TFL Management Ltd v Lloyds TSB Bank Plc
| Jurisdiction | England & Wales |
| Judge | Judge Pelling QC |
| Judgment Date | 28 February 2013 |
| Neutral Citation | [2013] EWHC 772 (Ch) |
| Docket Number | Case No: HC11CO2289 |
| Court | Chancery Division |
| Date | 28 February 2013 |
[2013] EWHC 772 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
The Rolls Building
Fetter Lane
London EC4A 1NL
His Honour Judge Pelling QC
(SITTING AS A JUDGE OF THE HIGH COURT)
Case No: HC11CO2289
MR C HARRIS (instructed by Charles Fussell & Co) appeared on behalf of the Claimant
MR N LEVY (instructed by CMS Cameron McKenna) appeared on behalf of the Defendant
APPROVED JUDGMENT
Introduction
This is the hearing of an application by the defendants for an order striking out the claimant's claim or for summary judgment of so much of the claim as is formulated as a restitution claim. There is a cross application brought by the claimants for summary judgment, although it is now accepted by the claimant that if it is able to resist the defendant's applications there will have to be a trial.
Background Facts
This claim arises out of some relatively complex commercial dealings and litigation. By an agreement made on 18 May 1995 ("the Agency Agreement") Trading Force Limited was appointed the marketing agent for a manufacturer of military engineering equipment called Hesco Bastion Limited ("Hesco"). In 1998 Trading Force Limited entered into a joint venture agreement with Hesco for the purpose of supplying equipment to the US Government under which Trading Force Limited was entitled to be paid commission by Hesco. I refer to this agreement thereafter as the "DSCC Agreement", to the commission payable there under as "DSCC Commission", and to the Agency Agreement and DSCC Agreements together as the "Hesco Agreements".
The defendant was Trading Force Limited's banker, and was the beneficiary of a fixed and floating charge over the assets and undertaking of Trading Force Limited. On 10 April 2002 the defendant appointed joint administrative receivers pursuant to the fixed and floating charge.
On 30 April 2002, the defendant, the receivers, Explorer Group Limited ("Explorer") and a director of Trading Force Limited entered into a sale agreement, known in these proceedings as "the CSA Agreement", by which the receivers sold certain assets to Explorer. Certain other assets were retained. The assets retained were defined in the CSA Agreement as "retained assets" and included Trading Force Limited's book debts as defined. Under the CSA Agreement, Explorer was appointed by the defendant as its agent to pursue the book debts in a process that was to commence on 30 April 2002 and terminate six months thereafter. This was later extended to 30 April 2003. On 14 June 2002 Hesco purported to terminate Trading Force Limited's agency. On 26 June 2002 Trading Force Limited went into liquidation.
In November 2002 Trading Force Limited acting by the receivers commenced proceedings against Hesco to recover sums said to be due from Hesco down to 10 April 2002. These proceedings were amended later to include claims down to but not after 30 April 2002. I refer to these proceedings hereafter as the "TTF Claim". On 13 June 2003 Explorer commenced proceedings against Hesco to recover sums said to be due from Hesco from 30 April 2002. I refer to these proceedings thereafter as the "Explorer Claim". Trading Force Limited was joined as a defendant to the Explorer Claim, but played no part in those proceedings. In January 2004, the TTF Claim was settled on terms that Hesco would pay some £235,000 to Trading Force Limited.
The Explorer Claim was tried by Simon J and judgment was handed down on 28 July 2004. Both Hesco and Explorer appealed from Simon J's order made following the trial. On 20 July 2005 judgment was handed down by the Court of Appeal. Both judgments are complex. The key point, however, is that Simon J had held that Explorer was entitled to DSCC commission earned after 30 April 2002 — the date when the CSA Agreement took effect. The Court of Appeal held that DSCC commission were book debts within the meaning given to that term in the CSA Agreement, from which it followed that Explorer's Claim failed in relation to DSCC commission entirely and succeeded only as to other commissions falling due after 30 April 2002. The consequence of this decision was that the defendant's charge attached to and it became entitled to DSCC commissions that became payable as well after as before 30 April 2002.
