Somatra Ltd v Sinclair Roche & Temperley (A Firm). ; Sinclair Roche & Temperley v Somatra Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Lord Justice Tuckey,LORD JUSTICE SCHIEMANN,LORD JUSTICE TUCKEY,LORD JUSTICE LONGMORE,Lord Justice TUCKEY |
| Judgment Date | 23 October 2003 |
| Neutral Citation | [2003] EWCA Civ 509,[2003] EWCA Civ 1474,[2003] EWCA Civ 1475 |
| Docket Number | Case No: A3/02/2375,Case Nos: 2002 2375 A3,Case No: QBCMI 2000/0055/A3 |
| Court | Court of Appeal (Civil Division) |
| Date | 23 October 2003 |
[2000] EWCA Civ J0726-16
Lord Justice Waller and
Lord Justice Clarke
Case No: QBCMI 2000/0055/A3
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
COMMERCIAL COURT (Mr Justice Timothy Walker)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand,
London, WC2A 2LL
Mr Mark Cran QC, and Miss Rebecca Sabben-Clare (instructed by Ince & Co, London EC3) appeared for the Defendants/Claimants by Counterclaim/Respondents )
Mr Christopher Symons QC and Mr Mark Cannon, (instructed by Herbert Smith, London EC3) appeared for the Claimants/Defendants to Counterclaim/Appellants
Introduction.
On the 29 th May 1991 the ABT SUMMER sank. As a result her owner, ("Somatra"), which is the claimant in this action and the principal appellant on this appeal, made a substantial claim against its hull underwriters. The claim led to an action in the Commercial Court, which was settled in April 1994. The respondents ("Sinclairs") were acting as Somatra's solicitors in connection with the claim and the action. Somatra's case in this action is that when Sinclairs were acting as its solicitors they were negligent and thus in breach of duty and contract and that as a result it has suffered loss. The claim against underwriters was settled for some US$40 million, which was about 66 per cent of the full amount of the claim including interest. Somatra's case is that but for Sinclairs' negligence it would or might have recovered 85 per cent of the claim. The claim against Sinclairs is of the order of US$10 million. Sinclairs counterclaim for their unpaid fees in the sum of £577,137.54 plus interest. Their claim is against both Somatra and the other two defendants to the counterclaim. They are also appellants, but need not be considered separately from Somatra in order to resolve the issues which arise on this appeal.
Meetings and Telephone Conversations.
Some time after the action was settled in April 1994 a dispute arose between Somatra and Sinclairs as to Sinclairs' unpaid fees, during which Somatra made a number of complaints about the way Sinclairs had represented it. It was agreed that the parties should meet in Jeddah in order to try to resolve the situation. Accordingly meetings took place in Jeddah over two days, the 24 th and 25 th September 1994. Somatra had by this time consulted Herbert Smith, but it was represented at the meetings, not by anyone from Herbert Smith, but by Mr Hisham Alireza and by Mr Tariq Mustafa. Sinclairs were represented by Mr Ben Leach, assisted by Mr Joachim Atkinson. Mr Leach, who was the managing partner of Sinclairs at the time, had played no part in the original action. The partner principally involved when Sinclairs were acting for Somatra had been Mr Harvey Williams. He had been assisted by Mr Atkinson, who was an assistant solicitor.
It is common ground that the meetings were without prejudice. As I understand it, that is on the basis that, although they were not expressed to be without prejudice, the nature of them was such that they should be so treated. For the same reasons, it is also common ground that two subsequent telephone conversations were also without prejudice. Those telephone conversations were between the same representatives of Somatra and Mr Leach. The first took place on the 8 th October 1994 and the second at the end of October or the beginning of November 1994. As the judge said, the meetings and telephone calls covered a large number of matters which are in issue in this action and Mr Leach engaged on behalf of his partners in a full and uninhibited discussion of the conduct of the original action by Sinclairs.
Unknown to Mr Leach, Somatra covertly recorded the meetings with both audio and video equipment. It also covertly recorded the two telephone conversations. As a result there are now available transcripts of both the meetings and the telephone conversations, except for one period of about two hours during the course of one of the meetings. The judge inferred, in my view correctly, that it is in the highest degree unlikely that Mr Leach would have participated if he had known that the conversations were being recorded. The judge also described Somatra's behaviour in making the recordings as unattractive. I see the force of that, but it is not to my mind relevant to the correct resolution of any of the issues in this appeal. It seems to me that either the contents of the conversations are admissible at the trial or they are not. If they are, no-one suggests that the court should not have the best evidence of what was said, namely the recordings.
