Antonio Caliendo and Another v Mishcon De Reya (A Firm)and Another
| Jurisdiction | England & Wales |
| Judge | Mr Justice Arnold |
| Judgment Date | 04 February 2016 |
| Neutral Citation | [2016] EWHC 150 (Ch) |
| Docket Number | Case No: HC-2013-000029 |
| Court | Chancery Division |
| Date | 04 February 2016 |
[2016] EWHC 150 (Ch)
The Hon Mr Justice Arnold
Case No: HC-2013-000029
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Rolls Building
Fetter Lane, London, EC4A 1NL
Alan Gourgey QC and Katie Powell (instructed by DLA Piper UK LLP) for the Claimants
Ian Croxford QC, Clare StanleyQC and Jonathan Chew (instructed by Robin Simon) for the Defendants
Hearing dates: 1–4, 7–11, 14, 17–18 December 2015
Contents
| Introduction | 1–3 |
| The Transaction Documents | 4 |
| Brief outline of the Claimants' case | 5–10 |
| The witnesses | 11–24 |
| Missing witnesses | 25–28 |
| Should an adverse inference be drawn from the failure to call witnesses? | 39 |
| Should an adverse inference be drawn from the Claimants' failure to give disclosure? | 40–41 |
| Mishcon de Reya's files | 42–43 |
| Factual background | 44–614 |
| Key factual issues | 615–664 |
| Retainer or assumption of responsibility | 665–727 |
| Fiduciary duties under the powers of attorney | 728 |
| Breach of duty | 729–761 |
| Loss | 762–787 |
| Result | 788 |
Introduction
This is a claim for professional negligence by Antonio Caliendo and Barnaby Holdings LLC ("Barnaby") against the firm of solicitors Mishcon de Reya (which become a limited liability partnership during the relevant period, but for present purposes the distinction between the firm and the LLP can be ignored). Mr Caliendo and Barnaby claim not only in their own right, but also as assignees of Franco Zanotti and Wanlock LLC following an assignment on 13 March 2013, and accordingly for convenience I shall refer to all four collectively as "the Claimants". The claim concerns a transaction on 1 September 2007 in which Wanlock sold its 19.9% shareholding in QPR Holdings Ltd ("QPRH") to Sarita Capital Investment Ltd ("Sarita", a vehicle for Flavio Briatore) and Bernie Ecclestone (together, "the Purchasers"), and in which Barnaby and Moorbound Ltd undertook to sell their 27.5% and 14.8% shareholdings to Sarita, and in which Mr Caliendo partially waived various loans he had made to QPRH ("the Transaction").
The Claimants contend that the terms of the various documents which were entered into by the parties to the Transaction ("the Transaction Documents") differed materially, and to the detriment of the Claimants, from the terms which Mr Caliendo had instructed Mishcon de Reya to implement on their behalf.
Mishcon de Reya denies that it was retained by the Claimants or assumed any duty to the Claimants. It is common ground that Mishcon de Reya did act on behalf of QPRH in relation to the Transaction, and that this is not determinative of the question of whether it also acted on behalf of the Claimants. Mishcon de Reya also contends that the Claimants have suffered no loss, or were contributorily negligent. More fundamentally, however, Mishcon de Reya takes issue with a number of the key factual foundations for the Claimants' claims.
The Transaction Documents
The principal Transaction Documents were as follows:
i) A share sale agreement between Wanlock, Mr Caliendo, Sarita and Mr Ecclestone dated 1 September 2007 ("the SSA"). The SSA provided for the sale by Wanlock of its shares in QPRH for a total price of £199,000, of which £49,000 was payable by Sarita and £150,000 by Mr Ecclestone. The SSA was executed by Kevin Steele of Mishcon de Reya on behalf of Wanlock and Mr Caliendo.
ii) A deed of irrevocable undertaking given by Barnaby in favour of Sarita, by which Barnaby undertook to accept an offer of 1 pence per share for all of its shares in QPRH from Sarita. One copy of the undertaking dated 31 August 2007 was executed by John Wortley Hunt on behalf of Barnaby. A second copy of the undertaking dated 1 September 2007 was executed by Mr Steele on behalf of Barnaby.
iii) A deed of irrevocable undertaking given by Moorbound in favour of Sarita dated 1 September 2007, by which Moorbound undertook to accept an offer of 1 pence per share for all of its shares in QPRH from Sarita. The undertaking was executed by Gianni Paladini and Mr Steele on behalf of Moorbound.
iv) A document signed by Mr Caliendo and witnessed by Ilario Calvo on 29 August 2007 acknowledging that the sums owed to Mr Caliendo by QPRH totalled £6,581,328 interest free and that Mr Caliendo was not owed any other sums ("the Caliendo Acknowledgement").
