Various North Point Pall Mall Purchasers v 174 Law Solicitors Ltd
| Jurisdiction | England & Wales |
| Judge | Hodge |
| Judgment Date | 10 January 2022 |
| Neutral Citation | [2022] EWHC 4 (Ch) |
| Docket Number | Case No: BL-2019-MAN-000092 |
| Court | Chancery Division |
[2022] EWHC 4 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN MANCHESTER
BUSINESS LIST (ChD)
Manchester Civil Justice Centre
1 Bridge Street West
Manchester M60 9DJ
HIS HONOUR JUDGE Hodge QC
Sitting as a Judge of the High Court
Case No: BL-2019-MAN-000092
and
Mr David McIlroy (instructed by Penningtons Manches Cooper LLP) for the Claimants
Mr Michael Bowmer (instructed by DAC Beachcroft LLP) for the Defendant, 174 Law Solicitors Limited
Mr Glenn Campbell (instructed by Caytons Law LLP) for the Part 20 Defendant, Key Manchester Limited
The following cases are referred to in the judgment:
Arnold v Britton [2015] UKSC 36, [2015] AC 1619
Bristol Alliance Nominee No 1 Ltd v Bennett [2013] EWCA Civ 1626, [2014] 1 EGLR 9
Burrough v Skinner (1770) 5 Burr 2639
C F Partners (UK) LLP v Barclays Bank Plc [2014] EWHC 3049 (Ch)
Delta Petroleum (Caribbean) Ltd v British Virgin Islands Electricity Corporation [2020] UKPC 23, [2021] 1 WLR 5741
Gribbon v Lutton [2001] EWCA Civ 1956, [2002] QB 902
Hastingwood Property Ltd v Saunders Bearman Anselm [1991] Ch 114
Howkins & Harrison v Tyler [2001] PNLR 27, CA
Manzanilla Ltd v Corton Property & Investments Ltd unrep., 13 Nov 1996, CA
Potters v Loppert [1973] Ch 399
Rabiu v Marlbray Ltd [2016] EWCA Civ 476, [2016] 1 WLR 5147
Rockeagle Ltd v Alsop Wilkinson [1992] Ch 47, CA
Royal Brompton NHS Trust v Hammond [2002] UKHL 14, [2002] 1 WLR 1397
Sharma v Simposh Ltd [2011] EWCA Civ 1383, [2013] Ch 23
Tinkler v Revenue and Customs Commissioners [2021] UKSC 39, [2021] 3 WLR 697
Various Claimants v Giambrone & Law [2017] EWCA Civ 1193, [2018] PNLR 2
Verschures Creameries Ltd v Hull and Netherlands Steamship Co Ltd [1921] 2 KB 608, CA
Sale of land — Stakeholder — Off-plan fractional residential development scheme — Buyers' deposits held by seller's solicitor to order of buyer company established to protect buyers' interests — Authority to release deposits — Construction of stakeholder contract — Estoppel by convention
Whether claim for breach of stakeholder contract sounding in debt or damages — Measure of damages
Contribution between stakeholder and buyers' solicitors
Hearing dates: 16–19, 22–25, 29 and 30 November 2021
APPROVED JUDGMENT
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
HIS HONOUR JUDGE Hodge QC
Judge Hodge QC:
This judgment is structured under ten chapter headings as follows:
I: Introduction and overview
II: The trial
III: The witnesses
IV: The Agreement for Sale
V: The law on stakeholder contracts
VI: Analysis of the stakeholder contract
VII: The narrative of events
VIII: Conclusions on the claim
IX: The claim for contribution
X: Disposal.
However, I have divided the judgment in this way for structural reasons only and I would emphasise that the contents of each chapter have contributed to the court's overall assessment of the evidence and the arguments and have been taken fully into account when arriving at its conclusions. In order to produce a comprehensible judgment of reasonable length, I have not addressed all of the many points that were raised during the course of the evidence and the submissions. This does not mean that they have been overlooked but merely that I did not consider them to be of material assistance in determining the real issues in the case.
I: Introduction and overview
In this case, the court has to consider the duties of a stakeholder in relation to the release of substantial deposits which it had received from the purchasers of residential units in an ‘off-plan’ development who were substantially funding the construction costs in the unusual, quadripartite, situation where those deposits were held to the order of neither the purchaser nor the seller but rather to the order of a buyer company ostensibly established to protect the purchasers' interests. The court must also consider a claim for contribution from the stakeholder against the solicitors who had been retained by the claimants on their respective purchases of units in the development.
