England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
LIVERPOOL DISTRICT REGISTRY
(His Honour Judge Hedley)

		Royal Courts of Justice Strand London WC2 Friday 22nd June, 2001

1. LORD JUSTICE JONATHAN PARKER: This is an application by Mr Roger Owen Fowler, the claimant in the action, for permission to appeal against an order made by His Honour Judge Hedley, sitting as a judge of the Chancery Division in the Liverpool District Registry, on 22 February 2001, whereby he dismissed the claim. The judge also refused permission to appeal.
2. I can summarise the factual background briefly. Mr Fowler has a professional background in marine electrical engineering and he also has wide personal experience as a yachtsman. In 1973 he went into business on his own account and the business proved successful. By 1983 he had established himself in Manchester, in Salford Quays, where he hoped to develop a marina on the model of Port Grimaud in the south of France. At that time, a similar project was being considered at the other end of the Manchester Ship Canal, in Liverpool. In 1980 the government had set up the Merseyside Development Corporation ("MDC") with responsibility for developing reclaimed or derelict land including the area of Liverpool South Docks, an area which was vested in MDC in about 1981. From 1984 onwards a number of meetings took place between Mr Fowler and MDC at which the possible development of a marina in the South Docks area was discussed. In 1985 a feasibility study was undertaken by Mr Fowler and his team, the costs of which were shared with MDC. On 30 October 1986 a meeting took place between Mr Fowler and MDC which Mr Fowler described at the trial as "something of a watershed". At that meeting, MDC stated that it proposed to construct "the first phase of the berthing and on-shore facilities" in the South Docks area. Mr Fowler would be granted a licence to operate these facilities, and a long lease would be granted when the marina development had been completed and Mr Fowler had injected his share of the total cost of the project. However, as the judge found, it was made clear that these proposals were subject to approval by the board of MDC. At around that time, Mr Fowler committed himself to the development of a marina in the South Docks area. By June 1987 MDC had completed the first phase of the marina, and Mr Fowler was engaged in operating it. However, there was as yet no legal agreement, nor had any other significant development taken place in the area. In December 1987 there was a press reception to publicise a proposal to develop an adjacent area known as Kings Dock. This was to be an ambitious commercial project, including shopping malls, a cinema and an arena. In April 1988 Mr Fowler was granted a licence by MDC to fit out the marina clubhouse, and contractors came on site to carry out that work. From around that time onwards, Mr Fowler was to all intents and purposes committed to the development of the marina, although no legal structure for the project was as yet in place and Mr Fowler had no legal security. By that time, there had been little other development in the area. In February 1989 Mr Fowler made clear to MDC his ability and willingness to commit £400,000 to the development of the marina, and he offered a personal guarantee of £100,000 to MDC. He was able to arrange banking facilities enabling him to provide this finance with the Royal Bank of Scotland. On 12 October 1989 an operating agreement was finally signed in relation to the marina, limited to a period of two years. At about the same time, the proposed project in relation to the Kings Dock site collapsed, the Secretary of State calling in the scheme. The judge found that MDC had not expected the scheme to be called in, and that the collapse of the scheme was:

"a severe and unexpected blow to the development of the southern docks."

3. However, Mr Fowler remained optimistic, despite the fact that (as the judge found) the seeds of financial collapse had already been sown. The judge continued:

"The plain fact was that the [marina] had not attracted the number of berth holders anticipated and that the revenue did not and could not sustain the servicing of the capital outlay."

4. Mr Fowler contends that the failure of the marina project was the direct and foreseeable consequence of the failure of MDC to honour its representations as to the development of the whole South Docks area. Mr Fowler contends that it was the absence of this development which effectively destroyed the viability of the marina project.
5. Thereafter, things went from bad to worse. The marina project was a financial failure, and Mr Fowler lost his investment and his home. As the judge recorded in his judgment:

"Unhappily for Mr Fowler his difficulties coincided with a national economic recession and it was accepted on all sides that this market was particularly vulnerable to recession."

6. Mr Fowler's claim against MDC is based effectively on two causes of action: first, breach of collateral warranty, and secondly misrepresentation.
7. Mr Fowler also raised a third issue relating to his suretyship obligations, but it was accepted at the trial that those issues depended upon his success on either of the two primary heads of claim, namely collateral warranty and misrepresentation.
8. In his judgment, the judge summarised the essence of Mr Fowler's case as follows:

"Mr Fowler says that what drew him into this development were representations made by or on behalf of or adopted by MDC to the effect that a 500 berth marina was feasible in the context of a fully developed southern docks, something that would have been completed by 1989 or 1990. He says that he placed decisive reliance upon these representations as MDC knew or ought to have known that he would do. Those turned out to be misrepresentations. He has suffered serious (for him personally catastrophic) loss, and the substantial cause of that loss was his reliance on those misrepresentations."

9. I make it clear that that passage is a summary of Mr Fowler's case. It does not represent the findings of the judge, to which I shall come in a moment.
10. In support of his case, Mr Fowler relies on a water strategy document produced by MDC in December 1984, on a document entitled "Liverpool Waterfront Development Plan Procedure" dated 16 December 1987, on a press release of that date, on extracts from the Daily Post of 27 July 1987 and 17 December 1987, and on MDC's annual reports for 1988 and 1989. As to those documents, the judge observed as follows:

"There is no doubt that those documents present an optimistic view of the development plans and that read literally, and by themselves, are capable of bearing the meanings attributed to them by Mr Fowler."

