ON APPEAL FROM THE HIGH COURT OF JUSTICE
(QUEEN'S BENCH DIVISION)
BRISTOL DISTRICT REGISTRY
HHJ Havelock-Allan QC
Strand, London, WC2A 2LL
B e f o r e :
LADY JUSTICE ARDEN
LORD JUSTICE LONGMORE
| GRAHAME HENRY BOND
|- and -
|DUNSTER PROPERTIES LIMITED
DUNSTER HOLDINGS LIMITED
GRAHAME MILES JAMES BOND
Ms Michelle Stevens-Hoare (instructed by Andrew Simpson, In House Solicitor for the First and Second Defendants) for the Respondents
Hearing date : 14 March 2011
Crown Copyright ©
Lady Justice Arden :
"Everyone is entitled to a hearing…within a reasonable time"
Standard of review on appeal against findings of fact in a seriously delayed judgment
"113. Because of the delay in giving judgment, it has been incumbent on us to look with especial care at any finding of fact which is now challenged. In ordinary circumstances where there is a conflict of evidence a judge who has seen and heard the witnesses has an advantage, denied to an appellate court, which is likely to prove decisive on an appeal unless it can be shown that he failed to use, or misused, this advantage. We do not lose sight of the fact that the judge had transcripts of the evidence, as well as very extensive written submissions from counsel. But the very fact of the huge delay in itself weakened the judge's advantage, and this consideration had to be taken into account when we reviewed the material which was before the judge. In a case as complex as this, it is not uncommon for a judge to form an initial impression of the likely result at the end of the evidence, but when he has come to study the evidence (both oral and written) and the submissions he has received with greater care, he will then go back to consider the effect the witnesses made on him when they gave evidence about the matters that are now troubling him. At a distance of 20 months, Harman J. denied himself the opportunity of making this further check in any meaningful way."
"As to demeanour, two things can be said. First, in their Lordships' collective experience, a judge re-reading his notes of evidence after the elapse of a considerable period of time can expect, if the notes are of the requisite quality, his impressions of the witnesses to be revived by the re-reading. Second, every experienced judge, and Georges J was certainly that, is likely to make notes as a trial progresses recording the impressions being made on him by the witnesses. Notes of this character would not, without the judge's permission or special request being made to him, form part of the record on an appeal. They might be couched in language quite unsuitable for public record."
". . . delay may have so adversely affected the quality of the decision that it cannot be allowed to stand. It may be established that the judge's ability to deal properly with the issues has been compromised by the passage of time, for example if his recollection of important matters is no longer sufficiently clear or notes have been mislaid."
Part of the judge's order under appeal
Background to the proceedings
"(1) GBJ [Mr Bond Junior] would procure DHL [Holdings] to enter into a written project partnership agreement with GBS [Mr Bond Senior] for the purchase and refurbishment of 18 Admiral Court ("the Admiral Court PPA")."
(2)Admiral Court would be purchased in the name of GBS rather than GBJ.
(3) GBS would lend a total of £500,000 to DHL or its nominees in addition to the sum of £70,000 paid into the account of DPL [Properties] in December 2002.
(4) GBJ would give post-dated cheques as initial security for the advances made, but would in due course provide alternative security in the form of legal charges over properties owned or controlled by GBJ.
(5) The money was to be repayable to GBS only on completion of the refurbishment and sale of the Admiral Court property, and the drawing up of partnership accounts."
(Judgment, paragraph 13)
Trial and the delivery of judgment
"..insofar as delay in the production of the judgment is relied on as justifying an appeal, I do not consider that the criticisms made of the judgment illustrate that I had forgotten the evidence or argument to any material degree since I had full manuscript notes of the oral evidence, a transcript of the oral evidence, detailed written submissions from counsel (annotated by me in the course of their oral arguments), and a very clear recollection of the way in which the key witnesses (the claimant, the third defendant, Mr Le Roux and Miss Glynn) gave their evidence and the impression they made in the witness box. "
"27. I should make it clear that I found all the witnesses other than the two protagonists (GBS and GBJ), to be entirely straightforward and trying to be truthful to the best of their recollection. That does not mean that GBS and GBJ left me with the impression that they were being untruthful, and certainly not consciously or deliberately so. But they are much more complex characters and have had a fractured personal relationship as father and son for many years. This has made it difficult to assess their evidence and resolve the points of conflict. It is certainly not possible to approach their dealings as if they were dealings between businessmen at arm's length. There is a heavy emotional overlay, which, in my view, led GBJ to not say things or clarify points which, in the course of a normal commercial relationship, would have been said or clarified, out of a desire not to appear to his father to be provocative or difficult. This led to issues not being addressed, and to risks being taken, which would not have happened if the parties had not been trying to use their business dealings to restore a familial relationship.
