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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Staechelin & Ors v ACLBDD Holdings Ltd & Ors [2019] EWCA Civ 817 (14 May 2019) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2019/817.html Cite as: [2019] 3 All ER 429, [2019] EWCA Civ 817 |
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ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Mr Justice Morgan
HC-2014-000468
Strand, London, WC2A 2LL |
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B e f o r e :
LORD JUSTICE LINDBLOM
and
LADY JUSTICE ROSE
____________________
(1) RUEDI STAECHELIN (2) MARTIN DAVID PAISNER (3) CARLYN MCCAFFREY |
Appellants |
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- and - |
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(1) ACLBDD HOLDINGS LIMITED (a company incorporated in the Bailiwick of Jersey) (2) DE PURY & DE PURY LLP (3) SIMON DE PURY (4) DR MICHAELA DE PURY |
Respondents |
____________________
Mr Jonathan Cohen QC & Mr Ashley Cukier (instructed by Grosvenor Law) for the Respondents
Hearing dates : 9th and 10th April 2019
____________________
Crown Copyright ©
Lord Justice Lewison:
Introduction
The judge's findings
"Following Mr Bennett's offer of $230 million, Mr de Pury telephoned Mr Staechelin (not later than 19 March 2013) and encouraged him to accept the offer. Mr Staechelin told me that he asked Mr de Pury for his confirmation that there would be no commission deducted from the $230 million. Mr de Pury replied that he was expecting to be paid commission by the sellers. Mr Staechelin told me that he was surprised to be told this as he had thought that Mr de Pury was acting for the Qataris. The matter was not resolved in that conversation. I accept Mr Staechelin's evidence as to the conversation with Mr de Pury about commission."
"On 23 March 2013, Mr de Pury emailed Mrs Staechelin (but not Mr Staechelin) referring to "the offer of 230"."
"Mr Staechelin gave evidence that Mr de Pury told him over the telephone about the change of Emir and that the purchaser would not offer $230 million again but would only offer $210 million."
"What I consider probably happened is that Mr de Pury emphasised to Mr Staechelin that Mr Bennett would offer $210 million but the price was not negotiable and there was no prospect of getting back to the previous year's offer of $230 million."
"It was common ground that, at this meeting, Mr Bennett explained why he was offering $210 million. Mr Bennett referred to the new Emir and his attitude to impressionist art. Mr Bennett also said that the market had fallen. At the time of this meeting, Mr de Pury and Mr Staechelin knew that Mr Bennett had made an offer of $230 million the previous year. Mr Bennett's explanations for the figure of $210 million were entirely consistent with that. That comment particularly applies to Mr Bennett's comment about the market having fallen. I find that Mr de Pury and Mr Staechelin understood Mr Bennett to be explaining to them why he was only offering $210 million when he had offered $230 million the previous year."
"Even if that specific figure was not mentioned, Mr Staechelin clearly understood from Mr de Pury's earlier statements that Mr Bennett had offered $230 million the previous year and Mr Staechelin also understood that Mr Bennett was saying to him that he was now only offering $210 million and the higher figure of the previous year was no longer available."
"The words used at the meeting would have simply stated that if the sale went through at $210 million, then Mr de Pury would receive a commission of $10 million."
"He [i.e. Mr Bennett] wanted me to understand very clearly that he had never made any offer of US $230. Did I appreciate that?"
"[91] Mr Paisner immediately telephoned Mr Staechelin and told him what Mr Bennett had said over the telephone. Mr Paisner's note of what Mr Staechelin said stated:
"He expressed surprise, since he had understood from Simon de Pury that there was an offer on the table at US $230 and he had this in writing."
Mr Staechelin told me that when he said that "he had this in writing", he had in mind Mr De Pury's email of 11 April 2013. Mr Paisner then suggested that he should ask Mr Bennett to contact Mr Staechelin and Mr Staechelin agreed to that course. Mr Paisner telephoned Mr Bennett again and arranged for him to speak to Mr Staechelin.
[92] Mr Staechelin then telephoned Mr Bennett. Mr Staechelin referred to an earlier offer of $230 million. He said that Mr de Pury had told him that Mr Bennett had offered $230 million. Mr Bennett simply said words to the effect "No, that's not true" and that he had never offered $230 million.
