![]() |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] [DONATE] | |||||||||
England and Wales Court of Appeal (Civil Division) Decisions |
||||||||||
PLEASE SUPPORT BAILII & FREE ACCESS TO LAW
To maintain its current level of service, BAILII urgently needs the support of its users.
Since you use the site, please consider making a donation to celebrate BAILII's 25 years of providing free access to law. No contribution is too small. If every visitor this month gives just £5, it will have a significant impact on BAILII's ability to continue providing this vital service.
Thank you for your support! | ||||||||||
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Prosser v Castle Sanderson Solicitors (a firm) & Anor [2002] EWCA Civ 1140 (31 July 2002) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2002/1140.html Cite as: [2002] Lloyds Rep PN 584, [2002] BPIR 1163, [2002] Lloyd's Rep PN 584, [2002] EWCA Civ 1140 |
[New search] [View without highlighting] [Printable RTF version] [Help]
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEENS BENCH DIVISION
MANCHESTER DISTRICT REGISTRY
MERCANTILE LIST.
His Honour Judge Hegarty QC
Strand, London, WC2A 2LL | ||
B e f o r e :
LORD JUSTICE CLARKE
and
LADY JUSTICE HALE
____________________
| ||
MICHAEL ANTHONY PROSSER | Appellant/ Claimant | |
and (1) CASTLE SANDERSON SOLICITORS (A FIRM) (2) GEOFFREY MARTIN & CO (A FIRM) | Respondents/Defendants |
____________________
Simon Monty (instructed by James Chapman & Co) for the First Respondent
Francis Bacon (instructed by Beachcroft Wansbroughs) for the Second Respondent
Hearing dates: 24 and 25 July 2002
____________________
Crown Copyright ©
Lord Justice Clarke:
Introduction
Background facts
Personal assets
Lakeside
“It follows from this survey of the assets and liabilities of Lakeside that there was value within the company which could potentially have been unlocked in order to release monies which might have been used by Mr Prosser to pay off his personal debts and liabilities. The precise net asset position would depend upon the value properly attributable to The Old Warehouse. If this property is brought into account at the lower figure of £325,000, Lakeside would have total assets worth approximately £622,500 from which must be deducted the overall indebtedness of £438,850 comprising the amounts due and owing to AIB and to the Inland Revenue and other unsecured creditors, as adjusted in the way I have previously explained. This produces a net asset figure of £183,650. If, however, The Old Warehouse is brought into account in the sum of £620,000 as ultimately contended for on behalf of Mr Prosser, the net asset position of Lakeside would be represented by the substantially larger figure of £478,650.
But Mr Prosser would have faced very substantial problems indeed in unlocking this store of assets. For a start, as I have previously pointed, real property is not a liquid asset. It has to be marketed and sold with inevitable delay and associated cost. The market was fairly nicely poised in early 1990 and its future movements would not have been easy to predict. If sales were delayed in order to obtain vacant possession and the best price for the properties, Lakeside would continue to incur financing costs at the high rates of interest which were then prevailing.
Furthermore, any sales would almost certainly have given rise to additional tax liabilities, assuming that the properties were disposed of a profit.”
The judge then considered the potential tax liabilities and concluded that the factors which he had taken into account indicated that any liquidation of Lakeside’s property portfolio in late 1989 or early 1990 would have generated a significantly smaller net return than might be suggested by the arithmetical calculations of its net asset position.
“No doubt there were various ways in which an orderly realisation and distribution of Lakeside’s assets might have been achieved. Various possibilities were raised in the course of the hearing, such as receivership, administration or a company voluntary arrangement, as an alternative to liquidation, though it seems to me that any realisation of the entirety of Lakeside’s assets by any of those routes would almost certainly have ended up with the liquidation of the company. Another possibility that was investigated was that of refinancing Lakeside’s property portfolio. But, whatever the merits of a refinancing operation, and even assuming that a lending institution would have been prepared to advance further monies for the purposes of enabling a distribution to be made to shareholders, there would still have been practical problems in effecting such a distribution. In any event, any of these methods of releasing monies from the company would have had significant cost implications, would have taken some time to implement and would have involved potential additional tax liabilities on the monies distributed.
