Harlequin Property (SVG) Ltd and Another v Wilkins Kennedy (A Firm)
| Jurisdiction | England & Wales |
| Judge | The Hon. Mr Justice Coulson |
| Judgment Date | 21 December 2016 |
| Neutral Citation | [2016] EWHC 3233 (TCC) |
| Date | 21 December 2016 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-2014-000038 |
[2016] EWHC 3233 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Rolls Building
Fetter Lane, London, EC4A 1NL
The Hon Mr Justice Coulson
Case No: HT-2014-000038
Mr Nicholas Davidson QC and Mr Hefin ReesQC (instructed by ELS Legal LLP) for the Claimants
Mr Justin Fenwick QC, Mr George Spalton and Mr Peter Morcos (instructed by Kennedys Law LLP) for the Defendant
JUDGMENT (No. 4)
COSTS AND OTHER CONSEQUENTIAL MATTERS
INTRODUCTION
On 12 December 2016, I handed down the main Judgment in these proceedings ( [2016] EWHC 3188 (TCC)). For the reasons set out in that Judgment, I dismissed the second claimant's claim in its entirety. I also dismissed most of the first claimant's claims against the defendant 1. However, I allowed one sizable claim, based on the defendant's negligent advice in advising the claimant employer not to have a contract with ICE, the building contractor, which resulted in the absence of any binding valuation process relating to the construction works. The defendant, as the claimant's de facto chief financial officer, thus oversaw a system whereby ICE were paid far more than the value of the work which they were carrying out.
Following the handing down of the draft Judgment, there were a series of further disputes between the parties. Sadly, there was no discernible co-operation between the solicitors in the run-up to the hearing set aside to deal with consequential matters, which resulted in a flurry of late documents, and a raft of unrealistically extreme arguments on both sides. I confess that I expected rather better.
There were the following issues for decision at the hearing on 12 December:
(a) The correct currency in which the Judgment Sum was to be expressed;
(b) The appropriate mechanics of payment of the Judgment Sum;
(c) A series of related issues concerned with interest;
(d) Liability for costs;
(e) The amount of any payment on account of costs;
(f) Two discreet issues of costs;
(g) The defendant's application for permission to appeal.
Due to time constraints, I decided issues (a) (currency) and (b) (mechanics of payment) at the hearing, but said that I would provide fuller reasons for my decisions in writing. The claimant was unable to deal with all of the aspects of issue (c) (interest) and so I answered the questions I could, and reserved the rest. I have since received further written submissions on that topic. I reserved my judgment on (d) (liability for costs) and (e) (interim payment of costs). I gave rulings on (f) (discreet costs issues) and (g) (permission to appeal). My ruling on the last topic has been typed up, approved and already provided to the defendant.
Accordingly, this Judgment sets out fuller reasons for my decisions on (a) (currency) and (b) (mechanics of payment); fuller reasons for those issues as to interest which I was able to decide under (c) (interest); and contains my decisions, with reasons, on
the remainder of the issues as to (c), (d) (liability for costs), and (e) (interim payment of costs).ISSUE 1: CURRENCY
The issue arises in this way. The claim which I allowed was expressed in dollars so, at paragraph 895 of the main Judgment, I identified the recoverable sum as $11,630,970.50. The defendant sought an order that the Judgment Sum be expressed in sterling and should be calculated in accordance with the exchange rates set out in the claimant's own evidence at trial. This mattered because, if I did not express the Judgment Sum in sterling in accordance with those exchange rates, the $11,630,970.50 would be subject to the exchange rates currently in place, which would give the claimant a significantly larger figure.
The notes in the White Book at paragraph 40.2.2 make plain:
"If the court does express its judgment for the payment of money in a foreign currency, the judgment will be entered in that currency or its sterling equivalent at the time of payment.
…
It would seem that the court retains a residual discretion to determine whether the judgment should be expressed in sterling or in a foreign currency and that it will exercise this discretion having regard to all the circumstances including the position of the parties and the fluctuations in the rates of exchange between the currency of the contract and sterling during the period between the date when the cause of action whether in contract or tort arose and the date of judgment."
