Savings and Investment Bank Ltd v Fincken
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE PETER GIBSON,LORD JUSTICE ROBERT WALKER,LORD JUSTICE KEENE |
| Judgment Date | 06 November 2001 |
| Neutral Citation | [2001] EWCA Civ 1639 |
| Docket Number | Case No: CHANI/2001/0646/A3 |
| Court | Court of Appeal (Civil Division) |
| Date | 06 November 2001 |
[2001] EWCA Civ 1639
Lord Justice Peter Gibson
Lord Justice Robert Walker And
Lord Justice Keene
Case No: CHANI/2001/0646/A3
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
CHANCERY DIVISION
Lightman J.
Royal Courts of Justice
Strand,
London, WC2A 2LL
Miss Elizabeth Gloster Q.C. and Mr. David Ashton (instructed by Messrs D J Freeman of London for the Appellant)
Mr. Adrian Francis (instructed by Messrs Radcliffes (incorporating Jay Benning & Peltz) of London for the Respondent)
The main issues to which this appeal gives rise are (1) whether a proposed amendment to a claimant's pleading after the expiry of the limitation period is a claim involving a new cause of action for limitation purposes, and (2) whether the right to rescission of a contract induced by a fraudulent misrepresentation has been so clearly lost through the affirmation of the contract that summary judgment can be given dismissing the claim for rescission.
The claimant, Savings and Investment Bank Ltd. ("SIB"), an Isle of Man bank, was wound up on 2 August 1982 heavily insolvent. It claimed that it was owed some £19 million by the defendant, Kenneth Fincken. In February 1988 it issued proceedings against Mr. Fincken for the recovery of that money. On 13 October 1988 he entered into a Deed of Settlement with SIB, but defaulted on an obligation undertaken thereunder. By a second Deed of Settlement on 25 July 1990 again he undertook specific obligations, but again defaulted and a bill of exchange for some £19 million which he delivered to SIB was dishonoured on presentation.
On 8 April 1991 SIB brought bankruptcy proceedings against Mr. Fincken. Those proceedings were dismissed on 25 July 1991 on a technical ground. SIB appealed. On 9 December 1991 Mr. Fincken swore an affidavit of means ("the Affidavit") for the purpose of those proceedings. To it he exhibited a statement ("the Statement") of his personal assets, liabilities and business interests at that date, which information he thereby declared was true. The assets so declared included his home, Field House, in Chalfont St. Giles, Buckinghamshire, but no other real property, and, under "Investments and Collections", two Aya shotguns for which he gave a value of £2,500, but no other guns and few other assets.
On 6 May 1992 a third Deed of Settlement ("the Deed") was made between, amongst others, SIB, its liquidators and Mr. Fincken. Reference was made in recital (8) to the Affidavit. Cl. 1 contained a definition of "assets" in wide form and the following definition of the adjective "material": "worth £5,000 or more either alone or together with other assets". Cl. 2 contained the following warranty:
"Mr. Fincken warrants that in the affidavit he has made full disclosure of all material assets worldwide beneficially owned by him or in which he has an interest whether alone or jointly with others …."
By cl. 3 Mr. Fincken agreed that, if he was in breach of cl. 2, then at SIB's option he should transfer to SIB his interest in the undisclosed assets or he should pay to SIB the value of those assets. By cl. 6 SIB agreed to discontinue its bankruptcy appeal. By cl. 8 it was agreed that the Deed was made in full and final settlement of all claims between SIB, its liquidators and Mr. Fincken.
In 1997 three informants approached SIB seeking to sell to the liquidators information on Mr. Fincken's beneficial ownership of some £12 million of assets other than those which he had disclosed. In April 1998 the liquidators were informed that Mr. Fincken in the summer of 1991 had purchased a property known as Field House Barn for £25,000. Other information about other assets was also provided by the informants.
The liquidators, having carried out their own investigations after receiving this information, issued a writ in the Queen's Bench Division on 1 May 1998, very shortly before the expiry of 6 years from the date of the Deed. By the writ SIB claimed against Mr. Fincken (1) an order for the transfer of any asset retained by Mr. Fincken in breach of the Deed pursuant to which he warranted that he had made full disclosure of all material assets beneficially owned by him, and (2) alternatively or additionally, damages for breach of the Deed. Thus at that stage the only claims were in contract.
