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England and Wales High Court (Chancery Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Hague Plant Ltd v Hague & Ors [2014] EWHC 568 (Ch) (05 March 2014) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2014/568.html Cite as: [2014] EWHC 568 (Ch) |
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CHANCERY DIVISION
LEEDS DISTRICT REGISTRY
Oxford Row Leeds LS1 3BG |
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B e f o r e :
sitting as a Judge of the High Court in Leeds
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HAGUE PLANT LIMITED |
Claimant |
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- and - |
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(1) MARTIN HARTLEY HAGUE (2) JEAN ANGELA HAGUE (3) MHH CONTRACTING LIMITED |
Defendants |
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Gregory Pipe (instructed by Shulmans LLP) for the First and Third Defendants
Margaret Griffin (instructed by Taylor & Emmet LLP) for the Second Defendant
Hearing dates: 12, 13 February 2014
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Crown Copyright ©
Judge Behrens :
1 Introduction
2 Previous Litigation
3 Witness Statements
Mr Scott
1. The Conduct of the Proceedings. He complains that Martin had provided bare denials of liability and refused to provide details of how Martin assessed the fairness of the intercompany trading. He accuses Martin and Jean Angela of misleading the court in their explanation for not providing an account of the stewardship of HPL by Martin. He contends that these factors will justify an inference of dishonesty on the part of Martin and Jean Angela.
2. Changes in the Defendants' case. He contends that the Defendants' case has shifted fundamentally since Hague(1) and during the present proceedings.
1) Cross Invoicing He contends that the case on cross invoicing has expanded. False invoices now amount to £10.7 million. This requires HPL to set out its case as to why the allegations of cross-invoicing are little more than a smoke screen.
2) Recycling He contends that the case in relation to recycling has changed. He suggests that there are 2 conflicting lines of evidence being advanced by Martin in relation to the recycling business at Carlisle Street. This has necessitated alterations to HPL's claim.
3) The Grey Books He contends that Martin's case on the Grey Books has changed from a previous acceptance of their accuracy to the current position where he casts doubt on their accuracy. He makes the point that HPL wish to allege a duty to keep proper records.
4) Responsibility for Invoices He draws attention to the change in the Defendants' case in relation to the responsibility for the invoices from MHH to HPL which is considered in detail in the Defence Amendment judgment. He contends that, as a result, the Defendants are estopped from denying that Jean Angela was a de facto director.
5) Inter-Company trading He contends that Martin's attitude to the trading between HPL and MHH (especially with regard to the recycling business carried on at Carlisle Road) had been inconsistent. After citing four examples of inconsistency he asserts that it is "plainly necessary to draw these strands together and deal with the various inconsistencies in the Defendants' position".
3. Disclosure - He makes the point that HPL needs to plead to the JA Note and other (unidentified) documents disclosed by the Defendants.
Mr Wadkin
6. "The Claim Form was issued in these proceedings on 23 June 2011 and was amended twice prior to service. The Particulars of Claim were dated 18 October 2011 and the letters serving the proceedings on the Defendants were dated 20 October 2011.
7.
8.
9. To date considerable work has been undertaken by and for the Defendants and very significant expense has been incurred by them in seeking to defend the claims in the way in which the Claimant has sought to advance its claims and run the litigation.
10. The Defendants have had to deal with three substantial Requests for Further Information together with pleading to the Claimant's claims and the Defendants have prepared and served three Requests for Further Information. Disclosure has been considerable and significant further requests for disclosure from the Claimant have been submitted but are presently not being addressed by the Claimant, initially because they relied on an indication made by His Honour Judge Saffman that such issues should await the outcome of the Claimant's application for Summary Judgment, but now, presumably, pending clarification of the Claimant's case which may well require further disclosure and further detailed work to be undertaken. Indeed, the draft Re-Amended Particulars of Claim, themselves, despite their length, require considerably more particularity and, if allowed, will require the detailed preparation of a significant Request for Further Information.
11. These proceedings have, so far, involved 13 applications, including the Application, which have included two applications by the Claimant for Summary Judgment, a detailed application to strike out paragraphs from the Defences and a significant appeal from the decision on that application. Seven full days and further court time have been used to determine those applications and further considerable court time is allocated to the hearing of the Claimant's present application.
12. If the Claimant's application is granted, then over 2½ years since the proceedings were issued and nearly three years since the letter before action was sent, the claim will not have progressed beyond the issuing of the Particulars of Claim and the Defendants will then be put to considerable further work in having to plead to the Re-Amended Particulars of Claim."
Mr Cooke
4 The Pleadings
The Particulars of Claim
1) That he had procured HPL wrongfully to transfer moneys to MHH. This claim was provisionally put at £7 million.