28. For all GBJ's desire to build a bridge with his father, and to secure his father's approval, he mistrusted him and his motives. GBS equally distrusted his son. Indeed the whole dispute is bedevilled by a deep vein of mistrust between the two of them. GBS doubted his son's business acumen. He believed him to be profligate and came eventually to the view that his businesses would go bankrupt. GBJ thought that GBS was unpredictable and intent only on exercising control of him through holding the purse strings."
"dealt with each other over the loans and the Admiral Court project with an informality which makes it difficult to pinpoint precisely what was agreed between them and when." (Judgment, paragraph 30).
The Bentley Jennison meeting
The "curtains meeting"
"46….GBJ and Sam Le Roux [Mr Bond Junior's partner] called at The Grey House to see GBS and his partner, Catherine Glynn. The meeting was primarily a social event. GBJ and Mr Le Roux had brought some curtains or curtain material which they thought might be suitable for The Grey House. GBJ and Miss Glynn went to another room to see how the curtains would look. Mr Le Roux's evidence is that while they were out of the room GBS asked if he would witness his signature on a document. Mr Le Roux did not look at the document closely but recognised it from its blue binding as being a contract or deed produced by DHL or DPL. It had already been signed by GBS and Mr Le Roux added his signature as witness, and completed the section underneath with his name, address and occupation. Miss Glynn says that when she returned to the room with GBJ, GBS asked her to take some copies of the document. Mr Le Roux took the document out of its binding to make copying easier. She then took the pages to the photocopier in the billiard room and made at least one copy. She was unable to reinstate the binding and tucked the copy or copies inside the original, which was loose between the covers. A few days later she saw GBS tuck a copy of the document into a book.
47. Catherine Glynn gave evidence that the document she had copied was the Admiral Court PPA. GBS denies that he signed any document at the curtains meeting. When it was put to him in cross-examination that he had asked Mr Le Roux to witness his signature and that Catherine Glynn had done the photocopying his answer was that "it didn't happen".
48. GBJ says that he was unaware until much later on, when Mr Le Roux told him, that any document had been signed or any signature witnessed in the course of that evening. However he had noticed in his father's sitting-room that there was a copy of a blue bound document lying on a table. He recognised from its cover that it was a copy of one of his PPAs. GBJ's evidence is that he discussed the Admiral Court project with his father during the curtains meeting and that the PPA was part of that discussion. He recalls his father referring to it and acknowledging that it was the basis of their joint-venture. From this he assumed that the PPA had been signed or would shortly be signed: but he was not given a copy of the signed version to take away with him.
49. GBJ says that he also took the opportunity of raising once again with his father the serious shortage of cash which the Dunster companies were experiencing. He told his father that DHL would need about £500,000 by the summer of 2003 and that, without further funding of that magnitude, the refurbishment of the Admiral Court property could not proceed. According to GBJ, GBS responded by agreeing to lend up to £500,000, for which he wanted security and interest at the rate of 10%. It was agreed that the money would be repaid when DHL's share of the profit in the Admiral Court project was realised. GBS denies that any such discussion took place."
"52. Whoever is right on that score, GBJ acted at all times in and after March 2003 as if the Admiral Court PPA applied. GBS' professional advisers (Mr Curwen and Mr Hards), to the limited extent they were further involved in giving advice about the Admiral Court project, acted as though the PPR route had been agreed. GBS was enigmatic. It is hard to detect from his conduct until at least the middle of June which of the two routes he was pursuing or, indeed, whether he was not trying to keep his options open."
