Richard John Hone and Others v Abbey Forwarding ((in Liquidation)) and Another
| Jurisdiction | England & Wales |
| Judge | Lord Justice McCombe,Lord Justice Vos,Lady Justice Arden |
| Judgment Date | 02 July 2014 |
| Neutral Citation | [2014] EWCA Civ 899,[2014] EWCA Civ 711 |
| Docket Number | Case No: A3/2013/0840 |
| Court | Court of Appeal (Civil Division) |
| Date | 02 July 2014 |
[2014] EWCA Civ 711
Lady Justice Arden
Lord Justice McCombe
and
Lord Justice Vos
Case No: A3/2013/0840
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CHANCERY DIVISION
His Honour Judge Pelling (sitting as a Deputy High Court Judge).
HC09C00296
Royal Courts of Justice
Strand, London, WC2A 2LL
Philip Coppel QC and Paul Marshall (instructed by Banks Kelly Solicitors Ltd.) for the Appellants
Stephen Nathan QC, Sarah HarmanandRuth Hughes (instructed by Howes Percival) for the Second Respondent on the main appeal, and for both Respondents on the Costs Appeal
Hearing dates: 18, 19, and 20 February 2014
(A) Introduction
This is an appeal by the above named Appellants (hereafter called collectively "the Appellants" and individually "Mr Hone", "Mr P Owen" and "Mr W Owen") from a judgment and order of 19 March 2013 of His Honour Judge Pelling QC, sitting as a Deputy Judge of the High Court. By his order the judge ordered the First Respondent ("Abbey") to pay to Mr Hone £8000, to Mr P Owen £11,463.41 and to Mr W Owen £8,000. Such orders were made by the judge in respect of the losses which the judge found that those Appellants had suffered, by reason of a freezing order obtained by Abbey, which the judge considered that Abbey should pay pursuant to the "cross-undertaking in damages" in that freezing order. I put the phrase "cross-undertaking in damages" in inverted commas because the use of that description belies a long legal story, material to the present dispute, to which I have to return below.
The judge also ordered that the Appellants should pay to Abbey its costs (less £10,000) of the inquiry conducted by him, to be assessed (if not agreed) on the standard basis up to 21 August 2012 and thereafter on the indemnity basis. He also made orders for interim payments of costs which are stayed pending the present appeals.
The Appellants contend that the judge was wrong to have confined his orders in their favour to the sums which I have mentioned and was wrong, in any event, to make the costs orders which he did. They appeal in those respects by permission granted by Lady Justice Gloster on 4 October 2013.
By a Respondent's Notice, the Second Respondent ("HMRC") brings a cross-appeal by which it seeks to reverse the judge's order to the extent that nothing should be awarded in the Appellants' favour at all and to reverse, in particular, the award of £3,000+ to Mr P Owen, as special damages, over and above the awards of £8,000 that the judge made to all the Appellants. HMRC's cross-appeal is brought with permission granted by Lady Justice Gloster on 28 January 2014 in respect of the awards of £8,000 to all the Appellants. However, she refused permission to appeal in respect of the additional sum awarded to Mr P Owen. HMRC's application for permission to appeal against that aspect of the judge's order is now renewed before us. We refused permission to appeal on this point during the course of the hearing and my own reasons for this appear below.
We also had before us an application by the Appellants to adduce fresh evidence on their appeals. We refused that application during the course of the hearing. Again, I set out my own reasons for refusing the application later in this judgment.
(B) Background Facts
The proceedings have a long history. That history begins for present purposes in February 2009 when Abbey was carrying on a freight forwarding and warehousing business from a substantial warehouse with 23 staff. Its business, which initially traded under the name "W.V. Davies", was a family concern established in 1971 by the father of Messrs W and P Owen. Both his sons went straight into the business from school. They were joined in about 2003 by Mr Hone, who had known the Owen family for many years. The business was acquired at that stage by Abbey. In February 2009 the Owens and Mr Hone owned one-third each of the 100 issued shares of Abbey (Mr W Owen owning the odd additional share, giving him 34 out of the 100 shares). The Owens, Mr Hone and a Mr Richard Mills were the directors of Abbey.
