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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Shearer & Ors v Spring Capital Ltd & Ors [2013] EWHC 3148 (Ch) (17 October 2013) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2013/3148.html Cite as: [2013] EWHC 3148 (Ch) |
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CHANCERY DIVISION
Fetter Lane London EC4 |
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B e f o r e :
Sitting as a Deputy Judge of the Chancery Division
____________________
(1) IAIN LAWRIE SHEARER | ||
(2) JAMES RICHARD DEBRUYKER DAWES | ||
(3) CAPITAL CASH LIMITED | ||
(4) JADE INVESTMENTS WORLDWIDE LIMITED | Claimants | |
and | ||
SPRING CAPITAL LIMITED | First Defendant | |
(a) TENON PENSION TRUSTEES LIMITED and | ||
(b) RODERICK CHARLES THOMAS | ||
as trustees of THE TENON GROUP SIPP – RC THOMAS TGS0057 | Second Defendants | |
(a) TENON PENSION TRUSTEES LIMITED and | ||
(b) STUART JAMES THOMAS | ||
as trustees of THE TENON GROUP SIPP – MR SJ THOMAS TGS0059 | Third Defendants |
____________________
Mr James Aldridge (instructed by Harbottle & Lewis) for the Defendants
Hearing date: 9-10 October 2013
____________________
Crown Copyright ©
Mr Daniel Alexander QC:
INTRODUCTION AND BACKGROUND
The issues and the claim
Invalidity of tender
Summary of the parties' contentions
First defendant's contentions
Claimants' contentions
Action against the second and third defendants
THE APPLICATIONS
Principles on strike out and summary judgment applications
Strike out
22. The correct approach is not in doubt: the court must be certain that the claim is bound to fail. Unless it is certain, the case is inappropriate for striking out (see Barrett v Enfield London Borough Council[2001] 2 AC 550 at p. 557 per Lord Browne-Wilkinson). Lord Browne-Wilkinson went on to add:
"[I]n an area of the law which was uncertain and developing (such as the circumstances in which a person can be held liable in negligence for the exercise of a statutory duty or power) it is not normally appropriate to strike out. In my judgment it is of great importance that such development should be on the basis of actual facts found at trial not on hypothetical facts assumed (possibly wrongly) to be true for the purpose of the strike out."
Summary judgment
"20. It is important to keep in mind the principles to be applied in deciding whether a case is suitable for disposal on a summary basis. The most authoritative up-to-date statement is that of Lord Hope in Three Rivers DC v Bank of England (No 3)[2001] 2 All ER 513:
"In other cases it may be possible to say with confidence before trial that the factual basis for the claim is fanciful because it is entirely without substance. It may be clear beyond question that the statement of facts is contradicted by all the documents or other material on which it is based. The simpler the case the easier it is likely to be to take that view and resort to what is properly called summary judgment. But more complex cases are unlikely to be capable of being resolved in that way without conducting a mini-trial on the documents, without discovery and without oral evidence. As Lord Woolf said in Swain v Hillman,[2001] 1 All ER 91, at p. 95 that is not the object of the rule. It is designed to deal with cases that are not fit for trial at all."
21. Another frequently cited passage on the same theme is the judgment of Colman J in De Molestina v Ponton[2002] 1 Lloyd's Rep 271, 280 para 3.5, speaking of the difficulty of basing summary judgment on inferences of fact in a complex case:
"…, as Three Rivers District Council shows, where the application in such complex cases relies on inferences of fact, the overriding objective may well require the claim to go to trial in the interest of a fair trial. That is because the relevant inference could not be safely drawn without further discovery and oral evidence at the trial. It is thus necessary, where such inferences are relevant, to guard against the temptation of drawing them as a matter of probability, because the achievement of the over-riding object requires a much higher degree of certitude. Where in a complex case, as may often be the situation, the frontier between what is merely improbable and what is clearly fanciful is blurred, the case or issue should be left to trial."
