Success in the Mercantile Court and Court of Appeal
Walsham Chalet Park Limited, trading as The Dream Lodge Group v. Tallington Lakes Limited [2015] EWHC 2083 (QB)
Following last year’s appeal (which we have previously reported) on a significant point of procedural law in this case, Charles Fussell & Co LLP is pleased to announce that it has taken the case to trial and won. The case concerned what should have been a short-lived dispute between two companies who used to operate a joint venture but fell out acrimoniously in February 2012. Most of the issues between the parties were matters of simple accounting under a simple contract which could and should have been resolved by agreement without the need for legal proceedings.
Unfortunately, however, the Defendant was represented throughout by a director who (as the trial judge found) was “apt … to lose perspective completely when an issue is raised and then descend into quite unnecessary vitriol with those who do not agree with him”. Not content with taking every conceivable point, he made wild allegations against everybody involved in the case.
He wrote insulting emails to us, which ranged in tone from the mischievous (comparing us to characters in well-known sketch shows and ostriches, in each case helpfully including photographs) to the seriously unpleasant and unprintable. When presented with the Claimant’s disclosure, he accused us of criminal conspiracy to fabricate evidence.
He also accused our client of orchestrating a curiously half-hearted campaign of intimidation against him personally. He said this included acts of criminal damage to the gates outside his home and the sending of a cryptic email containing the word “Capet”, which he construed as “kaput” and therefore a veiled threat to him and his family – on the basis that our client’s managing director was born in 1961 and was therefore familiar with terminology from the Second World War. The trial judge found this allegation to be “bizarre and baseless”.
Notwithstanding this barrage, a team led by Simon Winter of Charles Fussell & Co LLP patiently martialled the facts and rebutted all the Defendant’s allegations. We instructed first Daniel Saoul of 4 New Square and then Michael Buckpitt of Tanfield Chambers to represent the Claimant in Court.
Ultimately, and after no fewer than seven lengthy pre-trial hearings (including one in the Court of Appeal), the Claimant succeeded on every significant issue at trial and the Defendant has been ordered to pay substantial damages, additional damages under Part 36 of the Civil Procedure Rules – for having failed to beat a pre-trial offer of settlement – and costs on the indemnity basis.
The Defendant applied for permission to appeal and a stay of execution – twice, once on paper and once orally. Both such applications were dismissed.
Charles Fussell & Co LLP wins in the London Mercantile Court
Charles Fussell & Co LLP was instructed by QuikClot International Limited ("QCI") in late 2009 to bring a claim against Darwish bin Ahmed ("DBA") for breach of contract. In November 2011, the case was heard in the London Mercantile Court, at which QCI was awarded the full sum of the claim, together with part-indemnity costs.
QCI was part of the Explora Group, a group of companies which specialise in producing and marketing non-lethal military defence products. QCI was set up for the international provision of QuikClot, an adsorbent haemostatic blood-clotting agent which is used in emergency situations to staunch blood flow until medical assistance can be obtained.
DBA expressed an interest in purchasing packets of QuikClot for onward provision to the UAE Military Forces in about 2003. The parties entered into negotiations and in October 2003, a draft purchase order was sent by DBA to QCI's predecessor (who later assigned the claim to QCI). The terms of the purchase order order requested 100,000 packets of QuikClot, 20,000 of which were to be delivered immediately and the remaining 80,000 of which were to be delivered over the forthcoming four years. The purchase order was negotiated between the parties and finalized in February 2004, containing the same term.
Whilst the initial 20,000 was ordered and dispatched successfully, DBA failed to draw down the order for the remaining 80,000 packets within the four year period in the sum of $US 360,000. Accordingly, QCI brought proceedings for the loss of profit it would have made on the sale.
DBA defended the claim on two heads:
- as a matter of law, it claimed that the purchase order should be constructed to mean that it was only obliged to order 20,000 packets of QuikClot, with an option to purchase a further 80,000 packets at a set price over the following four years; and
- as a matter of fact, it claimed that QCI would have been unable to fulfill the contract in any event.
