JD Wetherspoon Plc v Harris and Others [Ch D]
|England & Wales
|01 May 2013
| EWHC 1088 (Ch)
|Case No: HC11C00425
|01 May 2013
 EWHC 1088 (Ch)
IN THE HIGH COURT OF JUSTICE
Royal Courts of Justice
Strand, London, WC2A 2LL
THE CHANCELLOR OF THE HIGH COURT
Case No: HC11C00425
Ms Catherine Newman QC, Mr Hugh EvansandAlec Mccluskey (instructed by Pinsent Mason) for the Claimant
Mr John Wardell QC and Mr Simon Colton (instructed by K&l Gates LLP) for the 1st Defendant
Mr David Wolfson QC (instructed by Mishcon De Reya) for the 2nd, 3rd and 4th Defendants
Hearing dates: 16 April 2013
Sir Terence Etherton, Chancellor:
On 16 April 2013 I heard the following four applications in these proceedings: (1) an application by the first Defendant for summary judgment against the Claimant; (2) an application by the second to fourth Defendants for summary judgment against the Claimant; (3) an application by the second to fourth Defendants for permission to amend their Defence; and (4) an application by the Claimant to strike out the majority of a witness statement made Michael Robert Goldberger on behalf of the second to fourth Defendants.
At the conclusion of submissions by counsel on each application, I gave my decision. I dismissed the applications for summary judgment and granted the application to amend. I granted the application by the Claimant in relation to Mr Golberger's witness statement subject to allowing the second to fourth Defendants an opportunity to agree with the Claimant or to persuade the Court that parts of that witness statement, in addition to the parts conceded by the Claimant as legitimate, could be retained in the light of the principles underlying my decision. I gave a reasoned judgment in relation to the application to amend. In relation to the applications for summary judgment and in respect of Mr Goldberger's witness statement I said that I would give my reasons in writing. That is the purpose of this judgment.
In very broad terms the Claimant alleges that, in relation to two property transactions which took place in 1995 and 1996, the first Defendant dishonestly assisted Van De Berg Co Limited ("VdB"), a property finder and consultant to the Claimant, in breaches of VdB's fiduciary duties to the Claimant. It is also alleged that the first Defendant paid a bribe to VdB in connection with those two transactions. The consequence of those transactions was that one or other of the second to fourth Defendants acquired the freehold of a property, in which the Claimant acquired at the same time a leasehold interest, although, so the Claimant alleges, it would or might have acquired the freehold had VdB, consistently with its fiduciary duties, advised the Claimant that the freehold was available for purchase by the Claimant. At the time of those transactions the second to fourth Defendants were in the same group of companies (together "First London"), and the first Defendant was a director of each of them. The Claimant alleges that the first Defendant's knowledge, acts and omissions are to be attributed to First London. The Claimant claims damages, equitable compensation, an account of profits and interest.
It is not necessary or, in view of my decision on the summary judgment applications, appropriate to examine the factual background and the claims and defences in exhaustive detail. The action will now proceed in the ordinary way, and it is important that nothing I say should unfairly impact on the conduct and outcome of the trial. The following summary is sufficient for the purpose of this judgment.
The Claimant is the well known operator of public houses. In some cases it is the freehold owner of its properties, and in some cases it merely has a leasehold interest. In the majority of its properties, both now and in the past, it has only ever had a leasehold interest. At the relevant time VdB were retained by the Claimant as property agents to find, and advise on, suitable properties from which the Claimant could carry on its business. They were paid fees for their services to the Claimant.
The first transaction in which the first Defendant became involved in acquiring the freehold of a property, in which a leasehold interest was simultaneously granted to the Claimant, concerned a property in Grantham ("the Grantham property"). VdB introduced the Grantham property to the Claimant and then First London. The Claimant had, well before the introduction to First London, considered whether to purchase the freehold, but decided against it. It was, however, interested in acquiring a leasehold interest if a developer purchased the property. It appears that VdB contacted a developer, Dencora plc ("Dencora"), to see if it was interested in acquiring the freehold. VdB subsequently contacted First London for the same reason. It seems that, at some point, Dencora ceased to be interested and First London purchased the Grantham property. No claim has been made by the Claimant against First London in respect of the Grantham property, but, as I shall explain, First London relies on it heavily as explaining and supporting the first Defendant's innocent state of mind as regards the two property transactions which are the subject of these proceedings.
