England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CARDIFF DISTRICT REGISTRY
(His Honour Judge Moseley QC)

		The Royal Courts of Justice The Strand London WC2A Tuesday 10 July 2001

Tuesday 10 July 2001

1. LORD JUSTICE MUMMERY: These applications, made by Mr Denekamp in person, are for permission to appeal and an extension of time in which to appeal. The decision which he wishes to appeal is the order of His Honour Judge Hywel Moseley QC sitting at Cardiff on 11 April 2001 in proceedings between Mr John Denekamp and the defendant, a solicitor, Mr David Vaughan, who carries on practice in a firm of solicitors called Gabb & Co. Judge Mosely heard two applications. The solicitor defendant, Mr Vaughan, applied for summary judgment undert the Civil Procedure Rules against Mr Denekamp. Mr Denekamp, the claimant, applied for permission to amend his particulars of claim.
2. This order was made: (1) that Mr Denekamp's undated particulars of claim be struck out; (2) that his application to amend the particulars of claim be refused; (3) that he pay Mr Vaughan's costs of both applications, summarily assessed at £3,180; (4) Mr Denekamp to pay Mr Vaughan's costs of the action to date, to be subject to detailed assessment if not agreed; and (5) Mr Denekamp to pay to Mr Vaughan the sum of £10,000 by 4.00 pm on 9 May 2001 on account of the costs in paragraph (4); and (6) unless by 4.00 pm on 9 May 2001 Mr Denekamp apply to the court for permission to serve particulars of claim, exhibiting the proposed pleading to the application, and the court subsequently grants permission to serve those particulars; and unless Mr Denekamp pays the costs ordered by (5) above, the action will be dismissed with costs to the date of dismissal, to be subject to a detailed assessment, if not agreed.
3. None of this is understood without explanation of the very unfortunate disputes which have caused unhappiness in the Denekamp family and those connected with it. The background, briefly, is this. Mr Denekamp's father, Mr Hendrik Denekamp, died on 8 January 1989. He left a widow, Mabel, two sons and a daughter, but no will. As a result of his dying intestate, it was necessary for someone to obtain letters of administration to his estate. Letters of administration were granted in April 1989 to Mr John Denekamp and his mother Mabel. Mr Vaughan acted as solicitor to the administrators.
4. Following Mr Hendrik Denekamp's death the members of the family agreed upon a deed of variation on 13 March 1989, in consequence of which Mrs Mabel Denekamp became entitled to the estate. One of the assets not in the estate was a property, Silver Birches, which, according to the evidence, was jointly held between Mr Hendrik Denekamp and his wife Mabel. As it was joint property, on Mr Denekamp's death it passed by survivorship to her. There were negotiations for the sale of Silver Birches and other properties. According to the evidence, an approach was made at some time between February and March 1989 to Mrs Mabel Denekamp by a Mr Shute who was interested in buying Silver Birches. The property was unoccupied and was starting to deteriorate. Mrs Mabel Denekamp was prepared to sell it for £325,000 and appointed solicitors to carry out the transaction. However, this was never to take place. Mr Denekamp has produced the relevant documents to the court. A letter was written by Mr Shute's solicitors on 28 February 1989 to Messrs Rubin & Co of Cwmbran, saying:

"We understand that you act for Mrs Denekamp of Silver Birches. . . In her proposed sale at a price of £325,000 (subject to contract) of that property to our Clients Doctor and Mr K Shute."

5. They asked for a draft contract for approval. On 22 March the solicitors acting for Mrs Mabel Denekamp wrote to the Shutes' solicitors, saying:

"We regret to advise you that for personal reasons our client has decided not to sell the above property. She regrets any inconvenience caused. We should be grateful if you would return the documents to us."

