Warner v Merriman White (A Firm)
| Jurisdiction | England & Wales |
| Judge | His Honour Judge Toulmin CMG |
| Judgment Date | 22 May 2008 |
| Neutral Citation | [2008] EWHC 1129 (Ch) |
| Docket Number | Case No: 2462 of 2007 |
| Court | Chancery Division |
| Date | 22 May 2008 |
[2008] EWHC 1129 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
St Dunstan's House
133137 Fetter Lane
London, EC4A 1HD
His Honour Judge Toulmin Cmg Qc
In the Matter of Microsulis Limited (in Administration) And
In the Matter of the Companies Act 1985
Case No: 2462 of 2007
Adam Cloherty (instructed by Withers) for the 2 nd Petitioner
Edward Davies (instructed by Covington & Burling)
for the 1 st, 2 nd, 5 th, 6 th, 7 th and 9 th Respondents
James Potts (instructed by Lawrence Graham) for the 3 rd, 4 th and 8 th Respondents
Richard Wilson QC (instructed by Merriman White (A Firm)
for the Respondents to this Application
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.
I have before me three Applications. The first is dated 20 December 2007 and is brought by the 2 nd Petitioner, SMP Trustees Limited (“SMP”) a company incorporated in the Isle of Man. The company has had a number of changes of name, the most recent being on 14 June 2007 when it changed its name from Fortis Intertrust (IOM) Limited (“Fortis”) to its present name, SMP Trustees Limited (“SMP”).
SMP claims that the Petition brought against the Respondents with Fortis/SMP as second named Petitioner was initiated by Merriman White (a firm), solicitors practising from 14 Tooks Court, London EC4A 1LB without the authority of SMP. SMP claims that Merriman White acted in breach of its warranty of authority and that there can be no arguable defence to SMP's claim for relief. SMP asks that (1) the court orders dated 25 October 2007 and 21 and 27 November 2007 against the 2 nd Petitioner and their trustees should be rescinded, (2) the 2 nd Petitioner's name should be struck from the Petition and (3) Merriman White be ordered to pay the trustees' costs occasioned by the wrongful institution of the Petition on the trustees' behalf.
In separate Applications, the 1 st, 2 nd, 5 th, 6 th and 7 th Respondents and the 3 rd, 4 th and 8 th Respondents, as two groups separately represented, apply for identical relief save as to the costs of the hearing on 12 February 2008. In the event that the Application of the Trustees of the 2 nd Petitioner is successful, they seek an Order that Merriman White be ordered also to pay their costs of the Action to 27 November 2007 on an indemnity basis, or alternatively make an interim payment on account of such costs together with the costs of this Application. If the 2 nd Petitioner is unsuccessful the Respondents ask for an Order that SMP Trustees make a payment on account of costs pursuant to the Order of Chief Registrar Baister dated 25 October 2007 and in respect of the costs of this Application.
In relation to the costs of the hearing on 12 February 2008 the 3 rd, 4 th, and 8 th Respondents ask for an Order that Merriman White pay the costs. The remaining Respondents ask that in the event of their being unsuccessful in their Application, the Trustees of the 2 nd Petitioner be ordered to pay their costs.
In this Application Merriman White is not appearing for the 1 st Petitioner, Mr Warner, but solely on its own behalf as a party contesting the Application for costs against it. Mr Warner was not present or represented.
Before dealing with these Applications it is necessary to set out some of the relevant history. The proceedings were commenced on 30 March 2007 by a Petition with the following named Petitioners: David Warner (1 st Petitioner) a resident of Spain, and SMP, then called Fortis Intertrust (IOM) Limited. The wording of the Petition is that the Petition of the above-named David Warner “and of the above-named Highland Foundation (the 2 nd Petitioner) of Churches House, Lord Street, Douglas, Isle of Man, shows as follows”.
At paragraph 9 of the Petition, the 2 nd Petitioner is described as “the Trustee of a discretionary trust (The Highland Foundation) set up for the benefit of the 1 stPetitioner's family … and is a minority shareholder”. This is an incorrect characterisation of the 2 nd Petitioner as the Trust Deed makes clear.
