Ridgewood Properties Group Ltd and Others v Kilpatrick Stockton Llp and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Arnold |
| Judgment Date | 25 July 2014 |
| Neutral Citation | [2014] EWHC 2502 (Ch) |
| Docket Number | Case No: HC11C02557 |
| Court | Chancery Division |
| Date | 25 July 2014 |
[2014] EWHC 2502 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Rolls Building
Fetter Lane, London, EC4A 1NL
The Hon Mr Justice Arnold
Case No: HC11C02557
David Turner QC and Adam Rosenthal (instructed by Mishcon de Reya) for the Claimants
Patricia Robertson QC and Christopher Knowles (instructed by Bristows LLP) for the First Defendant
David Halpern QC (instructed by BLM LLP) for the Second Defendant
Emer Murphy (instructed by Browne Jacobson LLP) for the Third Defendant
Hearing dates: 14–15 July 2014
| Topic | Paras |
| Introduction | 1 |
| Background | 2–30 |
| The Airspace Agreements | 2–12 |
| The Texaco proceedings | 13–26 |
| The present proceedings | 27–30 |
| Assessment of damages for professional negligence | 31–34 |
| The Defendants' application to strike out | 35– |
| The law | 36–43 |
| Application to the present case | 44–59 |
| Does paragraph 62(1) involve a collateral attack on | |
| Proudman J's findings? | 44–49 |
| Would it be manifestly unfair to the Defendants? | 50 |
| Would it bring the administration of justice into disrepute? | 51–57 |
| Does the new evidence satisfy the Phosphate Sewage test? | 58–59 |
| Conclusion | 60 |
| The Defendants' application for summary judgment | 61–88 |
| Principles applicable to summary judgment applications | 62–63 |
| The rule in Hollington v Hewthorn | 64 |
| Is there a real prospect of success? | 65–88 |
| Clerkenwell Road | 68–71 |
| Caledonian Road | 72–75 |
| Hove | 76–78 |
| Blue Star and Forty Avenue | 79–80 |
| Dome | 81–84 |
| St Katharine's, Lansdowne and Hendon Way | 85–86 |
| KS's alternative argument | 87 |
| Wasted expenditure | 88 |
| Conclusions | 89 |
| Postscript |
Introduction
This is an application by the Defendants to strike out paragraph 62(1) of the Claimants' Re-Amended Particulars of Claim on the ground that it is an abuse of process because it amounts to a collateral attack upon findings made by Proudman J in three judgments in previous proceedings, alternatively for summary judgment on the ground that the plea has no real prospect of success.
Background
The Airspace Agreements
Between 23 March 2001 and 30 July 2004 the First Claimant ("RPG") entered into a series of contracts with Texaco Ltd (subsequently known as Chevron Ltd and then as Valero Energy Ltd) ("Texaco"), known as the Airspace Agreements, under which RPG acquired conditional options to purchase a number of sites used by Texaco as petrol filling station shops (or, in one case, RPG entered into a conditional contract to purchase the site). The scheme of the Airspace Agreements was that RPG would apply for planning permission for redevelopment of each site, which would involve the demolition of the existing shop and the construction of a building comprising a shop with flats above. On the grant of satisfactory planning permission, RPG would take a building lease of the site and carry out the development for which permission had been granted. Upon completion of the development, RPG would surrender the building lease and either acquire the freehold or a long lease of the site, subject to Texaco retaining the shop.
This claim concerns the Airspace Agreements relating to nine sites ("the Sites"), which were entered into in three phases, as follows.
| Phase | Site(s) | Date(s) |
| Phase 1 (Conditional Contract) | Clerkenwell Road | 23 March 2001 |
| Phase 2 (Option) | St Katherine's, Caledonian Road, Hove, Landsdowne | 24 July 2003 (Lansdowne – 31 July 2003) |
| Phase 3 (Option) | Blue Star, Dome, Forty Avenue, Hendon Way | 30 July 2004 |
The Airspace Agreements in all three phases required RPG to obtain satisfactory planning permission before the expiry of a specific period, whereupon RPG was entitled to give notice exercising the options (in relation to Phases 2 and 3) or became obliged to complete the conditional contract (Phase 1). The periods were extended by agreement.
As extended, the relevant periods were as follows:
i) Phase 1: satisfactory planning permission had to be granted by 23 December 2005, unless an appeal had been lodged by that date.
ii) Phase 2: satisfactory planning permission had to be granted by 24 January 2006 (or 31 January 2006 for Lansdowne), unless an appeal had been lodged by that date, in which case satisfactory planning permission had to be granted by 11 June 2007 (or 18 June 2007 for Lansdowne).
iii) Phase 3: the definition of "option period" in the Airspace Agreements was ambiguous, so that satisfactory planning permission had to be obtained by either 30 December 2005 or 30 January 2006, unless an appeal had been lodged by that date, in which case satisfactory planning permission had to be granted by 17 June 2008. For the purposes of this application, the Defendants are content to proceed on the assumption that the correct date was 30 January 2006.
