Goose v Wilson Sandford and Company
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE PETER GIBSON |
| Judgment Date | 13 February 1998 |
| Date | 13 February 1998 |
| Docket Number | CH 1991 G 8O26 |
| Court | Court of Appeal (Civil Division) |
[1998] EWCA Civ J0213-12
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(MR JUSTICE HARMAN)
Royal Courts of Justice
Strand
London W2A 2LL
Lord Justice Peter Gibson
Lord Justice Brooke
Lord Justice Mummery
CH 1991 G 8O26
CH 1994 G 2283
MR ALAN BOYLE QC and MR PHILIP MARSHALL (Instructed by Messrs Sharpe Pritchard, London WC1V 6HG) appeared on behalf of the Appellant (Plaintiff).
MR RONALD WALKER QC and MISS CATHERINE BROWN (Instructed by Messrs Hextall Erskine, London E1 8ER) appeared on behalf of the Respondents (Defendants).
This is the judgment of the court to which all members of the court have contributed.
l. The Plaintiff, Rex Goose, appeals from the order of Harman J. on lst April 1996. By that order the judge dismissed a consolidated action brought by Mr. Goose against Wilson Sandford & Co., a firm of chartered accountants practising in Brighton. Mr. Goose sued the firm (l) for damages for breach of contract, negligence and deceit, and (2) for equitable compensation for breach of fiduciary duty and for dishonestly assisting a fiduciary, Peter Bray, in a dishonest breach of fiduciary duty.
A.HISTORY OF THE DISPUTE
March-May 1984
2. Mr. Goose is a Lincolnshire farmer who on his father's death in 1983 inherited Hagbeach Farm, a farm of some 480 acres at Whaplode Drove, Spalding, Lincolnshire. His family has farmed in that area for more than l00 years. He was interested in acquiring a farm in France as farmland there was very much cheaper than in England. His intention was to raise the purchase moneys on the security of Hagbeach Farm. In March 1984 he was given the name of Mr. Bray as being someone also interested in acquiring a French farm. Shortly afterwards Mr. Goose met Mr. Bray. Unknown to Mr. Goose Mr. Bray was a fraudster who had twice been convicted and sentenced to terms of imprisonment and had already been made bankrupt. Mr. Bray gave Mr. Goose to understand that he was interested in buying a farm for himself or for the Brent Foundation, which was said by Mr. Bray to be a Liechtenstein trust of which the beneficiaries were Mr. Bray's family. The trust was said to have farms in Zimbabwe and some semi-precious stones ("the gemstones") held in Zurich and worth U.S.$500,000. Mr. Goose was at the time considering the purchase of a particular farm in the Tours region. On 29th March 1984 Mr. Bray wrote to him on paper headed Intas Technical & Managerial Services Ltd. with a Swiss address, offering to undertake arrangements to enable Mr. Goose to purchase the farm. Mr. Bray suggested funding the transaction through a Swiss intermediary and creating a capital reserve. That transaction did not proceed, but Mr. Bray and Mr. Goose visited France together to look at some farms and had other meetings. Mr. Goose was impressed by Mr. Bray, so much so that he made him an unsecured loan of £l0,000 on 20th May 1984. He was willing to enter into a syndicate scheme suggested by Mr. Bray for each of them to buy farms in France with money raised in Switzerland at the low interest rates prevailing there on the security of their own assets, Mr. Bray using the gemstones and Mr. Goose Hagbeach Farm. The borrower in Switzerland was to be an English company, Intag Estates Ltd. ("Intag"), which on 2nd May was incorporated for Mr. Bray and of which Mr. Bray was to be the chairman and Mr. Goose was to be a director. Both were to be shareholders. Another possible participant in the scheme was Mr. Tony Riby.
3. The true position on the gemstones, though never revealed to Mr. Goose, appears to have been that they originally belonged to the Holford Trust Ltd., a subsidiary of an American company. In 1982 Mr. Bray asked the Holford Trust to assist him in providing security to Trinkaus & Burkhardt (Switzerland) Ltd. ("Trinkaus & Burkhardt "), from whom Mr. Bray hoped to obtain a facility. Trinkaus & Burkhardt are the Swiss subsidiary of a German bank owned by the Midland Bank. The Holford Trust agreed, taking promissory notes from the Brent Foundation, signed by Mr. Bray. It is not clear whether that constituted a sale of the gemstones either to the Brent Foundation or Mr. Bray. The promissory notes were never honoured. The gemstones were sent to Trinkaus & Burkhardt where they were kept at Zurich airport in the duty-free zone. Mr. Bray acknowledged to the Holford Trust that the gemstones were held to its order. Although Trinkaus & Burkhardt do not appear to have given Mr. Bray the facility, by July 1984 they were claiming that he owed them debts of some Sfr. 60,000 and nearly U.S.$8,000. Further, on 26th August 1982 they had by telex confirmed to Barclays Bank that they intended to remit up to U.S.$83,000 of the proceeds of the gemstones to that bank to cover debts then owed to it by Mr. Bray's wife and they were not prepared to release the gemstones without that bank relinquishing any rights resulting from that confirmation.