The claims in the Petition are in essence that the Respondents exercised their powers improperly to provide bonuses and incentives with the purpose of reducing the Petitioners' stake in Microsulis Ltd (paragraph 48 of the Petition); promoted the interests of 3i Group unfairly over the interests of other shareholders including the Petitioners (paragraph 52); conspired to injure the Petitioners (paragraphs 53 and 54) and conducted the affairs of the company in a manner prejudicial to the interests of the Petitioners. The Petition was filed by Merriman White, solicitors for the Petitioners. The pleading is signed by Richard Wilson QC, who appeared before me on this application.
SMP contends that these proceedings were brought by the solicitors, Merriman White, purporting to act on its behalf but without the authority of SMP's Trustees and without their knowledge.
The company profile of SMP shows that SMP is incorporated in the Isle of Man at an address in Lord Street, Douglas. It has, as its officers, five directors. Mr Watterson, the deponent on behalf of SMP, has been a director since 26 March 2001 and is the longest serving director. The company has an authorised share capital of 248,000 £1 shares.
The Trust Deed annexed to Mr Watterson's second witness statement, shows that as a result of a settlement made on 1 December 1998 between Mr Warner and Intertrust Trustees (Isle of Man) Ltd, the 2 nd Petitioner under a previous name, the Trustees will “stand Possessed of the Trust Fund to be known as The Highland Foundation”. The powers given by the Trust Deed are wide. Clause 4 of the Trust Deed emphasizes that they are to be exercised as the Trustees think fit.
Clause 14 of the Trust Deed provides specifically:
“(a) The Trustees shall exercise the powers and discretions vested in them as they shall think most expedient for the benefit of all or any of the persons actually or prospectively interested under this settlement and may exercise (or refrain from exercising) any power of discretion for the benefit of any one or more of them without being obliged to consider the interests of the others or other.
(b) Subject to the previous sub-clause every discretion vested in the Trustees shall be absolute and uncontrolled and every power vested in them shall be exercisable at their absolute and uncontrolled discretion and the Trustees shall have the same discretion in deciding whether or not to exercise any such power.”
The Third Schedule provides that the beneficiaries under the settlement are to be charities involved in the field of medical research. Under the terms of the Trust Deed Mr Warner is the settlor. He is not the beneficiary and the Trustees are under an obligation to exercise their powers independently and not under Mr Warner's direction.
With this background in mind I come to the current litigation. Messrs Lawrence Graham act as solicitors for the 3 rd, 4 th and 8 th Respondents. Messrs Covington and Burling act as solicitors for the 1 st, 2 nd, 5 th, 6th, & 7 th Respondents.
Following the filing of the Petition on 30 March 2007, Messrs Lawrence Graham wrote to Merriman White on 12 April 2007 asking for the most recent accounts of the 2 nd Petitioner and also asking questions in relation to the statement of truth at the end of the Petition.
On 27 April 2007, Merriman White responded by saying that they were taking instructions. In relation to the statement of truth at the end of the Petition, Merriman White wrote that the statement of truth was in fact signed by Mr Warner, “who is the 1 st Petitioner and a beneficiary of the 2 nd Petitioner”. This assertion is clearly incorrect.
In its response dated 9 May 2007, Lawrence Graham noted specifically in relation to the statement of truth that the Petition was not sufficiently particularised to stand as the Points of Claim.
On 6 May 2007 Merriman White applied without notice for an injunction to restrain the sale of the company or its assets by the administrator.
On 9 May 2007, Lawrence Graham wrote a long letter to Merriman White in the course of which they renewed their earlier request to see the 2 nd Petitioner's accounts.
The 25 th May 2007 was the first return date for the hearing of the Petition, which was then adjourned to 6 July 2007.
On 29 June 2007 there was an application by the Petitioners for permission to continue proceedings against the 9 th Respondent. The accompanying witness statement was sworn by Mr Raymond Murphy, who was described at various times as consultant and partner of Merriman White. In his witness statement Mr Murphy deposed to the fact that the application was authorised by the Petitioners (including therefore the 2 nd Petitioner).
On 3 and 5 July 2007 each group of the Respondents issued applications for security for costs. In each witness statement in response, Mr Murphy signed the witness statement as “authorised on behalf of the Petitioners”.
Purporting to act on behalf of both the 1 st & 2 nd named Petitioners Mr Murphy negotiated an extension of time for submitting evidence in opposition to the Respondents' application to strike out the Petition to 31 August...
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