6. Mr Denekamp also referred to a more recent letter dated 12 November 1999, sent to him by a firm of solicitors Hodson Parsons James & Vaux, which is headed "To whom it may concern, re Silver Birches, Parc Road, Llangibby, Gwent". It reads:

"We can confirm that we wrote to Messrs Rubin & Co on behalf of a client on the 28th February 1989, requesting draft Contract for approval in respect of Mrs Denekamp's sale of the above property to our client at a price of £325,000. No valuation of the property had been obtained, although our client intended to obtain such a valuation before any contract was signed.

However, on the 21st March 1989 our client advised us that he was having doubts about the appropriateness of the price of the property, and on the 22nd March 1999 we received a letter from Messrs Rubin & Co, informing us that Mrs Denekamp, for personal reasons, no longer wished to sell her property."

7. Mr Denekamp informed the court that he relied on that letter to show that Dr and Mr Shute were not prepared to pay £325,000 for Silver Birches. Mr Denekamp and his wife purchased Silver Birches. The transaction was completed on or about 12 May 1989, and the sum paid was £325,000.
8. Mr Denekamp approached the Office for the Supervision of Solicitors complaining about Mr Vaughan's behaviour. He started proceedings on 16 December 1999. He makes a number of complaints about the conduct of Mr Vaughan in relation to the administration of Mr Hendrik Denekamp's estate. He alleges that Mr Vaughan has been negligent and has fraudulently conspired in a number of ways with Mr Denekamp's brother, Johan. The claims are, in summary, that Mr Vaughan failed to inform Mr John Denekamp that the value of Silver Birches for the purposes of the estate had been increased from the probate valuation of £240,000 to £300,000, and after the sale to £325,000; that Mr Vaughan failed to inform him that these values were not based on any professional assessment of the property; that Mr Vaughan corresponded principally with Mr Johan Denekamp about the administration of the estate, when Mr Johan Denekamp was not an administrator and was dealing only with the business of their late father; also that Mr Vaughan acted for Mabel Denekamp in the negotiation and documentation of the loan, putting himself in a conflict of interest, and finalised the estate, paying to Mrs Mabel Denekamp a sum of £18,000, without his, Mr John Denekamp's, authority.
9. Mr Denekamp's particulars of claim, at pages 29-31 of the bundle, set out the complaints in great detail. A defence to those allegations was served on behalf of Mr Vaughan on 7 February 2000. In an illuminating witness statement, which goes into the details of the case and was signed by Mr Denekamp on 2 March 2001, he helpfully states that the essence of his claims is as follows: events surrounding the fraudulent amendment of the Silver Birches probate value from £240,000 to £300,000; the background and ancillary issues involving Mr Vaughan's affinity and conspiracy with his siblings; Mr Vaughan's thwarting of any resolution between the administrators to agree a compensatory figure for the loss that he incurred through the improper conveyance of the title of Silver Birches in 1983, despite Mr Vaughan's knowledge that his claim was justified; Mr Vaughan's conspiracy with his brother Johan to evade paying the mortgage interest he owes to Mr Hendrik Denekamp's estate; Mr Vaughan's conspiracy with his siblings to evade their Inheritance Tax and his attempt to use Mr John Denekamp as an unwitting vehicle to that end; Mr Vaughan's contrivance to finalise the estate without his agreement; Mr Vaughan's proven conflict of interest between the administrators; other examples of Mr Vaughan's negligence in the handling of the estate. He then goes on to give details of the claims.
10. When Mr Vaughan attempted to obtain summary judgment against Mr Denekamp in respect of those allegations, Mr Denekamp issued an application dated 6 April 2001 to amend his claim. The reason for the amendment is that facts have come to light through the inspection of documents following the institution of his proceedings. Under the heading "Additional particulars of loss and damage", Mr Denekamp sets out a number of further matters, both in relation to his personal claim and his claim in respect of his office as administrator of his father's estate. He claims for himself entitlement to his father's estate before he signed the deed of variation of 13 March 1989 and further entitlement to his father's estate at his mother's death; financial loss due to errors created by what he describes as the illegal transfer of title of Silver Birches; and also sums for