Estera Trust (Jersey) Ltd and Another (Petitioners) v Jasminder Singh and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Morgan |
| Judgment Date | 10 November 2017 |
| Neutral Citation | [2017] EWHC 2805 (Ch) |
| Docket Number | Case No: CR-2015-009042 |
| Court | Chancery Division |
| Date | 10 November 2017 |
In the Matter of Edwardian Group Limited
[2017] EWHC 2805 (Ch)
Mr Justice Morgan
Case No: CR-2015-009042
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
Royal Courts of Justice,
Rolls Building, Fetter Lane,
London, EC4A 1NL
Justin Fenwick QC and Alex Barden (instructed by Arnold & Porter Kaye Scholer LLP) for the Petitioners
Daniel Lightman QC (instructed by Orrick, Herrington & Sutcliffe (UK) LLP) for the First Respondent
Sam O'Leary (instructed by Herbert Smith Freehills LLP) for the Second and Third Respondents
Hearing dates: 26 and 27 October 2017
Part I: Introduction
This is an application by the First Respondent for declaratory relief and for an order for inspection of two classes of documents which are referred to in the First Respondent's application notice dated 23 June 2017 as the "Litigation Funding Documents" and the "Magwells Documents".
The declaration claimed is that, by failing to give inspection of the Litigation Funding Documents and the Magwells Documents, the Petitioners have failed to comply with an earlier order for disclosure and inspection of documents. The First Respondent then claims an order that the Petitioners do permit the First Respondent to inspect the Litigation Funding Documents and the Magwells Documents. The First Respondent did not apply for specific disclosure of documents which had not been disclosed.
The proceedings in which this application is made are unfair prejudice proceedings brought pursuant to section 994 of the Companies Act 2006. The Petitioners are minority shareholders in Edwardian Group Ltd ("the company") and the Respondents are the company and the principal other shareholders in the company. The company is the holding company of a group which owns and manages hotels. By reference to the most recent annual account, the value of the assets of the company is in the region of £1 billion. The Petitioners own approximately 20% of the shares in the company. The primary relief claimed by the Petitioners is that the first three Respondents should be ordered to buy the Petitioners' shares at a fair price, with no discount for the shares being a minority holding and so that the valuation should disregard certain matters of which the Petitioners complain. The Second Petitioner, Herinder Singh, ("Herinder") and the First Respondent, Jasminder Singh, ("Jasminder") are brothers.
One of the acts of unfair prejudice alleged by the Petitioners is the removal of Herinder as a director on 22 July 2009. The Petition was presented on 20 November 2015. In his Points of Defence, the First Respondent contends that because of the delay between July 2009 and November 2015, some 6 years and 4 months, the Petitioners should not be granted any relief. Further, it is alleged that the delay should lead the court to order that any valuation of the Petitioners' shares should be at a date in the past (rather than the date of the Petition) and various dates between January 2006 and July 2009 are contended for. In their Points of Defence, the Second and Third Respondents plead a detailed case of laches and contend that the Petitioners should not be granted any relief or alternatively that the shares should be valued as at 31 December 2005 or some other date or dates prior to the presentation of the Petition.
The Petitioners have served a combined Reply to the Respondents' Points of Defence. In their Reply, the Petitioners dispute the Respondents' contentions as to the existence of, or the consequences of, the alleged delay. In particular, they plead that the period from July 2009 to November 2015 did not amount to "improper delay" in all the circumstances. They then particularise six circumstances. The pleaded circumstances include, but are not confined to, the contention that in July 2009, the Petitioners did not have sufficient funds to conduct "heavy" section 994 proceedings to trial, that the Petitioners were starved of funds by reason of Herinder's removal as an employee (in 2010) and the improper payment of no or minimal dividends. It is then pleaded:
"From 2009 to December 2014 when he was introduced to the current funders, Herinder (initially) and subsequently the Petitioners together, in each case through their solicitors, actively but unsuccessfully sought funding to commence the litigation."
