Bailey v Wood & Rs
| Jurisdiction | England & Wales |
| Judge | Mr Justice Blackburne |
| Judgment Date | 27 February 2009 |
| Neutral Citation | [2009] EWHC 363 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC07CO1176 |
| Date | 27 February 2009 |
[2009] EWHC 363 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Blackburne
Case No: HC07CO1176
Paul Marshall (instructed by Shakespeare Putsman) for the Claimant
John Randall QC and Mark Anderson (instructed by George Green LLP) for the Defendants
Hearing dates: 17 th and 18 th February 2009
Mr Justice Blackburne:
Introduction
By an application notice dated 8 September 2008 the claimant, Simon Bailey, seeks an order, either under CPR Part 3.4(2) or under the court's inherent jurisdiction, striking out the defendants' defence, alternatively striking out that part of it which asserts that an agreement was reached on the 23 March 2007 (or that the defendants be debarred from defending the claim in reliance on such an agreement), and that permission be given pursuant to CPR Part 32.7(1) for the first and second defendants, Nigel Wood and Anna Dunford, to be cross-examined. The application is supported by a witness statement of a partner of Shakespeare Putsman (“Putsmans”), the solicitors representing Mr Bailey, which runs to over 100 paragraphs and exhibits documents running to over 140 pages. The grounds relied upon for the relief sought are (1) that the defendants have made and permitted to be made false disclosure statements knowingly and without honest belief in their truth, (2) that Mrs Dunford in the course of these proceedings has made a material document and then deliberately destroyed the original version, (3) that Mrs Dunford materially altered a document after the date on which it was made and did so for the purpose of advancing a false case on behalf of the defendants and (4) that the defendants have repeatedly failed to comply with their disclosure obligations. It is claimed by the application that the defendants have thereby interfered with the course of justice and put the fairness of the trial in jeopardy, have rendered any judgment that may be entered in their favour unsafe and further proceedings unsatisfactory, and have thereby prevented the court from doing justice. Towards the end of his opening submissions on behalf of Mr Bailey, Mr Paul Marshall indicated that he was only relying on the first of the grounds as against Mrs Dunford.
The underlying dispute
The application, which is resisted in every respect by the defendants, arises out a partnership dispute involving a firm of Birmingham solicitors called The Wilkes Partnership (“TWP”). From 1 May 2001 to 30 April 2007 Mr Bailey was an equity partner in TWP, having joined the firm (I assume in a salaried capacity) on 31 March 1998. As I understood it, Mr Paul Marshall contended that Mr Bailey is or may still be a partner of TWP. It is not in dispute, however, that since 1 May 2008 Mr Bailey has worked full time as a salaried partner in another Birmingham firm called Tuckers.
Mr Bailey contends that it was agreed when he joined TWP, indeed that it was the express purpose of his agreement to become a partner in the firm, that he would have responsibility for heading up, supervising and developing the firm's criminal law practice which had earlier been in decline. It is common ground that Mr Bailey did head up the firm's criminal law practice and that by March/April 2007 that department (“the criminal department”), in addition to himself, had a salaried partner (a Mr Alex Walsh-Atkins) and 17 other employees. The criminal department was known as “Carvers”.
This litigation is about the circumstances in which Mr Bailey, together with the others in his department, transferred to Tuckers with effect from 1 May 2007. Mr Bailey contends that by a series of events culminating in the decision of the defendants made at an equity partners' meeting on 23 March 2007 he had no option but to transfer and that, in law, the partnership between him and the other equity partners, who are the defendants, was repudiated. He contends that he accepted the repudiation so as to entitle him to compensation. He therefore claims damages. In the alternative, for I think that it is (and can only be) an alternative, he contends that the partnership was dissolved by notice of dissolution given by him to each of his co-partners on 24 April 2007, alternatively that the court should order the partnership to be dissolved. Accordingly, Mr Bailey seeks a winding up of the partnership's affairs and other consequential relief.
