England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
COMMERCIAL COURT
(MR JUSTICE FLAUX)

		Royal Courts of Justice Strand London, WC2A 2LL
		16 July 2015

1. LORD JUSTICE LONGMORE: This is an application for permission to appeal a case management decision of Flaux J, made on 5 June 2015, that Mr Zanotti should serve a statement of case setting out whether he has any claim to interest in a car which has been auctioned by Bonhams and is currently sitting in a warehouse in Southampton.
2. Bonhams described the car at auction as a 1954 Ferrari 375-Plus, said to be one of only five ever made, with chassis and engine number 0384/AM. It was knocked down to a Mr Leslie Wexner for £9.6 million plus buyer's premium, which of course on that sum will not be insignificant.
3. The history of the car is now a subject matter of litigation. I only summarise it in the briefest possible terms. In 1958, a Mr Kleve purportedly acquired a car, a Ferrari, with the same number, 0384/AM, in the United States of America, although it might in fact have been apparently 0394/AM and with or without its original engine. In 1970, the engine was sold to a Mr Leydorf. In January 1989 that car, without its engine, was stolen from the land of Mr Kleve. In February 1989 a car without an engine was shipped to Belgium and impounded and later acquired by Messrs Swaters and Lancksweert, who restored the car with apparently a new engine. At some later date, Mr Swaters, or perhaps his daughter, acquired the old engine from Leydorf. In December 2003 Mr Kleve died and at some later date his daughter, Mrs Lawson, sought to bring the car to auction and Bonhams helped to resolve disputes between Mr Swaters or his daughter and Mrs Lawson and other people who had other claims.
4. Meanwhile, Mr Zanotti claims that he, on 23 September 2003, purchased from a Dr Favero in Italy the chassis and parts of a Ferrari 375-Plus with the number 0384/AM, then stored in Parma in Italy in premises owned by a Signor Malatesta which was part of Dr Favero's classic car collection. That sale was apparently evidenced by a notarised instrument made in Montevideo. But, at a later date, it is said that that collection was moved and the chassis and the parts disappeared, presumably stolen.
5. To revert to the story with Bonhams, sometime in May 2014, Bonhams advertised the auction of the car which they had (0384/AM, supposedly) for 27 June 2014. Mr Zanotti got to hear about it and he discussed the auction of that car with his lawyers, apparently in May. But only on 24 June 2014 did Mr Zanotti's solicitor come on the scene asserting that he was the owner of the car, or part of it, if it was in fact the 0384/AM which had been stolen from him; otherwise, he maintained, the car that was being auctioned was not truly 0384/AM.
6. Two days later, on 26 June, Mr Zanotti issued a claim form against Bonhams, and with the sale happening the next day Bonhams settled that claim, apparently, for £2 million payable on 30 June as to £1 million and on 31 July 2014 for the second £1 million in return for the assignment of Mr Zanotti's interest. The auction duly took place on 27 June and Bonhams in due course on or before 30 June paid Mr Zanotti his first instalment of £1 million. A few days later, Mr Zanotti discontinued his claim.
7. On 8 July, the purchaser's solicitor, Mr Wexner, purported to rescind the sale which they had made via Bonhams for misrepresentation about the American provenance of the car and they issued proceedings in the Chancery Division. Those proceedings are now transferred to the Commercial Court.
8. On 30 July, 24 hours before the second instalment was due, Bonhams asserted that Mr Zanotti's claims against them which had been settled were fraudulent and they refused to pay the second instalment because, as they put it, settlement was voidable for fraud or economic duress, the economic duress taking the form that the claim was made so shortly before the auction. On 17 October 2014, Bonhams sued Mr Zanotti in the Commercial Court for rescission for fraud and/or avoidance or economic duress. Mr Zanotti tried to have those proceedings struck out, but that application failed in front of Cooke J on 10 December 2014.
