Cheltenham and Gloucester Building Society v Ricketts and Others
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE NEILL,LORD JUSTICE MANN,LORD JUSTICE PETER GIBSON |
| Judgment Date | 07 April 1993 |
| Judgment citation (vLex) | [1993] EWCA Civ J0407-2 |
| Docket Number | QBENI 92/0514/E |
| Court | Court of Appeal (Civil Division) |
| Date | 07 April 1993 |
[1993] EWCA Civ J0407-2
(Sir Peter Pain)
Before: Lord Justice Neill Lord Justice Mann and Lord Justice Peter Gibson
QBENI 92/0514/E
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
MR. S. GEE (instructed by Messrs Stephenson Harwood, 1 St Paul's Churchyard, London EC4) appeared on behalf of the Appellant (Plaintiff)
MR. G. VOS (instructed by Messrs Theodore Goddard, 150 Aldersgate Street, London EC1A 4EJ) appeared on behalf of the Respondents (Defendants)
Wednesday 7th April 1993
On 29 November 1989 Mr. Mark Ricketts applied to the Cheltenham and Gloucester Building Society (then the Portsmouth Building Society) for a mortgage to be secured on 16 Eton Road, NW3. In January 1990 applications for mortgages were received by the Building Society in respect of flats in Prince Albert Road N.W. The proposed mortgagors in respect of the three flats were Mr. Sullivan, Mr. A. Caya and Miss Wood, and Mr. D. Caya. In each of the three applications in respect of the flats in Prince Albert Road the selling agents were stated to be Stylegrade Ltd. (a company of which Mr. Mark Ricketts is the sole director) and Mr. Mark Ricketts was named as the person with whom a valuer should make contact to arrange access to the property.
On 16 August 1990 the Building Society applied ex parte for an injunction against Mr. Ricketts and also against his brother Mr. Michael Ricketts, and against Mr. John Creasey, a former employee of the Building Society, and Stylegrade Ltd. The application was supported by an affidavit sworn by Mr. Iain Brown, the head of the internal audit department of the Building Society. He stated that he had received information from Chief Inspector Brian Wallace of the Fraud Squad that a possible mortgage fraud had been perpetrated by two firms of financial brokers and by Mr. Creasey. The affidavit contained allegations to the effect that Mr. Ricketts and Stylegrade were involved in the fraud. It was suggested that it could be inferred that "Mr. Caya" might be a mere alias for Mr. Ricketts. The allegations of fraud were not particularized. It was said in paragraph 8 of the affidavit that the society's investigations were not complete but that it was believed that a very serious fraud had been committed and that the Building Society might have lost between one and two million pounds. The nature of the alleged fraud was that moneys had been obtained from the Building Society by the overvaluation of properties.
In paragraph 7 of his affidavit Mr. Brown stated that he had been informed by Mr. Wallace that in a search of the premises believed to be owned by Mark Ricketts documents relating to a Canadian bank account in the name of Caya had been found. In paragraph 10 and 11 of his affidavit Mr. Brown referred to information obtained from the police which appeared to show that a sum of £200,000 had been transferred to the account of Stylegrade Ltd. on 27 December 1989 and that this payment was linked with the mortgage on 16 Eton Road. In paragraph 13 of his affidavit Mr. Brown continued:
"… While its investigations are not complete, and it has not seen most of the documents in the possession of the police, the Society is extremely concerned that any assets which are held by these defendants and in particular the monies held in the Barclays accounts and in Canada, may be dissipated if it delays in seeking injunctive relief."
The application was heard by Mr. Justice Morland in Chambers. He made an order against each of the defendants other than Mr. Creasey in the Mareva form and also an order against each of the defendants restraining them from dealing with or disposing of any assets which were derived or partly derived from monies advanced by the Building Society. The order contained other provisions to which it is not necessary to refer. It is necessary, however, to record that the order contained an undertaking given by the Building Society in these terms:
"To abide by any order which this court may make as to damages in case this court shall be of the opinion that the defendants or either of them or any innocent third party shall have suffered any by reason of this order which the plaintiffs ought to pay."
