Ian Paton v Rosesilver Group Corporation
| Jurisdiction | England & Wales |
| Judge | Lord Justice Henderson,Sir Christopher Clarke |
| Judgment Date | 24 March 2017 |
| Neutral Citation | [2017] EWCA Civ 158 |
| Docket Number | Case No: A3/2015/2367 |
| Court | Court of Appeal (Civil Division) |
| Date | 24 March 2017 |
[2017] EWCA Civ 158
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
The Honourable Mr Justice Mann
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Henderson
and
Sir Christopher Clarke
Case No: A3/2015/2367
Mr Shaiba Ilyas (instructed by Strafford Law Limited) for the Appellant
Mr Barry Isaacs QC and Mr Ryan Perkins (instructed by Gordons Solicitors Limited) for the Respondent
Hearing date: 26 January 2017
Approved Judgment
Introduction
This is an appeal by the defendant, Ian Paton ("Mr Paton"), from an order made by Mann J on 1 July 2015 granting specific performance of an agreement for the sale by Mr Paton to the claimant, Rosesilver Group Corp. ("Rosesilver"), of a flat at 47 Belgravia Court, Ebury Street, London SW1 ("the Property") together with an associated parking space. The order was made on Rosesilver's application for summary judgment against Mr Paton, which the judge had heard on 11 and 12 June 2015. Mr Paton was the registered proprietor of the leasehold interest in the Property. The contract for sale of the Property by him to Rosesilver had been made on 10 May 2011, and was subsequently varied by a supplemental agreement made between the same parties on 21 May 2013.
In his reserved judgment handed down on 19 June 2015, the judge set out some of the wider background to the case and then described the key documents, the pleadings, and the procedural history of the summary judgment application, including a very late application to adduce further evidence (in the form of a witness statement by Mr Paton) which was not made until the first day of the hearing, after Mr Barry Isaacs QC (appearing then, as before us, for Rosesilver) had completed his opening submissions on behalf of his client. The judge ruled against that application on the following day, for reasons which he subsequently gave in the judgment: see [2015] EWHC 1758 (Ch) at [11] to [15].
The judge then addressed the defences relied on by Mr Paton, as advanced by counsel then appearing for him, Mr Kavan Gunaratna. The judge grouped those defences under two heads. The first head comprised a group of related arguments which sought to establish that the contract for sale of the Property was in some sense intended to be a security for substantial loans made to Mr Paton and his partner, Ms Amanda Clutterbuck, in order to fund litigation brought by them against a woman known as Sarah Al Amoudi ("the Al Amoudi litigation"), on the alleged understanding that completion of the sale of the Property was not to take place if the litigation had a successful outcome. The judge analysed and rejected these supposed defences at [17] to [39], and no appeal is brought against any of his conclusions in relation to them.
The second group of defences involved the role of a solicitor, Mr Stephen Brook, who was at all material times one of the two partners of a firm called Brook Martin & Co. In broad terms, it was said that Mr Brook had acted for both sides in relation to the sale of the Property, without the informed consent of Mr Paton, and/or that he had an undisclosed personal interest in the transaction, with the consequence that the agreement for sale of the Property should be set aside, or it would at least be inequitable to enforce it by specific performance. There was also a vaguely formulated claim that Mr Brook had procured Mr Paton's entry into the contract by means of undue influence.
The judge disposed of the undue influence defence in [41], saying that such allegations could not be allowed to proceed "on the basis of vague statements in evidence, coupled with speculative submissions on the part of counsel". He then dealt with, and rejected, the conflict of interest points, fairly briefly, in [42] and [43]. It is only the judge's conclusions on this part of the case which are now challenged by Mr Paton on the present appeal, which is brought with permission granted by Floyd LJ at an oral hearing on 3 November 2015. Floyd LJ refused Mr Paton permission to appeal on a third ground, which sought to argue that the judge had wrongly taken into account, when reaching his conclusions on grounds 1 and 2, evidence which he had ruled inadmissible pursuant to the ruling which he gave on the second day of the trial.
The two grounds of appeal for which permission was granted read as follows:
"(1) The learned Judge made an error of fact, in holding that Mr Brook was not acting as Mr Paton's solicitor in the transaction, or that such a relationship was not vouched for in any way in the evidence.
(2) The learned Judge also erred to the extent that he held that Mr Paton had no real prospect of proving that Mr Brook had an undisclosed personal interest in the transaction."