The next transaction, in which a property was introduced to the first Defendant by VdB, and First London simultaneously purchased the freehold and granted a lease to the Claimant, concerned the property at 33–37 Bridgegate, Rotherham ("the Rotherham property") in 1995. This is one of the two transactions which are the subject of these proceedings. VdB introduced the Claimant and then First London to the Rotherham property. VdB initially introduced Dencora as a potential purchaser of the freehold, but Dencora subsequently decided not to proceed. First London then acquired the freehold. The Claimant alleges that VdB never advised the Claimant that it could acquire the freehold. In a letter dated 13 June 1995 to Mr Gold of First London, which set out the terms for the acquisition of the freehold of the Rotherham property by First London and the simultaneous grant of a lease to the Claimant, Mr George Aldridge of VdB said:
"Van de Berg & Co will be looking for a fee for the introduction of this freehold investment equating to 1% of the purchase price including VAT. We will, obviously, not be looking for a letting fee and I trust you will find this to be in order".
First London denies that it ever paid any commission to VdB in respect of the Rotherham property. The Claimant alleges that commission was paid and that it was disguised as a payment for services to First London in respect of a quite separate property transaction in Blackpool.
The other property transaction which is the subject of these proceedings concerns a property at 153–155 High Street, Burton upon Trent ("the Burton property"), which was introduced to both the Claimant and the first Defendant by VdB in 1995. Once again, First London acquired the freehold and at the same time granted a lease to the Claimant. The Claimant alleges that it was never advised by VdB that it could purchase the freehold. In his letter informing the first Defendant of the Burton property Mr Aldridge said that he would "be grateful if [the First Defendant] could keep any fee arrangements with [VdB] confidential." The Claimant alleges that a secret profit or bribe of £5,000 was paid by First London to VdB.
The summary judgment applications
The Defendants cannot succeed in their applications for summary judgment pursuant to CPR Part 24 unless they are able to satisfy the court that the Claimant has no real prospect of succeeding in its claims and there is no other compelling reason why the case should be disposed of at a trial. Mr John Wardell QC, for the first Defendant, in his admirably concise and eloquent submissions, relied on the principles and approach of the Court of Appeal in . It is sufficient, for the purpose of this judgment, to say that Mr Wardell accepted that the Defendants have to show that the Claimant has no more than a fanciful, as distinct from a realistic, prospect of success: see also at  (Lord Woolf MR).
It is well established that, in a case which turns on disputes of fact, the summary judgment procedure is inappropriate if it would involve the court conducting a mini trial on the documents, including witness statements, or undertaking a minute and protracted examination of the documents: at , at  and .
The application notice of the first Defendant states that the basis of his application for summary judgment is that, even if VdB owed fiduciary duties to the Claimant and was in breach of them, there is no real prospect of the Claimant establishing (1) that the first Defendant knew of any such breach of duty, or (2) dishonesty on the part of the first Defendant, or (3) the payment of any bribe by the first Defendant. The application notice of the second to fourth Defendants does not contain any similar elaboration but, as is made clear in their skeleton argument, and was confirmed by their counsel, Mr David Wolfson QC, at the hearing, they have nothing to add to the submissions on behalf of the first Defendant on the issue of summary judgment against the Claimant.
The applications for summary judgment were made after the exchange of witness statements. The trial is due to take place at the beginning of June this year with a time estimate of 10 days. Excluding the witness statement of Mr Goldberger, there are approximately 82 pages of witness statements. The first witness statement of the first Defendant extends to 198 paragraphs and the...
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