Hague Plant Ltd v Hague and Ors

Hearing dates: 19–20/11/2014

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Introduction

This is an appeal against the Order of HHJ Behrens, sitting as a judge of the Chancery Division in the Leeds District Registry, made on 5 ^th March 2014 whereby, save for a small number of agreed items, he refused permission to the claimant (and appellant in this Court) Hague Plant Limited ("HPL") to re-amend its Particulars of Claim in these proceedings alleging dishonest breach of fiduciary duty and dishonest assistance against the defendants (and respondents to this appeal) Martin Hague ("Martin"), Jean Angela Hague ("Jean Angela"), and their wholly owned company MHH Contracting Limited ("MHH").

Notwithstanding that this is an appeal against a discretionary case management decision, it has been litigated on a truly grand scale. Skeleton arguments by both sides in excess of forty pages were deployed, and no less than nineteen lever arch files of documents (for each member of the Court) were lodged. The appeal took a full two days of hearing and more than a full day's pre-reading for each member of the Court. It is likely that hundreds of thousands of pounds of costs have been incurred on this appeal, and even larger sums for the preparation and hearing of the application before the Judge.

It is not, at least initially, the function of this Court to re-examine de novo the detailed merits of an appealed case management application. That task arises in this Court only if it decides both that the first instance decision cannot stand, and decides to re-exercise the judge's discretion afresh. This Court's first task is to determine, on a much narrower basis, whether the case management decision under appeal can be impugned. In Walbrook Trustee (Jersey) Limited v Fattal [2008] EWCA Civ 427, at paragraph 33, Lawrence Collins LJ said this:

"These were case management decisions. I do not need to cite authority for the obvious proposition that an appellate court should not interfere with case management decisions by a judge who has applied the correct principles and who has taken into account matters which should be taken into account and left out of account matters which are irrelevant, unless the court is satisfied that the decision is so plainly wrong that it must be regarded as outside the generous ambit of the discretion entrusted to the judge."

I would add that, in the context of the increased focus of the overriding objective upon the proportionate conduct of litigation, and the ever-increasing need to husband limited court resources so as fairly to allocate them among all litigants, there is a real need to conduct appeals about case management decisions with economy and, wherever possible, brevity. I have constructed this judgment with the same objectives in mind. It will be sufficient to explain my reasoning to the parties, even though it omits an extended description of the background, the litigation and the draft pleading under review, for all of which readers unfamiliar with this litigation will need to consult other documents, and in particular the judgment under appeal.

It is evident that the Judge himself paid full regard to the requirements of economy and brevity in formulating his own reserved judgment, in which he dealt with the extensive submissions and documentation with admirable focus in a mere seventeen pages. For this he was taken to task in the appellant's Grounds of Appeal for having, in various respects, failed to give adequate reasons. In that respect he was in my view entitled to take account of this dictum of Griffiths LJ in Eagil Trust Co Limited v Pigott-Brown [1985] 3 All ER 119, at p. 122:

"I cannot stress too strongly that there is no duty on a judge, in giving his reasons, to deal with every argument presented by counsel in support of his case. It is sufficient if what he says shows the parties and, if need be, the Court of Appeal the basis upon which he has acted…"

The main reason for the Judge's refusal of permission to re-amend was that, taken as a whole, the draft pleading was:

"disproportionate in the sense that it would not lead to the litigation being conducted at proportionate cost and would lead to further extensive judicial time being expended at the expense of other litigants."

In slightly more detail, he concluded that the draft pleading was constructed in a style which failed to comply with the primary requirement of a pleading, namely that it should include a concise statement of the facts upon which the claimant relies, so as to clarify rather than obscure the issues: see McPhilemy v Times Newspapers [1999] 3 All ER 775, at p. 793. Large parts of it consisted of detailed citation of the first defendant's position as set out in previous litigation between the parties, in disclosure, transcripts, pleadings, witness statements and Part 18 information, and all in a document five times longer than the original Particulars of Claim, including much which, because it was merely responsive to the Re Amended Defences, could perfectly well have been included in a Reply.

These conclusions were, in essence, about the form and style of the draft pleading rather than its detailed content in terms of the matters alleged. The judge's conclusion that, taken as a whole, the draft should not be permitted, on proportionality grounds, did not of itself prohibit the claimant from seeking to re-plead all or part of the underlying content in a different way, and indeed the claimant has applied for permission to re-plead parts of that content by an application which has been stayed, pending this appeal, but which is in due course to be heard by the Vice-Chancellor Norris J.

Nonetheless, in later parts of his judgment, the judge did address specific parts of the content, and made rulings to the effect that no form or style of pleading of those parts could be permitted, either because they were, on a summary judgment test, bound to fail, or (in one instance) because they amounted to an abusive collateral attack upon findings in a judgment resolving earlier litigation between the same parties or their privies. The appellant accepts that, unless successfully appealed, those separate parts of the judge's conclusions would prevent those aspects of the substance from being re-pleaded, even though the judge's conclusions about them do not appear in the Order under appeal, which merely dismisses the application to re-amend, save where items were allowed by consent. The appellant's thirteen Grounds of Appeal therefore address both the proportionality decision about the form and style of the draft pleading, and the specific conclusions about parts of its substance. In this judgment I shall, without slavishly following the numbered order of those Grounds, nonetheless deal first with proportionality, and then with the specific matters of substance. But it is first necessary to say a little about the background.

Background

These proceedings are the fifth stage in a lengthy and bitterly fought dispute between members of the Hague family. They are therefore generally referred to as "Hague 5". Douglas and Jean Hague had three children, David, Dianne and Martin. They moved to Prospect Farm near Sheffield in the late 1950s primarily in order to farm. In 1975 Douglas set up HPL to take over the various non-farming businesses which each of Douglas and Jean had established in the meantime. HPL was originally owned as to twenty percent by each of Douglas, Jean, David, Diane and Martin, but in 1996 Douglas and Jean transferred most of their shares to their children.

HPL developed a flourishing business in excavation, site clearance and land reclamation during the early 1980s and, in 1984, obtained a tipping licence at a disused quarry near Prospect Farm, thereby establishing a tipping and landfill business.

MHH (then called Hague Plant Excavations Limited or "Excavations" for short) was established in mid-1985. Initially, its shares were held equally between the three children but, later in 1985, David and Dianne transferred their shares to Martin and his wife Jean Angela, and Dianne, Jean and David's wife Rosemary resigned as directors, leaving Martin and Jean Angela as the sole owners and directors of MHH.

Shortly thereafter, in early 1986, Martin became aware of the opportunity to purchase a landfill site at Carlisle Street near Sheffield city centre. This, and the tipping licence obtained for its exploitation, became the foundation for MHH's considerable business success thereafter.

From then until the parties fell out in 2005, Martin ran both HPL and MHH, and the two companies did a great deal of business together. For example, HPL carried out a substantial amount of tipping at MHH's Carlisle Street site. It stationed plant there and, when MHH...