22. To these familiar citations, Mr Reza adds the words of Potter LJ in ED&F Man Liquid Products v Patel[2003] EWCA Civ 472para 10:
"However, that does not mean that the court has to accept without analysis everything said by a party 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 contemporary documents. If so, issues which are dependent upon those factual assertions may be susceptible of disposal at an early stage so as to save the cost and delay of trying an issue the outcome of which is inevitable…"
23. If Mr Reza was hoping to find in those words some qualification of Lord Hope's approach, he will be disappointed. The Three Rivers case was specifically cited by Potter LJ. He was in my view intending no more than a summary of the same principles. Lord Hope had spoken of a statement contradicted by "all the documents or other material on which it is based" (emphasis added). It was only in such a clear case that he was envisaging the possibility of rejecting factual assertions in the witness statements. It is in my view important not to equate what may be very powerful cross-examination ammunition, with the kind of "knock-out blow" which Lord Hope seems to have had in mind."
3. Summary judgment: general
4. Summary judgment procedures, which are designed for the swift disposal of straight forward cases without trial, are only available where the applicant demonstrates that the defence (or the claim, as the case may be) has no "real" prospect of success and if there is no other compelling reason why the case or issue should be disposed of at a trial: CPR Part 24.2. Thus, without the assistance of pre-trial procedures, such as disclosure of documents, and without the benefit of trial procedures, such as cross examination, the court's function is to decide whether the defendant's prospect of successfully establishing the facts relied on by him is "real", that is more than "fanciful" or "merely arguable." The test to be applied was summarised by Sir Andrew Morritt V-C. inCelador Productions Ltd v. Melville [2004] EWHC 2362 (CH) at paragraphs 6 and 7.
5. Although the test can be stated simply, its application in practice can be difficult. In my experience there can be more difficulties in applying the "no real prospect of success" test on an application for summary judgment (or on an application for permission to appeal, where a similar test is applicable) than in trying the case in its entirety (or, in the case of an appeal, hearing the substantive appeal). The decision-maker at trial will usually have a better grasp of the case as a whole, because of the added benefits of hearing the evidence tested, of receiving more developed submissions and of having more time in which to digest and reflect on the materials.
6. The outcome of a summary judgment application is more unpredictable than a trial. The result of the application can be influenced more than that of the trial by the degree of professional skill with which it is presented to the court and by the instinctive reaction of the tribunal to the pressured circumstances in which such applications are often made.
7. I doubt, however, whether the decision to have or not to have a trial of the action is much affected by the fact that it is heard by a specialist judge. I see no objection, for example, to the use of judges or deputy judges, who are not intellectual property specialists, to hear and decide applications for summary judgment in this field. I mention this topic and wish to say a little more about it for two reasons. First, as a result of hearing some recent appeals against the grant of summary judgments in a variety of areas of law, I have some general concerns about the use of the summary judgment procedure. Secondly, I am aware of views recently aired in the profession questioning the "efficiency" of using non-specialist judges for summary judgment applications in intellectual property cases.
8. In my opinion, the decision whether or not an action should go to trial is more a matter of general procedural law than of knowledge and experience of a specialised area of substantive law. All judges, specialist and non-specialist, are experienced in procedure and practice. Procedural justice is the judicial specialisationpar excellence. It may take a little longer for the application to be opened to a non-specialist judge, but that may be no bad thing. I am confident that all judges to whom such applications are likely to be made will have the necessary procedural expertise to sort out those cases that can properly be disposed of without a trial. (I add that the leading practitioners' text book on trade mark law (Kerly 14th edition 2005) contains no discussion of summary judgment procedure in infringement actions. That is an indication that the decision whether or not to grant summary judgment is more one of general procedure and practice than specialist expertise in substantive trade mark law.)
9. I also wish to say a few words about the litigation expectations and tactics of claimants and defendants. Claimants start civil proceedings (including intellectual property actions) in the expectation that they will win and often in the belief that the defendant has no real prospect of success. So the defence put forward may be seen as a misconceived, costly and time-wasting ploy designed to dodge an inevitable judgment for as long as possible. There is also a natural inclination on the part of optimistic claimants to go for a quick judgment, if possible, thereby avoiding the trouble, expense and delay involved in preparing for and having a trial.
10. Everyone would agree that the summary disposal of rubbishy defences is in the interests of justice. The court has to be alert to the defendant, who seeks to avoid summary judgment by making a case look more complicated or difficult than it really is.
11. The court also has to guard against the cocky claimant, who, having decided to go for summary judgment, confidently presents the factual and legal issues as simpler and easier than they really are and urges the court to be "efficient" ie produce a rapid result in the claimant's favour.
