Patrick McKillen (Petitioner) v Misland (Cyprus) Investments Ltd (a company registered in Cyprus) and Others
| Jurisdiction | England & Wales |
| Judge | Mr. Justice David Richards |
| Judgment Date | 05 March 2012 |
| Neutral Citation | [2012] EWHC 521 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: 8690 of 2011 Claim No: Hc11c03437 |
| Date | 05 March 2012 |
[2012] EWHC 521 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
Royal Courts of Justice
7 Rolls Buildings, Fetter Lane,
London, EC4A 1NL
Mr. Justice David Richards
Case No: 8690 of 2011
No. 8690 Of 2011
Claim No: Hc11c03437
Mr. Philip Marshall QC, Mr. Richard HillandMr. Gregory Denton-Cox (instructed by Herbert Smith LLP) appeared for the Petitioner/Claimant.
Mr. Stephen Auld QC and Mr. Michael d'Arcy (instructed by Messrs. Quinn Emanuel Urquhart & Sullivan LLP) appeared for Derek Quinlan.
Mr. Sa'ad Hossain (instructed by Weil, Gotshal & Manges) appeared for Misland (Cyprus) Investments Limited, Ellerman Corporation Limited, B. Overseas Limited and Maybourne Finance Limited.
Mr. Edward Davies (instructed by Messrs. Ashurst LLP) appeared for Richard Faber, Michael Seal and Rigel Mowatt.
Lord Grabiner QC and Mr. Edmund Nourse (instructed by Messrs. Weil, Gotshal & Manges) appeared for Sir David Barclay and Sir Frederick Barclay.
Mr. Andrew Mitchell QC (instructed by Messrs. Berwin Leighton Paisner LLP) appeared for Barclays Bank plc (Third Party).
Mr. Michael Fealy (instructed by Messrs. SJ Berwin) appeared for Mrs. Siobhan Quinlan (Non-party).
This judgment is concerned with applications by the petitioner and claimant, Patrick McKillen, to make very extensive amendments to his Petition and Particulars of Claim in an associated Part 7 claim, and with an application by one of the respondents to the petition, Derek Quinlan, for further information. I will deal first with the amendment applications, which raise a significant number of issues, both of principle and detail.
The proceedings are brought by Mr. McKillen in relation to the affairs of Coroin Limited (the company) against Sir David and Sir Frederick Barclay ("the Barclay Brothers"), trusts and companies associated with or controlled by them ("the Barclay Interests"), and present and former directors of the company. They were commenced on 5 th October 2011, when a Petition under section 994 of the Companies Act 2006 was presented and a claim form endorsed with Particulars of Claim was issued.
The proceedings raise serious allegations against the respondents in connection with the plan by the Barclay Brothers to obtain control and ownership of the company and hence of the hotels which it indirectly owns.
The need to hear the proceedings as quickly as reasonably possible was apparent and was supported by evidence from the company's independent chief executive, who takes a strictly neutral stance in these proceedings. At a directions hearing on 22 nd November 2011, I made an order for an expedited trial, which was not opposed by any party. I gave directions for disclosure, exchange of witness statements and so on, all on a tight timetable. Shortly after the hearing, a trial date starting in mid-March 2012 was fixed.
On the petitioner's application, permission was given on 22 nd November 2011 to make significant amendments to the Petition and the Particulars of Claim. At a PTR on 10 th February 2012, counsel for Mr. McKillen indicated that an application might be made further to amend the Petition and Particulars of Claim. I directed that any such application be issued by 17 th February for hearing at a further PTR on 24 th February. An application was issued on 17 th February seeking leave to make wide-ranging amendments. In the light of points taken by the respondents in their skeleton arguments, a revised draft of the proposed petition was produced on 26 th February.
While some relatively minor amendments are not opposed, the significant amendments are opposed on essentially two grounds. First, the amendments do not raise an arguable case. Secondly, the application is made very late and the amendments should not be allowed in view of the imminence of the trial.