The writ was not served immediately. Its validity was renewed twice. On 16 April 1999 Ian Kennedy J. gave SIB leave to add a second defendant, Bradenham Holdings Ltd. ("Bradenham"), on the basis that it was Mr. Fincken's alter ego and had received assets from Mr. Fincken, and to amend the writ to claim (a) in the alternative to an order for the transfer of undisclosed assets, an order for the payment of the value of the assets, and (b) damages for deceit in respect of the misrepresentation in the Statement which induced SIB to enter into the Deed. He granted SIB an injunction restraining Mr. Fincken from, amongst other things, disposing of certain undisclosed assets.
On 19 April 1999 the writ was served on Mr. Fincken. On 4 June 1999 the Statement of Claim was served. After setting out the warranty in the Deed, it was pleaded in para. 13:
"In breach of the warranty …. Mr. Fincken failed to disclose material assets".
Particulars of the breach are then given. They included non-disclosure of cash in two undisclosed Swiss bank accounts, shares in Bradenham, land and buildings consisting of Field House Barn and two other properties, the lease of certain shooting rights and certain assets subject to a Guernsey settlement made by Mr. Fincken in 1995.
It was pleaded that by its writ SIB elected to have transferred to it all the undisclosed assets and that, if such transfer was not possible, by its solicitors' letter dated 15 April 1999 to Mr. Fincken it elected to have paid to it the value of the undisclosed assets.
It was also pleaded that Mr. Fincken by the Statement had represented that the information given in the Statement was true and that thereby he had induced SIB to enter into the Deed which otherwise it would not have done, but that the representation was false by reason of Mr. Fincken's ownership of the undisclosed assets particularised in para. 13 of the Statement of Claim and was made fraudulently. Particulars were then given of the allegation of fraud. SIB by the prayer claimed:
(1) an inquiry as to what material assets Mr. Fincken had failed to disclose;
(2) an order for the transfer to SIB of all such undisclosed assets;
(3) further or alternatively, an order for the payment of the value of the undisclosed assets;
(4) further or alternatively, damages for breach of contract;
(5) further or alternatively, damages for deceit.
On 12 June 1999 SIB applied to amend the Statement of Claim to plead negligent misrepresentation in the alternative to fraudulent misrepresentation and, alternatively to its other claims, rescission of the contract contained in the Deed. On 23 June 1999 Mr. Fincken and Bradenham applied to strike out the Statement of Claim. Both applications were heard by Wright J. On 30 July 1999 he refused to strike out the Statement of Claim (save for the reference to the lease of the shooting rights as an undisclosed asset) and he allowed the amendments sought by SIB. He also directed the transfer of the action to the Chancery Division.
Mr. Fincken and Bradenham then appealed to this court. They sought to set aside Wright J.'s dismissal of their application to strike out and his allowance of the amendments to the Statement of Claim. However we are told that no argument was directed to the amendment claiming recission, and the order made by this court on 29 October 1999 left Wright J.'s order on that undisturbed. The form of the Amended Statement of Claim which this court ordered to stand included the rescission claim. In his judgment (with which Laws L.J. and Jonathan Parker J. agreed) Morritt L.J. pointed out that there was no contractual or other right to the inquiry that SIB sought and that, in relation to all but one of the assets which SIB pleaded were material undisclosed assets, SIB's case was insufficient to sustain its claim. The references in the Amended Statement of Claim to those assets were therefore struck out. The claim against Bradenham was struck out. The one asset referred to which was not struck out was Field House Barn.
In the course of argument counsel for SIB referred, as he had done before Wright J., to a claim by SIB that Mr. Fincken had failed to disclose shotguns which he owned other than the two Aya guns. That claim had not been pleaded, but SIB nevertheless sought to rely on it. Morritt L.J. described that as a "wholly new" allegation. A belated application by SIB at the appeal hearing to reamend its pleading was refused on the grounds that Mr. Fincken was entitled to put in evidence dealing with the merits of the claim, and SIB could apply for leave in the ordinary way.
SIB then applied to Deputy Master Bartlett for permission to reamend the Amended Statement of Claim to plead non-disclosure of several other shotguns. One of the informants, Robin Syrett, had on 14 June 1999 told the liquidators that Mr. Fincken had owned a valuable shotgun which had been left as security with Mr. Syrett and for which Mr. Syrett had obtained a valuation of £15,000. At Mr. Syrett's suggestion SIB made enquiries of the local police who keep a register of guns registered in their area. They revealed that in 1991 and 1992 Mr. Fincken had had 8 shotguns registered on his shotgun certificate, only one of which was an Aya. They included a...
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