Richard Terence Percy v Merriman White
| Jurisdiction | England & Wales |
| Judge | Briggs |
| Judgment Date | 12 January 2021 |
| Neutral Citation | [2021] EWHC 22 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC-2015-001065 |
| Date | 12 January 2021 |
[2021] EWHC 22 (Ch)
Chief ICC Judge Briggs
(sitting as a Deputy High Court Judge, Chancery Division)
Case No: HC-2015-001065
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS ENGLAND AND WALES
CHANCERY DIVISION
BUSINESS LIST
Business and Property Courts England and Wales
The Rolls Building, Fetter Lane, London, EC4A 1NL
Henry Bankes-Jones (instructed by DAC BEACHCROFT LLP) for the Additional Claimants
Patrick Lawrence QC (instructed by Reynolds Porter Chamberlain LLP) for the Additional Defendant
Hearing dates: 8,9,10 December 2020
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.
DEPUTY HIGH COURT JUDGE Briggs (Chief ICC Judge)
Deputy High Court Judge Briggs (Chief ICC Judge):
Introduction
The claimant, Mr Richard Percy engaged Merriman White as solicitors to act in relation to a commercial dispute involving a joint venture. Merriman White instructed Mr David Mayall, a barrister in private practice, to advise on the legal and tactical merits of the claim, draft particulars of claim and represent Mr Percy in court. The claim failed at a preliminary stage (the “Derivative Claim”). Mr Percy subsequently made a claim for negligence or breach of contract against Merriman White, and Mr Mayall (the “Negligence Claim”).
After pleadings had closed in the Negligence Claim Mr Percy agreed to no longer pursue Mr Mayall on the basis that each side pay their own costs. Later Merriman White settled with Mr Percy.
By this action Merriman White seek a contribution from Mr Mayall pursuant to the Civil Liability (Contribution) Act 1978.
The structure of this judgment
In this judgment I shall first describe the background to the Derivative Claim (paragraph 12). I heard evidence from the lead solicitor at Merriman White, Mr O'Sullivan, and Mr Mayall on certain issues. I shall make findings of fact where required.
An issue arose during the course of this trial as to where the burden of proof lay when a party seeks permission to bring a derivative claim on behalf of a company. I intend to cover this issue next (paragraph 45) but shall do so with some brevity.
Thirdly, I shall add further context by making reference to the judgment given in the Derivative Claim (paragraph 47).
Fourthly, there was an application to appeal the judgment (paragraph 52).
Fifthly, I shall turn to the Negligence Claim (paragraph 54), make reference to the pleadings in that claim and the agreement not to continue against Mr Mayall, struck between Mr Percy and Mr Mayall (paragraph 66).
Sixthly, I shall analyse the Contribution claim (paragraph 68) and make findings as to what defences are permissible against a party who seeks a contribution against another.
Seventhly, I shall deal with specific issues raised by Mr Mayall who argues that he was not negligent, and did not cause loss to Mr Percy (paragraph 93). The second of these issues primarily concerns the no reflective loss principle.
Lastly, I shall deal with any quantification of contribution (paragraph 101) and make my conclusions (paragraph 108) in the form of a summary.
Background to Derivative Claim
On 9 January 2007 Mr Percy and Mr Trevor agreed to enter a joint venture agreement (the “Agreement”). They decided upon a corporate structure to facilitate the venture incorporating an operations company known as Seven Holdings Limited (“SHL”). SHL was incorporated on the same day. They used two corporate vehicles to hold an equal number of shares in and be members of SHL. Mr Percy wholly owned Langley Ward Limited (“LWL”) and Mr Trevor wholly owned Maddisonjay Estates Limited (“MEL”). I shall refer to these three companies in the collective noun (the “Companies”). The Agreement specified that the Companies “have decided to acquire the Property in joint venture through the medium of A Limited on the basis that A Limited will act as their nominees for B Limited and C Limited as beneficiaries”. The “Property” is defined as “such freehold or leasehold property or properties” as MEL and LWL shall direct to be acquired by SHL. At the time of the Agreement, they had or were about to acquire 10A Austin Avenue Bickley, Kent (“Austin Avenue”) and intended to refurbish it and construct two new detached houses for sale. The Agreement apportioned ownership shares, outlined duties (such as procuring SHL to keep proper records accurately and recording Receipts and Expenses), relative investments, the division of profit or loss and an arbitration clause: “in the event of any difference or dispute arising between the parties hereto in relation to any matter or thing required to be done performed or observed hereunder such dispute or matter shall be referred to an arbitrator in accordance with the provisions of the Arbitration Act 1990…”. The Agreement was determinable upon notice “with immediate effect upon the earlier of… any time after the Property or the last of the Property has been sold whichever the case may be.”