2) That he had procured HPL to provide services and goods to MHH at an undervalue. This claim was put at £11 million.
3) That he had caused HPL to tip at MHH's tipping sites when it could have tipped for free.
The Defences
The Amended Particulars of Claim
The Amended Defences
The Re-Amended Defences
The Defendants do pay all costs of and occasioned by their re-amendments including for the avoidance of doubt any consequential amendments to the Claimant's Amended Particulars of Claim. [For the avoidance of doubt it will be for the Claimant to establish that any proposed re-amendment to the Amended Particulars of Claim is consequential upon the Defendants' re-amendments. Nothing in this order is to be taken as the expression of any view by the Court on the issue.]
5 The Proposed Re-Amended Particulars of Claim
1. Amendments to plead, rely upon and take account of the Defendants' admissions;
2. Amendments to set out and address Martin's varying accounts of how he dealt with the services that HPL provided to MHH;
3. Amendments to set out and address the Defendants' change of position on the Grey Books;
4. Amendments to rely on the Defendants' conduct of the proceedings and refusal to engage with the claims made;
5. Amendments to address the Defendants' latest case on the alleged cross-invoicing as presented in the Re-Amended Defence;
6. Amendments to re-introduce the allegation that Jean Angela was a de facto director of HPL;
7. Amendments to plead further heads of relief in light of the above;
8. Miscellaneous.
1. They point out that this is not the usual application to amend. It is an application by HPL to change its case fundamentally after some 2½ years of litigation.
2. They criticise the Re-Amended Particulars of Claim as "a rambling, narrative pleading which copiously and comprehensively misstates Ds' position, in material respects, and then seeks to draw conclusions by a false syllogism from false premises"
3. They draw to my attention the legal principles applicable to an application to amend including citation from Swain-Mason v Mills & Reeve LLP (Practice Note) [2011] 1 WLR 2735. They draw to my attention the changes brought about by the Jackson reforms including the need for the case to be dealt with at proportionate cost, the need to comply with rules practice directions and orders. They draw to my attention the guidance offered by the Court of Appeal in a series of post Jackson cases such as Mitchell v News Group Ltd [2013] EWCA Civ 1537
4. They divide the proposed re-amendments into a number of categories of which the most important are:
1) The new allegations in paragraph 12 that the transfer of shares in MHH by David and Dianne to Martin was based on what Douglas told them were Martin's intentions in respect of MHH and HPL.
21) The re-introduction (in a far more extensive form) that Jean Angela was a de facto director of HPL.
3) New allegations of breach of duty including new fiduciary duties, new statutory duties and new contractual duties that are not foreshadowed in the claim form.
4) A new allegation that Martin is estopped from asserting that any documents other than the Grey Books contain a more accurate record of any of HPL's activities than are contained in the Grey Books.
5) New allegations of breach of duty including claims for breach of contract, reckless breach of fiduciary duty.
6) New allegations of dishonesty in relation to these and other proceedings.
7) The cross invoicing scheme.
6 Principles
"The overriding objective (of the CPR ) is that the court should deal with cases justly. That includes, so far as is practicable, ensuring that each case is dealt with not only expeditiously but also fairly. Amendments in general ought to be allowed so that the real dispute between the parties can be adjudicated upon provided that any prejudice to the other party caused by the amendment can be compensated for in costs, and the public interest in the administration of justice is not significantly harmed".
"As a postscript I would add that, although decided prior to the introduction of the CPR and concerned with an egregious application to change direction in the course of trial itself, the judgment of this court in Worldwide Corporation Ltd v. GPT Limited contains a full compendium of citation of authorities as at that date which emphasises that, even before the CPR , the older view that amendments should be allowed as of right if they could be compensated in costs without injustice had made way for a view which paid greater regard to all the circumstances which are now summed up in the overriding objective."
"Where a party has had many months to consider how he wants to put his case and where it is not by virtue of some new factor appearing from some disclosure only recently made, why, one asks rhetorically, should he be entitled to cause the trial to be delayed so far as his opponent is concerned and why should he be entitled to cause inconvenience to other litigants? The only answer which can be given and which, Mr Brodie has suggested, applies in the instant case is that without the amendment a serious injustice may be done because the new case is the only way the case can be argued, and it raises the true issue between the parties which justice requires should be decided.
We accept that at the end of the day a balance has to be struck. The court is concerned with doing justice, but justice to all litigants, and thus where a last minute amendment is sought with the consequences indicated, the onus will be a heavy one on the amending party to show the strength of the new case and why justice both to him, his opponent and other litigants requires him to be able to pursue it."
