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||Neutral Citation Number:  EWHC 716 (Ch)
||Case No: HC 2014 000516
IN THE HIGH COURT OF JUSTICE
Fetter Lane, London, EC4A 1NLL
||20 March 2015
B e f o r e :
THE HON MR JUSTICE ARNOLD
|| HUGHMANS (A FIRM)
||- and -
Michael Soole QC and Gavin Hamilton (instructed by Mills & Reeve LLP) for the Claimant
Steven Gee QC (instructed by direct access) for the Defendant
Hearing dates: 2-5 March 2015
HTML VERSION OF JUDGMENT
Crown Copyright ©
MR JUSTICE ARNOLD :
| Ms Dunhill, Mr Turner and the Children
| The AST
| Commencement of the judicial separation proceedings
| Mr Turner's Form E
| The Welsh Properties
| The 2003 Consent Orders
| Preparations to purchase 71 Eaton Terrace
| The 23 March 2004 letter
| Purchase of 71 Eaton Terrace
| Correspondence in September and October 2004
| PHB's advice
| Acquisition of the freehold of 71 Eaton Terrace
| Ms Dunhill instructs Withers
| Yorkton's sale of the Welsh Properties
| The abortive consent order
| The divorce
| Correspondence in 2008
| "Teds Agreement"
| The Verbier Agreement
| Mr Black's expertise
| Ms Dunhill instructs Hughmans
| The Retainer Letter
| Commencement of the variation application
| Ms Dunhill's Form E and accompanying witness statement
| Mr Turner's Form E
| Conference with counsel
| The FDR
| Mr Turner's cross-application
| Mr Turner's replies to the schedule of deficiencies
| Production Appointment against Mr Beazeley
| Dr Peters' report
| Mr Smulders' email
| Ms Dunhill's 6 July 2011 witness statement
| First hearing before DJ Berry
| Ms Dunhill seeks advice concerning Prof Gazzard
| DJ Berry's first judgment
| Leading counsel is instructed
| Ms Dunhill takes advice elsewhere
| DJ Berry refuses to allow a further questionnaire
| Second hearing before DJ Berry
| DJ Berry's second judgment
| Hughmans exercises a lien
| Ms Dunhill complains to Hughmans
| DJ Berry's orders
| Ms Dunhill changes solicitors again
| These proceedings
| The 2014 Consent Order
| Genesis of the present applications
|Principles applicable to summary judgment applications
| Ms Dunhill's application for summary judgment
| Ms Dunhill's application for summary judgment
| Issues (i), (ii) and (iii)
| Issues (iv) and (v)
| Issues (vi) and (vii)
|Hughmans' application for summary judgment: the claim for unpaid fees
|Hughmans application for summary judgment: the counterclaim for professional negligence207-249
| The scope of Hughmans' retainer
| The parties to the retainer
| Did Hughmans owe the Children an independent duty of care?
| Breach of duty
| The AST
| Mr Turner's non-disclosure
| Prof Gazzard
| Costs of about £25,000
| Loss of maintenance
| Instructions to Mr Francis
| Procedural failures
| General allegations
| Conflict of interest
|Hughmans' application for summary judgment: breach of fiduciary duty
|Hughmans' application for summary judgment: the Childrens's claims
|Hughmans' application for summary judgment: wasted costs
|Hughmans' application for summary judgment: inherent jurisdiction
- The Claimant ("Hughmans") is a firm of solicitors. Peter Black was at all material times, and remains, a partner in Hughmans. Hughmans, mainly in the person of Mr Black, advised and acted for the Defendant ("Ms Dunhill") from mid April 2010 to 23 November 2012. In these proceedings Hughmans claims for unpaid fees in the sum of £179,666.68 plus interest, Ms Dunhill already having paid the sum of £64,619.95. Ms Dunhill counterclaims for professional negligence, breach of fiduciary duty, wasted costs and compensation.
- There are three applications before the Court. First, by an application notice dated 23 September 2014 Hughmans seeks summary judgment on its claim and seeks to strike out, alternatively summary judgment dismissing, Ms Dunhill's Defence and Counterclaim. Secondly, by an application notice dated 3 October 2014 Ms Dunhill seeks (i) summary judgment on certain issues, (ii) an order for wasted costs under section 51(6) of the Senior Courts Act 1981, (iii) an order for compensation under the Court's inherent jurisdiction over solicitors, (iv) an order that Hughmans be required to provide further information and (v) directions. Thirdly, by an application notice dated 27 October 2014 Ms Dunhill seeks permission to amend her Defence and Counterclaim, although the amendments sought have been revised subsequently. Hughmans has consented to some of the amendments, but not others. It is common ground, however, that Hughmans' application should be considered on the basis of the Defence and Counterclaim as proposed to be amended. By agreement between counsel, argument over the directions sought by Ms Dunhill was deferred until after determination of the principal applications.
- The factual background is of some complexity. It is regrettably necessary to set it out in considerable detail in order to make the issues comprehensible. I shall do so as far as possible chronologically.
Ms Dunhill, Mr Turner and the Children
- Ms Dunhill was born on 19 January 1960. She was formerly married to Charles Turner, a United States citizen born on 18 February 1953. It appears that Mr Turner qualified as US lawyer, but after that carried on business as a property developer. Ms Dunhill and Mr Turner were married in a Roman Catholic ceremony on 9 November 1991. On 17 May 1992 their daughter Natasha Dunhill-Turner ("Natasha") was born. On 24 April 1994 Piers Dunhill-Turner ("Piers") was born. Piers has special needs. On 15 November 2000 William Dunhill-Turner ("William) was born. I shall refer to Natasha, Piers and William collectively as "the Children". Ms Dunhill cared for the Children and did not earn an income.
- On 27 May 1993 Ms Dunhill's father together with Ms Dunhill and Mr Turner settled the Alexandra Settlement Trust ("the AST"). Ms Dunhill and Mr Turner were the original trustees of the AST. The principal beneficiary was Ms Dunhill for her life, and thereafter her children. The trust Deed was fairly conventional in nature and it is not necessary for me to recite its terms save to note that there was a power of appointment in favour of Ms Dunhill. The principal asset of the AST at the time of the settlement was a leasehold property at Flat 26B Eaton Terrace, London SW1, which was the matrimonial home. The AST subsequently acquired a property at 33 Chelsea Park Gardens, London SW3 when that became the matrimonial home (or at least a significant interest in that property).
Commencement of the judicial separation proceedings
- It appears that Ms Dunhill and Mr Turner's relationship broke down in 2000. On 29 January 2001 Ms Dunhill presented a petition for judicial separation. It appears that at or around the same time she applied for ancillary relief for herself and the Children. Nicholas Lee, the Children's godfather, was appointed as the Children's guardian ad litem in the proceedings.
Mr Turner's Form E
- On 7 May 2002 Mr Turner swore a Form E Financial Statement in the judicial separation proceedings. Apart from an interest he claimed in 33 Chelsea Park Gardens, he declared his net assets as being £159,872. It is not clear what this related to, since the relevant page is (rather oddly) not in evidence. He also declared his estimated annual income for the coming year as being £87,763. This included rental income from "33 Gloucester Walk, Yorkton Properties". This is a reference to Yorkton Properties Inc ("Yorkton"), a Panamanian company which Mr Turner subsequently admitted was effectively owned and controlled by him through a discretionary trust administered in Jersey. It is not entirely clear from the pages of the Form E in evidence, but it appears that Mr Turner may have implicitly acknowledged that he owned Yorkton in the Form E. The income also included what was described as "Welsh Venture Management fee".
- On 13 August 2002 a decree of judicial separation was made.
The Welsh Properties
- On 5 December 2002 a board meeting of a company called Chalanes De Velacruz SA ("CDV") was held in Monaco. One of those present was Maurice Smulders. At the meeting CDV resolved to authorise CDV's solicitors Davenport Lyons to execute the sale of two properties known as Oldway House, Porth Street, Porth and Oldway House, Bute Street, Treorchy ("the Welsh Properties") to Yorkton.
- Both of the Welsh Properties were leased to the Secretary of State for the Environment for rents totalling £95,500 per annum, being £77,000 in respect of Oldway House, Porth and £18,500 in respect of Oldway House, Treorchy.
- On 7 February 2003 CDV executed transfers of the Welsh Properties to Yorkton in consideration of the payment of £490,000 for Oldway House, Porth and £140,000 for Oldway House, Treorchy. The total purchase price for the two properties was £630,000. The transfers were executed by solicitors from Davenport Lyons on behalf of both CDV and Yorkton.
- According to a CV of Mr Turner's dating from 2008, "one of my Dutch investors and I" purchased four properties in Wales in December 1999, two of which were located in Porth and Treorchy and were let to the Government (i.e. the Welsh Properies). All four of the properties had been sold by 28 January 2003, yielding profits of just over £1.2 million.
- Ms Dunhill has obtained expert evidence for the purposes of these proceedings that the combined market value of the Welsh Properties on 7 February 2003 was £1,055,000, comprising £850,000 in respect of Oldway House, Porth and £205,000 in respect of Oldway House, Treorchy. On that basis, deducting the purchase price of £630,000, there was equity in the Welsh Properties amounting to £425,000.
The 2003 Consent Orders
- It appears that by February 2003 agreement had been reached between Ms Dunhill and Mr Turner, subject to the approval of the Court, as to two proposed consent orders under the Matrimonial Causes Act 1973 ("MCA73"), one dealing with periodical payments to be made to Ms Dunhill for the benefit of the Children and the other dealing primarily with a variation of the AST. In the event, the first of these orders was made prior to the second order, and by the time the second order was made some of the steps it contemplated had already been taken.
- On 11 February 2003 Mr Turner's solicitors (Jones Day) signed a Form M1 (a form required for the making of a consent order under the Family Proceedings Rules) on Mr Turner's behalf and served it on Ms Dunhill's solicitors (Payne Hicks Beach, "PHB"), the Children's solicitors (Boodle Hatfield) and the Court. The Form M1 set out a summary of Mr Turner's means which omitted Mr Turner's interest (or, more strictly, Yorkton's interest) in the Welsh Properties and the rental income generated by them from Mr Turner's assets and income. It is convenient to note at this juncture that Mr Turner was under a continuing duty until the consent orders were made to ensure that the financial information he provided to the Court was correct, complete and up to date: see Jenkins v Livesey  AC 424, Bokor-Ingram v Bokor-Ingram  EWCA Civ 412,  2 FLR 922 and Imerman v Tchenguiz  EWCA Civ 908,  Fam 116.
- On 25 February 2003 Bank of Scotland provided a breakdown of the sum required to pay Mr Turner's indebtedness as at 28 February 2003. The total was £962,031.26, of which £761,568.11 was in respect of an overdraft facility and £200,463.15 in respect of a mortgage. It appears that both sums were secured on 33 Chelsea Park Gardens. It also appears that by then it had been agreed at least subject to contract that 33 Chelsea Park Gardens would be sold for the sum of £2,580,000.
- On 27 February 2003 DJ Bassett Cross sitting in the Principal Registry of the Family Division ("PRFD") made the first consent order, which required Mr Turner to make periodical payments to Ms Dunhill for the benefit of the Children of £5,000 per annum each, plus school fees, until they reached 17 or finished full time education, or further order ("the First 2003 Consent Order").
- On 20 March 2003 the sum of £1,301,912.97 was transferred by PHB to the AST bank account at the Bank of Scotland. This figure was the net proceeds of sale of 33 Chelsea Park Gardens after deductions including the overdraft, mortgage, estate agents' commission and Boodle Hatfield's costs.
- On 7 April 2003 DJ Redgrave sitting in the PRFD made the second consent order ("the Second 2003 Consent Order"). This recited that it had been agreed subject to contract to sell 33 Chelsea Park Gardens, whereas in fact it seems clear that the sale had been completed. It also recited that it had been agreed that the net proceeds of sale of 33 Chelsea Park Gardens would comprise the assets of the AST. It also recited that the parties had agreed that a Deed of Variation of the AST would be prepared on the joint instructions of the parties within seven days of the exchange of contracts for the sale of 33 Chelsea Park Gardens; but it does not appear that a Deed of Variation was ever drafted or, if drafted, executed.
- Paragraph 1 of the Second 2003 Consent Order was, so far as material, in the following terms:
"Pursuant to section 24(1)(c) of the Matrimonial Causes Act 1973 the [AST] ('the Settlement)
be varied as follows:
1.1 to remove the Petitioner [Ms Dunhill] and the Respondent [Mr Turner ] as Trustees of the Settlement and to appoint in their place as Trustees Mr Nicholas Lee
and Mr Ted Kalborg
1.2 to provide for a fund of £150,000 for the provision of school fees, reasonable billed extras and school uniform (other than their shoes) for the children of the family (to be known as the 'The Turner Children's School Fees Fund)
1.3 to provide for the division of the remainder of the assets of the Settlement into two further funds, to be known respectively as 'The Alexandra Dunhill Turner Fund' and 'The Charles Turner Fund', as to 73% of the remaining assets of the Settlement being settled in the former Fund and 27% being settled in the latter Fund;
1.4 to provide that the Trustees of the Funds may in their discretion allow the following (inter alia, and subject to the agreed terms of the Deed of Variation):
1.4.1 for the advance of capital from their respective Funds to the Petitioner in the sum of £85,000 and to the Respondent in the sum of £150,000, it being recorded that the purpose of such advance(s) is to enable the parties to pay personal liabilities;
1.4.2 for the purchase of a property of their choice for each of the Petitioner and the Respondent from their respective Funds, with the aid of mortgage finance if required, but not to exceed 50% of the purchase price of the property
, on the basis that any such property will be held on Trust by the Trustees for the benefit of the Petitioner and the Respondent respectively during their lifetimes and thereafter for the children of the family in equal shares absolutely
- The Second 2003 Consent Order also provided for Mr Turner to pay Ms Dunhill a lump sum of £8,000 and to make periodical payments to Ms Dunhill of £37,500 per annum, falling to £25,000 per annum from 1 September 2005, both amounts increasing annually in accordance with the Retail Price Index, during their joint lives or until Ms Dunhill remarried or further order.
- The Second 2003 Consent Order also provided:
"6. Upon completion of the variation of settlement and payment of the lump sum provided for by paragraphs 1 and 2 of this Order the parties' respective claims for lump sum, pension sharing and property adjustment orders do hereby stand dismissed.
8. There be liberty to apply as to the implementation and timing of the terms of this order."
- Just as it does not appear that a Deed of Variation was ever executed, there is no evidence that Mr Lee and Mr Kalborg (jointly, "the Trustees") exercised their discretion as contemplated by paragraph 1.4 of the Second 2003 Consent Order. Ms Dunhill says that, in fact, Mr Turner had already received the sum of £150,000 referred to in paragraph 1.4.1 by the time the order was made. I presume she had likewise received the sum of £85,000. Furthermore, it is clear from the events of March 2004 that the Trustees were not given control of the AST's bank account, which remained under the control of Ms Dunhill and Mr Turner.
Preparations to purchase 71 Eaton Terrace
- By early March 2004 Ms Dunhill was in the process of purchasing a property at 71 Eaton Terrace, London SW1 as a home for herself and the Children for £1,450,000. On 6 March 2004 Ms Dunhill transferred the sum of £145,000 to PHB for the deposit (plus an £18 transfer fee). On 8 March 2004 the sum of £150,000 was transferred from the AST's account to Ms Dunhill to cover this payment. Also on 8 March 2004 the sum of £52,000 was transferred from the AST's account to Mr Turner. This may have been used to pay the deposit on a flat for Mr Turner to live in. Although Ms Dunhill has not said so, it appears to me that both these transfers must have been made on the joint instructions of Ms Dunhill and Mr Turner.
The 23 March 2004 letter
- According to Ms Dunhill, on 23 March 2004 there was a meeting between Mr Turner and herself in the kitchen of 73 Eaton Terrace, London SW1, which she was renting at that time. During the meeting Mr Turner presented Ms Dunhill with a letter addressed to her headed "Re: Agreement to release TRUST FUNDS" and marked "Subject to contract". This letter began:
"Further to your letter of 10th November 2004 [sic] concerning the release of the trust funds for our housing needs, I am pleased to make you the following offer, which I have discussed with Nick Lee.
On the release of the trust funds, whereby we each receive our appropriate portion in our own names, I agree to do the following:
The letter dated 10 November 2003 is not in evidence, and Ms Dunhill said subsequently that she did not recollect writing such a letter. Mr Lee has denied that Mr Turner's offer was discussed with him.
- The 23 March 2004 letter then set out in seven numbered paragraphs various payments and other provisions that Mr Turner agreed to make. These included:
i) an eight year term life insurance policy for £650,000 to be placed in trust for the Children (paragraph 3);
ii) a will for his assets other than those held in Yorkton (paragraph 4);
iii) maintenance for Ms Dunhill continuing at £5,200 per month, to include £12,500 per annum for special help for Piers (paragraph 5);
iv) three "agreed extras", namely family membership at the Hurlingham Club, private health insurance and reasonable medical bills for Piers (paragraph 6); and
v) a contribution of £5,000 a year for five years towards the mortgage interest on 71 Eaton Terrace, the £25,000 to be repaid by Ms Dunhill when the house was refinanced or sold (paragraph 7).
- The letter went on:
"8. It is understood that this agreement is intended to form part of a new court order and that each party will instruct his or her solicitors to implement the order as set out herein."
An additional ninth point concerning Ms Dunhill's tax position was added by someone in manuscript at some point.
