Ensign House Ltd v Ensign House (FEC) Ltd

Hearing dates: 7–10, 14–18, 21–25, 28–30 November 2022 1, 12–14 December 2022, 10 May 2023

APPROVED JUDGMENT

This judgment was handed down remotely at 10.30 am on 27 June 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

Table of Contents

I. Introduction

A. The Parties

The Claimant is Ensign House Ltd (“ EHL”) and on 8 December 2014 it was incorporated in Jersey under company registration no. 117286. Its sole shareholder was JTC Corporate Services Ltd (“ JTC”) and it was incorporated or acquired by Mr John Downer as a special purpose vehicle for the purchase of Ensign House, 17 Admiral's Way, Canary Wharf, London E14 9XQ (“ Ensign House”). Its original directors were Mr Downer, Mr Stephen Whale, Ms Donna McCrorie and Mr Robert Monticelli (whose alternate was Mr Paul Weir). On 10 August 2015 Mr Darren English was appointed to be a director and on 1 September 2016 Ms Linda Garnier was also appointed as a director. On 17 September 2019 Mr Downer resigned and on 8 July 2019 all of the remaining directors were removed (apart from Mr English who had already resigned). The current directors of EHL are Mr Roger Lal, an accountant, and Ms Caron Ann Bennett.

Mr Downer described himself in evidence as a property developer with over 25 years' experience in property acquisition and development. He is (and was) the founder, beneficial owner and chief executive of a number of companies operating under the name “ Investin” or “ Investin PLC” although Investin has no formal group structure or parent company. In practice, Mr Downer formed a new company for each of his projects and the shares were either held by him or by JTC on his behalf. Mr Downer was resident in Monaco for most (if not all) of the time during which the events giving rise to this claim took place. He gave evidence that he was the beneficial owner of EHL and that he controlled the company.

Mr Downer also used the services of a company called Countrywide Project Management Ltd (“ Countrywide”) to provide legal, financial and other management services. Mr Lal and Ms Bennett (above) were both directors of Countrywide and Mr Jon Burgwin (who was a close colleague and acted as a director of a number of Investin companies) was also a director. On 15 December 2017 Ms Lisa McGinn, who was formerly employed as a solicitor at Browne Jacobson LLP (“ Browne Jacobson”), also became the legal director of Countrywide. In this judgment I will use the umbrella term “ Investin” to refer to all of Mr Downer's Investin companies or to their management (including Countrywide) unless it is necessary for me to identify the actions taken by a specific Investin company or the knowledge or state of mind to be attributed to it.

In 2012 Mr Downer was introduced to the Fourth Defendant, Mr Terence Alford, who was a property agent and introducer. Mr Alford was closely involved in the acquisition of a neighbouring property, Quay House, 2 Admiral's Way London E14 9XG (“ Quay House”) and in negotiations to take an option or options over the various interests in Ensign House. There were a number of important issues between the parties about the nature and scope of Mr Alford's retainer, when or whether it came to an end and whether it imposed fiduciary duties upon him. But Mr Alford himself, who is now resident in Vietnam, played no part in the trial and did not give evidence. On 28 March 2022 Deputy Master Rhys made an unless order against Mr Alford in relation to the disclosure of certain bank statements, he failed to comply with that order and as a result his defence was struck out and he was debarred from defending the claim. In the event, EHL obtained copies of his bank statements by making an application for third party disclosure.

The Far East Consortium (“ FEC”) is an international group of property development companies owned or controlled by the Far East Consortium International Ltd (“ FEC International”) of which Mr David Chiu is the Chairman and Chief Executive. The Second Defendant, FEC Development Management Ltd (“ FEC UK”), was incorporated in England and Wales on 20 February 2014 and it also forms part of the FEC group. The Third Defendant, Mr John Connolly, was the head of UK development and a director of FEC UK. On 10 October 2019 FEC UK formed the First Defendant, Ensign House (FEC) Ltd (“ EHFL”), and Mr Connolly became a director of that company too. In about 2014 FEC separated its hotel arm from its development arm and incorporated Dorsett Hospitality International Ltd (“ Dorsett”) to hold its hotel business. FEC International was listed on the Hong Kong Stock Exchange between 2010 and 2015. I will use the umbrella term “ FEC” to refer to the group or its management (including FEC UK, EHFL and Dorsett) unless it is necessary for me to identify the actions taken by a specific FEC company or the knowledge or state of mind to be attributed to it.

On 19 January 2019 EHL and FEC UK entered into a non-disclosure agreement. I was taken to a number of non-disclosure agreements in the course of the trial and I will refer to such an agreement by the generic term “ NDA”. Where I refer to “ the NDA” in this judgment I intend to refer to the agreement dated 19 January 2019 (unless the context dictates otherwise). I will have to consider the construction and effect of the NDA in some detail but, for present purposes, it is enough to record that EHL's claims in this action arise out of the alleged misuse of confidential information and the alleged misconduct of Mr Alford. EHFL also made a counterclaim against EHL in relation to the registration of a restriction under Rule 93 of the Land Registration Rules 2003 which was compromised during the trial.

Ms Joanne Wicks KC and Mr Lee Jia Wei appeared for EHL at trial instructed by Spector Constant & Williams Ltd (“ SCW”). Mr Jonathan Seitler KC, Mr Benjamin Faulkner and Ms Francesca Mitchell appeared for the three Defendants (apart from Mr Alford) instructed by DLA Piper UK LLP (“ DLA”). Ms Wicks presented the case for EHL and Mr Seitler presented the factual case for EHFL, FEC UK and Mr Connolly. Mr Faulkner presented their case on the valuation issues and made closing submissions on remedies.

I am grateful to counsel and their instructing solicitors for the quality of their written and oral submissions and the assistance which they gave the Court. I should record that this trial was noticeable for the good humour and co-operation on both sides, which can often be lacking in long trials where serious allegations are made and much is at stake. Where I refer to counsel's submissions below, I do so as shorthand and recognising that those submissions were the product of a great deal of hard work by their entire teams. I also use the shorthand “ Defendants” to refer to EHFL, FEC UK and Mr Connolly (unless I specifically refer to Mr Alford) because they were the only active Defendants.

B. Ensign House

Ensign House is a six storey office building and during the period with which this judgment is concerned it contained 18 separate office units to which the parties referred (and I will refer) as “ Suites”. I will also refer to their owners as “ Suiteholders”. The property is located immediately adjacent to Quay House and both form part of the Waterside estate (the “ Waterside Estate”) in the London Borough of Tower Hamlets (“ Tower Hamlets LBC”), which was the relevant planning authority.

In 2014 the Waterside Estate consisted of a four acre site overlooking Canary Wharf and Marsh Wall within the Isle of Dogs and included a number of other buildings (one of which was called Beaufort Court). The Docklands Light Railway lies immediately to the west of Quay House and wraps...