Nigel Cayzer v Robert Beddow
| Jurisdiction | England & Wales |
| Judge | Lord Justice Mummery,Lord Justice Keene,Lord Justice Jacob |
| Judgment Date | 29 June 2007 |
| Neutral Citation | [2007] EWCA Civ 644 |
| Court | Court of Appeal (Civil Division) |
| Date | 29 June 2007 |
| Docket Number | Case No: A2/2006/1010 |
[2007] EWCA Civ 644
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 TUGENDHAT
HO OOO7193
Lord Justice Mummery
Lord Justice Keene and
Lord Justice Jacob
Case No: A2/2006/1010
Mr Alan Steinfeld QC and MR Stuart Adair (instructed by SJ Berwin LLP) for the Appellant
Mr Nigel Douglas Jones QC and Mr Colm nugent (instructed by Messrs AR Legal Solicitors) for the Respondent
Hearing dates: 24 th April 2007
Introduction
This is an appeal from an order dated 27 April 2006 made by Tugendhat J on the basis of two judgments. He handed down the first judgment on 20 March 2006 (the Judgment). On 4 May 2006 he delivered the second judgment (the Further Judgment) dealing with the form of the order to be made in consequence of the Judgment. According to the grounds of appeal there are serious inconsistencies within the Judgment and between it and the Further Judgment.
The dispute is about the beneficial ownership of 67,500 shares in CVS (UK) Limited (the Company), which was incorporated in 1999 to raise finance for the acquisition of veterinary surgeries and practices. The shares are currently held in the names of two bodies, neither of which is a party to the action: Perth Business Corporation (PBC), a Panamanian corporation, and Gulf Securities Corporation (GSC).
The court inquired about the likely value of the shares which were the subject matter of such costly and drawn out proceedings, but received no information or indication from counsel on this point. Presumably the parties must think that their worth justifies the expense. Attempts at mediation have failed.
The principal points of dispute in the litigation are (a) whether a binding oral contract was concluded at a meeting on 11 February 1998 (and affirmed on 27 July 1998) in connection with the promotion of a company and the issue of shares in it (the contract point); and, if not, (b) whether, as a result of the parties' conduct, shares issued are held on a constructive trust (the constructive trust point).
Preliminary issues on appeal
The preliminary issues for decision on this hearing of the appeal are easier to explain by starting with the judge's order rather than with the origins of the dispute and the institution of legal proceedings.
The judge's order contains a declaration and directions about the destination of the disputed shares. The order is made against Mr Nigel Cayzer, who is the defendant in the proceedings and the appellant in this court. The order is in favour of Mr Robert Beddow, a former stockbroker, who is the claimant in the action and the respondent in this court.
Mr Cayzer is ordered to direct PBC and GSC to transfer to him the full legal and beneficial interest in the shares held by them in the Company. The judge found that Mr Cayzer has power to give directions about the shares to those entities. The judge also found that Mr Cayzer holds that power in trust for Mr Beddow; that Mr Cayzer held the right and opportunity to subscribe for the disputed shares, prior to a Subscription Agreement dated 13 August 1999, on trust for Mr Beddow; and that he is liable to account to Mr Beddow for the shares or their value. Mr Cayzer is accordingly ordered to take all such steps as are necessary to transfer the full legal and beneficial interest in the shares to Mr Beddow by 24 June 2006 upon Mr Beddow paying to Mr Cayzer a sum equivalent to the price paid in respect of the shares pursuant to the Subscription Agreement. Failing such transfer, Mr Cayzer is ordered to pay damages and equitable compensation to Mr Beddow.
Mr Cayzer is also ordered to pay Mr Beddow's costs of the action and to make an interim payment of £110,000.
Neuberger LJ granted permission to appeal on 27 July 2006 for all 18 grounds of appeal, but on the basis that the parties should consider having a preliminary hearing of the appeal. The purpose of such a hearing would be to determine whether a clear point or points could be identified and decided. This might be a relatively short way of disposing of the whole appeal without having to decide the remaining grounds of appeal on law, mixed law and fact and fact.