the time he has spent corresponding with Mr Vaughan informing him of his errors and trying to persuade him to resign from acting for the estate. In respect of his claim as an administrator, Mr Denekamp claims (and I have heard considerable detail about this in the course of the submissions today) a tax credit which Mr Vaughan failed to obtain from the Inland Revenue in 1989 amounting to £176; interest for late payment of tax; a payment to be made to a Mr L Beckett and interest on a mortgage/loan that his brother Johan owes to the estate. Each these items has been given a figure and details are given in amended particulars of claim which are put forward as clarifying the initial claim of 16 December 2000.
11. His Honour Judge Moseley dealt with Mr Vaughan's application for summary judgment and Mr Denekamp's application for permission to amend at the same hearing. He summarised Mr Denekamp's unamended claim as relating to, first, a breach of the duty of care owed by Mr Vaughan to Mr Denekamp personally, which had led him to pay an excessive price for Silver Birches; and, secondly, loss to the estate on whose behalf Mr Denekamp purported to act, caused by the payment of £18,000 to Mrs Mabel Denekamp.
12. The judge concluded that neither of these claims had any real prospect of success in the form in which they were pleaded. Mr Denekamp put forward in his amended particulars of claim that he had no recollection of the valuation figure mentioned at the family meeting on 11 February 1989 or in the Inland Revenue accounts. He said he was aware of the figure of £300,000 having been substituted for the original probate valuation of £240,000 only when he obtained the papers in 1998. He also stated in the amendments that he had not relied on the figure of £300,000 when he bought Silver Birches, and had not been told by Mr Vaughan that any professional valuation had been carried out. The judge therefore held that Mr Denekamp was contending that Mr Vaughan owed a duty of care to him to tell him that no valuation of Silver Birches had been carried out, and to advise him to obtain one. The judge held that Mr Vaughan, as solicitor to the administrators, had no such duty to Mr Denekamp, and Mr Denekamp had lost nothing through the silence of Mr Vaughan on the question of a professional valuation. As to the claim relating to the £18,000 the judge noted that, even if this had been improperly distributed to Mrs Mabel Denekamp without Mr Denekamp's consent as administrator, no loss had been caused to the estate as, under the deed of variation, Mrs Mabel Denekamp was the only beneficiary of the estate. To uphold Mr Denekamp's claim would only result in the money being paid by Mabel back to herself and Mr Denekamp as trustees for Mrs Mabel Denekamp. The judge therefore concluded that, whatever negligence or fraud was alleged against Mr Vaughan in the administration of the estate, it could not have caused any relevant loss.
13. The judge went on to review the list of amendments that Mr Denekamp was seeking to make to his particulars of claim, noting that some of the new heads of claim were weak. He was not convinced, however, that none of the claims could be made out if they were properly pleaded and supported. So he decided, in the form of the order which I have already quoted, to give Mr Denekamp a last chance to apply to the court to serve fresh particulars of claim on terms that he paid to Mr Vaughan £10,000 on account of the costs which Mr Vaughan had incurred to date in resisting Mr Denekamp's claims.
14. Mr Denekamp wishes to have permission to appeal against that judgment. He has taken the court during the last hour to a number of relevant documents. His notice of application states that he wishes to appeal the orders of Judge Moseley on a number of grounds. He complains that he was not given an opportunity to argue his case, having been allowed to speak for only about 15 or 20 minutes. He was not able to present his application to amend. He was not given an opportunity to rebut the application of Mr Vaughan to have the claim struck out. Having been obliged to keep going over the main issues proving fraud, and because Judge Moseley did not accept it caused loss to the property Silver Birches, he had not been allowed to move on to the cover-up of the fraud and its consequences in causing other losses to him personally. Those other losses are the claims detailed in the application. He said that in part of his application for the estate there are items, including fraud, false accounting and negligence, proved only by his issuing the claim on 16 November 1999. For this reason alone, he submitted, his case should not have been struck out or an order for costs made against him before the claims had been justly and correctly dealt with by the court. Further details of these points are contained in Mr Denekamp's skeleton argument of 26 May 2001, and a further one dated 10 July 2001 which was faxed to the court at 9.55 this morning. I have read both of those documents.
