JD Wetherspoon Plc v Van De Berg & Company Ltd & Others
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE LEWISON,Mr Justice Lewison,Mr JUSTICE PETER SMITH,MR JUSTICE PETER SMITH,SM |
| Judgment Date | 07 April 2009 |
| Neutral Citation | [2007] EWHC 1044 (Ch),[2009] EWHC 639 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC05C00723,Case No: HC06C04095 |
| Date | 07 April 2009 |
[2007] EWHC 1044 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Lewison
Case No: HC06C04095
Miss Catherine Newman QC, Mr Hugh Evans and Mr Alec McCluskey (instructed by DLA Piper UK LLP) for the Claimant
Mrs Jane Giret QC and Mr Marc Dight (instructed by Turbervilles) for the First and Second Defendants
Miss Clare Hoffmann (instructed by Mundays LLP) for the Third Defendant
Hearing dates: 18, 19, 20 April 2007
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
THE HONOURABLE MR JUSTICE LEWISON
| Introduction | 2 |
| The approach | 3 |
| Two sample transactions | 4 |
| Canterbury 1 | 4 |
| Folkestone | 4 |
| The nub of the complaints | 5 |
| The causes of action | 5 |
| Deceit | 5 |
| Breach of fiduciary duties | 6 |
| Personal fiduciary duties | 8 |
| Limitation | 9 |
| Result | 15 |
In the 1990s JD Wetherspoon was increasing its pub estate. It had retained Van De Berg & Co Ltd (“Van De Berg”) to act for it as its property finder and adviser. Van De Berg was set up by Mr Chris Braun, who was one of its directors. Richard Harvey and George Aldridge were also directors. The arrangement between JD Wetherspoon and Van de Berg at the relevant time was that Van De Berg were paid an annual retainer and a success fee for every property that they successfully introduced to JD Wetherspoon.
In this action JD Wetherspoon allege that in relation to a number of transactions, all of which were completed before 1998, Van De Berg and Messrs Braun, Harvey and Aldridge made secret profits behind JD Wetherspoon's back. The typical pattern that is alleged relates to the acquisition of interests in vacant property suitable for conversion into a pub. What is said is that instead of informing JD Wetherspoon that a particular freehold was available for sale, Van De Berg, Mr Braun and Mr Harvey advised JD Wetherspoon to enter into a lease of the property in question, while at the same time arranging for the freehold to be acquired by other business associates or clients. The effect of the grant of a lease to JD Wetherspoon turned a vacant property into a valuable investment with a relatively secure cash flow, and thus substantially increased the freehold value. This in turn enabled the acquirer of the freehold to make a quick and substantial profit, in some cases by selling the freehold to JD Wetherspoon itself; which in effect paid for the enhancement of the freehold value attributable to the value of its own covenant.
These three defendants apply to strike out the claim on the ground that it is statute barred. The two personal defendants also apply for summary judgment on the basis that there is no cause of action raised against them which has a real prospect of success. There is one further defendant, Mr Aldridge, who was also a director of Van De Berg at the relevant time. Unlike the other defendants he has served a defence but does not join in the present applications. There will, therefore, be a trial of the allegations against him, irrespective of the outcome of these applications.
The approach
Both the application to strike out and the application for summary judgment are summary applications. The application for summary judgment is made by defendants against a claimant, which is less usual than an application by a claimant for judgment against a defendant. The authorities deal mainly with applications by claimants. The correct approach on applications by defendants is, in my judgment, as follows:
i) The court must consider whether the claimant has a “realistic” as opposed to a “fanciful” prospect of success: Swain v Hillman [2001] 2 All ER 91;
ii) A “realistic” claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8]
iii) In reaching its conclusion the court must not conduct a “mini-trial”: Swain v Hillman
iv) This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10]
v) However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550;
vi) Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63;
vii) The court should be especially cautious of striking out a claim in an area of developing jurisprudence, because in such areas decisions on novel points of law should be decided on real rather than assumed facts.
In my judgment the same approach is warranted both in relation to the allegation that the causes of action are statute barred and also in relation to the allegation that no valid cause of action has been pleaded against the personal defendants.
Since different limitation periods apply to different causes of action, I propose first to consider what causes of action are pleaded against the various defendants, before considering which (if any) of them are undoubtedly statute barred.
Two sample transactions
In order to illustrate what this case is about, I will first describe two sample transactions about which JD Wetherspoon complain. I should make it clear that what I am summarising are J D Wetherspoon's allegations; not proved or admitted facts.
Canterbury 1
On 20 October 1995 Mr Harvey wrote to the agents for the owners of 5/9 Burgate in Canterbury. The letter contained an offer to buy the freehold for £725,000. Although the offer appeared to have been made by JD Wetherspoon, in fact they knew nothing about it and the offer was made without authority. Nearly four months later, on 12 February 1996, Mr Braun wrote to the agents again with an increased offer of £950,000, but this offer was subject to obtaining planning permission for change of use and an on licence. Again, the offer purported to have been made on behalf of JD Wetherspoon; and again JD Wetherspoon knew nothing about it. However, in his letter Mr Braun explained that J D Wetherspoon had a 100 per cent track record in obtaining licences. This was designed as an inducement to persuade the owners to agree to accept the offer. In fact they did accept the offer, on 15 February 1996, presumably thinking that they were about to contract with J D Wetherspoon, although the interest on offer was not in fact the freehold but a long lease at a nominal rent. Just over two weeks later, on 4 March 1996, Mr Harvey wrote to the agents saying that the lease was to be granted to Nickleby Holdings Ltd. Nickleby Holdings was the creature of a Mr Ferrari, a business associate and former colleague of Messrs Braun in a firm of estate agents called Ferrari Dewe. J D Wetherspoon knew nothing about this either. On the same day, Mr Harvey wrote to J D Wetherspoon's solicitors (with a copy to J D Wetherspoon itself) saying that J D Wetherspoon had agreed to take a lease of the property at a rack rent of £120,000 per annum. This was the first that J D Wetherspoon had heard of the property; and they agreed to take the lease on Van De Berg's recommendation. By the summer of 1996 J D Wetherspoon had obtained planning permission for change of use and an on licence. On 4 December 1996 Nickleby Holdings bought the long lease for £950,000 and simultaneously granted an underlease to J D Wetherspoon at a rent of £120,000 per annum.
Within a month or two Van De Berg began marketing the long lease on behalf of Nickleby Holdings. It was sold in May 1997 for £1.3 million. Thus within the space of five months, Nickelby Holdings had made a profit of £350,000.
Folkestone
At the beginning of 1997 J D Wetherspoon passed on to Van De Berg particulars of a freehold for sale in Folkestone. The asking price was £150,000. Two months later, on 5 March 1997, Mr Harvey wrote to J D Wetherspoon's solicitors (with a copy to J D Wetherspoon) saying that J D Wetherspoon had agreed to take a lease of the property at a rent of £40,000 per annum. The landlord was named as a company called Peachey. In fact there was no such company at the time; but a company with that name was incorporated a week later on 12 March 1997. Peachey was another company which belonged to Mr Ferrari.
On 11 July 1997 Mr Harvey wrote to J D Wetherspoon's solicitors saying that J D Wetherspoon had agreed to buy the freehold from Peachey for £400,000. At that time Peachy did not own the freehold and had no contractual interest in it. On 8 September 1997 Peachey contracted to buy the property for £150,000; and simultaneously contracted to sell it on to J D Wetherspoon for £400,000. Both sales were completed on 30 October 1997. Thus Peachey made...
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