QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| KEITH IVAN EUGENE SWEETMAN
|- and -
|BERNARD ROBERT M SHEPHERD
NIGEL ROBERT JONES
JOHN HARRY ROBERTS
BERNARD ROBERT PORTER
DAVID S JOHNSON
|KEITH IVAN EUGENE SWEETMAN
|(1) RONALD STEVEN NATHAN
(2) DAVID ANTHONY RUBIN
(3) STEPHEN BRIAN SIMMONS
(4) DEBORAH JANE LEVY
(5) KEITH A PRICE
(6) HAROLD B. BERWIN
(The First to Sixth Defendants formerly practising as Ronald Nathan & Co (a Firm)
|KEITH IVAN EUGENE SWEETMAN
|(1) RUSSELL JONES WALKER (a firm)
(2) ANGUS McCULLOUGH
Mr Bernard Livesey QC (instructed by Browne Jacobson) for 1,2,3,5 Defendants in First Action
Mr Michael Pooles QC & Mr M Jackson (instructed by Beachcroft LLP.) for the 2-6 Defendants in Second Action
Mr Francis Bacon (instructed by Reynolds Porter Chamberlain) for First Defendant in the Third Action
Mr John Wardell QC (instructed by Withers LLP.) for Second Defendant in the Third Action
Hearing dates: 20-21 December 2006, 12 January 2007
Crown Copyright ©
Mr Justice Irwin:
"I [Ronald Nathan] confirm that the intention is to effect an exchange of contracts for the purchase of the land in your name for £1.5m and then to sell the land at its highest possible figure thereafter, up to prospectively £10m. I equally confirm that there is to be an agreement between yourself and the vendor of the land, or another party, or both, with regard to the division of the net profits of sale. In consideration of my introduction of this project to you, and my making arrangements for the deposit of £70,000, you have agreed that you would divide, on a 50/50 equal basis, the net profits you realise with me. "
The Defendants rely on this letter, inter alia, as showing that Mr Nathan was not acting as the Claimant's solicitor but rather as a business partner, and was therefore not acting through his legal partnership. In using his services for the purpose of this deal, they say the Claimant was not relying upon the existence or status of the partners in Mr Nathan's firm. They would thus argue that those partners whom they represent, who have been described by all in the course of this case as the "innocent" Nathan partners, should not be liable for any loss, even if loss is proved. In my view, this point is a rather elegant illustration of the degree to which oral evidence would be necessary for the fair disposal of the issues in the case. Even were the complete run of documentation before a court, the full picture of this relationship would not likely emerge from the papers.
"( .if a valid claim exists) then the purchaser is to pursue a claim against Churchill Properties Surveyors Limited or their insurers under their appraisal and report dated November 1990 subject to the costs thereof being divided equally between the Parties hereto".
"In fact, Shawdale had agreed with Sweetman in June 1991 to take £400,000, and on the 26 July to take £200,000, for her rights, so Sweetman knew the representation was false. Of the rest of the £1.5m, £525,000 went to Roberts and was then returned to Nathan by Roberts as the 5% deposit due under the contract of resale and was subsequently released by Nathan to Sweetman; £450,000 was retained by Nathan, £190,000 went to Corbett for introducing the purchaser, and the rest went to Sweetman."
"we hold building society cheques payable to us [meaning Shepherds solicitors] which total the purchase price of £10.5m ..we understand that you need this information to assist you in other matters "
The Claimant forwarded that letter by fax to Mr Brown of Coutts Bank on 18 July 1991. According to his unsigned statement, the contents of which was adopted in the course of the hearing before Conrad Dehn QC, the Claimant stated that he was told by Mr Nathan it was the contract for sale to Darvist Property Company Limited which was essential for the advance of the further £1.5m by Coutts. The Claimant said that he had a good deal of contact with Mr Corbett, the agent, and that he relied upon Coutts Bank's assurance that Darvist Property Company were a strong company.
" .is of course bankrupt. As far as I am aware, there have been no distributions in his bankruptcy. The land at Crow Knowl remains unsold but subject to an offer of £10,000".
"I propose to declare that the options the subject of these proceedings are forgeries. In the event of the eleventh option not being a forgery, I would have been prepared to set it aside in equity."
It was also a finding that the "Keith Sweetman", in respect of whom the successive options were made out, was in fact the son not the father. It follows from the findings in the Eggleton case that the instant claimant never had an option on the land in Tring and the option in favour of his son was a forgery.
"The Trustee ..does not himself wish to bring proceedings in respect of the Causes of Action ."
Under the terms of the assignment, the assignee, that is to say the claimant, is obliged to pay 35% of the first £4 million of any proceeds of actions assigned to the trustees in bankruptcy. If the proceeds exceed £4 million, then 50% of such excess goes to the trustee. The assignment is in relation to the causes of action against the two firms of solicitors, Ronald Nathan and Co. and Shepherds, as set out in Draft Statements of Claim annexed to the assignment. Two days after the assignment, on 25 July 1997, two Writs were issued, one against each firm. In each case, it was agreed that the Writ was issued within one day of the expiry of the limitation period. I shall hereafter refer to the Writ against Nathan and Co. simply as the "Nathans" Action and similarly the other case as the "Shepherds" Action.
Representation of the Claimant
"(1) there was a lack of evidence as to what enquiries were made by Nathan and Co leading up to the exchange of contracts;
(2) the Committee were concerned about the applicant's credibility having regard to the judgment in the Coutts' case;
(4) having regard to the doubtful prospects as weighed against the potentially high costs and risks of this litigation "
The Nathans Action Procedural History
"1. Many documents in the Central Criminal Courts Exhibits and the listed unused documents taken by the police and not returned. I do not know whether others were taken but never listed.