The matter was listed for a three-day hearing in the Mercantile Court in November 2011 and was heard before His Honor Judge Mackie QC, head of the Mercantile Court, with Dr Christopher Harris of 3 Verulam Buildings appearing for QCI and Mr Simon Hale of Hardwicke Chambers, instructed by Child & Child, appearing for DBA.
After only one and a half days of evidence, the trial came to an end. Giving an extempore judgment, Judge Mackie upheld the claim, ruling that:
- as a matter of law, the purchase order could only be constructed to mean that DBA was under an obligation to purchase 100,000 packets of QuikClot over four years; and
- as a matter of fact, QCI would have been able to fulfill the contract in any event.
Judge Mackie also awarded QCI its costs, partly on the standard basis and partly on the indemnity basis.
Charles Fussell & Co LLP acting in an application to debar a defaulting party from participating in a detailed costs assessment procedure
Charles Fussell & Co LLP has an ongoing instruction in relation to a matter which was heard at trial in March to April 2015, with judgment having been handed down in July 2015. Charles Fussell & Co LLP acted for the First to Fourth and Sixth Respondents.
After a two-day hearing in respect of costs, the judge ordered the unsuccessful Petitioner to pay the First to Fourth and Sixth Respondents' costs to be assessed if not agreed. The Petitioner was ordered to make a substantial interim payment to each of the parties three weeks after judgment. On the day before payment was due, the Petitioner issued an application for permission to appeal and for a stay of execution, rehearsing similar arguments to those heard by the trial judge. The Petitioner has made no further efforts to meet his obligations under the interim payment or otherwise seek to negotiate his obligations.
Accordingly, an application has now been issued in the Chancery Division, seeking an order that unless the Petitioner meet his obligations under the interim payment order, he be debarred from participating in the detailed assessment procedure pursuant to the precedent in Days Healthcare UK Limited v Pihsiang Machinery Manufacturing Company Limited and Others [2006] All ER (D) 205 (Jun) with questions arising as to the enforceability of interim costs orders and clarity as to whether there is any acceptable reason for failure to meet such orders.
It is anticipated that the application will be heard in the early part of 2016.
Court of Appeal clarify the law on when an incidental benefit can found a claim in unjust enrichment.
Dr Christopher Harris of 3 Verulam Buildings, instructed by Charles Fussell & Co LLP appeared for TFL, the successful appellant.
Professor Gerard McMeel and Mr Neil Levy of Guildhall Chambers, instructed by CMS Cameron McKenna LLP appeared for Lloyds Bank.
The facts giving rise to the appeal are relatively complex. In 2002, a previously-successful company, The Trading Force Limited ("TTFL"), went into receivership, although it had a number of current contracts. The main debtor was Lloyds TSB Bank PLC ("Lloyds Bank"), which engaged receivers (the "Receivers") to deal with the assets and recover the debt owed to it. Accordingly, the Receivers entered into a Chargee Sale of Assets Agreement (the "CSA Agreement") which provided that certain assets were transferred to the Receivers, and the remainder of TTFL's assets were retained by Explora Group Plc ("Explora"), a company associated with TTFL.
Explora mistakenly believed that one of the assets transferred to it was the fruits of a particular contract with a third party, Hesco Bastion, and pursued payment of the contract by means of a successful action in the High Court. On appeal from Hesco Bastion however, the Court of Appeal found that, although Hesco Bastion owed the debt under the contract, the fruits of the contract had not, in fact, been transferred to Explora by way of the CSA Agreement, but had instead been retained by the Receivers for the ultimate benefit of Lloyds Bank.
TFL Management Services Limited ("TFL"), which has conduct of Explora's claim through a series of assignments, now seeks restitution from Lloyds Bank on the basis that the bank has been unjustly enriched by Explora's pursuit of the debt owed by Hesco Bastion. The main factual allegations, as summarized by Floyd LJ, are as follows:
- Throughout its proceedings against Hesco Bastion, Explora mistakenly believed that the benefit of the future commissions due under the CSA Agreement had been assigned to Explora;
- At all material times Lloyds (through TTFL's receivers) laboured under the same mistake as Explora; namely, the benefit had passed to Explora;
- Because of the mistake, Explora incurred the costs of bringing proceedings against Hesco Bastion to recover the debt owed by Hesco Bastion, but Lloyds Bank benefitted by the proceedings; and
iv. Accordingly Explora conferred a valuable benefit on Lloyds Bank, and Lloyds Bank was unjustly enriched at the expense of Explora.