I will take the second of those objections first. The respondents referred to the decisions of the Court of Appeal in Worldwide Corporation Limited v GPT Limited [1998] EWCA (Civ) 1894 and Swain-Mason v Mills and Reeve [2011] EWCA (Civ) 14. Those decisions established the modern approach to be taken to late applications to amend statements of case. It is no longer enough to say that the payment of the opposing party's costs will be sufficient to compensate for the lateness of the amendment provided only that the opposing party is not prejudiced in meeting the new case.
In Worldwide Corporation Limited v GPT Limited, Waller LJ giving the judgment of the court said:
"Where a party has had many months to consider how he wants to put his case and where it is not by virtue of some new factor appearing from some disclosure only recently made, why, one asks rhetorically, should he be entitled to cause the trial to be delayed so far as his opponent is concerned, and why should he be entitled to cause inconvenience to other litigants? The only answer which can be given and which, counsel has suggested, applies in the instant case is that without the amendment, a serious injustice may be done because the new case is the only way the case can be argued and it raises the true issue between the parties which justice requires should be decided. We accept that, at the end of the day, a balance has to be struck. The court is concerned with doing justice, but justice to all litigants and thus, where a last-minute amendment is sought with the consequences indicated, the onus will be a heavy one on the amending party to show the strength of the new case and why justice, both to him, his opponent and other litigants, requires him to be able to pursue it."
The circumstances of the Worldwide Corporation and Swain-Mason cases were rather different from the circumstances of this case. They were both cases which had been proceeding to trial over a considerable period and where the applications to amend were made at a very late stage and were not the result of recent developments such as late disclosure. In the Worldwide case, the application was made in the first week of a five-week trial. I have already referred to the timetable in the present case, which has put great pressure on all parties, with disclosure, the exchange of witness statements and the start of the trial all occurring within a period of two months. The scope of the case is considerable. I am told that the respondents' disclosure comprises more than 25,000 documents.
The amendments proposed by Mr. McKillen arise in substantial part from the disclosure and inspection of documents which took place only three or so weeks before the amendments were formulated. While it is right that the trial is now due to start in two weeks' time, the petitioner cannot, in the main, be criticised for the application being made at this stage. I will not therefore refuse the amendments on the grounds of lateness.
I turn, therefore, to consider whether the amendments, or any of them, should be refused on the grounds that they do not put forward an arguable case. The parties are agreed that the correct test is that applicable to applications for summary judgment under CPR Part 24. I heard extensive argument on this question. So close to trial, it might be tempting either to refuse them all on the grounds of lateness or to allow them all and leave it all for argument at trial. I have explained why the first approach would be wrong. I consider also that the second approach would be wrong. The amendments are so extensive that it is difficult to assess the extent to which they would widen the scope of the trial. I am far from satisfied that they would not do so. Moreover, the structure of the proposed Petition and Particulars of Claim is so complex that it is essential at this stage to analyse the amended case sought to be made.
The importance of statements of case as the means by which the real issues in the case are defined is clear in all cases, but it is of particular importance in proceedings under section 994 of the Companies Act 2006 where the jurisdiction is so widely expressed. This was recognised in In re Tecnion Investments Ltd [1985] BCLC 434 at 441 by Dillon LJ who, as a first instance judge, had early experience of the new unfair prejudice jurisdiction introduced by section 75 of the Companies Act 1980.
I will deal with the proposed amendments to the Petition principally by reference to the subject areas which they cover before turning to the Particulars of Claim in the Part 7 action. My concerns with the present structure of the amended petition will become apparent as I deal with each area.
Mr. McKillen seeks to introduce a new case that the Barclay Brothers were de facto or shadow directors of the company. Paragraph 60A of the proposed petition alleges that,
"At all material times from the appointment of Mr. Faber, the majority (by vote) of the board of the Company have been accustomed to act in accordance...
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