J J Harrison (Properties) Ltd v Harrison
| Jurisdiction | England & Wales |
| Judge | Lord Justice Chadwick,Laws LJ,Sir Anthony Evans,LORD JUSTICE MUMMERY,MR JUSTICE WILSON |
| Judgment Date | 11 October 2001 |
| Neutral Citation | [2001] EWCA Civ 1467,[2001] EWCA Civ 1295 |
| Docket Number | Case No: 2001/0735,No A3/2001/0735 |
| Court | Court of Appeal (Civil Division) |
| Date | 11 October 2001 |
[2001] EWCA Civ 1295
Lord Justice Mummery
Mr Justice Wilson
No A3/2001/0735
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
APPLICATION FOR PERMISSION TO APPEAL
Royal Courts of Justice
Strand
London WC2
MR R HOLLINGTON QC (Instructed by Keeble Hawson of Leeds) appeared on behalf of the Applicant
MR C PARKER (Instructed by Hamlin of London) appeared on behalf of the Respondent
There are three inter-related applications before the court: (1) an application for permission to appeal, (2) an application for permission to adduce fresh evidence on the appeal, and (3) an application for an extension of time in which to appeal. Mr Robin Hollington QC appears for the applicant, Mr Peter Harrison, and Mr Parker appears for the respondent to the applications, J J Harrison Properties Ltd, (“the company”). We heard detailed oral argument on the applications and no less than four skeleton arguments were provided for the court's assistance. On 7th December 2000, pursuant to an order made for a split trial, a decision on liability was made by Mr Kevin Garnett QC, sitting as a Deputy High Court Judge. He made an order that there should be an account of profits by the defendant, Mr Harrison, to the claimant company, the company having elected for that remedy following the handing down of a judgment on 27th November 2000. The order for an account was made in respect of a transaction on 12th February 1986 under which Mr Harrison bought for the price of £8,400 a piece of land in Yorkshire on which there were derelict buildings. He had bought the land from the company, a substantial family property company of which he was a director at that time and remained a director until his resignation on 27th March 1992. The judge reserved the costs of the liability issue to await the outcome of the account to see whether Mr Harrison had made any profit out of the transaction. He refused permission to appeal. The time for appealing to this court expired on 21st December 2000. 2. The application for permission was not issued until 27th March 2001. On 2nd May 2001 the single Lord Justice adjourned the application to an oral hearing on notice in order to debate, inter partes, the significance of a letter of 23rd February 2001 to the three applications. I should mention that in the meantime the taking of the account was proceeding.
On 6th February 2001 Mr Justice Blackburne had ordered Mr Harrison to make payment of £5,000 by 6th March 2001. It was not paid until 20th March. On 15th March directions were given for the conduct of the taking of the account. The hearing, which is estimated to last as long as five days, is due to take place in October. The grant of permission to appeal will probably have the effect of delaying those proceedings pending the determination of the appeal.
I need to examine the background of the dispute in order to deal with the applications. The sale to Mr Harrison on 12th February 1986 had been approved by the board of the company two days earlier. Peter Harrison was a director at that time and so remained until his resignation in 1992. On 3rd April 1986 planning permission for the land he purchased was granted subject to conditions. In December 1988 he sold part of that land for £110,000. In April 1992 he sold the remainder for £122,500. On 8th July 1998 proceedings were started against him in respect of the sale over 12 years previously, alleging that he acted in breach of duty. The particular breach of duty is that he failed to disclose to the board (1) that the vluer, Mr Johnson, whose valuation had been put before the board, had stated that he had not taken into account development potential of the barn conversion on the site; (2) he had failed to disclose that there was an application for planning permission submitted shortly before the board meeting; (3) he had failed to disclose that he had been advised that the application was likely to be successful, as it was.
