Barrowfen Properties Ltd v Girish Dahyabhai Patel
| Jurisdiction | England & Wales |
| Judge | Mr Justice Leech |
| Judgment Date | 03 February 2022 |
| Neutral Citation | [2022] EWHC 207 (Ch) |
| Docket Number | BL-2018-002028 |
| Court | Chancery Division |
[2022] EWHC 207 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
Mr Justice Leech
BL-2018-002028
Mr Jonathan Dawid (instructed by Withers LLP) appeared on behalf of the Claimant.
THE FIRST DEFENDANT appeared in person.
Mr Roger Stewart QC and Mr Joshua Folkard (instructed by Reynolds Porter Chamberlain LLP) appeared on behalf of the Second Defendant.
APPROVED JUDGMENT
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic
I. Introduction
In this judgment I refer in some detail to the judgment on liability, causation and quantum which I handed down on 21 July 2021 ( [2021] EWHC 2055 (Ch)). In this decision I will use the term the “ Judgment” to refer to it. It will also be necessary for me to refer to an earlier judgment dated 15 March 2021 ( [2021] EWHC 690 (Ch)) in the same proceedings dealing with the Second Defendant's application for permission to Re-Amend. I will use the term the “ Amendment Judgment” to distinguish it from the Judgment itself (which I handed down later). I also adopt the defined terms and abbreviations which I used in the Judgment and will therefore refer to the Second Defendant as “ S&B” for the remainder of this decision.
Mr Roger Stewart and Mr Joshua Folkard appeared on behalf of S&B (as they had done at trial). Mr Jonathan Dawid, who had not appeared at the trial, represented Barrowfen, the Claimant, on this occasion. Girish, the First Defendant, was present throughout both applications but did not ask to address me on any of the issues.
By Application Notice dated 7 January 2022 S&B seeks an order declaring that certain sections of the evidence served by Barrowfen on 28 October 2021 fall outside of the scope of the permission to adduce further evidence which I granted in the Judgment. In the Application Notice S&B advanced three grounds: (i) the evidence was irrelevant or sought to re-open matters which I had finally decided; (ii) Barrowfen was seeking to advance a new case on loss which it had decided not to pursue before trial and (iii) the admission of that evidence would cause undue delay, expense or oppression to S&B.
The evidence which S&B seeks to exclude included paragraphs 10, 11, 16 and 17 of the sixth witness statement of Mr Prashant Patel dated 28 October 2021 (“ Prashant 6”). S&B also seeks to exclude paragraphs 26 to 48 and 64 to 74 of the expert report of Mr Nick Powell dated 28 October 2021 (“ Powell 1”). S&B also objected to the scope of Mr Powell's instructions. I will use Mr Stewart's term “ Disputed Paragraphs” to refer collectively to the disputed parts of both Prashant 6 and Powell 1.
The evidence of Prashant and Mr Powell is relevant to an issue which arose at a late stage of the proceedings, namely, whether Barrowfen had to give credit for any additional profit which it had made by adopting and implementing the Revised Development Scheme. Based on the evidence of the expert valuers, I held that the Revised Development Scheme produced a developer's profit of £2,508,182 more than the Amended Original Development Scheme and that this was not a collateral benefit: see the Judgment, [654] to [677]. However, Barrowfen's case is that if account is taken of the future costs of financing the Revised Development Scheme (including the additional equity finance which Barrowfen received from Asian Agri), it made no profit.
Barrowfen did not accept that it was necessary to amend its case to rely on this factual and expert evidence. But by Application Notice dated 24 January 2022 it applied to Re-Re-Amend the Reply to plead that the additional cost of carrying out the Revised Development Scheme included the net present value of additional equity of £2,377,271 which was advanced by Asian Agri.
II. Procedural History
To address the issues which arise on this application, it is necessary for me to set out a selected procedural history of this issue. In the Judgment, Appendix 3 I set out a detailed procedural chronology: see [862] to [875]. I also set out the procedural chronology relevant to S&B's application to amend in the Amendment Judgment: see [10]. In this judgment I will try to avoid covering the same ground and will attempt to limit the history which I recite to those procedural steps which are directly relevant to my determination of both applications.
On 10 July 2020 Barrowfen served Amended Particulars of Claim. In addition to the lost income caused by the delay in the development of the Tooting Property, it also claimed “Lost developers' profit”. In answer to a request for further information, Barrowfen withdrew this claim and in the Re-Amended Particulars of Claim served on 3 November 2020 this claim was struck through.
