Thames Valley Housing Association Ltd and Another v Elegant (Guernsey) Ltd and Others and Another (3) Howard MacPherson (Part 20 Defendant)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Lewison,MR JUSTICE LEWISON |
| Judgment Date | 24 May 2011 |
| Neutral Citation | [2011] EWHC 1288 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: TLC677/09 |
| Date | 24 May 2011 |
[2011] EWHC 1288 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Lewison
Case No: TLC677/09
and
David Halpern QC (instructed by Barlow Lyde & Gilbert LLP) for the Second Defendant Willmett Solicitors
Nicholas Stewart QC (instructed by Ahmud & Co Solicitors) for the Third party, Howard MacPherson
Hearing dates: 10–13 & 16 May 2011
| Introduction | 2 |
| Elegant: the constitutional position | 3 |
| Mr Macpherson | 3 |
| Willmett | 4 |
| The BOS witnesses | 4 |
| Non-witnesses | 5 |
| Evidential matters | 5 |
| Burden and standard of proof | 5 |
| Failure to call witnesses | 6 |
| Disclosure | 6 |
| Lies | 7 |
| Mr Macpherson as a witness | 7 |
| The acquisition of the site | 9 |
| The loan from BOS | 12 |
| The sale to TVHA | 15 |
| The litigation | 27 |
| The claim against Mr Macpherson | 27 |
| Procuring a breach of contract | 27 |
| Conspiracy to injure by unlawful means | 28 |
| Mr Macpherson's true role | 28 |
| Did Mr Macpherson procure a breach of contract? | 29 |
| Did Mr Macpherson and Elegant conspire to injure TVHA by unlawful means? | 30 |
| Are Willmett entitled to contribution from Mr Macpherson? | 31 |
| Willmett's direct causes of action | 32 |
| Unlawful means conspiracy | 32 |
| Procuring breach of retainer | 32 |
| Result | 33 |
Introduction
In 2007 Elegant Homes (Guernsey) Ltd ("Elegant") acquired a site at 264–270 Windsor Road, Bray, Maidenhead, Berkshire. It was a development site with planning permission for 30 dwellings, including 9 affordable dwellings. On 1 June 2007 Elegant granted a charge ("the Charge") over the whole site to Bank of Scotland ("BOS") to secure an overdraft facility under which Elegant borrowed £6.277 million for its purchase and development. On 11 April 2008 Elegant exchanged contracts with Thames Valley Housing Association Ltd and Thames Valley Charitable Housing Association Ltd (together called "TVHA") for the sale of the affordable housing part of the site (known as Plots 1–9) in 2 tranches for £675,000. Transfers were executed on the same day.
Willmett, a firm of solicitors, had acted for Elegant on its purchase and also acted for it on the sale to TVHA. In the course of the sale, Willmett gave an undertaking to TVHA's solicitors (Andersons) to procure the release of Plots 1–9 from the Charge. This reflected terms in the sale contract, which obliged Elegant to transfer the plots free from encumbrances and with full title guarantee. However, Elegant did not pay off the Charge to BOS; and BOS refused to release the Plots from the Charge without payment. The upshot was that Willmett were held to be in breach of their undertaking; and liable to procure the release of the Plots from the Charge. On 27 October 2009 Willmett (by its insurers) paid the sum of £1,355,433.13 to BOS, which then released Plots 1–9; thus enabling the transfer to TVHA to be registered.
Willmett now seeks to recover that sum from Mr Howard Macpherson. Mr McPherson is not a de jure director of Elegant. Nor is he a direct shareholder in that company. But Willmett say that he was the "directing mind" of Elegant or, more colloquially, "the man behind" it. This allegation is hotly disputed by Mr Macpherson and is the main dispute of fact that I must resolve. If Willmett succeed in establishing this factual allegation, they say that Mr Macpherson is liable for inducing or procuring Elegant to be in breach of contract with TVHA and/or for conspiring with Elegant to injure TVHA by unlawful means. They also allege that Mr Macpherson is liable for inducing or procuring Elegant to commit a breach of its contract of retainer with Willmett; and/or for conspiring with Elegant to injure Willmett by unlawful means.
Mr David Halpern QC presented the case for Willmett; and Mr Nicholas Stewart QC presented the case for Mr Macpherson.
Elegant: the constitutional position
It must be said at the outset that Elegant is in liquidation and has taken no part in the trial. At earlier stages in the litigation it was ordered to give disclosure. It produced one slim file of documents. But these disclosed documents did not include the counterparts of documents disclosed by Willmett which had been sent to or from Elegant. Nor did they include any additional documents (such as communications relating to business decisions). It is plain that disclosure was inadequate. Mr Macpherson's initial disclosure was limited to three documents.
