David Rubin v Wharf Land Investments Ltd and Another
| Jurisdiction | England & Wales |
| Judge | Mr Justice Barling |
| Judgment Date | 26 June 2015 |
| Neutral Citation | [2015] EWHC 2999 (Ch) |
| Docket Number | Case No: 17042012 |
| Court | Chancery Division |
| Date | 26 June 2015 |
[2015] EWHC 2999 (CH)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
IN THE MATTER OF SANDFORD FARM PROPERTIES LIMITED (a company incorporated under the laws of Jersey)
The Rolls Building
7 Rolls Buildings
Fetter Lane
London, EC4A 1NL
The Honourable Mr Justice Barling
Case No: 17042012
Mr Gregory Banner (instructed by Wallace LLP) appeared on behalf of the Claimant
Mr Laurence Page (instructed by Jeffrey Green Russell) appeared on behalf of the Defendant
This is an application by the liquidator of Sandford Farm Properties Limited ("the Company") to broaden what is known as the "Confidentiality Club", that is the class of persons to whom the liquidator is permitted to disclose information and documents obtained by him pursuant to an order under section 236 of the Insolvency Act 1986. The original disclosure permission, to which I will refer in due course, was obtained in respect of an assignee of a specific cause of action, the assignment having been made by the liquidator. The present application is to broaden the scope of the disclosure to include a different assignee, there having been a second assignment.
The Company was an investment vehicle promoted in 2005 by Mr Douglas Maggs, the second-named respondent to the application, and others to acquire land at Sandford Farm near Reading. In this application both the respondents are represented by Mr Lawrence Page and the applicant liquidator is represented by Mr Gregory Banner.
The investment plan was, speaking in very general terms, to acquire planning permission in respect of Sandford Farm and then sell the property with the benefit of that permission at a profit. The property was acquired in November 2005 for about £12.5 million and the purchase price was a mixture of investment monies as to some £5 million, the remainder being borrowed from a bank. The Company had, so I am told, Jersey-based professional directors.
On 8 November 2005 it entered into a property management agreement with the first respondent, Wharf Land Investments Limited ("Wharf"). Mr Maggs was a director of Wharf and it appears that, effectively, the Company was run under Wharf's directions, those directions simply being (and I do not mean this pejoratively) rubber-stamped by the Jersey directors.
The plan to obtain planning permission was not successful, and on the 1 November 2007 the Company refinanced its lending with a c.£15 million facility with Abbey National Treasury Services Limited ("Abbey"). By June 2009, the Company had no more money and planning permission was still not forthcoming. At that stage Wharf presented a winding up petition against the Company. This, in turn, triggered Abbey's appointment of a Law of Property Act receiver over Sandford Farm. Later that month, June 2009, the whole property was sold by the receiver to a company called Woodley Properties Limited ("Woodley"), in which Mr Maggs was a shareholder. The sale price was c.£15 million, a sum advanced to the purchasing company by Abbey. A few months after that, in November 2009, planning permission was obtained, the sale to Woodley being completed in December that year. In September the following year Woodley sold part of the farm for some £27 million to Taylor Wimpey.
It is common ground that the investors in the Company received nothing and in 2010 one of those investors, a company called Ludsin Overseas Limited ("Ludsin") commenced proceedings against Mr Maggs and Wharf amongst others. In those proceedings there was a nine-day trial before Ms Vivien Rose, sitting as a Deputy Judge of the High Court. The learned Deputy Judge (as she then was) gave judgment in July 2012, finding that Mr Maggs and Wharf were liable to Ludsin in deceit in the sum of approximately £1.75 million. The Court of Appeal subsequently upheld her decision.
The applicant was appointed liquidator of the Company in Jersey in April 2010, and in May 2010 Ludsin took an assignment from the liquidator of some of the claims which were vested in the Company. Under the terms of that assignment, the Company is entitled to a 15 per cent share in any recovery made by Ludsin. On 14 December 2012, Mr Peter Leaver QC, sitting in the Companies Court as a Deputy Judge of the High Court, made an order about which there has been considerable discussion in the course of this application. I will call that "the Leaver Order". There were some formal parts of the Leaver Order, including recognition of the applicant as the liquidator of the Company in England and Wales, and it also provided for a private examination of Mr Maggs under section 236 of the Insolvency Act 1986. The provision that was made in respect of that private examination was very specific in terms of the categories of documents and the nature of the issues which Mr Maggs was required to produce and to be examined on respectively.
