Parker v C S Structured Credit Fund Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 12 February 2003 |
| Neutral Citation | [2003] EWHC 391 (Ch) |
| Docket Number | HC 02C02833 |
| Court | Chancery Division |
| Date | 12 February 2003 |
[2003] EWHC 391 (Ch)
Mr. Gabriel Moss Q.c
(sitting As A Deputy Judge Of The High Court)
HC 02C02833
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
MR. S. BRODIE Q.C. (instructed by Messrs. Druces & Attlee) appeared on behalf of the Claimant
MR. H. MERVIS (Solicitor Advocate of Messrs. S. J. Berwin) appeared on behalf of the Defendants.
(As approved by the Judge)
THE DEPUTY JUDGE:
This is an amended application by Mr. Parker, the claimant in the present proceedings. The defendants are C.S. Structured Credit Fund Limited and Elegant Hotels Limited.
The amended application seeks disclosure primarily under CPR Part 25.1(1)(g). Alternatively it seeks disclosure by way of standard disclosure. In the further alternative it seeks specific disclosure. The disclosure that Mr. Parker is interested in relates to documents which concern an actual or potential transaction for the sale or exchange of certain hotels owned by the second defendant. The First Defendant appears to be a majority shareholder in the second defendant. The amended application asserts that these documents are relevant to the issues in the case and in particular to the claim for rescission made by the Defendants.
It would not be appropriate in this judgment to deal comprehensively with the issues that now appear in the pleadings served by the parties. Those pleadings appear to have closed and the parties should shortly be seeking a CMC with a view to the efficient case management of the proceedings.
Briefly, Mr. Parker's complaint concerns an alleged breach of a share sale agreement (the relevant details of which are set out in the Particulars of Claim). The share sale agreement provided that Mr. Parker would, with effect from 5th May 1999, sell certain shares in the Second Defendant to the First Defendant. The share sale agreement provided that Mr. Parker would receive a sum of over US$5 million immediately and that he might receive certain further consideration in certain events.
I do not need to go into all the details or the disputes relating to the conditions relating to the drawing up of accounts which constitute the conditions precedent to Mr. Parker's entitlement to further sums. There is a dispute about whether those conditions have been met or not and, in particular, as to whether the accounts which were actually drawn up complied with the agreement, and whether or not accounts complying with the agreement ought to have shown a profit or a loss. Those questions are central issues thrown up by the pleadings.
Mr. Parker alleges, amongst other things, that accounts complying with the agreement were not finalized within a reasonable time. There is a conflict in the evidence and correspondence in relation to that and as to any blame to be attributed to any delay. I am of course not in any position to make any finding about that issue. It is clearly one that will have to be decided at trial or possibly in a summary judgment application mentioned in passing by the Solicitor Advocate for the Defendants.
Mr. Parker's primary claim is to have paid to him the balance due on the basis that the preconditions were met or should have been met had the Defendants complied with the agreement. He also claims that he should have received further shares in the Second Defendant than he has in fact received —and again there is an issue about that, depending on the accounts and the financial position of the Second Defendant.
There is a further issue about whether the First Defendant rightly or wrongly exercised certain option rights contained in the agreement. There is an allegation of a failure to remedy alleged breaches made by Mr. Parker and an allegation of a repudiatory breach, which Mr. Parker alleges that he accepted. Mr. Parker claims damages from the First Defendant in a sum of over US$1 million and he claims the value of a substantial block of shares from the first and/or Second Defendants pursuant to the agreement.
The Defence and Counterclaim puts in issue the matters alleged by Mr. Parker. In the Counterclaim the First Defendant claims that the share sale agreement has effectively been rescinded under the terms of the agreement and that Mr. Parker is obliged to pay a sum over US$5 million to the First Defendant. Other items of alternative relief are claimed which I need not go into at present.
There is a reply by Mr. Parker and a Defence to the Counterclaim. The application for disclosure of documents concerning alleged prospective or actual sale of property by the Second Defendant was originally made under CPR Part 25.1(1)(g) and was supported by a witness statement of Colin Shrago (dated 14th November 2002). This referred to the relevant part of the CPR, summarised Mr. Parker's case and referred to certain correspondence as a result of which it is said that Mr. Parker's suspicions that there was an actual or proposed transaction "at what may well be an undervalue" had been confirmed.
At para. 14 of his witness statement Mr. Shrago asserts that the information is of a character which would have to be provided to Mr. Parker in documentation covered by discovery obligations in any event. He suggests in this paragraph that it was impossible to see how providing the information early could cause the Defendants any prejudice or increased costs, unless of course Mr. Parker's suspicions prove to be well-founded.
Mr. Parker himself put in a witness statement dated 24th November 2002, after he had seen witness statements from the Defendants, to which I shall refer shortly. In this witness statement he refers to an admission by the Defendants that they intend selling certain of the hotels owned by the Second Defendant. He refers further to the fact that the Defendants' witness statements say that Mr. Parker is not entitled to the information because it is commercially confidential information. He refers to the fact that they refer to him as a known hotelier and someone who is considered to be a competitor of the Second Defendant and that he would use the information to his commercial advantage. I should interject here that during the submissions of Mr. Brodie, Queen's Counsel, who appeared for Mr. Parker, stated that Mr. Parker was now in the hotel business in England.
Mr. Parker, in his witness statement, suggests that if the rescission being claimed by the Defendants took place certain shares would be returned to him and as a result he would be a substantial but not controlling shareholder in the Second Defendant. He asserts that he would have no incentive to harm the company and that he in fact has no intention of harming the company. He puts forward, at para. 10, his willingness to give an undertaking to keep any information provided confidential and not to use it for any extraneous purpose.
The only evidence (if one can call it that) in relation to the proposed sale of certain assets of the Second Defendant was contained originally in para.8 of Mr. Shrago's witness statement to which I have referred above. In hearsay from his client he states that Mr. Parker learned from "sources close to the Defendants" —those being sources which "he does not wish to disclose" —that the Second Defendant was seeking to sell or alternatively exchange for other property three of the hotels in the Group "at what may well be an undervalue". It is elementary that the rules require sources of information to be given and Mr. Shrago's affidavit plainly does not...
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