"Where it does appear reasonably arguable that the defendant has a limitation defence in respect of a new claim, the court should not permit the claimant to raise that new claim by amendment since to do so could defeat the arguable defence, i.e., the amendment would take effect from the date of the original document amended (see para.17.3.4 above). Instead the claimant should be left to bring fresh proceedings on the new claim (Goode v Martin [2001] 3 All E.R. 562), reversed on other grounds, [2001] EWCA Civ 1899; [2002] 1 All ER 620."
7 Consent
8 Proportionality
"Cases are usually important to the parties but if such considerations weighed too heavily one would be unable to implement the objectives of the new rules. One would be unable to prevent some claims from taking unfair amounts of judicial resources away from other claims at the very moment when it is common knowledge that budgetary constraints may lead to fewer judges in the courts, and to reduce non-judicial resources to operate those courts.
Judicial time is thinly spread, and the emphasis must, if I understand the Jackson reforms correctly, be upon allocating a fair share of time to all as far as possible and requiring strict compliance with rules and orders even if that means that justice can be done in the majority of case but not all."
9 A Late Application.
10 The Style of the Pleading
"The need for extensive pleadings including particulars should be reduced by the requirement that witness statements are now exchanged. In the majority of proceedings identification of the documents upon which a party relies, together with copies of that party's witness statements, will make the detail of the nature of the case the other side has to meet obvious. This reduces the need for particulars in order to avoid being taken by surprise. This does not mean that pleadings are now superfluous. Pleadings are still required to mark out the parameters of the case that is being advanced by each party. In particular they are still critical to identify the issues and the extent of the dispute between the parties. What is important is that the pleadings should make clear the general nature of the case of the pleader. This is true both under the old rules and the new rules .As well as their expense, excessive particulars can achieve directly the opposite result from that which is intended. They can obscure the issues rather than providing clarification."
"These amended proposed particulars of claim may be shorter, but they are nonetheless extraordinary in their discursive formulation and they reveal an idiosyncratic and wholly unhelpful structure. In essence they are so prolix, detailed and confusing in the way they are developed that the burden imposed on the respondents and the court in dealing with them would be wholly unreasonable. The length[y] process of unravelling, understanding, answering and adjudicating on them would defeat the overriding objective and would constitute an abuse of the process of the court. This proposed pleading would not allow the case to be dealt with expeditiously and fairly.
Hart J. indicated to the applicant that any proposed amendment should contain a concise statement of the facts on which he seeks to rely. These proposed amended particulars of claim do not begin to comply with such a clear and readily achievable indication. Further, this document does not in any sense lend itself to division between permissible and impermissible paragraphs. It would have been impossible for the learned Judge to dissect these proposed pleadings, allowing certain amendments while disallowing others."
"a rambling, narrative pleading which copiously and comprehensively misstates Ds' position, in material respects, and then seeks to draw conclusions by a false syllogism from false premises".
"trawl through the historic claims between the parties and their privies, including disclosure, transcripts, pleadings and witness statements in order to understand and to get a measure of C's extensive (mis)statement of what has happened and what has been said upon which the proposed amendments are founded and said to be justified."
11 Changes to the Defendants' Case
"the response to the allegation that Martin consciously preferred the interests of MHH over those of HPL is now that he and Jean Angela had always expected that he would."
12 Extent of duty owed by Martin
"There is no reference in the Judgment in Hague 1, nor in the evidence in Hague 1, to Douglas telling David and Dianne that preferential tipping rates would be provided "at MHH 'sites". Douglas' evidence (which was accepted subject to the qualification outlined above) was that he told Dianne that HPL would be able to tip cheaply at Lightwood Lane (Carlisle Street had not been purchased at this point). C has no real prospect of making out this allegation. Further, Martin did not say he has complied with any promise or condition."
13 Jean Angela a de facto director?
in raising such invoices for [HPL] and causing payment to be made by [HPL] on the invoices of [MHH], which she knew to be inflated and/or spurious Jean Angela acted as a de facto director of [HPL] and in breach of the fiduciary duties set out in paragraphs 17 and 18 above.
1. In paragraph 16 it is alleged that as a result of a submission (?) made by Mr Pipe (on behalf of MHH and Martin) that the Defendants are estopped from denying that Jean Angela was a de facto director.
2. In paragraph 17 12 additional matters are pleaded in support of the allegation that Jean Angela was a de facto director.
3. Other allegations are made in paragraphs 20(1), 21(2), 22, 45, 57, 74(3), 83, 90, 91, 92, 93 which make it clear that HPL now wish to allege that Jean Angela is in effect jointly liable with Martin for all the breaches.
