John Brian Hopkinson v Jane Hickton and Others
| Jurisdiction | England & Wales |
| Judge | Lord Justice Patten,Lady Justice King |
| Judgment Date | 03 November 2016 |
| Neutral Citation | [2016] EWCA Civ 1057 |
| Docket Number | Case No: A3/2014/3807 |
| Court | Court of Appeal (Civil Division) |
| Date | 03 November 2016 |
[2016] EWCA Civ 1057
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION, BIRMINGHAM DISTRICT REGISTRY
His Honour Judge Purle QC
Case Number 8503 of 2012
IN THE MATTER OF MAXIMUS SECURITIES LIMITED
AND IN THE MATTER OF THE COMPANIES ACT 2006
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Patten
and
Lady Justice King
Case No: A3/2014/3807
Andrew Mold (instructed by Harrison Clarke Rickerbys Ltd) for the Appellant
Avtar Khangure QC (instructed by FBC Manby Bowdler LLP) for the Respondents
Hearing date: 6 October 2016
Approved Judgment
This is an appeal by the petitioner, Mr Hopkinson, against an order of HH Judge Purle QC, sitting as a judge of the Chancery Division, dated 3 November 2014. The judge dismissed an application by Mr Hopkinson to enforce the terms of a Tomlin Order dated 6 February 2014 which compromised an unfair prejudice petition that Mr Hopkinson had brought in 2012 in relation to the affairs of the fourth respondent, Maximus Securities Limited ("MSL"). Under the terms of the schedule to that Order, the fifth respondent, Maximus Group Limited ("MGL"), agreed to purchase the petitioner's shares in MSL at their open market value as of 30 September 2010. MSL is a single-purpose vehicle whose only asset was the value of some land at Clay Cross in Derbyshire ("the Clay Cross land") which was registered in the name of a wholly owned subsidiary, Cavendish Estates (London) Limited ("CELL"). The schedule therefore provided for what it described (in clause 2(c)) as an independent valuation of the Clay Cross land and for the value of the petitioner's shares in MSL to be determined in the light of that valuation.
Clause 2(d) of the schedule provided as follows:
"The procedure for the determination of the value of the Land shall be:
The Land shall be valued by a suitably qualified independent valuer.
The Respondents will provide to the Petitioner's solicitors the names of three suitable Valuers with relevant experience of valuing such land within 28 days of the date of this order.
The Petitioner shall select one of the Valuers within a further 7 days.
The parties' solicitors shall jointly instruct the selected Valuer ("the Valuer") to value the Land within a further 14 days. In the event that the Petitioner is unwilling to select any of the proposed Valuers, then an appropriate independent valuer with the relevant experience of valuing such land shall be nominated by the President for the time being of the Royal Institute of Chartered Surveyors and the President's nominee shall be the selected valuer and shall carry out the valuation of the Land.
Each party shall be entitled to make written submissions to the Valuer within 14 days of the Valuer's joint instruction.
The Valuer shall value the land acting as an expert and not an arbitrator.
The Valuer shall within a further 28 days report to the parties' solicitors with his determination of the value of the Land and details of this rationale and supporting evidence sufficient to facilitate the proper determination of the value of the shares pursuant to this agreement.
The Valuer's valuation of the Land shall be binding on the parties save in the event of manifest error by the Valuer.
The costs of the Valuer in determining the value of the Land shall initially be borne equally as between the Petitioner on one hand and the Respondents on the other. However the ultimate responsibility for the costs of the Valuer fall to be determined in accordance with paragraphs 4–6 below."
The schedule (in clause 2(e)) goes on to specify the procedure for the valuation of the petitioner's shares once the value of the Clay Cross land has been determined. Under clause 3, the value of the shares is to be paid by MGL within 21 days of an independent accountant certifying the value of MSL. The valuation of MSL also has cost consequences. If the shares are valued at more than £300,000 then the respondents are to pay the petitioner's costs; if less than £300,000 the petitioner is required to pay the respondents' costs. If the valuation is exactly £300,000 there is to be no order for costs.