- The letter was expressed to be copied to Mr Lee and Mr Kalborg, but both Mr Lee and Mr Kalborg say that they do not recollect seeing it. It was also expressed to be copied to Mr Turner's solicitor at Jones Day. The letter has been endorsed in manuscript with the statement "I agree to be bound by the terms of this letter" and a signature which purports to be that of Ms Dunhill. Although in her witness statement dated 6 July 2011 (as to which, see below), Ms Dunhill admitted signing the letter, she apparently denied this in her oral evidence before DJ Berry and she maintains that denial.
- Ms Dunhill says that, during the meeting on 23 March 2004, Mr Turner obtained Ms Dunhill's signature on a fax from the two of them instructing Bank of Scotland to make transfers out of the AST bank account of £160,541.80 to Mr Turner's personal account and £789,382.01 to Ms Dunhill's personal account. Certainly, on 29 March 2004 a transfer of £160,541.80 was made from the AST bank account to Mr Turner and a transfer of £789,382.01 was made from the AST account to Ms Dunhill. This left a remaining balance in the AST account of £136,397.15. It is not clear what happened to this money subsequently.
- Thus in March 2004 Mr Turner received a total of £212,541.80 (£52,000 plus £160,541.80) from the AST, while Ms Dunhill received a total of £939,382.01 (£150,000 plus £789.382.01) from the AST. As will appear, Ms Dunhill said subsequently that she had agreed to these transfers contrary to legal advice she had received, it appears from PHB.
Purchase of 71 Eaton Terrace
- On about 27 April 2004 Ms Dunhill purchased the leasehold interest in 71 Eaton Terrace. In addition to the purchase price, there were further costs for stamp duty (£58,000), an oven and dishwasher (£200), ground rent (£199.45), insurance (£737.01) and legal costs (£5,191.74), making a total of £1,514,328,20. The sum of £789,382.01 which Ms Dunhill had received from the AST was used to complete the purchase. £320,000 came from a mortgage from Cheltenham & Gloucester. The remainder was funded by £80,000 from Ms Dunhill's father, £65,000 representing proceeds of shares given to Ms Dunhill by her father and £200,000 from Ms Dunhill's father on the condition that it would be returned to him if he needed to go into a nursing home or needed nursing care. The property was registered in Ms Dunhill's sole name.
Correspondence in September and October 2004
- On 1 September 2004 Mr Turner, having been unwell for some time, was diagnosed with a long-term condition. Ms Dunhill says, however, this subsequently responded well to medication. Mr Turner was treated by a physician called Professor Brian Gazzard.
- On 27 September 2004 Ms Dunhill sent Mr Turner an email saying:
"I need to restructure the letter of intent to release the trusts and fix Piers 12,500 per annum lumped with children's money and not with my maintenance.
Also confirm agreed extras of Hurlingham and Health Insurance to be paid by you until at least 2020 when William will be 18. Please get your secretary to write a letter to this point and sign it and bring home tonight"
It is common ground that the "letter of intent" referred to was the "subject to contract" letter dated 23 March 2004.
- On 1 October 2004 Mr Turner wrote to Ms Dunhill as she had requested in her email of 27 September 2004 in the following terms:
"Re: Agreement to release TRUST FUNDS.
Further to my letter dated 23rd March 2004 (subject to Contract) I am clarifying point 5, regarding maintenance.
I will continue to pay £12,500, special needs help for Piers which will end on this [sic] 18th Birthday. This money will be included in the maintenance order for the children and and will not come under the balance of maintenance for yourself.
This £12,500 will be used in good faith for help in the home with the children and any other attention Piers needs daily.
Point 6 'Agreed Extras' a, b and c will continue until the all children reach 18 years of age.
I look forward to these detailed points to be added clearly to the restructure of maintenance order to take place with our finalising of the divorce which is in process now."
- On 15 October 2004 Margaret Heathcote of PHB's family department sent Ms Dunhill a three page letter of advice concerning the financial arrangements to be made in connection with the divorce which Ms Dunhill desired to obtain. It is clear from the terms of this letter that Ms Heathcote had seen Mr Turner's "subject to contract" letter of 23 March 2004, and it appears probable that she had also seen his letter dated 1 October 2004. Ms Heathcote began by reminding Ms Dunhill that a final financial order had been agreed at the time of the judicial separation which would be binding upon her in the event of a subsequent divorce, and continued:
"Since that order was made, you have agreed with Charles to depart from its terms:
a. in order to divide the capital of the [AST] absolutely between you, in the same amounts as provided by the order; and
b. to vary the duration of your additional income for Piers' nanny and to extend Charles' commitment to pay for the extras mentioned in his letter to you of 23rd March."
- After referring to Mr Turner's diagnosis, Ms Heathcote said that she assumed he would no longer be able to obtain life insurance as proposed in that letter. She continued:
"He may, however, still be able to insure your life to the value of the nil rate inheritance tax band (£263,000) to protect your gift to him of his share of the [AST] in the event that you do not survive that gift by 7 years. No mention is made of this in his letter to you.
You will recall that this was advice that Alice Palmer gave you in relation to the re-appointment of those funds."
Alice Palmer appears to have been a colleague of Ms Heathcote who was a trust lawyer.
- Ms Heathcote went on to say that another difficulty was that of the security of Ms Dunhill's and the Children's maintenance given that (a) Mr Turner was not domiciled in this country, (b) it was not known what provision Mr Turner had made for Ms Dunhill and the Children in his will and (c) Mr Turner had said in the 23 March 2004 letter that his assets were mostly held by Yorkton, which was owned by a discretionary trust administered in Jersey. Ms Heathcote commented:
"We do not really know what those assets now are, nor how they are held, nor for whose benefit.
I am very concerned that there are so many unknowns in relation to Charles's circumstances which do not enable me to advise you fully as to how to proceed. Again, to protect your best interests I believe that we should have the co-operation and involvement of Charles and his legal advisors."
- Ms Heathcote concluded as follows (emphasis added):
"I would like to take Alice Palmer's advice again as to whether the [AST] needs to be formally wound up and re-appointed as she previously recommended. I am very aware that Charles has agreed to underwrite your costs to the extent of £10,000. The work 'on the clock' now exceeds by a small margin the money that I am holding on account of your costs which was paid by Charles, and these negotiations will incur costs for you.
If you wish me to proceed as you have indicated:
1. to agree a variation of the existing financial order without requiring provision of guaranteed security for you;
2. to do so without reference to Charles' diagnosis in my dealings with his lawyer;
3. not to take any further steps in relation to the [AST] and to make no mention of the variation of those clauses of the order of 7th April 2003 in any agreed variation order; and
4. to take no further account in my advice to you of Charles' diagnosis,
then I must ask you to counter-sign the copy of this letter which is enclosed by way of acknowledgement of the advice it contains to the effect that there will remain areas in relation to which you will, in my view, remain exposed to potential financial risk and that you choose in the knowledge of my contrary advice to proceed notwithstanding.
Please can I have your instructions, and in writing please."
- Ms Dunhill duly countersigned the copy letter, it appears on 8 November 2004. Although Ms Dunhill subsequently provided Mr Black with a copy of this letter when she instructed Hughmans, Ms Dunhill has otherwise declined to waive privilege in respect of the advice she received from PHB.
Acquisition of the freehold of 71 Eaton Terrace
- On 21 July 2005 Ms Dunhill acquired by enfranchisement the freehold of 71 Eaton Terrace for £418,000. This was funded by a loan from Kleinwort Benson of £800,000, the remainder of which was used as follows: (i) £320,000 to refinance Ms Dunhill's Cheltenham & Gloucester loan; (ii) £36,000 for work on the property; and (iii) £23,000 to pay off personal debts.
Ms Dunhill instructs Withers
- In late August 2005 Ms Dunhill instructed Michael Gouriet of Withers to advise and act for her. She continued to instruct him on an intermittent basis from then until early April 2010. Mr Gouriet has stated in a letter to Ms Dunhill dated 19 November 2014 that the scope of his retainer was "limited to the negotiation by consent of a variation of the spousal and child maintenance provisions in the Court Orders of 2003 to reflect and regularise the actual payments that were being made by Charles Turner, the resolution of some outstanding issues in connection with chattels, and the completion of the divorce suit". He has also stated that he was not instructed to advise, and did not advise, Ms Dunhill "in relation to any trust arrangements or any trust property" nor "in relation to the acquisition of the property at 71 Eaton Terrace
or the ownership of that property (which property was acquired prior to your instruction of my firm)". It is very unclear from the papers presently before the Court what Withers did, apart from dealing with the divorce. It is even less clear what advice they gave. Again, Ms Dunhill has declined to waive privilege in respect of the advice she received from Withers.
Yorkton's sale of the Welsh Properties
- On 26 September 2005 Yorkton sold Oldway House, Treorchy for £230,000. On 16 November 2005 Yorkton sold Oldway House, Porth for £950,000. Total £1,180,000.
The abortive consent order
- It appears that in December 2005 there was a meeting between Ms Dunhill and Mr Gouriet on the one hand and Mr Turner and his solicitor from Jones Day on the other hand to discuss a proposed consent order to vary the 2003 Consent Order.
- On 1 January 2006 Mr Turner commenced voluntarily paying Ms Dunhill maintenance at the rate of £7,000 per calendar month (£84,000 per annum).
- On 19 May 2006 Jones Day sent draft minutes of a consent order by fax to Withers which provided for increases to Mr Turner's maintenance and periodical payments and the "agreed extras", but otherwise making no variation to the 2003 Consent Orders. It is unclear what happened to this proposal, save that no order was ultimately made, presumably because no final agreement was reached.
- On 22 November 2006 a decree nisi was pronounced.
- On 1 June 2008 Mr Turner reduced his voluntary periodical payments to Ms Dunhill.
- On 22 July 2008 a decree absolute was pronounced.
Correspondence in 2008
- On 30 July 2008 Rhiannon Lewis of Dawson Cornell wrote to Mr Gouriet at Withers saying that her firm had been instructed by Mr Turner in place of Jones Day. She went on to say that Mr Turner had reduced the payments he had been making "on an entirely voluntary basis over and above his obligation under the [2003 Consent Orders]", that he would comply with his obligations under those Orders and that he was willing to attend a mediation after mutual disclosure by way of Form E. It does not appear that this occurred.
- On 1 October 2008 Mr Turner further reduced his voluntary payments to Ms Dunhill.
- In mid October 2008 there was a meeting between Mr Turner, Ms Dunhill and Mr Kalborg at a restaurant in Knightsbridge at which Mr Kalborg tried to act as an "honest broker" between Ms Dunhill and Mr Turner. According to Mr Kalborg, there was a discussion about whether the AST could be broken up providing certain conditions were met.
- On 22 October 2008 Ms Dunhill sent Mr Turner an email with the heading "Teds [sic] Agreement" which states that:
"I cannot work with the points you put into the agreement.
I am not going to sign an agreement on the proceeds of my home as this is nothing to do with you. I will sort this out with Ted seperately [sic] and take his advise [sic] not forced by you
I again need to state that I cannot live off a maintenance order lower than £7,000 per month. Even then I will need any extra income to pay for the shortfalls and holidays my pension tax in the income etc.
New Court Order agreements needs to be signed not delayed and the sale of my home is not the major factor in your maintenance agreements.
If I do put money aside for Piers is [sic] is not for his schooling but for his future. It is your responsibility to pay for the school. We already took 150 thousand for the school fee fund from my home to assist with schooling.
This needs sorting before tonight. I am forwarding this to Ted > I know you will continue to alter things if he does not help."
- On 23 October 2008 Mr Kalborg emailed Ms Dunhill asking whether she had sorted things out with Mr Turner. Ms Dunhill replied "No and desperate". Ms Dunhill then sent a further email to Mr Kalborg stating:
is not sending any money or backlog. I am in a terrible state and he said he will only sent [sic] money when I sign his agreement which is not correct and needs amending a lot
Can you speak to him. All I want for now is the backlog to straighten my affairs and he is refusing after agreeing on Tuesday."
- Mr Kalborg replied to her first email:
"I suggest that you tell him that you will start legal proceedings. I am so sorry as I thought that there was a deal in the making."
- Despite this, Mr Turner restored his maintenance payments to £7,000 a month.
The Verbier Agreement
- On 1 January 2010 Mr Turner reduced his maintenance payments to £6,000 a month.
- In February 2010 there was a meeting between Ms Dunhill and Mr Turner at a hotel in Verbier, Switzerland. Mr Turner produced a draft agreement which provided for Ms Dunhill to sell 71 Eaton Terrace and invest the net proceeds of sale of £4 million in two equal funds, one of which would be invested in a new property which would be sold at a profit after Ms Dunhill had lived in it for 3-4 years and the other of which be invested in other property development projects. Mr Turner offered to pay maintenance totalling £48,800 per annum. This proposed agreement is referred to by Ms Dunhill as "the Verbier Agreement", although she declined to accept it.
- On 1 April 2010 Mr Turner reduced his payments to £4,200 per month.
- At some point in April 2010 Ms Dunhill accessed Mr Turner's computer and obtained copies of certain documents relating to Mr Turner's financial affairs. These included a letter from Peter Beazeley, Mr Turner's accountant, to NatWest Bank dated 7 April 2010 concerning Mr Turner's earnings and attaching a statement of his income showing this to have been £590,567 in 2007, £631,080 in 2008 and £721,955 in 2009 and estimated income of £948,409 in 2010.
Mr Black's expertise
- Mr Black's expertise in 2010 is evidenced by the following description of him given on Hughmans' website in 2013:
"Senior Partner in the Civil department specialising in novel, difficult and high profile matrimonial and property cases. Peter is well known for providing a fresh, creative approach to his clients' cases and has over 35 years of experience of successful practice. He regularly acts in 'big money' matrimonial cases and has been instructed in groundbreaking property cases."
Ms Dunhill instructs Hughmans
- Ms Dunhill instructed Hughmans in mid April 2010. Hughmans opened its file 23016 "Divorce" (subsequently Hughmans opened a second file 23233 "Contact"). Ms Dunhill gave Mr Black copies of the AST Deed, the 2003 Consent Orders, the letters dated 23 March, 27 September and 1 October 2004, Ms Heathcote's letter dated 15 October 2004 and the documents which she had found on Mr Turner's computer.
- Ms Dunhill alleges in paragraph 65 of her draft Amended Defence and Counterclaim that Mr Black orally advised her (i) to bring proceedings for increased maintenance and periodical payments, (ii) that such proceedings would cost "about £25,000", and (iii) that the court rarely if ever took away existing periodic payments. Ms Dunhill further alleges in paragraph 71 of her draft Amended Defence and Counterclaim that she subsequently agreed to Hughmans' retainer in reliance upon Mr Black's representations that the proceedings would cost "a maximum of £25,000" and that the court rarely if ever took away existing periodic payments.
- On 22 April 2010 Hughmans wrote to Mr Turner stating:
"We have been instructed by Mrs A D Turner in respect of maintenance for both herself and the children of the family.
We note in 2006 that there was an agreement reached but not embodied in a Consent Order that as from 1st February 2006:-
- Periodical payments for the children of the family at the rate of £15,500 per annum each
- From 1st January 2006 maintenance for our client at the rate of £39,000 per annum
This is a total of £84,000 per annum namely £7,000 per month.
We note that following the agreement you have been making payment at that rate although on occasions you have sought to express the element of £3,200 as a personal loan which is clearly incorrect.
We have advised our client that she should immediately issue proceedings in the PRFD to embody the agreement that had historically been reached so as to vary the original Orders of 7th April 2003 and 27th February 2003.
She, however, would far rather deal with this by agreement and we would hope that you, likewise, would prefer it to be dealt within [sic] this manner."
It appear from the documentary evidence that on the evening of 22 April or the morning of 23 April 2010 Ms Dunhill sent Mr Black a note headed "Finances" (although Mr Black says that Ms Dunhill handed him the note on 21 July 2010). The note stated (emphasis added):
"Charles and I agreed to finalise the Divorce, no longer a Legal Separation and get a new Court Order for Maintenance in Place. Charles agreed to pay for this process using my lawyers and capping the cost up to £5,000.
I Agreed to release the Trust Funds money on this as even in 2004 it was totally impossible to live off such a low maintenance order running the sole home for the children etc. I was therefore forced to do this as I would have rather left the Trust Funds in place.
From February 2003 I have been receiving £7,000 from Charles in cheques for the extras required.
The Court Order was low because we were unable to make any sense of Charles form E income or whatever. No tax returns worldwide and it was costing time and money, stressful, house was out of control, Charles would not move out. I had a buyer for the house. Therefore I was forced to accept this order.
We were unable to prove from Charles form E,s [sic], lack of tax returns worldwide, description of investments a higher sum as Charles has never properly made clear his assets but has continued to live at a very high rate immediately after the Court Order was signed.
It was therefore obvious that I had been cheated but life was so dangerous that I had to cut my losses and protect the family and accept the offer
On 1st October 2004 we made an arrangement to release the Trust Funds with agreement that the maintenance would continue at £5,200 index linked until the children were at least 18 years of age or finished education. It was also agreed that Charles take out a life Insurance policy for protection and would continue to pay the Agreed Extras Hurlingham Club, Private Health Insurance and Doctors Bills. Especially for Piers with his disability.
Charles also agreed to get a new court order in place to inforce [sic] this agreement between us to release the trust funds to enable him to buy his house and borrow more that the trust was allowing.
