Lloyds Bowmaker Ltd v Britannia Arrow Holdings Plc

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
Judgment Date18 March 1987
Judgment citation (vLex)[1987] EWCA Civ J0318-1
Docket Number87/0253
Date18 March 1987
Lloyds Bowmaker Limited
Britannia Arrow Holdings PLC


A.G. Lavens (T/A Commend Communications)(by original action)
Britannia Arrow Holdings PLC
Lloyds Bowmaker Limited


A.G. Lavens (T/A Commend Communications)


Sprigchoice Limited (By Counterclaim)

[1987] EWCA Civ J0318-1


Lord Justice Dillon

Lord Justice Glidewell






Royal Courts of Justice

MR J.P. BURKE Q.C. and MR C. STUTT, instructed by Messrs Matthew Trackman Lifton & Spry, appeared for the Appellant (Mr A.G. Lavens).

MR P.A. TWIGG Q.C. and MR R.W. MOXON-BROWNE, instructed by Messrs Smyth & Co., appeared for the Respondents (Britannia Arrow Holdings PLC).


I will ask Lord Justice Glidewell to give the first judgment.


By a specially endorsed writ issued in May 1984 the plaintiffs, Lloyds Bowmaker, as assignees of Hamilton Leasing Limited, claimed £63,138.09 as arrears of rental under 27 agreements for the leasing of telephone equipment made between Hamilton Leasing and the defendants, Britannia Arrow, between September 1981 and July 1983.


Britannia Arrow's defence in summary is that the rental charges under the agreements were grossly excessive and unfair and that Britannia Arrow had entered into the agreements in reliance on the advice of Mr Lavens, the third party, who purported to be an expert in the field of telephone equipment and was alleged to have acted as the agent of Hamilton Leasing. The defence claims rescission of the agreements and counterclaims for negligence by Mr Lavens.


On 6th August 1984 Britannia Arrow issued a third party notice against Lavens making allegations to which I shall refer later. On 20th August 1984 Mr Justice Kennedy, on the defendants' ex parte application, granted a Mareva injunction against Mr Lavens and against a company called Sprigchoice Limited. The injunction restrained Mr Lavens and the company from "disposing of or removing from the jurisdiction or otherwise disposing of or dealing with or parting with their assets within the jurisdiction" in excess of £681,686, and save for the sum of £1000 a month. It also restrained Lavens and the company from disposing of or dealing with the sum of £500,000 or other receipts in respect of 28 rental agreements. Mr Lavens and the company were also required to disclose information which would, the defendants hoped, enable the monies received by Mr Lavens by virtue of the transactions to be traced.


These injunctions were varied on 20th December 1984 and again on 1st May 1985, so as to allow various payments for Mr Lavens' costs, but otherwise remain in force.


On 2nd July 1986 Mr Lavens and Sprigchoice applied on summons to Sir Neil Lawson for the discharge of the Mareva injunction on the general ground that it was obtained as a result of material non-disclosure by the defendants. The application was dismissed. With the leave of Sir Neil Lawson, Mr Lavens now appeals against that decision.


The third party notice alleges that Mr Lavens, trading as Commend Communications, specialised and had expertise in the supply and installation of telecommunications equipment for office purposes. It is said that in February 1981 the defendants, by Mr White (their company secretary), sought Mr Lavens' advice as to the supply of telecommunications equipment for their offices, and that he agreed to give such advice. It is alleged that Mr Lavens knew, or ought to have known, that neither Mr White, nor Mr Tyler, the defendants' office manager, had any expertise in matters relating to telecommunications equipment, and that they would rely upon him to advise them, amongst other matters, as to whether the prices charged to the defendants for such equipment were fair.