June 1984
4. Mr. Bray suggested to Mr. Goose, and Mr. Goose agreed, that Wilson Sandford, of whom Mr. Bray had heard, be instructed to act as Intag's accountants. Mr. Bray met one of the four partners, Robin Wilson, on 20th June 1984. Mr. Bray represented to Mr. Wilson that all the Bray family assets had been put into the Holford Trust, the interest in which had been replaced by a Swiss trust. Mr. Bray said that he was the sole beneficiary of that trust and that it owned the gemstones; they had been transferred to Zurich where they were under the "guidance" of Trinkaus & Burkhardt, and should not be brought to the UK as VAT would be payable. Mr. Bray gave Mr. Wilson a list headed "Stones delivered to Bray", detailing the gemstones and giving them a value of U.S.$525,188.25. This was a list which appears to have come from the Holford Trust. Mr. Wilson's note of the meeting with Mr. Bray makes no reference to Intag and in a telex sent to Trinkaus & Burkhardt on 28th June Mr. Wilson said that Wilson Sandford had been instructed to inform them that Wilson Sandford had instructions to act in connection with all the financial affairs of the Bray family. Mr. Wilson asked to be provided with a schedule of all investments held by Mr. Bray, his family and the family trust and with a list of all the gemstones together with a valuation. Mr. Karl Schaefer of Trinkaus & Burkhardt spoke to Mr. Wilson on the telephone and in a telex on l0th July informed Mr. Wilson of the amounts to be paid to have the gemstones released (viz. Sfr.60,720.05 and U.S.$7,858.7l) and of the requirement of a release from Barclays Bank. Mr. Schaefer continued: "The price indications of the stones held as collateral are mentioned on the accompanying certificates for which we refuse any responsibility with respect to the prices mentioned as well as the authenticity of the certificates". He listed the gemstones with their values, which totalled U.S.$498,7ll.
5. Mr. Wilson in his oral evidence said that he was told on 20th June by Mr. Bray about a farming project in France involving Intag. He was told that there was a consortium comprising Mr. Bray, Mr. Goose and Mr. Riby, each of whom was to buy farm properties in France, the purchase money to be borrowed under an umbrella organisation, Intag. He said that he accepted instructions on behalf of Wilson Sandford to act for Intag in connection with the project. Wilson Sandford were to be Intag's auditors and their office was to be its registered office.
July 1984
6. On llth July Mr. Wilson wrote himself a memorandum under a heading of Mr. Bray and Intag. In it he recorded that meetings had taken place that day with Linda Goetz of Depinna Scorers & John Venn, a firm of Notaries Public and Solicitors, and with John Dewhurst of J.F. Chown, a firm of tax consultants. It is apparent from that memorandum that it was contemplated that three farms in France would be purchased, one for Mr. Bray, one for Mr. Goose and one for Mr. Riby. Among the points noted were:
"(5) It is agreed that 3 French companies will be formed each to own the Farms in one particular area. The formations will be dealt with by Linda Goetz but Wilson Sandford need to provide advice regarding the shareholdings in the Intag (Sologne) Sarl which will be buying the Farm known as La Devinniere with the shares being held by Rex Goose."
7. Another paragraph recorded that Intag would hold signed share transfers in respect of the three French companies so that "in the event of necessity" the shares could be transferred to Intag, and that Wilson Sandford would keep the transfers. It was also noted that concern had been expressed that the local accountants dealing with Mr. Riby and Mr. Goose might not report the circumstances of Intag "correctly" and that it was necessary to make certain that "if possible all affairs are dealt with by one firm of accountants but this cannot be guaranteed until a meeting has taken place with Goose & Riby."
8. Mr. Dewhurst on l6th July reported to Mr. Wilson, giving tax advice on the project and recommending a particular corporate financing structure. This showed Intag as owned by Mr. Bray and owning a French company and Mr. Riby and Mr. Goose together owning another company which in turn owned two French companies; each French company was to own a farm. At that stage the scheme recommended by Mr. Dewhurst was a joint venture or partnership with profits and losses on the farms being shared. Also in July Mr. Milne of HarvestMinster Ltd., instructed by Mr. Bray to act as the adviser to Intag on financial administration, wrote two reports, one on farm acquisition and development, and...
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