We agreed to get this Trust Fund agreement processed through the court and also agreed at a meeting in December 05 at my Lawyers Withers and Charles Lawyers present. Charles agreed to pay for this process up to £5,000 of my lawyers costs. Since then this variation of Maintenance Order has been delayed and costs have escalated to £10,000 £7,000 still outstanding as Charles has deliberately delayed costing money and now has back tracked on the agreement saying he cant [sic] pay and wont [sic] contribute to the costs. Another broken agreement which is morally wrong and get [sic] me further into financial mess.
Since February 2003 I have been the sole carer for the children ...
I should therefore be financially sorted out for taking sole care of the children.
On 29 April 2010 Dawson Cornwell wrote to Hughmans denying any agreement to pay maintenance at the rate of £84,000 per annum and contending that Mr Turner was only bound to pay £4,000 per month in accordance with the 2003 Consent Orders. Dawson Cornwell said that, in addition, Mr Turner had paid certain other sums, some by way of gift and some by way of loan, including a monthly payment of £3,000 since the end of 2008 which was to be repaid upon the sale of 71 Eaton Terrace and other loans in relation to which it was said that Ms Dunhill had signed loan agreements.
The Retainer Letter
On 11 May 2010 Mr Black sent Ms Dunhill a letter setting out Hughmans' retainer ("the Retainer Letter"). Ms Dunhill countersigned the Retainer Letter on 14 May 2010. The material parts of the Retainer Letter were as follows
"RE: Matrimonial affairs
The purpose of this letter is to confirm the basis on which my firm is acting for you. This is set out in the enclosed Terms of Business and in the following paragraphs of this letter.
Scope of Work
My firm's instructions are to act on your behalf in regard to your matrimonial affairs. The firm will not be responsible for acting outside those instructions.
My firm's charges in relation to this matter will be calculated and payable on the basis referred to in the enclosed Terms of Business.
It is not possible at present to fix or give a realistic estimate of the overall costs and disbursements that will be incurred and no estimate or quotation is given.
As referred to in the Terms of Business, each person involved in the firm has an hourly charging rate depending on seniority and experience.
Your continuing instructions will amount to acceptance of this letter and my firm's Terms of Business.
In addition, can you please confirm your acknowledgement of and agreement to the above by signing and returning to me the enclosed copy of this letter."
The enclosed Terms of Business included the following:
The scope of our work will be as discussed with your and/or as set out in our engagement letter. As the matter progresses, we will endeavour to keep you regularly informed of issues arising, action taken and progress achieved
In acting for you, we will endeavour to exercise all reasonable care and skill consistent with our legal and professional duties, to put your interests first when representing you, to treat all clients fairly and without discrimination, to maintain confidentiality in. respect of your affairs (except as required by law) and generally to discharge our obligations as set out in these Terms of Business. These are the extent of our responsibilities to you and, in so far as permitted by law, we do not accept any further liability to you.
Our advice is given for your benefit alone, on such terms as may be agreed from time to time: it may only be used, for the purposes for which it has been prepared, and may not be distributed to any third party except with our prior written consent. All intellectual property rights are retained by us in our advice. Our advice does not and is not intended to create any enforceable rights for the benefit of, and we accept no responsibility to, any third party, so that the provisions of the Contracts (Rights of Third Parties) Act 1999 do not apply to our agreement with you.
Our charges are based predominantly on time spent dealing with a matter.
In the course of any matter, we will give you the best information possible about the likely overall costs
. Where any estimate, quotation or other indication of costs is given, this will be done in good faith but will not be binding and will not amount to a fixed estimate or quotation.
We will also endeavour to keep you properly informed about the costs incurred as a matter progresses."
Commencement of the variation application
On 13 May 2010 Mr Black wrote to Ms Dunhill confirming that he was "now issuing Form A seeking the variation of the Order". He went on:
"With regard to this firm's fees are you able to let me have certain money on account and thereafter I suggest I take an equitable charge over the property that you hold in Eaton Terrace."
Ms Dunhill alleges that it was orally agreed between herself and Mr Black at about this time that she would pay £5,000 on account of costs and the balance at the conclusion of the case and that the amount to be paid on account was negotiated with reference to the figure of £25,000.
On 17 May 2010 Natasha turned 18 years of age. Nevertheless Ms Dunhill continued to instruct Hughmans to seek increased periodical payments for Natasha's benefit. It is common ground that Hughmans did not advise Ms Dunhill that Natasha should instruct it or obtain independent representation.
On 21 May 2010 Hughmans acting on behalf of Ms Dunhill issued a Form A Notice of Application for Ancillary Relief which gave notice that Ms Dunhill intended to apply to vary a periodical payments order. The Form A contained an "X" in a box to indicate that "there is a written agreement made on or after 5 April 1993 about maintenance for the benefit of children".
On 26 May 2010 Mr Black sent Ms Dunhill an email confirming that the application to vary had been issued and setting out a timetable leading to a First Appointment on 3 September 2010. The email stated that Mr Black would shortly be serving the application on Mr Turner's lawyers, following which "we can proceed to commence preparation of your Form E". It went on: "I am also most grateful for your signed retainer letter and documentation together with your cheque in the sum of £5,000 on account of costs."
Ms Dunhill's Form E and accompanying witness statement
On 20 July 2010 Mr Black sent Ms Dunhill an email enclosing a first draft of a witness statement which was to accompany her Form E and stating:
I see in the letter that he wrote to you on 23rd March 2004 he refers to a letter that you wrote to him on 10th November 2004 (should be 2003) do you have a copy of that letter as it suggests that it was you who wanted the Trust Funds to be broken, not him.
I look forward to receiving the documentation in respect of:
- The recent letter whereby he indicated that he would pay you £7,000 per month providing you put in funds from the sale of 71 Eaton Place.
I think I will write to the other side to advise that we will have a short delay on the filing of your Form E as I want to make sure everything is absolutely right
The real meat will come when we see his Form E
In the event, Ms Dunhill swore her Form E Financial Statement on 22 July 2010. It is common ground that the Form E was competed on her behalf by Hughmans and that Mr Black advised her in relation to it. The cover page of the Form E contained the following rubric:
"Please fill in this form fully and accurately.
You have a duty to the court to give a full, frank and clear disclosure of all your financial and other relevant circumstances.
A failure to give full and accurate disclosure may result in any order the court makes being set aside.
If you are found to have been deliberately untruthful, criminal proceedings for perjury may be taken against you.
You must attach documents to the form where they are specifically sought and you may attach other documents where it is necessary to explain or clarify any of the information that you give.
If you are in doubt about how to complete any part of this form you should seek legal advice.
This Statement must be sworn
before it is filed with the Court or sent to the other party
Section 2.2 of the Form E required disclosure of "Details of your interest in any other property, land or buildings" including the following information:
"Details of who owns the property and the extent of your legal and beneficial interest in it (i.e. state if it is owned by you solely or jointly owned with your spouse/civil partner or with others). If you consider that the legal ownership as recorded at the Land Registry does not reflect the true position, state why."
Section 2.2 of Ms Dunhill's Form E stated in relation to 71 Eaton Terrace "I own it 100%" and "Extent of your legal and beneficial interest (%): 100". It stated the net value of the property as being £2,542,000 out of Ms Dunhill's total assets of £2,600,511.62. It made no reference to the AST or the fact that 71 Eaton Terrace was acquired using money from the AST.
Also on 22 July 2010 Ms Dunhill signed a witness statement in support of her application which was filed together with her Form E. This witness statement ran to 30 paragraphs. In it Ms Dunhill described the events after the 2003 Orders at some length. For present purposes the following passages are particularly relevant (emphasis added):
"13. Following the Order in April 2003 two separate funds were established and Trustees appointed following a variation of the Alexandra Settlement Trust:-
- The remainder of the proceeds (after payment of debts and the establishment of a school fees fund) was divided into The Alexandra Dunhill Turner Fund and The Charles Turner fund with 73% of the remaining assets into the former and 27% into the latter.
From there there was an advance of capital and also the ability to raise and acquire property.
14. On 23rd March 2004 Charles wrote a letter to me. In that he refers to a letter that I wrote on 10th November 2004 (that must have been 2003) as I needed to release trust funds for my housing needs and that of the children. I do not recollect writing such a letter and the release of the Trusts (which was against legal advice I received) was his idea. It was his desire to push this through and I was trying to get as much as possible in return.
20. We both went to lawyers with a view to finalising a Court Order. It was agreed there would be a composite figure, in the discussions that took place, of £7,000 per month between our respective solicitors. This was to avoid Charles paying the extra over a course of a year. The draft Order was circulated and it had been agreed between us that:-
- Charles would pay for the benefit of each of the children at the rate of £15,000 per annum.
- For myself £39,000 per annum.
23. As far as I was concerned an agreement have [sic] been reached I refer to the Minutes of Order and whilst minor details were outstanding the principal [sic] was agreed. Indeed Charles commenced from January 06 to pay me the sum of £7,000 per month together with holidays and other payments. He however prevaricated in signing off the Order to enable it to be lodged in Court.
28. Charles still continues to develop properties both in this country and abroad. As a result of the Hildebrand documents which I discovered on his computer in Verbier there is a letter his accountant Peter Beazeley wrote to NatWest Bank
29. I had agreed to vary the trusts in [sic] the grounds that he would pay maintenance for myself at the rate of £39,000 and £15,000 for each child. This was to be embodied in a Court Order. He was paying the agreed figure and I rely upon this. As I refused to sign the February 2010 Verbier agreement he has now withdrawn the payments he was making. My needs are such that I require a substantial maintenance Order to look after myself and the children.
30. I believe that he has a very complicated structure through Jersey, Switzerland, BVI and Panama which will need to be investigated to clarify his actual income."
Mr Turner's Form E
On 6 August 2010 Mr Turner signed his Form E. In section 1.1 he described his condition, his medication and their effects on him, concluding:
"The fatigue and inability to focus adversely effects [sic] my ability to work. Please see attached medical report. I am obtaining a medical report."
It appears that the medical report referred to (whether it was attached or provided later) was from a Dr Jonathan Boreham.
In section 2.6 Mr Turner alleged that the following sums were owed to him by Ms Dunhill:
"(1) Loan towards the cost of servicing the Petitioner's loan to purchase the freehold of 71 Eaton Terrance (see copy letter dated 23 March 2004 paragraph 7, annexed). £25,000
(2) Ad hoc loans for personal expenditure see schedule and copy documents attached. It was agreed that these loans were to be repaid, with interest, on the refinancing of 71 Eaton Terrace. The Petitioner refinanced the house towards the end of 2009 but did not repay me. £17,996 (plus interest @ 4%)"
In section 2.8 Mr Turner stated that his total assets were £61,870.68. In section 2.10 he stated that his total liabilities were £591,666. In section 4.1.2 he said that he was involved in litigation in Spain as a result of his property dealings there which might cause him further losses. In section 5, he said that he sought orders (a) for the dismissal of Ms Dunhill's claims for maintenance and (b) for Ms Dunhill to contribute towards the school fees and living expenses of the Children. He also said that the time was right for the Court to impose a clean break between Ms Dunhill and himself and for them to share the expenses of the Children.
At some point, possibly as an attachment to his Form E, Mr Turner disclosed a letter from Mr Beazeley addressed "to whom it may concern" dated 30 July 2010 regarding Mr Turner's finances. This stated inter alia that "Mr Turner also received an income of some £80,000 per annum from his Welsh properties in 2003/4/5".
Conference with counsel
On 23 August 2010 Ms Dunhill and Ms Black attended a conference with counsel, Simon Gill. On 25 August 2010 Mr Black sent Ms Dunhill a chronology and statement of issues incorporating counsel's amendments. The draft statement of issues read as follows:
1. This is a claim for a variation of both spousal and child Maintenance Orders made on 27 February 2003 and 7 April 2003 respectively and the Applicant seeks an increase both for spousal and child maintenance from the figures stated in the orders.
2. The parties had agreed in 2006 to increase the global figure payable under both orders to £84.000 per annum. The Respondent had been paying the increase and substantial further payments for the benefit of the Applicant and the children of the family until January 2010 but since then he has progressively reduced the level of payments and seeks to rely upon the fall in the property market in Spain as to why he is no longer able to afford maintenance at the previous level.
3. The Applicant believes that the Respondent, whose affairs are extremely complex, has a much more substantive [sic] income than that disclosed in his Form E."
On 2 December 2010 Mr Black sent Ms Dunhill an email concerning a forthcoming Financial Dispute Resolution (FDR) hearing on 8 December 2010 saying:
"Unfortunately in your case I believe that there will have to be a substantive hearing and I do not see anyway round that as you can see from the without prejudice letter we are considerably far apart in terms of any settlement.
His proposals are frankly outrageous and we will need to try and expose him for the liar that he is which will require the Production Order.
Unfortunately basing one's case on the hope of getting documents is never a position that I particularly like to be but I am hopeful that we will have sufficient credibility issues that he will simply not be believed in his call of only £48,000 per annum."
On 7 December 2010 Mr Black sent Ms Dunhill a further email, evidently following discussion with counsel, Harry Oliver, who was to represent Ms Dunhill at the FDR, saying:
"One of the difficulties that both he and I are coming up against is the fact that we are in difficulties in trying to locate any substantial hidden assets.
It is quite clear that you ex is a liar but the question is precisely what he is lying about. Whilst it is clear that he has assets the question is how much in reality are they and how do they set against your position.
When you have your assets set out and liabilities then your position is circa £2.6M which is of course greater than his stated capital position."
As Mr Black had predicted, no settlement was achieved at the FDR. At the conclusion of the hearing DJ Reid made an Order for directions leading to a three day hearing commencing on 18 July 2011. Paragraph 9 of this Order was in the following terms:
"There be permission to the Respondent Husband to file and serve, if so advised, a CPR compliant medical report from his treating physician by 4pm on 29th April 2011."
Paragraph 10 required each party to make and file a witness statement setting out their evidence as to the relevant criteria under section 25 of the MCA73.
Mr Turner's cross-application
On 10 December 2010 Mr Turner's solicitors issued a Notice of Application for Ancillary Relief seeking variation and termination of paragraph 3 of the Second 2003 Consent Order and variation of the arrangements for payment of school fees and periodical payments for the Children under the First 2003 Consent Order.
On 10 February 2011 Ms Dunhill paid Hughmans the sum of £28,981.33, being the full amount claimed in Hughmans' invoice dated 16 December 2010.
On 5 May 2011 Ms Dunhill paid Hughmans the sum of £7,591.92, being the full amount claimed in Hughmans' invoice dated 27 April 2011.
Mr Turner's replies to the schedule of deficiencies
On 10 May 2011 Mr Black sent Ms Dunhill an email following the receipt of Mr Turner's replies to a schedule of deficiencies which Ms Dunhill had served. He commented:
"Two immediately interesting points emerged:
1. Yorkton in 2003 sold Welsh Properties making a profit £700K.
2. He has exhibited his passport and it is clear that he comes into the UK as a visitor and not, as I would have imagined, with Indefinite Leave to remain - no doubt obviously trying to keep under HMRC radar.
We will still be pressing on with the Production Appointment against Peter Beazeley."
On 8 June 2011 Mr Black sent Ms Dunhill an email saying:
"I enclose herewith the Form E that he swore in the previous proceedings and you will note the reference to Yorkton Properties Inc but no mention of Wales and an interesting tax liability (contingent of £100,000)."
Production Appointment against Mr Beazeley
At some point between 10 May 2011 and the hearing, Hughmans obtained a Production Appointment against Mr Beazeley which resulted in Mr Beazeley producing a substantial quantity of documents relating to Mr Turner's financial affairs.
Dr Peters' report
By 24 June 2011 Mr Turner had instructed Ross & Craig as his solicitors in place of Dawson Cornwell. On that date Ross & Craig wrote to Hughmans stating:
"Our client has experienced considerable difficulty obtaining a report. He asked his
doctor Dr Brian Gizzard [sic] whether he would simply approve the existing report by Dr Jonathan Boreham but Dr Gizzard has a policy of not getting involved in legal proceedings. He also has a close relationship with your client who speaks to him regularly about our client's condition. Our client has seen Dr. Barry Peter [sic] who has prepared a report and we enclose this. Your client has 3 weeks to raise any questions which is more than sufficient."
There is no dispute that Dr Peters was an appropriately qualified expert and that he would have had access to Mr Turner's medical records as well as examining him. It appears that Dr Peters produced an updated report on 11 July 2011.
Mr Smulders' email
On 29 June 2011 Ms Dunhill received an email from Mr Smulders saying:
"[CDV] (a corporation of mine) sold early 2003 two properties to Yorkton
(a corporation of Charles).
The minutes of the relevant Board meeting of [CDV] containing a number of details of the transaction are attached.
Further details can no doubt be found by your solicitors in the relevant public property registers."
Ms Dunhill forwarded this email to Mr Black later the same day saying:
"Yorkton owned these properties in November 2002 which was not on his form E."
PB replied to Ms Dunhill on the same day saying:
"good stuff and i will search the registers to see if we can get the nec docsto certain extent not killer as old but further nail in credibility coffin."
Still on 29 June 2011 Hughmans obtained Land Registry searches in respect of Oldway House, Porth and Oldway House, Treorchy. The former referred to the transfer by Yorkton in 2005 and the existence of a lease for 42 years from 21 May 1973. The latter referred to the existence of a lease to the Secretary of State for the Environment for 42 years from 29 September 1971. It does not appear that Hughmans obtained details of the earlier transfers. Nor did Hughmans obtain valuations of the Welsh Properties.
