Stuart v Goldberg Linde

JurisdictionEngland & Wales
JudgeLord Justice Lloyd
Judgment Date17 January 2008
Neutral Citation[2008] EWCA Civ 2
Docket NumberCase No: A2 2007/0512
CourtCourt of Appeal (Civil Division)
Date17 January 2008
Jeffrey Charles Stuart
Claimant Appellant
(1) Stephen Goldberg And Carl Linde
First Defendants Respondents
(2) Pavlos Nikos Vardinoyannis
Second Defendant

[2008] EWCA Civ 2

[2007] EWHC 878 (QB)


Sir Anthony Clarke, Mr Lord Justice Sedley and

Lord Justice Lloyd

Case No: A2 2007/0512







Royal Courts of Justice

Strand, London, WC2A 2LL

Gilead Cooper Q.C. (instructed by Stock Fraser Cukier) for the Appellant

Nicholas Elliott Q.C. and David Quest (instructed by Reynolds Porter Chamberlin LLP) for the Respondents

Hearing date: 15 October 2007

Lord Justice Lloyd

Mr Stuart, the Claimant, appeals against an order which prevents him from suing the Respondents, Goldberg Linde, solicitors, in respect of two causes of action, on the grounds that if he wanted to assert such claims against them he should have done so in other proceedings which he brought against them in 2000, and which came to trial, successfully from his point of view, in January 200I will call this the 2000 Action; the word “action” is not used by the Civil Procedure Rules, but I use it here to avoid confusion between “claim”, in the sense of proceedings brought by a claimant, and “claim”, in the sense of a cause of action asserted, or relief sought, in those proceedings. Master Fontaine held that for Mr Stuart to bring the second claim (which I will call the 2005 Action) was an abuse of the process of the court, of the kind discussed in Johnson v Gore Wood [2002] 2 AC 1 Burton J gave Mr Stuart permission to appeal to the High Court, and directed that the appeal come before a High Court Judge. Despite that direction, the appeal was listed before Judge Seymour Q.C., who heard and dismissed the appeal. On Mr Stuart's behalf Mr Cooper Q.C. contends that this decision is wrong, and that it was not an abuse of the process for him to start the 2005 Action, in particular because on one of the two causes of action now raised, Mr Stuart was not aware of all the relevant facts until after the trial of the 2000 Action in 2001.


The disputes arise from dealings between Mr Stuart, Mr Linde and a Mr Vardinoyannis in 1999. Mr Stuart and Mr Vardinoyannis made an agreement on 21 June 1999 with a view to Mr Stuart acting together with Mr Vardinoyannis (and not with others) in relation to possible commercial enterprises in Mongolia. It is not in dispute that Mr Vardinoyannis thought better of the agreement very shortly after entering into it, and did not proceed with it. Mr Stuart has a separate claim against him in these proceedings, which has not been struck out, but is not relevant to this appeal.


His claims against Mr Linde are two-fold. The first is that he induced Mr Vardinoyannis to break the contract, by untrue statements about Mr Stuart. Mr Stuart became aware of the statements which Mr Linde had made to Mr Vardinoyannis in October 2000, from a witness statement of Mr Linde in the 2000 Action. In respect of that claim, which I will call the Inducement Claim, Mr Stuart knew the facts before the trial of the 2000 Action.


The second claim is in misrepresentation, and relies on statements made to himself by Mr Linde, some about Mr Linde's own position and others about Mr Vardinoyannis. (I will refer to it as the Misrepresentation Claim.) These statements are said to have influenced Mr Stuart in entering into the contract with Mr Vardinoyannis. He knew what had been said to him, but he did not know the true facts, he says, at any rate as regards some of the statements, until after the trial of the first claim.


The 2000 Action was brought to enforce a solicitor's undertaking; I will refer to that claim as the Undertaking Claim. Mr Linde is a solicitor, and was acting for Mr Vardinoyannis at the time. Mr Stuart alleged, successfully, that in the course of two telephone conversations on 9 and 10 June 1999 Mr Linde had given him an oral undertaking, as a solicitor, that he would in any event be paid $350,000, regardless of whether Mr Vardinoyannis entered into the contract which was then contemplated. Mr Stuart needed this assurance in order to enable him to undertake a trip to Mongolia for which he left later on 10 June. Normally, proceedings to enforce a solicitor's undertaking are not lengthy or complex; they are often suitable for summary procedure. Usually, however, the undertaking has been given in writing. In the present case Mr Linde disputed having said the words relied on at all, and also denied that, if he had done so, he did so in his capacity as a solicitor. Thus the proceedings were not suitable for summary determination and had to go to trial with oral evidence over five days. Nevertheless, the issues were clear and simple, even if not easy to resolve: had the words alleged to constitute the undertaking been spoken, and if so were they spoken by Mr Linde as a solicitor? If so, Mr Stuart was entitled to be paid the balance of the sum covered by the undertaking (he had been paid a small part of it in any event).