2. The originals of documents which I sent to other people.
3. Other documents which have been destroyed, lost or returned to their originators."
"75. Therefore, bearing in mind the way the point on loss was raised and the total obscurity in relation to the relevant facts, [emphasis added] we have, after some hesitation, come to the conclusion that it would be wrong to strike this action out on the basis that [it] is not arguable that Mr Sweetman suffered some loss as a result of Nathan's negligence.
76. Nevertheless, we agree with all those who have previously considered this problem, that the chances of Mr Sweetman ultimately succeeding in this action are wholly unclear[emphasis added]. The Defendants have been disadvantaged in costs by reason of Mr Sweetman's resiling from concessions previously made and in principle we think it right that he should give security for the Defendants' costs in an amount that he can afford. That can be determined by the costs Judge."
It was on that basis, that the Court allowed the appeal.
"There is accordingly reason to conclude that the action amounts to an abuse of process".
He ordered a stay in this case until further order. Having reviewed the history of the Nathans Action to the point where it may be said to have converged procedurally with the other two, it will be helpful to look at the history of the other actions and bring them to the same point.
The Shepherds Action: Procedural History
" if properly represented the present Claimant could have raised against his co-defendants in the Coutts action the claim which he now seeks to pursue, his failure to do so does seem to be attributable to his own inexperience of legal procedure rather than any deliberate holding back";
But thirdly, and perhaps most significantly, the appeal was allowed on the basis that the Claimant was now seeking to prove that Roberts was dishonest towards him, an allegation which was not litigated at all before the Deputy High Court Judge.
"Thirdly, although the Defendants are in law answerable for some of the acts of their former partner, the court has a duty to see that litigation is properly conducted so as to enable all defendants and insurers, and particularly those defendants who are only at risk of being held liable vicariously, to discharge their liabilities in an orderly action, and to get on with their lives. Here the defendants settled with Coutts many years ago, and the present claimants three year period as a bankrupt does not seem to us to be anything like a satisfactory reason for the delay in prosecuting this claim.
Finally, we are not satisfied that even now the claimant is being frank with the court. We are not told how this action is being funded, or who is to benefit and to what extent from any award of damages. There is the possibility that this case is simply an improper attempt to use the threat of expensive litigation to extract a settlement from the defendants or their insurers."
In my view, those strictures of the Court of Appeal, delivered nearly 7 years ago, are highly pertinent when considering the position of the claimant in 2006/2007.
" .having made full and frank disclosure of his financial position, pays into court such amount as may be agreed between the Parties, or in default of agreement such amount as may be fixed by the Master."
"We will discuss with Counsel whether he considers it necessary to amend the Particulars of Claim and shall revert to you in this regard once we have received his comments."
In my view, this approach by the Claimant was wholly unacceptable. Nine months on from the end of the Court of Appeal hearing in the Nathans Action, and despite many reminders, the Claimant had done nothing and indeed indicated that nothing had been decided.
Procedural History: The Lawyers Action
" ..deprived the Defendant of the opportunity to consider the nature of [the Claimants] allegations",
Nor do I agree, that the absence of such a letter of claim deprived the solicitor defendants of any other opportunity in reality. The position may be a little different for the Second Defendant Mr McCullough. As I understand the chronology, he was not involved in any of the build-up to the hearing before Mr Justice Stanley Burnton. I can find no correspondence in the file before me relating to him which ante-dates the service of the claim form in this action. The claim form was issued on 23 January 2003 but was not served until 21 May 2003.
"The excessively slow pace of this action, together with the apparent lack of progress in the other two actions and your continuing failure to respond to correspondence .."
On 29 July 2004, Master Eyre ordered disclosure by 10 September 2004 and a further CMC on 27 September 2004. On 16 September 2004, the Claimant wrote to the lawyer defendants in a way which indicated he had not yet reached a final decision that it was advisable for all these cases to be managed together.
Common Procedural History of the Three Actions from Autumn 2004 Onwards
The Claimant's Delays
"In another case, it might be possible to establish that the customer ratified the gratuitous payment either expressly or by taking advantage of it; or there might conceivably be circumstances not amounting to ratification in which it would nevertheless be unconscionable to allow the customer to recover from the bank the balance of his account without deduction of a payment which the bank had made gratuitously. But I agree with Pill LJ that no such circumstances were established in this case."
Personal Circumstances Relevant to Prejudice
"The extended continuation of proceedings in this case has caused real difficulty to these defendants. Two out of the three current partners in Shepherds are ill and all are in their fifties and above. They are under-insured and unable to wind up their affairs because of the existence of this claim."
"(2) The court may strike out a Statement of Case if it appears to the court
(b) that the Statement of Case is an abuse of the court's process or is otherwise likely to obstruct the just disposable of the proceedings; or
(c) that there has been a failure to comply with a rule, practice direction or court order."
"a claimant has and always has had a duty to get on with proceedings, and is liable to sanctions if he does not".
The learned judge stated that sanctions should be proportionate and that:
"to dismiss a claim where the claimant appears to stand a reasonable chance of success and of recovering substantial damages is a strong thing to do".
The Judge went on to suggest a check list of normally relevant factors in such a decision, which I have found useful in coming to my conclusions in these cases.
"It would indeed be ironic if as a result of the new rules coming into force, and the judgment of this court in the Biguzzi case, judges were required to treat cases of delay with greater leniency than they would have done under the old procedure. I feel sure that cannot have been the intention of the Master of the Rolls in giving judgment in the Biguzzi case. What he was concerned to point out was that there are now additional powers which the court may and should use in the less serious cases. But in the more serious cases, striking out remains the appropriate remedy where that it is what justice requires."