Ms Dunhill's 6 July 2011 witness statement
On 6 July 2011 Ms Dunhill signed a witness statement drafted by Mr Black in accordance with DJ Reid's Order. This witness statement ran to 95 paragraphs and set out both the history and her current circumstances and future needs in considerable detail. For present purposes the following passages are particularly relevant (emphasis added):
"11. At the time of the financial proceedings following my Petition for Judicial Separation, Charles swore a Form E setting out his estimate income as being £87,763 and net assets of £1.16M (this included the family home of which he was only a trustee not a beneficiary). This income sum was repeated in Charles Form M1
I understand that he had assets in Wales which he acquired through Yorkton. I refer to pages 3-9 of 'AJDT 1' which is Charles's CV in which he refers to the Welsh portfolio and also an email and enclosures from the company who sold the two properties to Yorkton.
[73 Eaton Terrace] gave me a base from which to look for a property to purchase in the name of the Trust.
19. I refer to pages 18-19 of 'AJDT 1'. This is a letter Charles wrote to me an the 23 March 2004. He makes reference in it to a letter I bad allegedly written to him on the l0th November 2004 (sic). His reply seems to imply I had stated I needed to release the funds in my Trust absolutely to me. I certainly have no recollection of writing such a letter I was always adamant that I wanted to retain any property that I was going to acquire with the funds in my Trust within that Trust as that would ultimately benefit the children, It made no difference to me whether the funds were in the Trust or not, as I would have a home either way. Charles has not produced the letter to which he was allegedly replying.
20. As I state previously I was renting 73 Eaton Terrace
and indeed was formulating plans to acquire a property to be owned by the Trust with the funds. I had made friends with a Mrs Hayle (a widow) who lived at 71 Eaton Terrace (next door). It became apparent that she wanted to sell and very happy to conclude a private sale that was to be done with the Trust as the purchaser as had always been intended.
21. The letter of 23rd March 2004 was following up on Charles's original oral requests to me that the funds in his Trust be released to him to continue his property development. He did not want to be fettered having to use the funds in the Trust for a home for him (and of course a home for the children when they were with him) and having to ensure that the money was not lost and would be preserved for the children. He felt restricted and wanted to be able to use without the restrictions of a Trust. He was as he always has been, keen to look for investment funds and finance far his personal property development projects, which of course the Trust restriction would not allow.
24. Having been provided with all these comforts, therefore I reluctantly agreed to release the funds in Charles' Trust to him (and mine to me as a result) hence I received the capital although it did not matter to me whether or not it was still in the name of the Trust or my own and indeed from my point of view I was very much keener that it did retain [sic] in the name of the Trust rather than being in my sole name.
25. We both signed our agreement as shown on the letter. However, as before, Charles continued to pay more than set out, and indeed we carried on discussions to arrive at an overall position in relation to my maintenance. We duly came to a composite figure of £7,000 per month payable by Charles for myself and the children. That was a figure that I was happy with and in addition he was to pay [the agreed extras].
26. Although our discussions above and agreements were not embodied in an Order of the court we both understood the position and what I was to receive and what benefit Charles received (free and unfettered use of the what was once a sacrosanct housing fund), and we both acted upon them.
27. Consequently in January 2006 Charles commenced payment of the £7,000 per month together with the other agreed items.
This should been in a Consent Order but, typically, Charles did not finalise it
29. Completion [on 71 Eaton Terrace] was in April 2014. By this time the Trust funds had been released at the request of the Respondent. My father was very keen on my acquiring this property for his grandchildren. The funding was as follows:-
£840,000 this was from the dissolved Trust (although it could easily have been from the Trust itself had it not been dissolved as set out above)
61. [Charles] has sought to argue that [his condition] has a major impact on him and he has to take it easy. Whilst obviously the thought of that illness is not good he is well able to keep it under control and certainly his lifestyle shows no signs of abating. Indeed as recently as May 2011 he had entered the men's singles tournament at the Hurlingham Club
62. Charles has produced an updated medical report which really take this issue no further as he clearly will not retire as he loves to make money to support his lifestyle. I know him very well and he enjoys the excitement of his business. There is no way that he would 'retire'. He tells everyone how successful he is. He will try and present the opposite image in these proceedings.
81. Charles' Form E suggests that he has no assets at all. He claims that all the valuable assets he has and in relation to which he conducts business are owned by a Panamanian Foundation called the Swandale Foundation. He claims, in his Form E, and since, that he has no interest in Swandale and that it is solely for the benefit of the children,
82. It is my case that this is utterly untrue
84. Charles' accountant (Mr Beazeley) (as shown by documents I obtained following a production appointment
) classes Swandale assets as his own for the purposes of making representations to the bank and also classes Swandale profits as his historic income for the same purpose.
85. Charles' accountant's files contain a wealth of information shedding light on his affairs. For example in 28 May 2010 he wrote to Barclays Bank
advising that he had been the Respondent's financial accountant for the last 10 years confirming excluding property sales that his average income had been in excess of £240,000 for the past three years. His projection, he said, for the next year i.e. this financial year 2011 is in excess of £650,000. This does not compare well with Charles' Form E that he signed under three months later asserting his income was £48,000 for the following year.
First hearing before DJ Berry
Ms Dunhill's and Mr Turner's applications came on for hearing before DJ Berry sitting in the PRFD on 1820 July 2011. The bundles for the hearing consisted of 10 lever arch files of documents. Ms Dunhill gave evidence first. While Mr Oliver was examining Ms Dunhill in chief about the 23 March 2004 letter and the payments made by Mr Turner subsequently, the following exchange took place:
"DISTRICT JUDGE BERRY: But it is common ground there was no court order.
MR OLIVER: There was no court order and my learned friend says that there is no concluded agreement. So there is no concluded agreement of anything that flows from this. That is the only point I wanted to get to.
MR SOUTHGATE: No, there is no concluded agreement of what was negotiated in the privileged correspondence."
Mr Turner gave evidence on 20-21 July 2011. On 20 July 2011 he was cross-examined about Yorkton's purchase of the Welsh Properties and the non-disclosure of this in his Form M1. In summary, his evidence was as follows:
i) he had not revealed the Welsh project (i.e. the project concerning the four Welsh properties mentioned in his 2008 CV) to Jones Day, Ms Dunhill or the Court in 2002-2003;
It was not put to Mr Turner that he had deliberately and dishonestly failed to disclose his interest (via Yorkton) in the Welsh Properties in his Form M1, as Ms Dunhill now alleges was the case. Ms Dunhill alleges that the cross-examination of Mr Turner on this topic was wholly inadequate. In particular, she complains nothing was put to Mr Turner about the date Mr Turner agreed that he would purchase the Welsh Properties, the dates when the transfers were made, the value of the Welsh Properties, the rents of £95,500 per annum, the materiality of the non-disclosure and what order would have been made in 2003 if there had been disclosure. Furthermore, Ms Dunhill complains that the cross-examination took place without Mr Oliver having the Land Registry searches and information required to conduct the case properly.
ii) the Welsh project had made over £1.2 million in profits in January 2003, but those profits went to CDV which Mr Turner had no beneficial interest in. According to Mr Turner, Mr Smulders was a "very mean Dutchman" who had only paid him £30,000 or £50,000 out of those profits and that might well have been after February 2003;
iii) the price at which Yorkton had purchased the Welsh Properties had been based on a valuation by Chestertons;
iv) the purchase of the Welsh Properties by Yorkton was financed 100% by loans;
v) he accepted that he owned Yorkton;
vi) Yorkton had subsequently made a lot of money - Mr Turner had previously said £700,000, but having looked at the figures he thought it was more like £400,000 - out of the Welsh Properties in 2006, but that money had been used for failed Spanish investments and other purposes, and Mr Turner had disclosed all of this in the current applications.
The hearing before DJ Berry did not finish on 21 July 2011, and accordingly it was adjourned part heard.
Ms Dunhill seeks advice concerning Prof Gazzard
On 28 September 2011 Ms Dunhill telephoned Mr Black. Mr Black made a note as follows:
"She has spoken to her barrister friend who says that there is no point in PMB writing to Professor Gazzard as he would not do that due to breach of confidentiality.
She is adamant that this will be critical to her case and he will say capable of working
PMB will seek advice from Harry."
It appears that Mr Black did seek advice from Mr Oliver the following day, but Mr Oliver's advice has not been disclosed. The thrust of the advice can be inferred from what followed, however.
On 29 September and 3 October 2011 Ms Dunhill paid Hughmans two sums totalling £7,800, being the full amount claimed in Hughmans' invoice dated 19 May 2011.
On 9 November 2011 Hughmans wrote to Ross & Craig noting that the Order of DJ Reid dated 8 December 2010 referred to Mr Turner obtaining a medical report from his treating physician and continued:
"The report that you produced was from Dr Peter [sic] who clearly was not your client's treating physician. We write to enquire as to why Professor Gazzard was not instructed to prepare the report as he is clearly well acquainted with your client's condition and is his treating physician. Consequently a report in order to comply with this Order should have been from him."
The hearing before DJ Berry was resumed and concluded on 25 November 2011. Neither party called Prof Gazzard to give evidence.
DJ Berry's first judgment
DJ Berry handed down his (first) judgment on 21 December 2011. The judgment is a careful and detailed one which runs to 12 pages of single-spaced typescript (not including the schedule annexed to it). The following points should be noted. First, DJ Berry directed himself as to the approach he should adopt to the applications before him as follows:
"The law I must apply is to be found in s. 31 Matrimonial Causes Act 1973 which, in turn, requires me to consider the relevant provisions of s.25 and s.25A, each of which must be interpreted in the light of the observations of the House of Lords in the leading case of White. That decision makes it clear that my ultimate objective is to arrive at a fair solution, unless I find that some other objective outweighs the requirement of fairness. Fairness requires (inter alia) that there is no place for financial discrimination between husband and wife when considering the differing roles they have played in their family during their marriage and subsequent separation. The welfare of the children (whilst under the age of 18) is my first consideration.
It is not in dispute in this case, so far as I am aware, that as a general proposition parents should contribute to the cost of their children's upbringing and educational costs in proportion to their means so long as they can otherwise provide for their own reasonable needs, unless it is shown that that would be unfair. On a variation application it is not for me to conduct a new balancing exercise of the type appropriate at the time of the original order and to attempt to restore the financial position of the parties, relative to each other, to the position achieved by the original order. Rather, I have to make such adjustments as appear to be fair and proportionate to the way in which the parties' separate financial circumstances have evolved and my powers to do so are far more limited than at the time of the original orders.
Secondly, DJ Berry noted at an early stage of his judgment, having referred to the 2003 Consent Orders, that (emphasis added):
"It is agreed that Mr Turner has paid substantially more than the orders required; Ms Dunhill says in fact he paid her about £7,000 p m in additional to education costs and £30,000 p a on holidays, from January 2006 until shortly before her application. She says that he did so partly in exchange for her agreeing to release funds to him which were subject to a trust created (or perpetuated) by the 2003 agreement but none of this detail has been explored before me.
It is said by Mr Turner that the capital division that the court sanctioned in 2003 resulted in him ultimately receiving net capital of £310,000 and Ms Dunhill receiving £850,000 taking into account the agreement referred to in the last paragraph. There is no reason to doubt the broad accuracy of that calculation.
Thirdly, DJ Berry's assessment of the evidence regarding Mr Turner's health was as follows:
. There is a report from an experienced consultant physician, Dr Barry Peters about the effects of the diagnosis. He concludes that Mr Turner's ability to work is likely to be compromised presently and that his reasonable retirement age is likely to be 5-10 years earlier than for a comparable [unaffected] person. Mr Turner told me that his health, which he described in some detail, is such that he has decided to retire in the next year or two. Although Ms Dunhill asserts that Mr Turner enjoys the excitement of his work as a property developer and may work for many years yet, Mr Turner told me how stressed and fatigued he feels, although he believes he can cope with one more modest development project if he can find one. In view of Dr Peters' report I do not doubt what Mr Turner told me in that respect."
Fourthly, DJ Berry accepted that Ms Dunhill was likely to need substantial expensive assistance with Piers' care for many years to come.
Fifthly, DJ Berry began his assessment of the financial positions of the parties as follows:
"The present alleged financial circumstances of the parties are set out in a schedule prepared by Mr Southgate, counsel for Mr Turner, for the purpose of final submissions, with comments in the right hand columns prepared by Mr Oliver for Ms Dunhill, a copy of which is attached as an appendix to this judgment. In summary Ms Dunhill suggests that she has assets of about £3,170,000 and Mr Turner has assets of £3,421,000. Conversely Mr Turner says he has assets of £2,670,000 and Ms Dunhill has £4,126,000.
the biggest single difference between the parties, which accounts for about half the total, arises from a dispute about the value of Ms Dunhill's home at 71 Eaton Terrace."
DJ Berry went on to say that he thought that Mr Turner's expert's valuation of £6 million was nearer the mark, but that this was not crucial because he was proposing an order substantially contingent on the price actually achieved on sale.
Sixthly, DJ Berry was somewhat critical of some of Ms Dunhill's evidence, in particular in the following passage:
"It seemed to me that she had not taken sufficient trouble to have a real grasp of the level of expenditure she could sensibly afford as she developed her house and got so heavily into debt. She clearly spent very extravagantly at times, not only on the building and furnishings but also on her private expenditure on clothing and the like and imposed little financial control on her total expenditure. Her answers, for example, to cross examination about the statements in bundle 5 1734 and following make that quite clear. However she seemed to me to be an intelligent person who was well able to understand what would be reasonable for her to undertake and not someone overawed by Mr Turner. I suspect that part of the difficulty was that she did not wish to believe Mr Turner when he told her that his financial affairs were in trouble but I have heard no evidence to lead me to conclude that she should have distrusted what he told her. I was entirely unconvinced by her denial that when Mr Turner advanced money to her on several occasions, to ease her liquidity problems, but required her to sign loan notes, that she did not understand what she was signing. She even said, incredibly, she did not 'really accept I was asking for a loan' in the email she sent on 19.3.09 (at page D 28.8 381). Although she said she presumed he was 'just giving me maintenance' I have little doubt that she did understand but closed her eyes to the significance of such documents rather as she closed her eyes to the consequences of much of her expenditure."
Seventhly, DJ Berry accepted Mr Turner's evidence as to his financial circumstances as can be seen in particular from the following passage:
"In his Form E Mr Turner said that until 2009 his annual income had been about E200,000, in addition to his fees from Swandale. However, for reasons he explained in Form E his income then dropped dramatically to about E50,000 p a. I listened to Mr Turner's evidence about his financial dealings over recent years with some initial scepticism in view of the apparent discrepancies in Mr Beazeley's letters but in fact I could detect no manifest dishonesty or lack of candour about any of the detail he gave. On the contrary, he provided a highly articulate account of his finances and answered almost every question put to him by reference to relevant documents, It may be that an accountant's professional analysis would have thrown 'up matters exposing lack of proper explanation but I detected no evident exaggeration or dishonesty nor, I think, was any specific dishonesty identified and commented upon by counsel for Ms Dunhill. Having heard Mr Turner I conclude that Mr Beazeley's letters are an extreme example of tendentious professional reporting, possibly coming very close to dishonesty in the case of the letters to the banks (though I hasten to add that I have not heard from Mr Beazeley on the point). Taking the evidence of Mr Turner in its entirety, I accept the submission of his counsel that, notwithstanding some late and incomplete disclosure of documents and the problems with Mr Beazeley's letters, Mr Turner has produced a mass of documentary material about his complex finances disclosing nothing inconsistent with his evidence, and his past generosity to his family is compelling evidence that it is unlikely that he has set out to cheat or withhold important evidence. It is, of course possible that I am wrong, but Ms Dunhill has not been able to point to sufficient evidence to establish on the balance of probability that Mr Turner has mislead me as to his present finances."
Eighthly, assuming that 71 Eaton Terrace was worth about £6 million, DJ Berry concluded that Ms Dunhill had assets worth approximately £4,014,740 and Mr Turner had assets worth approximately £2,729,605.
Ninthly, DJ Berry's overall assessment was as follows:
"The principal changes since 2003, apart from the change in the ages of the parties and their children, are firstly the change in Mr Turner's health which has resulted in a corresponding decline in earning capacity and secondly the marked decline in most of the European property markets (Belgravia being a notable exception for the moment). Those changes have had a large impact on the income of Mr Turner and therefore Ms Dunhill. The original division of the capital assets was approximately 27% / 73% in Ms Dunhill's favour. The present division appears to be about 40.5% / 59.5% in Ms Dunhill's favour so that Mr Turner now has a larger share of the total remaining capital which is much greater, even allowing for the increase in the RPI, than it was in 2003. The really significant change however is that to which I have just referred, namely the loss of income. Whereas Mr Turner was previously able to generate very substantial, tax free, income for both himself and Ms Dunhill that is no longer the case; the enhanced capital available to the parties will now have to be used to generate investment income and be slowly amortized to provide for both parties' reasonable expenditure for (probably) the rest of their lives. How that can be achieved depends in significant measure on whether Mr Turner can manage one more significantly profitable development and whether Mr Johnson's valuation opinion proves to be correct. Even if both of those possibilities turns out favourably however, a radical change in the family outgoings will be necessary and far from easy. The estimates of what each party has spent in the past in Forms E, and elsewhere in the papers, are no guide to what can now be afforded, although they do provide some guidance as to the parties' immediate needs whilst they try to sell their more valuable assets, substantially downsize their accommodation and then reorganise their finances.
