Paul Holgate v Addleshaw Goddard (Scotland) LLP
| Jurisdiction | England & Wales |
| Judge | Master Clark |
| Judgment Date | 16 July 2019 |
| Neutral Citation | [2019] EWHC 1793 (Ch) |
| Court | Chancery Division |
| Date | 16 July 2019 |
| Docket Number | Case No: BL-2018-000475 |
[2019] EWHC 1793 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (ChD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Master Clark
Case No: BL-2018-000475
Stephen Davies QC (instructed by Knights plc) for the Claimant
Jamie Smith QC (instructed by Clyde & Co (Scotland) LLP) for the Defendant
Hearing date: 26 October 2018, 8 February 2019
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Application
This is my judgment on the defendant's application dated 13 September 2018 seeking:
(1) a declaration that the courts of England and Wales have no power under the Civil Jurisdiction and Judgments Act 1982 to determine any of the causes of action or equitable remedies advanced or claimed in this claim; alternatively
(2) a stay on the grounds of forum non conveniens.
Background and the claim
The application concerns the allocation of jurisdiction within the UK. The rival forums are England and Scotland. The claim is not time-barred in England, but may, at least in part, be time-barred in Scotland, where the relevant period of prescription (the Scottish equivalent of limitation) is 5 years.
The claim is for damages for breach of contract, negligence and/or breach of fiduciary duty in connection with and arising out of the defendant's acceptance and performance (and/or non-performance) of instructions to act as solicitor for and to advise Arthur Holgate & Son Limited (then in administration, now in liquidation) (“the Company”) in relation to a dispute between the Company and Barclays Bank PLC (“the Bank”) in the period from about 29 February 2012 until about 3 June 2013. The pleaded value of the claim is £10–15 million.
The Company was a family company, incorporated on 26 March 1935 in England and Wales as a private company limited by shares. Its directors and shareholders were at all relevant times, the claimant, Paul Holgate, and his parents, Martin and Margaret Holgate (together “the Holgates”).
The claimant brings the claim as assignee of the Company's cause of action against the defendant under a Deed of Assignment dated 9 February 2018.
The defendant is a limited liability partnership registered in Scotland called Gateley (Scotland) LLP at the material times, and now called Addleshaw Goddard (Scotland) LLP.
The Company's business was owning and operating caravan holiday and residential parks. It owned 3 parks (“the Parks”): two in England (called Mount Pleasant and Silver Ridge) and one in Scotland (called Brandedleys).
In 2007 the Company bought an interest rate hedging product, which, the claimant alleges, was mis-sold by the Bank; and which, following the 2008 financial crisis and plummeting of interest rates, caused the Company to be unable to service the interest and other charges levied by the Bank, leading to its formal insolvency. Mount Pleasant was sold in September 2009 and Silver Ridge in November 2010, both at the Bank's insistence.
In December 2010 the Company wrote setting out its mis-selling claims (“the Swaps Claims”).
On 1 February 2012, the Bank appointed John Charles Reid and William Kenneth Dawson (“the JAs”) joint administrators of the Company under the supervision of the High Court of Justice, Chancery Division at the Manchester District Registry. Both JAs were practitioners at Deloitte LLP, a limited liability partnership incorporated in England. Mr Reid was based at and practised from Deloitte's Edinburgh office. Mr Dawson was based at and practised from Deloitte's Manchester office. They were assisted by Peter Mackie, an employee of Deloitte, based at the Edinburgh office, who acted on their behalf.
On 29 February 2012, the JAs formally instructed the defendant. The solicitor who advised them, Timothy Cooper, was based at and advised from the defendant's Edinburgh offices. He was, at all relevant times, English-qualified and regulated by the SRA; and was registered in Scotland as a “Foreign Expert”.
