Sir Martin Broughton (Respondent/Claimant) v Kop Football (cayman) Ltd and Others (Applicants/defendants)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Lewison,Lord Justice McCombe,Lord Justice Tomlinson |
| Judgment Date | 20 December 2012 |
| Neutral Citation | [2012] EWCA Civ 1743 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | A3/2012/2858 A3/2012/2859 A3/2012/3321 |
| Date | 20 December 2012 |
[2012] EWCA Civ 1743
Lord Justice Tomlinson
Lord Justice Lewison
Lord Justice Mccombe
A3/2012/2858 A3/2012/2859
A3/2012/2862A3/ 2012/2861
A3/2012/3321
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
CHANCERY DIVISION
(MR JUSTICE PETER SMITH)
Royal Courts of Justice
Strand
London, WC2
MR ALI MALEK QC and MR RICHARD HILL QC (instructed by Clyde & Co) Appeared on behalf of the the Applicants
MR PAUL HARRIS QC and MR OWAIN DRAPER (instructed by Couchmans LLP) appeared on behalf of Sir Martin Broughton
MR RICHARD SNOWDEN QC and MR JAMES POTTS (instructed by Freshfields Bruckhaus Deringer LLP) appeared on behalf of the Royal Bank of Scotland
This is an application for permission to appeal with the appeal to follow if permission is granted against case management orders made by Peter Smith J in the course of bitterly fought and very expensive proceedings.
The extraordinary volume of paper, the extravagantly long skeleton arguments, which more resemble the Michelin Man than skeletons, and the inordinate citation of authority are quite inappropriate for an application dealing principally with case management decisions.
I emphasise that the appeal is against the judge's orders and not an appeal against remarks which he made during the course of the hearings. In paragraph 7.2 of Jackson LJ's report on costs in civil proceedings, he put forward the view that he regarded it as vital that the Court of Appeal supports first instance judges who make robust but fair case management decisions. This principle has been affirmed on a number of occasions in this court, see for example Deripaska v Cherney [2012] EWCA Civ 1235 and Stokors SA v IG Markets Limited [2012] All ER(D) 31 (Nov).
In the present case, the judge's case management decisions were certainly robust. Were they fair? In order to put those decisions in context, it is necessary to go some way into the background.
Until about two years ago, Liverpool Football Club was operated by the Liverpool Football Club and Athletic Grounds Limited ("LFC"), whose shares were owned by Kop Football Limited ("KFL"). KFL was in turn owned by other companies whose ultimate parent was Kop Football Holdings Limited ("KFH"). This network of companies was owned by two residents in and citizens of the United States, Messrs Hicks and Gillett. The companies were in part funded by the Royal Bank of Scotland ("RBS"), together with another lender.
Because of these companies' financial difficulties, RBS put pressure on Messrs Hicks and Gillett to sell the club. By April 2010, RBS wanted them to give up control of the sale process and to give control of that to the board of KFH. In consequence, a number of agreements came into existence dealing with corporate governance. Under the terms of those agreements, the board of KFH was to consist of a new independent chairman, the two executive directors of that company, Messrs Purslow and Ayre, and Messrs Hicks and Gillett. In April 2010, under the terms of the agreement, Sir Martin Broughton was engaged as the independent chairman of the board in order to lead the process of selling or transferring control of LFC to meet the indebtedness to RBS. The sale process was conducted between April and October 2010.
On 6 October 2010, against the wishes of Messrs Hicks and Gillett, a subcommittee of the board decided to accept an offered made by UKSV Holdings Ltd. KFL then concluded a conditional agreement for the sale of the entire share capital of LFC to UKSV.
On 13 October, Messrs Hicks and Gillett and their companies (whom I will collectively refer to as "the Kop defendants") filed a petition with the district court in Dallas County, Texas, seeking a temporary restraining order to stop the sale. They alleged that the sale was "an epic swindle at the hands of rogue corporate directors and their co-conspirators", naming Sir Martin and Messrs Purslow and Ayre (who I will collectively refer to as "the English directors"). They alleged that the sale price was "hundreds of millions of dollars below true market value" and that the English directors were in blatant disregard of their fiduciary duties. The English directors were said to be pawns of RBS and to have enriched themselves at the club's expense. RBS and the English directors were alleged to have entered into a conspiracy to promote the breaches of fiduciary duty. The petition contained more along the same lines.
