England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice The Rolls Building Fetter Lane, EC4A 1NL
		01/04/2015

Mr Justice Norris :

1. This is an appeal against the order of the Chief Master dated 25 April 2014 by which he struck out Mr Bruce's claim against TTA Management Limited ("Management") and its two executive directors ("Mr Carpenter" and "Mr Clark") and its other non-executive director, all three of whom were directly or indirectly shareholders in Management. His ground for so doing was that Mr Bruce's statement of case disclosed no reasonable grounds for bringing the claim. In the alternative the Chief Master granted summary judgment in favour of those Defendants because they had satisfied him that Mr Bruce had no real prospect of succeeding on his claim.
2. Mr Bruce's appeal is limited to a review of the Chief Master's decision: and to succeed he must demonstrate that the decision was wrong (there being no question of a serious procedural or other irregularity). Insofar as the order depends upon a legal conclusion, Mr Bruce must demonstrate that there was an error of law. Insofar as the order results from the exercise of a discretion, Mr Bruce must demonstrate that the outcome was outside the generous ambit within which reasonable disagreement is possible (and therefore must embody an error of law).
3. The decision to strike out a claim is a case management decision, and any appellate court must exercise caution when reviewing the decisions of the case managing judge. But some case management decisions are not pure exercises of discretion, but depend on legal conclusions. Whether a statement of case discloses reasonable grounds for bringing a claim and whether (after reviewing the evidence) it is concluded that a Claimant has no real prospect of succeeding on the claim are both legal conclusions.
4. They are, however, different legal conclusions, as Lord Woolf MR pointed out in Swain v Hillman [2001] 1 All ER 91 at 92h:-

"Clearly, there is a relationship between rule 3.4 and rule 24.2. However, the power of the court under part 24, the grounds are set out in rule 24.2, are wider than those contained in rule 3.4. The reason for the contrast in language between rule 3.4 and rule 24.2 is because under rule 3.4, unlike rule 24.2, the court generally is only concerned with the statement of case which it is alleged discloses no reasonable grounds for bringing or defending the claim".

So there is a difference in emphasis. CPR 3.4 is concerned with the statement of case, and what it discloses. Part 24 is concerned with the evidence that (in the instant case) the Claimant would have available to prove the pleaded case, or the Defendant would have available to advance a defence to that pleaded case. But, as paragraph 1.7 of PD3A says:-

"A party may believe he can show without a trial that an opponent's case has no real prospect of success on the facts, or that the case is bound to succeed or fail, as the case may be, because of a point of law (including the construction of a document). In such a case the party concerned may make an application under rule 3.4 or part 24 (or both) as he thinks appropriate".

5. In the instant case by Application Notice dated 20 November 2013 the Defendants applied to strike out Mr Bruce's Particulars of Claim under CPR 3.4(2)(a) and/or (b): and in the alternative applied for summary judgment under CPR 24.2. By his Order dated 20 April 2014 the Chief Master struck out the claim under CPR 3.4(2)(a): and in the alternative gave judgment on the claim in favour of the Defendants pursuant to CPR 24.2.
6. For the purposes of the appeal it is in my judgment necessary to consider those alternative legal conclusions separately.
7. The Claim Form explained that:-

"The claim is in tort and contract for damages and interest and/or declaratory relief arising from and relating to the expert valuation dated 13.4.2007 and the subsequent sale of [Mr Bruce's] shares in [Management] pursuant to a compromise agreement and share purchase agreement ("SPA") both dated 12.9.2005. The Claimant alleges that his shares were undervalued by the expert valuer as a result of the fraudulent acts of the Defendants, in particular their fraudulent mis-statement of financial and trading particulars to the expert."