No doubt it was in the light of considerations of this kind that a further possibility was pursued at trial, namely the marketing of Lakeside as a going concern by way of a sale of the shares by Mr Prosser and the liquidator of MAPD. Whether this would have been practicable is a matter to which I shall return later in my judgment, as is the question of the proper valuation of Mr Prosser’s shares in Lakeside. Once again, at this stage, it is sufficient to say that any such marketing exercise is also likely to have taken some time to have come to fruition, particularly having regard to the likelihood that any prospective purchaser would wish to see proper accounts for Lakeside and to satisfy himself as to its property portfolio and as to its value. I should add that, so far as I am aware, no consideration was given at the time to a possible sale of shares rather than a realisation of assets.”
Those considerations are directly relevant to the principal issues in this appeal and I will return to them after considering the advice sought by the appellant in late 1989 and early 1990.
Advice sought
“In summary, therefore, at the end of 1989 and the beginning of 1990, Mr Prosser was faced with a liquidity crisis. He needed to raise about £145,000 as a matter of urgency, and, despite a positive net asset position, he had no immediate access to the necessary liquid funds. In saying that, I do not neglect the fact that he had, it would seem, about £35,000 available to him from funds provided by Colonel Bass [who was the guardian of his first wife], that he might have been able to borrow further funds from his brother and that, in February 1990, he managed to raise £50,000 or thereabouts from the sale of 21 and 23 Lowerhouses Road, in order to fund his Vending Revolution venture. He was, therefore, unable to meet his debts as they fell due; and he faced at least one creditor, namely Barclays Bank plc, which appears to have been intent upon making him bankrupt.”
“Furthermore, of course, it was the view of Castle Sanderson that there was no defence to either of the actions and that the creditors were likely to be hostile [ie to refinancing]. In those circumstances, it is unsurprising that, within a fairly short space of time, Mr Prosser appears to have decided to enter into a voluntary arrangement. … I think it is likely that there would have been discussions between Mr Addlestone or his colleagues at Castle Sanderson and Mr Sleight, in his capacity as insolvency practitioner and probable nominee of a voluntary arrangement, as to whether this was the best route to take; and I think it is likely that he would have agreed.”
The first proposal
“The proposal itself referred to the collapse of MAPD and stated that, in his belief, his current predicament stemmed from the failure of that company. He then verified the details of his assets and liabilities, as set out in the accompanying statement of affairs. I will have some further comments to make on this statement of affairs and the related passages in the body of the proposal. But the essence of the proposal is set out at paragraph 9. It was proposed that a number of the residential properties owned by Lakeside should be sold and the proceeds of sale should be realised for the benefit of creditors by way of a members voluntary liquidation. It was specifically stated that he held 98 shares in Lakeside and his wife the remaining 2 shares. The supervisor of the voluntary arrangement was to be the liquidator in the members voluntary liquidation. It should, perhaps, also be noted that, at paragraph 14, it was proposed that the duration of the voluntary arrangement should be 12 months or such longer time as should be absolutely necessary for the realisation of the assets. It was therefore envisaged from the outset that it might take more than a year to bring the liquidation to a conclusion.”
