Complete Facilities Solutions Ltd v Livingstone Consulting Ltd
| Jurisdiction | England & Wales |
| Judge | Master McQuail |
| Judgment Date | 14 March 2023 |
| Neutral Citation | [2023] EWHC 571 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: BL-2022-000400 |
[2023] EWHC 571 (Ch)
Master McQuail
Case No: BL-2022-000400
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Robert Ewing in person for the Claimant
Tom Nixon (instructed by Preston Turnbull LLP) for the Second Third and Fifth Defendants
Hearing date: 18 January 2023
Approved Judgment
This judgment was handed down remotely at 9.30 am on 14 March 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives
The Application
By application notice dated 29 June 2022, the second, third, and fifth defendants ( D2-3-5) seek to strike out this claim brought against them by Complete Facilities Solutions Ltd ( CFS), alternatively they ask for summary judgment.
CFS's claim was issued on 8 March 2022. The first defendant is Livingstone Consulting Limited ( Livingstone or LC). James Espin is the second defendant ( D2). Simon Wetherell is the third defendant ( D3). Christopher Vallis is the fourth defendant ( D4). Neil Bromley is the fifth defendant ( D5). Martin McColl Limited is the sixth defendant ( MCL).
At the material times MCL operated around 1000 retail premises across the United Kingdom. The premises periodically required reactive maintenance works, such as fixing electrical or plumbing issues.
Livingstone acted as a managing agent for MCL.
D2, D4 and D5 were at all material times directors of Livingstone.
D3 was formerly a consultant to, but at all material times a senior employee (but not a director) of, Livingstone.
The application is supported by witness statements all dated 28 June 2022 of Andrew Preston of Preston Turnbull who are D2-3-5's solicitors and by each of D2, D3 and D5.
CFS did not respond substantively to the application until, on 10 January 2023, Mr Robert Ewing, sole director of CFS, served upon D2-3-5 a Notice of Change of Legal Representative confirming that CFS's former solicitors had ceased to act, and that CFS would be acting in person. On 11 January 2023 Mr Ewing wrote to the Court requesting an adjournment. I refused that informal application. Mr Ewing renewed his application, having issued a form N244 supported by a witness statement signed by him, at the start of the hearing. I refused that application also. I noted, in particular, that it is Mr Ewing who signed the statement of truth verifying CFS's Particulars of Claim and Reply and therefore has knowledge of all the factual material on which the claim is based.
Exhibited to Mr Ewing's evidence in support of CFS's adjournment application was a statement of a Mr Clint DeSouza, a former regional facilities manager at Livingstone. The statement is dated 20 December 2021 and thus pre-dates the issue of the claim and therefore also D2-3-5's application. I permitted Mr Ewing to rely on its content at the hearing.
The witness statement of D2 sets out the history in some detail. D3 and D5's shorter witness statements agree with that which D2 says.
Background History
Livingstone and MCL entered into a contract dated 24 June 2020 ( the MCL Agreement). The scheme of the MCL Agreement was that (a) a third party maintenance contractor would accept maintenance jobs at MCL premises via MCL's Mpro5 web portal; (b) the works would be performed by the contractor at an agreed price; (c) the contractor would send Livingstone its invoices and work sheets recording the works performed; (d) Livingstone would collate those documents into batches and, roughly once per month, pass those documents on to MCL; (e) MCL would undertake a review in a joint meeting with Livingstone and approve or reject the invoices and work sheets; (f) Livingstone would inform the contractor of the approvals and the contractor would then provide Livingstone with consolidated invoices for approved works; (g) Livingstone would re-invoice MCL (adding on Livingstone's management fee); (h) MCL would pay Livingstone's invoices; and (i) once Livingstone had received funds from MCL, it would pay the contractor in respect of the corresponding invoices (retaining its management fee).
CFS was one of the contractors who performed maintenance works at MCL's premises. After a period of working pursuant to orally agreed terms, Livingstone and CFS entered into a written contract dated 17 February 2021 ( the Livingstone Agreement). At clause 1.1 of Schedule 4 the Livingstone Agreement states that:
“Livingstone shall pay all valid invoices for charges … on the day following payment by [MCL] of Livingstone's corresponding invoice under the Terms of the [MCL Agreement]”.