The appeal was complicated by the service in November 2006 of a respondent's notice running to 21 pages seeking to uphold the Judgment on other grounds.
The outcome of the direction of Neuberger LJ and of further consideration by him and the parties is an agreed document setting out three preliminary issues of law for determination at this hearing: first, whether the judge was wrong in law to find a binding contract; secondly, whether the judge was wrong in law to find that the dealings between the parties gave rise to Mr Beddow's beneficial interest in the shares in accordance with the principle in Pallant v. Morgan [1953] Ch 43.
As for the third issue, the parties were initially unable to agree its scope and formulation. I directed that, in the absence of agreement, the court would decide whether it should determine any preliminary issue in addition to the contract point and the constructive trust point and, if so, what that issue is and how it should be answered. It has since been agreed that the third issue should be as formulated by Mr Alan Steinfeld QC, who appears on behalf of Mr Cayzer. (He did not appear in the court below.) It is common ground, however, that the third issue adds nothing of substance to the first two issues. It is only a matter of labelling the legal relationship between the parties.
The agreed preliminary issues to be determined at this hearing are as set out in the Appendix to the judgments of this court.
Practice points
Before turning to the salient facts, two points of practice call for comment.
The first point is that, in my view, this case should have been brought in the Chancery Division. This is not a criticism of the judge, who was given no choice in the matter and had to try the case that was listed for hearing before him. Nor is it a criticism of counsel who appeared in this court, none of whom were instructed in the case when the proceedings were instituted in the Queen's Bench Division.
The subject matter of the case includes the promotion of the Company, the beneficial ownership of shares in it, the possible intervention of equity to impose a constructive trust on the shares and a relationship variously described as a joint venture, a project or a partnership at will. Breach of the equitable duty of confidence was also pleaded, though later abandoned. These are obviously all matters for the Chancery Division. The Divisions of the High Court do not exist solely for administrative convenience. The judges assigned to the Chancery Division and the practitioners regularly practising there have relevant individual expertise and (just as important) a wealth of collective professional experience in the specialised areas of practice assigned to the Division.
The second point is a word of caution about the use of preliminary issues on an appeal. Neuberger LJ sensibly encouraged the parties to shorten the appeal by exploring the possibility of slimming down the glut of grounds of appeal and concentrating on the important points at the hearing. The parties co-operated and agreed on the preliminary issues, which are presented as a mixture of issues of fact and law, grounds of appeal and submissions.
Although the parties agreed the preliminary issues, they are still not prepared to commit themselves at this stage on whether the answers to the preliminary issues will dispose of the entire appeal one way or the other. Naturally they want to wait and see the judgments of this court.
Further, the agreed wording of the issues may present difficulties. If followed to the letter, the terms in which the court can express its views on the contract and constructive trust points may be unduly restricted. The parties cannot have intended the court to adhere literally to the agreed wording of the preliminary points if it did not think that it would be helpful to do so. The members of the court must be free to express their judgment in their own words on the material before them.
A further problem arising from the preliminary issues approach is that in the oral and written submissions the court was taken through only a few paragraphs in the very detailed Judgment. It was thought that that was all that was necessary in order to deal with the three preliminary issues. Although that is nothing to complain about in itself, it has been difficult to know how much more of the Judgment needs to be referred to in this judgment in order to put the preliminary issues in proper context.
Outline facts
The directions of the court on the destination of the shares are based on the judge's finding that a legally binding oral contract was made on 11 February 1998 regarding a project to raise money for the acquisition, consolidation and operation of veterinary surgeries and practices through a company to be floated on the Stock Exchange.
The feasibility of such a project followed from the acceptance in November 1997 by the Royal College of Veterinary Surgeons, after consultation with the Office of Fair Trading, that it had no power to prevent companies from owning and operating veterinary surgeries and practices. This development is an example of the pressures driving the current process of de-professionalising the practice of professional skills.
Mr...
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