8. Many of the facts alleged in the Particulars of Claim were not disputed, though no formal concession appears to have been made that in the application under CPR 3.4 it was to be assumed (for the purposes of the application) that the pleaded facts would be proved at trial. The bare bones of Mr Bruce's case were these:-

a) The Claimant was from the foundation of Management in 1994 until April 2007 a shareholder and non-executive director of Management.

b) Mr Carpenter and Mr Clark were shareholders and executive directors of Management.

c) Management provided services to Travel Trust ("TT"), a company limited by guarantee founded in 1993 and whose primary business was to act as a trade association providing a scheme of trust accounts backed by fidelity insurance for travel agents to use as an alternative to the ABTA bond scheme. (Although it did not feature in the pleaded case, Mr Bruce's evidence was that he and another had advanced all the funding to establish TT's operations).

d) TT was at all material times controlled by Mr Carpenter and Mr Clark.

e) TT was intended to operate as a non-profit making institution (which assertion was not specifically denied in the Defence which Management, Mr Carpenter and Mr Clark filed). Precisely what was meant by "non-profit making" was not clear: it might or might not have meant that any surplus earned by TT was to be extracted by way of management charge payable to Management. But it is clear that at the least it meant that any surplus was not distributable amongst the members (which is why it was accumulated and not paid out).

f) Amongst the services that Management provided to TT was fidelity insurance backing TT's scheme, and also promoting and selling additional travel insurance and travel related products for the members of TT.

g) By clause 3.4 of the Management Agreement between Management and TT it was agreed that in return for the services provided by Management under the agreement that Management should be entitled "to the entire revenues from the insurance services provided to members in respect of their customers together with any other products provided to such members in conjunction with [TT]".

h) The members of TT benefitted from some concessionary arrangements with suppliers of travel services under a scheme known as "the Business Partners Scheme" ("BPS") and the suppliers paid to TT commission at a rate of 1% on business transacted by them with members. Mr Bruce said that Management was entitled to the commission: but Mr Carpenter and Mr Clark said that TT was entitled to the commission.

i) By an agreement in writing dated the 12 September 2005 ("the Compromise") various disputes between Mr Bruce on one hand and Mr Carpenter and Mr Clark on the other were resolved by an agreement that Mr Bruce's shares in Management should be purchased by the company itself.

j) The price to be paid by Management for Mr Bruce's shares was to be determined by Ms Angela Hennessey on the terms of engagement which bound her to act as an expert and not as an arbitrator, and to provide her decision in writing but without disclosing reasons.

k) What her letter of engagement required her to do was to value Mr Bruce's shareholding as a rateable proportion of "the total value of the Company as a going concern without any discount for the fact that the holding [was] a minority holding and assuming a willing buyer and a willing seller".

l) By clauses 1.2 and 1.3 of the Compromise, the parties agreed that Ms Hennessey should be supplied with "comprehensive, accurate and current financial information concerning [Management], including the documents set out in [a] letter of 25 January 2005 (paragraph 5(viii))…"

m) Amongst the documents specified in paragraph 5(viii) of that letter were "forecasts for future trading of [Management] over the next two years" and "copies of the Management contracts between [Management] and [TT]… together with any further information or documentation requested by the expert and considered by [her] in [her] absolute discretion as required for the purposes of [her] valuation".

n) By a letter dated 4 January 2006 Ms Hennessey advised the parties that she regarded the issue of whether the commission income on the BPS formed part of the revenues to which Management was entitled as significant to any consideration of the valuation of Management.

o) At a meeting of the board of Management on 20 February 2006 the board (Mr Carpenter and Mr Clark forming the majority) resolved that it would continue to treat the commission income from the BPS as belonging to TT. This left the profit from the BPS operation accumulating in non-profit making TT, and meant that Management's income stream did not include the BPS income even if it constituted revenue from "any other products provided to such members in conjunction with [TT]".

p) In communicating that resolution to Ms Hennessey the solicitors for Management, Mr Carpenter and Mr Clark said:-

"What the resolution does make absolutely clear is that there is no prospect of [Management] receiving the [BPS] income".

q) On 15 March 2006 Ms Hennessey informed the parties that unless proceedings were issued to determine Management's entitled to income from the BPS she would proceed to complete the valuation on the assumption "that [Management] (either as currently owned or as owned by a prospective purchaser) is unlikely to receive any income from this source".

