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England and Wales High Court (Technology and Construction Court) Decisions
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Cite as:  EWHC 3526 (TCC)
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QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Strand, London, WC2A 2LL
B e f o r e :
| Webb Resolutions Limited
|- and -
|JV Limited T/A Shepherd Chartered Surveyors
Andrew Walker QC and Richard Fowler (instructed by Reynolds Porter Chamberlain) for the Defendant
Hearing dates: 8 November 2013
Crown Copyright ©
Mr Justice Stuart-Smith:
"(i) Whether the assignments pursuant to which the Claimant brings its claim herein were valid and effective; and
(ii) Whether the Claimant (as opposed to the original assignor or any other assignee) is entitled to bring the claim; and
(iii) Whether the Claimant (as opposed to the original assignor or any other assignee) is entitled to recover any loss from the Defendant; and
(iv) Whether the Claimant is entitled to maintain its claim if by reason of the said assignments the original assignor has suffered no loss;
being the issues identified in paragraphs 9 to 14 and 23 (in relation to the Clarke Claim), 31 to 35 and 44 (in relation to the Hunt Claim) and 52 to 57 and 66 (in relation to the Moss Claim) of the Defendant's Defence; and"
"(i) Whether, and if so to what extent, the amount of any claim that the Claimant is able to maintain stands to be reduced or extinguished by reason of contributory negligence; and/or
(ii) Whether any loss in respect of which the Claimant is able to maintain a claim was entirely caused by matters other than the breaches of duty or of contract alleged against the Defendant;
being the issues identified at paragraphs 25 to 28 (in relation to the Clarke Claim), 46 to 49 (in relation to the Hunt Claim) and 68 to 71 (in relation to the Moss Claim) of the Defendant's Defence"
14. complete [i.e. unredacted] versions of the MSAs with full annexures;
15. A version of annexure 4 to the MSA dated 30 June 2009 which shows the column headings.
16. Any prospectuses or other information regarding the portfolios and state of the loans within them and all information as to the performance of the portfolios that were circulated to (i) Wave, Webb SARL and/or the Claimant at or prior to the dates of the two MSAs; (ii) to any other prospective purchasers of the two portfolios prior to the dates of the MSAs.
17. Any documents attesting due diligence carried out, in relation to the purchase of the portfolios, by or on behalf of the Claimant, Webb SARL and/or Wave, and any memos, records of decisions of minutes or meetings at which such due diligence was discussed, and at or by which the decisions to purchase the portfolio's and/or to take the alleged assignments of the related rights or claims was taken.
18. Documents relating to the reasons why the Claimant, Wave and WEBB SARL agreed to the transfer of these legal rights from Wave to your client in particular any memos, records of decisions or minutes of meetings (of either your client, Webb SARL or Wave at or by which the decision was taken.
i) Is it open to the Claimant to apply to strike out parts of the Defence at this stage?
ii) Should the Claimant be required to disclose the correspondence with GMAC showing its requests for documents and GMAC's responses?
iii) Should disclosure be given in respect of Categories 14 and 16-18?
iv) What directions should now be given in respect of the Defendant's expert evidence?
i) It is not open to the Claimant to apply to strike out parts of the Defence at this stage;
ii) the Claimant should not be required to disclose the correspondence with GMAC showing its requests for documents and GMAC's responses;
iii) the defendant's application for specific disclosure fails; and
iv) the Defendant shall file and exchange any expert evidence upon which it wishes to rely by 4pm 14 days after the date of handing down of this judgment, final order. In default of compliance, the Defendant will be debarred from calling or relying upon expert evidence at the First Trial.
Issue 1: Is it open to the Claimant to apply to strike out parts of the Defence at this stage?
Issue 2: Should the Claimant be required to disclose the correspondence with GMAC showing its requests for documents and GMAC's responses?
Issue 3: Should disclosure be given in respect of Categories 14 and 16-18?