Lakeside’s accounts
“So none of this documentation provides any support whatever for the proposition that Mr Prosser had provided any of the information required by Revell Ward in their letter of 12th January 1990; and Mr Prosser was quite unable to point to any other documentation supporting his recollection. I am quite unpersuaded that any detailed information was provided by Mr Prosser, though much of it could probably have been supplied comparatively easily. Indeed, Mr Prosser emphasised that Revell Ward or his other professional advisers could have obtained the necessary documentation without any active involvement on his part. But, as it seems to me, the fact remains that Mr Prosser was asked for this information on a number of occasions and failed to take any steps to provide it, even though the importance of providing up to date accounts was emphasised to him on a number of occasions. No doubt, once the information was available, the accounts could have been prepared in a matter of weeks, since Lakeside’s business was a fairly simple and straightforward one. But, as Mr Sleight asserted in evidence, the accounts would have been a matter of considerable importance to Mr Prosser’s creditors in order to enable them to obtain a tolerably clear view of the company’s financial position, including its tax liabilities and any claim which it might have against Mr Prosser or vice versa. But Mr Prosser was either unable or unwilling to ensure that the accounts were in fact prepared and he cannot avoid responsibility for the consequences of that failure by sheltering behind his professional advisers.”
As appears below, those conclusions are important in the context of this appeal.
The second proposal
“It may therefore be necessary for me to dispose of all the company’s assets to discharge my liability to Allied Irish Finance Limited in full, before any remaining surplus becomes available to be paid for the benefit of my creditors.”
“Up to date accounts need to be prepared in relation to Lakeside … . I am therefore making arrangements for the Company Accountants, Messrs Revell Ward, to complete the accounts and to liaise with Mr Sleight. This will reveal whether there are any hidden liabilities which may affect the valuation of my investment in the company.”
I set out under the heading ‘Lakeside’s accounts’ above the efforts made by the respondents to obtain details of the accounts. The significance of this passage is that it shows two things. First, it shows the importance which was attached to the accounts by the respondents as the appellant’s advisers at the time. Secondly, it shows the reason why the accounts would be regarded as important by a creditor, namely that they would reveal whether there were any hidden liabilities of which they should be aware before making a decision as to what attitude to take to the proposal or any future modification of it. The importance of that information was stressed again at the end of the appellant’s affidavit.
“As yet, however, I do not have up to date information as to the true financial position of the Company, although the Debtor has indicated that he will be providing certain information to the Company’s auditors to enable them to bring the accounts up to date. From the information supplied by the Debtor, it would appear that there are substantial assets within the Company, although I understand that the Company may have certain outstanding tax liabilities and may be a creditor of Mr Prosser in respect of his Directors Loan Account. I have therefore advised the Debtor to provide every assistance to the auditors to ensure that this information is made available in time for the Creditors’ Meeting.”
On 5 March the court extended the period until 14 May to enable a creditors’ meeting to be held on 23 March.
“It is absolutely essential that all of the above information is provided in time for the Creditors Meeting, since your creditors will wish to know that the proposal is a realistic one and since your creditors will be aware that considerable time has elapsed since we first obtained an Order from the Court, giving you plenty of opportunity to obtain this documentation in time for the meeting. Any suspicions which may be raised by the creditors could jeopardise the arrangement and leave you open to the possibility of a Bankruptcy Petition being issued against you.
There is a procedure allowing for the Meeting of Creditors to be adjourned but this procedure is rarely adopted and ordinarily the proposal is either approved by the creditors or rejected. If there is an adjournment of the meeting it must reconvene within fourteen days and there can be no further adjournment. If the creditors cannot agree the proposal by that time it will be rejected and a new proposal will not be entertained by the court.”
The creditors meeting
“Mr Jackson appears to have concentrated particularly on Lakeside. According to Mr Sugden’s note, he pointed out that the original statement of affairs showed a deficit as regards unsecured creditors unless the value of his shareholding in Lakeside was brought into account; and he effectively confirmed this assessment in his witness statement. The position might well, of course, have been different if Lakeside House and Lakeside Lodge could have been sold at £550,000, if £200,000 could have been raised by way of a re-financing arrangement over Hollybank, and if the connected creditors had been willing formally to waive any claims to repayment. But, there was no valuation evidence to support such a value for Lakeside House and Lakeside Lodge; nor were there any formal offers of re-finance of Hollybank. Furthermore, there were no formal letters of waiver, save for a rather nondescript document produced by Mr Prosser at the meeting which appears to constitute such a waiver from Mrs Rayghi. Mr Clive Prosser stated that he told the meeting that both he and Masterway Limited would waive their claims, though there was no formal document to that effect. I accept Mr Clive Prosser’s evidence on this point, though, interestingly, Mr Sugden’s note appears to suggest that “Mr Prosser” said that Hi-Spek Limited and Masterway Limited “may or may not waive their claims”.
