Martin Charles Armstrong v Berrymans Lace Mawer LLP (Trading as BLM)
| Jurisdiction | England & Wales |
| Judge | Andrew Hochhauser |
| Judgment Date | 31 July 2020 |
| Neutral Citation | [2020] EWHC 2064 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: CR-2015-007978 |
| Date | 31 July 2020 |
[2020] EWHC 2064 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (CHD)
7, Rolls Building,
Fetter Lane, London
Mr Andrew Hochhauser QC
(Sitting as a Deputy Judge of the High Court)
Case No: CR-2015-007978
In the Matter of Transform Medical Group (CS) Limited
And in the Matter of the Insolvency Act 1986
Christopher Boardman QC, instructed by Charles Russell Speechleys LLP, for the Applicants
David Halpern QC, instructed by Mills & Reeves LLP, for the First Respondent
Ben Lynch QC, instructed by DWF LLP, for the Second Respondent
Hearing dates 4, 5, 6, and 7 February 2020
I direct that pursuant to CPR PD 29A para 6.1 no official shorthand note shall be taken of this Judgement and that copies of this version as handed down may be treated as authentic.
Andrew Hochhauser QC
APPROVED JUDGMENT
Introduction
This is the hearing of an issue (the “ Issue”) directed for determination by ICCJ Jones on 8 July 2019, namely “ whether or not the Joint Retainer files (defined in the parties' evidence) should be disclosed to HJI and / or to Hugh James”. The Issue arises in the context of an application issued on 11 January 2019 (the “ Application”), pursuant to section 234 and section 236 of the Insolvency Act 1986 (the “ 1986 Act”), by the Applicants, the joint administrators (the “ Administrators”) of Transform Medical Group (CS) Ltd (“ Transform”) seeking an order against the First Respondents, Berrymans Lace Mawer LLP (“ BLM”) that they “ deliver up to the Applicants' solicitors all files that they hold pursuant to retainers with the Company”.
On 28 June 2019, the Application came before ICCJ Jones and he made an order, sealed on 8 July 2019 (the “ July Order”), joining Travelers Insurance Company Ltd (“ Travelers”) as a party and requiring “ subject to (a) the Undertakings and (b) the “sifting” process set out below, the Joint Retainer Files shall be delivered up to the Applicants by the Respondent by 4.30pm on 27 September 2019” (the “ Deadline”). He further ordered “ the Respondent is to use its best endeavours to deliver up documents from the Joint Retainer files that have been through the “sifting” process including the monitoring to the Applicants every three weeks” (the “ Ongoing Obligation”). The effect was to determine the Application, save for the Issue and costs.
Notwithstanding the July Order, none of the Joint Retainer files (or any of their contents) were provided to the Administrators. On 17 September 2019, ICCJ Mullen made an Order by consent extending the Deadline to 4.30 pm on 27 December 2019.
On 4 December 2019, Travelers made an application for a stay of the disclosure procedure set out in the July Order, alternatively an extension of time (“ Travelers' Application”).
On 10 January 2020, Deputy ICCJ Shaffer made an Order on the Travelers' Application (for a stay of compliance until this hearing, alternatively an extension of time for compliance) further extending the Deadline to 21 February 2020, suspending the Ongoing Obligation until this hearing, and adjourning the Travelers' Application to this hearing. It is accepted that the determination of the Issue will render Travelers' Application largely irrelevant, save as to the issue of costs.
At the conclusion of the hearing before me, on 7 February 2020, I made an Order further extending the Deadline to 6 March 2020 and lifting the suspension of the Ongoing Obligation. That was followed by a further short hearing before me on 28 February 2020, when, upon certain undertakings being given by BLM, I extended the Deadline once again to 13 March 2020.