r) The solicitors for Management, Mr Carpenter and Mr Clark said in response that it was "more accurate to say that there is no real possibility at all of the [BPS] income being paid to [Management]".

s) Mr Bruce did issue such proceedings but Mr John Jarvis QC (sitting as Deputy High Court Judge), declined to determine the question on the footing that where parties chose to select valuation by an expert, then recourse to the Courts was virtually non-existent (except where there had been a true breakdown in the machinery or a frustration of the contract).

t) By a letter dated 13 April 2007, Ms Hennessey formally determined the transfer price for Mr Bruce's shares at £1,485,914.00.

u) Immediately after the completion of the sale of Mr Bruce's shares to Management, during the period from the 1 July 2007 to the 12 November 2007 TT paid to Management sufficient money to enable it to declare a profit of £1.96m on a turnover of £740,000 (as compared to the profit during the year ending 30 June 2007 of £791,000 on a turnover of £2.67 million). The solicitors for Management, Mr Carpenter and Mr Clark explained that the exceptional profit figure

"represents revenue from [TT] which we understand was declared by way of dividend, and is therefore consistent with [Mr Bruce's] own contention to the expert valuer".

v) The "declaration of dividend" was achieved because after the purchase of Mr Bruce's shares they were cancelled by Management, and then TT ceased (in October 2007) to be a company limited by guarantee and was re-registered as a company having a share capital. Its one issued share was registered in the name of Management (itself now in the ownership of Mr Carpenter and Mr Clark and others to the exclusion of Mr Bruce). So TT could now avoid distributing the profits to its general members, avoid transferring them to Management under the Management Agreement (if applicable) and could distribute the accumulated profits by way of dividend to Management (and hence to Mr Carpenter and Mr Clark). The end result was that Management did receive the BPS income, and Mr Carpenter and Mr Clark enjoyed it to the exclusion of Mr Bruce.

9. The nature of Mr Bruce's legal complaint is to be found in paragraph 13 of the Particulars of Claim in these terms:-

"The determination by Ms Hennessey of the transfer price was compromised by the breach of contract and fraudulent misrepresentation by and/or on behalf of [Management] [Mr Carpenter and [Mr Clark] [and others] in respect of which the Defendants conspired together to injure the Claimant".

The causes of action there referred to are breach of contract, fraudulent misrepresentation and conspiracy to injure.

10. The breach of contract is particularised in paragraph 13(15) as a breach of clause 1.2 of the Compromise in that Ms Hennessey was not "supplied with comprehensive, accurate and current financial information regarding the company" because there was a failure properly to account within Management for the BPS commission income to which Management was said to be entitled.
11. The fraudulent representations are identified in paragraph 13(12) in these terms:-

"The representations made by and on behalf of the Defendants that the commission income from the BPS did not belong to [Management] and that there was no real possibility of that income being paid to [Management] were to the knowledge of the Defendants, false. Alternatively the representations were made without belief by them in the truth thereof. In either event, the representations were made fraudulently with the intention of depriving [Mr Bruce] of the true value of his shares."

12. The case in conspiracy is "particularised" in paragraph 13(12) in these terms:-

"In making those misrepresentations the Defendants conspired to injury of the Claimant by reducing the apparent value of his shares in the assessment thereof Ms Hennessey".

I use the description "particularised" because it was said (in my judgment fairly) that from the literal words used it is not apparent what exact form of conspiracy was being alleged. But Mr Green QC (who was not, and nor was his junior Mr Evans, responsible for the form of the Particulars of Claim) submitted that fairly read the words of the pleading meant:-

"In making those fraudulent misrepresentations to Ms Hennessey the Defendants conspired to injure the Claimant by unlawful means by reducing the apparent value of his shares in the assessment thereof by Ms Hennessey".