In May 2002 Abbey had begun to operate a bonded warehouse business, in addition to its traditional activities, and it was from the dealings in that part of the business that the problems arose. Between January 2008 and February 2009 HMRC raised 9 assessments against Abbey for sums totalling £7,547,359. The majority of this amount was made up of two assessments, issued on 2 February 2009, totalling £5,965,704. The assessments were based upon 301 movements of duty suspended alcohol removed from Abbey's warehouse, which (it was said) had not reached the destination bonded warehouse (or warehouses) in France. HMRC contended that the contents of these shipments had been sold in the UK without duty having been paid.
On 4 February 2009, HMRC made an ex parte application to Blackburne J for the appointment of a provisional liquidator of Abbey. The application was based upon the assessments and HMRC's contention that Abbey would be unable to pay the amounts claimed. The application was granted and the liquidator, then of Baker Tilly, chartered accountants (later of Deloittes) ("the liquidator"), was appointed to the office. Her counsel was present in court during the application and, immediately upon the judge making the order for the appointment of a provisional liquidator, he applied on her behalf (in Abbey's name) for worldwide freezing orders against the Appellants. The allegations made against the Appellants (in summary) were that the Appellants had either dishonestly or negligently broken their duties to Abbey in permitting it to become subject to the assessments.
The freezing order was in substantially standard form and it will be necessary in the course of this judgment to refer to some of its detailed terms. However, importantly for present purposes, the order contained (in Schedule B) the usual "cross-undertaking" by Abbey in these terms:
"If the court later finds that this order has caused loss to the Respondent and decides that the said respondent should be compensated for that loss, the Applicant will comply with any order the court may make."
The order, unusually however, included (in Schedule C) an undertaking to the court by HMRC in these terms:
"HM Revenue and Customs will provide an indemnity to the Applicant in respect of the Applicant's cross-undertaking in damages as set out in paragraphs 1 and 4 of Schedule B." 1
Obviously, on HMRC's case before Blackburne J, Abbey was insolvent and, without some additional security in respect of the cross-undertaking, the freezing order would have been unlikely to be granted.
The trial of Abbey's claims against the Appellants came before Lewison J (as he then was) between 6 and 20 July 2010. On 30 July the judge dismissed Abbey's action and discharged the freezing order with effect from 10 September 2010 (to allow for the expiry of an extended time in which to apply for permission to appeal to this court). There was no application for permission to appeal and accordingly the freezing orders stood discharged. Paragraph 5 of Lewison J's order provided that,
"The Defendants have permission to proceed to an inquiry as to what, if any, damages have been caused by the Freezing Order…"
He gave directions for statements of case on the inquiry and the trial of the Appellants' claims came, in due course, before Judge Pelling on various dates between 20 November 2012 and 15 February 2013.
It is, to my mind, of some residual significance to note what happened after Lewison J's judgment, and before the inquiry conducted by Judge Pelling, in respect of the assessments raised upon Abbey that had been the entire basis of HMRC's claim to appoint the Liquidator and Abbey's claim against the Appellants. I derive the following from the Appellants' statement of the facts, set out in Counsel's skeleton argument, but corrected in certain small respects by a note from Counsel for HMRC.
The Appellants invited the Liquidator to appeal against the assessments. She refused to do so. Accordingly, the Appellants brought an application under the Insolvency Act 1986 for permission to conduct an appeal against the assessments on Abbey's behalf. The Liquidator opposed that application which came before the court in November 2010. On the second day of the hearing before Warren J, the Liquidator acceded to the application and consented to the Appellants conducting the appeal. In January 2011 the appeals came before the First-tier Tribunal for a pre-trial review. HMRC asked the Tribunal to direct a hearing of the appeals in 2012. The judge, however, directed an expedited hearing of the matter, owing to the significant financial difficulties by then facing the Appellants. The case was fixed for hearing in September 2011. The evidence filed with the Tribunal by HMRC consisted of much of the same evidence as that deployed by Abbey before Lewison J, but with some additions.