Following the making of the Tomlin Order the respondents' solicitors provided the names of three valuers to the petitioner's solicitors. They included Mr Peter Clarke FRICS, a partner in Jones Lang La Salle ("JLL") in Birmingham. Mr Clarke was at the time the Head of Regional Valuation for JLL and managed about 70 valuers based in 12 regional offices across the UK.
On 29 January 2014 Mr Clarke was selected by Mr Hopkinson to carry out the valuation of the Clay Cross land in accordance with the Tomlin Order. A joint letter of instruction was sent to him on 10 February 2014 followed by written submissions from the parties on 27 February. On 21 February in his letter accepting the appointment to carry out the expert valuation he confirmed that the land would be valued at market value in accordance with the standard published RICS guidelines and that his report would be fully compliant with the CPR. He acknowledged that he would have "an overriding duty of independence and impartiality" and said that he had carried out the checks necessary to confirm that he had no conflicts of interest in acting as the expert valuer.
His report was provided to the parties on 11 April 2014. In it he valued the Clay Cross land as at 30 September 2010 in the sum of £5.9m. MSL had considerable debts and liabilities. Its banking facilities had been withdrawn in 2012 and CELL was placed into administration. In July 2013 the administrators sold the Clay Cross land to St Modwen Properties plc for £4m. Given the scale of MSL's liabilities, its shares can have no value unless the Clay Cross land was worth at least £12.5m. The valuation at £5.9m meant that the company in 2010 had a negative value of about -£6.5m and Mr Hopkinson's shares are therefore worthless.
In paragraph 1.05 of his report, headed "Disclosure of Interest", Mr Clarke referred to his previous involvement as a valuer with the Clay Cross land:
"As mentioned in paragraph 1.01.04, I have had overall responsibility for valuing the St Modwen Properties Plc portfolio of properties which, after July 2013, has included the subject property (therefore included in the November 2013 valuation that was undertaken on their behalf). Whilst I did not personally undertake the valuation, I had responsibility for overseeing it and formally "signed it off". As such, I had some familiarity with the property prior to receiving these instructions and was aware of the purchase price as at July 2013 (which in any event has been confirmed in the parties' submissions). This valuation was undertaken over three years after the valuation date in this matter, in a different market, for a different purpose and under different circumstances. I confirm that the St Modwen valuation exercise did not reveal any new or different information that would either supplement or contradict the information that has been made available to me in this matter. I do not consider, therefore, that this valuation advice conflicts with my expert advice in this report."
This was the first occasion that Mr Clarke had disclosed his role in the 2013 valuation for St Modwen to both parties. When he was first approached by the respondents' solicitors in January 2014 to find out whether he was willing to act as the expert valuer and for an estimate of his fees, Mr Clarke had disclosed to them as an indication of his relevant experience that he did provide valuation advice to various property companies including St Modwen who had a large land bank within their portfolio. He did not, however, mention any involvement with the Clay Cross land nor was there any reference to this or to St Modwen more generally in the C.V. he submitted to the parties on 13 January.
In his witness statement prepared for the hearing before Judge Purle, Mr Clarke explained that although he signed off the 2013 portfolio valuation for St Modwen, he was not involved with the valuation of the individual properties within it such as the Clay Cross land. His only role was to carry out what he described as a high level review of the portfolio valuation and he did not immediately connect the reference in it to "Clay Cross" with the land he was asked to value in 2014. The computerised conflict check he carried out prior to replying to the respondents' solicitors on 13 January did not make a link between the 2013 valuation and the proposed instructions which explains why he referred in general terms to having acted for St Modwen but made no specific reference to the Clay Cross land. The statement about there being no conflicts which was contained in his letter of 21 February accepting the joint instructions to act as an expert valuer was made on the same basis.
Mr Clarke said that it was only when he received the respondents' written submissions on valuation that he became aware that the Clay Cross property which St Modwen had purchased in July 2013 for £4m was the subject property. He said that he considered whether this gave rise to a conflict of interest or otherwise compromised his independence having regard to the rules in Part 35 of the CPR and in the RICS Practice Statement and Guide Note about acting as an expert witness but decided that it did not. He explained his...
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