Elegant was registered in Guernsey on 27 April 2004. It had two corporate directors (CCD Alpha Ltd and CCD Beta Ltd) and a corporate secretary (Consec Ltd). Its memorandum and articles of association were unremarkable. The directors of Alpha and Beta were Mike Brown and Rudi Falla, respectively. Neither of them gave evidence. Both these individuals are directors of Confiance Ltd, a provider of offshore company management services. Alpha, Beta and Consec all operate out of the Guernsey premises of Confiance.
The publicly accessible documents do not reveal the identity of the shareholders in Elegant. This is common in offshore corporate structures.
Mr Macpherson
Mr Howard Macpherson left school at 16. He ran a successful car business. He began property development in 1996. His development activities were carried out through the medium of Howard Construction Ltd. That company was incorporated in 1999 and Mr Macpherson was the sole director. His father, Iain Macpherson, was the company secretary. Mr Macpherson has also been a director (often the sole director) of and shareholder (often the sole shareholder) in a large number of other companies. He is clearly no stranger to the corporate world.
Mr Macpherson says that in 2004 he was advised to consider setting up an offshore tax saving pension scheme. His bank manager, Mr Baker, introduced him to a Mr Bradley of Mazars, who in turn put him in touch with Mr Mike Brown of Confiance Ltd. His witness statement continues:
"Confiance was instructed in 2004 to set up Elegant Homes and corporate structure for the initial purpose of building new build properties in West London."
He does not say who gave those instructions, although it is obvious that he did. Mr Macpherson claims that he does not understand the corporate structure or how it works. He says that he has never been a shareholder in Elegant; and says that it is important from a tax point of view that he should not be personally involved in the day to day operation and management of that company. He says that during the whole set up and running of Elegant "I have employed professional directors to run Elegant" (note the singular first person pronoun); and that "I have had no personal involvement in the running of Elegant". He says that "all relevant business decisions on behalf of Elegant … were taken, and the decision making process was carried out by the two directors and the team at Confiance running Elegant". Mr Macpherson says that the shares in Elegant are owned by IM Investments Ltd which is in turn owned by IM FURBS, a pension company. He says that he does not control or run the fund in any way. Confiance are trustees of the fund. But Mr MacPherson acknowledges that he is the only beneficiary of that fund. Thus, even on his own case he is the only person with an economic interest in Elegant. In addition the pension fund has made loans to him amounting to between £1 million and £2 million. According to Mr Macpherson's lawyers there is no money left in the fund.
These general assertions about Mr Macpherson's role must be tested against the contemporaneous documents.
Willmett
Jonathan Gilbert was the partner at Willmett who acted for Elegant. He acted both on the purchase of the site and on the sale of Plots 1–9. It was he who gave the undertaking which led to Willmett's liability. On 2 March 2009 Mr Gilbert failed to turn up for work and sent a note to his partners resigning from the partnership effectively admitting that he had acted dishonestly. It transpired that, amongst other things, he had made up conversations with BOS in order to justify his actions. He had also been involved in other acts of dishonesty involving property and mortgage advances. In consequence of Mr Gilbert's misdeeds Willmett went into administration; and the individual equity partners were all either made bankrupt or forced to enter into IVAs.
In the course of this litigation Willmett received no co-operation from Mr Gilbert; but found at its offices a substantial number of documents from Mr Gilbert's files relating to Elegant. Unfortunately, Mr Gilbert had removed his laptop and this has never been recovered, despite proceedings by Willmett against him. Mr Gilbert did not give evidence.
The BOS witnesses
I heard evidence from Mr David Squire (who left to work for Lloyds Bank, although it is now part of the Lloyds Banking Group together with BOS); Mr Tony Manwaring and Mrs Sue Steele. All gave evidence under compulsion of a witness summons so as not to compromise the bank's duty of confidentiality.
Each of them gave evidence honestly, clearly and fairly; and were obviously doing their best to assist the court. Understandably, given the lapse of time they were unable to remember in specific detail the provenance of certain pieces of information recorded in contemporaneous documents which they prepared and which remained on the bank's file. But save where I expressly state the contrary, I accept their evidence as accurate and reliable.
Non-witnesses
No evidence was given by Mr Brown or Mr Falla who, according to Mr Macpherson, were the decision makers in Elegant. Their...
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