The claimant claims that various rights belonging to Explorer, including the right to bring these proceedings, was assigned to it on 11 July 2011. Although the defendant does not admit the assignment or its validity, the claimant is entitled in these proceedings for such to be assumed in its favour and that is an assumption that I make. Explorer asserts that its legal costs incurred in the Explorer Claim were £550,000, together with Value Added Tax thereon. This figure is not admitted by the defendant, but again it is conceded that the assertion is to be assumed as correct for the purposes of these applications now before me.
On 11 July 2011 the claimant commenced these proceedings. The defendant's application is, as I have said, to strike out paragraphs 25 to 29 and paragraphs 43B and 44A of the Particulars of Claim; or, alternatively, for summary judgment in its favour in relation to the claims made in those paragraphs. In those paragraphs reference to the " Explorer v Hescoproceedings" is a reference to what I have been calling the Explorer Claim.
Before setting out the relevant paragraphs, I should say that although paragraph 27 of the Particulars of Claim contained a reference to acquiescence by the defendant, it was accepted by the claimant that this assertion should be treated as deleted for the purpose of determining the applications before me. With that adjustment applied, the relevant paragraphs of the Particulars of Claim are to following material effect:
"25. At all material times and specifically at the date of the CSA Agreement and throughout the course of the Explorer v Hesco proceedings, Explorer mistakenly believed that the benefit of the Hesco Agreement had been transferred by the defendant acting by its receivers to Explorer under the CSA Agreement.
26. Further, at all material times and specifically at the date of the CSA Agreement and throughout the course of the Explorer v Hesco proceedings, the defendant and/or the receivers acting as agents for the defendant mistakenly believed that the benefit of the Hesco Agreement had been transferred by the defendant acting by its receivers to Explorer under the CSA Agreement.
27. By reason of the above mutual mistake, Explorer incurred substantial legal costs in pursuing the Explorer v Hesco proceedings in the amount of £550,000 plus VAT ("Explorer's costs").
28. In the premises Explorer conferred valuable benefit on the defendant and the defendant was unjustly enriched at the expense of Explorer.
Particulars
(a) The Explorer v Hesco proceedings were pursued at Explorer's expense;
(b) the Explorer v Hesco proceedings determined TTF's entitlement to commission or payments received by Hesco between 30 April 2002 and 14 June 2002 an order generated by or through enquiries obtained by TTF under the Agency Agreement;
(c) the Explorer v Hesco proceedings determined TTF's entitlement commissions under the DSCC Agreement in respect of sales made under the DSCC Agreement after 30 April 2002;
(d) but for Explorer's pursuit of the Explorer v Hesco proceedings, the defendant acting by the receivers would have had to pursue similar proceedings against Hesco at its own expense in order to determine its entitlement to the above commissions;
(e) instead, in the light of the favourable judgment of the Court of Appeal in the Explorer v Hesco proceedings, the receivers were entitled to pursue much simpler less costly debt claim ("the book debts claim");
(f) furthermore, the receivers reached a settlement agreement with Hesco for the benefit of the defendant pursuant to which the claimant understands that Hesco agreed to pay a sum in excess of £1,180,000 in settlement of the book debts claim ("the settlement sum"), plus an amount in respect of the receiver's costs of pursuing the book debts claim. The defendant is put to strict proof as to the amount of the settlement sum, including any non-monetary benefit conferred upon the defendant as part of the same.
29. By reason of the aforesaid, the defendant was incontrovertibly benefited by Explorer's pursuit of the Explorer v Hesco proceedings at the expense of Explorer …"
43 … Pursuant to the deeds Explorer assigned to the claimant whatever right title and interest, whether legal, equitable or otherwise which Explorer had in the following claims …
(b) any claim for unjust enrichment arising out of or caused by Explorer's pursuit of the claims against Hesco in the Explorer v Hesco proceedings. The unjust enrichment claim in paragraphs 25 to 29 above is such a claim.
44. Accordingly, the claimant as assignee of Explorer's claims:
(a) seeks restitution of Explorer's costs in the Explorer v Hesco proceedings against the defendant…"
I should add that by paragraph 1 of the Prayer to the Particulars of Claim, the relief sought in respect of the restitution claim is "restitution of Explorer's costs as set out in paragraph 44(a) above." It is worth noting at this stage that as pleaded the claim is exclusively one for the restitution of the entirety of Explorer's costs.
It is not necessary that I set out the defence in any detail, save to say that by paragraph 13 it is pleaded that the clarification by the Court of Appeal in the Explorer Claim of points that might have been taken by...
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