12. In handling all applications for summary judgment the court's duty is to keep considerations of procedural justice in proper perspective. Appropriate procedures must be used for the disposal of cases. Otherwise there is a serious risk of injustice.
13. Take this case. Although it was described by the claimant's counsel as an open and shut case in which a "smoke screen" defence was being raised, it was rightly accepted in the court below that the evidence "looks quite lengthy." It certainly is lengthy for a Part 24 application. The papers look to me more like a set of trial bundles rather than interlocutory application bundles. There are four files of witness statements, exhibits and associated legal documents and two lever arch files of authorities, many of them on EU competition law.
14. The claimant's counsel supported the application for summary judgment by a 22 page skeleton argument, accusing the defendants of "diversionary tactics designed to try to avoid summary judgment," of introducing "red herrings" and of having used their "best efforts to make the matter appear to be complicated." It was submitted that the case nevertheless "remains a matter appropriate for summary disposal." But already the seeds of doubt have been sown about how open and shut the case really is and whether the court should set out along summary judgment road at all.
15. On the appeal counsel for the claimant repeated that the defendants' arguments in this court "are further designed to try to make matters look complicated and unsuitable for summary determination" and so attempt to avoid liability. As explained later, the case may turn out at trial not to be really "complicated", but it does not follow it should be decided without a fuller investigation into the facts at trial than is possible or permissible on summary judgment.
16. In this case there are, as we shall see, two particular fact-sensitive areas: (a) the alleged presence of "economic links" or "the possibility of control" connecting entities which have been or have become proprietors of the relevant trade mark; and (b) whether the circumstances have made it inequitable to enforce the trade mark against the alleged infringers.
17. It is well settled by the authorities that the court should exercise caution in granting summary judgment in certain kinds of case. The classic instance is where there are conflicts of fact on relevant issues, which have to be resolved before a judgment can be given (see Civil Procedure Vol 1 24.2.5). A mini-trial on the facts conducted under CPR Part 24 without having gone through normal pre-trial procedures must be avoided, as it runs a real risk of producing summary injustice.
18. In my judgment, the court should also hesitate about making a final decision without a trial where, even though there is no obvious conflict of fact at the time of the application, 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.
The evidence and argument on these applications
Principles on the application for an interim injunction
FACTS
The Standstill Agreement
"Outstanding Indebtedness" the aggregate amount from time to time owing (whether capital, interest or other sums due) to Spring RTS or STS [the SIPPs] under the terms of the Loan Agreements, being £13,719,492.90 as at 13 February 2012, the sum due under clause 6.1 of this Agreement and the Debt Assignment.
For the avoidance of all doubt, in the event that any of the Outstanding Indebtedness remains unpaid on 13 February 2013 then Spring [the first defendant] shall be entitled to enforce the terms of the Security to the extent that such Security has not been released.
The first defendant sets out its claims
"…hereby declare the Loans (as defined in each of the Loan Agreements) and all accrued interest and all other amounts accrued or outstanding under the Loan Agreements to be immediately due and payable. The aggregate amount outstanding at the date of this letter [i.e. 18 January 2013] under the Loan Agreements is £3,183,743.42".
The first defendant ups the claim
"Ironically, having carried out this detailed exercise, we are pleased that such pressure was applied and it will be necessary for us to issue revised demands to you and the guarantors immediately."
The pre-tender letter
"…intend to make available to you the full sum of £3,187,743 demanded by that letter under protest",
reserving the right subsequently to apply to court for an account or determination of the sums properly due. The letter said that in Edwin Coe's view:
"The securities which you hold in respect of the outstanding indebtedness will fall to be redeemed upon acceptance of such tender"
"…you will no longer be entitled to charge any continuing interest on any sums outstanding and Mr Shearer and Mr Dawes will seek a determination to that effect."
Mr Shearer and Mr Dawes complete their efforts to raise money
The Capital Cash money
The Jade Investments money
"If Jade/Iain Shearer/James Dawes are successful with their attempts to agree a redemption figure with Spring or if the court finally determines the amount due to Spring then LMCL will provide a fully secured loan in the normal manner under separate reference (10105842) which together with the funds to be returned from Edwin [Coe, the claimants' solicitors] under this loan will provide for redemption of this loan together with the funding required to redeem Spring (as to which Iain Shearer and James Dawes are to provide the balance) and LMCL will then be granted a first and only legal charge over the Property by Jade."
