Independent Trustee Service Ltd v GP Noble Trustees and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Peter Smith,MR JUSTICE PETER SMITH |
| Judgment Date | 14 December 2010 |
| Neutral Citation | [2010] EWHC 3275 (Ch),[2010] EWHC 1653 (Ch) |
| Docket Number | Case No: HC08C03132 |
| Court | Chancery Division |
| Date | 14 December 2010 |
[2010] EWHC 1653 (Ch)
Before: Mr Justice Peter Smith
Case No: HC08C03132
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Richard Spearman QC & Jonathan Hilliard (instructed by Taylor Wessing) for the Claimant
Graham Pitcher the Third Defendant appeared in person
Gary Cordell the Fourth Defendant appeared in person
Peter Malmstrom the Fifth Defendant appeared in person
Hearing dates: 13th, 14th, 17th, 18th, 19th, 20th and 24th May 2010
Mr Justice Peter Smith:
INTRODUCTION
This judgment arises out of the trial of these proceedings which is a complaint made by the Claimant (“ITS”) about the transfer out from a number of occupational pension schemes of £30,000,000 on 14th August 2007 and a further £22,000,000 on 18th – 21st April 2008 and about the Defendants' subsequent dealings with those monies or their traceable product.
Of those sums as will be set out £31,000,000 has been recovered to date and was held in court pending the trial. At the conclusion of ITS' closing submissions I indicated that I could see no defence to a claim for the return of those monies put forward by any of the Defendants but would give reasons for that conclusion later. I therefore made an order directing that the monies in court be paid out immediately to ITS' solicitors.
In addition £531,258.31 has already been paid out to ITS' solicitors by D13 (“Number Thirty One”) which ITS was entitled to be paid pursuant to a Deed of Assignment dated 12th August 2009.
There are a total of 27 Defendants. The only one who participated in the trial was D5, Mr Malmstrom. He appeared in person during the trial but on 20th May 2010 after both ITS and he had opened their cases and after ITS had called its evidence but immediately before he was due to be called and subjected to cross examination Mr Malmstrom (without admission of liability) submitted to judgment of the entirety of the claims against him (£4,350,000 plus costs) on the terms of a Consent Order which I approved.
Mr Pitcher and Mr Cordell (D3 and D4 respectively) applied for an adjournment of the claims against them. They had made a similar application to Morgan J, the Interim Applications Judge, on 5th May 2010 and he adjourned their application for consideration on the first day of the trial. The main basis for the application was that they had been charged on 25th March 2010 following an investigation by the Serious Fraud Office (“the SFO”) of a number of matters involving the funds the subject matter of the present claim. Mr Pitcher was a director of the First Defendant Trustee company (“GPN”) Mr Cordell was also a director of GPN. The claims against them are that they together with Mr Malmstrom, Mr Morris (D6), Mr Starkey (D7) and Mr Webb (D8) carried out dealings with the assets of the pension funds pursuant to a dishonest scheme or a series of dishonest schemes by which they intended to generate secret profits for themselves and which they would conceal from the two pension trustees GPN and the Second Defendant BDC Trustees Ltd (“BDC”). Separately the allegations against them were that they in effect provided dishonest assistance to the decision of GPN and BDC to transfer assets as set out above. In fact they were the officers of GPN and BDC who approved the relevant transfers.
The justification for the application for an adjournment was primarily based on the fact that it was contended that if they were required to give evidence and participate in a civil trial in advance of their criminal trial (which could not take place apparently before April 2011) it would be unfair to them because it might prejudice the way in which they conducted their Defence.
There are various ways in which that problem can be addressed. In an unreported decision called Balfron Trustees and followed by me in Attorney General of Zambia v Meer Care Desai and Ors [2005] EWHC 2102(Chancery) orders were made in effect ring fencing the civil trial until further order. Such orders then prevented any third party (including the Attorney General or the Serious Fraud Office) from having access to evidence that was given in the civil trial unless an order was made subsequently on application.
This is a drastic order to make when the primary view of the courts is that justice should be open and thus the public should have full access. To be balanced against that of course is the need for any party to the proceedings to have a fair trial and not be prejudiced. The ability of Defendants in criminal cases nowadays to invoke the right to silence is somewhat restricted. In the instant case Mr Pitcher and Mr Cordell are required to give their Defence statements by the end of July this year. In preparing those statements they will have access to all the material which is in effect in this case and such other material as the prosecuting authorities have provided them. In preparing their Defence statement in the criminal proceedings they will have access to lawyers with legal aid. They are unrepresented in the present action. It seemed to me therefore that the appropriate way to deal with the matter was not to make a ring fencing order but rather to adjourn the trial against them as it raises issues only as to whether or not they dishonestly assisted GPN and BDC in their breaches of trust. That is a self-contained part of the trial. It is not necessary to examine their conduct with specificity in order to establish the liability of the two trustees for what has gone on and to establish that they are vicariously liable for the actions of Messrs Pitcher and Cordell irrespective of their particular guilt. Thus if they were grossly negligent in carrying out their duties as officers of the trustee companies the trustee companies would be vicariously liable for those actions. If they are dishonest in the way in which they carried out their functions the companies will be vicariously liable for those actions also (I do not accept the assertion to the contrary in the Defence which GPN has served and which was adopted by BDC see Lloyd v Grace, Smith & Co [1912] AC 716 and El Ajou v Dollar Holdings Plc [1994] 2 All ER 685 at 695–696). It is not necessary therefore in my view for the purpose of determining the liability of GPN and BDC to examine the nature of the actions carried out by Mr Pitcher and Mr Cordell (i.e. their state of mind when carrying them out); the question is as to whether or not the actions they caused GPN and BDC to carry out were themselves breaches of trust by those two Defendants.
Mr Starkey sent a letter without an address and merely an email address to respond to, supporting the application for an adjournment. He asserted that he received no information about the court process but I do not accept that in light of the evidence provided by ITS as to service. I could see no reason in his letter justifying an adjournment of the case against him and I rejected it.
On 18th May 2010 a firm of Barristers and Attorneys in Victoria British Columbia (Heenan Blaikie LLP) sent ITS' lawyers an email attaching a copy of Mr Webb's Defence purportedly lodged with the court by their agent on 14th May 2010. Attached to that email was an undated 33 page document titled “ Defence of Christopher Webb”which contained a statement that “the Defendant Christopher Webb believes that the facts stated in this Defence are true”. It was not signed by Mr Webb but was signed by Mr John S Heaney of the above firm. This document was produced on the 7th day of the trial counting pre reading days and on the 4th day of the hearing and was delivered long after the time for service of the Defence under the CPR and court orders had expired. It did not comply with the requirements of CPR 22.1 in that the statement of truth was not made by Mr Webb and was not made by a legal representative or litigation friend of his. Neither Mr Webb nor Mr Heaney stated that they believed the Defence contents were true as opposed to the facts stated.
Previously Heenan Blaikie filed an acknowledgment of service on behalf of Mr Webb on 12th October 2009 giving an address for service in the jurisdiction as a firm of solicitors in London. It was made clear to ITS' solicitors that those lawyers were merely asked to be just a mailing address as required for acknowledgment of service.
Thus Mr Webb has not provided a proper address for service of documents, and he has chosen not to participate in the proceedings until sending this late purported Defence which itself does not comply with the requirements of CPR as to a statement of truth (a somewhat vital requirement). In the circumstances I determined that I would take no notice of the document for those reasons. ITS' solicitors informed Heenan Blaikie of that decision the same day and have heard nothing more during the course of the trial.
The only other Defendant that participated initially in the proceedings was Line Trust Corporation (“LT”) (D24). It...
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