[93] Mr Staechelin told me that these statements from Mr Bennett shocked him. His reaction was to conclude that Mr Bennett was telling the truth and that Mr de Pury had lied to him about there having been an offer of $230 million in March 2013. He became very suspicious of Mr de Pury and thought that Mr de Pury had earlier tried to prevent Mr Staechelin having a meeting with Mr Bennett alone.
[94] Mr Staechelin then spoke to Mr Paisner again. Mr Paisner said that on the basis that the offer of $210 million was the highest offer on the table, he and his family ought to give it very serious consideration. Mr Staechelin agreed with this advice. He told me that an acceptance of the offer of $210 million would give the trustees time to consider and that they could back out later if they discovered anything new to contradict Mr Bennett.
[95] Mr Staechelin spoke to Mr Bennett again on the telephone. Mr Bennett repeated that there had never been any offer of $230 million. Mr Staechelin told him that he would recommend the offer to the trustees subject to Mr Bennett confirming in writing that there had been no previous offer of $230 million.
[96] On 7 July 2014 at 13.13 London time, Mr Bennett sent an email to Mr Staechelin referring to their earlier conversation. The email stated:
"As requested, this email is to confirm that I never made a formal offer for the painting by Paul Gauguin for the amount of $230 million.
The only formal offer made was directly to you for $210 million on the 18th June 2014.
I am overwhelmed that you have accepted this offer pending agreement from the other trustees and I very much look forward to concluding the contract."
[97] On 7 July 2014 at 14.47 Swiss time, Mr Staechelin replied to Mr Bennett thanking him for his email and saying "agreed". Mr Staechelin also, at around that time, sent Mr Bennett's email to Mr Paisner."
"In his evidence, Mr de Pury was quite clear that Mr Bennett had made an offer to buy the painting for $230 million. He was also quite clear that Mr Bennett knew that and also that Mr Staechelin knew that because Mr de Pury had told Mr Staechelin so and indeed had discussed it with him a number of times. Mr de Pury told me he was puzzled why Mr Staechelin wanted Mr Bennett to put into writing something that both he and Mr Bennett knew was not true."
"The fact that Mr de Pury did not immediately contact Mr Staechelin and tell him that there had indeed been an earlier offer of $230 million can be explained by a number of factors. The first is that Mr de Pury believed that Mr Staechelin knew as well as he did that Mr Bennett had made an earlier offer of $230 million. The second factor is that there was an emphasis in Mr Bennett's statement that there was no "formal offer" and this seemed to be intended by Mr Bennett and by Mr Staechelin to be consistent with what they both knew as to the earlier offer. The third factor is that Mr de Pury was puzzled about what Mr Staechelin's motive was. The fourth factor was that at around this time (if not on 7 July 2014, then on 8 July 2014) Mr Bennett told Mr de Pury that Mr Staechelin did not want Mr de Pury to be involved. That was indeed the case as Mr Staechelin did say to Mr Bennett at around this time that he did not want Mr de Pury to be informed of what was going on."
"I also find that one of the reasons why Mr Staechelin wanted Mr Bennett to send an email about there not being an earlier offer of $230 million was to use that email against Mr de Pury in relation to Mr de Pury's claim to commission."
"On 11 July 2014, Mr de Pury telephoned Mr Staechelin. Mr de Pury gave evidence about this conversation. Mr Staechelin told me that he did not recall what had been discussed. I accept the essentials of Mr de Pury's evidence about this conversation. Mr de Pury was eager to contact Mr Staechelin as he was unclear what was happening and he wished to raise again his own position in relation to the sale. His pretext for contacting Mr Staechelin was that Mr Paisner had asked him on 26 June 2014 whether the commission would include VAT. Mr de Pury therefore told Mr Staechelin on 11 July 2014 that his commission would not bear VAT. Mr de Pury told me that he then referred to Mr Bennett's email of 7 July 2014 but Mr Staechelin tried to close down the conversation and said that he did not want to have a "bilateral" conversation about that matter but that he would later have a discussion with Mr de Pury and Mr Bennett so that he could understand why the final deal would be for $20 million less than the previous offer. Mr de Pury then tried to explain the position and Mr Staechelin said that he did not want to discuss it over the telephone. Mr de Pury said that he would be happy to meet him and Mr Bennett in due course."