Summary judgment was sought by Lloyds Bank in February 2013, inter alia, on the basis that TFL was precluded from recovering because any benefit received by Lloyds Bank was incidental to the main benefit sought (though not received) by Explora. TFL defended its position on the basis that its mistake was an unjust factor which had caused Lloyds to be unjustly enriched, and asserted that the benefit received by Lloyds Bank was not, in fact, an incidental benefit but a direct benefit, being the same benefit that Explora had sought for itself. In particular, TFL relied on Greenwood v Bennett [1973] 1 QB 195, in which Denning LJ held that a direct benefit, whether pursued for the benefit of oneself or for another, was recoverable in unjust enrichment. Lloyds Bank was granted summary judgment, with the judge distinguishing Greenwood v Bennett, because he concluded that there was a rule that incidental benefit (which, he found, Lloyds Bank had benefitted by), could not found a cause of action in unjust enrichment.
TFL successfully appealed. The Court of Appeal (Beatson and Floyd LJJ allowing the appeal with Sir Stanley Burnton dissenting) held that the law in the area was in a state of flux and was not, in any event, suitable to be determined at summary judgment. The main issue on the appeal was how to define an incidental benefit, and the issues which surrounded the doctrine. TFL argued that in order to create an incidental benefit, there must be a primary benefit incurred by one party, which is separate and distinct from any additional, incidental benefit incurred by another. Lloyds Bank argued that it did not matter whether there was one benefit or more than one, as the basis of the defence of incidental benefit should be that the claimant had embarked on a course of action with some principal intended consequence in mind, which was pursued for the claimant's self-interest, but in the course of the same a benefit accrued to the defendant which was not identical to the claimant's principal intended consequence.
This was the first time that the court had been invited to formulate the exception to the type of benefit which, if conferred on a defendant by a claimant, can be relied on for the purposes of an unjust enrichment claim, though the issue had been considered by a number of academic commentators. Floyd LJ, giving the leading judgment, referred to the case of Banque Financiere de la Cite v Parc (Battersea) Limited [1999] 1 AC 221 in which Lord Steyn found that there were four main questions to consider in any claim for unjust enrichment; namely (1) had the defendant benefitted or been enriched; (2) was the enrichment at the expense of the claimant; (3) was the enrichment unjust; and (4) was there any specific defence available to the defendant.
Floyd LJ held that, in the context of the existing conceptual structure set out in Banque Financiere de la Cite v Parc (Battersea) Limited, there was no reason to formulate a general exception in the law of restitution on the basis of incidental benefit. He further held that where a claimant conferred a benefit on a defendant in circumstances where he was labouring under a mistake, so that the benefit he sought for himself actually benefitted someone else, there was no reason why the court should deny the claimant a remedy just because the benefit conferred was not identical to the one pursued by the claimant. Instead, the matter should rest on whether the other elements necessary to found a claim in restitution were present.
Beatson LJ agreed, noting that there was no confirmed authority, and that the test advocated by Lloyds Bank would preclude restitution in a number of cases where it had been ordered. Sir Stanley Burnton dissented, principally on the basis that he was unable to contemplate how Explora's loss could be quantified, though also on the basis that he believed that Explora's remedy should lie in rectification rather than in restitution.
Charles Fussell & Co instructed to advise in respect of an injunction against publication of defamatory material
Charles Fussell & Co has been asked by a multi-national group of companies to advise upon threats made by a former disgruntled associate to the effect that unless the group of companies meets a number of unwarranted demands, the former associate would publish untrue and highly defamatory material on the internet. Charles Fussell & Co is instructed to take steps to prevent publication of any such materials, including obtaining an urgent injunction against publication if necessary.
