Erika Jeep Morris v Ian Paul Hatch
| Jurisdiction | England & Wales |
| Judge | HHJ Paul Matthews |
| Judgment Date | 19 June 2017 |
| Neutral Citation | [2017] EWHC 1448 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: C30BS842 |
| Date | 19 June 2017 |
[2017] EWHC 1448 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
BRISTOL DISTRICT REGISTRY
Bristol Civil Justice Centre
2 Redcliff Street, Bristol, BS1 6GR
HHJ Paul Matthews
(sitting as a Judge of the High Court)
Case No: C30BS842
Richard Anderton (instructed by Clyde & Co) for the Applicant
Brittany Pearce (instructed by Pride Solicitors Ltd) for the Claimant/Respondent
The Defendant did not appear and was not represented
Hearing date: 16 June 2017
Judgment Approved
Introduction
On 16 June 2017 I heard and dismissed an application by Mr Raymond Hayes to set aside a witness summons dated 23 May 2017 that had been served upon him, requiring him to attend the trial of this claim, which is listed for 20 and 21 June 2017 here in Bristol. I did however vary the summons so that he was required to attend only at 2pm on 20 June 2017. At the hearing Richard Anderton of counsel appeared for Mr Hayes, and Brittany Pearce appeared for the claimant. (I should say that neither is instructed in relation to the trial.) At the time when I dismissed the application, I said I would give my reasons for the decision later. These are those reasons.
The claim
The application is made in the context of a claim by the claimant to recover £250,000 from the defendant, said to have been lent by the claimant to the defendant on or about 19 May 2013 by cheque cashed on 22 May 2013. The claim form was issued on 23 June 2016, accompanied by detailed particulars of claim. A defence was filed on 12 July 2016, accepting that the sum of £250,000 had been paid, but denying that it was a loan, and asserting it was a gift. It was also alleged that the claimant had on 26 May 2013 signed a document, prepared by her, acknowledging that she had made a gift and not a loan to the defendant. The claimant subsequently filed an undated reply joining issue on the question whether the payment was a loan or a gift, alleging that the document of 26 May was prepared by the defendant rather than the claimant, and alleging it was "was procured by trickery or erroneous advice". But the central issue in the case is the question of "gift or loan", and it will have to be resolved by the oral evidence of the persons involved, coupled with the relatively few documents which bear on the question.
The witness summons
The witness summons in question was issued at the instance of the claimant on 23 May 2017, directed to Mr Hayes. He was the solicitor who acted for the defendant in the purchase of a house at 33 St Dunstan's Road, Salcombe, Devon in August 2013. It appears that the purchase price was £280,000, and that the £250,000 received from the claimant was used in part-payment. In addition, the defendant secured a loan on mortgage of the property from HSBC bank for £40,000, the extra £10,000 apparently covering taxes and costs.
The witness summons required Mr Hayes, first, to produce to the court the conveyancing file for the purchase and mortgage of the property in Salcombe, and second, to give oral evidence at the trial. It will be seen at once that Mr Hayes, assuming that he has relevant evidence to give, would be a most important witness in resolving the factual issues at the heart of this case. He is, after all, not only not one of the parties, and so has no interest in the litigation to protect, but he is also a professional of long standing, used to taking care in transactions, in following rules, making appropriate records, and (hopefully) recalling accurately what was said to him by his own client and others involved.
It appears that, on 23 May 2017, the defendant wrote to Mr Hayes giving him permission to release a copy of the conveyancing file to Michelmores LLP, the defendant's solicitors. It further appears that the file was produced to Michelmores by email on the 25 May 2017, and was then sent again to them on 31 May 2017. I understand that that file has since been disclosed and produced to the claimant's solicitors, so that any privilege in its contents has been waived. Mr Anderton, for Mr Hayes, accepted as much at the hearing before me. That waiver will also extend to oral evidence about the conveyancing transaction, at least so far as the defendant is concerned. I have not heard any argument in relation to the position of the mortgagee for whom Mr Hayes also acted.
The application to set aside
Mr Hayes' application notice was issued on 31 May 2017 for an order to set aside the summons. It was supported by Mr Hayes' own witness statement dated 6 June 2017. On 8 June 2017 Mr Amjad Farooq, the claimant's solicitor, made a witness statement in opposition to the application. It is necessary to consider the terms of these two witness statements in some detail.
