Joseph Ackerman v Andrew Robert Thornhill QC and Others
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Snowden |
| Judgment Date | 26 January 2017 |
| Neutral Citation | [2017] EWHC 99 (Ch) |
| Docket Number | Case No: HC-2015-002539 |
| Court | Chancery Division |
| Date | 26 January 2017 |
[2017] EWHC 99 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Rolls Building, Fetter Lane,
London, EC4A 1NL
Mr Justice Snowden
Case No: HC-2015-002539
Philip Coppel QC and David Bedenham (instructed by Forsters LLP) for the Claimant
Graeme McPherson QC and Amanda Savage (instructed by Kennedys Law) for the First Defendant
John Wardell QC and Andrew Mold (instructed by Berwin Leighton Paisner LLP) for the Second to Fourth Defendants
Hearing dates: 7, 8 and 11 April 2016
This is an application by the Defendants to strike out the claim against them or for summary judgment in their favour. The claim was issued in June 2015 (the "2015 claim") and followed the trial and settlement of an earlier claim between the same parties that had been commenced in 2011 (the "2011 claim").
The application to strike out or for summary judgment is essentially made on the basis that the Claimant is barred by the doctrine of res judicata, or by the terms of a settlement of the earlier claim, from pursuing the 2015 claim. In response to the application, the Claimant has produced drafts of an Amended Claim Form and Amended Particulars of Claim (which were further amended at the hearing) for which he seeks permission to amend. The most significant proposed amendment is that the draft amended claim and pleading now includes an application to set aside the judgment of Vos J handed down on 21 December 2011 in the 2011 claim on the grounds that it was obtained by fraud, collusion and dishonesty.
In the conventional way, I shall consider whether the claim sought to be made in the final version of the draft Amended Particulars of Claim ought to be struck out, rather than consider that question on the basis of the existing pleadings.
Background
The litigation arises out of the ownership of a property business that Mr. Joseph Ackerman ("Joseph"), and his brother Mr. Jack Ackerman ("Jack") established in the early 1960s, known as the Ackerman Group (the "Group"). The Group consisted of a large number of property companies, some individual properties, a sub-group of companies known as the Superetto group, a Gibraltarian trust, a charitable company (Delapage Limited) and its two non-charitable subsidiaries (Haysport Limited and Twinsectra Limited) and a company called Loch Tummel Limited. In general terms, Joseph and Jack each had a 50% interest in the various parts of the Group and when Jack died in 1989, his widow, Mrs. Naomi Ackerman ("Naomi") inherited his share.
After Jack's death, the affairs of the Group were run by Joseph, assisted by his son-in-law Daniel Wulwick ("Danny"). However, from 2001, Jack and Naomi's son, Barry Ackerman ("Barry") became involved in the Group's business and began to work part-time with Joseph. After a relatively short time, in about 2004, the relationship between Joseph and Danny (on the one hand) and Naomi and Barry (on the other) deteriorated. This culminated in a decision in February 2006 that there should be a demerger of Joseph's and Naomi's one-half interests in the Group.
The demerger did not proceed without difficulty. Naomi complained about the lack of information provided by Joseph and about a number of transactions which he undertook on his own account.
Mr. Andrew Thornhill QC ("Mr. Thornhill") is a barrister specialising in tax matters, who first met Joseph in 1977 and had been a long-standing adviser to him in relation to both personal matters and matters in relation to the Group. When Mr. Thornhill heard about the difficulties which had arisen, he offered his services to the parties to assist in concluding the agreed demerger, and in September 2008 he was appointed by both sides to act as an expert to determine the basis for the demerger of the Group. Mr. Thornhill's appointment was initially made under a document dated 22 September 2008, which was then superseded by a revised document dated 5 December 2008 entitled the "Further Agreed Way Forward Agreement".
In outline it was agreed that Mr. Thornhill should undertake a lottery (the "Lottery") to decide how the various individual companies, properties and other assets of the Group should be allocated between Joseph and Naomi, and that he would have exclusive authority from both of them to determine the form of the demerger. It was also agreed that after the Lottery but before the division took place, Mr. Thornhill would have authority to determine adjustments to be made in respect of a variety of matters including, in particular, any cash taken out of the companies for private purposes and in respect of inter-company indebtedness.