According to Mr Sugden’s note, Mr Jackson also asked how any re-financing package was to be financed, and pointed to the absence of any cash-flow forecasts. He also asked how it had come about that Mr Prosser had become a 98% shareholder in Lakeside, having regard to the information contained in its returns. There was also discussion, during the course of the meeting, about the absence of any up-to-date accounts for Lakeside, though, according to Mr Sugden’s note, Mr Sleight pointed out that a valuation of its properties showed assets of £1.1million. There appears also to have been a reference to cash-flow problems experienced by Lakeside; and some consideration appears to have been given to the "tax implications of Lakeside.”
In the light of these matters, and, no doubt, also in view of the bank's assessment of Mr Prosser, Mr Jackson argued forcefully for an immediate liquidation of Lakeside. That was very much against the wishes of Mr Prosser. Miss Kavanagh, on behalf of the liquidator of MAPD, however, was willing to agree to the modifications put forward at the outset by Mr Sleight, so that Mr Prosser would have six months’ grace in which to realise his personal assets before having to put Lakeside into liquidation. Mrs Kavanagh was, therefore, willing to cast the liquidator’s vote, in respect of both his loan account claim and his wrongful trading claim, in favour of Mr Prossers’s proposal, subject to certain other, less fundamental, modifications. But Mr Jackson objected to any vote being allowed in respect of the wrongful trading claim. As chairman of the meeting, Mr Sleight was called upon to rule on this question and he decided that Miss Kavanagh should be admitted to vote only in respect of the loan account claim, though he proposed that provision should be made in the voluntary arrangement for the amount claimed by the liquidator on the grounds of alleged wrongful trading. This decision to make provision for the wrongful trading claim was the subject of criticism on behalf of Mr Prosser during the course of the trial. In those circumstances, it is somewhat ironic that Mr Prosser appears to have supported Miss Kavanagh’s right to vote for the entirety of the liquidator’s claim. Mr Jackson’s note of the proceedings records that Mr Prosser was “keen to admit the whole wrongful trading claim to save his bacon.” Furthermore, Miss Kavanagh herself, in cross-examination confirmed that this was so. I am satisfied that this is correct.
Now, at some stage in the course of the debate as to whether Lakeside should be put into immediate liquidation, there was a short adjournment during which Mr Prosser, Mr Addlestone and Mr Sleight retired to discuss these developments.”
The advice
“Inevitably, it is impossible to determine precisely who said what to whom during the few minutes which they had to discuss developments. But Mr Prosser had clearly been unwilling to agree to the immediate liquidation of Lakeside and I am quite satisfied that, in the presence of both Mr Addlestone and Mr Sleight, he asked whether he had any alternative to immediate liquidation. It is equally clear that he was told that he had no alternative. It is plain that this view was shared by both Mr Addlestone and Mr Sleight . Furthermore, that view appears to have been correct, in the sense that it must have seemed that Mr Prosser could not have obtained the requisite 75% majority for his proposal, if it had been put to the vote there and then, unless he had been willing to agree to the further modification. Both Barclays Bank plc and Lynboard Limited were intent on voting against the unmodified proposal, and the Inland Revenue had lodged a proxy vote against it. Despite the support of Miss Kavanagh, therefore, once Mr Sleight had ruled that she could not cast a vote for the full amount of the liquidator’s claim, it must have seemed inevitable that the proposal would have been voted down unless Mr Prosser had agreed to the immediate liquidation of Lakeside.”