On 23 March 2013 RPG assigned its rights under the Clerkenwell Airspace Agreement to the Second Claimant. On 20 September 2005 RPG assigned its rights under the St Katherine's, Lansdowne and Hendon Way Airspace Agreements to the Third, Fourth and Fifth Claimants respectively. All the Claimants appear to be controlled by Norman Lynch. Both Norman Lynch and his son Paul Lynch act as consultants to the Claimants.
On 28 April 2005 Texaco entered into an agreement to sell a large portfolio of properties, which included the Sites, to Somerfield Stores Ltd ("Somerfield") and Azure Properties LLP ("Azure"), the latter being associated with Somerfield. On 21 June 2005 Texaco duly transferred the Sites to Somerfield and Azure. Texaco did not secure from Somerfield or Azure the power to compel performance of the Airspace Agreements.
Almost immediately, Somerfield indicated an intention not to be bound by the Airspace Agreements. Somerfield told Norman Lynch on 28 July 2005 that it regarded the Airspace Agreements as unenforceable and the First Defendant ("KS") sent Norman Lynch an email on 10 August 2005 attaching a letter from Somerfield confirming that it did not regard itself as bound by the Airspace Agreements. In the Texaco proceedings (as to which, see below), Norman Lynch accepted in cross-examination that he was aware of Somerfield's stance by 10 August 2005.
Notwithstanding Somerfield's stance, the Claimants continued to try and obtain planning permission in relation to the Sites within the periods required by the Airspace Agreements at least until March-April 2006. In the event, they did not obtain planning permission in relation to any of the Sites.
The Claimants were advised by Mark Johnstone, who is a solicitor and was a partner in KS until 31 August 2005, when he moved to the Second Defendant ("FSI"). KS instructed the Third Defendant ("Mr Woolf") in August 2005.
In February 2006, Mr Woolf was instructed by FSI, together with leading counsel, to advise, among other things: (i) whether by disposing of the Sites, Texaco had breached the Airspace Agreements; (ii) if so, whether the Claimants could bring an action for damages against Texaco, and if it could, what the measure of damages would be; and (iii) whether, in relation to three of the Sites, the Claimants might be best advised to withdraw extant planning appeals and pursue their claims against Texaco for damages.
The Claimants' evidence is that, in accordance with the advice received from Mr Woolf and leading counsel, the appeals in relation to Caledonian Road, Hove and Dome were withdrawn in March-April 2006.
The Texaco proceedings
On 17 May 2011 the first four Claimants, and on 16 June 2011 the Fifth Claimant, brought proceedings against Texaco ("the Texaco proceedings"). The Claimants alleged that Texaco had committed a repudiatory breach of the Airspace Agreements. The Claimants claimed damages compensating them for their loss of profits, alternatively their wasted expenditure. Texaco denied that it had breached the Airspace Agreements. In the alternative, Texaco contended that the Claimants had affirmed the Airspace Agreements.
Texaco brought a Part 20 Claim against Pannone LLP, the solicitors who had acted for Texaco in the sale to Azure and Somerfield. An order was made by Master Teverson on 28 September 2011 directing that the question of liability be tried as a preliminary issue. By the order of 28 September 2011, Pannone was permitted to participate in the trial on liability as between the Claimants and Texaco.
The trial on liability was heard on 10 to 12 and 15 October 2012 before Proudman J. The Claimants relied on the evidence of Norman Lynch. Because the trial was only concerned with liability, the Claimants say that they did not at that stage attempt to adduce wider factual evidence or expert evidence relevant to causation and loss (i.e. as to their prospects of obtaining planning permission and the quantification of their losses). Nevertheless, Norman Lynch did give evidence in paragraphs 25–32 of his witness statement about the Claimants' efforts to secure planning permission, dealing specifically with each of the Sites. Furthermore, Norman Lynch was cross-examined on what had happened in relation to each of the Sites. Although Norman Lynch said in his witness statement that he was not in the UK for much of the time, he also said that he was regularly updated as to progress by Paul Lynch and Steve Thompson (another consultant).
Proudman J gave her first judgment on 30 January 2013 ( [2013] EWHC 98 (Ch), [2013] Ch 525). In summary, she held that:
i) No term should be implied into the Airspace Agreements prohibiting a sale of the Sites by Texaco.
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