13. No particulars of knowledge of the falsity of the representations are given: nor are any material facts pleaded in relation to the allegation that the representations were made without belief in their truth. Mr Green QC explained that that was because it was to be inferred from the fact that the sale completed in April 2007 and the transfer of funds generated by the BPS commission commenced (according to the pleading) on 1 July 2007 that that had been the plan all along; and also that it was to be inferred that that was the plan at the time when the representations were made that there was no prospect of Management receiving the BPS income.
14. The Chief Master (in striking out the claim and in the alternative giving summary judgment against Mr Bruce) did not give separate reasons for exercising the different powers. Indeed he explicitly considered the evidence that was filed in considering the exercise of his power under CPR 3.4 (as well as his power under CPR 24). He thought the manner in which paragraph 13 of the Particulars of Claim had been pleaded was "unsatisfactory": but as I read his judgment he did not hold that he should strike out the case because of a failure to comply with paragraph 8.2 of PD16. He based himself upon CPR3.4(2)(a) viz. that the statement of case disclosed no reasonable grounds for bringing the claim (and in the alternative upon CPR 24).
15. The Chief Master's careful judgement needs to be read in full. But the principal points that emerge are these:-

a) The breach of contract claim was not properly pleaded because it was not clear what breach was alleged:

b) If the breach alleged was a failure to provide "comprehensive, accurate and current financial information" then statements about the likelihood of Management receiving the BPS income in the future were not "information" but rather legal submission and clause 1.2 of the Compromise did not provide a basis for a claim because Mr Carpenter and Mr Clark were entitled to make submissions:

c) In any event Ms Hennessy must have formed a view about whether the BPS income was or was not properly payable to Management (or otherwise taken the issue into account) but because the valuation was a non-speaking one there was no way of knowing how this influenced the valuation:

d) The conspiracy claim was not properly pleaded because it was not clear whether Mr Bruce alleged an "unlawful act" conspiracy or an "unlawful means" conspiracy:

e) It was "hopelessly vague and should be struck out":

f) The claim for fraudulent misrepresentation did not appear to have been given the degree of attention that such a serious claim merited, because it did not allege that Mr Bruce had been influenced by the representations (i.e. that it was "absolutely clear" that there was no prospect of Management receiving the BPS income and that there was "no possibility" of the BPS income being paid to Management) to his detriment:

g) There could be no deceit in relation to the accumulation of the BPS income (which Mr Bruce knew from no later than the date of the board resolution had not been paid to Management):

h) Insofar as Mr Bruce alleged that upon the true construction of the Management Agreement the BPS income was payable to Management, that Mr Carpenter and Mr Clark knew that this was so, and that they intended to pay the BPS income to Management once Mr Bruce's shares had been acquired, he "face[d] real difficulty in establishing subjective fraudulent intent":

i) Further, even if it was the intention of Mr Carpenter and Mr Clark to restructure TT that could only be done by the issue of a share to Management "a step which [they] had no obligation to take":

j) Even assuming a claim in deceit was available it was impossible for Mr Bruce to establish that the representations had any effect on Ms Hennessy because her award was non-speaking ("Quite what she made of the issue and how she rationalised her decision will never be known") and "events appeared to suggest strongly" that they had no effect:

k) In any event, the "representations" were only legal submissions, and meant only that the board resolution had settled the matter (not that Mr Carpenter and Mr Clark were not going to undertake a lawful restructuring of TT and Management):

l) To rely on the October 2007 restructuring as demonstrating the falsity of the representations made in March 2006 amounted to "impermissible backwards temporal reasoning".