In his judgment the deputy judge held that the sale was liable to be set aside for breach of the “self-dealing” rule by failure to make adequate disclosure to the board meeting on 10th February 1988. As the rescission was no longer possible, the judge held that the company could elect between account of profits or equitable compensation. As already indicated, the company elected for the former at a hearing which took place on 7th December. The deputy judge rejected the company's claim that Mr Harrison was a constructive trustee of the property. He also rejected Mr Harrison's defences of acquiescence and limitation. I refer, in particular, to the judge's conclusions on laches. He found as a fact that the company knew of some of the relevant facts as early as 1992 and had the means of finding them out. But he concluded that the fact the non-disclosure was a serious one, coupled with the fact the company did not discover what really happened until 1997, tipped the balance in the company's favour. He expressed the view that it would not be unconscionable for the company to assert its claim despite the passage of time.
I should also mention some further background material relating to disputes within this family. J J Harrison (Investments) Ltd was the holding company; it was the subject of a Section 459 petition in early 1992. The petition was compromised on 27th March 1992. It was pursuant to that agreement that Mr Peter Harrison resigned as a director. In that petition allegations were made against Mr Harrison. The petition was presented by his brothers. Mr Harrison also has three sisters, who were involved in disputes with him.
The company was owned by a trust under which the sisters and their families are the beneficiaries. Since 1992 Miss Terry Harrison has been chairman of the company and a director, and her sister Gwen Fuller, the general manager until recently. Mr Giles, a solicitor, has been a director of the company. It is relevant to mention Mr Giles' position because he was the author of the letter of 23rd February 2001, which has been a central feature of the applications. The letter was sent by Mr Giles. He has been involved in the affairs of the Harrison family since 1986. He was an executive director of the holding company. I should refer immediately to the letter. It was written to Peter Harrison on 23rd February. It is headed:
“Dear Peter,
Re: J J Harrison Estates Ltd.
Thank you for sending me what you call a `personal copy' of the letters that you sent to your sister Terry on 20th and 21st February. I am sure you will understand that for reasons of professional etiquette I cannot comment on these matters where your solicitor, Mr Simpson, is instructed. However, as you have written to me personally, I think there can be no objection to me writing to you personally about the general family situation. When you left the company in what might best be described as ignominious circumstances Terry was most concerned that your reputation should not be tarnished and there should be no muck-raking about your stewardship of the company. It was hoped you would be able to enjoy a dignified retirement with your reputation intact and with a comfortable standard of living.”
The letter is said by Mr Hollington to constitute fresh evidence which should be admitted on appeal under Civil Procedure Rule 52.11 (2) (b), as it satisfies the principles of Ladd v Marshall, which remains relevant to the exercise of the court's discretion to admit evidence on an appeal under the Civil Procedure Rules.
In the light of that, as well as apart from that, Mr Hollington contends that the appeal has a real prospect of success on the laches issue. The letter is also relevant to the question of delay in applying for permission to appeal. Mr Hollington said that the letter threw fresh light on the case. It is contended that it is evidence that, on Mr Harrison's departure from the company in March 1992, a deliberate decision was made by the other members of the family that the company would not investigate possible wrongdoing by him. Theh initiation of these proceedings in July 1998 and the evidence given on behalf of the company at the trial were inconsistent with a decision of the kind indicated in Mr Giles' letter.
The grounds on which permission to appeal is sought are two: first, that the judge ought to have held that the claim was barred by the equitable doctrine of laches, as a matter of law and fact. The letter of 23rd February is relied upon as relevant to that ground. Secondly, the judge ought to have held that the claim is statute barred under Section 21 (3) and or Section 23 of the Limitation Act 1980. That is a pure point of law.
The conclusions which I have reached on the three applications in these circumstances are as follows. I deal first with the application for permission to adduce fresh evidence. Mr Hollington submitted that the letter of 23rd February 2000 was an admission by Mr Giles, a person fully conversant with the affairs of the company and the Harrison family, that on Mr Harrison's departure from the company there would be no muck-raking about his stewardship of the company. This item of information was not available to Mr Peter Harrison's advisers at the time of the trial. It could not have been obtained by him or them by the use of reasonable efforts for use at the trial. This was evidence solely within the knowledge of the directors of the company and their advisers. Mr Hollington submitted that it is material and apparently credible evidence on the issue of laches. The judge emphasised the fact that there was no general reason to be suspicious about Mr Harrison. This letter was evidence of a...
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