Although I have attempted to devise an order which would take into account the various major uncertain features of Ms Dunhill's finances, without the need for a further hearing, I regret I have come to the conclusion that it is not possible.
I can not compel Ms Dunhill to sell her house but realistically she has no choice, except perhaps as to timing. In my view she can not afford to wait.
What I propose therefore is to order periodical payments until the next hearing in about August 2012 and list a brief (I suggest 1 day) hearing to consider the way in which the uncertainties have been resolved; I will then make a final order. If Ms Dunhill has not taken reasonable steps to complete the sale of her house by then I shall almost certainly draw appropriate adverse inferences about her financial affairs.
Tenthly, Dr Berry expressed his concern at the disproportionate costs which had been incurred by the parties on the applications.
Finally, DJ Berry concluded by observing:
"I hope that any evident error of fact, arithmetic or law in this judgment will be brought to my attention promptly
When handing down the judgment DJ Berry proposed an interim order requiring Mr Turner to pay Ms Dunhill £6,000 per month together with the Children's school fees and invited written submissions on this proposal by 27 January 2012. As I understand it, DJ Berry did subsequently make this order.
Leading counsel is instructed
On 29 December 2011 Ms Dunhill sent Mr Black an email raising concerns about DJ Berry's judgment and instructing him to book a consultation with Nicholas Francis QC. She went on:
"Peter, it is vital that I have confidence that all the evidence that is relevant and can be placed before the judge has been placed before the judge and I don't feel this is the case at present including the admissibility of the 'imerman' evidence and my verbal evidence.
This is why I would like the consultation with Nick Francis and see his view."
Later the same Ms Dunhill sent Mr Black another email stating:
"I would like to instruct you to tell the Judge tomorrow, directly, we are bringing in Leading Counsel because it is quite clear that there are significant mistakes in judgment that do not relate the correct facts. Once leading Counsel is instructed we will correct the errors of fact as soon as possible and will also be asking to arrange an early directions hearing.
Please confirm to me that you have emailed the Judge direct due to the last two paragraphs of the judgment where it states any errors to be brought to the Judge's attention promptly."
On 30 December 2011 Mr Black replied to the first email saying:
"All the evidence was before the judge as you know what was not? nick is good and who has recommended him to you?"
He also replied to the second email saying:
"I am certainly not advising dj bringing in leading counsel - I will be emailing him to advise that will be sending comments on judgment when all back after 3rd jan
this smacks slightly of custer's last stand as too [sic] a certain extent given now adjourned till sept then much will change - still the primary problem of C having no income save deals as a property developer and clear that has no hidden assets - a conference with leading counsel will be expensive and there is no guarantee will provide a solution but we will see."
It appears that at some point Mr Black did write to DJ Berry to point out certain errors (or alleged errors) in the first judgment, but this letter is not in evidence.
On 23 January 2012 Hughmans sent instructions to Mr Francis and Mr Oliver to advise in consultation on 27 January 2012. In explaining the background to the applications before DJ Berry, the instructions stated:
"The nub of the case was that in order for the Trust Funds to be released to H and W individually W agreed that she would receive:-
- Maintenance at £5,200 per month
- Membership at the Hurlingham Club, PHI
It was going to be embodied in a Court order but despite promises this was never done.
The instructions stated that Ms Dunhill was "extremely upset" by DJ Berry's first judgment, primarily on three grounds: "1. Professor Gazzard 2. The sale of 71 Eaton Terrace 3. The fact that H is likely to retire". With regard to the first and third points the instructions stated:
"Counsel is referred to the report of Barry Peters which was sent 11th July shortly before the commencement of the hearing on the 18th July.
A decision was made not to challenge this report despite the fact the Order of 8th December had indicated 'there be permission to the Respondent Husband to file and serve, if so advised, a CPR compliant medical report from his treating physician by 4pm on 29th April 2011.'
His treating physician is Professor Gazzard and Dr Peters is not somebody that has ever treated him but has obviously gone through his reports and put the spin that [Mr Turner's condition] would mean a retirement 5 to 10 years earlier. H stated that he wished to withdraw at the age of 60.
The reality was that he was then able in the witness box to put forward the 'Form E' position and W will say effectively hoodwinked DJ Berry into believing that to be the case. W is firmly of the view however that as he has never worked in the common sense of the word then he will never retire as he enjoys his lifestyle so much
H in the witness box came over as somebody who probably was telling the truth in that W's team were not able to uncover any further hidden assets but put the spin that he was not going to be working and would shortly be retiring.
Dealing [with] Professor Gazzard [Ms Dunhill] obviously knows of him and understands that he would obviously be willing to come to Court to give evidence but only if there was a Court Order. Obviously there is medical confidentiality and Counsel will consider whether or not any application could be made so as to now seek to challenge Dr Peter's [sic] report and to obtain a report from Professor Gazzard
Ms Dunhill complains that (a) the enclosures to the instructions did not include the AST, the 2003 Consent Orders or the letter dated 23 March 2004, (b) the instructions did not set out the position in relation to the AST and (c) Mr Francis QC was not asked to advise in relation to this or in relation to Mr Turner's alleged non-disclosure with regard to the Welsh Properties in his Form M1.
Someone prepared a chronology and note for the purposes of the consultation. It is not clear to me whether this was an enclosure to Hughmans' instructions or whether it was prepared by Mr Oliver, but this does not matter. The chronology includes the following entry (emphasis added):
"23/03/2004 H wrote to W requesting release of monies from The Alexandra Dunhill Turner and The Charles Turner Fund (set up pursuant to final ar order). W was advised against it but agreed on the following conditions:
On 27 January 2012 Ms Dunhill and Mr Black attended the consultation with Mr Francis and Mr Oliver. They were joined by Mr Black's assistant during the course of the consultation. Mr Black and his assistant made notes of the consultation. These record that Mr Francis began by stating that he had not read all the papers he had been sent, but did not feel it was necessary and he had been able to form an overall view. The notes include the following passages relating to the AST and what had been agreed in March to October 2004:
"AD very concerned that all the promises were undone pushed me to do it signed and gave in.
Part of our case was in regard to that but HO indicated that Berry was really not interested and it was water uner the bridge in regard to that matter.
Clear breach of fiduciary duties. Consent orders partially drawn up but only on without prejudice basis.
NF states [that] the view the Judge takes is that [he] looks back at the change in circumstances [i.e. since the 2003 Consent Order] and what his Order [should be] in the light of the changed circumstances.
A: Alexandra settlement he asked in judgment said not looked at.
NF: Not relevant."
The notes include the following passage relating to Mr Turner's Form M1:
"NF: Analyse what will happen! Judgment page 10- ' changes since 2003- health, property, 27/ 73%, 40.5 in Mr. Dunhill's favour'. Change in capital, in circumstances in your favour. Issue is periodical payments effect of not capital - you have capital - judge, terminate maintenance may make nominal but might be final (spousal).
A: Income changed since 2003 he's made more money that he's ever done in his life.
NF: His earning capacity lower than 2003.
PMB: Form Ml told us.
H: A lie - he said not disclosed Wales - that's how he could pay maintenance more than before.
NF: Ability I have - what will happen - not how unfair
The notes include an extensive passage concerning Prof Gazzard, from which it is evident that Mr Francis QC, Mr Oliver and Mr Black were unanimous in advising Ms Dunhill that there was nothing to be gained from attempting to compel Prof Gazzard to give evidence for the following reasons:
i) it would be difficult to override doctor/patient confidentiality;
On 29 February 2012 Ms Dunhill paid Hughmans the sum of £9,540.00, being the full amount claimed in Hughmans' invoice dated 15 February 2012 for the instructions to and consultation with Mr Francis QC and Mr Oliver. A substantial sum remained unpaid in respect of other invoices, however.
ii) it was unlikely that Prof Gazzard would contradict Dr Peters, whose evidence was to the effect that Mr Turner was "doing quite well" for a person with his condition;
iii) the real issue was when Mr Turner was likely to retire, which primarily depended on Mr Turner's evidence rather than the medical evidence;
iv) the judge had taken the view that it was reasonable for Mr Turner to want to retire at 60; and
v) the judge would be reluctant to re-open the issue.
On 24 April 2012 Piers turned 18 years of age. Nevertheless Ms Dunhill continued to instruct Hughmans to seek increased periodical payments for Piers' benefit. It is common ground that Hughmans did not advise Ms Dunhill that Piers should instruct it or obtain independent representation.
Ms Dunhill takes advice elsewhere
According to the Schedule to her Voluntary Particulars of Loss and Damage, between May 2012 and January 2013 Ms Dunhill incurred fees obtaining advice from Moss Fallon solicitors and Mr Francis QC and Philip Cayford QC. No explanation has been given by Ms Dunhill as to why she sought this advice at a time when she was instructing Hughmans or what the nature of the advice sought was. Nor has she waived privilege in respect of the advice given.
DJ Berry refuses to allow a further questionnaire
On 7 August 2012 Ms Dunhill applied for permission to serve a further questionnaire on Mr Turner. The application was based on further documents Ms Dunhill had obtained from Mr Turner's computer and flat. Mr Turner consented to the documents being produced at the second hearing. As I understand it, DJ Berry refused to permit a questionnaire to be served at that stage, but indicated that he would permit Ms Dunhill to renew the application at the forthcoming hearing.
Second hearing before DJ Berry
On 10-11 September 2012 there was a further hearing before DJ Berry at which both Ms Dunhill and Mr Turner again gave evidence. Mr Turner was cross-examined on the documents Ms Dunhill had obtained. In the light of that cross-examination DJ Berry again refused to permit Ms Dunhill to serve the further questionnaire on Mr Turner.
On 3 October 2012 Ms Dunhill sent Mr Black an email stating:
"Could you please search for the email agreement we had between us where we agreed I pay you the money sent on deposit bank in May 2010 which was either 5,000 or 10,000 and the balance at the end. We never predicted it you go on like this and I have paid what I can so far."
DJ Berry's second judgment
On 4 October 2012 DJ Berry handed down his second judgment. The judgment is again a careful and detailed one which runs to seven pages of single-spaced typescript. The following points should be noted. First, DJ Berry began by giving his reasons for refusing to permit Ms Dunhill to serve the further questionnaire. In summary, as DJ Berry put it:
"Whilst it is clear Mr Turner has continued to seek out investment or development opportunities (as he never denied he would until he is 60) there was nothing that appeared in the documents, nor that Mr Turner said in reply to questions, that seemed to me to require any revision of the opinion I expressed on page 9 of my earlier judgment that
'If [Mr Turner] finds a successful development project he may generate a considerable profit but it is entirely unpredictable. He can not now afford taking high risks and his profit is therefore unlikely to be on the scale of past projects.'
The one area of Mr Turner's evidence which was not so convincing was his analysis of how he funds his lifestyle
. but the net result seemed to me to be that he continues to spend heavily relative to his actual income. In other words, despite my analysis of his finances in my first judgment he has not yet greatly changed his lifestyle. I have not seen any documentary evidence which demonstrates significant undisclosed income
The only document which did make a difference was a valuation which Ms Dunhill had discovered Mr Turner had obtained of his flat at 65 Eaton Terrace for £3.15 million, which DJ Berry took as the best available evidence of the value of this property.
Secondly, DJ Berry was somewhat critical of Ms Dunhill's attempts to sell 71 Eaton Terrace. He nevertheless took £5.85 million as representing the price which she could reasonably expect to achieve.
Thirdly, on these bases DJ Berry calculated Ms Dunhill's assets at £3,607,160 and Mr Turner's assets at £3,301,654, a significant shift in Ms Dunhill's favour compared to the first judgment.
Fourthly, DJ Berry dealt with the sums which Mr Turner claimed he had lent Ms Dunhill as follows:
"My view about [the 'loans'] is that they probably amount to a recoverable debt and they demonstrate generosity on the part of Mr Turner. I therefore bear them in mind as part of the considerable contribution he has made to the welfare of the family since 2003. My order, exercising my wide discretion, is made on the basis that Mr Turner will undertake to the court to take no further steps to recover the 'debts'. My order would otherwise have been appropriately more generous to Ms Dunhill."
Fifthly, DJ Berry recorded that neither party had taken issue with his summary of the applicable law in his first judgment.
Sixthly, in arriving at his conclusion, DJ Berry took into account Ms Dunhill's "significantly greater housing need and her obligations to Piers." So far as Piers was concerned, DJ Berry found that:
"The evidence strongly suggests that Ms Dunhill has borne, and will continue to bear, the principal burden of caring for him and providing for his financial support. The severity of his disorder and the available resources make it clear that his circumstances are sufficiently exceptional to justify making a periodical payments order for his lifetime."
Seventhly, DJ Berry proposed to make an order which terminated Ms Dunhill's maintenance payments, but required Mr Turner to pay:
i) periodical payments of £18,000 per annum for Natasha until completion of her first degree,
Finally, DJ Berry expressed the provisional view that there should be no order for costs save that Ms Dunhill should bear the costs of one hearing concerning the documents she had obtained.
ii) periodical payments of £18,000 per annum for Piers for Piers' lifetime secure on a suitable asset belonging to Mr Turner;
iii) periodical payments of £7,500 per annum for William, plus his school fees, and then 60% of William's education and maintenance costs while he studied for his first degree; and
iv) the payments for Piers and William to increase in line with the CPI.
Overall, the outcome of DJ Berry's second judgment was reasonably favourable to Ms Dunhill. This is particularly so given that (a) for the reasons explained below, any agreement she had reached with Mr Turner in 2004 was unenforceable in the absence of a court order and (b) Ms Dunhill had not succeeded in proving that Mr Turner had hidden assets or undeclared income.
On 2 November 2012 Ms Dunhill sent Mr Black an email stating:
"I would never have released the Trust Fund Money and under clause 4(b) to Charles outright or to myself without the promises and assurances from Charles about periodic payments which were intended to continue.
I think everyone has missed the whole point of my case and that was why I was so confused at the hearing as to why everyone was going on about my asset schedule when all along I was under the impression that these were mainly trust assets for the children and the process of officially closing the trust funds in [sic] not finished.
The Alexandra Settlement is not closed by the trustees which required Charles and my signature. It is only sitting empty with money in our sole accounts which is now at risk of being sued by the children. I would like to get this across to the judge somehow as he admitted that he never went into the Settlement."
Mr Black replied shortly afterwards saying:
"We will discuss but clear that we were very aware of your case and the issues involved namely he persuaded you to release fund as against promises which never finalized in order and he then cuts the agreed payments. As regards the trust this was varied in initial order and then separated into three. I believe that the trustees acquiesced and would find it difficult to now issue against you and Charles re the Trust and I believe this is a dead point.
On 21 November 2012 there was a meeting between Ms Dunhill and Mr Black, which was attended by William Geddes, a friend of Ms Dunhill's. According to Mr Geddes' account of the meeting:
"At the meeting Alexandra asked Peter Black about the Alexandra Settlement Trust which was the subject of a Deed in 1993 and has been varied by the High Court in 2003. Alexandra wanted to discuss the trust. Alexandra also stated she had given Peter Black all the documents related to the Trust and that he replied that he did not have time to go through endless files wasting clients' money. He said he knew a lot about Trusts and the trust had no legality whatsoever.
Peter Black told Alexandra that she had 'Catholic guilt' over the trust and that she should forget the trust.
Mr Lee and Mr Kalborg have said that Mr Black did not contact them during the period that Hughmans was instructed by Ms Dunhill. I do not understand this to be disputed by Hughmans.
Termination of Hughmans' retainer
On 22 November 2012 Ms Dunhill attended a consultation with new solicitiors whom she had instructed, Miles Preston & Co, and an unidentified Chancery Leading Counsel. Hughmans was not represented at the conference. Ms Dunhill has declined to waive privilege in relation to that consultation.
On 23 November 2012 Ms Dunhill terminated her retainer of Hughmans. Miles Preston wrote to DJ Berry informing him of their instruction. The email stated:
"We are in the process of taking instructions on various aspects of the case. Depending on our instructions and the advice which we give in response, we may be asking you to re-open the evidence and argument in the case. On that basis, we respectfully invite you not to make an order."
It appears that Miles Preston subsequently instructed Valentine Le Grice QC on Ms Dunhill's behalf.
Hughmans exercises a lien
On 26 November 2012 Hughmans wrote to Miles Preston declining to provide its files on the ground that it had a lien over them due to substantial fees outstanding from Ms Dunhill. Mr Black has given evidence that by this time Hughmans' files comprised about 30 lever arch files.
On 28 November 2012 Mr Lee applied to intervene in the proceedings pending before DJ Berry, acting in person.
On 29 November 2012 there was a hearing before DJ Berry. It appears that this led to an adjournment.
On 4 December 2012 Hughmans sent Ms Dunhill their final bill.
Ms Dunhill complains to Hughmans
On 13 January 2013 Ms Dunhill sent Mr Black an email making a number of complaints, including a complaint that Mr Black had advised her that the cost of the proceedings would be about £25,000. Hughmans replied to this in letter dated 18 February 2013. This letter included the following passages:
"1. Court Hearings
It is clear from the file you were fully advised throughout; your instructions were taken fully and advised and, where appropriate, acted upon. We are surprised that you should seek to suggest otherwise.
It is clear from the outset it was your case your ex-husband had hidden assets; after extensive third party disclosure from his accountant it became clear he did not have hidden wealth but had simply been somewhat economical with the truth on applications for lending.