Mr Hayes' witness statement
In his witness statement, Mr Hayes says that he has practised as a solicitor since October 1985, and now heads the property department of Bartons solicitors, in Salcombe. He confirms that he acted for the defendant in connection with his purchase of 33 Dunstan's Road, which completed on 12 August 2013. At paragraph 8 of his statement he says as follows:
"8. I am advised that the claimant's solicitors most likely wish me to attend court so that they can ask me:
8.1. what steps I took to establish the source of the £250,000 paid to my firm by the defendant to enable him to buy the property;
8.2. whether the defendant stated that the funds were a loan or a gift;
8.3. what evidence I saw relative to the source of the funds; and
8.4. whether I gave any assurance to the mortgage provider HSBC about the source of the funds for the mortgage deposit."
In paragraph 10 of his statement he says this:
"10. I confirm that I shall say:
10.1. that as far as I recall, the defendant told me that he had received a contribution towards the purchase monies (the sum of £250,000) as a gift from the claimant;
10.2. that in respect of another transaction (for a different client) in which the claimant had made a similar gift, a fee earner from my office contacted her private banker, Steve Lamb, of Lloyds TSB in Bristol, on 18 November 2011. The purpose of the call was to verify the source of funds and to verify that the claimant was in the habit of making gifts. Steve Lamb told us he was authorised to speak to us by the claimant and confirmed, broadly, that she was very wealthy and that he was aware of her proposed gifts. Following the call, he sent to us a certified copy of the claimant's ID. I am unable to produce the documents to verify this discussion as they fall within the scope of an instruction relating to another client;
10.3 that because the monies from the claimant were a gift, I was under no obligation to undertake any investigations into the source of funds. I knew that they came from the claimant and as I have stated above, I already had her ID documents available to me;
10.4. that (as above), when I was instructed to act on behalf of the defendant, I already had ID documents for the claimant on file (having received them in 2011 in the course of another, similarly structured transaction). I did not have to carry out any further enquiries into the claimant's identity. She was already known to me;
10.5. that in a casual conversation in Salcombe, probably at the beginning of 2012, the claimant approached me in Fore Street outside the bakery for a conversation – we walked together back to my office (which is about five minutes walk) on Island Street;
10.6. that during the conversation, the claimant indicated that as an elderly widow she did not need all of the wealth that she had, and as a result wanted to help others. In fact this sort of arrangement is not uncommon amongst the very wealthy in Salcombe. It is something that I have come across before with a small number of my own clients;
10.7. that as far as I recall I was never contacted by the claimant during the course of the transaction, and no suggestion was made to me that the monies were in fact alone. Had there been any suggestion that the monies constituted a loan, or that I could act for the claimant, I would have followed the code of conduct and told the claimant to take independent legal advice;
10.8. that had the monies been a loan, I would have had to organise a deed of priority or have alerted HSBC to the existence of a second loan; and
10.9. that whether or not I gave any assurance to HSBC is irrelevant within the context of the current action, and is a matter between HSBC and Bartons."
Mr Hayes went on to say that in the circumstances a non-party disclosure application would have been more appropriate, although, since he had already produced his correspondence file to the defendant, in his view even this was unnecessary. He added that in his view the witness summons had not been issued in good faith for the purposes of obtaining relevant evidence. He repeated that he had already produced his file. At this point I observe only that, according to Mr Hayes himself, his file was produced to the defendant's solicitors for the first time only on 25 May 2017, that is, two days after this witness summons had been issued. I saw no correspondence or other evidence suggesting that Mr Hayes had been asked before the issue of the witness summons to disclose his file, and that he had indicated that he would (or, indeed, that he would not).
Mr Farooq's witness statement
The witness statement of Mr Farooq on behalf of the claimant was made to oppose the application to set aside the witness summons. After making some preliminary points, in paragraphs 8 and 9 he says the following:
"8. In paragraphs [sic] 10 Mr Hayes states his proposes [sic] what he is going to say on the basis that the Claimant would ask only matters set out in paragraph 10. That cannot be correct as there may be more...
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