The first defendant's e-mail of 11 February 2013
"That [i.e. the c.£19 million amount] is our redemption figure and that is the figure we require the guarantors to pay Spring Capital Ltd [i.e. the first defendant] in exchange for the release of the security which Spring holds."
The letter of tender
"…being in a position to confirm that we hold the sum of £3,183,743, it is Mr Shearer and Mr Dawes' intention by this letter to tender under protest the sum of that £3,183,743 (together with further interest which has accrued since the date of the demand to the date of tender) in discharge of their obligations under their respective guarantees, and in redemption of the sums secured by existing and additional securities which you retain"
"Our clients now make tender under protest in the sense that they reserve their right subsequently to apply to court for an account or determination of the sums properly due, but that will not affect the validity of the tender. The securities which you hold in respect of the outstanding indebtedness will fall to be redeemed upon acceptance of the tender, as to which we attach a non exhaustive schedule to which there is attached a bible of draft documentation for your consideration.
The aftermath of the tender
The letter accepting the tender
"…it remains our client's position that the tender under protest remains open for acceptance by your client"
Subsequent correspondence
"It is my understanding that in order to be valid, a tender must be unconditional. Consequently, the Claimants decision to refuse to pay the sums purportedly tendered, save on the condition that Spring [the first defendant] simultaneously execute deeds of release renders the purported tender invalid."
LAW AND APPLICATION TO THE FACTS
General principles
The right to redeem and the effect of a valid tender
The issues concerning the validity of the tender
(i) Whole outstanding sum must be offered
Summary of principles
Triable issue?
(ii) Money available and kept aside for payment
Summary of principles
A paradigm case
A harder case
"It is very difficult indeed to say whether or no a man will be able to have control of money at a future date."
"In actions for debt or assumpsit, the principle of the plea of tender…is that the defendant has been always ready (toujours prist [in modern French, "toujours prêt"]) to perform entirely the contract on which the debt is founded; and that he did perform it, as far as he was able, by tendering the requisite money… and as in ordinary cases, the debt is not discharged by such tender and refusal, the plea must not only go on to allege that the defendant is still ready (uncore prist [encore prêt]), but must be accompanied by a profert in curiam [i.e. payment in] of the money tendered."
"In equity, no case has been cited in which interest has been stopped where there has not been an actual tender of the money due and it is contended that the rule of equity is strict that there must be such actual tender. I am not satisfied that that is not placing the rule too high.
It is not, however, in my opinion necessary to decide whether in equity anything short of an actual tender will stop interest."
"I have been referred by counsel…to a number of cases which seem to me to establish the principle that even if there has been a tender by the borrower of the amount due for principal and interest, that tender does not stop interest running after the date of tender unless there is evidence that the sum has been set aside and is ready for payment at any time. [He referred to Gyles v. Hall, Kinnaird v. Trollope, Bank of New South Wales v.O'Connor and Edmondson v. Copeland]
"…very much open to doubt whether the plaintiff was in a position to pay off the mortgage on Dec 14 1943. It may be he would have had to raise the money from a bank or in some other way in order to do it….there is…no evidence that any money was set aside for the purpose and was available for payment of the mortgage."
Triable issue?
Availability and the source of the funds
Availability where the funds are obtained in breach of covenant
General equitable principles
"…to correct men's consciences for frauds, breaches of trust, wrongs and oppressions of what nature soever they may be."
There are real difficulties in deciding, in such a case, whose consciences would benefit from correction and who was oppressing whom. In my view, there is an arguable point here and the first defendant accepts, indeed asserts, that this aspect of the case may be live in the action if it proceeds.
(iii) Conditionality
Tender must be unconditional
(a) The effect of a tender, if it is made conditional upon execution of release document in a particular form but time is not expressly given to consider draft release documents
Principles
Wiltshire v. Smith
"There is not one case in twenty upon the fact of an absolute refusal after a tender that is ever made out – for they are generally attended with circumstances that explain the refusal, and are nothing more than causes cooked up by country attornies to make themselves business. The plaintiff did not, as he ought to have done, send a draft of the assignment to the defendant, any time before the money was tendered.
The plaintiff insists that the defendant absolutely refused to take his money, or execute a deed of assignment; if this had been the fact, it would have been unconscionable and unreasonable in the defendant.