The Lottery to divide the various assets was performed by Mr. Thornhill on 3 March 2009, but the results were not immediately disclosed to the parties. The Further Agreed Way Forward Agreement of 5 December 2008 was then superseded by an agreement drafted by Mr. Thornhill and entered into on 25 June 2009 entitled "A Revised Further Agreed Way Forward Agreement" (the "RFAWF Agreement"). Under the RFAWF Agreement, both sides gave Mr. Thornhill extensive powers of investigation and decision-making, together with the authority to deal on their behalves with the assets of the Group in order to ascertain the adjustments that were required so as to achieve a fair division of the Group between Joseph and Naomi.
In his judgment in the 2011 claim, Vos J held that Joseph and Danny sought to undermine the process to which they had agreed under the RFAWF Agreement by refusing to provide Mr. Thornhill with the necessary information concerning the Group to allow him to ascertain the adjustments to make. Vos J expressed the view that this was very likely to have been because Joseph did not want to separate the Group, but wanted to be able to continue to run it himself using Naomi's half interest without consulting her, as he had in the past.
Eventually, on 5 January 2011, Mr. Thornhill published a "Provisional Adjustment Report" setting out the result of the Lottery in 2009 and the adjustments he had decided to make, together with what he had done to give effect to those matters. In the Provisional Adjustment Report, Mr. Thornhill determined that Joseph had removed a substantial quantity and value of assets from the Group, and that as a consequence (i) the entirety of the Group and jointly owned properties should be transferred to Naomi or a company that she owned (the Fourth Defendant, BANA One Limited ("BANA")); (ii) Naomi had a further claim of £20.33 million against Joseph; and (iii) Haysport Limited and Twinsectra Limited had claims for £9 million against Joseph. The Provisional Adjustment Report also disclosed that in late December 2010 Mr. Thornhill had used his powers and authority under the RFAWF Agreement to carry his determination into effect as regards the transfers of shares and assets to Naomi and BANA, and the resignation of Joseph from the boards of the relevant companies.
After an exchange of letters before action, on 22 April 2011, Joseph commenced the 2011 claim against Mr. Thornhill, Naomi, Barry and BANA, challenging the Provisional Adjustment Report and what Mr. Thornhill had done in purported exercise of his power of attorney on behalf of Joseph.
Mr. Thornhill gave early disclosure in the proceedings in May 2011, and this was followed by disclosure being given by all parties in August 2011. Following disclosure having taken place, Amended Particulars of Claim were served by Joseph on 19 October 2011, and an expedited trial commenced before Vos J on 23 November 2011.
Vos J handed down judgment in the 2011 claim on 21 December 2011: see [2011] EWHC 3428 (Ch). In paragraph 6 of his judgment, Vos J summarised Joseph's allegations,
"In these proceedings, Joseph alleges that Mr Thornhill was guilty of actual bias, collusion and partiality in favour of Naomi and her side of the family, that he acted unfairly and deceitfully, and that he materially departed from his instructions contained within the [RFAWF] Agreement. As a result, Joseph contends that the Report and the steps taken in pursuance of it are invalid and of no effect, and the breaches are so serious as to amount to a repudiation of the [RFAWF] Agreement which is said to have been accepted and therefore be at an end."
This summary was expanded in paragraphs 152 – 160 of the judgment which included a list of issues based upon a list produced by Joseph's counsel after the evidence had been concluded. At paragraphs 257–279 of his judgment, Vos J identified the four main legal questions underlying the case – the binding nature of expert determination, procedural unfairness, the materiality of any departure from the expert's instructions, and bias. In relation to the last of these, Vos J made the point, at paragraph 275, that the allegation of bias was an allegation of actual bias as opposed to the appearance of bias. He supported that point with citation of a passage from the judgment of Robert Walker J in Macro v Thompson (No.3) [1997] 2 BCLC 36 at page 65 that referred to older cases which equated actual bias with "fraud or collusion" or "gross fraud or partiality".
At the trial, Joseph did not give evidence, and it was left to Danny to explain his position. Vos J was critical of this, given the "serious allegations" that were being levelled at Mr. Thornhill (see e.g. paragraphs 173 and 186 of the judgment). He also found that Danny was a wholly unsatisfactory witness, who had "little or no grasp of the difference between truth and falsehood" (paragraph 182). Vos J was not wholly impressed with Barry either, commenting that he was on occasions deliberately evasive (paragraph 191). Vos J did, however, accept...
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