Issues below: (1) did Mr Bond Senior sign a copy of the AC PPA? and (2) if not, did Mr Bond Senior nonetheless agree to participate with Mr Bond Junior in the acquisition and refurbishment of Admiral Court on the terms of the PPA? – The judge's conclusions
"With regards to the PPA we believe that a written PPA was prepared but was never finally signed off by Mr Bond Senior (apparently due to personal tax concerns). Nevertheless Mr Bond Senior said that he would honour the terms of the PPA".
"96…It was alleged to be a photocopy of the Admiral Court PPA on which Mr Le Roux had witnessed the signature of GBS at the curtains meeting. It was one of the photocopies which Miss Glynn had taken on the photocopier in the billiard room. It had first come to light sometime early in 2006 when Miss Glynn, suffering from depression after the end of her relationship with GBS, was sorting through papers taken with her to her new home. She had placed the copy to one side and only later told GBJ that she had found it. In spite of his requests that she should produce it, she could not remember where she had put it and did not feel well enough to look for it again. GBJ visited her at Easter 2007 and asked permission to have one last search. It was then that he found it in the shed. He immediately took it to the local post office for copying. He made several copies but inadvertently left the original photocopy on the copying machine. When he realised his mistake and went back to look for it, it had gone. So the copy disclosed was a copy of the photocopy found in the shed."
"100…Two characteristics of the document attracted the attention of GBS' legal team. The first was that the style, format and number of the signature pages attached to this version of the PPA was different from the signature pages attached to the copy of the PPA sent to Mr Curwen before the Bentley Jennison meeting. For shorthand I will call the latter version of the PPA "the Curwen PPA". The Curwen PPA had only two signature pages, one for DHL as "The Contractor"(where a director and the company secretary were to sign), and one for GBS (as "The Investor"). The Investor signature page was laid out for a witness to sign underneath and write his name, address and occupation. The Easter PPA had three signature pages. The Investor signature page was similar in wording to that of the Curwen PPA but the layout and typescript was different. The Contractor signature page was identical to that of the Curwen PPA save for the addition of the superfluous phrase "SIGNED as a deed by" at the top of the page. The third page attached to the Easter PPA was a signature page for DHL as "The Developer" (again with space for signature by a director and the company secretary) but with the following introductory wording not present on the other signature pages: "IN WITNESS whereof the parties hereto have duly executed this document as a deed that day and years first above written".
101. There is no version of the Curwen PPA with any signatures on it. The photocopy of the Easter PPA shows the signatures of GBJ and Mrs Bond on the Developer page, the signatures of GBS and Mr Le Roux on the Investor page (with Mr Le Roux's name and address filled in underneath his signature and his occupation given as "IT support"), and the signature of GBJ alone on the Contractor page. The absence of Mrs Bond's signature on the Contractor page is immaterial since the Developer and the Contractor were one and the same company and she had already signed as company secretary on the Developer page.
102. The explanation given by GBJ for the difference in the printed wording and layout of the signature pages attached to the two PPA documents is that they were produced on different days. The Curwen PPA was printed on 24 February 2003 and received by Mr Curwen and Mr Hards the following day. GBJ then revised the Schedules and had a second copy of the PPA printed and bound on 25 February. This copy was signed by him and by Mrs Bond before the Bentley Jennison meeting. He then took it with him to the meeting and gave it to his father for him to sign. His father took it with him when he left the meeting. The PPA was stored in the Dunster database as a series of separate components. There was the title page saved as a Word document in which the name of the participating parties would be altered from project to project. There were the standard terms which were also saved as a Word document and required no change save as to the "effective date" in the first paragraph. There were the Schedules (1-5) which identified the parties (Schedule 1) and the property (Schedule 2), contained the figures which reflected the project appraisal (Schedule 3), listed the profit share proportions of the participants (Schedule 4), and set out the contributions expected from Investors by way of equity and finance (Schedule 5). The Schedules were bespoke for each project and kept in the form of Excel spreadsheets. Finally, there were the signature pages, which were each kept as separate Word documents.