This is my considered judgment following the trial of the six claims (brought by eight claimants) that remain outstanding following the settlement of the majority of the claims which had originally been brought by 138 claimants represented by Penningtons Manches Cooper LLP (PMC) on 14 October 2019 in respect of three residential developments at North Point Pall Mall and Baltic House in Liverpool and Angelgate in Manchester. This trial is concerned only with the North Point development. As a result of various case management orders, the court had determined that these claims should be managed alongside other claims, brought by other claimant purchasers, represented by other solicitors' practices, on a development-by-development basis. Thus, at the time of the case management hearings that took place before me on 6 and 9 November 2020 and 7 January 2021, the court was managing claims across no less than four developments, brought by seven different groupings of claimants represented by a further two solicitors' practices, Walker Morris LLP and Elysium Law Richard Gray Limited, in addition to PMC.
Happily, the bulk of these claims have now settled. The terms of settlement encompass (amongst others) claims brought by 11 purchasers of seven residential units at North Point against the solicitors' practice of Amie Tsang and Company Limited (ATC), which changed its name to Key Manchester Limited on 16 April 2018, and which had acted for those buyers on their respective purchases. Eight of the buyers of six of the units at North Point had also brought claims against another solicitors' practice, 174 Law Solicitors Limited (174). On or about 20 November 2015, 174 had taken over from a third solicitors' practice, Wirral Solicitors Limited, trading as David Roberts & Co (DRC), the role of acting for the developer (and seller) of the units which were being constructed at North Point. These eight claimants allege that, having received the buyers' deposits as stakeholder, 174 proceeded to release them to the seller, in breach of the terms on which it was required to hold those deposits. It is that discrete aspect of the claims which forms the subject-matter of this trial, which took place before me, by way of a hybrid hearing, over ten court days between Tuesday 16 and Tuesday 30 November 2021. Whilst it denies any liability to the remaining claimants, 174 brings a claim for contribution against ATC. At trial, the claimants were represented by Mr David McIlroy, 174 by Mr Michael Bowmer, and ATC by Mr Glenn Campbell (all of counsel). No claim has been brought against 174 by any of the buyers who had instructed a fourth solicitors' practice, which had traded as Oliver & Co, on their respective purchases; and no claim has been brought against 174 by any of the claimants who were represented in the wider litigation by solicitors other than PMC.
North Point was an ambitious development of some 426 residential and live-work units at a brown-field city centre site at 70–90 Pall Mall, Liverpool. The development was being constructed by North Point (Pall Mall) Limited (NPPM) which was a special purpose vehicle established by its parent company, North Point Global Limited (NPG), to carry out the development. North Point was sold off-plan, predominantly to overseas investors who intended to let the units out once the development was completed. At the time they contracted to purchase units in the development, all of the present claimants were resident in Hong Kong (although, in January 2017, two of them were attracted to move permanently to live in Crosby, in North Liverpool). The principal of ATC, Ms Amie Tsang, is a solicitor who speaks fluent Cantonese. The development adopted a fractional sales model, whereby significantly larger deposits than usual were paid (typically 50 to 80% of the purchase price) and the deposits were then to be used to fund the development. This development model had gained in popularity after the ‘credit crunch’ towards the end of the first decade of this century and, by 2015, it was an established, albeit risky, form of property investment. Sadly those risks came to pass in relation to North Point. The construction of the development had started in June 2015 but it came to a standstill in or around July 2017. LPA receivers were appointed in June 2018; and the site was eventually sold without any of the units ever having been constructed. The buyers' deposits had all been spent on marketing fees and other costs and the uncompleted works of development. Each of the buyers lost all of their investment. The remaining claimants now sue 174 for breach of the stakeholder contract which came into existence when they each entered into their individual, common-form sale agreement with the developer.
The typical stakeholder contract is a tripartite agreement, under which the stakeholder holds moneys to which one party has rights (in the present case, the claimants as purchasers) until a triggering event occurs, and then the stakeholder transfers the moneys to the second party (in the present case, the seller). In the present case, as well as the triggering event, there was a precondition that the claimants' interests should be protected by the registration of a first legal charge in the name of a buyer company, limited by guarantee, which had ostensibly been established to protect the buyers' interests. (Under the sale agreement, each of the purchasers had been entitled to become a member of the buyer company). Put simply, the...
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Yee Shi Yin and Others v 174 Law Solicitors Ltd
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