Mr Bailey's claim is defended. In particular, the defendants contend that their partnership with Mr Bailey came to an end on 30 April 2007 when, by mutual agreement, he left the practice and thereafter (with effect from 1 May 207) joined Tuckers taking with him the entire criminal department. They accept that he was entitled to an account in accordance with the terms of the partnership deed and say that they have fully accounted to him for what he was due by paying him (by 14 August 2007) £257,420 and by allowing him to retain a car valued at £24,500. They contend that this agreed parting of the ways came about as a result of an agreement made on 23 March 2007 between Mr Bailey and Mrs Dunford (TWP's managing partner) and its implementation on 30 April/1 May 2007 when Mr Bailey and the criminal department transferred to Tuckers, alternatively as a result of a combination of that agreement and the parties' subsequent conduct (consisting of a number of pleaded communications between the defendants, or employees of TWP, on the one hand and Mr Bailey, representatives of Tuckers and the Legal Services Commission on the other) culminating in the transfer to Tuckers.
The essence of Mr Bailey's case is, as I have indicated, that, effectively, he had no choice but to leave TWP and that this was in consequence of the firm's decision, which he opposed, reached at the partners' meeting early on 23 March 2007 but adumbrated, if not made inevitable, by comments made and positions adopted by the defendants (or some of them) starting in February 2007 (if not earlier) that the criminal department which he headed would have to close. The context of this was that, as I understand to be common ground, the criminal department in the nine months to 31 January 2007 had made a net profit of only £8,000, a figure which made no allowance for the profit shares of Mr Walsh-Atkins and Mr Bailey. The defendants' position about this was that, viewed against its historic performance, the continued existence of the criminal department was and would continue to be hugely detrimental to the overall profitability of the firm and therefore that the firm should not continue to invest in criminal work. Mr Bailey, by contrast, was of the view that the department's fortunes would improve and that it could be made profitable once again. He points to the fact that, at one stage at least, the department had been very profitable. An important factor in all of this was a contract between the firm and Legal Services Commission (“the LSC”) whereby the LSC funded a large proportion of the work of the criminal department. By March/April 2007 the contract yielded about £750,000 of the firm's annual income and was essential to the continued operation of the criminal department. At all events the firm's decision, opposed by Mr Bailey, to give notice to the LSC terminating the firm's contract with that organisation carried with it a decision to terminate the criminal department. That crystallised what he asserts was the defendants' repudiation of his partnership with them. He contends that his action in moving to Tuckers was by way of mitigation of his loss resulting from the defendants' repudiatory conduct.
The wider background
In order to set in context the application which is now before me I must set out some of the wider background to the dispute.
It appears that, viewing as inevitable the decision of his co-partners to terminate the firm's criminal practice (even though, formally, the decision to do so by cancelling the LSC contract was not resolved upon until, as I have mentioned, the partners' meeting early on 23 March 2007), Mr Bailey had begun in early 2007 to look around to see if he could join another suitable firm and take with him some or all of the others in TWP's criminal department.
To this end he entered into negotiations with representatives of Tuckers, in particular a Mr Brian Craig who was Tuckers' business manager and also Mr James Turner, a partner in that firm. It appears that contact had been made by them with Mr Bailey by mid-February 2007. Tuckers were interested in acquiring the criminal department of TWP provided Mr Bailey and Mr Walsh-Atkins joined Tuckers as well. Matters progressed to a point where two of the partners of Tuckers actually visited Carvers' premises, apparently without the knowledge of the defendants. According to the note which Mr Craig prepared of a meeting held on 20 February 2007 involving himself, two of his Tuckers' colleagues, Mr Bailey and Mr Walsh-Atkins, the discussion had progressed to matters such as the TUPE regulations, who was in the criminal department, existing levels of remuneration within the department, what notice Mr Bailey and Mr Walsh-Atkins would have to give TWP and how the files (of the department) would be transferred.
On 21 March 2007 there was a meeting between Mr Bailey, Mr Walsh-Atkins, Mr Craig and Mr Turner. According to a witness statement of Mr Craig (whom Mr Bailey intends calling at the trial) the meeting “sought to iron out the respective roles of each of those present as well as to consider what issues would arise in the event of Tuckers taking Carvers over and/or the ramifications of...
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