Each director contributed £244,000 to the purchase of Austin Avenue and SHL raised finance from the Bank of Ireland. The Agreement provided that the contributions would be made by the Companies. If that is correct, the contributions are more likely than not to have been made by Mr Trevor via MEL and Mr Percy via LWL who received them as loans from the individuals. However, the contributions are said to have been added to the directors' loan accounts of SHL. Despite the corporate structure the only interested humans were Mr Percy and Mr Trevor.
Once Austin Avenue was purchased the refurbishment and development required funding. Further advances, including advances for the purchase of materials, increased the loan accounts.
A further property known as Sundridge Avenue was purchased. Mr Trevor made additional advances. It is not clear from the documents before the court whether the advances were made directly to SHL or via MEL. Some amounts were repaid and debited to his loan account when Austin Avenue and later Sundridge Avenue were sold. By the end of January 2009 the credit balance of his loan account was over £800k. By contrast, Mr Percy made no further advances, but received repayments of around £40k, and had a credit balance of around £220k.
While Austin Avenue and Sundridge Avenue were being developed, both Mr Percy and Mr Trevor were engaged in building a house for personal occupation, Mr Percy at 25 Bosbury Road, Catford, and Mr Trevor at 7 Mavelstone Close, Bromley. Mavelstone Close was conveyed into Mr Trevor's name in November 2007. The house was part of a larger plot which he purchased with a friend called Julian Beale in May 2007. They had agreed to divide the plot allowing each to build a house. It was geographically close to Sundridge Avenue.
By 2010 Mr Percy became suspicious that Mr Trevor was using money standing in the bank account of SHL (set up in accordance with recital 2 of the Agreement) for his own purposes. More precisely Mr Percy was suspicious that Mr Trevor was ordering building materials, paying for those materials and labour from the bank account of SHL and using the purchased materials and labour for his own benefit at Mavelstone Close.
This suspicion led Mr Percy, in February 2010, to write to the directors and shareholders of SHL calling for an extraordinary general meeting for the purpose of removing Mr Trevor as director. The letter was passed to GSC solicitors LLP (“GSC”) by Mr Trevor who he instructed to deal with the issue. They wrote to Mr Percy on 12 March 2010 stating that the notice was invalid and suggesting that he take independent legal advice. Contained in the letter was an accusation that Mr Percy had breached his duties owed to SHL and was “conducting the affairs of the Company in an unfair and prejudicial manner”. GSC asserted that the relationship between Mr Percy and Mr Trevor was “no doubt a quasi partnership”.
The extent of the distrust between Mr Percy and Mr Trevor at that time can be gleaned from a letter written by GSC to a firm of solicitors which acted for SHL in connection with a property acquisition: “we understand that you have on occasions been instructed by the other director to [SHL] Mr Richard Percy to act for [SHL] on property transactions and that on occasions you have refused to speak with our client or report to him on transactions that you are or have been undertaking in [SHL's] name. This is not acceptable. You are no doubt aware that [SHL] is essentially deadlocked…”.
Mr Percy contacted Merriman White (“MW”) who had acted for him in respect of a driving offence. Mr St John Murphy, a partner at MW wrote to him on 18 March 2018 first addressing the problem and secondly providing a solution: “I am sorry to learn of the dispute which has arisen between yourself and your partner. From the information you have provided I consider that you have a good case to petition the court for an order that your partner sell his shares in the company to you…I also confirm that if we can identify there is a real risk of dissipation of assets you will be entitled to obtain a freezing order…it is essential to ensure the outlay [in costs] is justified by the anticipated return.” Mr Percy subsequently attended a meeting at the offices of MW where Mr Jeremiah O'Sullivan, who had liaised with Cranfield accountants to obtain...
To continue reading
Request your trial
-
Richard Terence Percy v Merriman White
...AND PROPERTY COURTS BUSINESS LIST (ChD.) Chief Insolvency and Companies Court Judge Briggs (sitting as a judge of the High Court) [2021] EWHC 22 (Ch) Royal Courts of Justice Strand, London, WC2A 2LL Patrick Lawrence QC (instructed by Reynolds Porter Chamberlain LLP) for the Michael Pooles Q......
-
Lucy Burnford v Automobile Association Developments Ltd
...Technology v Lectra Systems Ltd [1997] RPC 443, RP Howard Ltd v Woodman Matthews and Co [1983] BCLC 117, and Percy v Merriman White [2021] EWHC 22 (Ch). 71 The claimants say that their losses were caused by independent wrongs committed against them by the defendant, and were not merely “th......
-
SS and Essex County Council
...Holding Limited v IMI Plc & Delta Limited [2016] EWCA Civ 773 and the more recent Court of Appeal judgment in Percy v White & Anor [2021] EWHC 22 (Ch). Mr Ford argued that whilst liability will not be proved by a settlement in every case, on the instant facts, where ECC's liability is (i)......