At the forefront of the claim is the allegation that the relationship between the defendant and the Bank was such that the Bank had “Informal Control” over the defendant — para 7 of the Particulars of Claim (“PoC”):
“At all material times, [the defendant] was a firm appointed to [the Bank]'s panel of preferred solicitor firms (“[the Bank]'s panel”) with the result that:
a. [the defendant] and its respective members/partners and employees were each highly motivated to build and maintain a close relationship with [the Bank];
b. [the Bank] was able to negotiate lower fees in return for a promise of repeat work;
c. [the Bank] was able to reward and punish behaviour by offering or withholding repeat business;
d. consequently, the strong informal control that [the Bank] had over [the defendant], its members/partners and employees allowed [the Bank] effectively to influence the actions and matters which they were instructed (“Informal Control”);
e. the Informal Control was such that [the defendant] would not have been able to pursue a claim against [the Bank] without fear or favour and/or with the requisite independence required and would therefore have had a conflict of interests preventing it from acting for a party pursuing such a claim (as expressly acknowledged in an email sent by [the defendant] to the JAs' agent on 29 February 2012…).
The claimant's case as to the scope of the defendant's retainer is set out in para 30 of the PoC:
“to assess [the Swaps Claims] for the purpose of enabling the JAs to carry out their functions as administrators, including the formulation of their statutory proposals pursuant to paragraph 49 of Sch B1 to the Insolvency Act 1986.”
This is fleshed out in paras 34 and 35:
“34. … The scope of [the defendant]'s retainer by or on behalf of [the Company] (‘the Retainer’) was:
a. To review, advise and assist in relation to [the Swaps Claims].
b. To liaise with Ellis Jones (or other solicitors acting for the directors and members of [the Company]) to obtain background information and advice given to [the Company] in relation to [the Swaps Claims].
c. To review and advise in light of such material, and any information to be provided by the JAs “as to the financial position of [the Company], the assets available for pursuit of claims, the purposes of administration on [sic] appropriate strategies for dealing with [the Swaps Claims].
d. To liaise with the JAs, Ellis Jones (or other solicitors acting for the directors and members of [the Company]), Pinsents 1, and [the Financial Ombudsman Service] for the purpose of obtaining information and documents as appropriate to enable [the defendant] to advise the JA's as above.
e. Not commence or defend any legal proceedings in relation to [the Swaps Claims] and, in the event of any such proceedings, to obtain further instructions from the JAs.
35. For the avoidance of doubt, it is the claimant's case that the scope of the Retainer included analysing the correlation between the value of [the Swaps Claims] and the purpose and conduct of the administration.”
As to the breaches alleged, these are said to arise out of the conflict of interest identified in para 7 of the PoC. They are set out at para 83, and can be summarised as:
(1) wrongly accepting instructions to act on the Company's behalf in advising on the Swaps Claims;
(2) wrongly continuing to act where the defendant knew or ought to have known that by reason of its relationship with the Bank there was a significant risk of conflict of interest;
(3) assessing the Swaps Claims in a manner which was superficial and/or uninterested and/or designed to delay pursuit of them to a resolution;
(4) failing to progress or advise the Company (acting by the JAs) to progress the FOS [Financial Ombudsman Service] complaint;
(5) failing to give due consideration to admissions by the Bank of LIBOR manipulation and various other events and announcements which increased the likelihood of the Company obtaining a very substantial compensation
(6) failing to advise the Company as to funding options for the Swaps Claims;
(7) failing to progress the claims with proper diligence and expedition.
On 26 February 2013 the JAs agreed to sell Brandedleys, despite opposition to this course by the Holgates, for the sum of £1,075,000, of which £437,451 was paid to the Bank, reducing the Company's liability to it to about £1 million.
On 7 June 2013, the Holgates placed the Company into creditors' voluntary liquidation and secured the appointment of liquidators who were not on the Bank's panel. The liquidators issued proceedings in respect of the Swaps Claims within a
The claim was issued on 26 February 2018, shortly before the end of the 6 year period from the date when the defendant was first instructed.
On 22 February 2018, the claimant (in his capacity as a shareholder of the Company) issued an application (claim no. CR-2018-001546) in the Insolvency and Companies List for permission to make an application under para 75(2), schedule B1 of the Insolvency Act 1986 against the JAs. This paragraph provides, so far as relevant:
“ Misfeasance
75
(1) The court may examine the conduct of a person who—
…
(b) has been or has purported to be the administrator of a company.
(2) An examination under this paragraph may be held only on the application of—
…
(e) a contributory of the company.
(3) An application under sub-paragraph (2) must allege that the administrator—
(a) has misapplied or retained money or other property of the company,
(b) has become accountable for money or other property of the company,
(c) has breached a fiduciary or...
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