"Thus, on 11 July 2014, Mr de Pury wished to discuss with Mr Staechelin the question of Mr Bennett's email of 7 July 2014 which referred to there having been no formal offer of $230 million and Mr Staechelin made it clear that he did not want to know what Mr de Pury had to say on that subject. Mr de Pury's preparedness to discuss that matter is incompatible with the Defendants' case that Mr de Pury had reached a prior agreement with Mr Bennett to lie to Mr Staechelin about the earlier offer of $230 million."
Appeals on fact
"Appellate courts have been repeatedly warned, by recent cases at the highest level, not to interfere with findings of fact by trial judges, unless compelled to do so. This applies not only to findings of primary fact, but also to the evaluation of those facts and to inferences to be drawn from them. The reasons for this approach are many. They include
i. The expertise of a trial judge is in determining what facts are relevant to the legal issues to be decided, and what those facts are if they are disputed.
ii. The trial is not a dress rehearsal. It is the first and last night of the show.
iii. Duplication of the trial judge's role on appeal is a disproportionate use of the limited resources of an appellate court, and will seldom lead to a different outcome in an individual case.
iv. In making his decisions the trial judge will have regard to the whole of the sea of evidence presented to him, whereas an appellate court will only be island hopping.
v. The atmosphere of the courtroom cannot, in any event, be recreated by reference to documents (including transcripts of evidence).
vi. Thus even if it were possible to duplicate the role of the trial judge, it cannot in practice be done."
"Given that the Extra Division correctly identified that an appellate court can interfere where it is satisfied that the trial judge has gone "plainly wrong," and considered that that criterion was met in the present case, there may be some value in considering the meaning of that phrase. There is a risk that it may be misunderstood. The adverb "plainly" does not refer to the degree of confidence felt by the appellate court that it would not have reached the same conclusion as the trial judge. It does not matter, with whatever degree of certainty, that the appellate court considers that it would have reached a different conclusion. What matters is whether the decision under appeal is one that no reasonable judge could have reached."
"An appellate court is bound, unless there is compelling reason to the contrary, to assume that the trial judge has taken the whole of the evidence into his consideration."
"I would add that, in any event, the validity of the findings of fact made by a trial judge is not aptly tested by considering whether the judgment presents a balanced account of the evidence. The trial judge must of course consider all the material evidence (although, as I have explained, it need not all be discussed in his judgment). The weight which he gives to it is however pre-eminently a matter for him, subject only to the requirement, as I shall shortly explain, that his findings be such as might reasonably be made. An appellate court could therefore set aside a judgment on the basis that the judge failed to give the evidence a balanced consideration only if the judge's conclusion was rationally insupportable." (Emphasis added)
"They may be summarised as requiring a conclusion either that there was no evidence to support a challenged finding of fact, or that the trial judge's finding was one that no reasonable judge could have reached."
i) The fire was started deliberately;
ii) The arsonist had keys to the property;
iii) The arsonist had keys to an intruder alarm; and
iv) The arsonist had tried to make it appear that access had been gained by a break-in.
"I have observed the demeanour of Mr Yaqoob closely over part of two days whilst he was rightly subjected to a searching cross-examination by Mr Lord [counsel for the insurers]. I detected no indication that he was being mendacious, nor was his evidence materially undermined. Placing that in the scales together with all the other evidence is sufficient to tip the balance in his favour."
"If, as I have sought to explain in the present case, the judge has not taken proper advantage of that opportunity by failing to make findings of fact which were essential, by failing to address the question of credibility and by failing to analyse and given proper weight to the necessary conclusions to be drawn from the forensic evidence as to the profile of the perpetrator then it cannot be enough for this court simply to say, "Oh well, the judge believed the witness and so must we"."