v) A deed executed on behalf of Mr Caliendo by Mr Steele on 30 August 2007 acknowledging that the sums owed to Mr Caliendo by QPRH totalled £6,581,328 interest free, that the loans were redeemable at any date before March 2011 but not were due until March 2011 and that Mr Caliendo was not owed any other sums ("the Deed of Acknowledgement").
vi) A deed of waiver between Mr Caliendo, QPRH, Sarita and Mr Ecclestone dated 1 September 2007 ("the Caliendo Waiver"). Under the Caliendo Waiver, Mr Caliendo waived £4,581,328 out of the debt of £6,581,328 owed to him by QPRH. £2 million was left outstanding, but subject to being reduced by an indemnity given by Mr Caliendo in favour of Sarita and Mr Ecclestone in the events that the Completion Net Assets determined pursuant to the Schedule to the deed were less than £3 million ("the Net Assets Indemnity"). The Caliendo Waiver was executed by Mr Steele on behalf of Mr Caliendo.
vii) An undated deed of waiver between Barnaby, Sarita and Mr Ecclestone, under which Barnaby waived any claim against Sarita or Mr Ecclestone. This was executed by Mr Hunt on behalf of Barnaby.
viii) An undated deed of waiver between Wanlock, Sarita and Mr Ecclestone, under which Wanlock waived any claim against Sarita or Mr Ecclestone. This was executed by Damian Calderbank on behalf of Wanlock.
ix) A deed of waiver between Barnaby and Sarita, under which Barnaby waived any claim against Sarita dated 1 September 2007. This was executed by Mr Steele on behalf of Barnaby.
x) A deed of warranty by Mr Paladini, Mr Caliendo and Mr Zanotti in favour of Sarita and Mr Ecclestone dated 31 August 2007, warranting that there were no outstanding loans or other indebtedness that are either convertible or owing to any of Carlos Dunga, Simon Blitz or a Mr Padula ("the Dunga Warranty"). The Dunga Warranty was signed by Mr Paladini and by Mr Steele on behalf of Mr Zanotti and Mr Caliendo.
xi) Loan and security documents providing for the loan by the Purchasers to QPRH of up to £5 million.
Brief outline of the Claimants' case
In brief outline, the Claimants' case against Mishcon de Reya is follows. The Claimants contend that Mr Caliendo expressly, alternatively impliedly, retained Mishcon de Reya to act on behalf of the Claimants in respect of the Transaction, alternatively that Mishcon de Reya assumed a responsibility to act on their behalf.
The Claimants further contend that Mishcon de Reya acted in breach of their duty to the Claimants by executing Transaction Documents which deviated from their instructions, and without advising them properly or at all, in the following respects:
i) the Transaction Documents failed to provide for the payment of a further £2 million to Mr Caliendo in the event that Queen's Park Rangers was promoted to the Premier League within five years, as in fact happened ("the Promotion Bonus");
ii) the Transaction Documents wrongly included the Dunga Warranty;
iii) the Transaction Documents wrongly included the Deed of Acknowledgment, and Mishcon de Reya failed properly to advise Mr Caliendo with respect to the Caliendo Acknowledgement;
iv) the Transaction Documents wrongly included the Net Assets Indemnity; and
v) the Transaction Documents failed to provide for the payment by the Purchasers of sums of £264,870, £198,161.69 and £541,134 (totalling £1,004,165.69) which the Claimants contend were owed by QPRH to third parties and guaranteed by Mr Caliendo ("the Three Debts").
The Claimants complain that, whereas they expected to receive a total of £2.5 million for their shares and partial repayment of loans made by Mr Caliendo to QPRH, £2 million in the event of promotion to the Premier League and discharge of the Three Debts, in the event they only received £485,488.36 and Mr Caliendo was left with liability in respect of the Three Debts. In addition, Mr Caliendo was exposed to proceedings brought by QPRH ("the QPRH Proceedings") following QPRH's settlement of proceedings brought by Mr Dunga ("the Dunga Proceedings").
Damages are claimed on the footing that, but for Mishcon de Reya's breaches of duty, the Transaction would not have been concluded on the terms of the Transaction Documents and that there was a substantial chance that the Transaction would have been concluded on the basis of the terms which the Claimants contend Mishcon de Reya had been instructed to agree. So far as concerns an overall payment of £2.5 million and the Promotion Bonus, those terms reflected the Purchasers' initial offer on 9 August 2007. The Claimants claim for loss of that chance.
In the alternative, the Claimants claim damages on the basis that, if the Purchasers had been unwilling to agree to their terms, the Claimants would have looked for another purchaser. The Claimants contend that there was a substantial chance that they would have secured an alternative purchaser during the course of the 2007/08 season on terms at least as beneficial as those which they had thought had been agreed with the Purchasers. Again, the Claimants claim for loss of that chance.
In addition to the claims for a loss of a chance, the Claimants seek recovery of the costs that Mr Caliendo incurred in defending the QPRH...
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