“It seems to me that Mr Sleight was not present during these brief discussions simply to hear what decision Mr Prosser had come to. An impasse had been reached at the meeting which needed to be resolved. Mr Sleight was an experienced insolvency practitioner and was seemingly willing to answer any questions. On balance, I think it is likely that he either gave or expressly associated himself with the advice that there was no alternative to placing Lakeside in immediate liquidation. That was his view, and I think it unlikely that he would not have expressed it. But I have no real doubt that the advice to this effect was intended to be understood as meaning that Mr Prosser had no alternative if he wished to secure approval from his creditors to his proposal for a voluntary arrangement, and thus avoid bankruptcy.
It is common ground that the discussions did not touch upon any other possible course of action. Neither Mr Sleight nor Mr Addlestone raised the possibility that he might seek an adjournment of the meeting for up to 14 days in order to allow further time to respond to the demand for immediate liquidation. Nor were the precise potential consequences of an adverse vote spelt out to him. He was not told, for example, that he would have up to 21 days to respond to a statutory demand, whether by payment or by the provision of security. Nor did Mr Prosser ask for any advice about the implications for the wrongful trading claim asserted by the liquidator of MAPD; and none was given.”
The creditors meeting then resumed.
The resumed meeting
Duty of care
Mr Addlestone
Mr Sleight
“But on the other hand, it seems to me to be plain that, whatever the position may have been in the run up to the creditors’ meeting, Mr Sleight was now acting as chairman of the creditors meeting with responsibilities to all involved, rather than as a private adviser to Mr Prosser. This can, in the sense, be illustrated by the way in which the claim is formulated. It is said that Mr Sleight should have advised Mr Prosser to apply for an adjournment of the meeting. But that was clearly a matter in relation to which Mr Sleight might be called upon to exercise his statutory discretion under rule 5.19 of the Insolvency Rules 1986. Now, I do see that Mr Sleight could have been said to have assumed a duty of care if he had simply informed Mr Prosser of the options which were in fact open to him, whether that was done in the course of the meeting itself or during a private discussion with Mr Prosser during a short adjournment of the meeting, when he might also have wished to ascertain from Mr Prosser how he wanted to proceed. But in fact, on my findings, he went somewhat further than that and gave, or associated himself with, positive advice that he had no alternative but to agree to the modification advocated by Mr Jackson.
It is, I think, a fine line. However, I have come to the view that, in this particular case, it would not be fair just and reasonable to impose a duty of care upon Mr Sleight in these circumstances. I do not think that the courts should be too ready to detect a change of capacity on the part of the chairman of the meeting, if, in the heat of the battle, he expresses an opinion which could be regarded as constituting advice to the debtor. To impose such a duty would potentially place an insolvency practitioner in a position where his duties to the debtor and to the other participants were in conflict. In particular circumstances of this case, I place significant weight on the fact that Mr Prosser was, in any event, attended by his own solicitor, who had some experience of insolvency matters. I consider that both Mr Sleight and Mr Prosser were entitled to expect that advice should be given by the person retained for that purpose rather than the chairman of the meeting, even though he may have temporarily left the chair and may, perhaps unwisely, have expressed an opinion as to how Mr Prosser should proceed. I therefore conclude that Mr Sleight did not owe a duty of care to Mr Prosser and that the claim against him, therefore, fails.”
Breach of duty
Mr Addlestone
“It seems to me, therefore, that Mr Prosser’s case against Mr Addlestone reduces to the contention that he was negligent in failing to advise him that he could ask for an adjournment of the meeting for up to 14 days. I am very conscious of the fact that the meeting had become somewhat fraught and that Mr Addlestone is likely to have had only comparatively limited time for reflection. But, in a sense, that underlines the very reason why, in my judgment, a reasonable practitioner in his position should have advised his client that there was one obvious alternative, namely to seek an adjournment. That would have given Mr Prosser and his advisers an opportunity for reflection so as to enable them to deal with the various points which had arisen during the course of a meeting and to put forward a reasoned response. I bear in mind that this was a course of action which he had expressly considered only the previous day when he wrote to Miss Kavanagh. I take the view, therefore, that, in failing to advise Mr Prosser that he might ask for an adjournment of the meeting, Mr Addlestone did not discharge the duty of care which he owed to his client.”