In February 1981, on Mr Lavens' advice, the defendants agreed to acquire an internal office telephone system. The equipment was supplied by Commend Communications to Hamilton Leasing, from whom the defendants agreed to lease the equipment. Thereafter the defendants entered into 26 further similar agreements with Hamilton Leasing, all relating to further equipment supplied by Commend Communications. The rental charge made by Hamilton Leasing was of course related to the price charged by Commend Communications for the equipment and its installation. In each case the rental agreement was for a period of five years. It is alleged that on the first agreement the price charged to Hamilton Leasing was reasonable, and thus the rental charge was approximately what might reasonably be expected. However, starting with the second agreement, it is alleged that Commend Communications, to Mr Lavens' knowledge, charged to Hamilton Leasing prices which were excessive and which gradually became less and less reasonable. The effect was that the rental charge being made by Hamilton Leasing vastly exceeded what would have been reasonable. Thus, in relation to the penultimate agreement entered into on 14th July 1983, it is alleged that the quarterly rental charged was £3,119.14, whereas a fair and reasonable quarterly rental would have been the sum of £53.65. In total it is alleged that Britannia Arrow under the agreements were required to pay total rentals over the five-year period of some £724,486, whereas a reasonable total rental would have been the sum of £42,800.40.


Britannia Arrow's claim against Mr Lavens is put in a number of alternative ways: firstly, it is alleged as breach of an implied term in a contract between them; secondly, in negligence; thirdly, as the result of misrepresentation (the representation alleged being implied, not expressed); and, finally, in deceit.


The material before Mr Justice Kennedy, in addition to the pleadings to which I have referred, consisted of three affidavits. The deponents were Mr White, Mr Tyler and Mr Simmonds, a telecommunications consultant whose evidence was that the prices charged were excessive and unreasonable. Mr White's evidence was to the effect that he sought Mr Lavens' advice in relation to the first agreement, and that he signed that agreement in the belief that the rental was a fair, genuine and reasonable rental. Thereafter, White left it to Tyler to sign the agreements. Mr Tyler's evidence was that he merely signed the agreements as an acknowledgment that the equipment had been installed. He said that he gave no attention to the rental figure because it was no part of his responsibility to check it. He did not inform White of the amount being charged. Moreover, Tyler alleged that he only had authority to expend sums up to £200 without reference to higher authority and he could not believe that Lavens thought he had authority to incur obligations of the size represented by the various agreements.


Mr White's affidavit exhibits a number of specimen rental agreements in which the supplier of the equipment is described as Commend Communications. In paragraph 13 of his affidavit Mr White says:

"In all my dealings with Lavens I understood that Commend Communications was his business name. I did not realise that it belonged to a £100 company. Lavens never disclosed the existence of Sprigchoice Limited to me or that his organisation was a limited company."


At the end of his affidavit Mr Tyler says:

"I now know that Commend Communications is a business name of a £100 company called Sprigchoice Limited. Nowhere from Lavens' letter does this fact appear and in all my dealings with Lavens he never disclosed this fact to me."


In Mr White's affidavit he exhibits a copy of a telex from Hamilton Leasing in which that company say that they sometimes paid by cheque made out to Sprigchoice. Mr White also exhibits a report upon Sprigchoice Limited which reveals it to be a £100 company of which Lavens is the sole director and owner of 99 shares, his wife being the owner of the remaining share. Mr White also produces the accounts of Sprigchoice Limited for the years 1981–1983.


Following the grant of the Mareva injunction, third party directions were given on 30th November 1984. Thereafter, Lavens filed a defence to the third party notice. This alleges that it was Sprigchoice who traded as Commend Communications, and that it was Sprigchoice using that name which supplied all the equipment to Hamilton Leasing. It denies that Lavens personally owed any duty to Britannia Arrow, either in contract or in tort. The defence neither admits nor denies that the prices charged on some of the later agreements were excessive. It says in effect that Britannia Arrow is a substantial company perfectly capable of making its own business decisions, and, if it chose to enter into a number of rental agreements without checking the prices or obtaining alternative quotations elsewhere, that is its concern. It is specifically denied that Tyler or White relied upon Lavens' advice. Misrepresentation, negligence, breach of contract and deception are all denied.


As I have said, it was almost two years after the grant of the Mareva injunction that Lavens' application to discharge it came before Sir Neil Lawson. The point made before the learned judge, and made before us, was, in short, that a party to proceedings who seeks an injunction ex parte, particularly a Mareva injunction, owes a duty to disclose to the court all facts which are material to the proceedings. It is alleged that the information put before Mr Justice Kennedy did not disclose all material facts, or draw them to the attention of that learned judge, and that accordingly the Mareva injunction should be discharged.


Mr Burke, for Mr Lavens, makes the following submissions as to...

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