In conducting Abbey's appeals the Appellants applied to strike out HMRC's case on "abuse of process"/res judicata grounds. On 4 August 2011, two business days before the hearing of that application, fixed for 9 August 2011 HMRC filed a notice of withdrawal of opposition to the appeals. The assessments, which had underpinned the entirety of the proceedings leading to the trial, were accordingly vacated. Not surprisingly Abbey sought its costs....
To continue reading
Request your trial
-
Stuart Drury v Umar Rafique
...are that the respondents had to prove their case, and the damages on a cross-undertaking are assessed on contractual principles ( Abbey Forwarding v Hone [2014] EWCA Civ 711) this not being a case which might engage the exceptions to that principle. The appellant has no specific point to ma......
-
JSC Mezhdunarodniy Promyshlenniy Bank and Another v Sergei Viktorovich Pugachev
...in damages given on appointment by the court; or on the subsequent grant of a freezing order. A recent example is Hone v Abbey Forwarding Ltd (In Liquidation) [2014] EWCA Civ 711; Abbey Forwarding Ltd (In Liquidation) v HM Revenue & Customs [2015] EWHC 225 (Ch). In that event there is no ......
-
Hunt v Ubhi
...relating to a company called Abbey Forwarding Limited (“Abbey”). As McCombe LJ explained in Abbey Forwarding Ltd v Hone (No 3) [2014] EWCA Civ 711, [2015] Ch 309, HMRC had there made an ex parte application for the appointment of a provisional liquidator and, immediately on the judge acce......
-
Dr Reddy's Laboratories (UK) Ltd v Warner-Lambert Company LLC
...and only the amount, for which it “should be compensated”. This was explained by McCombe LJ in Abbey Forwarding Ltd v Hone (No 3) [2014] EWCA Civ 711, [2015] Ch 309 following a thorough examination of the 89 Having accepted counsel's submission that the correct approach is to allow for “l......
-
Assessment of damages under a cross-undertaking
...type of loss it could suffer as a result of its assets being frozen. Footnotes: 1 Para [143] 2 Following Hone v Abbey Forwarding Ltd [2014] EWCA Civ 711). 3 Relying on The Anselma de Larrinaga (1913) 29 TLR 587, E. Bailey & Co Ltd v Balholm Securities Ltd [1973] 2 Lloyd’s Rep 404 and Alta v......
-
Table of Cases
...2006 BCSC 1712, leave to appeal to CA refused, 2006 BCCA 539 94,106 Holyoakev Candy, [2016] EWHC 970 (Ch) 162 Hone v Abbey Forwarding, [2014] EWCA Civ 711 Hong Everest Corp v Hqart Corp, [2008] OJ No 2456 (SCJ) 67 Hostman-Steinberg v 2049669 Ontario (2008), 73 CPC (6th) 302 (SCJ) 106,109 HS......
-
§ 75-2-502, MCA Definitions
...franchise, association, state or municipal agency, political subdivision of the state, or any other entity.Notes:History: Amended by Laws 2015, Ch. 309, Sec. 3, eff. 4/27/2015.History: En. Sec. 2, Ch. 581, L. 1989; amd. Sec. 179, Ch. 418, L....
-
§ 75-2-505, MCA Small Project Review Requirement
...than 260 linear feet of pipe; or(3) involves more than 3 cubic feet but less than 35 cubic feet of volume.Notes:History: Added by Laws 2015, Ch. 309, Sec. 2, eff....
-
§ 75-2-502, MCA Definitions
...franchise, association, state or municipal agency, political subdivision of the state, or any other entity.Notes:History: Amended by Laws 2015, Ch. 309, Sec. 3, eff. 4/27/2015.History: En. Sec. 2, Ch. 581, L. 1989; amd. Sec. 179, Ch. 418, L....
-
§ 75-2-505, MCA Small Project Review Requirement
...than 260 linear feet of pipe; or(3) involves more than 3 cubic feet but less than 35 cubic feet of volume.Notes:History: Added by Laws 2015, Ch. 309, Sec. 2, eff....