Savings & Investment Bank Ltd ((in Liquidation)) v Fincken (No 2)

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Rix,Lord Justice Carnwath
Judgment Date14 November 2003
Neutral Citation[2003] EWCA Civ 1630
Date14 November 2003
Docket NumberCase No: A3/2003/0454

[2003] EWCA Civ 1630





(Mr Justice Patten)


Lord Justice Rix and

Lord Justice Carnwath

Case No: A3/2003/0454

Savings & Investment Bank Ltd (In Liquidation)
Kenneth Fincken

Mr. Francis Tregear QC (instructed by Messrs Radcliffes Le Brasseur (incorporating Jay Benning & Peltz)) for the Appellant

Miss Elizabeth Gloster QC & Mr. David Ashton (instructed by Messrs Kendall Freeman) for the Respondent

Lord Justice Rix

This appeal arises from an application to amend particulars of claim shortly before trial. The application came forward in exceptional circumstances in that, in the court below, it was primarily based on an admission said to be made by the defendant at a without prejudice meeting. The judge, Patten J, found that the admission fell within a recognised exception to the doctrine of without prejudice privilege known as the "unambiguous impropriety" exception, a phrase coined by Hoffmann LJ in ( Forster v. Friedland CA, 10 November 1992, transcript No 1052 of 1992, unreported) and adopted in later cases such as Unilever plc v. The Procter & Gamble Co [2000] 1 WLR 2436 at 2444G. On that basis the judge exercised his discretion to allow the subject matter of the admission, as well as another closely related matter, to be pleaded by way of amendment. The trial date was accordingly lost, but the judge felt that there was a real doubt as to whether it could have been achieved in any event. Curiously, however, the reference to the admission itself was dropped from the proposed amendment by the claimant, and the judge adopted that concession in the order he made.


In this court, however, the successful claimant, while maintaining the basis on which the judge acted below, has put in the forefront of its submissions a new basis for the amendments, namely that irrespective of the admission made at the without prejudice meeting there is a plain case to be made on publicly available documents in support of those amendments. The judge's order should therefore be maintained in the discretion of this court even if he were in error in finding the unambiguous impropriety exception to have been made good.


It follows that there are three issues for this court:

(1) Was the judge correct to find that the admission in question had fallen within the unambiguous impropriety exception and thus had lost the protection of the without prejudice rule?

(2) If he was correct, could his exercise of discretion be faulted?

(3) If he was not correct, is there a new basis upon which this court should nevertheless exercise its own discretion to allow the same or similar amendments?

The background to the litigation


The litigation between the parties arose out of the compromise of a debt owed by Mr Kenneth Fincken, the defendant and here the appellant, to the Savings & Investment Bank Limited ("SIB"), the claimant and here the respondent. On 15 September 1982 SIB, an Isle of Man company, had gone into liquidation. Mr Michael Jordan, a partner of Cork Gully and now a consultant with PricewaterhouseCoopers ("PwC"), and Mr Timothy Beer, a then partner of Peat Marwick McLintock & Co and now a consultant with KPMG, were appointed joint liquidators by the Isle of Man court. Mr Fincken owed SIB a large sum of money. On 23 February 1988 SIB brought proceedings against Mr Fincken to recover that debt.


On 13 October 1988 SIB and Mr Fincken entered into a deed of settlement (the "first deed"). Mr Fincken thereby acknowledged the existence of various debts and agreed to deliver by 30 November 1988 a bill of exchange in the sum of over £19 million. He also agreed that he would pay £250,000 to SIB within the year, ie by 13 October 1989, in which case SIB would return the bill of exchange to him unnegotiated and unpresented. Mr Fincken delivered the bill of exchange on approximately 18 November 1988 but paid only £50,000 of the £250,000 promised. SIB's obligation to return the bill therefore did not materialise.


On 25 July 1990 the parties entered into a further deed of settlement (the "second deed") under which Mr Fincken agreed to deliver five bills of exchange, each in the sum of over £19 million, and at the same time to pay £50,000 at six monthly intervals down to April 1992, plus a further £20,000 on the last of those dates. On due performance the respective bill would be returned unnegotiated and unpresented. Mr Fincken made no payments in either April or October 1990, whereupon SIB presented the bill of exchange payable on 18 October 1990, which was dishonoured. A bankruptcy petition against Mr Fincken was dismissed for technical reasons.