2. Alexandra Settlement
We have reviewed this extensively and you will also recollect the view that NF QC took as did HO. We note you agreed (prior to this firm being instructed) for the funds, which should have been held in Trust, to be released. As a result of that, you as a Trustee, took steps which you now state should not have been taken. We have fully explained this to you, the last occasion being on 02/1 1/2012
It is clear that you should never have agreed to that and how you can now seek to argue that the case should have been presented differently is regrettably not understood.
The house is in your sole name and you had effectively broken the Trust together with your ex-husband.
Stupidly you failed to get him to sign off a Consent Order varying the maintenance before you allowed him access to the funds.
Of course if he had not had access to the funds then he may well not have created the capital pot that he presently has.
The history of the Trust was dealt with insofar as it was relevant.
At no stage did our Mr Black indicate that it would cost £25,000 and regular bills were raised which were discounted and in addition the hourly rate had not changed since 2010. You raised no query on this until very recently."
DJ Berry's orders
On 19 February 2013 DJ Berry made two orders. The first was an order that, pending final determination of the issue which was the subject of the second order, Mr Turner should make periodical payments in accordance with DJ Berry's second judgment. It appears that at some point Ms Dunhill filed an appellant's notice seeking to appeal against this order (and perhaps one or more of the earlier orders made by DJ Berry).
The second order was an order for the determination by a High Court Judge of the Family Division of the following issue:
what effect, if any paragraph 1 of the order made on the 11/04/03 had (a) in the absence of any settlements being executed under recital D of that Order and (b) in the light of the agreements made between the Petitioner and the Respondent and Mr Nicholas Lee and Mr Kalborg
The second order also recorded that Mr Lee had withdrawn his application to intervene, joined the Children as parties to the proceedings and gave directions for the determination of the issue identified above culminating in a hearing estimated at three days. I shall refer to the proceedings for the determination of that issue as "the 2013 Family Proceedings".
Ms Dunhill changes solicitors again
At the end of April 2013 Ms Dunhill ceased to instruct Miles Preston and instructed Hughes Fowler Carruthers instead.
On 12 April 2013 Hughmans commenced the present proceedings by issuing a Claim Form and serving it together with Particulars of Claim. On 7 May 2013 Ms Dunhill served her Defence and Counterclaim. On 17 July 2013 Hughmans served their Reply and Defence to Counterclaim. On 25 February 2014 Deputy Master Collaco Moraes made an order, as I understand it by consent, staying the proceedings until 30 June 2014 in order to enable the 2013 Family Proceedings to be determined before any further steps were taken in these proceedings.
The 2014 Consent Order
The hearing of the 2013 Family Proceedings commenced before Moylan J on 16 June 2014. Ms Dunhill was represented by Charles Howard QC and Laura Moys, Mr Turner was represented by Jonathan Southgate QC and the Children were represented by John Wilson QC. Mr Black received a witness summons from Mr Turner's solicitors. Mr Black attended the hearing on 23 June 2014, but Ms Dunhill declined to waive privilege in respect of Hughmans' advice. Accordingly, Mr Black was not required to give evidence. Hughmans' Reply and Defence to Counterclaim in these proceedings was amongst the documents before the Court.
Other than as set out in the previous paragraph, there is no evidence before me as to what transpired at the hearing before Moylan J. I presume that both Ms Dunhill and Mr Turner gave evidence. Moylan J gave no judgment, because the parties agreed a settlement. On 27 June 2014 Moylan J approved a consent order ("the 2014 Consent Order"), the key provisions of which were as follows:
'The Appointment' shall mean the appointment described at paragraph 3 below
'The Sub Trust' shall mean the Alexandra Dunhill Turner as defined at paragraph 1.3 of the 2003 order
3. AND WHEREAS in or about March 2004 the Wife and the Husband appointed out from the AST the entire remaining capital of the AST (after payment of the amounts referred to at paragraph 1.4.1 of the 2003 Order) and then gifted to the Husband a proportion thereof.
BY CONSENT IT IS ORDERED THAT
7. The Appointment insofar as resulted in a gift to the Husband of the Husband's share is hereby ratified.
8. Save as referred to in paragraph 7 above, the Appointment is hereby set aside.
9. Subsequent to paragraph 7 and 8 above, the 2003 Order is hereby varied:
(i) To provide that the Sub Trust now contains only £1,500,000 out of assets currently held by the wife;
(ii) To provide that the Trustees of the Sub Trust shall in their discretion be entitled to make appointments of capital from the sub trust to the Wife PROVIDED THAT that all such appointments shall collectively not exceed £500,000;
(iii) To provide that the wife shall be entitled to nominate Trustees in replacement of Nicholas Lee and Ted Kalborg;
(iv) To provide that the Wife shall at her expense cause to be executed a Trust Deed in relation to the Sub Trust in accordance with the 2003 Order as varied by this Order, by 1st September 2014;
(v) To provide that the 2003 Order insofar as it relates to 'the Turner Children School Fees Fund' and 'the Charles Turner Fund' therein defined is hereby set aside.
[Paragraphs 10 and 11 required Ms Dunhill and Mr Turner each to pay the other £75,000 for the benefit of William.]
13. The Husband shall pay or cause to pay to the wife periodical payments for the benefit of William as follows:
(i) From 26th June 2014 at the rate of £9,000 per annum payable monthly in advance until William shall attain the age of 18 years or until he completes his tertiary education (first degree only and a maximum of one prior gap year) whichever is the later;
(ii) From 26th June 2014 in respect of the cost of William's school uniform until William shall complete his secondary education as follows:-
(a) For the academic year 2014/15, one half of the costs incurred up to a cap of £600 (for his contribution) PROVIDED THAT the Wife shall pay for the full amount in advance and present him with the bill of which he will pay 50% forthwith subject to the cap;
(b) For each of the academic years 2015/16, 2016/17, 2017/18, and 2018/19, one half of the costs incurred up to a cap of £300 (for his contribution) PROVIDED THAT the Wife shall pay for the full amount in advance and provide him with the bill of which he will pay 50% forthwith subject to the cap.
14. The Husband shall pay or cause to be paid to the Wife periodical payments for the benefit of Piers as follows:-
(i) From 16th June 2014 for 12 months at the rate of £18,000 per annum payable monthly in advance;
(ii) Thereafter at the rate of £12,000 per annum payable monthly in advance until further order.
15. The Wife shall pay or cause to be paid to the Husband a lump sum of £49,650 on or before 10th July 2014.
16. All and any arrears under any previous Orders for periodical payments herein (and in FDO1 D07714) are remitted.
17. The Orders made on 27th February 2003 and in [sic] 19 February 2013 in respect of periodical payments for Natasha, Piers and William are hereby discharged.
18. The claims of the Husband and the Wife respectively for financial provision, property adjustment and pension orders are hereby dismissed and neither of them shall be entitled to make any further such applications against the other arising from this marriage under section 23(1)(a) or (b) of the Matrimonial Causes Act 1973 or otherwise. AND neither of them shall be entitled to apply for financial provision from the other's estate on that other's death.
19. The Wife shall pay to the solicitors of Natasha, Piers and William the full amount of their costs of these proceedings as billed by 10th July 2014.
20. The solicitors of Natasha, Piers and William shall repay to the Husband's solicitors the amount of £44,151.90 previously paid to them in respect of their costs by 10 July 2014.
21. The Wife's appeal of the Judgments of District Judge Berry are dismissed on the basis of no order as to costs.
It can be seen from this that the transfers to Mr Turner from the AST in March 2004 were ratified, whereas Ms Dunhill was required to reconstitute her Fund with £1.5 million of her own assets, of which £0.5 million can be appointed to her; and that the provision for periodical payments was slightly less than DJ Berry had proposed. Furthermore, counsel for Hughmans submitted without contradiction from counsel for Ms Dunhill that the figure of £49,650 mentioned in paragraph 15 represented the loans which Mr Turner claimed he had made to Ms Dunhill, together with interest.
23. Save as aforesaid, there shall be no Order as to costs
It is clear that the 2014 Consent Order represented a disastrous outcome to the 2013 Family Proceedings for Ms Dunhill. In the first place, its terms were considerably less favourable to her than the order which DJ Berry had proposed to make in his second judgment. Secondly, she had to pay very substantial legal costs. According to the Schedule to her Voluntary Particulars of Loss and Damage, she paid the following sums:
i) £483,934 to Hughes Fowler Carruthers (presumably including counsel's fees);
Ms Dunhill has declined to waive privilege in any of the advice she received in relation to the 2013 Family Proceedings. It is manifest, however, that she must have been advised that pursuit of the 2013 Family Proceedings was unlikely to lead to a better outcome for her than the 2014 Consent Order.
ii) £40,530 to Miles Preston (including counsel's fees);
iii) £64,109 to Moss Fallon (including counsel's fees);
iv) £234,452 to the solicitors who acted for the Children (presumably including counsel's fees);
v) £22,180 to Mr Lee's solicitors; and
vi) an unspecified sum to the Chancery Leading Counsel.
Genesis of the present applications
On 18 July 2014 Ms Dunhill served a short Request for Further Information is respect of Hughmans' Particulars of Claim and a lengthy Request for Further Information in respect of the Hughmans' Reply and Defence to Counterclaim. Hughmans replied to the former, but declined to reply to the latter.
On 6 August 2014 Hughmans' solicitors wrote to Ms Dunhill regarding Ms Dunhill's Requests for Further Information saying:
"We note that these Requests have been made after the Court Order dated 27 June 2014 in respect of the underlying litigation between yourself and your ex-husband. We assumed that you would be either withdrawing your Defence and Counterclaim, or at the least seeking permission to amend the same in light of the Court Order dated 27 June 2014, and in particular in respect of paragraph 3 of the Recital."
Ms Dunhill replied on 18 August 2014 maintaining that the Defence and Counterclaim was correctly pleaded.
On 23 September 2014 Hughmans issued their application. On 3 October 2014 Ms Dunhill issued her first application. On 10 October 2014 Ms Dunhill served Voluntary Additional Particulars of Loss and Damage.
Shortly before 10 October 2014 Natasha and Piers executed undated absolute and unconditional assignments to Ms Dunhill of all their causes of action, right, entitlements and claims against Hughmans and Mr Black in consideration of natural love and affection and the payment of £1.
On 27 October 2014 Ms Dunhill issued her application for permission to amend her Defence and Counterclaim. Among other things, the draft Amended Defence and Counterclaim seeks to introduce causes of action which are alleged originally to have accrued to the Children. In the case of Natasha and Piers Ms Dunhill claims as assignee of those causes of actions. In the case of William Ms Dunhill proposes that she should act as his litigation friend.
On 14 January 2015 counsel instructed by Natasha and Piers wrote to them to confirm that counsel had advised them in conference on 13 January 2015 with respect of the assignments they had executed in favour of Ms Dunhill and to record that they were satisfied with their decision to enter into those assignments.
On 6 February 2015 Ms Dunhill sent Hughmans a revised draft of her Amended Defence and Counterclaim.
Principles applicable to summary judgment applications
There is no dispute about these. They were conveniently summarised by Lewison J (as he then was) in the context of defendants' applications in Easyair Ltd v Opal Telecom Ltd  EWHC 339 (Ch) at :
"As Ms Anderson QC rightly reminded me, the court must be careful before giving summary judgment on a claim. The correct approach on applications by defendants is, in my judgment, as follows:
i) The court must consider whether the claimant has a 'realistic' as opposed to a 'fanciful' prospect of success: Swain v Hillman  2 All ER 91;
ii) A 'realistic' claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel  EWCA Civ 472 at .
iii) In reaching its conclusion the court must not conduct a 'mini-trial': Swain v Hillman.
iv) This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at .
v) However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5)  EWCA Civ 550.
vi) Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd  FSR 63.
This summary was cited with approval by Etherton LJ (as he then was, with whom Sullivan LJ and Wilson LJ, as he then was, agreed) in AC Ward & Son v Catlin (Five) Ltd  EWCA Civ 1098,  Lloyds Rep IR 301 at .
vii) On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant's case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd  EWCA Civ 725."
Ms Dunhill's application for summary judgment
Ms Dunhill seeks summary judgment on the following issues:
"(i) The proceeds of sale of 33 Chelsea Park Gardens were trust assets of the Alexandra Settlement Trust both before and after the variation of that trust by the Consent Order made in the Family Division on and/or dated 7th April 2003.
(ii) The proceeds of sale held in the joint account in the Bank of Scotland following the making of the Consent Order dated 7th April 2003 were held on the trusts set out in that Consent Order.
(iii) The trustees of the varied trusts appointed by the court by that Consent Order were Mr Nick Lee and Mr Ted Kalborg.
(iv) The transfer of £160,541.80 from the Bank of Scotland to Charles Turner in March 2004 was made to him out of the proceeds of sale held by that Bank, being trust money received by him and used by him for his own benefit, in breach of trust.
(v) A sum of about £900,000 in total was paid out of trust assets of the Alexandra Settlement Trust towards the purchase of the 52 year lease on 71 Eaton Terrace in April 2004. Trust money was used towards payment of the 10% deposit and the balance of the purchase money. The Alexandra Settlement Trust had a beneficial interest in No 71 Eaton Terrace because of use of its trust money in the purchase.
(vi) The Form E in the Family Division advised on by Hughmans, sworn by Alexandra Dunhill and filed by Hughmans in the court on or about 30th July 2010 and was inaccurate and misleading for that court in that:
a. It stated that No 71 was owned beneficially as to 100% by Alexandra Dunhill, whereas the Alexandra Settlement Trust was beneficially interested in it because of the trust money used in April 2004 in its purchase;
b. It omitted the liabilities of Alexandra to the Alexandra Settlement Trust arising from the transfer in breach of trust of a total of about £162,000 to Charles Turner, including the transfer of £160,541.80;
c. It omitted the liabilities of Alexandra to the Alexandra Settlement Trust arising from the use of trust assets in the purchase of the 52 year lease on 71 Eaton Terrace in April 2004.
(vii) The Witness Statement of Alexandra Dunhill made on 6th July 2011 pursuant to the order of District Judge Reid dated 8th December 2010 and which was advised upon by Hughmans and filed by Hughmans in the court on 7th July 2011, was inaccurate and misleading for the court in that:
a. Paragraph 29, first bullet point, which was drafted by Hughmans and advised upon by Hughmans, stated '£840,000-this was from the dissolved Trust although it could easily have been from the Trust itself has it not been dissolved as set out above)'. In fact the trust had not been dissolved and trust money was used to acquire the lease.
b. Paragraph 26 stated that Charles Turner received 'free and unfettered use of the what was once a sacrosanct housing fund'. This was inaccurate and misleading in not stating that the money taken by him was taken and used for his own benefit in breach of trust.
Counsel for Ms Dunhill submitted that these issues turned upon the interpretation of the Second 2003 Consent Order and other documents, and thus were suitable for summary determination. He further submitted that determination of these issues would facilitate settlement discussions between the parties.
c. Paragraph 29 represented that a sum of £840,000 paid towards the purchase price of the lease on No 71 in April 2004 was not trust money of the Alexandra Settlement Trust. This was inaccurate and misleading in that the total sum paid from trusts assets, which should have been about £900,000, was trust money used for the acquisition of the lease."
Counsel for Hughmans' primary submission was this application fell away if Hughmans' application was successful. Logically, this is unassailable. Nevertheless, I shall consider these issues, partly in deference to the great deal of time and effort which counsel for Ms Dunhill put into arguing them, but also because of counsel for Ms Dunhill's reliance upon these matters in support of his other submissions.
Counsel for Hughmans' secondary submission was that it was not appropriate to determine these issues in advance of trial because they affected Mr Turner and the Trustees, but (a) those parties are not before Court and (b) they had settled their differences with Ms Dunhill and the Children in the 2014 Consent Order. He accepted that the Court could determine these issues at trial, but contended that the Court should be cautious about doing so in advance of trial. I am not persuaded by this submission. The fact that Mr Turner and the Trustees have settled with Ms Dunhill and the Children and are not parties to these proceedings does not in itself provide a reason not to grant summary judgment on issues as between Ms Dunhill and Hughmans if those issues are otherwise amendable to summary judgment. I would also point out that both Mr Lee and Mr Kalborg have made witness statements on behalf of Ms Dunhill for the purposes of these proceedings.
Counsel for Hughmans' tertiary submission that was the issues in relation to which Ms Dunhill sought summary judgment were not in truth discrete issues of fact or law which were suitable for summary determination in isolation from the other issues between the parties. This strikes me as a point of greater force, but as will appear I consider that it applies more strongly to some issues than others.
Issues (i), (ii) and (iii)
These issues turn on the meaning and effect of the Second 2003 Consent Order. Although counsel for Ms Dunhill addressed these matters in considerable detail in his skeleton argument and oral submissions, it does not appear to me that there is any real dispute about them.
The Second 2003 Consent Order was expressed to be made pursuant to section 24(1)(c) of the MCA73, which provides, so far as relevant:
"(1) On granting
a decree of judicial separation
the court may make one or more of the following orders, that is to say-
Section 25(1) of the MCA73 provides that:
(c) an order varying for the benefit of the parties to the marriage and of the children of the family or either or any of them any ante-nuptial or post-nuptial settlement
made on the parties to the marriage
"It shall be the duty of the court in deciding whether to exercise its powers under section
and if so in what manner to have regard to all the circumstances of the case, first consideration being given to the welfare while a minor of any child of the family who has not attained the age of eighteen."