It was a matter of particular concern that the Texan lawyers representing the Kop defendants had untruthfully told the Dallas court that they had been unable to obtain relief in England because the courts were closed. The truth was that, immediately before the petition had been filed in the Dallas court, the Kop defendants had applied to the Chancery Division for an injunction which Floyd J had refused. The Dallas court was not told of this.
Messrs Hicks and Gillett have never been able to provide a satisfactory explanation either to Floyd J or to Peter Smith J how it came about that the Dallas court was so seriously misinformed.
As October moved on, Messrs Hicks and Gillett made statements to similar effect as those contained in the petition to national media, but there has been no repetition of those statements since.
Meanwhile, both RBS and the English directors had issued proceedings in England. Their initial purpose was to allow the sale to go through, but that has now been achieved. The proceedings have been substantially amended and in effect now seek negative declarations validating their conduct of the sale.
On 24 June 2011, the Kop defendants served a defence and counterclaim. They pleaded an agreement by RBS to extend the dates for repayment of the various credit facilities and alleged that the agreement contained implied terms which RBS had broken.
On 28 October 2011, RBS issued an application for summary judgment on the pleaded counterclaim. In March 2012, in the course of the first part of the hearing of the application for summary judgment, the Kop defendants, at the suggestion of the judge, made a number of applications for disclosure. The judge granted those applications. The reason behind the applications was to see whether the Kop defendants, with the aid of disclosure, would be able to plead a case alleging serious breaches of various obligations. Normally, of course, disclosure follows rather than precedes the pleaded case.
But the orders at first imposed a confidentiality requirement that meant that the disclosed documents were available only to the Kop defendants' English legal team. This had the effect that the legal team could not show the documents to Messrs Hicks or Gillett or to their US lawyers. Underpinning the rationale for this order was first the concern about the misinformation that had been given to the Dallas court and a fear that disclosed documents might find their way into the public domain; and second an appreciation that, if the case did not go beyond the summary judgment stage, the documents would not have been disclosable and the Kop defendants would have had no right to see them at all.
In April, Peter Smith J varied the earlier orders. In the course of his ruling, he said that RBS and the English directors were entitled to be fearful that the Kop defendants would break the rules when it suited them and that to enforce the rules in the USA would be time consuming and costly. The revised confidentiality regime allowed Mr Hicks and/or Mr Gillett personally to attend at their English solicitors' offices or counsels' chambers in order to view disclosed documents, accompanied by representatives of their US lawyers, but no documents were to be copied or removed.
An alternative regime was put in place to allow them to attend a meeting by video or telephone conference. That regime was still in place when the resumed hearing of the application for summary judgment took place.
That first came before Peter Smith J on 8 March 2012; and, following the applications for disclosure which I have mentioned, he adjourned it to be heard in May together with an application by the Kop defendants to amend the counterclaim. The proposed amendments put before the judge raised serious allegations of deliberate bad faith on the part of the English directors and various derelictions of duty and breaches of obligation on the part of RBS.
The adjourned hearing took place on 16 and 17 May. On 22 August 2012, the judge's clerk circulated the judge's draft judgment with a view to handing it down on 24 August. That did not, however, happen and judgment was in fact formally handed down on 22 October. It is the order made on that day which is the principal focus of this appeal.
In a supplemental skeleton argument, prepared shortly before the hearing, the Kop defendants complained that progress of the case had been delayed for a year. They continued:
"The case needs to be put in order and case managed closely to a trial."
While discussing the question of summary judgment with Mr Snowden QC, appearing then, as now, for RBS, the judge indicated on 17 May that he might exercise the court's residual power to allow the case to go to trial, but he added:
"If anything survives to go to trial, the timetable will lead to a trial early next year. It will go to a strict timetable, to a trial...
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