Charles Fussell and Elizabeth Stoppelmoor will act on this matter.
Charles Fussell & Co instructed in proceedings involving a protected party
Charles Fussell & Co has been asked by a private individual to act on his behalf to provide advice in respect of proceedings which involve a protected party within the meaning of Part 21 of the Civil Procedure Rules. Charles Fussell & Co will advise on the matter generally and the relevant necessary applications under Part 21.
Simon Winter will be involved in this matter.
Charles Fussell & Co LLP successful in defending s994 Companies Act petition
Charles Fussell & Co LLP was instructed to act on behalf of five of six respondents (the fifth being conflicted) in respect of an unfair prejudice petition presented under s994 Companies Act 2006 (the "Petition").
The facts giving rise to the Petition are relatively complex and concern a family-run business which dates back to 1952. Up until about 1984, the business ran as a partnership between the father and three of their five sons. Each of the father and the three sons held an equal 25% shareholding in the company which owned the Hotel (the "Company"). Of the two remaining sons, one was too young to join the business and the other – the Petitioner in this matter – had chosen to pursue a career elsewhere. In 1984, the partnership purchased a hotel in Central London (the "Hotel").
In 1986, the Petitioner chose to start working in the Hotel. Over time, he became further involved in the business and, in 1992, demanded a share in it. It was agreed between the four existing shareholders that each shareholder would give the Petitioner 10% (albeit one shareholder thought he was to give 2.5%) of his interest the Hotel and/or the Company upon the sale of the Company or Hotel, but the mechanism for providing this interest to the Petitioner was not agreed. Very little further action was taken in respect of the Petitioner's interest thereafter. This became known as the "10% Agreement".
In about 2009, a dispute arose between the Petitioner on the one hand and his brothers on the other. The Petitioner resigned effective 2 February 2010, and subsequently presented an unfair prejudice petition citing failure to recognise the additional 10% shareholding in the Company agreed in 1992, together with making various other allegations of unfairness. The Respondents defended the action by stating that first, the agreement in 1992 had not been intended to have any legal effect and was simply a gentlemen's agreement between family members. The Petition was split thereafter so that issue of the 10% Agreement was to be decided prior to any further allegations of unfair prejudice.
The issues in the Preliminary Issue became whether the Respondents, or any of them, were subject to an obligation as a matter of equity to recognise the Petitioner's alleged entitlement to further shares under the 10% Agreement and, if so, what formed the basis of that obligation. A further question arose as to whether or not any such obligation could be said to be the affairs of the Company in any event.
The matter was heard at trial between March and May 2015 before Martin Mann QC, sitting as a Deputy Judge in the Chancery Division. The Petitioner was unsuccessful on all issues in the Preliminary Issue, with the judge finding that none of the Respondents was obliged to recognise the Petitioner's alleged entitlement to any further interest in the Company. The 10% Agreement was too uncertain to be considered a contract, and the Petitioner had been forced to abandon any trust arguments throughout the course of the trial. Absent any other legal basis, the court found that there could be no obligation on the respondents under s994 Companies Act to transfer any interest in the Company to the Petitioner.
Charles Fussell & Co LLP continues to act for the First to Fourth and Sixth Respondents in relation to pursuing their costs of the action, further to the costs that were awarded to them upon judgment.
Charles Fussell and Elizabeth Stoppelmoor continue to be involved in this matter.
Charles Fussell & Co instructed in multi-million pound Libyan matter
Charles Fussell & Co has been asked by a Libyan entity to advise and assist it in respect of steps taken by its General Manager, who has sought to seize control of the company in a series of unlawful actions. The matter is particularly complex, and concerns not only the entity itself but a number of investments and subsidiaries which are, it is alleged, being irreparably harmed by the General Manager's actions. Charles Fussell & Co has been asked to explore ways in which the English courts may be able to intervene in the management of the entity in order to secure control and ensure that no further harm can be caused.
Charles Fussell and Tamsin Turk will be involved in this matter.