Normans Bay Ltd (formerly Illingworth Morris Ltd) v Coudert Brothers (A Firm)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE LATHAM,Lord Justice Waller,Lord Justice Laws,Lord Justice Carnwath |
| Judgment Date | 27 February 2004 |
| Neutral Citation | [2004] EWCA Civ 215,[2003] EWCA Civ 1023 |
| Docket Number | Case No: A2/2003/0741,A2/03/0741 |
| Court | Court of Appeal (Civil Division) |
| Date | 27 February 2004 |
[2003] EWCA Civ 1023
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
QUEEN'S BENCH DIVISION
(MR JUSTICE BUCKLEY)
Royal Courts of Justice
Strand
London, WC2
Lord Justice Latham
A2/03/0741
MR MICHAEL SWAINSTON QC AND MR SIMON BIRT (instructed by Messrs Barlow Lyde & Gilbert, London, EC3A 7NJ) appeared on behalf of the Applicant
The Respondent did not appear and was not represented.
This is a renewed application for permission to appeal a judgment of Buckley J of 20 March 2003 at the end of a long trial in which he found for the claimants in circumstances which undoubtedly were of much controversy. The disputes were far ranging, both on fact and on law in the application of Russian law to the circumstances of the case.
I was originally prepared on paper to grant permission to appeal on limited grounds only: first, in relation to the issue of anti-monopoly approval, and, consequentially, in relation to the judge's conclusions on causation and damages and his assessment of the case being one which could be dealt with as the loss of a chance and his assessment of that chance in any event.
That permission had inherent in it a logical flaw because the judge's conclusions were based upon the premise that, had the applicants carried out their work properly and carefully, there would have been no litigation in Russia at which the issue of the anti-monopoly approval would have been raised. It follows that permission is only effective if the applicant can argue that the judge was wrong in concluding that the litigation in Russia would not have taken place.
Having looked with care at the material that has been provided, and acknowledging entirely that the judge's conclusions were essentially conclusions of fact after a lengthy trial, I have been persuaded that it would be appropriate to allow the applicant to argue that the judge's conclusions were wrong. Accordingly, I consider that it would be appropriate for what is identified as ground 2 to be argued to enable the applicant to reach the part of the case as to which I had already given permission to appeal.
Having arrived at that stage, there is no reason to prevent the applicants from arguing the remainder of the grounds set out in the documents. It seems to me that there is sufficient to justify the conclusion that this court might be prepared to intervene. With some reluctance, because essentially it is a matter relating to one of assessment of facts, I am prepared to grant permission for the whole of the arguments in the grounds of appeal to be deployed.
I hope there has been no misunderstanding in the respondent's camp as to the position that they are in. I have taken into account in my conclusions the arguments put forward in their written skeleton argument but, nonetheless, for the reasons I have given, I consider that there should be permission.
Order: Permission to appeal granted. Costs to be costs in the appeal to include the costs of the respondent's skeleton argument if they win the appeal.
[2004] EWCA Civ 215
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
QUEEN'S BENCH DIVISION
MR JUSTICE BUCKLEY
Royal Courts of Justice
Strand,
London, WC2A 2LL
Lord Justice Waller
Lord Justice Laws and
Lord Justice Carnwath
Case No: A2/2003/0741
Mr Michael Swainston QC, Mr Simon Birt (instructed by Barlow Lyde & Gilbert) for the Appellant
Mr George Leggatt QC, Mr Tom Adam (instructed by Brooke North & Co) for the Respondent
This is an appeal from two judgments of Buckley J delivered on 19 th February 2003 and 20 th March 2003. The judgments are challenged in only limited respects, and the essential facts can be gleaned from the first of the judgments. I will accordingly attempt a synopsis hopefully sufficient to address the points in issue.
In late 1993 IML tendered for 49% of the shares in Bolshevichka a Russian suit manufacturer being offered for sale under the Russian Government's privatisation programme. The sale was administered by the State Property Committee (GKI), and it was GKI who issued two decrees, 763-r of 29 th April 1993, and 797-r of 6 th May 1993. By those decrees, GKI approved Bolshevichka's investment plan. In particular, decree 797-r approved a supplement to the plan to which was annexed the investment programme that the successful bidder would be required to implement. The Moscow Property Fund (MPF) acted as seller on behalf of GKI.
