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,
QUEEN'S BENCH DIVISION
(MR JUSTICE SULLIVAN)

		Royal Courts of Justice Strand London WC2 Thursday, 12 July 2001

1. LORD JUSTICE ROBERT WALKER: This was to have been an application by Mr Stephen Hiseman, who has on previous occasions appeared in person, for permission to appeal and an extension of time for appealing from an order of Sullivan J. Mr Hiseman, who is resident in France, has had two previous adjournments of this application in what I would describe as borderline circumstances and he has indicated to the Court that he may not appear on this occasion. In those circumstances I think it appropriate to deal with the matter on the papers which I have carefully read together with his written submissions.
2. The order which Mr Hiseman wishes to appeal was made by Sullivan J on 31 March 2000. It dismissed a claim by Mr Hiseman and a company called Arab Investment Syndicate Ltd against Janes, a firm of solicitors, and it entered judgment for the solicitors.
3. The second claimant company is incorporated in England and Wales and I will follow the judge in referring to it as AIS (UK). There is another company of the same name incorporated in the Cayman Islands and I will refer to it as AIS (Cayman).
4. The writ was issued on 11 December 1998. It had a general endorsement claiming damages for breach of duty as solicitors in respect of four matters and I quote from the endorsement.

"1. The restoration of Arab Investment Syndicate Limited to the Register of Companies;

2. The handling of a High Court Action brought against Arab Investment Syndicate Limited by Lloyds Bank plc in the High Court of Justice, Chancery Division, under case number CH 1995 L No. 7930.

3. Failure to secure the First Plaintiffs's interest in the property known as Rother Hill House;

4. The alteration of a mortgage deed in 1988. [Paragraphs 1 and 2 refer to AIS (UK). The endorsement then continued]:

The above breaches of contract and/or breach of duty of care occurred between 1994 and 1996, or alternatively first came to the knowledge of the Plaintiffs in 1996."

5. No statement of claim or particulars of claim were served within due time or for many months thereafter. On 19 November 1999 the solicitors applied to have the claim dismissed or struck out.
6. When the matter came before Sullivan J with both sides then represented by counsel, although only after an adjournment to enable counsel to be instructed for the claimants, the judge directed that a fully particularised statement of claim should be prepared and this was done. Nevertheless the judge came to the conclusion that the claim was bound to fail in its entirety and would in some respects be a clear abuse of process because of earlier proceedings referred to in the judgment. The judge dismissed the claim with indemnity costs, although the costs order was not to be enforced without the court's permission in respect of the period when Mr Hiseman was legally aided.
7. The matter goes back to 1985 when Mr Hiseman was, it seems, a successful businessman. He was living with his wife at a house in London, 5A Pembroke Gardens, Kensington. That house was owned by AIS (Cayman), the shares in which were held by the trustees of a discretionary trust. In 1994 the Court of Appeal was prepared to assume that the trustees of the discretionary trust would act in accordance with the wishes of the settlor who had provided funds for the settlement, that is Mr Hiseman. So AIS (Cayman) was already in place when a plan emerged for the purchase of property in Sussex, Rother Hill House, and its surrounding estate of about 20 acres.
8. AIS (UK) was also in existence in 1985, but the court knows little about its activities except that its controlling shareholder and director was Mr Hiseman. It was apparently dormant in 1985 and was struck off the register in 1986. It was restored to the register in 1996 or thereabouts. The Sussex property was bought for £826,750 of which £400,000 was borrowed on mortgage from Lloyds Bank. This initial borrowing was later paid off out of the proceeds of the London house. The legal title to the Sussex property was invested in AIS (Cayman). In 1986 and 1988 AIS (Cayman) charged the property successively to two mortgage lenders, Lloyds Bank and Arbuthnot Lathman. Part at least of this borrowing was for a wine bar venture which unfortunately did not turn out to be a success.
9. In later proceedings arising out of the appointment of a receiver by Lloyds Bank, the beneficial ownership of the Sussex property was exhaustively debated. This was when AIS (Cayman) through its receiver sought possession from Mr Hiseman and his wife. Mrs Hiseman, but not her husband, took the case from the Chichester County Court (where the proceedings had been begun) to this court. The matter was very clearly dealt with in the judgment of Hoffmann LJ in this court. After referring to an argument that the registered proprietor must be a nominee, Hoffmann LJ said:

"If Pembroke Gardens and Rother Hill had been purchased in the name of Mr Hiseman or in the name of an outsider who had no claim to beneficial interest then this argument ... might have considerable force... But any inference as to the common intention of the parties must take into account what actually happened in this case which is that the purchase was made in the name of the Cayman Islands company whose shares were held on discretionary trust. Mr Hiseman knew that the purchase was being made in the name of the company and that the purpose of so making it was to put the company's assets beyond the reach of the creditors. The way in which the discretionary trust was to have this effect was by preventing any of the family beneficiaries from having a vested or identifiable interest in the assets which the company held. Nevertheless, through his ability to give directions to the trustees Mr Hiseman retained control over the company and so, indirectly, over its assets. This, no doubt, enabled him, by virtue of the instructions which he left with the trustees as to what to do in the event of his death or bankruptcy, to protect the interests of his wife and family. It is clearly of the essence of such an arrangement that the company should own its assets beneficially."