Criticisms of the judge's findings
"I accept the evidence of Mr and Mrs de Pury that they were advised that they could proceed in that way to save tax and avoid the need to charge VAT although I do not need to decide whether such a scheme would indeed have those tax consequences."
"Undoubtedly, in the course of cross-examination, the way the de Purys had gone about matters could be made to look as if it involved the making of statements which they knew to be false and dishonest. However, I do not think that Mr and Mrs de Pury were guilty of conscious wrongdoing in the way in which they handled matters. It may be possible to criticise their readiness to adopt what they were advised would be a tax saving scheme and it is certainly possible to criticise their attention to the detail as to how the scheme was intended to work. However, these criticisms do not persuade me that they were guilty of conscious wrongdoing or were dishonest in these respects."
"The jury should in appropriate cases be reminded that people sometimes lie, for example, in an attempt to bolster up a just cause, or out of shame or out of a wish to conceal disgraceful behaviour from their family."
"The result of these assessments is that I will obviously give considerable weight to the contemporaneous documents when making my findings as to what really happened. I will treat much of the evidence given by Mr de Pury, Mrs de Pury and Mr Staechelin, in so far as it is not supported by the documents, or which is not corroborated by another reliable witness, with caution. I am likely to accept evidence from a witness where the evidence is against his interests in this dispute. However, these techniques will not be enough on their own to resolve the conflicts in the evidence in this case. Some of the evidence relates to oral discussions where there is no contemporaneous document, or corroboration, which is of much assistance. In those instances, where I am faced with two conflicting accounts from witnesses, neither of whom is wholly reliable, I will have to assess the overall probability of one version as compared with the other."
i) The judge failed to weigh the dishonesty of Mr and Mrs de Pury. This manifested itself in two principal ways. First, the evidence that they ultimately gave differed considerably from a number of iterations of their pleaded case which they had verified by statements of truth. The judge had found that part of Mr de Pury's evidence had been deliberately misleading. Second, the judge rejected part of Mrs de Pury's evidence as "astonishing" yet failed to take that into account in evaluating Mr de Pury's reliability.
ii) On the basis of his own findings, the judge held that Mr and Mrs de Pury had not told him the whole truth. That ought to have been weighed in the balance.
iii) The judge ought to have appreciated that, in telling the lie that he did in the e-mail of 7 July 2014, Mr Bennett was taking a considerable risk. The risk was that if the lie were to have been exposed, the proposed sale would go off. It would have made no sense for Mr Bennett to have taken that risk unless he had procured Mr de Pury's agreement not to reveal the truth.
iv) The judge failed to consider the conduct of Mr and Mrs de Pury after the critical events of 7 July 2014.
v) The judge failed to refer to text messages: both those which had been produced on disclosure; and those which were alleged to have been lost.
The big picture
The particular criticisms
"Both sides were able to draw attention to significant discrepancies between various versions of the pleadings and the witness statements and between the witness statements and the oral evidence. In relation to both sides to this dispute, these discrepancies have caused me to be cautious about the evidence of witnesses who now profess to recall specific matters which were originally described by them in different terms."
"It may be that there were more communications between Mr Bennett and Mr de Pury on 7 July 2014 than I have been told about and the conversations between them may have been more elaborate than I was told."
The conversation of 11 July
"I had a very short conversation today with Simon and told him that it is not the time yet to discuss commission. That we will do this with Guy (and possibly Martin) also speaking about the 230 offer."
Breach of fiduciary duty
"As regards the allegation that Mr de Pury agreed with Mr Bennett that he would not inform the trustees or Mr Staechelin that Mr Bennett's statement was false, I have found that Mr de Pury did not make any such agreement with Mr Bennett. As regards the narrower allegation that Mr de Pury committed a breach of fiduciary duty by not informing the trustees or Mr Staechelin that Mr Bennett's statement was false, I hold that Mr de Pury did not commit any breach of duty in this respect. I have already made a number of findings which are relevant in this context. I have held: (1) after Mr Staechelin was told by Mr Bennett that he had not made an earlier formal offer of $230 million, Mr Staechelin did not want to hear from Mr de Pury what he had to say about that; Mr Staechelin reached the firm view that Mr de Pury had earlier told him a lie about this offer whereas Mr de Pury had not told any lie;
(2) Mr Bennett told Mr de Pury that Mr Staechelin did not want to hear from him and that was indeed the case;
(3) on 11 July 2014, Mr de Pury attempted to discuss Mr Bennett's email of 7 July 2014 with Mr Staechelin but Mr Staechelin refused to discuss that matter with Mr de Pury;
(4) Mr de Pury was entitled to try to communicate with the trustees by speaking to Mr Staechelin; it was not necessary or even appropriate for Mr de Pury to disregard Mr Staechelin's statement that he did not want to discuss the matter with Mr de Pury and to attempt to raise the matter with Mr Paisner or the third trustee."