Section 25(2) of the MCA73 provides that the court shall in particular have regard to a list of eight specified matters.
It is common ground between the parties on the pleadings that the Second 2003 Consent Order was effective as soon as it was made. Accordingly, the AST was varied, the Trustees were appointed, the proceeds of sale of 33 Chelsea Park Gardens were held on the trusts set out in paragraphs 1.2 and 1.3 of the Order and the new beneficial interests vested on 7 April 2003: see Burton v Burton  2 FLR 419, Harper v O'Reilly  2 FLR 816 and Mountney v Treharne  EWCA Civ 1174,  Ch 135. Although no Deed of Variation was executed as contemplated by the Order, that was a matter of implementation, as to which the parties had liberty to apply.
Issues (iv) and (v)
These issues concern the transfers from the AST to Ms Dunhill and Mr Turner in March 2004 and the purchase of the leasehold interest in 71 Eaton Terrace. Although counsel for Ms Dunhill again addressed these matters in considerable detail in his skeleton argument and oral submissions, it appears to me that the scope of the dispute about them is quite narrow.
So far as the transfers are concerned, I have set out the facts in paragraphs 24, 29 and 30 above. I do not understand these facts to be in dispute.
Although Ms Dunhill says that she agreed to the transfers on the strength of Mr Turner's promises to make the payments set out in the 23 March 2004 letter, that letter was expressed to be "subject to contract" and it was followed by the letters dated 27 September and 1 October 2004 and the subsequent negotiations between the parties. As counsel for Ms Dunhill submitted, on a straightforward contractual analysis, no agreement was concluded.
Even if an agreement had been concluded, it would have been unenforceable. Only the Court can make an order under the MCA73 varying a trust or ordering maintenance or periodical payments. This is because the statutory discretions are entrusted to the Court, which must act in accordance with section 25. Thus the jurisdiction of the Court to make orders under section 24 of the MCA73 cannot be the subject of a legally enforceable contract: see Xydhias v Xydhias  2 All ER 386. The same applies to the jurisdiction of the Court to vary such an order under section 31 of the MCA73, subsection (7) of which requires the Court to consider the same matters (as DJ Berry correctly recorded). Again, I do not understand this to be in dispute.
Where there is more room for dispute is as to the effect of the transfers. On the face of it, Ms Dunhill and Mr Turner acted in breach of trust in arranging for the transfers. On the other hand, as counsel for Ms Dunhill pointed out, the Order envisaged that Ms Dunhill and Mr Turner would invest their respective Funds in the purchase of properties for them to live in; and Ms Dunhill did invest the money she received from the AST in the purchase of 71 Eaton Terrace. Counsel for Ms Dunhill submitted that the correct conclusion to be drawn in those circumstances was that the Alexandra Dunhill Turner Fund had acquired the relevant proportion of the beneficial interest in 71 Eaton Terrace.
The problem with that submission is that it does not reflect what actually happened and what did not happen. What actually happened was that the money was transferred to Ms Dunhill and used by her to purchase a property in her sole name. More importantly, what did not happen, as least so far as the evidence before me goes, is that the Trustees did not exercise their discretion as contemplated by the Order. On the other hand, that would not prevent the relevant proportion of the property from being held by Ms Dunhill on constructive trust.
In my judgment this issue is not susceptible to summary determination. The main reason for this is that I consider that it requires further investigation of the role of the Trustees during this period. Did they know what Ms Dunhill and Mr Turner were doing so? Did they agree to it, or at least acquiesce in it? It also requires investigation of what Mr Turner did with the money he received from the AST, and in particular the extent to which he used it to purchase a property as contemplated by the Order. It might also be affected by further investigation of the advice Ms Dunhill received from PHB. As noted above, Ms Dunhill has declined to waive privilege in respect of this any further than she has done. She is entitled to maintain her privilege, and no inference adverse to her can be drawn from that. Nevertheless, it seems to me to be arguable that, Ms Dunhill having at least partially waived the privilege, the waiver extends further.
I am also doubtful that this is a discrete issue which it makes sense to determine in isolation from the other issues. My reasons for saying this will, I hope, become clear below.
Issues (vi) and (vii)
These issues concern Ms Dunhill's Form E dated 22 July 2010 and witness statement dated 6 July 2011. Unlike the preceding issues, these matters are strenuously disputed.
So far as the Form E is concerned, Ms Dunhill contends that this was inaccurate and misleading in the three respects set out above, and in particular in stating that Ms Dunhill beneficially owned 100% of 71 Eaton Terrace. As counsel for Hughmans pointed out, however, the Form E was accompanied by Ms Dunhill's witness statement dated 22 July 2010. This explained that Ms Dunhill had agreed to Mr Turner's request to release money from the AST (as varied by Second 2003 Consent Order). Furthermore, paragraph 14 of the witness statement implied that she had used the money to buy her house, although it did not spell this out. Furthermore, the account given in the witness statement dated 22 July 2010 was amplified in the witness statement dated 6 July 2011. This made it crystal clear that Ms Dunhill had used the trust money to purchase 71 Eaton Terrace. It also stated clearly that Ms Dunhill had wanted the property to be in the name of the AST rather than in her own name. In these circumstances, I consider that Hughmans has a real prospect of establishing that the Form E was not materially inaccurate or misleading, or at least that any inaccuracy was subsequently corrected.
As for the witness statement dated 6 July 2011, Ms Dunhill contends that this was inaccurate and misleading in the three respects set out above, and in particular in stating in paragraph 29 that the AST had been "dissolved". Counsel for Ms Dunhill told me on instructions that it was Ms Dunhill's case that Mr Black had invented this statement and inserted it in her mouth, an allegation which is not pleaded (or least not clearly pleaded). In the alternative, he submitted that Mr Black should have realised that it was legally inaccurate. Mr Black's evidence is that the witness statement was prepared "with great care on the basis of [Ms Dunhill's] detailed written and oral instructions".
In my view the correct status of the AST during that period is not entirely clear. In particular, as noted in paragraph 29 above, it is not clear what happened to the balance of the money left in the AST account after the March 2004 transfers. Furthermore, while it may have been technically inaccurate to say that the AST had been "dissolved", I consider that it is arguable that this was a reasonable way to express, in summary and in layman's terms, what had happened, at least having regard to the rather fuller explanation of what had happened which preceded this statement. Accordingly, I consider that Hughmans has a real prospect of establishing that the witness statement was not materially inaccurate or misleading.
Hughmans' application for summary judgment: the claim for unpaid fees
Counsel for Ms Dunhill contended that she had no less than 11 defences to Hughmans' claim for unpaid fees. A number of these arise out of Ms Dunhill's counterclaim for professional negligence and/or breach of fiduciary duty and/or wasted costs and I shall deal with them under those headings below. At this stage I shall address three defences which are largely, although not entirely, independent of those claims.
Counsel for Ms Dunhill submitted that Ms Dunhill's retainer of Hughmans was an entire contract to conduct the proceedings which were pending before DJ Berry, relying on Underwood, Son & Piper v Lewis  2 QB 306, Richard Buxton v Mills-Owen  EWCA Civ 122,  1 WLR 1997 and French v Carter Lemon Camerons LLP  EWCA Civ 1180,  PNLR 2, so that Hughmans could only terminate the retainer on reasonable grounds and upon reasonable notice. I accept that this is well arguable.
Counsel for Ms Dunhill further submitted that Hughmans had repudiated the contract through their breaches of duty. This submission overlooks the fact that it was Ms Dunhill who terminated the retainer prior to the conclusion of the proceedings. Ms Dunhill does not allege any conduct on the part of Hughmans which evinced either an inability to perform the contract or an intention to treat it as at an end. Accordingly, in my judgment this contention has no real prospect of success.
Counsel for Ms Dunhill submitted that Ms Dunhill had a counterclaim for damages for misrepresentation under section 2(1) of the Misrepresentation Act 1967 arising out of Mr Black's alleged representation that the proceedings would cost "about £25,000" or "a maximum of £25,000" (depending on which paragraph of Ms Dunhill's pleading one is looking at). Hughmans denies that Mr Black made any such representation.
Counsel for Hughmans submitted that Ms Dunhill has no real prospect of establishing that this representation had made been. In support of this submission, he relied upon the following points. First, the inconsistency in Ms Dunhill's own pleaded case. Secondly, the absence of any reference to such a representation in the contemporaneous documentation. Thirdly, the fact that the Retainer Letter did not mention the figure of £25,000, but instead stated that "[i]t is not possible at present to fix or a give a realistic estimate of the overall level of costs and disbursements that will be incurred and no estimate or quotation is given" and "any estimate, quotation or other indication of costs
will not be binding" (see paragraphs 66 and 67 above). Fourthly, the fact that Ms Dunhill had paid Hughmans nearly £65,000 without any protest that the sums she was being charged were greatly in excess of £25,000. Fifthly, the fact that Ms Dunhill first suggested that Mr Black had advised her that the cost would be about £25,000 in her email dated 13 January 2013 (paragraph 158 above).
Having regard to these points, I do not consider that Ms Dunhill has a real prospect of establishing that the figure of £25,000 was anything more than an approximate, initial, non-binding indication of the level of costs that Mr Black estimated would be involved. Accordingly, I do not regard the misrepresentation claim as having a real prospect of success.
Counsel for Ms Dunhill submitted that it was open to Ms Dunhill to have Hughmans' fees assessed. As counsel for Hughmans submitted, however, under section 70(3) of the Solicitors Act 1974 no bill may be assessed more than 12 months after the delivery of the bill unless there are special circumstances. Ms Dunhill does not allege any special circumstances which would justify the delay. Accordingly, in my judgment this contention has no real prospect of success.
Hughmans' application for summary judgment: the counterclaim for professional negligence
Counsel for Ms Dunhill submitted that the sole ground upon which Hughmans had sought summary judgment in respect of the counterclaim for professional negligence was that Ms Dunhill had no sustainable case on causation, and that it was not open to Hughmans to seek summary judgment on any other ground. I do not accept this submission. The basis for Hughmans' application was that the counterclaim stood no real prospect of success, in particular but without limitation for that reason. Thus paragraph 12 of Mr Black's second witness statement dated 10 November 2014 clearly raised the issue of the scope of Hughmans' retainer, and Ms Dunhill served evidence in reply to that witness statement. Furthermore, Ms Dunhill's own application to amend her Defence and Counterclaim gives rise to issues as to the parties to the retainer and as to whether Hughmans owed the Children an independent duty of care.
The scope of Hughmans' retainer
I reviewed the law with regard to solicitors' retainers in Mason v Mills & Reeve  EWHC 410 (Ch),  STC 1177 at -. That analysis was not criticised by the Court of Appeal in its decision in that case  EWCA Civ 498,  STC 1760, where Davis LJ observed at :
"Really what these cases, and other cases cited to us, show is that the scope of the retainer, and the nature and extent of the duty arising, depend on the particular documentation and the particular facts of the particular case."
In the present case, Hughmans' retainer was set out in the Retainer Letter. It was to act for Ms Dunhill "in regard to your matrimonial affairs". Counsel for Hughmans submitted that the retainer was limited to acting for Ms Dunhill on, and advising her in relation to, an application to vary the 2003 Consent Orders for spousal maintenance and periodical payments for the benefit of the Children. In support of this he relied upon the following:
i) Hughmans' letter to Mr Turner dated 22 April 2010 (paragraph 63 above);
I agree that it is clear that the principal focus of the retainer was the variation application. Nevertheless, I consider that Ms Dunhill has a real prospect of establishing that Hughmans' retainer extended beyond this. At the very least, it must have extended to acting for Ms Dunhill on, and advising her in relation to, Mr Turner's cross-application. More importantly, I consider that it is arguable that the retainer extended to advising Ms Dunhill in relation to the financial aspects of her matrimonial affairs. I say this for two reasons. First, the terms of the Retainer Letter itself are quite general in referring to Ms Dunhill's "matrimonial affairs". It does not necessarily follow that the retainer extended to every aspect of Ms Dunhill's matrimonial affairs: for example, she was already divorced and there would have been no reason for Hughmans to advise her in relation to that. Nevertheless, the Retainer Letter was not restricted to the variation application. Secondly, Ms Dunhill's note on Finances made it clear that her concern was that she should be, as she put it, "financially sorted out".
ii) Ms Dunhill's note on Finances (paragraph 64 above);
iii) Mr Black's letter to Ms Dunhill dated 13 May 2010 (paragraph 68 above);
iv) Ms Dunhill's Form A (paragraph 71 above);
v) Mr Black's email to Ms Dunhill dated 26 May 2010 (paragraph 72 above); and
vi) Ms Dunhill's statement in paragraph 1 of her second witness statement in these proceedings that she had been "involved in Family Division Proceedings which were for variation of Maintenance for my benefit and the benefit of my Children".
The position can be tested in this way. In essence, what Ms Dunhill wanted was to give legal effect to the agreement she believed she had reached with Mr Turner for him to pay a total of £7,000 per month plus the agreed extras. But what mattered to her was the result, not the legal route by which it was to be achieved. Hughmans advised her that the correct procedure for attempting to achieve this result was by means of an application to vary the 2003 Orders. I consider that it is arguable, however, that the scope of Hughmans' retainer extended to advising Ms Dunhill as to the possibility of making an application to set aside the 2003 Consent Orders for non-disclosure by Mr Turner (which, I should make clear, is not the same thing as positively advising her to make such an application). Even if it is not arguable that the retainer extended that far at the outset, I consider that it is arguable that the retainer extended to this once it became an important part of Ms Dunhill's case, as it did after Mr Turner swore his Form E, that Mr Turner had substantial hidden assets and income.
Even if Hughmans is correct as to the scope of the retainer, however, it would not necessarily follow that all the matters of which Ms Dunhill complains fell outside the scope of the retainer. Thus I consider that it is at least arguable that the retainer extended to (a) advising Ms Dunhill in relation to her Form E and accompanying witness statement and (b) investigating the accuracy of Mr Turner's Form E and Form M1 from 2002 and 2003 in order to impeach his credibility, particularly once Mr Smulders' email had been received (see paragraphs 94-97 above).
On the other hand, I do not consider that Ms Dunhill has a real prospect of establishing that the scope of Hughmans' retainer was as broad as appears to be alleged in paragraph 62 of Ms Dunhill's draft Amended Defence and Counterclaim. In particular, I do not consider that Ms Dunhill has a real prospect of establishing that Hughmans' retainer extended to advising Ms Dunhill in relation to the AST, any more than PHB's retainer had following PHB's letter dated 15 October 2004 (see paragraphs 35-39 above) or Withers' retainer had (see paragraph 41 above).
The parties to the retainer
On the face of the Retainer Letter, Hughmans was retained by Ms Dunhill and not by the Children. This is not affected by the fact that Ms Dunhill was seeking periodical payments for the benefit of the Children as well as maintenance for herself. Furthermore, it was Ms Dunhill who paid Hughmans (in part) for their services. Despite this, Ms Dunhill contends that the Children were parties to the retainer. In my judgment, this contention is obviously unsustainable.
Counsel for Ms Dunhill relied on the fact that Natasha had turned 18 on 17 May 2010 and Piers had turned 18 on 24 April 2012. In my judgment this is immaterial. It is not suggested that this deprived the Court of jurisdiction to order Mr Turner to make periodical payments to Ms Dunhill for the benefit of Natasha and Piers: see Downing v Downing  Fam 288. Furthermore, the Family Procedure Rules did not require the Children to be separately represented on the variation application whether they were minors or adults.
Counsel for Ms Dunhill advanced an elaborate series of arguments concerning Hughmans' Terms of Business, and in particular the second and third paragraphs quoted in paragraph 67 which exclude liability to third parties. These arguments involved inter alia the Unfair Terms in Consumer Contracts Regulations 1999, the Contracts (Rights of Third Parties) Act 1999, Schedule 2 paragraph 24 of the Administration of Justice Act 1985, section 60(5) of the Solicitors Act 1974 and section 3 of the Unfair Contract Terms Act 1977. It is not necessary to consider the arguments in any detail. As counsel for Hughmans submitted, they all involved construing the word "you" in the Retainer Letter and Terms of Business as embracing the Children as well as Ms Dunhill. For the reasons given above, such a construction is unsupportable.
Did Hughmans owe the Children an independent duty of care?
Ms Dunhill contends that, even if the Children were not parties to the retainer, Hughmans owed the Children an independent (tortious) duty of care. In my judgment, this contention is equally unsustainable. Counsel for Ms Dunhill relied on the principle, which is well established, that a solicitor can owe a duty of care in the absence of a contractual retainer. There is no basis for contending that Hughmans assumed any responsibility to the Children, however. Furthermore, any duty owed by Hughmans to the Children would conflict with their duty to their client, Ms Dunhill.
Breach of duty
Paragraph 119 of Ms Dunhill's draft Amended Defence and Counterclaim contains no less than 34 allegations that Hughmans acted in breach of their duty of care towards Ms Dunhill. It also contains additional allegations of breaches towards the Children, but these traverse some of the same ground.
The AST. Ten of Ms Dunhill's allegations (sub-paragraphs (1) to (4), (15, (16), (21), (22), (30) and (31)) relate to Hughmans' failure to advise Ms Dunhill in relation to the AST, the transfers of money from the AST to herself and Mr Turner, the use of trust money to purchase 71 Eaton Terrace and related matters. Having regard to my conclusions as to the scope of Hughmans' retainer, I do not consider Ms Dunhill has a real prospect of establishing that Hughmans acted in breach of their duty in this respect. Ms Dunhill did not ask Hughmans to advise her about these matters. Nor were they matters which Hughmans had a duty to advise her about, for three reasons.