Thus Livingstone would be obliged to pay CFS shortly after it received payment for corresponding invoices from MCL. This arrangement is conveniently described as the obligation to “pay when paid”.
During 2021, MCL faced cash flow difficulties. MCL started to refuse to pay Livingstone in respect of works that CFS (and others) had performed. It is Livingstone's position that it was therefore not obliged to, could not and did not pay CFS.
MCL has since gone into administration. MCL was Livingstone's biggest client, and MCL owed Livingstone a total of £2.28m at the time it entered administration. Livingstone has recently gone into liquidation.
CFS's claim against Livingstone is for a total of £672,281.68 for maintenance jobs that it claims to have performed for MCL but for which it was not paid. The claim is brought primarily in debt. The claim is premised on, amongst other things, the assertion that Livingstone did not “pay when paid”. Livingstone defend the claim on the basis, amongst others, that it did “pay when paid”, but MCL stopped paying Livingstone.
CFS also brings a claim against MCL directly for the same sums based on an alleged direct contract. MCL's defence does not include any assertion that it has already paid Livingstone sums owed in respect of CFS's invoices.
In addition to the claims in contract against Livingstone and MCL, CFS also brings a claim against D2-3-5 (and D4) personally. The claim is not a contractual one; there was no contract with D2-3-5. The claim is put in various ways which D2-3-5 say should be variously struck out under CPR r3.4(2)(a)/(b) and/or the court's inherent jurisdiction or in respect of which summary judgment should be given pursuant to CPR 24.2(a)(i).
D2's evidence explains the difficulties that Livingstone had in dealing with MCL as MCL's cash flow problems increased. He says that MCL made spurious and unparticularised complaints about Livingstone in an attempt to avoid its contractual obligations. He says that at all material times, he and others at Livingstone worked to achieve a resolution that was for the benefit of CFS and the other contractors that were suffering as a result of MCL's insolvency. He says the reason why CFS was not paid is simply that MCL failed to pay Livingstone the relevant sums before going into administration and denies the allegations of personal wrongdoing.
The only witness evidence that possibly goes the other way are two brief extracts from Mr DeSouza's witness statement where he states: “I understand that [D5] would then hold back monies that should have gone to the Contractors” and “It was my understanding that MCL had paid LC in some of those cases.”. The source of Mr De Souza's understanding is not explained. CFS have not taken the opportunity to file any answer to the evidence of D2-3-5.
The Claims against D2-3-5
The Particulars of Claim ( PoC) are repetitive and contain unnecessary detail and narrative. The first eleven paragraphs recite the history and foreshadow the allegations to come. Included at paragraph 5 is the following:
“CFS was not a party to the MCL Agreement, was never aware of its alleged terms, and pending disclosure or witness statements, has no direct knowledge of the irregularities or conduct complained of on the part of LC, or the truth or accuracy of the alleged irregularities complained of on the part of LC.”
and at paragraph 11 the following:
“Pending, disclosure, admissions or trial, CFS cannot confirm who of MCL and or LC and or Mr Espin and or Mr Wetherall and or Mr Vallis and or Mr Bromley is telling the truth, or responsible for non-payment to CFS.”
It is alleged at paragraph 58(c) that D2-3-5:
“each procured, and or was directly responsible for, and or was sufficiently bound up in, the said misconduct and breaches identified above in paragraph 54 and paragraph 55 and paragraph 56, and or abrogated their responsibilities as directors to others (including each other) to decide or consider material matters in connection with the said actions and misconduct conduct [sic] and or breaches on the part of LC”.
Procuring breach of contract
Paragraph 54 sets out alleged contractual breaches of the Livingstone Agreement by Livingstone, primarily a failure to “pay when paid”, but also wrongful use of monies received from MCL to pay for overheads, and in operating a “system of deliberate overcharging [MCL]” and a failure to act honestly in good faith.
The paragraph 58 allegation so far as it relies on paragraph 54 seems to be one of procuring a breach of contract.
Deceit
Paragraph 56 alleges that:
“Further, or in the further alternative, LC made and continued and acted in breach of the said representations and assurances in paragraphs 26(b) and 32(b) above that CFS would be “paid when paid”, knowing them to be false, alternatively recklessly, and not caring whether they were true or false, with the intent that CFS should rely...
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