10. That judgment was given on 15 February 1994. Rather more than a year later, but with the Sussex property still unsold, Mr Hiseman put forward a new claim that the intention had been that the property should be conveyed or transferred not to AIS (Cayman) but to AIS (UK). The judge said of this in the course of his long and thorough judgment:

"It is important to see the basis of that new claim. It was not that the first claimant had instructed Mr Mendoza to purchase the property in the name of AIS (UK) rather than AIS (Cayman), but rather on the basis that there seemed to be a degree of confusion in the documentation."

11. I should add that Mr Mendoza was at that time a partner of Mr David Janes, who gave his name to the solicitor's partnership. Mr Mendoza had dealt with the conveyancing.
12. Mr Hiseman himself in a letter dated 2 May 1995 said that it was difficult after 10 years to recall exactly what happened. Mr Mendoza and Mr Janes had parted company by the time the current proceedings were started and Mr Mendoza had taken his conveyancing file with him. According to Mr Hiseman they parted in 1987.
13. In his full particulars of claim Mr Hiseman alleges that Mr Janes altered the charge to Lloyds Bank in order to extend the geographical scope of the security. No detail at all has been given of that allegation which should have been raised years ago in the proceedings in 1994 and 1996, if there was anything in it.
14. Before the judge there was a serious shortage of contemporaneous documents. That shortage might have been made good from Lloyds Bank's files which were produced under a witness summons, but counsel for Mr Hiseman and AIS (UK) objected on grounds of confidentiality. The judge said about that:

"I made it clear to [counsel for the claimants] that I would have been happy to look at any document in the bundles which supported the belated proposition that the first claimant had instructed Mr Mendoza to purchase the property for AIS (UK) rather than AIS [Cayman]. But no such document has been identified to me.

I am, of course, very conscious of the need to avoid holding a `mini trial' of the issues on an application for summary judgment under Part 24... That said, I am satisfied that the first claimant has had ample opportunity to put forward any material which he might wish in support of the existence of the alleged instruction to Mr Mendoza in 1985."

15. I must however complete the narrative of the events. Mr Hiseman tried to use his new claim that the Sussex property really belongs to AIS (UK), the struck-off company, to obtain a stay of execution of the possession orders. That attempt failed in May 1995 before Mr Recorder Ryan QC. Mr Hiseman then spoke of starting further proceedings. Mr Janes advised Mr Hiseman that they were bound to fail. However, a solicitor's letter was sent to the bank's solicitors on 7 July 1995. It had the effect of provoking Lloyds Bank into taking the initiative and issuing proceedings which ended with a consent order of Rattee J on 14 October 1996. The Sussex property was finally sold in November 1996.
16. The judge considered all these matters in a very thorough 25 page judgment. Mr Hiseman contends in Section 7 of his appellant's notice, enlarged on in his witness statement, which stands as a skeleton argument, that the judge concentrated on one single issue. I think it is probably true to say that the judge did concentrate on two main issues, that is what instructions were given to Mr Mendoza and whether it was arguable without abuse of process that AIS (Cayman) was not the beneficial owner of the Sussex property. The claimants's own counsel had identified the first of these as the key question, yet it was not properly raised either in the endorsement on the writ or in the particularised Statement of Claim. The judge said of the claim about the instructions to Mr Mendoza:

"... in considering whether this claim has a real prospect of success, it is relevant to note that it is only now being advanced, some 15 years after the conveyance in question. This is not an allegation which has been made for a long time and which has been inadvertently omitted from the writ. It is a wholly new allegation made at a very late stage. Accordingly, the court is entitled to view its prospects of success with a degree of scepticism. That scepticism is increased by the matters referred to below."

17. The judge then went on to refer to the Particulars of Claim, to Mr Hiseman's own evidence, to the inherent probabilities of the matter and to limitation and other problems. The judge also covered numerous other points, but it is not necessary or appropriate for this Court, which has to deal with applications for permission to appeal in a fairly summary way, to go into every point in detail. It seems to me that no serious criticism can be made of the judge's judgment. Nor were Mr Hiseman's rights under Article 6 of the European Convention on Human Rights violated by the use in an appropriate case, which this was, of summary procedure under Part 24 of the Civil Procedure Rules (see the judgment of May LJ in S v Gloucester County Council [2001] 2 WLR 909 at 933-5 and the other authorities discussed in that paragraph).
18. In my judgment there would be no reasonable prospect of persuading the full court that Sullivan J erred in the exercise of his discretion in giving summary judgment in this case. An appeal would be hopeless. I therefore dismiss the application for permission to appeal and I need not consider the application for an extension of time.
Order: Application for permission to appeal refused.