Some months then passed. In December 1990 Mr. Ricketts and Stylegrade applied to discharge the injunctions. This application came before Sir Peter Pain sitting as a judge of the High Court on 23 January 1991. He had before him four affidavits from Mr. Ricketts and two affidavits from his solicitors and also further affidavits sworn on behalf of the Building Society. Having heard argument Sir Peter Pain discharged the injunctions. In addition, as it subsequently transpired, he made an order in the exercise of his discretion that there should be an enquiry as to any damages which Mr. Ricketts or Stylegrade might have suffered by reason of the grant of the ex parte injunctions in August 1990. It is to be noted, however, that at that stage the order did not refer expressly to any enquiry but included directions as to pleadings and discovery "in relation to the plaintiff's liability (if any) upon its undertaking in damages given by it to the Court on 16 August 1990."
Following the discharge of the injunctions there was correspondence between the solicitors acting for the parties as to the effect of the judge's order. At one time it appeared that the parties had reached an agreement on the basis that the judge's order meant that the only matter in issue on the hearing of the enquiry would be the question of quantum. Later, however, after the Building Society had instructed new solicitors, the parties ceased to be in agreement as to the effect of the January 1991 order. In the result the matter came back before Sir Peter Pain in March 1992 under the slip rule in order that he could clarify the meaning and effect of the order which he had made in January 1991. By that stage the Building Society had obtained many more documents and wished to advance further arguments before Sir Peter Pain in support of the contention that no final decision had been reached in January 1991 as to whether an enquiry should take place.
After hearing argument Sir Peter Pain ordered the amendment of his original order so as to make it clear that he had exercised his discretion and had ordered that there should be an enquiry as to the damages, if any, which Mr. Ricketts and Stylegrade had suffered. He declined to look at the further documents put before him except on a de bene esse basis. Following the amendment paragraph 3 of the order dated 23 January 1991 provided as follows:
"(1) The first and fourth defendants be entitled to enforce the plaintiff's cross undertaking in damages in paragraph (4) of the order of Morland J. Dated 16 August 1990.
(2) The following directions be given in respect of the determination of the issue of what damages (if any) the first and fourth defendants have suffered by reason of the order of Morland J. Dated 16 August 1990:
…………"
At the same time Sir Peter Pain made certain other orders to which it is not necessary to refer save that he refused an application on behalf of the Building Society for security for costs in the enquiry proceedings from Mr. Ricketts and Stylegrade Ltd. He refused leave to appeal.
On 7 May 1992 Staughton L.J. granted the Building Society leave to appeal against Sir Peter Pain's order dated 23 January 1991 (as amended) and referred to the full court a number of other applications by the Building Society for leave to appeal. Staughton L.J. refused leave to appeal against that part of Sir Peter Pain's order whereby he dismissed the Building Society's application for security for costs from Mr. Ricketts.
The enquiry proceedings are due to be heard immediately after the trial of the main action.
I propose to deal first with the appeal brought by leave of Staughton L.J. against paragraph 3 of Sir Peter Pain's order dated 23 January 1991 (as amended) whereby he ordered an enquiry as to damages.
It is to be noted that there is no appeal against his discharge of the injunctions, that is, the Mareva injunction and the injunction in relation to sums derived from the Building Society. It is also to be noted that the Building Society have not made any further applications for injunctive relief despite the fact that they now have in their possession a substantial amount of further material.
Mr. Gee on behalf of the Building Society has sought to persuade us that we should consider all the material which is now available to the Building Society in support of their allegations that Mr. Ricketts has been guilty of fraud. It is to be noted, however, that the action between the Building Society and the defendants is due to be heard at the beginning of next term. In that action the Building Society's case will be fully deployed and the defendants will have an opportunity to refute it. It seems to me therefore to be most undesirable that this court should embark on any enquiry as to the merits of the case of fraud unless it is absolutely necessary to do so. We have therefore declined to examine the further documents.
When granting an injunction of an interlocutory nature it is the usual practice of the Court to require the plaintiff to give an undertaking as to damages. The use of the word "damages" is perhaps inappropriate because it might suggest that the grant of the injunction involved a breach of some legal or equitable...
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