In my discretion, therefore, I can express the Judgment Sum in sterling and can, if it is appropriate, make it subject to the exchange rates set out in the claimant's evidence rather than the current rates.
The law is set out by Lord Wilberforce in The Canadian Transport [1979] AC 685 at page 701 B-C. He said that damages should be calculated:
"…in the currency in which the loss was felt by the plaintiff or 'which most truly expresses his loss.' This is not limited to that in which it first and immediately arose. In ascertaining which this currency is, the court must ask what is the currency, payment in which will as nearly as possible compensate the plaintiff in accordance with the principle of restitution, and whether the parties must be taken reasonably to have had this in contemplation."
In accordance with that principle, I am in no doubt that, in this case, the Judgment Sum should be expressed in sterling and that the relevant conversion rates were those identified by Ms Tricker, the claimant's bookkeeper, during the trial. That is because, in this case, all the relevant sums were paid in sterling: the sums paid by the investors to HMSSE were in sterling, and the vast majority of the sums subsequently paid by the claimant to ICE were in sterling. Thus, because there was a significant overpayment by the claimant to ICE, that loss was felt by the claimant in sterling.
That conclusion is in accordance with paragraph 320 of the main Judgment. I noted there that the figures in the contemporaneous documents, the instructions to pay and the actual payments, were all in sterling. I expressly found that "the fact that they [the payments] were later expressed in US dollars was simply for accounting purposes". Thus, in accordance with The Canadian Transport, I find that the currency in which the loss was felt was sterling.
On behalf of the claimant, during the trial, Ms Tricker identified all the relevant payments in sterling and then applied the relevant conversion rate appropriate at the time. The figures so calculated were then used for accounting purposes, so it was those amounts that lay behind the original calculation of the claimant's damages. Since those were contemporaneous calculations, done for accounting purposes, and adduced by the claimant, it seems to me that I ought to adopt those calculations.
Mr Davidson QC argued that some earlier sums were paid to ICE in dollars and ICE themselves paid their employees and sub-contractors in dollars. But in the overall scheme of things, the earlier payments were of little significance (a finding which I have made in another context in the main Judgment where it favours the claimant), and how ICE spent its money is irrelevant, because what matters is the currency in which the claimant made the payments to ICE, not what happened to the money thereafter.
It is agreed that, on the basis of Ms Tricker's calculations, the Judgment Sum, expressed in sterling, is £7,443,821.12. For the reasons which I have given, that is therefore the sum that is the subject of the Order drawn up in consequence of the main Judgment.
ISSUE 2: THE MECHANICS OF PAYMENT
I ordered that the Judgment Sum notified above was to be paid by the defendant not later than the close of business on 13 January 2017.
In the main Judgment, I raised a concern (paragraphs 885–888) about the immediate payment of the Judgment Sum to the claimant. It seemed to me that there was a risk that, if that happened, the investors – who had, after all, provided all the money for the development in the first place – might be left without compensation. Those fears were strengthened when, after the closing submissions at the end of September 2016, I was told that the claimant was the subject of insolvency proceedings in SVG.
My original suggestion was that the money should, in the first instance, be paid into some form of escrow account. This would be on a temporary basis until the position in respect of both the investors and the insolvency were more clear-cut. However, even this relatively simple proposal gave rise to difficulties. The claimant's lawyers did not want the defendant's lawyers to have any control over the escrow account and pointed out that the defendant's lawyers did not act for the investors. The defendant did not want an escrow account as suggested by the claimant, which was subject to a simple undertaking from the claimant's solicitors, and sought to claim an interest in the money in the account because of the possibility of an appeal.
In my view, the risk to the investors is an entirely separate issue from any question of appeal. Indeed, having refused permission to appeal, that topic is no longer a matter for me. The escrow account was designed to provide some protection – albeit temporary – to the investors, but I can now see, given the nature of the relationship between the solicitors, that it would not be appropriate to order any sort of escrow account.
The other alternative was to order that the Judgment Sum be paid into court. That way the court has control over the money, at least until such time as the position of the investors and/or the insolvency becomes clearer. That would not...
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