16. Before considering the grounds of appeal I should clear some of the undergrowth. First, this is a claim about damages. On the facts pleaded there was no real prospect of obtaining a declaration that Ms Hennessy's valuation was a nullity (so that Mr Bruce was bound to return the £1,485,914 Management had paid him and Management was bound to return the shares it had acquired from Mr Bruce in 2007). Equally, there was no real prospect of obtaining an order for specific performance of the Compromise by the undertaking of a fresh valuation by Ms Hennessy.
17. Second, the Chief Master thought the pleading of the claims to be unsatisfactory: and in the main I agree with him.
18. However, their fault was not that they failed to plead facts sufficient to constitute the relevant cause of action i.e. that they were not comprehensive. Their fault was that they were too comprehensive and not sufficiently particular: they left Mr Bruce with too much room to manoeuvre in establishing his case.
19. I consider first the claim for beach of contract. In my judgment this was clearly and sufficiently pleaded. It was clear Mr Bruce was saying that as a matter of law, upon the true construction of the Management Agreement TT was bound to pay the BPS commission and like payments to Management (see paragraph 13(3)), and that the preparation of accounts which did not include this entitlement (even if there had been no actual payment in the relevant accounting period) was a failure to supply "comprehensive, accurate and current financial information" within the obligation imposed by clause 1.2 of the Compromise (see paragraph 13(15)). He was not alleging that statements about the prospect of future payment were a breach of contract (so whether this was "information" or submission did not matter). The loss he alleged was that if the true position had been made known to Ms Hennessy her valuation would have been higher. If Mr Bruce proved the facts he pleaded then he was home and dry.
20. I consider next the conspiracy claim. I consider that this was not satisfactorily pleaded. The simple allegation that the five Defendants "conspired together to injure" Mr Bruce "by the breach of contract and fraudulent misrepresentation" was (even as particularised as to the breach of contract and fraudulent misrepresentation) too broad and left too much room for manoeuvre. The impression that the claim had not been thought through is reinforced by the fact that the claim for loss and damage in paragraph 15 relies only on misrepresentation and breach of contract. But the lack of particularity is cured by the clarification provided by Mr Green QC (though an amendment would be required): an amendment would be required explicitly to plead damage caused by the conspiracy in addition to damage caused by the unlawful acts themselves.
21. I turn to the misrepresentation claim. Paragraph 13(12) clearly pleaded that representations made by and on behalf of the Defendants that the BPS income did not belong to Management and that there was no real prospect of that income being paid to Management were (to the knowledge of Mr Carpenter and Mr Clark false). Paragraph 13(13) pleaded that they knew that Management was entitled to that income and that they knew that they intended to cause TT to pay it to Management once the sale of Mr Bruce's shares had been completed. Paragraph 15 of the particulars alleged that Mr Bruce had suffered loss and damage in consequence of those misrepresentations having been made. In my judgment if the facts pleaded in the particulars of claim were proved Mr Bruce would have established reasonable grounds for bringing the claim.
22. It is correct that the representations were made to Ms Hennessy (not Mr Bruce) and that it was she (not he) who principally relied upon them; but that it was Mr Bruce (not Ms Hennessy) who claimed to have suffered loss in consequence of that. However, I would be loathe to accept as beyond reasonable argument the proposition that if you can fraudulently mislead the independent valuer then you have no liability to the other party to the transaction being valued. (I put the matter as one of principle without intending thereby to suggest that that is what Mr Carpenter and Mr Clark in fact did). Indeed, Spencer Bower and Handley's "Actionable Misrepresentation" suggests (at para. 20.25, citing Lonrho v Fayed (No 2) [1992] 1 WLR 1 at 10) that fraud may be practised on a claimant by misrepresentations to a third party, and may succeed if he was the intended victim.
23. Nor do I regard it as incapable of serious argument that the representations (though made to the valuer) were also directed to Mr Bruce and intended to influence his acceptance of the valuation and his exercise of the option in the Compromise. This was not, in my view, a case suitable for summary disposal as having no reasonable grounding.
24. Accordingly, I respectfully disagree with the decision of the Chief Master that Mr Bruce's statement of case did not disclose a reasonable ground for bringing the claim and should be struck out under CPR 3.4(2)(a).
