Caroline Teresa Adams and Others v Allen & Overy and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Foskett |
| Judgment Date | 11 July 2013 |
| Neutral Citation | [2013] EWHC 4735 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: CH/2013/0180 |
| Date | 11 July 2013 |
[2013] EWHC 4735 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
7 Rolls Building
Fetter Lane
London EC4A 1NL
Mr Justice Foskett
Case No: CH/2013/0180
Mr David Turner QC appeared on behalf of the Claimants
Mr John McGhee QC appeared on behalf of the First Defendant
Mr Scott Allen appeared on behalf of the second and Third Defendants
Approved Judgment
This appeal is from an order made by Master Price on 5 March following the CMC held on 28 February. He reserved his decision on two issues, one of which leads to this appeal. He gave a detailed judgment on both issues. The order he made in relation to the other issue was also at one stage the subject of this appeal, but that matter has now been resolved. The focus of the appeal is upon what has been labelled "the expert issue". I will describe the background to that issue shortly. In doing so, I will adopt the procedure of calling the First Claimant 'C1' and the First Defendant 'D1' and so on.
Master Price has given permission to appeal in respect of this issue, saying that a point of principle arises and a different view from the view he took was possible. Although he has given permission to appeal on that basis, the decision he made was a discretionary case management decision and, accordingly, the approach summarised by Moses LJ in Walbrook Trustees (Jersey) Limited & Ors v Fattal & Ors [2008] EWCA civ 427 at paragraph 33 applies:
"These were case management decisions. I do not need to cite authority for the obvious proposition that an appellate court should not interfere with case management decisions by a judge who has applied the correct principles and who has taken into account matters which should be taken into account and left out of account, matters which are irrelevant. Unless the court is satisfied that the decision is so plainly wrong that it must be regarded as outside the generous ambit of the discretion entrusted to the judge."
The Claimants, who were the unsuccessful parties on the issue that is the subject of this appeal, advanced the same arguments as those advanced before the Master, with the addition of one further argument not advanced previously, namely that the Master did not have the power under CPR Part 35.4(3) to make the order he did. It may be helpful to set out that provision at the outset before returning to the issues that arise specifically in this case. So far as is material, at the time of the master's decision, CPR part 35.4 provided as follows:
"(1) No party may call an expert or put in evidence an expert's report without the court's permission.
(2) When parties apply for permission they must identify–
(a) the field in which expert evidence is required and;
(b) where practicable, the name of the proposed expert.
(3) If permission is granted it shall be in relation only to the expert named or the field identified under paragraph (2) …"
The nature of the substantive dispute in this case can be summarised in this way: in 1997, C1 was the owner of land near Milton Keynes which was likely to be granted planning permission for residential development. She negotiated an agreement with a land trader called JJ Gallagher concerning the land in July 1997. D1 were her solicitors at the time and D2 were chartered surveyors who advised her in relation to the agreement.
The agreement contained a formula by which the price to be paid to C1 by the land trader was to be calculated, as well as specifying various mechanisms by which the price could be determined if the parties could not agree on the figures to be incorporated in the formula. Under the agreement, the land trader was to pay C1 a deposit of £1.375 million immediately and then, once planning permission had been obtained, a top-up payment of 50% of the net value of the land, less the deposit already paid. In other words, the whole arrangement involved the payment of an uplift, or "overage" payment of 50% of the open market value ('OMV') of the land subject to the deduction of the deposit. The agreement also contained a definition of the net value of the land.
I need not trouble for present purposes with more detail concerning the agreement. Suffice it to say that C1's case against D1 and D2 is that the agreement was defective in a number of respects, one particular respect being that it enabled the purchaser to have the OMV of the land determined by a tender process in the context of which the purchaser had the option to match the highest tender. The allegation is that this was not the basis upon which the true OMV could be obtained and, accordingly, that the sum actually received under the top-up payment provision, namely, a little over £23 million was less than ought to have been received. C1's case is supported by C2 and C3, the trustees of a settlement in favour of C1's two grandchildren, who are said to be the effective beneficiaries of the monies due.
The alleged inadequate sum was agreed in July 2006. D3, which is the same firm as D2, albeit containing different partners by the material time and thus sued separately, produced a report dated 31 May 2002 in respect of the strategy for negotiating and obtaining the top-up payment under the agreement. However, it is alleged that the report was defective and that this contributed to the Claimants' loss. For shorthand purposes, henceforth, I will refer to these two defendants as D2/D3.
It is obvious from that short statement of the primary nature of the dispute that if liability is established, the quantum of damages will fall to be assessed by reference to the lost opportunity of achieving a top-up payment based upon the alleged "true" OMV at the relevant time rather than, as alleged, the artificially low OMV. It is equally clear that that issue could be resolved only on the basis of expert evidence concerning the true OMV at the material time. The relevant date for assessing such a value is, on one view, August 2006 or thereabouts, and on another, sometime in 2007.
In order to explain the background to the issue raised in this appeal, it is necessary to trace the history of the action so far and the steps taken prior to the litigation entering its present contested phase. The first active step taken on behalf of the Claimants was for their solicitors, Messrs Lawrence Hamblin, to write pre-action protocol letters to D1 and D2/D3. Those letters were sent on 14 March 2008.
What was suggested in those letters was that the best general indication of the amount of the claim was that the Claimants lost the opportunity of obtaining something a little in excess of £45 million. Because of concerns about limitation the claim form was issued a few days later on 19 March 2008. It follows that the normal pre-action steps were not taken before the issue of proceedings. However, no further substantive steps were taken in the proceedings until the normal pre-action steps had been carried out.
It was not until January 2012 that the Particulars of Claim were served and it was then that what I have termed "the active phase of the litigation" commenced. For the purposes of the issue before me, it is important to see what occurred between the first pre-action protocol letters and the service of the original Particulars of Claim. Very detailed letters of claim were sent on 26 November 2008 to all defendants. In relation to the amount of the loss claimed, it was suggested that the OMV of the land at the material time was £71 million, which, when incorporated into the formula provided for in the agreement, would have yielded a top-up payment of just over £34 million resulting in a loss of about £11 million by reference to the payment actually agreed, a loss that fell to be increased, it was said, because the actual payment received was paid in three instalments over two years whereas an agreement that did not bear the alleged defects that the agreement possessed would have resulted in the sum being paid immediately.
The basis for the valuation of the OMV at £71 million was a "preliminary" report of Mr Steven Smith, the senior partner of Haslams, chartered surveyors based in Reading. That report was dated 13 November 2008 and ran to some 31 pages excluding the appendices, running to some 30 pages. It contained a statement of truth and was said by Mr Smith to be CPR-compliant.
There was then an understandably lengthy delay whilst the claims were investigated on behalf of the defendants and the proceedings were held in abeyance. Presumably by some kind of agreement, rather than simply as a result of coincidence, the defendants' respective solicitors replied to the letters of claim on the same date, 21 January 2010. Each refuted the allegations of negligence, but the solicitors acting on behalf of D1 suggested that if the agreement was defective, that was something for which the surveyors, D2, were responsible. However, so far as the question of loss was concerned, each took issue with the quantification set out in the letter of claim and with Mr Smith's analysis.
D1 had commissioned its own expert report from Mr Brian Buckingham of Bidwells. His conclusion was that the land was worth £46 million on an OMV basis at the material time and if that was right, there would have been no loss because the sum payable under the agreement would have been no more than the sum actually paid. His report was disclosed with a letter...
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