarthy's retention of the legal title. Whether the existence of such an interest would be recognised as a matter of Spanish law was not explored either at trial or on this appeal. We were asked (rather unsatisfactorily) to assume that the law of England and Wales applied. What was in issue at the trial was whether Mr Jones had ceased to be entitled to that beneficial interest; or was estopped from denying that he had. The judge found against Mr McCarthy on both issues; and, with the permission of Asplin LJ, Mr McCarthy appeals.
The principal actors
Mr Jones is a businessman who became semi-retired in 2007. As well as his various business interests, he owned a number of properties including the villa which is the subject of this dispute. Mr McCarthy was a long-standing friend and business associate of Mr Jones until they fell out in 2013. Mr Proctor was also a long-standing friend and business associate of Mr Jones with whom, amongst other things, he jointly bought a property in Dubai. Mr Jones owed money to Mr Proctor at the time of the trial, although the precise amount of the debt was in dispute.
At the time of the events in question Mr Mallett was described as Mr Jones' “right hand man” and was authorised to sign contracts on his behalf. Mr Mallett and Mr Jones have since also fallen out. By the time of the trial Mr Mallett appears to have aligned himself with Mr McCarthy.
Both Mr Jones and Mr McCarthy gave evidence at trial. Mr Proctor did not. Nor did Mr Mallett. In general terms the judge found Mr McCarthy to be an unreliable witness, for a number of reasons that he gave in his judgment. On the other hand, he accepted Mr Jones' evidence as being on the whole reliable. The judge's evaluation of the witnesses is not challenged on this appeal and does have a bearing on the live issues; not least because the documentary record is patchy.
The pleadings
Mr McCarthy's pleaded case was that between 2010 and 2012 Mr Jones, Mr McCarthy and Mr Proctor made a series of oral agreements. By 2012 there was a tripartite agreement between Mr Jones, Mr McCarthy and Mr Proctor that Mr Jones' beneficial interest in the villa would be transferred to Mr Proctor as security for the debt owing to him by Mr Jones; and that the proceeds of any sale of the villa would be applied in discharge of that debt; that “Mr Jones and/or Mr Proctor” would continue to fund monthly payments under the mortgage; and that Mr Jones would pay Mr McCarthy a loss which the latter had suffered on the sale of the yacht.
The second way in which the pleaded case was put was that in so far as Mr Jones had any enforceable beneficial interest in the villa, by April 2016, he had voluntarily surrendered it to Mr Proctor as security for the debt. How this surrender was said to have come about was not pleaded.
The third way the case was pleaded was the allegation that during a telephone call in early June 2016 between Mr Jones and Mr Proctor they orally agreed that the payment of €950,000 to be made by Mr McCarthy to Mr Proctor would be applied by Mr Proctor in or towards discharge of Mr Jones' debt to him “so that Mr McCarthy would acquire beneficial ownership” of the villa.
In Boake Allen Ltd v HMRC [2006] EWCA Civ 25, [2006] STC 606 Mummery LJ said at [131]:
“While it is good sense not to be pernickety about pleadings, the basic requirement that material facts should be pleaded is there for a good reason—so that the other side can respond to the pleaded case by way of admission or denial of facts, thereby defining the issues for decision for the benefit of the parties and the court. Proper pleading of the material facts is essential for the orderly progress of the case and for its sound determination. The definition of the issues has an impact on such important matters as disclosure of relevant documents and the relevant oral evidence to be adduced at trial. In my view, the fact that the nature of the grievance may be obvious to the respondent or that the respondent can ask for further information to be supplied by the claimant are not normally valid excuses for a claimant's failure to formulate and serve a properly pleaded case setting out the material facts in support of the cause of action. If the pleading has to be amended, it is reasonable that the party, who has not complied with well known pleading requirements, should suffer the consequences with regard to such matters as limitation.”
This court added to that in Prudential Assurance Co Ltd v HMRC [2106] EWCA Civ 376, [2017] 1 WLR 4031 at [20]:
“Our procedural system is and remains an adversarial one. It is for the parties (subject to the control of the court) to define the issues on which the court is invited to adjudicate. This function is the purpose of statements of case. The setting out of a party's case in a statement of case enables the other party to know what points are in issue, what documents to disclose, what evidence to call and how to prepare for trial. It is inimical to a fair hearing that a party should be exposed to issues and arguments of which he has had no fair warning. If a party wishes to raise a new point, he should do so by amending a statement of case. We were told that by the time that skeleton arguments for trial were served each party would know what points were in issue. We do not regard that as sufficient.”
Neither of these principles were affected by the subsequent appeal in each case. Lord Phillips MR said much the same thing in Loveridge v Healey [2004] EWCA Civ 173, [2004] CP Rep 30 at [23]; as did Dyson LJ in Al-Medenni v Mars UK Ltd [2005] EWCA Civ 1041 at [21]. Likewise in Sainsbury's Supermarkets Ltd v Visa Europe Services LLC [2020] UKSC 24, [2020] Bus LR 1196 the Supreme Court said at [242]:
“In the adversarial system of litigation in this country, the task of the courts is to do justice between the parties in relation to the way in which they have framed and prosecuted their respective cases, rather than to carry out some wider inquisitorial function as a searcher after truth.”
The events of 2010
By the time of the trial the emphasis of Mr McCarthy's case had shifted. In his closing submissions Mr McPherson, appearing for Mr McCarthy, submitted that the central issue was whether there was an agreement in December 2010 that Mr Jones should transfer his beneficial interest in the villa to Mr Proctor. He did not persist in the pleaded allegation that there was some subsequent agreement or voluntary surrender of Mr Jones' beneficial interest. Nor did the closing submissions advance the argument that any acquisition of a beneficial interest by Mr Proctor in 2010 was by way of security only.
Thus, at trial it was argued that the agreement was recorded in an email dated 9 December 2010 from a Mr Mallett to Sr Serra's assistant and which was copied to both Mr Jones and Mr Proctor. The email read:
“We have agreed a property swap with Brian [Proctor] such that Brian now is the beneficial owner of number 22, the property that Toni [Serra] dealt with as part of a property swap with [Andrew] McCarthy.
We have agreed that Brian will acquire the property (at a value of €1,200,000 and the latent debt €739,000 to La Caixa) in exchange for Brian's beneficial interest in a property in Dubai, apartment 3401, Saba II Jumeirah Lake Towers. Brian has no wish to transfer the title into his own name and will want to [leave] the property registered in Andrew's name but Brian will be responsible for the outgoings with immediate...
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