25. I therefore turn to the claim for summary judgment which (again in respectful disagreement with the Chief Master) I think raises different issues because it involves consideration of whether, on the evidence adduced and also that likely to be available at trial, Mr Bruce's claim had a real prospect of success.
26. The principles are familiar and I would do nothing of value by repeating them. The ultimate question to be addressed is whether Mr Bruce's case is simply not a fit subject for any trial at all, not because it is improbable but because it lacks reality. In answering that question it may be taken that I am proceeding upon the terms of Part 24 itself as illuminated by the guidance summarised in Lewison J's judgment Easyair v Opal Telecom [2009] EWHC339 at [15].
27. As Mummery LJ observed in Doncaster Pharmaceuticals [2006] EWCA Civ 661 at [5] the test so expressed is extraordinarily difficult to apply (more difficult, indeed, than trying the case in its entirety) for it is done on limited material and in ignorance of much that may emerge in disclosure and cross-examination.
28. Counsel for Mr Bruce made an over-arching submission that whatever may emerge from a close analysis of the issues and the available material, this is simply a case where there is a compelling reason for a trial under CPR 24.2(b) because it raised for decision the nature and effect of statements made in an ADR process. They relied first upon Miles v Bull [1969] 1QB 258 ("….[summary judgment] is for the plain and straightforward, not for the devious and crafty. There is here a case for investigation…." per Megarry J at 266F). They relied secondly on the City of London Garages Case [1971] 1 All ER 541 where (at 548c) Cairns LJ suggested that cases in which a party had acted unconscionably might make it desirable that judgment on the matter should be given in the full light of publicity.
29. I am not persuaded by this submission. There may be exceptional cases (particularly where summary judgment is sought against a defendant) in which, although matters seem straightforward at that stage in the action, nonetheless there is a "compelling" reason (the adjective a strong one) for permitting the matter to go to trial. But that possibility is not an open door at which claimants with no reasonable prospect of success may push. It is true that this case involves an ADR process: but its subject matter does not make it exceptional.
30. The Chief Master held that the claim for breach of contract had no real prospect of success. He said that the breach was not explained.
31. The breach alleged was that presenting accounts which omitted income to which Management was entitled was a failure to provide comprehensive, accurate and current information. This seems to me to be an allegation of breach with a real prospect of success. The accounts were plainly "financial information" provided to Ms Hennessy. If the accounts that were provided actually omitted to mention income to which the company was entitled (even if not collected) it is not fanciful to argue that such accounts were not comprehensive or accurate.
32. Much more difficult were the questions whether Mr Bruce had a real prospect of establishing (a) that on its true construction and in the events which happened Management was entitled to the BPS income: and (b) whether the breach of contract had caused him loss.
33. The construction question raised two groups of issues. Was the proper construction of the Management Agreement so plainly against Mr Bruce that it could be determined without trial? Was it open to Mr Bruce to take the construction point?
34. The Chief Master felt (see paragraph 53 of his judgment) that Mr Bruce had not raised the construction issue but merely assumed that he was right. In my judgment Mr Bruce had raised the issue by making the express allegation in paragraph 13(3) that Management was entitled to the income (which Mr Carpenter and Mr Clark were able to and did deny in paragraph 16.3 of their Defence). The Chief Master was correct to say that the subjective intentions of the parties were not relevant to the construction question: so no trial could help that case. But once the construction issue was raised it could not be determined against Mr Bruce without an examination of the context in which the Management Agreement operated (and in particular his evidence that TT and Management were treated as one business for the purpose of developing a range of products and collecting income). So if the issue was rightly raised it could not be determined summarily.
35. The Defendants said that Mr Bruce was not entitled to raise the issue because he had entered into the Compromise and submitted all valuation issues to the decision of an expert (including how the claim to the BPS income should be reflected in the price). This was the conclusion of Mr John Jarvis QC when the issue was actually argued out before him by the parties. He held:-