103. I find the evidence that versions of the PPA were produced on 24 and 25 February entirely plausible. It is supported by the dates of printing given in the footer on the Schedules attached to the Curwen PPA and the Easter PPA. It is also entirely plausible that the Developer signature page was omitted in error from the draft sent to Mr Curwen. However the production of two versions of the PPA on consecutive days does not obviously explain the difference in the wording and/or layout of the Investor and Contractor signature pages. One would have expected these to be the same for both versions, since they were produced so close together in point of time. The only reason why they would be different is if the person who printed them resorted to different signature page templates within the Dunster database in order to generate those pages on 24 and 25 February.
104. The second distinguishing characteristic was the appearance of the Dunster logo. The logo consisted of four small square boxes each containing a motif. The motif in the third box was an oak tree. Every page of the Curwen PPA was printed on notepaper bearing the logo in the middle of the top of the page. Only the main body of the Easter PPA was printed on paper bearing the logo. There was no logo at the top of the Schedules or the signature pages.
105. A detailed forensic analysis by GBS' solicitors (Thring Townsend) of the reproduction of the Dunster logo in documents disclosed in this action resulted in Mr. Ascroft, counsel for GBS, making the following submission. The logo appeared in the documentation in three styles. Style I was the style which appeared on DPL's headed notepaper and continuation paper in use from about 1996. According to Mr Le Roux this was pre-printed stationery, stocks of which ran out sometime in 2004. Style 2 was a style which appeared on DHL's headed notepaper. The oak tree in this version of the logo had the appearance of a mushroom cloud. It was computer generated and produced for DHL on equipment belonging to the architects' office on the floor below at 27 Gironde Road. The earliest document received by GBS bearing this version of the logo was in April 2003. Style 3 was the style of logo which appeared in the Easter PPA (except on the Schedules and signature pages). It was a computer generated image produced in Dunster's own offices by a process of scanning. It is the same or very similar to the new batch of printed stationery that was produced for DPL by a firm called Purnells in 2004. There is no example of it having been used in 2002 or 2003. The first document which GBS received with logo style 3 was in 2005.
106. When these differences in style of logo were put to GBJ, he had no explanation. Mr. Ascroft invited me to infer that the Easter PPA was a false document which had been concocted long after the events of February 2003 and probably sometime in 2005 or later."
"24) I have no recollection of either
a) signing the Admiral Court PPA given to me by my son or any Admiral Court PPA from which those copies could have been taken, or;
b) signing this document (or any other Admiral Court PPA) in front of Mr Le Roux
25) I do not know how this document, the Signed AC PPA, or any documents from which it may have been copied, came into existence.
43) The signature appearing on the Signed Admiral Court PPA is a fair copy of my signature but I do not believe that it is one made by me. It is however, possible that it is.
47) I am unable to explain by whom, when or in what circumstances this apparent signature of mine appears on the Signed AC PPA.
75)…I had, so far as I can recall, never signed a PPA for the Rookery site either…
79) As noted above I cannot exclude the possibility that the signature appearing on the signed PPA is a copy of my signature. If it is, I cannot explain how it came to be on or appears to be on this document.
80) [sic] I decided not to never in fact decided that a PPA should apply to Admiral Court and which is why I did not ever deliver a signed version to my son. "
"114. Mr Ascroft still submitted that the Easter PPA was a false document. I disagree. The evidence of Mr Le Roux of how logos were produced in Dunster's offices does not persuade me that the fact that the logo in the Easter PPA had the appearance of style 3 means that the Easter PPA could only have been generated much later than 2003. I think it possible that a logo resembling style 3 could have been generated in Dunster's offices as early as February 2003. Moreover it must be remembered that the Easter PPA disclosed on 11 April 2007 was a photocopy of a photocopy. At least two separate types of photocopier were involved in its production and the copying process is likely to have had a distorting effect. More importantly, if Mr Ascroft is right, Mr Le Roux and Miss Glynn must have been lying when they gave their account of what happened about witnessing the signature of GBS at the curtains meeting and photocopying the signed PPA. Not only would they have been lying, they would have been party with GBJ to a deliberate attempt to deceive the court. I am unable to accept that that is the case. I found Mr Le Roux and Miss Glynn to be honest witnesses. Faced with the choice of believing their account of the curtains meeting and the account given by GBS, which was that the witnessing of his signature and the photocopying of the PPA never happened, I unhesitatingly prefer the evidence of Mr Le Roux and Miss Glynn. Furthermore I find it incongruous that, if Mr Le Roux, Miss Glynn and GBJ were intent on concocting a signed version of the Admiral Court PPA, they should have gone about it in the haphazard way that the piecemeal emergence of the component parts of the Easter PPA suggests."