11. The judge further accepted that Mr Fowler was much impressed and influenced by them. However, the judge concluded that Mr Fowler underplayed his own expertise in these areas, an expertise which (as the judge held) Mr Fowler had made clear to MDC officers and which he acknowledged in evidence. The judge further concluded that Mr Fowler had underplayed:

"... other knowledge which he would have as a prudent and successful businessman and which MDC would be entitled to assume that he had, i.e. the fact that MDC officers would require the support of their board, that the DOE retained final control of public spending, and that the whole development scheme was predicated on the basis of private finance and enterprise with all its potential uncertainties."

12. After setting out (correctly, in my judgment) the elements of each of the two causes of action relied upon by Mr Fowler, the judge continued:

"There is no evidence in this case of misstated facts, it is all about forecasts."

13. In that connection the judge referred to Esso Petroleum Company Ltd v Mardon [1976] 1 QB 801, White v Jones [1995] 2 AC 207 and Hedley Byrne v Heller and Partners [1964] AC 465.
14. In paragraph 33 of his judgment, the judge stated his clear conclusion that Mr Fowler's claim was fatally flawed in several but crucial respects. The judge continued:

"The essential difficulty that Mr Fowler cannot in my judgment overcome is his own knowledge, experience and expertise which was known to the MDC officers."

15. In the following paragraph of the judgment, the judge concluded that MDC was entitled to assume that Mr Fowler would make his own commercial judgment on the viability of the scheme. The judge expressed the view that that essential weakness undermined the whole of his case in relation to commercial development. The judge continued:

"He was the expert in marina development and he made (as I find) no attempt at any stage to make the MDC aware that his whole plan was predicated upon successful development in accordance with their publicity. The reasons that he did not do so are essentially twofold: first, he did not in fact believe that to be the case; and secondly, even if he did he knew that they could not be held to their publicity. Indeed had he done so, I have no doubt that the MDC officers would immediately and clearly have disclaimed." (emphasis added)

16. In paragraph 35 of the judgment the judge found that Mr Fowler must have known that the documents upon which he relied were essentially publicity or planning documents, and that in progressing such a project there was always likely to be "many a slip 'twixt cup and lip". The judge continued:

"Even if he did not know these things and did not consider them, I am clear that the MDC would be quite entitled to assume that he did."

17. The judge continued:

"What in fact happened here was that Mr Fowler was, like others, carried away in the enthusiasm of an exciting and innovative project and committed himself to the extent that he was not unable to sustain unforeseen development and a recession. In other words this bold judgment misfired but it did not do so through any cause for which the MDC could be held liable in law. His claim in breach of collateral warranty fails because in dealing with forecasts (and that is what they were) the MDC had, in relation to Mr Fowler, no special skill, experience or knowledge and I cannot accept at all that both parties took any such representations to be of contractual effect. Moreover, in my view all the representations made orally or in writing by the MDC, material to this case, were true when made and were made with reasonable care. They were defeated by matters outside their control, matters which could not necessarily be predicted and which were in any event risks of which Mr Fowler should have been aware. By the same token the claim must fail in negligent misstatement. On the facts I have found MDC would have had no reason to believe that Mr Fowler would rely on their advice as opposed to his own expertise and that of his professional advisors and, in any event, the evidence comes nowhere near establishing any voluntary assumption of responsibility."

18. The judge then went on to consider causation, concluding that the reason for the failure of the marina project was a fundamental commercial misjudgment at the outset and poor or inadequate management and/or an unexpected recession which Mr Fowler's financial reserves could not sustain. In paragraph 40 of his judgment, the judge said:

"He is also unable to persuade me that the lack of development [that is a reference to development in the areas adjoining the marina] made the difference between success and failure."

19. The judge further concluded, on the basis of accountancy evidence, that in any event, Mr Fowler could not demonstrate that he would have survived the recession. The judge concluded his judgment (in paragraph 44) as follows:

"It follows that whatever personal sympathy I may have for Mr Fowler in his misfortune (and it is significant), he has failed to prove that that misfortune can be attributed to any act or omission for which the MDC can in law be held liable. Accordingly his claims must be dismissed."

20. In support of his application for permission to appeal, both in his helpful written skeleton argument and by his oral submissions, made if I may say so with great clarity and courtesy, Mr Fowler seeks to challenge the judge's findings that he did not rely on the various representations, and that in any event the catastrophic losses which he suffered were not caused by those representations or his reliance upon them. Mr Fowler also raises a further point, namely that he had a legitimate expectation that MDC, as a government-sponsored body, would be credible in its unqualified public pronouncements (I take that summary of his submission from paragraph 10 of his written skeleton argument).
21. One is, I think, bound to feel sympathy with Mr Fowler in the financial predicament in which he finds himself. However, as the judge rightly indicated, that sympathy cannot found a cause of action in law against MDC. In my judgment, despite the submissions which Mr Fowler has made, the judge's findings on reliance and causation are not susceptible of challenge in the Court of Appeal. These were findings which the judge was fully entitled to make on the evidence before him, and it was preeminently a matter for him to assess that evidence. Nor can I detect any error of law in the judge's judgment. As to legitimate expectation, no doubt there is substance in the proposition that a government-sponsored body must take care to ensure that its public pronouncements are accurate, and go no further than is justified by the circumstances. But I cannot, I am afraid, see any basis upon which the invoking of that proposition could give Mr Fowler a cause of action in private law against MDC; not least because, as the judge found in the passage from his judgment which I emphasised earlier, Mr Fowler did not in fact believe the marina project was predicated upon the successful of the surrounding area in accordance with the publicity put out by MDC.
22. Accordingly, despite all Mr Fowler's submissions, both in his written skeleton argument and orally, I find myself wholly unable to discern any substance in the proposed appeal, which would not in my judgment stand any real chance of success. I must therefore refuse permission to appeal.
ORDER: Application for permission to appeal refused. (Order not part of approved judgment)