Twinsectra Ltd v Yardley
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE POTTER,SIR IAIN GLIDEWELL,SIR DAVID HIRST |
| Judgment Date | 28 April 1999 |
| Judgment citation (vLex) | [1999] EWCA Civ J0428-11 |
| Docket Number | QBENF 1997/1508/1 |
| Court | Court of Appeal (Civil Division) |
| Date | 28 April 1999 |
[1999] EWCA Civ J0428-11
Lord Justice Potter
Sir Iain Glidewell
Sir David Hirst
QBENF 1997/1508/1
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
(MR JUSTICE CARNWATH)
Royal Courts of Justice
Strand
London WC2
MR R TAGER QC with MR J CLARGO (Instructed by Messrs Wallace & Partners, London WC1) appeared on behalf of the Appellant
MISS S PREVEZER (Instructed by Messrs Nabarro Nathanson, London WC1) appeared on behalf of the Second and Fifth Respondents
MR R JACKSON QC with MISS S CARR (Instructed by Messrs Barlow LYde & Gilbert, London) appeared on behalf of the Sixth Respondent
Mr Yardley appeared in person
Wednesday, 28 April 1999
INTRODUCTION
This is an appeal by the plaintiffs ("Twinsectra") against an order of Mr Justice Carnwath of 9 th October 1997 ("the Order") following judgment handed down on 20 th December 1996 in four consolidated actions brought by Twinsectra against the first defendant ("Mr Yardley") the second, third, fourth and fifth defendant (respectively "Commercial", "Maltsword", "Sales" and "Properties"; collectively "the Companies") of which Mr Yardley was the controller and moving spirit and the sixth defendant, ("Mr Leach"), Mr Yardley's solicitor.
Twinsectra claimed to have lent Mr Yardley, alternatively the Companies, £1 million with interest (at 24% per annum) and sought to recover the principal and interest in contract or deceit from Mr Yardley or the Companies, alternatively to trace the proceeds in equity. Further or alternatively, Twinsectra claimed the £1 million from Mr Leach on the basis that (as Mr Yardley's solicitor) he had received and later paid out that sum on Mr Yardley's instructions in circumstances in which he was a knowing accessory to a breach of trust. Carnwath J found in favour of Twinsectra against Mr Yardley personally in contract but dismissed the claim against him in deceit. He also dismissed Twinsectra's claims against the Companies and Mr Leach. Mr Yardley cross-appeals in respect of the judgment against him for repayment of the loan.
At trial, Twinsectra and Mr Leach were represented by leading counsel. Mr Yardley, who had been legally represented until shortly before the hearing, appeared in person and initially, with the leave of the judge, acted as advocate for the Companies. However, during the course of the hearing, petitions were lodged for Administration Orders under Part 2 of the Insolvency Act 1986 in respect of the Companies. On 20 th November 1996 the judge gave leave for the proceedings to continue pursuant to section 10(1)(c) of the Act, following which Miss Prevezer made closing submissions on behalf of the Companies.
THE RELEVANT FACTS
The critical evidence in the case concerned negotiations during a short period between 18 th and 24 th December 1992, when the loan arrangement sued upon was agreed. However, the background requires exposition. At that time, Mr Yardley had for some months been concerned in a scheme involving various parties to share a large sum of money which was said to be available in Nigeria. At the same time, and quite separately, he had been engaged with the Companies in a series of property transactions in this country.
The Nigerian Scheme
The Nigerian scheme involved a company called Quadrille Consultants Limited ("QCL"). QCL were promoting the scheme through Mr Sims, a solicitor and partner in the Dorset firm of Sims and Roper. Mr Sims had a substantial financial interest in the success of the venture, the full extent of which is not clear but which was critical to his personal fortunes. As represented to Mr Yardley by Mr Sims, QCL were assignees of the right to a sum of $49.2 million due from the Nigerian Ministry of Aviation and Transport in respect of a completed engineering contract. QCL were trying to secure the release of the money by paying inducements to a number of individuals within the Nigerian Central Bank and Ministry of Finance including a Dr Innocent Williams and a Chief Mike Davis. Mr Sims was seeking persons prepared to contribute to the inducements in return for a share of the money, once released. Mr Yardley was one such person.