But the person who was to take an assignment of the mortgage swears, that the defendant desired further time or to that effect.
The question is, Who was in the wrong?
The plaintiff certainly was.
For where there are covenants on the part of a mortgagee, it is very reasonable that he should have some time to look them over. And the plaintiff's attorney ought to have left the deed for a week with the defendant, that he might have an opportunity to advise upon it, and the plaintiff's attorney should have appointed a time to pay the money after the defendant had been allowed a sufficient time to advise; or as I said before, he should have sent a copy, or the ingrossment of the assignment.
But the subsequent transaction, and what passed before the filing of the bill explains it.
Did ever a mortgagor, as is the case here, after he was put under this difficulty, lie by a year and a quarter without bringing the bill to redeem.
What could be the reason?
Why the plaintiff, the mortgagor's attorney, told him you have made a tender of your mortgage money, and the defendant's refusal has forfeited his interest, so that you may keep the money and compel the defendant to take the principal without interest from the time of the tender."
Webb v. Crosse
"But when such a tender is made conditional on the execution of a conveyance, it is I think necessary that a reasonable time shall be allowed to obtain the execution of the conveyance, especially when the conveying parties are not the parties to whom the tender is made"
"The tender was made, however, without giving the mortgagees notice of the mortgagor's intention in that behalf, and on a condition which there was no possibility of the mortgagees being able to fulfil; and it was made to a person not authorized to receive it and who had been given no opportunity to procure authority for that purpose. Under these circumstances I am of the opinion that the tender was not such as to deprive the mortgagees of their right in equity to interest…"
This was, like Wiltshire, a situation in which the mortgagor was seeking to impose a condition of payment which the mortgagee could not possibly comply with there and them.
Graham v. Seal
"The mortgagee is entitled before the money is tendered to have a reasonable opportunity of approving the draft re-conveyance, and therefore the draft ought to be sent to him a reasonable time before the appointment to tender the money but that was done in the present case."
"…That seems to me clearly to import the statement that the tender may be an effectual tender for the purpose though it be made conditional upon the re-conveyance provided only that the form is observed of offering to the mortgagees a reasonable opportunity for executing that re-conveyance."
Discussion
Wiltshire
The basis of the rule and its application in a modern context
Triable issue?
Construction of the tender- not conditional
Tender remaining open
Ideal mortgage practice
(b) The effect of a tender where the availability of the money to pay the debt is conditional upon simultaneous release of the security
Principles
"The obligation of a mortgagee is, as against payment of what is due to him, to re-convey and delivery up the deeds of the mortgaged premises. It is like the obligation of a vendor to convey and hand over the title deeds and the conveyance against the payment of the purchase money….in the paying off of a mortgage a mortgagee is not entitled to insist upon payment of the mortgage money with a view to his re-conveying at some future time. The mortgagor is not required by law to be at any time at risk in the sense that he must pay off all the mortgage money to the mortgagee and then at some future time obtain a re-conveyance of the mortgaged property. The transactions must be simultaneous, he is paying off the mortgage and obtaining a re-conveyance and delivery up of the title deeds. Under these circumstances the tender made by the plaintiffs…was a valid tender. There was no condition imposed other than that which the law enables the law to require, that is as against payment of the proper amount…the mortgagee must simultaneously give up the deeds and re-convey the mortgaged property."
Discussion
Triable issue?
Refinement of the modern equitable rules
Principles or practices
The importance of clarity and anti-gaming rules
How rules of this kind should be refined
The practical context
"It is a fact of modern life that a mortgagor will only be able to redeem a mortgage loan with funds provided by a new financier who requires his own security to be put in place on release of the funds."
and
"…the simultaneous release of securities upon payment of a secured debt is a standard and necessary requirement of modern commercial dealing."
Equity and the Commonwealth impact of authority
Other considerations
The latent Webb v. Crosse/Cukurova point
"…equity can and should respond by a special order as to interest or costs in exceptional situations where the mortgagee has by words or conduct rejected, made impossible or delayed repayment of the mortgage debt…"
Further tender/settlement?
Summary and principles
Payment in of the disputed sum
Conclusion on strike out/summary judgment
INJUNCTION
Conclusion on injunction
COSTS
DIRECTIONS
Time estimate
Acknowledgement and apologies
"The question is. Who was in the wrong? I cannot yet tell. There must be a trial".