Avonwick Holdings Ltd and Anr (Applicant/Respondent) v Shlosberg (Respondent/Appellant)

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice David Richards
Judgment Date11 Jul 2016
Neutral Citation[2016] EWCA Civ 819
Docket NumberA3/2016/0537 & A2/2016/0528

[2016] EWCA Civ 819

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT

CHANCERY DIVISION

(HH JUDGE DIGHT)

Royal Courts of Justice

Strand

London, WC2A 2LL

Before:

Lord Justice David Richards

A3/2016/0537 & A2/2016/0528

Avonwick Holdings Limited and Anr
Applicant/Respondent
and
Shlosberg
Respondent/Appellant
Avonwick Holding Limited and Ors
Applicant/Respondent
and
Castle Investment Fund Limited and Ors
Respondent/Appellant

Mr Tom Smith QC and Mr Henry Phillips (instructed by Dechert LLP) and Mr Henry King (instructed by Quinn Emanuel Urquhart & Sullivan UK LLP) appeared on behalf of the Applicant

Mr Philip Marshall QC and Mr James Mather (instructed by Enyo Law LLP) appeared on behalf of the Respondent

Lord Justice David Richards
1

This is an application for permission to appeal against orders made by His Honour Judge Dight, sitting as a Deputy High Court Judge in the Chancery Division. By his orders, amongst other things, he acceded to applications by the claimants in the proceedings to lift the automatic stay on proceedings against the fifth defendant, Mr Shlosberg, arising on his bankruptcy and giving permission to join Mr Shlosberg as an additional defendant to the substantive proceedings and to reamend the particulars of claim in order to include claims against Mr Shlosberg. Those applications were resisted on behalf of Mr Shlosberg at a hearing which lasted three days in or about November or December 2015.

2

Mr Shlosberg was refused permission to appeal by HHJ Dight, and he makes his application to this court for permission to appeal. When I considered the application on paper I concluded that it would be difficult to deal with the matter without an oral hearing and so the matter comes to me today with Mr Shlosberg represented, as he was before the judge, by Mr Marshall QC and Mr Mather, and with the second and third claimants, that is to say a company called Webinvest Limited and its liquidators, represented by Mr Smith QC and Mr Phillips. Before HHJ Dight, Mr Smith and Mr Phillips also represented the other claimant, Avonwick Holdings Limited, but it is represented today by Mr King. On the application for permission to appeal, Mr King has adopted the submissions made by Mr Smith.

3

The background to the present proceedings is set out in the judgment of HHJ Dight, in particular at paragraphs 2 to 6, and the nature of the claims sought to be brought against Mr Shlosberg and others are briefly summarised in paragraph 7. The judgment thereafter sets out in some more detail in paragraph 10 the transactions which are at the heart of the present proceedings. I do not intend to repeat those facts here. This judgment should be read alongside that of HHJ Dight and alongside the re-amended particulars of claim which HHJ Dight gave permission to amend by bringing in the claim against Mr Shlosberg.

4

The grounds of appeal are substantially grounds on which Mr Shlosberg opposed the applications before the judge. I will take the applications to join Mr Shlosberg and amend the particulars of claim first, dealing with the application for permission under section 285 of the Insolvency Act 1986 at the end, that being the order in which Mr Marshall made his submissions to me today.

5

The parties are agreed, so far as the joinder application and the permission application are concerned, that the right test for the judge to apply was whether the proposed claims sought to be added by amendment had a real prospect of success. It is in respect of applying that test to the claims that it is submitted on behalf of Mr Shlosberg that the judge went wrong. I will take in turn the bases on which it is said that the judge should have come to the conclusion that the applications should be refused.

6

The first grounds relate to the ingredients as a matter of law of the claim that is made against Mr Shlosberg. The claim is pleaded as a claim in tort under what is generally known as unlawful means conspiracy. It is alleged that Mr Shlosberg agreed with others, in particular Mr Machitski and two companies owned and/or controlled by Mr Machitski, to cause damage to the claimants Avonwick and Webinvest by the use of unlawful means. The focus of Mr Marshall's submissions has been on the unlawful means which are alleged, and whether they can constitute unlawful means for the purposes of a claim in conspiracy to injure by the use of unlawful means.

7

Paragraph 49 of the re-amended particulars of claim which alleges that the relevant transactions were entered into pursuant to a combination, understanding or concert between Mr Shlosberg on the one hand and Mr Machitski and his companies on the other to use unlawful means to cause harm to and injure Avonwick in its capacity as a creditor of Webinvest and/or Webinvest itself by, first, wrongfully seeking to divest Webinvest of its assets and put them beyond the reach of Avonwick, contrary to sections 238, 239 and/or 423 of the Insolvency Act 1986; and/or secondly, wrongfully inducing or procuring Webinvest's directors to enter into those transactions in breach of their fiduciary duties.

8

Mr Marshall submits that the first limb of alleged unlawful means, that is to say that the transactions were contrary to the three sections of the Insolvency Act which I have mentioned, cannot constitute unlawful means for the purposes of the tort of conspiracy. He accepts that unlike provisions which are being considered in some of the cases, these sections give rise to claims which are actionable. However, he submits that where the statute itself sets out the remedies available to a claimant, that leaves no room for a claim in conspiracy based on the breach of the statute constituting the unlawful means.

9

He bases that submission on a statement made by Lord Tenterden in Murray v Bridges 1831 cited by Lord Diplock in Lonrho Limited v Shell Petroleum Co. Ltd (No. 2) [1982] AC 173 at page 185. Lord Tenterden's statement as cited by Lord Diplock was referring to the general rule that where a statute creates an obligation and provides specific remedies for, or consequences of, its breach, no other remedies or consequences are available. Lord Diplock cited that passage in the context of dealing with the effect, or the relevance, of breaches of statutory provisions creating purely criminal offences in the context of claims for damages for conspiracy to injure by unlawful means.

10

The facts of Murray v Bridges did not concern a conspiracy at all and were a very long way from the facts of any conspiracy case. Mr Marshall is not able to cite any authority which establishes that where there is an actionable breach of a statutory provision imposing a civil liability, the breach of that provision cannot constitute unlawful means for the purposes of a claim in conspiracy to injure by unlawful means. He submitted that a distinction was to be drawn between a statutory provision which prohibited a particular act for the benefit of a class of persons but did not specify any remedy, and a similar provision which did specify a specific remedy such as a claim in damages. He submitted that the breach of the latter provision could not constitute unlawful means for the purposes of an unlawful means conspiracy, but the former section could, notwithstanding that a claim in damages for its breach might lie at common law. The distinction was said to be that in one case the remedy was specified and in the other case it was not. This is an interesting argument, but it is not one which in my view could possibly lead to the conclusion that the contrary was not arguable. It seems to me there is no real prospect of success on an appeal in respect of that matter.

11

Mr Marshall went on to refer to the fact that so far as Avonwick's claim in conspiracy based on breaches of sections 238 and 239 are concerned, those are sections which are not in any circumstances actionable by a creditor such as Avonwick, unlike section 423. He submitted that it was necessary, for an unlawful means conspiracy, for the unlawful means to be actionable at the suit of the claimant rather than at the suit of any other party. Again, it seems to me that that raises an interesting issue which is not answered by any of the authorities to which Mr Marshall referred me. It is not in my judgment an issue on which Mr Shlosberg has any real...

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