On 10 th November 1993, IML put in a bid referring to a total investment of US5,500,000 over 5 years. There was one other bidder, a Russian Company Obergan which also put in a bid offering to invest US5,500,000 over 5 years but demonstrating little ability to be able to do so. On 12 th November 1993, the MPF Tender Commission elected IML the winner, and that was announced on 16 th November.
Under the terms of the tender, IML was required to enter into a share purchase agreement within 30 days. Coudert became IML's advisers in relation to the completion of the Share Purchase Agreement. That agreement (the SPA) was concluded between IML and MPF on 16 th December 1993. Coudert also advised in relation to an Investment Agreement ultimately concluded between IML and Bolshevichka on 14 th February 1994.
During 1994 and 1995, Obergan unsuccessfully challenged the legality of IML's tender in the Russian courts. During this challenge GKI, MPF and in particular Mr Gurov of Boshevichka, supported IML. During this stage, there was no suggestion by anyone, that the investment plan approved by GKI, and as appended to Decree 797-r, provided for investment over 3 years, and not the 5 years offered by both tenders.
In late 1995 Mr Gurov of Bolshevichka and Mr Lewis of IML fell out. Mr Gurov became an implacable opponent of IML. IML also lost the support of GKI. Mr Gurov prompted the Public Prosecutor of the City of Moscow to challenge the legality of IML's tender and the agreements founded thereon. It seems, that the point relied on by Mr Gurov was, that the tender was invalid because it offered investment over 5 years and not 3, contrary to the investment plan approved by GKI. One might think this hardly a meritorious point for Mr Gurov to take, since on any view he had accepted, on behalf of Bolshevichka, the 5 year investment plan, in return for more beneficial licensing arrangements.
The challenge by the Prosecutor was ultimately based on two points. It was alleged first that the tender was defective, because it offered investment over 5 years, whereas, it was said, that the privatisation programme approved by GKI pursuant to Decree 797-r, had stipulated 3 years. It was alleged secondly that the transaction was invalid, because IML had failed to obtain approval for it from the Federal Anti-monopoly Committee of Russia. Coudert was no longer representing IML by this stage.
By a decision of the Moscow Arbitration Court dated 24 th April 1996, the decision of the tender committee, and the SPA and the IA, which rested on it, were declared invalid. The main point on which the court relied, was that since the tender offered 5 years, whereas the privatisation programme approved by GKI laid down 3 years, the tender was invalid and the agreements were invalid as a result. Mr Leggatt for IML before us accepted that that was the process of reasoning of the court. A second point was also relied on, which was that permission had not been obtained from the Federal Anti-monopoly Committee. IML appealed. On appeal by a written decision dated 22 nd July 1996, the Federal Court of Arbitration of the Moscow District rejected IML's appeal on both points. Again the reasoning of the court was first that the tender was invalid and that invalidity made invalid the agreements based thereon, and as a secondary point that anti-monopoly permission had not been obtained. Attempts to appeal that decision to the higher courts failed. By letter dated 14 th December 1996, the Deputy Chairman of the Supreme Arbitration court declined to enter a protest, and by a decision dated 7 th July 1997, the Chairman of the Supreme Arbitration Court declined to enter a protest. These latter two decisions referred only to the 3 –5 year point and the invalidity of the tender; they did not refer to the anti-monopoly point.
Thus it was that IML lost their investment in Bolshevichka.
IML commenced proceedings against Coudert seeking to recover their losses, or some part thereof. They asserted that Coudert's retainer included an obligation to investigate provisions of local law. They asserted in relation to the 3 year –5 year point, that a competent solicitor in the position of Coudert would have discovered that there was a Decree that stipulated 3 years, and that the advice of Coudert should have been, (1) that IML should accept as an express term of the SPA and the IA that their investment would be completed within 3 years; and (2) that IML should persuade GKI to take no point on the invalidity of the tender. IML asserted that they would have accepted that advice, and that they would have persuaded GKI to approve the transaction. On that basis,...
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