By October 1992, Mr Sims and Mr Yardley were discussing a proposal to provide US$300,000 via Mr Yardley and two business associates of his living in Monte Carlo, Mr Pocknell and Mr Glibbery. Their expected return was $2 million. Having received the draft of an undertaking from Mr Sims in respect of the sum eventually payable, Mr Yardley passed it on to Mr Leach, his solicitor, on 20 th October 1992. Mr Leach also received a "Heads of Terms", explaining the mechanics for the transfer of the money to be provided to the account of Dr Innocent Williams against the subsequent payment of $2 million under Sims' and Roper's undertaking. Mr Leach wrote to Sims and Roper giving details of the proposed transfer to be provided via his client account. While Mr Leach was aware that Mr Yardley was involved in a highly speculative transaction from which he hoped to make a substantial sum of money, he was not told the purpose of the payments or asked to advise on the merits of the transaction, his role being simply to ensure that the documentation was in order and the undertaking effective in law.
The proposal did not go ahead in the form then proposed; by 20 th November, it had been revised to one whereby Messrs Yardley, Pocknell and Glibbery provided to QCL a short term advance in the sum of $75,000 in return for his undertaking to remit the Sterling equivalent of that sum to Mr Leach as Mr Yardley's solicitor, and also to pay to Mr Leach the sum of US$1.5 million as and when a Nigerian negotiable instrument was cleared, and in any event within 3 months whether or not the Nigerian venture was successful ("the first Nigerian undertaking").
The $75,000 was duly transmitted but, by 2 nd December, Mr Leach wrote to Mr Sims complaining that the repayment of the Sterling equivalent of that sum had not been received, but extending the time for payment until 4 th December on the understanding that the transaction would be complete by then. That did not happen and on 16 th December Mr Leach wrote on Mr Yardley's instructions saying:
"Our clients believe they have been misled in respect of the transaction and….lost total faith in the proposal".
Proceedings were threatened.
However, in December, Mr Yardley was persuaded to make a further short term advance, eventually agreed at $50,000 (£34,000), which was the subject of a further undertaking from Mr Sims to repay that sum together with a further $1.5 million if (but only if) the Nigerian venture bore fruit ("The second Nigerian undertaking"). That undertaking became operative on 23 rd December in the course of negotiations over the Twinsectra loan to which I shall now turn.
Mr Yardley's Property Interests
Mr Yardley, through his companies, was involved in three relevant property transactions during 1992, the principal of which concerned a site of some 35 acres at Apperley Bridge, Bradford. In autumn 1992, Mr Yardley negotiated to purchase the site for a total of £3 million. There was to be a pre-contract deposit of £50,000 and payment of £950,000 on exchange of contracts which would release ten acres, the balance being paid over a period of eighteen months secured by charges over the remainder of the land. By 1 st December, Mr Yardley had made arrangements to sell on 5 acres of the land to a house building company for £1 million. He arranged for the purchase of Apperley Bridge and the on-sale to be made in the name of Properties, which company he specifically formed to facilitate the charge in respect of the deferred payment terms.
Having paid the pre-contract deposit Mr Yardley approached his bankers, Barclays in Kidderminster, for bridging finance in respect of the £950,000 payable on exchange of contracts. Delays occurred and, as a second string to his bow, Mr Yardley sought alternative arrangements through a financial adviser, Mr Flanagan. Mr Flanagan, via another financial adviser Mr Newman, introduced Mr Yardley to Twinsectra and negotiations for a loan began, to which I shall shortly turn. In the event, however, by the afternoon of 23rd December, Barclays agreed to make available £1 million to assist in the purchase at Apperley Bridge. Mr Yardley promptly exchanged contracts on Apperley Bridge on the evening of 23 rd December and the purchase was subsequently completed on 29 th January 1993.
Before turning to the Twinsectra loan, I mention the two other relevant property transactions at Stourport and Droitwich respectively. On 1 st June 1992 Maltsword had exchanged contracts to purchase land at Stourport for the sum of £300,000 plus VAT. Completion was due on 30 th November, but this was extended to 31 st March 1993, provided Maltsword paid £100,000 by way of further deposit by 31 st December 1992. Maltsword was also the registered proprietor of land at Droitwich in which it was involved in a joint venture with William Davies, builders. Maltsword was indebted to William Davies who had registered charges over the land. On 27 th December 1992 there was a meeting at which arrangements were made for maintaining Maltsword's interest on terms which included a payment of £475,000 to be made by Maltsword to William Davies by 23 rd January 1993. In the event the £100,000 deposit in respect of Stourport and the £475,000 in respect of...
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