The Evidence
The evidence before me consisted of the following:
(1) The Witness Statement of Martin Armstrong dated 10 January 2019 (“ Armstrong 1”);
(2) The First Witness Statement of Mark Whittaker dated 13 February 2019 (“ Whittaker 1”);
(3) The Witness Statement of Andrew Sherwood dated 4 March 2019 (“ Sherwood 1”);
(4) The Witness Statement of Praveen Reddy dated 23 April 2019 (“ Reddy 1”);
(5) The Second Witness Statement of Mark Whittaker dated 5 June 2019 (“ Whittaker 2”);
(6) The Witness Statement of Richard James Locke dated 5 August 2019 (“ Locke 1”);
(7) The Witness Statement of Douglas John Keating dated 6 September 2019 (“ Keating 1”);
(8) The Third Witness Statement of Mark Whittaker dated 4 December 2019 (“ Whittaker 3”);
(9) The Second Witness Statement of Praveen Reddy dated 3 January 2020 (“ Reddy 2”);
(10) The First Witness Statement of David Jonathan Charles Gooding dated 7 January 2020 (“ Gooding 1”)
(11) The Second Witness Statement of Richard James Locke dated 27 January 2020 (“ Locke 2”);
(12) The Second Witness Statement of Douglas John Keating dated 29 January 2020 (“ Keating 2”);
(13) The First Witness Statement of Mark Andrew Harvey dated 3 February 2020 (“ Harvey 1”);
(14) The First Witness Statement of Jonathan Michael Herne dated 6 February 2020 (“ Herne 1”)
Despite the objection of Travelers to the late service of Locke 2 and Harvey 1, I permitted both witness statements to be adduced in evidence, giving Travelers a right of response to Harvey 1, if necessary, Keating 2 having already responded to Locke 2. No further evidence was produced.
Representation
At the hearing, the Administrators were represented by Christopher Boardman and Travelers by Ben Lynch. Since then both have been appointed to the ranks of Queen's Counsel. The quality of their oral and written submissions showed their elevation was richly deserved. BLM was represented by David Halpern QC. I am grateful to all Counsel for their assistance.
The Background
Transform carried on business as one of the UK's leading cosmetic surgeries, with 25 clinics across the UK, which provided (amongst other things), breast implants, manufactured by a French company, Poly Implant Prothese (“ PIP”). In 2010, Transform faced a large number of claims by female claimants in respect of allegedly faulty PIP breast implants, who claimed that there was a failure to use medical grade silicone in the manufacturing process, causing the implants to rupture. Proceedings were subsequently issued and on 17 April 2012 a group litigation order (“ GLO”) was made, with Hugh James LLP (“ Hugh James”) acting as lead solicitors for the claimants. Each claimant was also represented by their own solicitors. Hugh James and the other solicitors acted on the basis of conditional fee agreements (“ CFAs”).
Travelers provided product liability insurance to Transform over the period 31 March 2007 to 30 March 2011, which covered some, but not all, of the claims. Transform participated in the GLO. Transform and Travelers jointly engaged BLM to act on their behalf in relation to the insured claims. In addition, BLM was retained by Transform alone in relation to the uninsured claims and by Travelers alone in relation to additional matters. In June 2014, Transform voluntarily disclosed to the claimants in the GLO the extent of its insurance cover, despite an earlier unsuccessful application by the claimants to obtain such disclosure from Transform. It was apparent by then that, without insurance, Transform would be unlikely to have the resources to pay compensation or costs to successful uninsured claimants.
The insured claims were settled in 2015 and Transform then entered into administration, the Administrators being appointed on 30 June 2015. The uninsured claimants (to whom I will refer to hereafter as the “ Claimants”) obtained summary judgments against Transform on 20 October 2016. One effect of pursuing Transform to judgment was to trigger the CFAs under which the Claimants' solicitors were acting, thereby exposing the Claimants to the liability to pay their own solicitors' costs.
The Claimants then sought a third party costs order under section 51 of the Senior Courts Act 1981 (the “ section 51 costs application”) against Travelers, which had funded the entire costs of Transform's defence. That application succeeded at first instance and on appeal, but it was rejected by the Supreme Court: see Travelers Insurance Company Ltd v XYZ [2019] UKSC 48. As Lord Briggs recorded and held at [12] and [74], one important reason why the Claimants pursued Transform to judgment was in order to pursue a section 51 costs application against Travelers. The total costs claimed were at least £11.5 million.
On 11 April 2018 Charles Russell Speechlys (“ CRS”), acting on behalf of the Administrators, wrote to BLM stating: “ We are aware that your firm acted for [Transform] in relation to the PIP Breast Implant Litigation. These files are the property of [Transform] and accordingly we would be grateful if you would deliver the files to us as soon as possible.” They also relied upon section 234 of the Insolvency Act 1986, which provides that an office holder is entitled to delivery up of “ any property, books, papers or records to which the company appears to be entitled”.
On 9 May 2018, BLM wrote to CRS stating: “ Where there has been a joint retainer I believe that we are still required to obtain the consent of the other client i.e. the insurer – see Hamilton and Dixon Group Sipp v Hastings and Company (Solicitors)(sued as a firm) [2014] NICh 27. That consent is being obtained and I believe will not be withheld, whereupon your client will be entitled to a copy of the documents to which your client is entitled at...
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