Mr Sleight
Causation
The legal principles
The chance of a better outcome
“On the other hand, I am perfectly satisfied that no accounts for Lakeside would have been prepared within the short period of time available. Mr Prosser appears to have shown reluctance bordering on obduracy in providing the material needed for the preparation of those accounts. He also appears to have been unwilling to pay the necessary fees to Revell Ward, though it may conceivably have been possible to have reached some arrangement by which they would have been paid in the voluntary arrangement. It may be that Mr Addlestone or, for that matter, Mr Sleight, might have been able to chase Mr Prosser’s letting agents or his bankers in order to extract additional documentation as to the rent-roll of Lakeside’s properties and its bank borrowings. But, without proper accounts, the creditors would hardly have been in a position to form a view as to the actual or potential tax liabilities of Lakeside, or its liabilities to trade creditors or as to the existence of any claims by or against Mr Prosser himself or whether it would be feasible for it to continue to operation as a going concern.
Without proper accounts, and without some alternative proposal for extracting value from Lakeside, I think it is extremely unlikely that there would have been any change in the attitude of Mr Jackson and his client, Barclays Bank plc. As I have already said, the bank had taken a dim view of Mr Prosser and his activities, and would have been most reluctant to agree to any step which would have left him, in effect, in control of Lakeside even for a comparatively limited period. Its sole commercial interest as a creditor was to ensure that there were sufficient realisations from Lakeside to ensure that it, and the other creditors, were paid in full. The rudimentary information contained in the statement of affairs annexed to Mr Prosser’s proposal indicated that there was substantial equity in the company. That would have remained the case even if substantial provision had to be made for potential clawback. If that were so, from the bank’s standpoint, the equity could best and most rapidly be released by way of a liquidation, even if that meant that there would be less for the shareholders. If, on the other hand, Lakeside’s position was not as it had been represented in the statement of affairs, that, in itself might be regarded as a reason for immediate liquidation. ”
“I was unimpressed by Mr Prosser, whether as a man of business, as a debtor dealing with his creditors and professional advisers or as a witness. He appears to have had scant regard for his obligations as a company director to keep proper accounting records.”
The judge said that he had “many reservations as to the way in which Mr Prosser conducted his affairs”. He found that he had a “cavalier approach to the need to ensure certainty and accuracy in the information placed before the court and the creditors”. He held that he did not emerge with “any great credit” from the inaccuracies in the statement of affairs. He found it extraordinary that he did not tell Lloyd’s about the IVA. Nor did he tell either of the respondents about the pressures he was under from Lloyd’s. As the judge put it on page 99, this lack of openness with creditors was nothing new. I have set out under the heading ‘Lakeside’s accounts’ in paragraphs 35 to 38 above the attempts made by the respondents to persuade the appellant to produce accounts, when, as the judge said in a passage quoted in paragraph 38, the appellant was either unwilling or unable to ensure that accounts were in fact prepared.
“The position of the liquidator of MAPD is, however, somewhat different. Once it had become apparent that MAPD held a substantial shareholding in Lakeside, he would obviously have been interested in maximising the return to members, rather than simply ensuring that sufficient assets were brought into the voluntary arrangement to discharge his claims. In itself, however, it does not seem to me that the mere realisation of the fact that MAPD had an equity interest in Lakeside is likely to have altered the liquidator’s approach to the voluntary arrangement. As a matter of fact, Miss Kavanagh, on behalf of MAPD, was willing to cast its vote in favour of the proposal, as amended at the outset of the meeting, thus giving Mr Prosser a period of six months grace before Lakeside would be placed in liquidation. But against the combined votes of Barclays Bank plc, Lynboard Limited and the Inland Revenue, the liquidator had insufficient voting power to secure the necessary majority without the amendments proposed by Mr Jackson.