We also have to deal with another late application to adduce fresh evidence. By an application dated 20 December 2016, Mr Paton sought permission to rely at the hearing of the appeal upon the third witness statement of the same date of Oliver Dykes, the solicitor with conduct of the matter on his behalf, together with the exhibits thereto. The proposed new evidence relates only to the second ground of appeal, so I will consider it in that context.
Leaving aside the application to adduce further evidence which he rejected, the evidence before the judge consisted of two witness statements, together with the particulars of claim (as verified by Claire Dawson-Pick of Gordons Solicitors Limited, Rosesilver's present solicitors) and the original defence (verified on Mr Paton's behalf by Mr Dykes). A draft amended defence and counterclaim had been produced at the hearing by Mr Gunaratna, which the judge was prepared to take as "encapsulating Mr Paton's lines of defence" (see the judgment at [15]), but this was never verified by a statement of truth. The evidence in support of the application for summary judgment was provided by Mr Martin Forrester, a fellow of The Royal Institution of Chartered Surveyors, who lives in Switzerland and has at all material times been the sole beneficial owner of the entire issued share capital of Rosesilver, and of a further company called Sator Properties Limited ("Sator"). The evidence in opposition to the application was a statement signed by Ms Clutterbuck on 8 May 2015, apparently drafted for her by Mr Paton, together with a voluminous single exhibit running to 684 pages. There was no evidence in reply.
The judge therefore had no evidence before him from Mr Paton himself, even though he was the registered proprietor of the Property who had contracted to sell it to Rosesilver, and even though he had been instrumental in preparing Ms Clutterbuck's statement. It is relevant to bear in mind that in her judgment in the Al Amoudi litigation, handed down on 20 February 2014 following a 20 day trial in 2013, Asplin J formed a very adverse view of both Mr Paton and Mr Brook as witnesses, and was scarcely less critical of the evidence of Ms Clutterbuck. She found Mr Paton to be "a very unreliable and unsatisfactory witness", and "generally evasive", while Mr Brook was also at times "extremely evasive" and an "extremely unsatisfactory witness". As for Ms Clutterbuck, to the extent that she had direct knowledge of the relevant events, her evidence "was repetitious and guarded", and she too "was an unsatisfactory witness": see Clutterbuck and Paton v Al Amoudi [2014] EWHC 383 (Ch) at [21] to [24].
Background
Mr Paton and Ms Clutterbuck are experienced property developers, who have invested in and developed many high-value residential properties in some of the most expensive parts of central London, including Knightsbridge, Belgravia, Chelsea and Westminster.
Rosesilver and Sator are companies incorporated in the British Virgin Islands, beneficially owned (as I have said) by Mr Forrester.
According to Mr Forrester, it was Mr Brook who introduced Mr Paton to him. Between 2007 and 2010, Sator made a number of loans to Mr Paton which Mr Paton used to finance the acquisition of several properties which rose significantly in value. In April 2010, it was agreed that Mr Paton owed Sator a total of £1.5 million. By then, Sator was unwilling to make further loans to Mr Paton, but Mr Brook then introduced Mr Forrester to Ms Clutterbuck, saying that he had acted for both Mr Paton and Ms Clutterbuck for many years. Mr Forrester had himself been a friend of Mr Brook's for nearly thirty years. Sator then made a number of further loans to Ms Clutterbuck, between 2010 and 2014. By December 2011, Ms Clutterbuck owed Sator approximately £746,000. On 20 March 2014, Ms Clutterbuck signed a promissory note in favour of Sator, payable on demand, in the sum of £1,458,964.39.
The Property was originally purchased by Mr Paton in November 2006 for investment. The purchase price was £445,000, of which Mr Paton borrowed £356,000 from Bank of Scotland on a buy-to-let mortgage. By October 2014, the borrowing from Bank of Scotland secured on the Property had increased to approximately £555,000.
The agreement for sale of the Property by Mr Paton to Rosesilver was dated 10 May 2011 ("the 2011 Contract"). By that date, Mr Paton and Ms Clutterbuck had engaged in, or were about to engage in, two major pieces of litigation from which they hoped to obtain very substantial sums of money if they were successful. One of these was the claim against Ms Al Amoudi; the other related to a joint venture with a Mr Elliot Nichol to develop a property in Cliveden Place, London. In the event, the Al Amoudi proceedings were comprehensively dismissed by Asplin J after the trial in 2013. She refused Mr Paton and Ms Clutterbuck permission to appeal, but they later made a renewed application to...
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