1. I have the greatest difficulty in seeing how Jean Angela could possibly be estopped from denying that she is a de facto director. I cannot begin to follow how a representation by Mr Pipe in an application to which Jean Angela was not a party could found such an estoppel [paragraph 91 of the joint written submissions]. I have the greatest difficulty in seeing what representation Jean Angela is said to have made which could found the estoppel.
2. I agree with the analysis [paragraphs 96 to 98 of the joint written submissions] that there is an analogy with discontinuance under CPR 38.7 and the notes to 38.7.1 are pertinent. I agree that it is only in exceptional circumstances that the Court will allow the claim to be reinstated.
3. I do not accept that any of the matters raised by Mr Parker QC justify the reinstatement of the de facto directorship allegation:
1) I do not accept that the decision of Hildyard J significantly changed the law. Prior to his decision Jacob J had indicated that there was to be a fact based approach in order to determine whether the person concerned had undertaken acts or functions such as to suggest that his remit to act in relation to the management of the Company was the same as if he were a de jure director.
2) The possibility that the Supreme Court might decide that section 21(1) of the Limitation Act did not apply to dishonest assistance existed when the claim was abandoned in the Amended Particulars of Claim. Thus, it does not provide a reason to reinstate it.
3) It is by no means clear what documents were in possession of HPL at the time of the Amended Particulars of Claim. I am not, however, satisfied that the documents identified by Mr Parker QC are of sufficient importance to justify the reinstatement of the claim.
4. I agree with Mr Pipe and Miss Griffin [paragraphs 99 to 103 of the joint written submissions] that the proposed re-amendments are not justified by the allegations made against Dianne in the Re-Amended Defence or in the amendments caused by the JA Note.
5. I agree with Mr Pipe and Miss Griffin [paragraphs 110 117 of the joint written submissions] that no explanation is given as to why HPL has sought completely to change and expand its case against Jean Angela so as to equate her alleged wrongdoing with that of Martin.
6. I also agree that the allegations against Jean Angela are in many respects inadequately particularised [see paragraph 113 of the joint written submissions].
14 Findings in Hague(1)
15 Cross Invoicing
"these paragraphs take the case no further at all and amount to nothing more than a series of belated attacks on Ds' general honesty and collateral attacks on the earlier findings of the Court in Hague 1 as a device, unnecessarily, in support of not putting a positive case. There can be no justification for permitting them."
16 The Grey Books
"the Defendants are estopped from contending :
(a) that documents other than the Grey Books contain a more accurate record of any of HPL's activities and/or it should be inferred that the claim that they are is false;
(b) that the value of the services performed at Carlisle Street by HPL does not appear and/or cannot be deduced from the Grey Books."
"Wherever possible cash jobs without paperwork were left out of the records, or if they had been entered, they would be deleted at a later date. In such circumstances it was necessary to ensure that none of the paperwork in the office revealed the existence of such jobs and therefore a check was done to make sure that such jobs were removed from any entries in the documentation which had already been made. The main documents to look at were the entries in the Grey Book to make sure that any entry for a job for which cash was received without any paperwork being issued was removed. This might be done by Dianne, Martin, me or, when he worked at Hague Plant Limited, Ian Sivell. In order to make sure that the entry could not be seen at all we would scribble out the entry in pen and then cover it over with tipp-ex. Or alternatively, if the entry was in pencil we would simply erase it and if necessary tipp-ex over. Simple errors which needed to be corrected would just be tipp-exed out. However, sometimes we would still scribble over these before tipp-exing so that one tipp-ex mistake would look the same as any other."
"[Martin] indicated that the majority of the cash was received by Plant in respect of materials supplied and skip hire but there was some cash received from Excavations. There was an elaborate procedure "Cash No Ticket" designed to ensure that there was no reference to any such contracts in the books including the Grey Books where all work was recorded. He did not dissent from the suggestion that the total amount of cash undeclared over the years could be as much as £1 million."
17 New Claims
17.1 The recycling business
17.2 New claim for the work done by HPL on MHH's sites
1. much of the material repeats the existing case (paragraphs 54(1), (2), 55(1), 56(1),57(2), 58(2).
2. much of the material misstates Martin's position (paragraphs 58(3), 58(4), 58(5),59 and 60(1), 60(3), 61(4), 67(2), 68(1).
3. many of the allegations of fraud are inadequately particularised. There is a new allegation of recklessness.
4. Appendix L is incomprehensible and thus impossible to plead to.
18 Conclusion
Note 1 Between the date when the draft of this judgment was distributed and the date when it is to be handed down the Court of Appeals judgment has been reversed by a majority of the Supreme Court. [Back]