If, therefore, Mr Prosser’s proposal, in the form in which it was placed before the meeting on 23rd March 1990, had been brought back before an adjourned meeting within, at most, 14 days, the result would have been no different unless Barclays Bank plc or Lynboard Limited had changed their views in the meantime. For reasons which I have already given, I think that is rather unlikely. Furthermore, it is a matter of established fact that, in the event, the liquidator ratified the decision to place Lakeside into immediate members’ voluntary liquidation, once it became apparent that MAPD was a substantial shareholder. Accordingly, I take the view that, no matter what arguments might have been raised during the period of any adjournment, it is unlikely that the result would have been any different, so long as Mr Prosser remained wedded to his proposal in the form in which it was presented to the creditors by Mr Sleight at the outset of the meeting on 23rd March 1990. To the extent, therefore, that the purpose of an adjournment was to persuade the creditors to accept the proposal in that form, I think it would have failed to achieve its purpose.”
“None of this gives a great deal of comfort to Mr Prosser. I think that there would have been major problems in finding a purchaser for the company, rather than its property portfolio, within a short time-scale. The problems of finding a purchaser would be particularly acute in the absence of proper accounts. Mr Prosser’s record in relation to such matters inspires no confidence whatever that, even in these altered circumstances, he would have put things right within a short period of time. An investor in the company would be buying a pig in a very large poke. Whilst, no doubt, he could quickly ascertain the capital value of its assets and its rent-roll, and could similarly obtain a reasonably clear picture of its borrowings and financial costs, he would be likely to have only a very general idea of its actual and potential liabilities, whether in respect of tax or otherwise. Given Mr Prosser’s record and financial circumstances, I consider that it is bordering on the fatuous to suggest that these uncertainties could be adequately addressed by way of personal warranties from Mr Prosser; and I think it is most unlikely that the liquidator would have been willing to give suitable warranties. A prospective investor would, in any event, need to have a much more precise idea of the company’s financial position in order to determine whether it could carry on trading, either in the long term, or even for a sufficient period to realise its portfolio, without the injection of further capital, and to decide how much further capital would be required. In fact, it is difficult to see how the liquidator of MAPD could have committed himself to a joint marketing exercise of the kind suggested, without satisfying himself that Lakeside was solvent and capable of continuing to trade.. In reality, on the material before me, I think that Miss Kavanagh’s initial perception of such a proposal, as being “wholly unrealistic” was a fairly accurate assessment. Whatever the theoretical attractions of such an approach, I think it is most unlikely that it would have constituted a practical answer to the problem of extracting value.”
“In the events which happened, Mr Prosser entirely lost the value of the shares which he held in Lakeside. That was, undoubtedly, an unfortunate result for him, since I accept that, on any view, the company’s assets exceeded its liabilities. But this was brought about by his personal insolvency, the doubtful viability of Lakeside, the perceived need to put it in liquidation and the difficulties experienced in realising its assets. For my part, I remain unpersuaded that he would have had any real prospect of a better outcome than that which actually resulted from the chain of events set in motion on 23rd March 1990, even if he had been given different advice and adopted a different approach. Similarly, it seems to me that it was well nigh inevitable that his own personal property portfolio would have had to be realised in much the same inauspicious circumstances as actually occurred. Once again, I see no real prospect of a significantly better outcome in relation to those properties. I conclude, therefore, that Mr Prosser has not satisfied me that he has suffered loss by reason of any negligence on the part of Mr Addlestone for which he is entitled to be compensated by an award of damages.”
I entirely agree with those conclusions.
Conclusions
Lady Justice Hale: I agree.
Lord Justice Mummery: I also agree.