By contrast, the 2005 Action, as against Mr Linde, gives rise not only to issues of fact as to what was said, and its truth or otherwise, but also as to its materiality, and, if false statements were made, whether they had any causative effect – on the one hand (misrepresentation) on Mr Stuart in inducing him to enter into the contract with Mr Vardinoyannis, and on the other hand (inducement of breach of contract) on Mr Vardinoyannis leading him to break the contract with Mr Stuart. They also give rise to substantial issues as to damages, since Mr Stuart claims to have lost large profits on projects that he would have been able to undertake in Mongolia, and seeks to recover these as damages.


I will first set out the facts in some more detail, sufficiently for the purposes of this appeal, then I will refer to the law, now set out in Johnson v Gore Wood, and then refer to the basis on which the matter was decided below, before dealing with the application of the relevant principles to the facts of the case.

The facts


Mr Stuart is himself a solicitor but has never practised as such. He is the managing director of Mongolian Development Corporation Ltd, through which he sought to develop commercial opportunities in Mongolia with the Mongolian Government, in relation to the privatisation of state assets and other commercial matters. Early in 1999 he met Mr Linde, who acted for Mr Vardinoyannis. The latter was interested in investing in Mongolia. Mr Linde arranged several meetings between Mr Stuart and Mr Vardinoyannis, which led eventually to their signing Heads of Agreement on 21 June 1999. During the negotiations, at a time when Mr Stuart had signed the Heads of Agreement but before Mr Vardinoyannis had done so, Mr Stuart went to Mongolia for a week, to prepare the ground for commercial co-operation with Mr Vardinoyannis. He anticipated having to incur substantial expenditure in the course of this visit, and wanted to be sure that he would be indemnified for that expenditure come what may, and in particular even if Mr Vardinoyannis did not sign the Heads of Agreement, bearing in mind that he would not only be spending money, but would be doing so specifically in relation to Mr Vardinoyannis, and thereby losing the opportunity to promote the interests of other potential investors.


Mr Stuart left for Mongolia on 10 June 1999, having had two telephone conversations with Mr Linde, in the course of which, as the judge found at the trial of the first claim, Mr Linde had given, and reiterated, an unconditional undertaking, in his capacity as a solicitor, that $350,000 would be transferred into bank accounts set up by Mr Stuart for the purpose.


On 21 June 1999 Mr Stuart was in Athens to meet Mr Vardinoyannis. In the course of that visit Mr Vardinoyannis signed the Heads of Agreement. Soon afterwards he thought better of the project, and did nothing towards it. In particular the $350,000 was not paid to Mr Stuart, though eventually £11,500 was paid to cover particular expenses.


Mr Stuart makes two relevant claims in the 2005 Action. The Misrepresentation Claim is that his own entry into the Heads of Agreement was induced by misrepresentations by Mr Linde. The Inducement Claim is that Mr Vardinoyannis' breach of the agreement (which breach he alleges separately against Mr Vardinoyannis) was induced by derogatory and untrue statements made to Mr Vardinoyannis by Mr Linde.


Misrepresentation. Mr Stuart's case as to the misrepresentations made to him is set out in paragraphs 59 to 62 of his Particulars of Claim in the present action. The representations are said to have been about Mr Vardinoyannis, or his family, and also about Mr Linde. Those about Mr Vardinoyannis were in summary as follows: statements that his family were the sole owners of Xiosbank, whereas in truth they had only a minority stake; that they owned Motor Oil Hellas, whereas they only owned 50% of it; that Mr Vardinoyannis owned Panathinaikos Football Club, whereas it was owned by two others (possibly relations of his); that he was involved in the take-over of certain European Airlines (whereas he failed in his attempt to acquire a majority stake in Olympic Airways); that he was not involved in any court proceedings at the time, whereas proceedings had been brought against him by Aramco, freezing assets to the order of $100 million, and his sister had also started proceedings against him.


The statements about Mr Linde were: that he was the first foreign member of the...

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