"The appellant contended that the agents have disentitled themselves to recover the commission, but I do not take that view at all. It seems to me that an agent might quite properly claim his commission, and yet have to pay damages for committing a bona fide mistake which amounts to a breach of duty. In these circumstances, I think the respondents are entitled to the claim which they make for commission."
"Now I am quite clear that if an agent in the course of his employment has been proved to be guilty of some breach of fiduciary duty, in practically every case he would forfeit any right to remuneration at all. That seems to me to be well established. On the other hand, there may well be breaches of duty which do not go to the whole contract, and which would not prevent the agent from recovering his remuneration; and as in this case it is found that the agents acted in good faith, and as the transaction was completed and the appellant has had the benefit of it, he must pay the commission."
"An agent may be deprived of his commission even though he has not acted dishonestly."
"As to the defendants' claim for commission, even if a breach of fiduciary duty by the defendants had been proved, they would not thereby have lost their right to commission unless they had acted dishonestly. In Keppel v Wheeler [1927] 1 KB 577 the agents admitted an honest breach of fiduciary duty by mistake and yet were entitled to their commission. In the present case the plaintiff did not allege, nor did the judge find, any bad faith by the defendants. Even on the view the judge took therefore there was no ground for depriving the defendants of their commission."
"Commission was payable to Premium under the terms of its contract with Mr and Mrs Stevens. An agent in breach of fundamental duties of loyalty imputed by equity cannot sue to recover commission to which he would otherwise have been entitled. The converse, that an agent cannot retain commission in circumstances where he is in breach of such duties, also follows. In Keppel v Wheeler Atkin LJ expressed the view that it was "well-established" that "in practically every case" such agent would "forfeit any right to remuneration at all". He allowed, however, that breaches which "do not go to the whole contract", by an agent acting in good faith (as through honest mistake), would not result in such forfeiture. A similar exception to the forfeiture of commission where breach of duty was not "dishonest" was acknowledged in Kelly v Cooper."
"The remuneration is forfeited because it has not been earned by good faith performance in relation to a completed transaction."
"A principal is entitled to have an honest agent, and it is only the honest agent who is entitled to any commission."
"I accept Mr Lopian's submission that there can be cases of harmless collaterality. And that there can be cases where there is just an honest breach of contract such as Keppel's [case] [1927] 1 KB 577. But this is simply not such a case. This is a case of a secret profit obtained because Mr Berry/Imageview was Mr Jack's agent. And there was a breach of a fiduciary duty because of a real conflict of interest."
"The non-disclosure of the proposed further borrowing was a breach of trust."
"It is not alleged that the defendant deliberately concealed the arrangements which the purchasers had made with their bank from the society or that he consciously intended to mislead it. Nothing in this judgment is intended to apply to such a case. My observations are confined to the case like the present where the provision of incorrect information by a solicitor to his client must be taken to have been due to an oversight."
"It is not alleged that he acted in bad faith or that he deliberately withheld information because he wrongly believed that his duty to the purchasers required him to do so. He was not guilty of a breach of fiduciary duty."
"Where such failure [i.e. a failure to disclose relevant information] is to the advantage of the other party, the court will jealously scrutinise the facts to ensure that there has been nothing more than inadvertence, but there can be no justification for treating an unconscious failure as demonstrating a want of fidelity."