On 9 December 1991 Mr Fincken swore an affidavit of means (the "affidavit") exhibiting a statement of personal assets, liabilities and business interests as of that date. He disclosed his residence at Field House in Chalfont St Giles and two shotguns valued at £2500, otherwise no other assets or investments of any kind. Among the scheduled liabilities were the mortgage arrangements on Field House and a loan to him from Guinness Mahon for £250,000. Among the disclosed business interests was his directorship in two companies: Westminster Property Holdings plc ("WPH") and Pyrok Group plc ("Pyrok"). His interest in WPH brought him an income of £25,000 per annum. That affidavit is at the root of the current litigation between the parties, for SIB says that Mr Fincken there misrepresented his assets and did so fraudulently. Prior to the amendment allowed by Patten J below the only non-disclosures pleaded were in respect of Field House Barn, a barn adjoining Field House which the liquidators say is worth at least £25,000, and a further shotgun, which the liquidators say is worth at least £7,500. The amendments allowed by the judge relate to holdings in the ordinary and preference shares of WPH (47,500 ordinary and 250,000 preference shares, the "shares"), which the liquidators say were worth £228,785, and a director's loan by Mr Fincken to WPH in the sum of £291,480, which the liquidators say was recoverable in full (the "loan").


On 13 December 1991, a few days after the making of that affidavit, Mr Fincken was interviewed by the liquidators about his means. A resume of that interview exists in the form of a letter written by Mr Richard Coleman to Messrs DJ Freeman, SIB's solicitors. Mr Coleman is a director of PwC in its forensic services department and has been assisting the liquidators, in their duties. Paragraph 11 of the letter reads as follows:

"11. We asked Fincken about his directorship of Westminster Property Holdings plc. He had disclosed a salary from this company of £25,000 a year. We asked if he had any interest in the shares. He said he had none, directly or indirectly. He told us that the shares registered in the name of Hallam Financial Services were in fact held for a Mr Nathan Lee."


There is a dispute between the parties as to whether that interview and thus that letter is itself covered by without prejudice privilege. Before us the dispute was left as a matter of submission and counter-submission. The only evidence we have is Mr Coleman's second witness statement of 31 January 2003, made for the purpose of the hearing before Patten J, which states that it was a without prejudice meeting.


The reference to Hallam Financial Services (Hallam Financial Planning Services Limited or "Hallam") was to a nominee company administered by WPH's auditors. WPH's annual return dated 30 September 1990 showed Hallam as WPH's secretary and Hallam's director as N Springer. WPH's auditors were Alexander Springer & Company. The same annual return showed Hallam (whose address was the same as that of the auditors) as registered owner of 49,998 of the 50,000 issued ordinary £1 shares in WPH.


On 6 May 1992 SIB and Mr Fincken entered into a third deed of settlement (the "third deed"). In it Mr Fincken warranted that he had made full disclosure of all assets worldwide beneficially owned by him or in which he had an interest and which were worth £5,000 or more. The third deed discharged Mr Fincken from any further liability, in full and final settlement of all claims, subject to a term which permitted SIB to claim any asset worth £5000 or more, or its value, in the event of non-disclosure. SIB agreed to drop its pursuit of Mr Fincken's bankruptcy. In effect the liquidators accepted that there was nothing more to be got out of Mr Fincken.

The litigation


These proceedings were commenced by the issue of a writ on 1 May 1998. Its validity was extended twice. On 16 April 1999 the writ was re-issued on amendment. At that time its claims of non-disclosure encompassed cash in Swiss bank accounts, shares in a company called Bradenham Holdings Ltd, interests in 18 properties (including Field House Barn), shooting rights and offshore trusts. On the same day SIB obtained an ex parte freezing order against Mr Fincken in the sum of about £12 million. The amended writ was served on Mr Fincken on 19 April 1999. On 4 June 1999 a statement of claim was served on Mr Fincken, but the non-disclosure claim relating to properties was at that time limited to four properties (including the barn). Mr Fincken applied to strike out the claims. His application was heard on 30 July 1999 by Wright J and substantially failed. On the same day SIB applied successfully for leave to amend to seek rescission of the third deed on the ground of misrepresentation. On 25 October 1999 SIB served voluntary further particulars relating to seven undisclosed shotguns. On...

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