15. I have also had a helpful summary from Mr Denekamp of the way in which he puts his case. He says in summary as follows. It is wrong for Mr Vaughan as a solicitor to have abused the legal rights of the administrators. He has acted deceitfully in seeking to cover up his fraud and to conceal the loss which the estate has suffered. He has manipulated Mrs Mabel Denekamp to ensure that his wrongful actions are not exposed. He has colluded with Mr Denekamp's brother to disadvantage the estate. Mr Vaughan has finalised Mr Hendrik Denekamp's estate without the agreement of Mr John Denekamp as administrator. Mr Denekamp was not given a proper opportunity to explain all these things to Judge Moseley. He is emphatic that he would not have bought Silver Birches as he did if Mr Vaughan had acted correctly in this matter. It is, he says, quite wrong that he should now be required by Judge Moseley to pay the sum of £10,000 to Mr Vaughan in order to be allowed to sue him for his wrongdoing. He is not willing to pay that sum in the light of all the serious criticisms which he has of the way in which Mr Vaughan has acted in this matter. He would like Mr Vaughan to cease to act as solicitor to the administrators. He accuses him of having beyond doubt lied to him. He relies particularly on the evidence he has obtained in relation to the £176 already mentioned. He says that Mr Vaughan has lied in order to extricate himself from the problems that he has created. He wants answers from him which he has not been provided with. He says that Mr Vaughan should step down and resign, as he alleges the Law Society advised him to do some time ago.
16. I have taken all these matters into account. It seems to me that I should start from this position. His Honour Judge Moseley, when dealing with these two applications on 11 April 2001, was engaged in a case management exercise. It was for him to decide, in the exercise of his discretion, whether the particulars of claim should be struck out or whether permission should be granted to amend them. When reviewing the exercise of the discretion of a judge engaged in a case management exercise, this court should not interfere, unless it is satisfied that the judge has gone wrong in principle or has reached a decision and made an order which no reasonable judge, understanding the facts and issues before him, could have reached.
17. It seems to me, having regard to the form of Mr Denekamp's particulars, that they require to be put into a more comprehensible shape than they are and to make more sense than they do at the moment. It seems that the amendments which were proposed by Mr Denekamp did not make many of the more important matters any clearer. The judge was entitled, in the exercise of his discretion, to require Mr Denekamp to produce a new set of particulars if he was serious about pursuing these claims. I can see how, as far as Mr Denekamp is concerned, being required to pay £10,000 to Mr Vaughan as a condition of being allowed to serve fresh particulars of claim was the last straw. As Mr Denekamp put it, why should he have to pay £10,000 to a person whom he accuses of serious negligence and dishonesty before he has had a chance to prove his case against him? In my judgment, that is a misunderstanding of the reason why this condition was imposed. The £10,000 payment was required in recognition of the fact that Mr Vaughan had been put to considerable expense in the two applications before the judge, on which he had achieved a large measure of success, and he should have some security for the costs which he had incurred before Mr Denekamp was to have a further, and I think possibly final, opportunity to put his case into proper order.
18. I refuse permission to appeal because I do not think there is a real prospect of this appeal against Judge Moseley's order succeeding. But, in order to give effect to paragraph (6) of Judge Moseley's order of 11 April, I will substitute, for 4.00 pm on 9 May 2001, 4.00 pm on 10 August 2001 as the time by which to make the application. The application for permission to serve the particulars of claim must be made to Judge Moseley's court. Subject to that, I would refuse the application for permission to appeal.
ORDER: Application refused. Order of 11 April amended to read application to be made by 4.00 pm on 10 August 2001. (Order not part of approved judgment)