The MSAs as disclosed
i) Generally, Mr Walker QC submitted that the portfolio of Mortgage Loans and associated rights (such as the right to sue the borrower or to enforce the security if the borrower defaulted) should be distinguished from the right to sue professionals such as the Defendant. His submission was that the right to sue the professionals was a discrete right which did not go to make good the security in the way that the assignment of a cause of action against someone who has damaged physical property may be said to "make good" the assignee's interest in the property itself. He submitted that the portfolio of Mortgage Loans had been sold by GMAC at a substantial discount with no separate consideration being allocated for the assignment of the right to sue his clients; and that parts of the portfolio have been sold on so profitably that any recovery from his clients should be regarded as a "windfall", though it was not entirely clear what he meant by that term. On the back of these submissions, he outlined the Defendant's case that the Claimant has no genuine commercial interest in the causes of action against the Defendant because it is not necessary to protect the primary debt under the Loan Agreements, and that the assignments should therefore be regarded as assignments of a bare cause of action and champertous.
ii) Category 14 – unredacted MSAs:a) Ms Connolly submits that the consideration given by the purchasers and the full Annexures are highly material to the issue of champerty and the validity of the assignment;b) Mr Walker QC submitted that knowing the details of the prices allocated to individual Mortgage Loans will be relevant to determining whether the assignment of the right to sue the Defendant is to be treated as ancillary to the Mortgage Loans or as a separate and discrete bare cause of action. He points to the fact that the repossession and sale of the Clarke and Moss properties meant that there was no residual value in those loans, so that any consideration allocated in respect of those loans must be for the right to sue his clients alone.
iii) Category 16 – Prospectuses relating to the portfolios and the state of the loans prior to sale:a) Ms Connolly's witness statement emphasises the significance of any prospectus for the issue of Investment Contributory Negligence, which has now fallen away;b) Mr Walker QC built upon Ms Connolly's evidence by submitting that a prospectus would set out what was being transferred, which he submitted was relevant to the issue of champerty.
iv) Category 17 – documents attesting due diligence on the loans by the Claimant/Webb SARL/Wave:a) Ms Connolly's evidence went to the relevance of these documents to the due diligence defence;b) Mr Walker QC made submissions specifically on this category which were limited to the due diligence reports referred to in the MSAs, but included it in his submission that disclosure would enable the Defendant better to understand the nature of the transaction.
v) Category 18 – documents relating to the assignment of legal title from Wave to the Claimant:a) Ms Connolly said that there was no evidence or disclosure to show the basis on which legal title in the 2008 MSA portfolio was transferred from Wave to the Claimant;b) Mr Walker QC recognised that evidence had been submitted (in the form of a witness statement from a Ms Geary) about the transfer from Wave to the Claimant; but he submitted that it was unsatisfactory that hearsay evidence should be given in the context of the application when no evidence had been given by witness evidence or disclosure for the trial.
i) She challenged the Defendant's categorisation of the assignment of the rights to sue professionals as either separate and discrete from the transfer of the Mortgage Loans or as being capable of being regarded as the assignment of a bare cause of action. In any event, she submitted that the nature of the transaction appears from the MSAs in their redacted form and that no further documentation is necessary for the Court to be able to rule on the true meaning and effect of those contract documents.
ii) Category 14: Ms Healy QC submitted that the sum allocated to individual Mortgage Loans as constituent parts of the Purchase Price under the MSA does not and cannot inform the question whether the assignments of the causes of action against the Defendant are champertous. The overall price paid is known and the fact that it was discounted or that the Claimant has subsequently sold all or part of the portfolio at a profit is irrelevant to the question whether the assignment of the prospective right to sue valuers (who are alleged to have been negligent in circumstances where the primary loan has not been repaid despite realising the security of the property) is champertous. She submitted that it is inconceivable that disclosure of the addresses and details pertaining to other loans than the Moss, Clarke and Hunt transactions will be relevant to the question whether the portfolio was bought solely for the purpose of litigating against surveyors.
iii) Categories 16 and 17: Ms Healy QC submits that the Defendant's submissions do not begin to show relevance to the issue of champerty.
iv) Category 18: Ms Healy QC relies upon the evidence of Ms Geary which, she submits, shows that the assignment of legal title from Wave to the Claimant had nothing to do with the trafficking of litigation.
Issue 4: What directions should now be given in respect of the Defendant's expert evidence?