"What distinguishes the role of equity from that of the common law is that equity is proscriptive not prescriptive. It forbids the fiduciary to act for himself. It does not tell him what to do for his principal. And if, in breach of his fiduciary duty, he does act for himself, he is treated as if he had acted for his principal." (Emphasis added)
Trustees' liability
"Exoneration of Third Parties. No person dealing with the Trustees shall be bound to see to the application or disposition of cash or other property transferred to them or to inquire into the authority for or propriety of any action by the Trustees."
"(A) Any Trustee, at any time or from time to time, may decline to participate in any one or more decisions to be made by the Trustees. Any such refusal shall be set forth in a written instrument signed by such Trustee or on his, her or its behalf and delivered to the other co-Trustees.
(C) Except as otherwise provided, all decisions as to the Trust authorized or required to be made hereunder by the Trustees shall be made by a majority of the Trustees who are not precluded by law or this Trust Agreement from making the decision and who have not declined to participate in the decision, but their ministerial duties (such as signing of checks, execution of brokerage transactions relating to securities or commodities, and execution of applications for life insurance) may be executed by any one Trustee."
"The bank contended that since the Parkers were a majority of the trustees in office, and since they could form a quorum at trust meetings, they could bind the trust acting together. But this is to confuse power to act with its due exercise. The deed empowered the majority of the trustees to meet and to make decisions. To this extent the joint action requirement was abrogated but the majority remained part of a three-trustee complement, and it had to exercise its will in relation to that complement. The bank does not suggest that any meeting or consultation of the trustees was convened, or that any vote took place in which the majority will was exercised. On the contrary, on the evidence which it has chosen not to challenge no such meeting, consultation or majority decision ever occurred. In these circumstances the Parkers on their own were not entitled to bind the trust."
"(vi) A creditor has no direct access to the trust assets to enforce his debt. His action is against the trustee, who is the only person whose liability is engaged and the only one capable of being sued. A judgment against the trustee, even for a liability incurred for the benefit of the trust, cannot be enforced directly against trust assets, which the trustee does not beneficially own. The creditor's recourse against the trust assets is only by way of subrogation to the trustee's right of indemnity: In re Johnson 15 Ch D 548.
(vii) Because the creditor's recourse to the assets is derived from the trustee's right of indemnity, it is vulnerable. It is exercisable only to the extent that that right exists. It may be defeated if there are insufficient trust assets to satisfy his debt, or if the trustee's right of indemnity is defeated, for example because the debt was unreasonably or improperly incurred and the indemnity does not extend to such debts, or because the trust deed excludes it on account of the trustee's wilful default or gross negligence. More generally a breach of trust by the trustee, even in relation to a matter unconnected with the incurring of the relevant liability, will, to the extent that it creates a liability to account on the part of the trustee, stand in the way of the enforcement of the indemnity. As has frequently been observed, this can be hard on the creditor, who will usually have no knowledge of the state of account between the trustee and the beneficiaries. But the creditor can in principle protect his position, for example by taking a fixed charge over the trust assets, or, as in the present case, by stipulating for a personal guarantee from the principal beneficiary."
"(iii) The legal personality of a trustee is unitary. Although a trustee has duties specific to his status as such, when it comes to the consequences English law does not distinguish between his personal and his fiduciary capacity. It follows that the trustee assumes those liabilities personally and without limit, thus engaging not only the trust assets but his personal estate. As Lord Penzance put it in Muir v City of Glasgow Bank (1879) 4 App Cas 337, 368, where debts are incurred by a trustee for the benefit of the beneficiaries, the trustee
"could not avoid liability on these debts by merely shewing that they arose out of matters in which he acted in the capacity of trustee or executor only, even though he should be able to shew, in addition, that the creditors of the concern knew all along the capacity in which he acted."
(iv) This liability may be limited by contract, but the mere fact of contracting expressly as trustee is not enough to limit it. It merely makes explicit the knowledge of the trustee's capacity which Lord Penzance regarded as insufficient: see Lumsden v Buchanan (1865) 3 M (HL) 89, [1865] UKHL 2_Paterson_1357. There must be words negativing the personal liability which is an ordinary incident of trusteeship."
Result
Lord Justice Lindblom:
Lady Justice Rose: