Andrew Pervis Scott v Harbinder Singh

JurisdictionEngland & Wales
CourtQueen's Bench Division (Commercial Court)
JudgeEyre
Judgment Date27 August 2020
Neutral Citation[2020] EWHC 1714 (Comm)
Date27 August 2020
Docket NumberCase No: CC-2019-MAN-000031

[2020] EWHC 1714 (Comm)

IN THE HIGH COURT OF JUSTICE

BUSINESS & PROPERTY COURTS IN MANCHESTER

CIRCUIT COMMERCIAL (QB)

Manchester Civil Justice Centre

1 Bridge Street West

Manchester M60 9DJ

Before:

HIS HONOUR JUDGE Eyre QC

Case No: CC-2019-MAN-000031

Between:
1) Andrew Pervis Scott
2) Adam Lewis
3) Bison Transport Limited (in liquidation)
Claimants
and
Harbinder Singh
Defendant

Terence Bergin QC (instructed by Clarke Willmott LLP) for the Claimants

Greg Pipe (instructed by Harrowells Ltd) for the Defendant

Hearing dates: 21 st and 22 nd April 2020; 26 th August 2020

HH Judge Eyre QC:

1

These proceedings arise out of the sale by the Defendant to the First and Second Claimants of his controlling shareholding in the Third Claimant (“Bison”). Bison is engaged in road haulage. There are two extant applications. The Claimants applied on 20 th March 2020 for permission to amend the Particulars of Claim and on 7 th April 2020 the Defendant applied for the striking out of the claim alternatively for summary judgment on the claim and for judgment on his counterclaim. Both applications are opposed by the other side and both were listed before me on 21 st and 22 nd April 2020. I directed that the Claimants' amendment application be considered first and adjourned the Defendant's application with a view to considering that in due course in the light of the decision made in respect of amendment.

2

The initial hearing was conducted remotely by way of a video conferencing platform provided by the Claimants' solicitors. I am grateful to the solicitors and counsel on both sides for their patience and persistence in overcoming the difficulties of communication which arose in the course of that hearing.

3

There was a further hearing on 26 th August 2020 conducted by MS Teams hosted by the court. The parties had received an earlier draft of this judgment at the end of June 2020. On behalf of the Claimants Mr. Bergin QC made submissions as to the effect of the judgment and Mr. Pipe made competing contentions for the Defendant. In the light of those matters I directed a further hearing at which counsel orally expanded on those competing submissions.

The Progress of the Action .

4

The Share Purchase Agreements whereby the Defendant sold his controlling interest in Bison and in Roadways Express Ltd (“Roadways”) to the First and Second Claimants were concluded on 25 th October 2018. On the same date the Defendant's wife, Varinder Kaur, entered an agreement selling her controlling interest in Global Drivers Ltd (“Global”) also to the First and Second Claimants. The agreement in relation to Bison provided for a retention sum and for the subsequent payment of that and an Additional Payment to the Defendant on the terms set out in the agreement.

5

On 22 nd January 2019 the Claimants' solicitors wrote to the Defendant's solicitors alleging misrepresentation and breach of warranty on the part of the Defendant in respect of all three share purchase agreements (“the Initial Letter”). In that letter the Claimants asserted a right to rescission under the Misrepresentation Act 1967; alternatively repudiation together with damages; alternatively damages for breach of warranty. The Initial Letter alleged nine misrepresentations.

6

The Initial Letter did not describe itself as a letter of claim and indeed in its second paragraph it said that it was to be followed by a protocol-compliant letter of claim but no such letter was in fact sent and the Claimants commenced proceedings on 13 th June 2019. In the Particulars of Claim the Claimants alleged sundry representations made by the Defendant together with express and implied terms of the Share Purchase Agreements. Six misrepresentations were asserted together with breaches of the alleged terms. In addition it was said that the Defendant had unlawfully removed £80,000 from Bison. The Claimants contended that the Defendant had known of the falsity of the representations and that there had been a fundamental breach or a repudiation of the Share Purchase Agreements. The Claimants sought declarations that they were discharged from any future obligations under the agreement; damages; and recovery of the sum of £80,000.