First, as I have said, the principal focus of the retainer was Ms Dunhill's desire to enforce the agreement she believed Mr Turner had made by means of the variation application.
Secondly, these were matters which (as Hughmans was aware) she had previously been advised about by PHB (whose advice Ms Dunhill had declined to accept).
Thirdly, given the Court's powers under the MCA73, it would not necessarily have made any difference to Ms Dunhill's case if it had been presented to DJ Berry on the basis (as Ms Dunhill now contends it ought to have been presented) that the Alexandra Dunhill Turner Fund, and thereafter the Children, had a beneficial interest in 71 Eaton Terrace. After all, it would have made no difference to the Court's assessment of Mr Turner's assets and income. Furthermore, the Court was required to give "first consideration" to the position of the (minor) Children in any event. I shall return to this point below.
Mr Turner's non-disclosure. Eight of Ms Dunhill's allegations (sub-paragraphs (5) to (11) and (17)) relate to Hughmans' failure properly to investigate Mr Turner's non-disclosure of assets in 2003. Notwithstanding the submissions of counsel for Hughmans to the contrary, I consider that Ms Dunhill has an arguable case that Hughmans acted in breach of duty in this respect. As Ms Dunhill has demonstrated in these proceedings, Hughmans could have obtained more evidence than it did: in particular, further Land Registry searches and valuations of the Welsh Properties. At the very least, it is arguable that Hughmans ought to have advised Ms Dunhill as to the possibility of obtaining such further evidence and obtained her instructions as to whether she was willing to pay for this.
Prof Gazzard. Three of Ms Dunhill's allegations (sub-paragraphs (12) to (14)) relate to Hughmans' failure to procure evidence from Prof Gazzard about Mr Turner's health. In my judgment these allegations are hopeless for the following reasons.
First, I accept that Prof Gazzard was a compellable witness in so far as he was in a position to give evidence of fact with respect to his treatment of Mr Turner, that is to say, as to his past observations, diagnoses and prescriptions, and that confidentiality would not have prevented such evidence from being adduced by Ms Dunhill (as opposed to requiring restrictions to be placed upon the use of the information). But since Dr Peters had access to Mr Turner's medical records, this would not have added anything.
Secondly, even if Prof Gazzard was technically a compellable witness with regard to his opinion as to Mr Turner's prognosis, the authorities indicate that the Court will normally be cautious about compelling such an expert to give evidence: see Brown v Bennett (unreported, 13 October 2000) at p. 7 (Neuberger J, as he then was). It is manifest that the Court will be even more cautious where it already has evidence from a suitably qualified independent expert. It therefore seems very unlikely that DJ Berry would have upheld a witness summons to Prof Gazzard which was designed to compel him to give opinion evidence.
Thirdly, even if Prof Gazzard had been compelled to give evidence, Ms Dunhill does not allege in her Defence and Counterclaim or her draft Amended Defence and Counterclaim that Prof Gazzard would have said anything different to Dr Peters. Still less does she allege that Dr Peters' evidence was wrong and that Prof Gazzard's evidence would have been preferred to Dr Peters'.
Fourthly, the real issue was not the medical evidence as to Mr Turner's prognosis, but Mr Turner's evidence as to when he intended to retire. DJ Berry accepted Mr Turner's evidence on this question, and this is no reason to think that Prof Gazzard would have given evidence which led to DJ Berry disbelieving Mr Turner.
Fifthly, this issue was considered not just by Hughmans, but also by Mr Oliver and Mr Francis and their advice was unanimous.
Piers. One of Ms Dunhill's allegations (sub-paragraph (18)) is of a failure on the part of Hughmans to investigate and prepare evidence concerning Piers' needs. This is a baffling allegation. Ms Dunhill's witness statement dated 6 July 2011 dealt in detail with Piers' needs, and DJ Berry accepted Ms Dunhill's evidence, finding that the severity of Piers' condition was such as to justify a periodical payments order for his lifetime (see paragraph 143 above). Accordingly, this allegation has no prospect of success.
Costs of about £25,000. Another allegation (sub-paragraph (19)) is that the costs estimate of about £25,000 was given negligently. No particulars of this allegation are given. In my judgment it has no real prospect of success.
Loss of maintenance. As noted above, Ms Dunhill alleges that Mr Black told her that the court rarely if ever took away existing periodical payments. Mr Black denies this. Counsel for Hughmans submitted that the allegation was not credible given the absence of complaint by Ms Dunhill when Mr Turner made his cross-application. I do not consider that this justifies the conclusion that Ms Dunhill has no real prospect of establishing that the representation was made. But what the pleading (sub-paragraph (20)) fails to make out is any coherent case that the advice, assuming it was given, was negligent. In particular, it is not alleged that no reasonably competent solicitor having Mr Black's expertise would have given such advice.
Instructions to Mr Francis. Ms Dunhill alleges that Hughmans failed properly to instruct Mr Francis for the consultation (sub-paragraph (23)). Although it is not expressly stated in sub-paragraph (23), the complaints made are those itemised in paragraph 95 of the draft Amended Defence and Counterclaim, in particular that the instructions failed to include the AST, the Second 2003 Consent Order or the 23 March 2004 letter and failed to ask Mr Francis to advise about the AST. It can be seen from the notes of the consultation, however, that the subject was discussed (see paragraph 128 above). Someone, perhaps Mr Oliver, said that there had been "a clear breach of fiduciary duties", but Mr Francis did not consider this relevant having regard to the test which the judge was required to apply. In my judgment this allegation has no real prospect of success.
Procedural failures. Six of Ms Dunhill's allegations (sub-paragraphs (24) to (25)) concern alleged procedural failures in the conduct of the litigation. The main complaint that is made is that Hughmans ought to have ensured that the case was listed before a High Court Judge. Remarkably, it is alleged that the failure to do so resulted in "protracted and expensive hearings which produced wholly disproportionate costs". The pleading does not attempt to explain why a hearing before a High Court Judge, rather than a District Judge, would have saved costs. In his submissions, however, counsel for Ms Dunhill contended that Hughmans ought to have ensured that a preliminary issue was directed to determine the beneficial ownership of 71 Eaton Terrace, with the Children being joined as parties, in accordance with the procedure endorsed by the Court of Appeal in Goldstone v Goldstone  EWCA Civ 39,  1 FLR 1926. He further contended that this would have saved costs and provided a correct basis for the further conduct of the proceedings. No coherent explanation has been given as to why it is alleged that Hughmans were negligent in this respect, however. Accordingly I do not consider that this allegation has a real prospect of success.
General allegations. Sub-paragraphs (32) to (34) contain some very general allegations of negligence on the part of Mr Black. In so far as they are particularised, they seem to be repetitions of matters I have already considered. The only new allegation is an allegation that Mr Black did not personally attend certain hearings in whole or in part. Mr Black admits that he did not personally attend the whole of every hearing. It would, of course, have cost Ms Dunhill more if he had done so. Why this was negligent is not explained. In my view this allegation has no real prospect of success.
Conflict of interest. Ms Dunhill alleges that Hughmans put themselves into a position of conflict of interest by acting for Ms Dunhill and for, or for the benefit of, the Children (sub-paragraphs (35) and (37)). In my judgment this allegation is untenable. As explained above, there would have been a conflict of interest if Hughmans had acted for the Children as well for Ms Dunhill. There was no conflict in acting for Ms Dunhill and seeking periodical payments to her for the benefit of the Children. This is commonplace in ancillary relief applications.
Counsel for Ms Dunhill argued that the position was different in this case because it was in the interests of the Children to uphold the AST as varied by the Second 2013 Consent Order and their rights in respect of it. But that argument simply confirms that there would have been a conflict of interest if Hughmans had acted for the Children as well for Ms Dunhill. If Ms Dunhill had instructed Hughmans to advise her in relation to the AST, then they might have had a duty to make it clear to her that they could only advise her and not the Children; but she did not.
Lien. Ms Dunhill complains that Hughmans asserted a lien over the case papers (sub-paragraph (37)). On its face, this is a baffling allegation. It is not even alleged that Hughmans was not entitled to exercise a lien, let alone that it acted in breach of any duty in asserting its entitlement. Counsel for Ms Dunhill told me that it was Ms Dunhill's case that Hughmans was not entitled to exercise a lien because Hughmans had repudiated the retainer. I have already addressed that issue above.
Even if (contrary to most of the conclusions I have reached in the preceding section of this judgment), Ms Dunhill has a real prospect of establishing breach of duty on the part of Hughmans, in order to have a viable claim she must also have a real prospect of establishing that those breaches of duty have caused her loss and damage.
Paragraph 121 of the Defence and Counterclaim pleaded Ms Dunhill's case as to the loss and damage alleged to have been caused to Ms Dunhill by the breaches of duty of which she complained. Paragraph 121 ran to 16 sub-paragraphs, which may be briefly summarised as follows:
i) Sub-paragraphs (1) to (7) alleged that, if Ms Dunhill had been properly advised, she would have brought claims against Mr Turner for breach of trust and for fraudulent non-disclosure of his assets in 2003, including but not limited to setting aside the 2003 Consent Order, and would have obtained and enforced judgments against Mr Turner, alternatively that she had lost the chance of achieving that.
Ms Dunhill's Voluntary Particulars of Loss and Damage run to no less than 30 paragraphs. Much of this traverses the same ground as paragraph 121 of the Defence and Counterclaim, but in different terms. The one thing that is completely new is the Schedule of legal costs referred to above.
ii) Sub-paragraph (8) alleged loss of the opportunity to negotiate a settlement with Mr Turner.
iii) Sub-paragraph (9) alleged that Hughmans had caused Ms Dunhill to lose her maintenance and her home.
iv) Sub-paragraph (10) alleged that Ms Dunhill had ongoing liabilities to the AST.
v) Sub-paragraphs (11) and (15) alleged that Ms Dunhill had incurred additional liabilities in relation to the Children.
vi) Sub-paragraph (12) alleged that Ms Dunhill had incurred legal costs.
vii) Sub-paragraph (13) alleged that the legal costs paid by Ms Dunhill to Hughmans were wasted.
viii) Sub-paragraph (14) related to alleged misuse of the School Fees Fund.
The draft Amended Defence and Counterclaim incorporates by reference the Voluntary Particulars of Loss and Damage into what is now paragraph 122. There are also certain other proposed amendments, and in particular the introduction of new sub-paragraph (2) alleging that, acting properly, Hughmans would have disclosed to Ms Dunhill the conflict between her interests and those of the Children and refused to act for, or for the benefit of, the Children.
Counsel for Hughmans submitted that, viewed as a whole, Ms Dunhill's pleaded case on causation is incoherent. I agree with this. It is impossible to extract from paragraph 122 of the draft Amended Defence and Counterclaim and the Voluntary Particulars of Loss and Damage any clear statement as to what Ms Dunhill alleges would have happened if the breaches of duty of she complains had not occurred, how this would resulted in a different outcome and what losses she has sustained as result. Indeed, the Voluntary Particulars are less clear in this respect than the original paragraph 121, and the proposed amendments simply compound the problem. Nor is the position clarified by paragraphs 25 and 26 of Ms Dunhill's sixth witness statement, on which counsel for Ms Dunhill relied, since these simply contain assertions as to certain specific steps she would and would not have taken.
Accordingly, I consider that paragraph 121 of the Defence and Counterclaim and the Voluntary Particulars of Loss and Damage should in any event be struck out, and permission to amend refused, pursuant to CPR r. 3.4(2)(a). In principle, however, this is a defect which could be cured by re-pleading the claim in a coherent manner and would not justify granting summary judgment. I consider that this is so even though Ms Dunhill has now had three attempts at pleading her case.
More fundamentally, counsel for Hughmans submitted that Ms Dunhill's case failed properly to address the outcome of the 2013 Family Proceedings as evidenced by the 2014 Consent Order. It is clear Ms Dunhill had the opportunity in the 2013 Family Proceedings to raise all her concerns relating to the AST and the March 2004 transfers, and it is to be inferred that she did so. Presumably she would also have been able to raise her allegations concerning Mr Turner's non-disclosure of assets in 2003 if so advised. (If she did not raise those allegations during the 2013 Family Proceedings, it must be asked why not.) Yet, as I have explained, the outcome of the 2013 Family Proceedings was a disaster for her. She did not improve her position, she made it much worse. How then does Ms Dunhill allege that she would have done better off if Hughmans had not committed the breaches of duty of which she complains? It is manifest that Mr Turner would have defended himself just as vigorously in any proceedings which Hughmans had advised Ms Dunhill to bring against him (in particular, claims for breach of trust and fraudulent non-disclosure) as he evidently did in the 2013 Family Proceedings.
Counsel for Ms Dunhill's only answer to this was to say that Ms Dunhill's pursuit of the 2013 Family Proceedings had been hampered by Hughmans' breaches of duty. But there is no trace of such a case in any of her pleadings, and counsel was unable to articulate in what way her case had been hampered and why this had led to a different outcome to that which would otherwise have been achieved.
In this connection, it is worth returning to two points that I have touched on already. Ms Dunhill's two main areas of complaint concern, first, the AST (as varied by the Second 2003 Consent Orders) and the March 2004 transfers and, secondly, Mr Turner's non-disclosure of the Welsh Properties in 2003. But Hughmans, Mr Oliver and Mr Francis were aware of the gist of Ms Dunhill's case on both these issues. So far as the first was concerned, the main facts were set out in Ms Dunhill's 6 July 2011 witness statement. Ms Dunhill now complains, in essence, that the correct trust law analysis of those facts was not placed before DJ Berry. But why, having regard to the nature of the jurisdiction DJ Berry was exercising, would that have made any significant difference?
So far as the second issue is concerned, as Mr Black pointed out in his email dated 29 June 2011 (paragraph 96 above), this was historic and thus went primarily to Mr Turner's credibility. Mr Turner admitted in his evidence that he had not revealed the Welsh project at that time, but he minimised its significance, He also admitted that he had made significant profits from the Welsh Properties subsequently. What mattered was whether, as Ms Dunhill alleged, Mr Turner had hidden assets or income in 2010-2012, and Ms Dunhill failed to prove that. I have accepted that Ms Dunhill has an arguable case that Hughmans could have done more to investigate this issue, but why would it have made a real difference to the outcome, and in particular the outcome Ms Dunhill achieved in DJ Berry's second judgment?
Absent some coherent case to the contrary, which has not been identified, the 2014 Consent Order indicates that neither matter would have assisted Ms Dunhill in achieving a more favourable outcome than she did before DJ Berry. I therefore conclude that Ms Dunhill has no real prospect of successfully establishing that any breaches of duty by Hughmans caused her loss and damage.
Hughmans' application for summary judgment: breach of fiduciary duty
Ms Dunhill alleges that Hughmans owed her and the Children fiduciary duties and that Hughmans breached those fiduciary duties because of the conflict of interest between Ms Dunhill and the Children. I have already considered the substance of this allegation above. It stands no real prospect of success.
Hughmans' application for summary judgment: the Children's claims
As explained above, in the draft Amended Defence and Counterclaim Ms Dunhill seeks to advance claims which have been assigned to her by Natasha and Piers and William seeks to advance a claim. (No doubt Ms Dunhill will seek an assignment from William when he turns 18.) But, as I have already held, Hughmans was not retained by the Children, Hughmans' Terms of Business excluded liability to third parties and Hughmans owed the Children no independent duty of care. Furthermore, the Children's case on causation is no better than Ms Dunhill's, particularly having regard to the fact that they were independently advised in relation to the 2014 Consent Order.
Hughmans' application for summary judgment: wasted costs
By her application notice dated 3 October 2014 and paragraph 141 of the draft Amended Defence and Counterclaim Ms Dunhill seeks an order for wasted costs against Hughmans pursuant to section 51(6) of the Senior Courts Act 1981. It is unclear precisely which costs Ms Dunhill claims have been wasted as result of Hughmans' conduct. Leaving that aside, counsel for Ms Dunhill made it clear that she relied on the same matters as she relies upon in support of her claim for professional negligence and that she was not seeking a summary remedy in this respect. Accordingly, this claim adds nothing. Counsel for Ms Dunhill told me that the purpose of the claim was to avoid a legal "black hole" whereby Hughmans owed a duty of care to Ms Dunhill who suffered no loss but did not owe a duty of care to the Children who had suffered loss. But as counsel for Hughmans submitted, there is no black hole: in so far as Ms Dunhill instructed Hughmans to obtain periodical payments for the benefit of the Children, then in principle Ms Dunhill can claim for the loss of sums which would have benefited the Children.
Hughmans' application for summary judgment: inherent jurisdiction
By her application notice dated 3 October 2014 and paragraph 141 of the draft Amended Defence and Counterclaim Ms Dunhill also seeks an order for compensation from Hughmans pursuant to the Court's inherent supervisory jurisdiction over solicitors. In this regard counsel for Ms Dunhill particularly relied upon Hughmans' failure to correct the alleged inaccuracies in Ms Dunhill's Form E and witness statement dated 6 July 2011. Again, Ms Dunhill does not seek a summary remedy. Again, this claim adds nothing to the professional negligence claim.
I shall grant Hughmans summary judgment on its claim and dismissing Ms Dunhill's counterclaim.
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