Laing v Taylor
| Jurisdiction | England & Wales |
| Judge | Lord Justice Buxton,Lord Justice Laws,Lord Justice Moses |
| Judgment Date | 15 November 2007 |
| Neutral Citation | [2007] EWCA Civ 1146 |
| Docket Number | Case No: A2/2007/0528 |
| Court | Court of Appeal (Civil Division) |
| Date | 15 November 2007 |
[2007] EWCA Civ 1146
Lord Justice Buxton
Lord Justice Laws and
Lord Justice Moses
Case No: A2/2007/0528
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
MR JUSTICE LANGLEY
Mr Michael Pooles QC and Mr William Flenley (instructed by Mills & Reeve) for the Appellant
Mr Jonathan Marks QC (instructed by McBride Wilson & Co) for the Respondent
Hearing dates: 30 October 2007
Judgement
Introduction
This is an appeal, brought with the leave of the judge, against the refusal of Langley J to strike out as an abuse of process a claim for negligence brought by Mr Laing against Taylor Walton [TW], a firm of solicitors. For reasons that will become apparent, I will refer to those proceedings as the second claim.
Mr Laing is an architect and property developer. Over the years he has had a number of business dealings with, and a relationship of friendship with, a Mr Ian Watson. Mr Watson has also for many years been active in property development. He conducts that activity partly in his own name and partly through corporate entities, those with which we will be concerned being Burkle Holdings Ltd [Burkle], which is owned as to some 85 per cent by Mr Watson, and European Securities Ltd [ESL], an Isle of Man company beneficially owned by Mr Watson.
In 1999 Mr Laing became aware of a business opportunity to develop a site at High Wycombe, which he intended to promote through a company formed for that purpose, New Federal Inc [NFI]. Mr Laing needed funding and, after having secured other investors, approached Mr Watson for the balance of the amount required of some £500,000. In October 1999 it was informally agreed between Mr Laing and Mr Watson that Burkle would loan that sum to NFI. However, in November 1999 that structure was changed, so that Burkle would make the loan to Mr Laing, who would then immediately make the same loan to NFI. The dispute between Mr Laing and Mr Watson, which founded the litigation between them (which I will refer to as the first case), turned on the terms on which that loan was made.
Mr Laing said that in November 1999 it had been agreed that Burkle would receive a 12 1/2% share of the profits of the venture, in place of the 12 1/2% shareholding originally to be allocated to Burkle or Mr Watson, security for that obligation on Mr Laing's part to be provided by a charge in favour of Burkle over a 12 1/2% shareholding in NFI that under the agreement was to be allocated to Mr Laing. Mr Watson on the other hand said that there had been not one but two agreements. The first agreement (which I will refer to as Mr Watson'sfirst agreement), which was not affected by the changes in November 1999, was that Mr Watson or his nominee would receive a 12 1/2% shareholding in NFI. That allocation to Mr Watson was said by him to have been in recognition of his procuring for the venture the £500,000 balance of the funding. The second agreement (which I will refer to as Mr Watson'ssecond agreement) was in the same terms as that alleged by Mr Laing, save that when the adjustment was made in November 1999 the security for Mr Laing's obligation to pay Burkle the agreed share of the profits of the venture was to be provided by a charge over shares in NFI allocated to an entity known as the Jedburgh Trust. Those shares were different from the shares to be issued to Mr Watson under Mr Watson's first agreement.
The stark difference between Mr Laing and Mr Watson was therefore that Mr Watson claimed to be entitled, either directly or through Burkle, both to a 12 1/2% share in the profits of the development and to a beneficial interest in a 12 1/2% shareholding in NFI. Mr Laing contended that all that Mr Watson had been granted beneficially was the 12 1/2% share in the profits. His interest in the 12 1/2% shareholding was only as security for that share in the profits.
Mr Laing caused a 12 1/2% shareholding in NFI to be issued to Burkle in November 1999. That transfer on its face appeared to be to Burkle beneficially, something that Mr Laing later claimed to have been a mistake. In 2000 the shares, still not expressed to be by way of charge or security, were at Mr Watson's request re-registered in the name of ESL. Differences then arose between the protagonists, both in relation to the development itself and in relation to the status of the shares held by ESL. The loan agreement was renegotiated in 2002. Mr Laing and Mr Watson again strongly disagree as to the effect of that step. Mr Laing says that the new agreement was the outcome of a previous oral agreement, and was intended entirely to abrogate the 1999 agreement by cancelling Mr Laing's obligation to pay the 12 1/2% profit share to Mr Watson in return for a recognition by Mr Laing that the shares held in the name of ESL were, as Mr Watson contended, held beneficially. Mr Watson says that the 2002 agreement was only concerned with the loan provisions. It did not refer to the 1999 agreements as to profit share because it was clear that Mr Watson and Mr Laing disagreed as to the implications of those agreements, and no variation of them was possible. As a result, in Mr Watson's view the beneficial status of ESL's holding remained unchanged, as did Mr Laing's obligation to pay over to Mr Watson 12 1/2% of the profits of NFI.
In the first case, heard in 2005, HHJ Thornton QC held, after a seven day trial in which he heard evidence from, inter alios, Mr Watson and Mr Laing, that Mr Watson's case as to the agreements and understandings between the two men had been true in its entirety. Accordingly, Mr Watson obtained a declaration that ESL's 12 1/2% holding was beneficial, and Burkle's entitlement to a 12 1/2% share in the profits of the venture, as provided under the 1999 agreement, remained binding upon Mr Laing. That decision was not appealed, Mr Laing having been advised of the difficulty of appealing decisions of fact made by a judge who had heard live evidence.
The allegations of negligence against Taylor Walton
The agreements informally made both in 1999 and in 2002 were followed by written agreements. I shall refer to those as, respectively, the 1999 Written Agreement and the 2002 Written Agreement. The drafting of those agreements was undertaken by a Mr Mathew Kelly, a partner in TW. Mr Kelly had in the past acted for both Mr Laing and Mr Watson in various matters. Whether he was instructed in the drafting of these agreements by Mr Laing as well as by Mr Watson is a matter of controversy in the second claim. On the assumption that Mr Kelly was instructed by Mr Laing, or alternatively owed a tortious duty of care to Mr Laing, Mr Laing complains in this, the second claim, that Mr Kelly was negligent in a number of respects, as set out in paragraph 18 of the Particulars of Claim. Those allegations can for present purposes be grouped under two main headings. First, that in or about preparing the 1999 Written Agreement Mr Kelly failed to advise Mr Laing that it must be clearly recorded in that agreement, as it was not, that Mr Laing held his 12 1/2% shareholding in NFI beneficially, and that the shares registered in Burkle's name were held by way of security only. Second, that Mr Kelly failed to draft the 2002 Agreement in accordance with his instructions, which were that the 2002 Written Agreement was entirely to abrogate the 1999 Written Agreement. That abrogation of the 1999 Written Agreement, and its replacement by the 2002 Written Agreement, would have meant that Burkle, through ESL, for the first time obtained a beneficial interest in the 12 1/2% shareholding in NFI, but Mr Laing ceased to have any obligation to pay over a 12 1/2% share in the profits of the venture to Mr Watson or Burkle.
The pleading then proceeded, in its paragraph 19.1, to say that Judge Thornton's findings in the first case had been wrong, and that Mr Laing “was exposed to the risk of such adverse findings….because of the breach of retainer, breach of duty and negligence” of TW. It is that claim that is said in the present application to be an abuse of process, in that it relitigates the findings reached by Judge Thornton in the first case between Mr Laing and Mr Watson.
A further feature of the case, which it will be convenient to mention now, is that in front of Judge Thornton there was a witness statement from Mr Kelly that appeared in part to support Mr Laing's case; and in interlocutory proceedings before HH Judge Toulmin QC, to which we will come in due course, Mr Kelly gave live evidence that also appeared to support the case then being made by Mr Laing. The full nature and implications of this evidence will have to be considered hereafter.
Abuse of process and the approach of this court
The nature of a claim of abuse of process, and the categories of circumstance in which it can arise, are well settled, albeit that the law has inevitably to be stated in somewhat general terms. It will be convenient to take that from the speech of Lord Diplock in Hunter v Chief Constable of the West Midlands Police [1982] AC 529 at p 536B:
[abuse of process] concerns the inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of it procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among...
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