S&B's Amendment Application
On 9 February 2021 S&B applied to Re-Amend to plead that Barrowfen had to give credit for the increased development value generated by the Revised Development Scheme and to adduce the supplementary report of Mr Clarke, its expert valuer. Mr Clarke had produced two development appraisals of the Tooting Property: the first on the assumption that Barrowfen had carried out and completed the Original Development Scheme by September 2016; and the second on the assumption that Barrowfen had carried out and completed the Revised Development Scheme by March 2021. Mr Clarke's evidence was that the Revised Development Scheme had generated a profit of £9,412,531 greater than the Original Development Scheme would have done (if it had been implemented).
The Amendment Judgment
On 15 March 2021 (Day 11 of the trial) I heard that application and delivered the Amendment Judgment (which I later revised and corrected for publication). Although the point was raised late, I held that the delay was a relatively short one and that there was a good explanation for it. I also held that S&B had a real prospect of success on the collateral benefit issue and that any prejudice to Barrowfen could be met by giving it the opportunity to adduce further evidence (including expert accountancy evidence) if the point arose: see the Amendment Judgment, [23]. Mr Stewart placed some reliance upon the way in which I expressed my views at sub-paragraphs [23](4) and (5) and I repeat them now:
“ (4) Expert accountancy evidence: Ms Hilliard also submitted that it would be necessary to obtain accountancy evidence about the present value of the future interest burden of the additional borrowing which Barrowfen had to take in order to complete the Revised Development Scheme. I am not satisfied that it would be impossible for the expert valuers to provide this evidence in their development appraisals and Mr Stewart took me to the relevant parts of Mr Clarke's development appraisals in which he had included finance costs. But even if it is necessary to obtain expert accountancy on this issue, this is not in my judgment a sufficient reason to justify refusing the amendment by itself. If the experts cannot deal with this issue, then it can be dealt with as part of the consequential matters following judgment. Parties often adduce evidence of their finance costs after judgment to justify a claim for interest, whether for statutory interest or interest as damages and, if necessary, I can direct an enquiry on this issue should it arise.
(5) Factual evidence: Finally, Ms Hilliard submitted that it would be necessary to call factual evidence on the negotiations with Barclays and in relation to the lost opportunity to re-invest. Again, I am not satisfied that this is a sufficient reason to disallow the amendment. It has been part of Barrowfen's case that it lost the opportunity to re-invest the rental income or the net rental income from the original development scheme since least 11 September 2020. If it wanted to call evidence on this issue, it should have done so to support its case. Moreover, as I have already stated above, I am not satisfied that factual evidence in relation to negotiation for Barclays has any real relevance to the capital value of the Tooting Property subject to the Revised Development Scheme. Nevertheless, if she does wish to adduce any further evidence in order to deal with these issues, I will permit her to do so.”
Immediately after I had given judgment, the following exchange took place between Ms Hilliard and me upon which S&B also places some reliance:
“Ms Hilliard, you've heard what I have to say about the evidence, but if you do feel it's necessary to call additional evidence or make additional disclosure, I will certainly not rule that out and I will give you benefit of the doubt…..DEPUTY JUDGE LEECH: As I said, it seems to me that the finance costs are something you may want to call — but it seems to me it's more likely to be a calculation than a full — blown expert's report and if it is a problem about netting off, you know, the — is what I call the marginal cost of — the additional interest that you're going to have to pay — MS HILLIARD: Yes. DEPUTY JUDGE LEECH: — it's something we could deal with it seems discretely at the end of the case. MS HILLIARD: I understand, my Lord.”
Barrowfen's Amendment Application
On 22 March 2021 Barrowfen served the supplemental report of its valuer, Mr Alford, replying to Mr Clarke's evidence and producing competing development appraisals of the Original Development Scheme, the Amended Original Development Scheme and the Revised Development Scheme at their respective completion dates. Mr Alford's evidence was that the developer's profit for the Revised Development Scheme was about the same as the profit for the Amended Original Development Scheme. (His appraisals produced a difference of no...
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Barrowfen Properties Ltd v Girish Dahyabhai Patel
...detail in a judgment dated 3 February 2022 dealing both with the amendment application and S&B's application to exclude evidence: see [2022] EWHC 207 (Ch). 5 I gave permission to Barrowfen to amend to plead the financial costs which it had incurred in relation to the Revised Development Sc......