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B e f o r e :
MORTGAGE AGENCY SERVICES NUMBER FOUR LIMITED
|ALOMO SOLICITORS (a firm)
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(Official Shorthand Writers to the Court)
MR ALAN TUNKEL (instructed by Kennedys) appeared on behalf of the Defendant
Crown Copyright ©
JUDGE SIMON BROWN QC:
i. The existence of a back to back or sub-sale arrangement under which the sale (or sub-sale) to the Borrower was on the same day as the grant of the lease to the intermediate vendor;
ii. The sale to the Borrower was at a price (£309,000) which was very substantially in excess of the price by which the property had just changed hands (£215,000 for no.s 180, 188 and 189 and £223,750 for no. 187; an inflation of 43% or 38%);
iii. The interposition of an intermediate vendor, namely Ellison Carter Limited ("ECL"), a company in the 50% ownership of the Borrower (and Dennis Edwards, possibly another family member;
iv. The effect of the price inflation and ownership structure of ECL was that the mortgage advance (£262,494 plus fees) exceeded the price paid by ECL to the developer, Berkeley Homes, such that in economic terms no deposit had to be found for the purchase. Instead substantial cheap finance (in the sum of approximately £188,000) was obtained;
v. The purchases formed part of a series of similar transactions for 15 properties involving the Borrower (in relation to 8 of the transactions) and, possibly, two family members, which involved them purchasing several properties using the same solicitors, the Defendant, from the same person, ECL, which used the same solicitors ("First Solicitors");
vi. On at least two of the purchase files there is evidence of the Borrower being paid cash backs by ECL (Apartments 187 and 189 - £47,000 each);
vii. The Defendant was not provided with sufficient funds to cover SDLT, such that there were long delays in registration, which did not occur for many months.
i. Hid, or failed to disclose, the sub-sale;
ii. Hid, or failed to disclose, the price uplift/differential;
iii. Hid, or failed to disclose, the cash backs; and/or
iv. Failed more generally to discharge its well known duties of care under the CML Handbook, and the Law Society 'Green Card' warning on property fraud.
i. Duties owed to GMAC
ii. The assignment issue
iii. Breaches and/or misrepresentations
v. The Valuer (Jack Goulde) issue
vi. Contributory negligence
viii. The settlement issue.
a. CPR 44.3 (5) (b) 'whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue'; and
b. CPR 44 (5) (c) 'the manner in which a party has pursued or defended his case or a particular allegation or issue.'
"The prices paid by Ellison Carter were substantially lower than the £309,000 which had been stated in the mortgage application forms in that Apartments 180 and 188 were sold for £215,000.'
Secondly, Paragraph 21:
"Ellison Carter is or was a company of which the Borrower was a 50% shareholder ..."
The Defendant, as he conceded in the witness box, knew of these important facts but did not notify, his client, the Lender, of them. Nevertheless, his Defence made no admissions to these key paragraphs.
'Experience in writing judgments suggests that, frequently, the parties have lost sight of the real dispute between them. It is buried in a morass of complex, long pleadings or, worse still, additionally, a great deal of evidentiary material. Very often, the most apparently complex cases distil down to one or a few critical documents or conversations, despite the mountain of other material that the parties tender or adduce into evidence by witnesses.
One early remedy that had an effect was used by the Lord Keeper in England in 1596 in the case of Mylward v Weldon: Bailii citation number:  EWHC Ch 1]. He ordered that a pleading 120 pages long be removed from the file because it was about eight times longer than it need have been. He ordered that the pleader be taken to the Fleet prison. His Lordship then ordered that on the next Saturday the Warden of the Fleet bring the pleader into Westminster Hall at 10 a.m. and then and there cut a hole in the midst of the pleading and place it over the pleader's head so that it would hang over his shoulders with the written side outwards. The Warden had to lead the pleader around Westminster Hall while the three courts were sitting and display him "bare headed and bare faced" and then be returned to the Fleet prison until he had paid a £10 fine a huge sum in those days.
Early identification of the real issues can streamline the conduct of a case. By making each party identify what must be proved to succeed, the judge can then begin to craft orders to focus the preparation of the case on those issues. Of course, this does not always result in a narrowing of the dispute. And, in any event, the judge may have to spend considerable time before and during an initial directions hearing to elucidate the issues.'
"In modern litigation, with the emphasis on proportionality, there is a requirement for parties to make an assessment at the outset of the likely value of the claim and its importance and complexity, and then to plan in advance the necessary work, the appropriate level of person to carry out the work, the overall time which would be necessary and appropriate [to] spend on the various stages in bringing the action to trial and the likely overall cost. While it was not unusual for costs to exceed the amount in issue, it was, in the context of modest litigation such as the present case, one reason for seeking to curb the amount of work done, and the cost by reference to the need for proportionality." [emphasis added].