The Issues.
Somatra wishes to adduce in evidence at the trial of this action the contents of the conversations (by which I mean what was said both at the meetings and in the telephone conversations) on the basis that Sinclairs are no longer entitled to rely upon the fact that they were without prejudice because of the use which Sinclairs made of them on an ex parte application for a Mareva injunction. To that end Somatra listed the recordings in a supplemental list of documents. Sinclairs say that the contents remain inadmissible because the conversations were without prejudice and that nothing that has happened since entitles Somatra to rely upon them. The judge accepted Sinclairs' submissions and in effect declared that Somatra (and the other appellants) are not entitled to refer to the contents of the conversations. He also ordered them to serve an amended supplemental list deleting reference to the recordings. The principal issue on this appeal is whether the judge was right to hold that the contents of the conversations are inadmissible.
The judge gave permission to appeal because of the lack of authority on the issues raised, although he added that he had no doubt as to the correct result. I shall consider what may be called the without prejudice issue first, before turning to the second issue, which relates to the question whether certain documents relating to or arising from the meetings should be disclosed by Sinclairs. That question turns in part upon the way in which the first issue is resolved.
Without Prejudice.
The Issue.
It is common ground that it follows from the fact that the conversations were without prejudice that Somatra cannot adduce in evidence any admission made in the course of them by or on behalf of Sinclairs unless subsequent conduct on Sinclairs' behalf entitles Somatra to do so. The conduct relied upon is reliance upon an affidavit in support of an ex parte application for a Mareva injunction made on the 16 th October 1998. The application was granted by Colman J. The question is simply whether reliance upon that affidavit entitles Somatra to rely upon the contents of the conversations at the trial.
The Affidavit.
The affidavit was sworn on the 14 th October 1998 by Mr Weir as a partner in Ince & Co, who were and are acting for Sinclairs. It was sworn in support of an application for a Mareva injunction to secure Sinclairs' claim for a total of about £824,000 in respect of unpaid fees, interest and costs. In paragraph 2 Mr Weir said that the facts and matters deposed to were either personally known to him or had been made known to him by Mr Leach, Mr Williams and Mr Atkinson, among others. The structure of the affidavit was as follows. Paragraphs 1 to 10 introduced the case and the parties; paragraphs 11 to 21 described Sinclairs' counterclaim for unpaid fees; paragraphs 22 to 29 discussed the allegations of breach of duty and paragraphs 26 to 37 set out the nature of the application and asserted the risk of dissipation of assets. The remaining paragraphs do not seem to me to be relevant.
Somatra relies upon two particular paragraphs in the affidavit. The first is paragraph 29.4, which must be considered in its context. As just stated, it is in the part of the affidavit which discussed the allegations of breach of duty against Sinclairs. In paragraph 26 Mr Weir asserted that there were a number of manifest weaknesses in those allegations. He then, in paragraphs 26 to 28, discussed three particular heads of loss alleged by Somatra, namely loss on settlement, White & Case fees and bank claims. There followed paragraph 29, in which he said that in addition he would draw the court's attention to a number of what he described as general points. There were four such points. It is correctly conceded by Mr Mark Cran QC on behalf of Sinclairs that the first three of them were all aimed at exposing the weakness of Somatra's case on breach of duty.
The fourth point was in these terms:
4. I would draw to the Court's attention that there are some references in correspondence between the parties in the second half of 1994 and 1995 to Mr Leach having offered an apology on behalf of Mr Williams (see eg p 102 of AHWM 5). I am told by Mr Leach, and I believe, that it appeared to him, especially from the two meetings which he had with Mr Alireza and Mr Mustafa in Jeddah on 24 th and 25 th September 1994 that these two gentlemen harboured great personal hostility concerning Mr Williams, such that, so it seemed from what they said, there had been some sort of severe personality clash. In the circumstances, he formed the view that there might be room for a very limited apology from Mr Williams to ABTI, with a view to resolving matters between them. The idea was put to Mr Alireza and...
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