" In entering into the compromise agreement, Mr Bruce agreed to the method of valuation which was to be a private valuation by one person….who was not to give any reasons…..If the Court were to interfere in the way sought by Mr Bruce(sc. by granting a declaration that Ms Hennessy was obliged to take into account the BPS income) it would be doing the complete opposite of the agreement of the parties."

36. With some reluctance I agree that once the Court has determined as between these parties that issues of construction were subsumed into the valuation exercise Mr Bruce is not entitled to raise the construction issue for the purposes of running a "breach of contract" claim in connection with that valuation exercise.
37. Counsel for Mr Bruce submitted that this conclusion had the effect of rendering nugatory the obligation Mr Carpenter and Mr Clark undertook to provide complete and accurate information to Ms Hennessy. But that takes to an unwarranted level of generality a particular dispute about what the accounts should have contained. The particular dispute was about the construction of the Management Agreement. The Court held that that lay within the remit of the valuer and was not justiciable by the Court. Mr Bruce did not appeal that result and is stuck with it in this action. The Chief Master made no error of law in his conclusion.
38. I also agree with the Chief Master (again with reluctance) that Mr Bruce stands no real prospect of establishing that the loss he claimed was caused by the breach of contract. Mr Bruce acknowledged in his evidence what his state of knowledge about the valuation was:-

"I did not know for certain whether [Ms Hennessy] had taken into account the BPS monies, or whether she had entirely discounted them or whether she had made some partial allowance for them. I also did not know how (if at all) she had valued the BPS revenue".

But he asserted

"Now that I am in possession of more information it is clear to me that the valuation could not have proceeded on the correct basis".

The question was: having acknowledged the former did he have any real prospect of establishing the latter? The Chief Master held not, since

"..because it was a non-speaking valuation there is simply no way of knowing the extent to which, if at all, the BPS income was taken into account".

If you do not know what was done it is fanciful to say that you will establish on the balance of probabilities that what was done was not correct.

39. I was at one time attracted by the notion that if it could be established that incorrect accounts had been submitted then, even if one did not know what was actually done, one stood a real prospect of establishing on the balance of probabilities that it cannot have been correctly done because the underlying data was false, and one could seek damages for loss of the chance of a more favourable outcome if the true data had been submitted. But on reflection this depends upon being able to establish both that the submitted data was false and what the true data was: and this in turn depends upon the true construction of the Management Agreement, which Mr John Jarvis QC has held is not a justiciable issue.
40. In giving summary judgement against Mr Bruce on the breach of contract claim I hold that the Chief Master did not err in law.
41. I can now address the case in deceit. A case of fraudulent misrepresentation is bound to be heavily dependent upon inferences to be drawn from primary fact, at least before disclosure is complete: and because it is based upon inference is likely to lack a degree of particularity (though it must comply with CPR 16 PD para 8.2).
42. In the light of that general observation I do not agree with some of the Chief Master's comments. In particular:-

a) I do not agree that Mr Bruce was guilty of "impermissible backwards temporal reasoning". In principle the fact that something did happen may properly found the inference that at some earlier point in time it was intended to happen. The period of time between the occurrence of the event and the possible planning of the event goes to the potency of the inference.

b) In the instant case the statements that there was no real possibility at all of the BPS income being paid to Management continued in effect until the formation of the sale contract in April 2007. On the evidence the restructuring occurred in October 2007 (though Mr Bruce said payments began in July 2007). That was not so long a period that drawing an inference (that Mr Carpenter and Mr Clark were simultaneously saying that receipt by Management of the BPS income was impossible and planning to achieve that end) is fanciful and can be summarily dismissed before disclosure and evidence.

c) In fact at trial the allegation of dishonesty will not depend entirely on temporal inference. Mr Bruce will pray in aid similar fact evidence: that in the valuation process Mr Carpenter and Mr Clark were found to have artificially reduced the income of Management by the creation of false invoices.

d) I do not agree that the fact that Management received the BPS income via a dividend rather than by means of a transfer of profits is necessarily fatal. It is true that the statements about the impossibility of Management receiving the BPS income were made in the context of a board resolution having been passed to the effect that Management would not claim the income. But the effect of the statements arguably was that looking forward two years (the period in relation to which information was to be provided) Management would not receive the accumulated BPS income in any form that would affect the valuation exercise. The question was whether this was merely arguable or whether the argument was more than fanciful. I would place it in the latter category.