On 7 July 2016, Registrar Barber held a case management conference in these proceedings at which she gave detailed directions. She split the issues arising so that there would be two trials. The first trial which is due to take place in January 2018 with a time estimate of 7 weeks, will deal with the allegations of unfair prejudice, the appropriate remedy for any unfair prejudice and the valuation date for any order for the Petitioners' shares to be bought out, and other matters. Paragraph 8 of the Registrar's order provided for standard disclosure in relation to the issues to be tried at the first trial and for inspection. There was no application to the Registrar pursuant to CPR 31.5 to limit disclosure.
On 12 January 2017, the Petitioners gave disclosure of documents and each prepared a separate list of documents. The First Petitioner's list stated that inspection was not to be permitted of certain documents on the ground that inspection would be disproportionate; the documents referred to for this purpose did not include the Litigation Funding Documents. The list of documents also included a claim to legal professional privilege. In this part of the list, it was said that some of the documents had been redacted for irrelevance and the list went on to describe:
"Redacted parts of documents listed in the List of Documents at Schedule 1 which refer to, reproduce, summarise, embody or otherwise reveal directly or indirectly the nature, content of effect of privileged communications."
I understand that the quoted words apply to the redacted parts of the Litigation Funding Documents.
As to the Magwells Documents, the First Petitioner's list stated that Magwells had previously been its legal advisers. It said that Magwells had asserted a lien over the First Petitioner's files in respect of allegedly unpaid fees. The First Petitioner commented that a significant amount of the material in the Magwells Documents was available from other sources and was being disclosed.
The list of documents served by the Second Petitioner was in essentially the same terms as the First Petitioner's list.
Part II: The Litigation Funding Documents
I was not shown the Litigation Funding Documents which have been disclosed. I was told that copies of them occupied 6 lever arch files. I was told that there were over 250 documents although some, possibly many, of these involved duplication. I was told that the disclosed documents did not include documents relating to negotiations and agreement with the Petitioners' current funder. I was shown a number of pages (with redactions) from the disclosed documents which appear to be emails between the representatives of the Petitioners and potential funders. The identity of some or possibly all of the funders approached is revealed but the identity of the current funder is not revealed. The redactions from the documents I have seen are very extensive. Mr Lightman QC suggested that, in terms of extent, some 75% of the Litigation Funding Documents have been redacted. It also appears that there are Litigation Funding Documents which have not been disclosed even in redacted form.
The parties have exchanged witness statements in relation to the evidence to be given at the first trial. In Herinder's witness statement, he refers to the Respondents' allegation of delay. In that context, he makes brief reference to the time taken in seeking litigation funding. He says that this began in 2009 and was not successful until the Petitioners were introduced to the current funder in December 2014. He says that the attempts to obtain funding were made by the solicitors, brokers and his trustee. He describes the attempts as "extensive".
Mr Prosser, who is a director of the First Petitioner, deals with the attempts to obtain funding in greater detail in his witness statement. He deals with the allegation of delay at paragraphs 83 to 110. That section deals with other matters relevant to the alleged delay in addition to the question of funding. Mr Prosser makes a number of points, as follows:
(1) the process of seeking funding was affected by the legal advice on the merits of the case, legal advice on the funding process and without prejudice matters; he says that he cannot refer to these matters and he does not waive privilege;
(2) the process was entrusted to legal advisers because they had experience of litigation funding and ATE insurance and at least one broker was used;
(3) the process was extremely difficult and time consuming;
(4) he says that it would be apparent from the documents disclosed that the process involved repeated attempts and a large number of different providers;
(5) the disclosed documents show that the Petitioners were "actively and persistently seeking funding";
(6) he refers to the overall chronology but he would not recite the contents of the documents;
(7) he then refers to a number of features of the search for funding;
(8) he repeatedly refers to matters being clear from the disclosed documents;
(9) an example of references to the contents of documents is in paragraph 98(d); whilst I cannot definitively say what the position is, I speculated in the course of argument that paragraph 98(d) refers to matters of alleged fact...
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