7

In the Particulars of Claim the claim for damages was put in two ways. At [58] it was said that the shares in Bison had “no value whatsoever” because of “the difficulties with the operation of Bison and Roadways and in particular the unlawful way they have been operated”. As a consequence of that the Claimants sought damages in the sum of £200,000 being the initial payment to the Defendant. At [59] as an alternative a claim is made for an “ongoing loss of £350,000 per year” on the basis that if the Defendant had not been in breach of contract Bison would have made a profit of no less than £350,000 per annum “which profit would accrue or substantially accrue to the Claimants as owners of Bison”.

8

By his Defence and Counterclaim of 22 nd July 2019 the Defendant denied liability and counterclaimed for payment of £100,000 in respect of the Retention; for the Additional Payment to be calculated as at the date of trial; and for damages said to have been caused by the Claimants' failure in breach of the Share Purchase Agreement to pay to him a bonus payment received from Maritime Transport Ltd.

9

In the Defence and Counterclaim the Defendant had contended that elements of the Particulars of Claim were too vague for him to plead to. He had also asserted that the allegations made by the Claimants were allegations of fraudulent misstatement which were inadequately particularised and which were liable to be struck out on that ground. The Defendant also took issue with the claims made with reference to the sum of £80,000 and to the alleged loss of profit on the part of Bison pointing out that the claims by the First and Second Claimants in relation to those elements were not recoverable by reason of being reflective losses.

10

The Defendant's criticisms of the adequacy of Particulars of Claim were repeated when the matter came before me for a case management conference on 31 st October 2019 and the Defendant's counsel explained that a strike out application was being contemplated. At that hearing directions were given for disclosure; for lay and expert evidence; and for listing for trial. It was common ground that disclosure and the preparation of evidence would be a time-consuming exercise. The directions provided for disclosure to be concluded by 27 th March 2020; for lay evidence to be exchanged by 5 th June 2020; and for expert forensic accountancy evidence to be concluded by 30 th October 2020. The trial was listed for 1 st February 2021 and was to take thirteen days of court time (included one day of pre-reading).

11

The Claimants were represented at the latest hearing by Mr. Bergin. He had not drafted the original Particulars of Claim and was not counsel at the CMC. He was, however, instructed on behalf of the Claimants at some point after the CMC and on 23 rd December 2019 draft amended Particulars of Claim prepared by Mr. Bergin were served on the Defendant's solicitors. The Defendant took time to reflect on the proposed amendment and it was only on 14 th February 2020 that his solicitors confirmed that the Defendant would not consent to the amendment. In the letter of 14 th February 2020 the Defendant's solicitors said that the Defendant was consenting in writing pursuant to CPR Pt 17.1 (2)(a) to parts of the proposed amendment but not to others and the letter listed those parts to which consent was being given and those to which the Defendant objected.

The Amendment Application .

12

It was against that background that the Claimants applied on 20 th March 2020 for permission to amend the Particulars of Claim. The draft pleading which accompanied the application was a revision of that which had been provided to the Defendant in December 2019. I will deal with the proposed amendment in some detail below but it is to be noted at this stage that it involved revision of the body of the pleading but also the addition of a Schedule of Loss and Damage and a Schedule of Representations, Falsity, and Knowledge. The latter was a substantial document running, in its original form, to 26 pages and 146 paragraphs. In part the proposed amendment of the Particulars of Claim involved the deletion of the short particulars of the alleged misrepresentations contained in the body of the Particulars of Claim and their replacement by markedly fuller particulars in the Schedule together with Particulars of Falsity and Particulars of Knowledge in respect of each representation or set of representations.

13

On 15 th April 2020 and so only six days before the date when the court was to determine their application the Claimants served further revised draft Particulars of Claim together with revised schedules. These further revisions to the proposed Particulars of Claim involved the removal of Bison as Third Claimant and the making of an averment that its claim for an alleged breach of the Defendant's duties as director (appearing first in the proposed amendment) had been assigned to the First and Second Claimants. The revision to the Schedule of Representations, Falsity, and Knowledge involved the addition of three paragraphs setting out the legal elements necessary for a claim of negligent misstatement. The revision of the Schedule of Loss and Damage involved the addition of the losses said to flow from the alleged breaches of the Defendant's director's duties.

14

The process whereby the Claimants have put forward a series of differing versions of the proposed new pleading was in large part a...

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    ...cases; and (f) enforcing compliance with rules, practice directions and orders.” 5. Further, as this Court held in Scott v Singh [2020] EWHC 1714 (Comm) (HHJ Eyre QC): i) the proposed amendment must be properly formulated (§18); ii) if the proposed amendment raises a new claim or defence, ......
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