e) I do not think that the fact that Mr Carpenter and Mr Clark could always have restructured TT and actually and lawfully achieved it by means of procuring the allotment of the sole share in TT to Management is material. The statements made about the BPS income arguably (and more than merely arguably) addressed the outcome not the mechanics.

f) Irrespective of the true construction of clause 3.2 of the Management Agreement binding TT and Management it was and is open to Mr Bruce to say that Mr Carpenter and Mr Clark knew what the clause was intended to say and their attempt to give it some other effect was dishonest. I do not, with respect, agree with the Chief Master when he said that Mr Bruce "faces real difficulty in establishing subjective fraudulent intent arising from the Defendants' belief about the meaning of clause 3.4 which has to be construed objectively". (I am sure that the Chief Master was not meaning to say that a case which faced "real difficulty" was one that was suitable for summary disposal).

g) If Mr Carpenter and Mr Clark did make false statements about the future treatment of the BPS income, and did so dishonestly in order to influence the valuation, then I do not agree that the fact that the valuation was a non-speaking one is as big an obstacle as it is in a pure contract claim. I would attach greater weight than did the Chief Master to the principle noted in Campbell v Edwards [1976] 1 All ER 785 and exemplified by Parry v Edwards Geldard [2001] All ER (D) 109. This is to the effect that whilst parties who agree that a price shall be fixed by a valuer are bound by the resulting valuation, "fraud or collusion unravels everything". That is because as Jacob J explained in Parry "it is absurd to suggest that the parties contracted to be bound where either of them …gave the valuer false information". Of course, the measure of loss may be difficult: but a Court which finds dishonesty to have occurred will in general not say that the victim must go uncompensated.

43. For these reason I respectfully think that the Chief Master erred in law in applying Part 24 principles to this case. Subject to consideration of the respondents' notice I would allow the appeal in part. In the light of what happened and the timescale over which it happened I do not think that, upon the arguments deployed, Mr Bruce's matters of complaint about deceit should have been disposed of summarily. This is most emphatically not an indication that I consider Mr Carpenter and Mr Clark are probably guilty of dishonesty: and I would specifically confirm that I reject the arguments advanced by Counsel for Mr Bruce that anything their solicitors had written in response to his complaints amounted to "admissions" of any sort. Mr Bruce's case faces formidable difficulties (only some of which have so far been canvassed). The Chief Master and I differ as to which side of a very difficult line to draw those difficulties place the case. I am of the view that whilst the breach of contract claim and the conspiracy claim (which adds nothing) should remain struck out, the deceit claim may proceed (though Mr Bruce should be in no doubt about the risk in costs in so proceeding for what inevitably will be a relatively modest damages claim).
44. The respondents' notice can be dealt with very shortly. Mr Carpenter and Mr Clark submit that the Chief Master's decision should be upheld on additional grounds. The first is that the claim constitutes an abuse of process because it depends upon establishing that Management was entitled to receive the BPS income and that (following the decision of Mr John Jarvis QC) is not justiciable. In my judgment the deceit claim is not so dependent.
45. The second is that Mr Bruce cannot now complain because he accepted the valuation at the time and sold his shares in accordance with it (which amounts to acquiescence for the purposes of declaratory and equitable relief). In my judgment the deceit claim is not susceptible of this criticism. Mr Bruce did not agree to Ms Hennessy receiving false information and Mr Bruce did not know she had done so (assuming the statement about the impossibility of Management receiving income was indeed false).
46. So the reduced claim ought in my view to proceed to trial.
47. I will hand down this judgment on the last day of term: but I do not expect the attendance of parties or their representatives. The representatives will please arrange with my clerk a consequential hearing to determine costs and to consider directions to progress the action. My provisional view is that I should deal with the preparation of revised statements of case, direct disclosure, provide a tight timetable for the resolution of any disputes over disclosure, then direct a short stay for ADR, before restoring the matter to the Master for directions to trial.