Another issue which arose before Mr Peter Leaver QC on that occasion was the question of the disclosure of the product of the private examination to the assignee, Ludsin. At the hearing before Mr Leaver, Mr Maggs and Wharf were represented by counsel and solicitors. I am told, and I understand this is not in dispute, that the issue was contested, both as to the ordering of a private examination and the disclosure to the assignee. In the event the matter did not have to be decided, and there was no decision as such by Mr Leaver, although it is indicated in the papers before me that he may have expressed a strong view about what the result would be. The parties negotiated the terms of an order which, when it came to be made by the court, was stated to be by consent insofar as matters relevant to this application are concerned.
As well as ordering the private examination, the effect of the Leaver Order was to require the disclosure by the liquidator of the product of that private examination to Ludsin and its legal advisors on terms that they gave specified undertakings. Generally, the undertakings that had to be given by the assignee were that they would:
"…hold and use all such documentation and information in confidence for the benefit of the Company such that the terms upon which Ludsin and Pavel Lisitsin holds or uses such documentation and information are no different to the terms upon which the Applicant holds or would hold such documentation or information, save as otherwise ordered by the Court."
The order also provided that there should be liberty to the parties to apply without change of circumstances.
I can now pass to some events which took place in the following year, 2013, to which reference has been made. There was, it appears, an approach by solicitors acting for Mr Maggs and others to the solicitors acting for, as I understand it, the liquidator and/or the assignee. The approach was to sound out the assignee and the liquidator as to whether they would be interested in settling various proceedings which were then either contemplated or on foot. This occurred at a time after the Court of Appeal had upheld the judgment of Ms Vivien Rose. I have been shown an email which was part of what was then a without prejudice exchange of correspondence between those parties on 8 May 2013. The existence of that correspondence was first referred to by Mr Maggs in his evidence filed for the purposes of this application. The without prejudice nature of it was therefore waived.
The email is addressed by the solicitor for the liquidator and/or the assignee, Mr David Judah, to Mr Philip Cohen, who was acting on behalf of Mr Maggs:
"Dear Philip
I refer to our various telephone conversations. As mentioned to you we are prepared to consider a proposal from Douglas Maggs and/or Charles Balfour to settle either Ludsin's existing claim (including the outstanding claim for costs which are yet to be assessed) or a global settlement involving also all outstanding claims of SFPL. You are aware of the existing claim against Wharf Land and Douglas Maggs in relation to the Ultramarine, Hook and Riminey claimants and the loan to Douglas Maggs. I have also mentioned to you the outstanding proprietary claim which has not yet been issued. As request I attach a copy of the draft Particulars of Claim prepared by Gregory Banner. Since these were drafted approximately two years ago significant further documentation and information have come to light and, as you know, we now have the findings of fraud against Messrs Maggs, Balfour and of course Wharf Land. We have instructed Counsel to re-draft the Particulars of Claim in light of the additional existing information and, as you know, the Liquidators enquiries in the Companies Court are still outstanding and Mr Maggs is yet to be examined in Court. We anticipate that toe claim will be expanded to bring in Messrs Maggs, Mellor and Balfour as parties to the proceedings. On the basis that, according to our calculations, Messrs Maggs, Mellor and Balfour have already received significant sums out of SFPL (from the original undisclosed turn, during the project and through Woodley Properties) which we estimate to amount to £15 Million and given that Woodley retains half the land at Sandford Farm and an entitlement to receive an overage payment from Taylor Wimpey (which you told me you estimated would amount to in excess of £6 Million in 2016) the value to the proprietary claim and any connected tracing action is, of course, very significant.
If your clients have a proposal to put forward to settle all outstanding claims by means of a substantial cash payment then please let me...
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