9. On 16 March 2015, Mr Zanotti's solicitors, under some pressure to say whether Mr Zanotti had any interest in the car, "conceded" that he did not, on the basis that either the settlement was a good settlement, in which case he was entitled to his £2 million, or it was voidable for fraud in which case he would not be entitled to claim any interest in the car either. The plea of economic duress was ignored at that stage.
10. There was then a case management conference on 19 March 2015, at which Flaux J ordered that there should be ADR and that Mr Zanotti should be joined to what were termed as "stakeholder proceedings". Mediation took place. As yet, there has been no settlement.
11. A second case management conference was fixed for 5 June 2015 and, apparently to Mr Zanotti's consternation, Bonhams on 28 May sought a judgment against Mr Zanotti on admissions or a summary judgment; alternatively, that there should be a preliminary issue dealing with all questions of title. It then became clear that Mr Zanotti's apparent concession in the letter of 16 March that he had no title to the car was not to be maintained in the event that Bonhams maintained their plea of economic duress.
12. Flaux J was not persuaded that it would be right to order judgment on admissions or alternatively summary judgment against Mr Zanotti at that stage, but he did order that Mr Zanotti should serve a statement of case setting out any claim to interest in the car. Mr Bartley-Jones QC, who appeared in front of Flaux J upon that second case management conference, as he now appears before me here, said that it would be unfair and wrong for Mr Zanotti to be required to set out his claim, if any, to any interest in the car without there being an inspection. He has shown me that ever since the letter of 16 March there has been a request for an inspection.
13. Flaux J was unimpressed by that because he did not think that an inspection would reveal whether or not any part of what is currently in Southampton would be part of whatever was stolen in 2003 or so in Parma, and he said it was time for Mr Zanotti to put up or shut up, particularly in the light of the fact that a date in October had been reserved for all questions of title to be resolved as between all the people competing for an interest in the car and of course Bonhams, the idea being that all possible people should be bound by any result to which the judge would come. So Mr Bartley-Jones' plea to Flaux J not to make such an order without an inspection taking place first failed.
14. He now seeks permission to appeal from that decision. He did not ask the judge for permission to appeal and so I do not know what the judge would have thought of it, but reading the transcript it seems unlikely that he would have granted such permission to appeal. Nothing daunted, Mr Bartley-Jones accepted that the decision is a case management decision made at a case management conference and therefore a decision with which this court would on general principles be most reluctant to interfere: see Royal & Sun Alliance Insurance Plc v T and N [2002] EWCA Civ 1964 at [38] and Walbrook Trustee (Jersey) Ltd v Fattal [2008] EWCA Civ 427. He submits that no concession has ever been made by Mr Zanotti in respect of non-fraudulent economic duress in relation to the title of the car. He submits that although the primary cases of Mr Zanotti and of Bonhams are, on Mr Zanotti's part, that the settlement agreement is valid and therefore he has no interest in the car, and on Bonhams' part that the settlement agreement was fraudulently induced that there would therefore be no interest in the car, there still remains the possibility that a claim for economic duress will succeed against Mr Zanotti and in that case he wishes to maintain that he might have a title to the car.
15. In that case, it does seem to me that Flaux J's order is exactly the right one. He should be required to put up or shut up, say what is the basis of any interest that he has in the car, and whereas I agree with Flaux J that the benefit of inspection is very tenuous, the fact remains that no application has ever been made to the Commercial Court for an inspection to take place. If an application had been made in March 2015 at the time that the apparent concession was made, no doubt the parties would have been able to consider whether they could agree such an inspection and what the terms of any such inspection should be. But no application having been made, no one has thought about the difficulties that such an inspection will give rise to. The obvious ones are, of course, is Mr Zanotti's inspector to be the only person to inspect it? Should it be under supervision of somebody else? Should other parties be able to inspect? And so on and so on.
16. It is far too late, in my judgment, for these kind of points to be ventilated now for the first time in the absence of any application having been made to inspect. This is a case management decision, and it would be quite wrong for me to give permission to appeal and so I will refuse it.