"115. Accordingly I find that, at some time between the Bentley Jennison meeting on 27 February and the curtains meeting on 28 February, GBS signed the copy of the Admiral Court PPA which GBJ gave to him at the Bentley Jennison meeting. Sam Le Roux was then asked by GBS at the curtains meeting if he would witness his signature. Sam Le Roux did so and Catherine Glynn took copies of the completed document. It is enough that GBS signed the Admiral Court PPA for its terms to be binding. Whether or not it was the private intention of GBS to keep his options open or possibly try to "back both horses" by adopting the PPA whilst at the same time making a principal private residence election so as to claim relief from CGT, is immaterial. No case has been advanced on his behalf which would justify the conclusion that his signature on the Admiral Court PPA did not indicate that he intended to agree to enter into a partnership on the terms of the PPA, or that somehow he is entitled to withdraw from that agreement."
"118. The background evidence establishes very clearly why it was important to GBJ that the PPA route should be adopted, and in my judgment the evidence of what occurred after 28 February 2003 shows that GBS was content to give the impression to GBJ that the Admiral Court PPA applied. GBJ proceeded with the project as if the PPA applied. Project Update Reports were sent, a finder's fee and a management fee was charged, the costs of the refurbishment were calculated on the assumption that VAT would be reclaimed and GBS was told of the amount of his equity and finance contributions. GBS made no protest about any of this at the time. GBS made no attempt to put in place any other form of agreement with DHL for the refurbishment works, and he purported to exercise no control over the works until he excluded GBJ from the property in August 2003. He took some steps to establish 18 Admiral Court as his residence, but not all of those recommended by Mr Hards. For example, he permitted DHL to register the property in its name for Council tax between 2003 and 2004 so as to be able to benefit from an exemption while the works were being undertaken and the property was unoccupied. If there had been no evidence about the signing of the Admiral Court PPA, I would have concluded from the evidence as a whole that GBS had agreed to follow the terms of the PPA as the basis of the joint venture with his son, regardless of whether this was or was not compatible with making a principal private residence election for CGT."
Submissions and discussion
i) Mr Bond Senior paid all the money initially required under the AC PPA to Holding when asked to do so.
ii) Mr Bond Senior paid the finder's fee and management fee provided for by the AC PPA without question.
iii) Holdings paid all costs and expenses associated with the purchase in its own name as if it were a partner under a PPA and there was no evidence that Mr Bond Senior investigated these figures.
iv) The cost of the refurbishment work was calculated on the basis that VAT would not be paid and this was consistent only with a PPA and not the PPR route.
v) Mr Bond Senior did not register for council tax but let Holdings register, which was inconsistent with PPR route.
vi) Council tax was dealt with on the basis that Admiral Court was unoccupied and being developed. This conflicted with the PPR route, and Mr Hards' recommendations.
vii) Mr Bond Senior did not exercise control over the works until he took possession and excluded the respondents.
viii) There was no other agreement for the refurbishment works.
Disposal of the appeal
"…this is an unhappy piece of litigation which ought not to have fought. It has been driven to a trial by intransigence on both sides."
Lord Justice Longmore:
"GBS had agreed to follow the terms of the PPA as the basis of the joint venture with his son, regardless of whether this was or was not compatible with making a principal private residence election for CGT"
i) Project Update Reports, as envisaged by the PPA, were sent by DML to GBS;
ii) a finder's fee and a management fee were charged by DHL, likewise as envisaged by the PPA;
iii) the costs of the refurbishment were calculated on the assumption that VAT would be reclaimed;
iv) GBS made no objection to any of this, although it is true (and it is not mentioned by the judge) that he did protest at the amount of the refurbishment costs being charged;
v) GBS made no attempt to make any other agreement in relation to the project nor did he purport to exercise any control over the works until he excluded GBJ from the property in August 2003;
vi) although GBS did register himself for Council Tax for a month (a fact not mentioned by the judge), DHL replaced him on the register and became notionally liable for Council Tax thereafter.
Master of the Rolls: