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Cite as: [2010] EWHC 2769 (QB)

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Neutral Citation Number: [2010] EWHC 2769 (QB)

Case No: HQ09X00290

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

 

Royal Courts of Justice

Strand, London, WC2A 2LL

 

Date: 03/11/2010

 

Before :

 

Mrs Justice Sharp DBE

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Between :

 

 

Withers LLP

Claimant

 

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Vivien Rosalind Harrison

Defendant

 

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Henry Knox (instructed by Withers LLP) for the Claimant

Grant Crawford (instructed by Humphreys & Co.) for the Defendant

 

Hearing dates: 20th - 22nd July 2010 & 26th – 28th July 2010

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Judgment


Mrs Justice Sharp:

 

Introduction

1.               The Claimant in this action is Withers LLP (“Withers”), a firm of solicitors. Withers acted for Mrs Harrison[1], the Defendant to these proceedings, and a former client, between November 2005 and October 2007 in relation to a dispute between Mrs Harrison and her former husband John Harrison. The dispute arose out of ancillary relief proceedings between Mr and Mrs Harrison in the Family Division of the High Court, and the judgment handed down in those ancillary proceedings on 30 September 2002, by Recorder Florence Baron QC (now Baron J): “the Baron judgment”.

2.               Withers now sues Mrs Harrison for the sum of £93,992.37 plus interest in respect of unpaid bills for professional charges and disbursements incurred between 1 July 2007 and 26 October 2007. Mrs Harrison’s defence to the action consists of a counterclaim for negligence[2] against Withers. Central to the claim of negligence is advice given to Mrs Harrison by Withers, in relation to proceedings brought by Mrs Harrison against Mr Harrison in the Queen’s Bench Division of the High Court (HQ07X00297 – “the QB proceedings”) to set aside the Baron judgment on the grounds that it was obtained by fraud or material non-disclosure. Mrs Harrison obtained a freezing injunction in the QB proceedings, but those proceedings came to an end when Mr Harrison obtained summary judgment in respect of Mrs Harrison’s claim.

3.               It is Mrs Harrison’s case that the QB proceedings were hopeless and would not have been brought by her but for the negligent advice she was given. In consequence, it is said that Withers is not entitled to be paid for work done or attributable to the claim, and Mrs Harrison is entitled to damages in respect of the costs she became liable to or agreed to pay to Mr Harrison, after the QB proceedings were struck out.

4.               It is said by Withers that Mrs Harrison now seeks to blame Withers for what were in fact the consequences of her own reckless refusal to accept or follow the advice that she was given. It is said that Withers was not negligent in advising that there was a proper case to argue that the Baron judgment should be set aside, and that Mrs Harrison was warned against proceeding with her claim, or bringing an application for a freezing injunction, given the substantial risks involved. It is said that Mrs Harrison incurred the substantial legal costs she did (both her own and Mr Harrison’s for which she became liable) not because of any negligent advice she received, but because she quite simply refused to accept or follow the advice she was given.

The evidence

5.               The parties have made available to me a very large amount of documentation, including the material available in the ancillary relief proceedings. In addition, I have heard evidence for Withers from the legal team who advised Mrs Harrison at all material times: Mr Andrew Ford and Mr Andrew Wass from Withers; and Mr John Wardell QC and Miss Tiffany Scott of counsel. Mrs Harrison gave evidence on her own behalf. With the odd exception, the numerous conferences and consultations which took place are evidenced by attendance notes (often more than one) taken at the time by one or other of the lawyers present. The content of the attendance notes, where there was more than one, in substance corroborated each other, and supported the evidence given by the Withers witnesses. Although Mrs Harrison disputes their accuracy in certain respects, it is important to note at the outset that I am entirely satisfied that the notes I have seen are an accurate record of what was said on each occasion, though, inevitably, they are not a complete record, and cannot convey the precise tone of the consultations about which I heard oral evidence.

6.               Insofar as what follows was contentious at the trial (and a great deal of it was not) it represents my findings on the evidence.

The history/factual background

7.               Mr and Mrs Harrison were married in 1988 when Mrs Harrison was in her early thirties. They had two children, born in 1990 and 1994. It is said in the Baron judgment that both parties had successful working lives before the marriage: Mr Harrison was a solicitor; Mrs Harrison had a public relations business and then set up a company called Uniquely Australian Pty Limited (“UA”) selling Australian products. The marriage was obviously not a happy one and there had been a number of separations before the parties finally separated in December 2000.

8.               The divorce petition[3] was presented on 5 December 2000 and the parties were eventually divorced in November 2002.

9.               Amongst the matters at issue in the ancillary relief proceedings, were the value of various assets owned by Mr Harrison, in particular, of two companies, one of which he had sold, Fastcash Limited, (Fastcash) and one of which was still operating, Interchange Organisation Limited (Interchange) also known as FirstrateFX and incorporated under the name The London Cash Exchange Wholesale Limited (or LCE).

10.            Question 1 of Mrs Harrison’s Fourth Questionnaire in the ancillary relief proceedings required Mr Harrison to disclose bank statements of his accounts and those of his named businesses, including FirstrateFX (and therefore Interchange). On 27 May 2002 at the pre trial review hearing of the ancillary relief proceedings before Black J, as she then was, Mr Harrison’s counsel stated that all such statements had been disclosed: he said Mrs Harrison had been provided with “every single bank statement for [Mr Harrison] and the businesses from separation.” As a result, Question 1 was struck through and Mr Harrison was ordered to reply to Mrs Harrison’s questionnaire, as now amended by the court.

11.            The ancillary relief hearing took place in July 2002 over 5 days before Baron J.

Fastcash

12.            Fastcash was a cheque cashing/foreign exchange business with retail outlets, and was incorporated in August 1997. Mr Harrison owned 90 per cent of the shares. (Baron J accepted Mr Harrison’s case that the remaining 10 per cent were not his, but were held by a nominee for a Mr Richard Cook). By a sale agreement dated 5 December 2000 Fastcash was sold to Dollar Financial (UK) Limited (Dollar), the British subsidiary of a US company together with a company called London Cash Exchange Ltd. The negotiations for the sale of Fastcash were kept secret from Mrs Harrison and when she discovered the sale agreement by accident, she made an application for a freezing injunction against Mr Harrison which she obtained from Bodey J on 12 December 2000.

13.            The price paid for Fastcash consisted of two elements: £1.9 million in loan notes, plus an agreed figure (£120,000) for the net assets and an earn-out based on a complex sliding scale relating to profits over the following calendar year – 2001. Baron J found the earn-out or deferred consideration - the precise figure for which had yet to be determined - to be £945,945. She did not accept Mrs Harrison’s contention that the earn-out had yet to be determined because Mr Harrison wished to make a further “secret profit”.

Interchange

14.            Interchange was incorporated in June 2000. It provided wholesale cash to retail “money shop” outlets, taking a percentage commission on the cash provided. Its history was dealt with by Baron J as follows:

“In December 2000, the Husband [Mr Harrison] considered that Interchange had a rosy future. He hoped that it would service all Dollar’s cash needs in the long-term and that he could groom it for sale to that organisation within a 2 year period. In an affidavit deposed to in December 2000, the Husband said … “I anticipate that within 24 months Dollar Group would unhesitatingly acquire this business for a substantial sum”.

Despite this assertion, the Husband’s expectations in that regard have not come to pass because Dollar decided to provide its cash requirements on an in-house basis (save for some surplus foreign exchange). The result is that the Husband has had to seek new sources of business for Interchange.

When the earn-out period ended, Interchange began to operate on a commercial basis and started to trade effectively in January 2002. The enterprise currently operates from rented offices in Bryanston Street with a total of 3 members of staff (apart from the Husband). Since January the Husband has taken several steps to enhance and support the business. In particular, he has introduced cash (via Director’s loan) of some £318,000 and he has recruited a key employee called Ilyas Azam (who has valuable contacts within the trade), he has sought shop front premises near Marble Arch (at an annual rent of some £85,000) because he hopes that a retail presence will help to cover overheads.

The Husband is very hopeful that this business will succeed but it is early days. The Wife [Mrs Harrison] has sought to value this business. She instructed Miss Pincott to seek to establish its value and this became a hotly contested issue before me. In her second report, Miss Pincott said that, although she could not value the business, it might be worth as much as £1.6 million. This calculation was based on an extrapolation of 12 days trading on a straight-line basis. I find this attempt to have been wholly fanciful. Next (in her third report), Miss Pincott sought to produce a more refined calculation based upon the companies daily reconciliation sheets for a 4 month period.”

15.            The two expert accountants who gave evidence before Baron J, Miss Pincott and Mr Harrison’s expert, Mr Lawrence, agreed Interchange was not saleable because of its short period of trading and lack of track record. They disagreed however as to its value. Mr Lawrence considered it was valueless, because of its lack of marketability and its current loss making position, a conclusion he drew from its management accounts produced by Mr Harrison, which showed Interchange trading at a loss and which in Mr Lawrence’s opinion was the best basis for establishing its real trading to date.

16.            In her second report to which Baron J referred, Miss Pincott used some daily reconciliation statements showing daily cash movements, less some expenses, for Interchange during two periods in April 2002 to estimate the profitability of Interchange. Mrs Harrison said the daily reconciliation sheets had come into her possession from anonymous sources (and I shall refer to them, as did Baron J, as the Hildebrand documents; see further paragraph 19 below). The second report and the Hildebrand documents on which it was based were provided to Mr Harrison’s solicitors on 24 May 2002, the Friday before the pre-trial review before Black J on the 27 May.

17.            Miss Pincott also used the Hildebrand documents to assist her in producing her third report, to which Baron J also referred. Miss Pincott concluded Interchange had made a profit of £22,000 over the best 4 month period (February to May 2002) which she then annualised. She then enhanced the annualised figure in expectation of an increase in profits, and applied a multiplier 4 to arrive at a bottom line valuation of £648,000. In contrast to Mr Lawrence, she decided to ignore the management accounts which showed trading at a loss.

18.            Miss Pincott’s third report did not find any more favour with Baron J than her second had and Baron J had no hesitation in preferring Mr Lawrence’s evidence and approach. Baron J said she considered “Miss Pincott’s valuation was wholly contrived and speculative I do not consider that the business has any present value and the attempt to give it a value was a simply waste of costs.” In the result, the only asset value Baron J attributed to Interchange was the investment of £318,000 of family money made in it since December 2000.

The Hildebrand documents

19.            At the trial, it was alleged by Mr Harrison that Interchange’s premises had been broken into; and that the Hildebrand documents had been tampered with and were therefore, by inference, unreliable. Mr Radwan, an employee of Interchange, and a witness for Mr Harrison, said in his written evidence that the break in had occurred on 9/10 May 2002, he had suspected Interchange’s computers had been tampered with, and the incident had been reported to the police on the 19 or 20 May 2002 (thus, before the PTR when Miss Pincott’s second report was given to Mr Harrison). Dean Stinton, also an employee of Interchange and a witness for Mr Harrison said in evidence that he also suspected someone had entered the office on evening of 9 May 2002 without authorisation. He discovered one computer had been used by someone before he arrived for work on 10 May 2002, and represented to the court in his oral evidence that he had accessed Interchange’s daily reconciliation sheets on 10 May and knew on that date that “numbers had been changed” so that “the figures on the reconciliation sheet that morning did not match.” Baron J accepted the evidence of Mr Harrison and his witnesses about the break-in and considered they had given honest evidence about it.

20.            Baron J concluded that “Apart from causing a great deal of upset and adding to the costs of these proceedings, the Hildebrand documents had not added anything to the overall knowledge of the Husband’s wealth.” Although Baron J was not prepared to find that Mrs Harrison had obtained the Hildebrand documents unlawfully (Mrs Harrison denied employing private detectives to obtain them) she rejected as improbable Mrs Harrison’s contention that the documents had been sent to her by her husband or his employees in order to discredit her.

The judge’s view overall

21.            There can be no doubt that Baron J was very critical of Mrs Harrison’s case, Mrs Harrison herself and her approach to what, in Baron J’s view, should have been a fairly straightforward matter.

22.            I cite as an example what Baron J said about Cash on Cars, a franchise business bought by Mr Harrison, which he said, operated from 1998 until early 2001 when it operated only to collect outstanding debts:

“During this litigation the Wife claimed that the Husband had deliberately chosen not to operate this business [Cash on Cars] in order to reduce its value. It is her case that failure of the business “is cosmetic and manufactured temporarily for the purpose of these proceedings”. She claims that the Husband will revive it once this case has ended. In essence, she asserts that the Husband has suppressed the true value of Cash on Cars to her detriment. I do not find this allegation to be made out. I have taken into account all the points which have been raised in her evidence and in the careful written submissions of her Leading Counsel but I do not find any of them convincing and I dismiss them all.”

23.            Baron J’s conclusions about Mrs Harrison were these.

“I have no doubt that the Wife has a number of good qualities. In her youth, she was enterprising and worked hard. She worked during the marriage and cared for the children. However, she has found her relationship with the Husband to be a very hurtful experience and she struck me as a woman who is now lonely and adrift. She is completely mistrustful of the Husband – both as to his actions and motives. She may have had justification for her concerns at the outset of these proceedings but I find that thereafter she has failed to take a proportionate view of the assets and issues at stake in this case.

Every part of the Husband’s evidence has been subject to the closest scrutiny. He has been made to produce evidence to support virtually every aspect of his disclosure. Despite this, the Wife has not managed to prove that his presentation was other than broadly correct. Whilst some figures were inaccurate, they were not such as to alter the overall asset position. The Wife has described this case as “white collar crime with a divorce attached”. Having seen her give her evidence, I consider that she still believes this statement. She very bitter towards the Husband and feels that his actions have been geared towards doing her down…..”

24.            Significantly, Baron J rejected Mrs Harrison’s evidence that Mr Harrison had deliberately sought to misrepresent or suppress evidence of the true value of his assets, and her views of Mrs Harrison are in pointed contrast with her view of Mr Harrison which was as follows:

“The Husband came across as much less volatile individual than the Wife. He was calm and more measured with an air of resignation about him.

It is clear that he failed to inform the Wife about the sale of Fastcash. He says that he did not do so because he felt that she would have interfered with the sale. He certainly hid his affair from the Wife and did not tell the truth about moving in with Mrs Watson, when the parties separated in December 2000.

Despite these points, I find that his presentation of his assets has been fundamentally correct throughout and I consider that he has done his best to make a success of his various business ventures. I note that, until the sale of Fastcash, this family did not have any significant wealth.”

25.            Baron J also considered the costs incurred had been wholly disproportionate to the assets or the issues involved. The costs estimates showed Mrs Harrison had spent some £425,000 and Mr Harrison some £210,000. The judge found the level of expenditure had made it difficult to resolve what should have been a relatively straightforward case, and the erosion of assets it had caused made it much more difficult to achieve a proper and fair solution.

26.            The blame for this was laid very firmly at Mrs Harrison’s door:

The costs. (b) The Wife’s attitude to the Husband and his disclosure. As set out above, she has described this litigation as “white collar crime with a divorce attached”. She does not trust the Husband and she has required every point to be verified, corroborated and checked. This has led to a huge amount of disclosure – which, in turn, has increased the Husband’s costs enormously. His costs are much higher than is usual for this type of case.

(c) The Wife has pursued a number of issues relentlessly to little purpose. In particular (i) the value of Cash on Cars, (ii) the current value of Interchange and (iii) the many other issues which are set out in this Judgment about which I have made specific findings.

The Wife’s costs are twice those of the Husband – she has borrowed against her home to fund them. Clearly any person is entitled to spend their own resources as they choose but I am of the view that that decision cannot be allowed to distort a fair outcome to litigation.”

27.            In consequence, Baron J broadly adopted the Leadbetter[4] approach to costs. She decided the costs incurred should be added back above the line before deciding on the proper distribution of assets, save for that part of the costs which might not be recoverable. She added back 70 per cent of the costs paid to date by each party, but omitted the costs still to be paid, which the parties would have to find from their own resources (whoever was ordered to pay them).

28.            In the result, she held in summary, that Mrs Harrison had net liabilities of £46,152 and that Mr Harrison had net assets of £1,256,211. After taking account of costs, she awarded Mrs Harrison a lump sum of £600,000 and £10,000 a year (which has come to an end) and £10,000 a year to each of their children, which continues. She made no order for the costs of the ancillary relief proceedings themselves.

After the Baron judgment

29.            It is evident that Mrs Harrison was deeply dissatisfied with the Baron judgment and remained convinced that Mr Harrison had defrauded her with the assistance of his accountant and Dollar.

30.            In 2004 she instructed her personal accountant, Michael Coussens, to investigate the matter further. She also employed private investigators to assist.

31.            On 21 November 2005, Mrs Harrison first consulted Withers for advice as to the merits of various claims she wished to bring against Mr Harrison, his accountant, a Mr Nunn and Dollar. As she was alleging fraud and dishonesty against Mr Harrison she was advised to speak to Mr Andrew Ford. Mr Ford is the practice group leader of Withers’ Commercial Litigation and Fraud team. He qualified as a solicitor in 1994, joined Withers in 1995 and became a partner in 2002.

32.            Mrs Harrison’s firm belief that Mr Harrison, with the assistance of others, had obtained the Baron judgment fraudulently and that he had hidden considerable funds from the court, is evident from a detailed 8 page background document she sent to Withers on or about 22 November 2005 describing her intended claims. The background document is entitled “Background history to V. Harrison’s civil litigation/trust claims arising from asset raiding/share defraudment in respect of Fastcash Ltd, the London Cash Exchange Ltd, Cash on Cars Ltd, the London Cash Exchange (Wholesale) Ltd, UA Importers Ltd and all other assets (corporate & personal) held co-jointly as at July 2002”.

33.            On 25 November 2005 Mr Ford and Mr Andrew Wass, then an assistant solicitor (now a partner) at Withers saw Mrs Harrison for the first time. From then on, Mr Ford had the overall conduct of Mrs Harrison’s claim against Mr Harrison assisted by Mr Wass, who carried out most of the day-to-day conduct of the matter under the supervision of Mr Ford. At this first meeting, Mrs Harrison explained that she wanted to bring a claim against Mr Harrison and his associates, including Mr Harrison’s former accountant and Dollar. Her case as set out in the background document and further e-mails she sent to Mr Ford on 28 and 29 November 2005 was that it was “clear as day” that she had been the victim of fraud.

34.            After the meeting, Mr Ford sent Mrs Harrison an engagement letter together with Withers’ terms of business, which she signed on 29 November 2005 and returned to confirm that Withers was instructed to act for her. In her email of 29 November 2005, Mrs Harrison noted that the “costs appeared to be steep versus divorce proceedings”. In his reply of the same date Mr Ford said:

“I appreciate that the level of costs is high, but I want to be realistic so that you understand what is involved if this matter is to be pursued. I will keep costs as low as I can, but it is inevitable that such a piece of litigation will be expensive.”

35.            Thereafter (and indeed throughout the period of the retainer), Mrs Harrison produced further detailed documentation to support her case. This included a long report dated 22 July 2005 prepared by Mr Coussens which unequivocally supported her complaint that her former husband had deliberately misled the court about the value of her assets with the assistance of Mr Nunn. His conclusions were that:

i)                Mr Harrison had lied about damage to some opal panels and had undervalued them by £99,610. (The panels were stock belonging to UA which by then was jointly owned). In the ancillary relief proceedings Mrs Harrison alleged they were worth £100,000 and Mr Harrison had deliberately undervalued the panels at £20,000 on the basis they were warped and unsaleable. Baron J valued them at £20,000, their written down stock value);

ii)              Dividends due to Mrs Harrison had been diverted by Mr Harrison;

iii)            Mr Harrison had lied in Court about the scope of the tax investigation into Cash on Cars Limited, which he and his wife had set up after returning to this country. As a result, Baron J was led to believe that his tax affairs were in order and that he was reliable;

iv)            Mr Harrison had deliberately withheld the statutory accounts in respect of Cash for Cars with the result that the Court was unable to make a fully-informed decision as to the company’s value;

v)              There were various accounting anomalies in respect of management accounts for Cash for Cars;

vi)            Mr Harrison had hidden the true value of the earn-out to which he was entitled on the sale of Fastcash to Dollar. According to Dollar’s accounts, the understatement totalled £1,107,555;

vii)          The value of Interchange had been understated by £1.62 million;

viii)        Mr Harrison had failed to disclose in his Form E the payment he had received for the net current assets of Fastcash;

ix)             Mr Harrison had failed to disclose the payment he had received in respect of the net current assets of Fastcash;

x)               Mr Harrison had failed to disclose two bank accounts in the name of Interchange.

36.            According to Mr Coussens, the above list was not exhaustive and he was able to identify other anomalies and discrepancies which showed that Mr Harrison had given a “grossly distorted” view of his net worth in the ancillary relief proceedings. In his view, Mrs Harrison had been “the victim of obstruction and false testimony for which she has borne the full financial burden”.

37.            In Mr Ford’s view the Coussens Report was full of assertions that lacked convincing supporting evidence, but there was sufficient material to take the matter forward. After an initial review of the materials supplied to him, he met Mrs Harrison again, on 15 December 2005.

38.            During the course of their initial meetings Mr Ford explained to Mrs Harrison (i) that an allegation of fraud could not be advanced without material which established on the face of it a case of fraud; (ii) that she had to produce new evidence rather than attempt to re-argue issues made before the Family Division in the ancillary relief proceedings; (iii) that she would need to bear in mind that any court considering her claim would start from the position that she was a ‘woman scorned’ who was simply not happy with the outcome of her divorce; and (iv) that she would need to be able to demonstrate that the court had been materially misled, if she were to overturn the decision.

39.            Mr Ford formed the view that Mrs Harrison was a bright woman who had acquired a certain amount of legal knowledge, though she was not a lawyer. She was adamant that she had been the victim of a fraud perpetrated by her husband and she was determined to pursue him via the courts, whatever it took. But he warned her that to undertake further legal proceedings against her former husband in separate proceedings would be very expensive and of the emotional price that she would have to pay, as to litigate something so personal would place her under enormous strain. However, Mrs Harrison was determined to press on and confirmed to Mr Ford that she was willing to spend money on legal costs. Mrs Harrison said that she wanted to undertake as much of the background work as possible.

The instruction of counsel

40.            In January 2006, Mr John Wardell QC was instructed to advise on the merits of the claims that Mrs Harrison wanted to bring against Mr Harrison, Mr Nunn and Dollar (Mr Ford had advised instructing a senior junior but Mrs Harrison opted to select a silk). Mr Wardell specialises in general commercial and professional negligence work; and has a particular interest in civil fraud. He was recommended by Mr Ford who had worked with him before.

Consultation with Mr Wardell on 26 January 2006

41.            In an e-mail of 20 January 2006 to Mr Wardell, to which he attached the Baron judgment Mr Ford described Mrs Harrison’s grievance as follows:

“VH [Mrs Harrison] believes that JH [John Harrison], together with his accountant (Ian Nunn of Nunn Hayward) conspired to take money out of the assets owned jointly by John and Vivien. Further, she believes they conspired to produce inaccurate financial details before the court, so that the court was unaware of the size of assets available for distribution in the divorce proceedings.

Nunn was, at one stage, Vivien's personal accountant as well as accountant to the relevant companies. He has a track record of providing misleading financial statements etc which have led to sanction.

We have been asked to see if we can bring a claim against JH, Nunn (& ors) for conspiracy, negligence etc. VH does not want to go back before the Family court as she has no confidence in their ability/willingness to deal with her allegations, in the context of Family Proceedings.”

42.            Mr Wardell was also sent a copy of a bundle of documents prepared by Mrs Harrison for the purpose of explaining to her lawyers why she was sure that she had been defrauded by her former husband with the help of Mr Nunn and Dollar. Included in it was the report from Mr Coussens, and summaries prepared by Mrs Harrison dealing with the specific allegations made by her against her former husband and Mr Nunn.

43.            Mr Wardell in his witness statement in these proceedings said this:

“The very confident language used by Mrs Harrison was reflected in her demeanour and her instructions at the consultation at my chambers on 26 January 2006. She was very much of the view that she had a compelling and unanswerable case that her former husband had deliberately misled the Court and she was keen to issue proceedings against him, Mr Nunn and Dollar as soon as possible. Her conviction that she had been cheated by Mr Harrison with the help of Mr Nunn and Dollar never wavered. ”

44.            Mr Wardell shared Mr Ford’s view however, that the documentation was much less convincing than Mrs Harrison and Mr Coussens appeared to believe. In particular, although he did not have sufficient material to dismiss the complaint out of hand, he said he did not see any proper basis for alleging that Mr Nunn and Dollar were parties to a conspiracy. On the other hand, in his view there were the makings of a case that her former husband had deliberately misled the court and suppressed key documents.

45.            In this regard, Mr Wardell said he considered the following to be of significance:

i)                The language of Dollar’s accounts tended to support the suggestion that the earn-out was substantially higher. Mrs Harrison herself was convinced that this was the case because the terms of the agreement with Dollar entitled Mr Harrison to an enhanced payment if the new stores which had been opened at around the time of the sale had in fact met their targets;

ii)              A private investigator engaged by Mrs Harrison had established that Interchange had many more bank accounts than had been disclosed by Mr Harrison at the time of the ancillary relief proceedings;

iii)            There was documentary evidence that, at least on one reading, appeared to support Mr Coussens’ conclusions about the opal panels;

iv)            Mr Harrison had a history of conduct consistent with dishonesty: in October 1995, when they lived in Canada, he cleared their joint bank accounts and went to England leaving Mrs Harrison destitute. This prompted her to obtain injunctions in both Canada and in England. After a reconciliation, the couple moved to this country and set up Fastcash and other businesses. Mr Harrison excluded Mrs Harrison from the business and then negotiated its sale without telling her about it. On discovering some incriminating documents in the boot of her car, Mrs Harrison was prompted to obtain yet another freezing order.

46.            In the circumstances, Mr Wardell said he was very concerned to try and lower Mrs Harrison’s expectations and to ensure that she did not issue proceedings before he had had the opportunity of getting to the bottom of her complaints.

47.            He therefore made it clear both at this meeting and subsequent meetings that Mrs Harrison would require solid evidence before she could proceed against Mr Harrison for fraud or material non-disclosure. Having re-read the relevant authorities and in particular Livesey v Jenkins [1985] 1 AC 424, he reached the conclusion that in a matrimonial case material non-disclosure was of itself a ground for setting aside a judgment.

48.            In an email of 30 January 2006 from Mr Ford to Mrs Harrison, Mr Ford said he and Mr Wardell were both encouraged with the information that Mrs Harrison had supplied during the consultation and considered it was worth her taking the matter forward before evaluating the prospects of proving fraud at trial. Mrs Harrison was asked to supply a set of the ancillary relief trial bundles and for copies of relevant correspondence.

Investigations in 2006

49.            In the ensuing months, Mrs Harrison had many consultations with Mr Wardell attended by Withers (on the 9 March 2006, 22 June 2006, 2 August 2006, 3 October 2006, and the 20 October 2006) during which the lawyers endeavoured to establish whether there was any substance to Mrs Harrison’s complaints and evidence to corroborate them.

50.            Mrs Harrison produced amongst other things, the set of the trial bundles from the ancillary relief proceedings and a considerable quantity of further material which she claimed supported her case against Mr Harrison, Mr Nunn and Dollar.

51.            Information was also provided deriving from her private investigator about various bank accounts. It suggested Interchange had had, since 2001, two sterling accounts at the Cavendish Square branch of the Royal Bank of Scotland in use at the time of the ancillary relief proceedings. These were accounts numbered 10178400 and 10153726 (“the 726 account”). The account numbered 10178400 had a balance of approximately £1,839,200 in May 2005. In addition, there were at least three other accounts in Interchange’s name (numbered 10186756, 10192624 and 10192632).

52.            Mrs Harrison’s firm instructions to Withers unequivocally supported by Mr Coussens were that these accounts including the 726 account had not been disclosed during the ancillary relief proceedings. There were also lists of Mr Harrison’s disclosed bank accounts in the ancillary relief proceedings including a schedule prepared by Messrs Sears Tooth (who acted for Mrs Harrison in the ancillary relief proceedings) setting out Mr Harrison’s bank statement disclosure as at 25 September 2002, and which did not include these accounts.

53.            Possibly in August 2006, but certainly during this period, further evidence emerged from a police report which concerned the date upon which Mr Harrison’s employees had reported the break-in at Interchange’s offices, to the police. The police report confirmed that the break-in had been reported on the 24 May 2000, that is, after the PTR before Black J, when Mr Harrison and his advisers had been given Miss Pincott’s second report which used the Hildebrand documents (the daily reconciliation sheets) to arrive at a valuation for Interchange of as much as £1.68 million.

54.            Mr Wardell considered the police report to be potentially significant to Mrs Harrison’s case for the reasons explained in his witness evidence:

“I think it important that I explain why I considered that it was a significant document. Mr Harrison’s evidence at the ancillary relief hearing had been that, since Dollar had brought the foreign exchange wholesale operation in-house, Interchange was not going to be nearly so successful as he had hoped. He supported his case about the lack of profitability by reference to management accounts that he had produced in advance of the PTR in May 2002. The information in the management accounts could not be reconciled with a number of daily reconciliation sheets that Mrs Harrison said she had received from an anonymous source. On the strength of these documents, Mrs Harrison’s expert valued Interchange as being worth as much as £1.68 million. This report was I believe served on Mr Harrison either at or shortly before the PTR, at which various disclosure orders were made against Mr Harrison. Later that day, Mr Radwan, an employee and director of Interchange, reported to the police that there had been a break-in earlier on in the month and he accused Mrs Harrison for being responsible for the break-in.

At the trial, evidence was given on behalf of Mr Harrison that the computers had been tampered with during the break-in giving rise to the implication that no reliance could be placed on the reconciliation sheets that had been sent to Mrs Harrison. He produced other reconciliation sheets which supported a much lower profit figure and a much lower valuation. Mrs Justice Baron concluded that the valuation methodology adopted by Mrs Harrison’s valuer was flawed and she eventually concluded that the company had no positive value at all.

In the circumstances, there was a compelling case that the break-in had been invented to throw doubt on the validity of the documents that had been obtained by Mrs Harrison. If this were the case, then it was likely that the reconciliation sheets that Mrs Harrison had received were accurate. This being so, I regarded it as obvious that, if Mrs Justice Baron had been persuaded that the break-in had been invented in order to raise doubts about the reconciliation sheets, she would have been likely to come up with a positive value for Interchange. However, as I made clear to Mrs Harrison both before the issue of proceedings and subsequently (see in particular the Note for Counsel dated 24 October 2007), I was always of the view that, to be confident of establishing that the break-in had been invented to cast doubt on the reconciliation sheets and to show that Baron J would probably have come up with a positive value for Interchange, the point about the break-in needed to be linked to the failure to disclose bank accounts. In other words, the evidence of a break-in was potentially of great significance if Mrs Harrison were right about the hidden assets in the non-disclosed bank accounts but was not of itself sufficiently compelling to justify running it as a stand-alone issue of fraud.”

55.            During this period (on 7 July 2006) Mr Ford also sent Mrs Harrison a note of advice written by a member of Withers’ Family Law department, the purpose of which was to identify exactly what Mrs Harrison would need to do to overturn the Baron Judgment. The note referred in terms to the judgment in Livesey v Jenkins [1985] AC 424 and various passages from Lord Brandon’s speech, including one in which he said:

“[i]t will only be in cases where the absence of full and frank disclosure has led the Court making…an order that is substantially different from the order which would have been made if such disclosure had taken place that a case for setting aside can possibly be made.” And “Parties who apply to set aside orders on the grounds of failure to disclose some relatively minor matter or matters, the disclosure of which would not have made a substantial difference to the order which the court would have made as approved, are likely to find their applications being [summarily] dismissed, with costs against them…”

56.            By the end of this period, Mrs Harrison was advised that there was insufficient evidence to justify pursuing claims against Mr Nunn or Dollar but that there was merit in investigating Mrs Harrison’s allegations against Mr Harrison. In particular that Mr Harrison had received approximately $1.3 million more from the sale of Fastcash and LCE to Dollar than he had disclosed in the ancillary relief proceedings, and that he had concealed the existence of various bank accounts containing over £1 million held at RBS in relation to Interchange.

57.            The view was taken that the Queen’s Bench Division would be more rigorous on the issue of fraud than the Family Division. Pursuant to an agreed strategy, therefore, the decision was made first, to obtain permission from the Family Division to use the documents disclosed in the ancillary relief proceedings, and then, as Withers advised Mrs Harrison, to obtain disclosure from RBS to verify the information obtained from her private investigators before pursuing any claim against Mr Harrison to set aside the Baron judgment or applying for a freezing injunction against him.

58.            Mrs Harrison considered an application for a freezing injunction was necessary for reasons explained by Mr Wardell:

“Mrs Harrison was very concerned that, if Mr Harrison got wind of what was happening, he would take steps to dissipate his assets. Since she had been compelled to obtain freezing orders on at least two previous occasions, her concern about this seemed entirely justified. This is why at that time, we were not thinking of making a similar application against Dollar because she was convinced that it would be impossible to prevent word of that getting back to Mr Harrison.”

59.            Mr Wardell had discussed the proposed strategy with another silk. Mr Wardell said:

“As I am not a matrimonial practitioner, I thought it sensible to seek the advice of a matrimonial silk to ensure that the proposed strategy did not conflict with any guidance given by the Family Division and would not otherwise be thought to be inappropriate. I discussed my strategy with Charles Howard QC, who specialises in financial provision and I was pleased to discover that he considered that the proposed course was appropriate.”

The RBS disclosure

60.            On 16 January 2007 therefore, Mr Wardell applied on Mrs Harrison’s behalf, to Macfarlane J in the Family Division of the High Court. Macfarlane J granted Mrs Harrison permission to use the documents disclosed in the ancillary relief proceedings including the witness statements, the transcripts of the hearings and the Baron judgment. Such documents were to be used in support of the proposed applications for a disclosure order against RBS and a possible claim to set aside the Baron judgment on the grounds of fraud and/or material non-disclosure.

61.            On 26 January 2007, the claim form in the QB proceedings to set aside the Baron judgment was issued.

62.            On 30 January 2007, junior counsel then acting for Mrs Harrison applied to Grigson J and obtained a gagging order against RBS. On 6 February 2007 there followed the application for a disclosure order against RBS for disclosure of bank statements for accounts in the name of, inter alia, Interchange and/or LCE. The disclosure order was granted by Dobbs J.

63.            The basis of the application before Dobbs J was set out in Mrs Harrison’s witness statement dated 16 January 2007. At paragraph 5 of that statement, Mrs Harrison stated:

“I have now received information that Interchange has, and has had since February 2001, accounts at the Cavendish Square branch of the Royal Bank of Scotland which were not disclosed within the ancillary relief proceedings in 2001 and 2002 despite the fact that Mr Harrison was ordered to produce all the bank statements on all of Interchange’s accounts. Assuming that the information I have been given is accurate and that these accounts were being used in 2001 and 2002 (which I have very good reason to believe is the case), I will then have conclusive proof of the fact that not only did my former husband lie on oath in our ancillary relief proceedings but that he did so in order to hide the true value of the joint assets.”

64.            At paragraphs 35-39 of her witness statement Mrs Harrison provided justification for the application for disclosure against RBS:

“In addition, I have learned through information provided by one private investigator, which has been corroborated by other private investigators, that Mr Harrison hid from the Court the existence of a number of Interchange’s bank accounts. I refer to the management accounts that Mr Harrison produced for Interchange exhibited at VRH7. These showed that Interchange had two sterling accounts with the Royal Bank of Scotland Cavendish Square branch, numbered 10153750 and 10132869. Interchange also had a Canadian dollar account and a US dollar account. Recent information provided by private investigators has shown that at the date of the hearing, Interchange had two other sterling accounts at the same branch (numbered 10178400 and 10153726) which were opened on 19 February 2001 and were in use at the time of the proceedings. Indeed account number 10178400 apparently had a balance of approximately £1,839,200 in May 2005. In addition, there are at least three other accounts in Interchange’s name, namely, 10186756, 10192624 and 10192632. The existence of these further accounts was never disclosed at the time.

At the PTR before Mrs Justice Black on 27 May 2002 Mr Harrison’s counsel told the Judge that he had disclosed to us ‘every single bank statement for my client and the businesses from separation.’ I attach at VRH7 a copy of the transcript together with a schedule drafted by Sears Tooth illustrating Mr Harrison’s bank statement disclosure as at 25 September 2002, and extracts from the management accounts of The Interchange Organization Limited showing the accounts held at Royal Bank of Scotland in 2002. In reliance on this assurance I limited the information sought in my questionnaire. In the light of the information obtained through private investigators, this appears to have been a deliberate misrepresentation. I should perhaps add that I have informed the police who are investigating Mr Harrison’s financial affairs and actions taken by our joint accountant about these bank accounts. In my dealings with DS Lambert who has been liaising directly with Revenue to confirm the factual evidence, I was given the impression that the information I had provided was accurate, including the fact that there were undisclosed bank accounts.

The reason why it is necessary to make an early application for disclosure of these accounts is simple. If, as I expect may well be the case, some or all of these accounts were not dormant at the time, then I will have conclusive proof that Mr Harrison lied to the Court in order to suppress the value of Interchange. I would then not hesitate to proceed with my intended action to set aside the judgment delivered by Mrs Justice Baron in September 2002, and bring to account/fully investigate the role which others may have played. On the other hand, if the information I have been given turns out to be wholly inaccurate, I would want the opportunity of considering whether to proceed with my claim even though, as I pointed out above, I have compelling evidence that Mr Harrison’s evidence on other matters was untruthful.

To ensure that there is no possibility of any active bank accounts remaining hidden, I would ask that the disclosure order should extend to any accounts in the name of the following entities set out in Schedule 2 of this witness statement, namely: FirstrateFX Limited, now known as V5 Car Loans Limited (company number 3747252), First Rate Foreign Exchange Limited, now known as Interchange Retail Limited (company number 4168560), The First Rate Group Limited (company number 4169370), and The London Cash Exchange Wholesale Limited, now known as The Interchange Organization Limited (company number 4019832). Mr Harrison’s evidence before Mrs Justice Baron was that these companies were all dormant and that they were simple “reservations of name” that he made when he renamed Interchange as FirstrateFX. Bearing in mind the various discoveries I have made, I consider that there are powerful reasons for not taking what he said about these other companies at face value.

Finally, I should make it clear that if the disclosure exercise shows what I anticipate it will show, then I will immediately be seeking wide-ranging injunctive relief against Mr Harrison. It is for this reason that I have asked that the Royal Bank of Scotland should not divulge the existence of this application to anyone else including Mr Harrison, any of Mr Harrison’s associates, or any officer, servant or agent of Interchange or any associated company. In the light of his previous conduct, Mr Harrison would not hesitate to take steps to dissipate his assets if he found out what was going on.”

65.            Mrs Harrison’s witness statement was supported by a list of disclosed bank accounts which Mrs Harrison verified and exhibited to her statement and by Mr Coussens’ report dated 22 July 2005, also exhibited to her statement. In section 9 of his report, Mr Coussens said as follows:

“It has been brought to my attention that a bank account was opened at The Royal Bank of Scotland Cavendish Square branch on 19th February 2001. The account number is 10178400 and the balance in hand at June 2005 is £1,839,241. This account was not disclosed to the Court in bundles “J” (Burgundy) and “K” (Yellow).

A further account was opened at the same branch, number 10153726, and its existence was also undisclosed.

The disclosure of management accounts, Court bundle page number 000204, being the final updating disclosure on which the Court and Grant Thornton relied shows quite clearly the individual bank accounts under current assets which exclude the two accounts mentioned above.

The Court bundle list of business accounts disclosed also excluded these accounts.”

66.            The order made by Dobbs J limited disclosure of the bank statements to Mrs Harrison’s legal advisers. Mrs Harrison was not entitled to inspect copies of the documents disclosed but her legal advisers were permitted to inform Mrs Harrison of information in the documents disclosed including balances on the accounts and any date or dates deemed material.

67.            On 8 February 2007 under cover of a letter from the Group Litigation Department, RBS disclosed various bank statements. The letter was headed: “Production order: Interchange Organisation Ltd.” The first line said: “Please find enclosed the following documents in relation to the Production Order for our customer, Interchange Organisation Ltd.” Amongst the bank statements now disclosed were those for the 726 account.

68.            The 726 statements were headed: “RBS Re Interchange Organization Ltd”. The address was stated to be “1st Floor Argyll House” on the first 9 sheets, “1st Floor Argyll House 246 Regent Street” on the 10th and “1st Floor, Argyll House 246 Regent Street, Depot Code 190” on the other three.

69.            Mr Wass inspected the RBS disclosure, including the bank statements for the 726 account. On 12 February 2007 Mr Wass sent Mrs Harrison a note on the RBS disclosure. His note recorded that only one account (the 726 account) was operating during the ancillary relief proceedings and that it contained £25,000 throughout the proceedings. Mr Wass noted that it should have been disclosed by Mr Harrison in 2002, but had never had a balance of more than £26,000 in it.

70.            In her email in reply sent to Mr Wass on 12 February 2007 Mrs Harrison wrote that she was “delighted to have successfully proven further non-disclosure of the bank accounts” and said that it “destroyed Baron’s presumption of innocence and honesty in JH’s [Mr Harrison’s] favour, by this latest proof positive of non-disclosure of bank accounts…the case for fraud could not now be better proven.”

71.            However, contrary to the position as Mrs Harrison and Withers then evidently believed it to be, the 726 account was not an Interchange account, but an RBS account in which Interchange had a beneficial interest; and though the 726 account (and its bank statements) had not been disclosed in the ancillary relief proceedings, the £25,000 in the 726 account had been. In Interchange’s Balance Sheet dated 24 April 2002 (a document exhibited by Mrs Harrison to her witness statement of 16 January 2007) it was disclosed in what was described as “Treasury Account”, containing £25,000 under the heading “Current Assets”.

Disclosure application against Dollar

72.            Following the disclosure from RBS the amount in the 726 account was sufficiently small to raise the question whether to seek similar pre-action disclosure from Dollar. The advice of counsel and Withers, set out in an e-mail from Mr Wass dated 14 March 2007 was that if Mrs Harrison was determined to proceed whatever the outcome of the Dollar application, she should get on with the claim, and seek disclosure from Dollar at the same time. Mrs Harrison decided not to follow this advice but to apply for disclosure from Dollar.

73.            On 22 March 2007, Miss Tiffany Scott of counsel was first instructed as junior counsel for Mrs Harrison (in place of junior counsel who had previously been instructed). She is a junior barrister in the same chambers as Mr Wardell, she was then of some 9 years call, and practices in the field of commercial chancery work.

74.            On 30 March 2007, Miss Scott applied for and obtained a gagging order against Dollar from Swift J and then a disclosure order against Dollar from Jack J on 18 April 2007.

75.            On or about 17 May 2007, Dollar provided a bundle of disclosed documents which showed that the inference drawn by Mrs Harrison that Mr Harrison had received $1.3 million more for the sale of Fastcash and LCE than he had disclosed was mistaken.

76.            The implications of the Dollar disclosure were discussed in detail at two telephone conferences between Mr Wardell, Ms Scott and Mrs Harrison which took place on 21 and 24 May 2007. Meanwhile, an order was obtained extending the time for service of the claim form in the QB proceedings to 26 July 2007.

77.            As the notes of the two consultations show, Mrs Harrison and Mr Coussens were convinced the Dollar disclosure showed Mr Harrison had received substantially more on the sale of the business than he had previously disclosed (though Mr Coussens was later to change his mind). Mr Wardell did not agree, and said so at the telephone consultation with Mrs Harrison on 24 May 2007. He advised Mrs Harrison, as he had before, that she needed solid evidence to go ahead with her claim. He also advised her that the evidence of the undisclosed bank account containing £25,000 was not enough on its own; they needed more than that to be sure a judge would set the judgment aside because Mr Harrison may convince a judge that he had simply overlooked disclosing the account which may lead the judge to refuse to set aside the judgment.

78.            Further inquiries were then made of Dollar on Mrs Harrison’s instructions, to clarify various points raised on the Dollar disclosure, and to ensure the inference drawn by Mrs Harrison from Dollar’s accounts was indeed mistaken.

The consultation of the 25 June 2007

79.            On 25 June 2007 a further lengthy consultation with Mr Wardell took place, attended by Mrs Harrison, Miss Scott and Mr Wass. It was clear that the result of the Dollar and the RBS disclosure was that Mrs Harrison could not show there was “a big pot of money” that Mr Harrison had not disclosed in the ancillary relief proceedings. This was emphasised to Mrs Harrison. Mr Wardell also advised Mrs Harrison amongst other matters, that in view of the Dollar disclosure and the RBS disclosure, he had “a real concern” that she would find herself at the end of a losing judgment with costs consequences.

80.            By now Mr Wardell had discussed the Dollar disclosure with Mr Coussens, who agreed that it did not support the preliminary conclusion Mr Coussens had reached. Her points on the Dollar disclosure were gone through in detail, but Mrs Harrison still did not agree with her lawyers’ advice that the Dollar disclosure had drawn a blank. There was discussion about asking Dollar for clarification on certain points. Mr Wardell asked Mrs Harrison if she wanted to carry on if those enquiries drew a blank Mrs Harrison said: “I will go ahead anyway. If I get a blank then I’ll go ahead anyway.”

81.            Despite the pessimistic advice she was now being given, Mrs Harrison continued to maintain there was “substantial evidence” of Mr Harrison having lied to Baron J in the ancillary relief proceedings and that her case remained a strong one (see for example the letter sent by Mrs Harrison to her lawyers on 23 July 2007, shortly before she was sent the letter of advice referred to in paragraph 83 below).

82.            About a week or so after the consultation of 25 June 2007 Mrs Harrison gave instructions that an application should be made for a freezing injunction as soon as possible. Mr Wardell was concerned about this as he now believed her prospects of success were no longer strong enough to justify the risk of adverse costs orders.

Written Advice given on 23 July 2007

83.            In the light of concerns within the legal team about how matters now stood, a letter of advice from Mrs Harrison’s legal team was prepared by Miss Scott to be sent to Mrs Harrison. Miss Scott sent a first draft to Mr Wass and Mr Wardell for their comments on 17 July 2007. The draft’s final paragraph said this:

“While there is probably sufficient evidence available for us to plead a case against John, we must advise you against issuing proceedings against him and subjecting yourself to a cross-undertaking in damages consequent upon obtaining a Freezing Order. There is no real lynchpin here to convince a Judge to make a finding of fraud. All the evidence we have at present could quite possibly and plausibly be explained away by John and the risk to you is substantial in those circumstances”

84.            On 23 July 2007 shortly after Mrs Harrison sent her letter of the same date, Mr Wass sent Mrs Harrison the letter of advice in its final form. It represented the opinion of Withers and both counsel concerning the application for the freezing injunction and the pursuit of her claim against Mr Harrison, as the email to which it was attached said.

85.            In that letter Mrs Harrison was advised, amongst other matters that:

i)                She should re-assess her position and the prospects of success before incurring further substantial costs in pursuing her case against Mr Harrison and committing herself to the cross undertaking in damages which would be necessary should she successfully apply for a freezing injunction;

ii)              Whilst there was still a prospect of obtaining a freezing injunction based upon the documentary evidence obtained from RBS revealing the existence of an undisclosed bank account, the failure to obtain any incriminating information from Dollar was damaging. Mrs Harrison might well not obtain a freezing injunction and if she did, Mr Harrison was likely to wage an expensive campaign to get it lifted;

iii)            The lack of any hard proof that Mr Harrison did receive substantially more from Fastcash and LCE than he had disclosed during the ancillary relief proceedings would discourage any trial judge from overturning the Baron judgment; and

iv)            It would be easy for Mr Harrison to argue that he must have overlooked the RBS account and there was therefore no question of the Baron judgment having been obtained by fraud.

86.            In summary, the letter concluded:

“Vivien, we know you feel very strongly about John’s [Harrison’s] dishonesty and are anxious to proceed. However, we are very concerned that you might be throwing good money after bad and, although we consider the claim can be pleaded, there are obvious dangers in proceeding.”

87.            The letter could not have been clearer as to the dangers of proceeding and the concerns of her legal team. Yet Mrs Harrison says she did not place much importance in the letter of advice, which she says “purported” to contain a warning of the risks she would face were she to proceed, because she knew there would be a telephone conference that afternoon.

88.            Later on the same day, that is the 23 July 2007, the telephone consultation anticipated by Mrs Harrison took place. Mr Wardell was attended by Miss Scott and Mr Wass. At that consultation the concerns clearly expressed in the letter of advice were made even more forcefully. As the notes of the consultation record, Mr Wardell made it clear to Mrs Harrison that in the light of the blank drawn from the Dollar disclosure and that the 726 account only had £25,000 in it, there would be a strong judicial reluctance to make a finding of fraud or overturn the Baron judgment. Mr Wardell expressed his “strong anxiety” that the application for a freezing injunction would be unsuccessful; and his “real concern” at the risk Mrs Harrison faced in trying to obtain a freezing injunction and in pursuing a claim against Mr Harrison. Mrs Harrison was told of the dangers of proceeding and the grave concerns of her legal team that she was “throwing good money after bad”. Mr Wardell asked Mrs Harrison whether she wanted to proceed if her chances of success were only 30-40 per cent; her response was it was “better to try and lose than not try at all”.

89.            Although Mrs Harrison concedes that Mr Wardell is recorded as expressing strong anxiety that the application for a freezing order might not succeed, she says she did not receive the impression that her case was hopeless; and she would have expected any such view to be forcibly expressed. She says she received the impression that there remained good prospects for obtaining an order, particularly on the basis of the undisclosed 726 account.

90.            If Mrs Harrison did receive such an impression, then in my view, it can only be because she did not listen to what was being said, or chose to ignore what she was being told because it did not accord with her views, which were it seems to me, by now, entrenched. Mr Wass said in evidence, and I accept, that a bald analysis of the notes of the consultation does not convey the very stern tone, the volume of his voice or the manner in which Mr Wardell gave the advice, which “was in as forceful a manner as he had ever known leading counsel to give advice”.

91.            As Mr Wardell and Miss Scott were later to say to Mr Lawrence Cohen QC in a letter dated 24 October 2007, accurately in my view, in summary Mrs Harrison was advised that although there was sufficient evidence to plead a case against Mr Harrison, in the light of Dollar’s disclosure and the discovery that the 726 account only had £25,000, there was now no real lynchpin which was likely to convince a judge to make a finding of fraud. The thrust of their advice was that although the claim could be brought, it should not be.

92.            Despite the pessimistic advice she had been given, and the great caution and concern expressed by her legal team against proceeding, Mrs Harrison instructed Withers to apply for a freezing injunction against Mr Harrison and to proceed with her claim against Mr Harrison to set aside the Baron judgment.

Particulars of Claim and the Freezing Injunction

93.            Particulars of Claim were drafted by Miss Scott in accordance with Mrs Harrison’s instructions. After discussion of their content with Withers and Mr Wardell they were served on 27 July 2007. It is clear from the evidence of Mr Wardell and Miss Scott to which I have referred above, that the main, if not the only reason why they felt it was possible to pursue a claim in fraud and attempt to obtain a freezing injunction was the apparent non-disclosure of the 726 account and the £25,000 it contained, combined with the evidence relating to the break-in.

94.            The Particulars of Claim pleaded six instances of fraudulent misrepresentation and material non-disclosure by Mr Harrison in the ancillary relief proceedings which it was said were made to suppress the true value of the joint assets and to obtain a favourable judgment. The first allegation concerned the non-disclosure of the 726 account. It was pleaded that Mr Harrison was required to disclose in the ancillary relief proceedings all bank accounts operated by Interchange, and that he had concealed the existence of the 726 account which contained approximately £25,000 during 2002.

95.            The other pleaded allegations related to (1) the break-in. It was said Mr Harrison and his employees had fabricated a break-in at Interchange so they might claim the Daily Reconciliation Sheets (the Hildebrand documents) had been doctored and so they would be disregarded; (2) an HMIT inspection which it was alleged was ongoing during the proceedings but which it was said Mr Harrison failed to mention when questioned on the point; (3) Mr Harrison’s annual drawings, which it was said had been considerably understated over the relevant period; (4) the value of the opal panels held as assets by UA. It was said Mr Harrison’s representation at the ancillary relief proceedings that their low stock value (of £20,000) reflected their (damaged) value, was false because, as confirmed in a letter from a Mr Walter Iberti dated 8 January 2003, they were in good condition and worth more than £100,000; and (5) Mr Harrison’s company, Cash on Cars. It was alleged Cash on Cars had not ceased trading as Mr Harrison had represented at the ancillary relief proceedings but continued trading under the name Log Book Loans during 2002 and 2003.

96.            On 26 July 2007 Miss Scott made an application to Butterfield J, for a freezing injunction at a without notice hearing also attended by Mr Wass. A transcript of the hearing is in evidence. The application was prepared by Miss Scott. Mr Wass’s affidavit in support of the application and Miss Scott’s skeleton argument described the non-disclosure of the 726 account as “compelling evidence of fraud”.

97.            At the hearing on 26 July 2007, as the transcript of the hearing shows, Miss Scott informed Butterfield J of the contents of Dollar disclosure (paragraph 26 of her skeleton argument had pointed out that suspicions regarding the remuneration Mr Harrison had received on the sale of Fastcash to Dollar (to which Mrs Harrison had referred in her first witness statement) had not been substantiated). Miss Scott showed the judge the RBS account statements disclosed pursuant to the order of Dobbs J; and drew Butterfield J’s attention to the fact that the 726 Account, which she described as an account in relation to Interchange, only had a balance of £25,000 over a particular period during the ancillary relief proceedings. Miss Scott said: “it is fair to say that is not an enormous amount of money” to which the judge responded “Not in the context of this case it is not, is it?”

98.            While the other pleaded allegations of material non-disclosure/fraud were mentioned briefly in Miss Scott’s skeleton argument, she did not seek to rely upon them but concentrated on the fact that the 726 Account had not been disclosed, and on the evidence obtained after the ancillary relief proceedings that the break-in had not been reported to the police on 19/20 May 2002, as alleged in witness statements served by Mr Harrison and his employees, but on 27 May 2002 only an hour or so after the PTR in the ancillary relief proceedings in which Black J had made disclosure orders against Mr Harrison in relation to Interchange. Butterfield J said he did not need any persuasion that there was a perfectly valid claim in relation to at least some of the matters raised.

99.            Miss Scott’s views on the viability of Mrs Harrison’s claim and whether it was proper to plead it are essentially the same as those of Mr Wardell. In her witness evidence she says:

“The money in the RBS Account was in any event an asset of Interchange which should have been disclosed during the ancillary relief proceedings. As we later learned, the money in the RBS Account was in fact disclosed in the ancillary relief proceedings, so presumably Mr Harrison himself considered it to be an asset of Interchange which he was required to disclose. I do not believe it would have made any difference to the way Mr Justice Butterfield approached the application if I had said that the account appeared to be an account in the name of RBS which held money of Interchange.

In purely monetary terms the revelation that Interchange held a further £25,000 in a separate bank account may not have made a difference to the actual Order made by Mrs Justice Baron. In my oral submissions I expressly stated “it is fair to say that is not an enormous amount of money” to which the Judge responded “Not in the context of this case it is not, is it?”

However the right question to ask was whether or not Mrs Justice Baron would have reached the decision she did and made the Order she did if she had known both that Mr Harrison had deliberately hidden assets from the Court and (together with the “second plank” on which I relied at the Freezing Order application) that he had lied to the police and the Court about a break-in in order to discredit company documents that tended to show that the business of Interchange had real value. There was a proper case to argue that she would not have done so.

Had Mrs Justice Baron been told that Mr Harrison had failed to disclose one of Interchange’s accounts despite an express direction that all accounts should be disclosed and had she also had before her evidence that the break-in was a fabrication designed to cast doubt on documents Mrs Harrison had received tending to show that Interchange was making a profit, Mrs Justice Baron may well have concluded that Mr Harrison was involved in a conscious exercise to hide the true value of Interchange and would not have remained of the view that Grant Thornton’s valuation of Interchange was “wholly contrived and speculative”. There was a proper case that Mrs Justice Baron would not have made an order in the terms that she did, both substantively and as to costs.

The Alleged Break-In

One of the criticisms now made by Mrs Harrison is that the facts concerning the alleged break-in were not new or were not of great significance. However, Mrs Harrison’s first witness statement dated 16 January 2007 and exhibit stated that it was only after the Baron Judgment was handed down that Mrs Harrison discovered that the alleged break-in had been reported immediately after the PTR at which the importance of the reconciliation sheets was first appreciated by the Court and by Mr Harrison.

An employee of Interchange, Dean Stinton, told the Court at the trial of the ancillary relief proceedings that he knew on 10 May 2002 (over 2 weeks before the PTR) that documents had been accessed on the office computer and tampered with. Yet he did not think this a sufficiently important matter to report the crime or tell Mr Harrison about it, even though Mr Stinton and his colleague Mr Radwan were well aware that Mr and Mrs Harrison were embroiled in acrimonious divorce proceedings in which the value of Interchange was a central issue.

As pleaded at paragraph 29(2)(d) of the Particulars of Claim, Mr Stinton told the Court that he knew on 10 May 2002 that numbers had been changed so that the figures on the reconciliation sheet that morning did not match. Mr Stinton also told the Court that he had printed out these different reconciliation sheets daily and kept a manual record, but curiously he had not kept copies of the two different reconciliation sheets which he claimed did not tally in order to demonstrate his belief that one had changed overnight.

As to the materiality of the break-in, I did not represent to the Court [at the hearing for a freezing injunction] that the issue of the break-in was crucial to the way in which Mrs Justice Baron approached the case. Rather, Mrs Harrison’s case was that Mrs Justice Baron was persuaded not to rely upon the report of Grant Thornton which placed a value on the business of Interchange, and that this was crucial to the way the Court approached Mrs Harrison’s case since Mrs Justice Baron accepted Mr Harrison’s assertion that Interchange was a business with negligible value.

Having heard evidence from Mr Harrison and his witnesses regarding the alleged break-in and tampering with company documents and having assessed those witnesses as giving that evidence honestly, Mrs Justice Baron accepted Mr Harrison’s evidence and contention (and that of his expert witness) that Interchange had no real value. Mrs Harrison’s case was that had Mrs Justice Baron known that Mr Harrison and his witnesses had lied to the Court about the break-in and tampering in order to discredit the authenticity of the reconciliation sheets she had obtained then the Judge’s assessment of the credibility of the witnesses would inevitably have been fundamentally different. If she had also known that Mr Harrison had failed to disclose a bank account containing assets of Interchange then she may well have reached the conclusion that Mr Harrison was attempting to suppress evidence which tended to show that Interchange was a business that had value. For the purposes of the Freezing Order application, it could properly be said that on that basis there was a good arguable case that Mrs Justice Baron would not have had “no hesitation” in preferring the evidence of Mr Harrison’s accountant and would not have found that Mrs Harrison’s accountant’s evidence was “wholly contrived and speculative”.

There was therefore a proper case to argue that the evidence of the fabricated break-in (coupled with evidence of hiding assets in the RBS Account) would have made a substantial difference to the outcome in the ancillary relief proceedings. I did not suggest in my oral or written submissions before Mr Justice Butterfield that the allegation regarding a fabricated break-in was a “stand-alone” allegation which would (if made out) of itself necessarily justify setting aside the Baron Judgment.”

100.         On 27 July 2007 the freezing injunction and the claim in the QB proceedings were served on Mr Harrison.

Manches’ letter of 4 September 2007

101.         On 4 September 2007, Manches LLP, Mr Harrison’s solicitors in the ancillary relief proceedings, wrote to Withers that he intended to apply to set aside the freezing injunction on the ground that it had been obtained by non-disclosure and misrepresentation, and to strike out the claim as misconceived. The Manches letter contained a detailed rebuttal of the matters relied on in support of the application for a freezing injunction, and the Particulars of Claim.

102.         In particular, it showed that the £25,000 in the 726 account had in fact been disclosed by Mr Harrison during the ancillary relief proceedings where it was referred to in Interchange’s balance sheet under the name “Treasury Account”. The sum of £25,000 had therefore been taken into account by the experts and Baron J in valuing Interchange. The letter explained that the 726 account was an internal account of RBS in which Interchange had a beneficial interest, holding a deposit of £25,000 which RBS required Interchange to deposit in support of its foreign exchange trading.

103.         In the letter, Manches invited Mrs Harrison to discontinue the proceedings and pay Mr Harrison’s costs on the standard basis, otherwise Mr Harrison would apply on the return date (18 September 2007) for the freezing injunction to be set aside, the claim to be struck out, for indemnity costs and an inquiry into damages.

104.         Mr Wass immediately forwarded Manches’ letter to Mrs Harrison. Mrs Harrison says she did not study that letter very closely, having previously had a number of hostile letters from that firm in the divorce proceedings.

105.         Mr Wardell and Mr Ford did so however. They were abroad together on an unconnected professional matter when they received it. Their joint view was that Mrs Harrison should give Withers immediate instructions to explore a settlement so that she could withdraw from the proceedings with as little damage as possible. Their joint recollection is that they telephoned Mrs Harrison. Mr Ford says he remembered that the call was a difficult one. Mrs Harrison would not listen and was frustrated with what she saw as negative advice. She was certain that she could un-pick Manches’ letter. In the end, it was agreed that the discussion would have to wait until they returned. Mrs Harrison says she does not recollect receiving any such call of which there is no attendance note.

Advice given on 10 September 2007

106.         On the 10 September 2007 after Mr Wardell’s return, there was a further telephone consultation with Mrs Harrison, and all four of her lawyers to advise her on the implications of Manches’ letter.

107.         In summary, as Mr Wass’ and Miss Scott’s attendance notes record, Mrs Harrison was advised by Mr Wardell and by Mr Ford as follows:

i)                She was reminded that in July her lawyers had been very cautious, had advised her that she should not proceed with her action and had tried very hard to persuade her not to do so;

ii)              It was now clear there was no material non-disclosure in relation to the RBS Account and so the main plank of the freezing injunction application and the claim had been removed. Mrs Harrison was told that the freezing injunction could not be maintained and that there was a high risk the claim would be struck out. Further, even if the claim was not struck out, she was bound to lose; and

iii)            Mrs Harrison had reached the end of the road, enough was enough, and she should give up now. She was strongly recommended to discontinue proceedings immediately.

108.         Mrs Harrison refused to accept the advice to discontinue. However, she did agree that she would consent to the discharge of the freezing injunction and that Withers would play for more time to allow her to deal with any strike out application. Accordingly, Withers agreed a consent order with Manches (dated 17 September 2007) discharging the freezing injunction and vacating the return date. Mr Harrison’s costs were reserved.

Advice given on 27 September 2007

109.         On 24 September 2007, as had been anticipated, Mr Harrison issued an application to strike out the claim and, in the alternative, for summary judgment, an order for costs on an indemnity basis and an inquiry into damages.

110.         In a letter from Manches dated 24 September 2007, Mr Harrison offered to settle the case on terms that Mrs Harrison discontinue her claim, pay Mr Harrison's costs to the date of settlement on the standard, rather than the indemnity basis and that there be no inquiry as to damages suffered by Mr Harrison and/or Interchange, which might otherwise be payable by Mrs Harrison pursuant to the cross undertaking in the freezing injunction.

111.         On 27 September 2007 Withers sent Mrs Harrison a letter from Mr Ford expressing the concern of Withers and counsel that Mrs Harrison was ignoring the very firm advice she had been given to discontinue the proceedings. The letter said the whole team (Mr Wardell, Miss Scott, Mr Wass and Mr Ford) had input into the letter and were as one on the advice it contained. In the letter, Mr Ford strongly recommended that Mrs Harrison accept the settlement terms offered by Mr Harrison. In addition he said:

i)                Mrs Harrison had been advised in consultation on 23 July 2007 that “we were very cautious about whether you ought to pursue an application for a freezing injunction and we advised that you should not bring the application”;

ii)              Mr Ford reminded Mrs Harrison that on 10 September 2007 she was told “our strong recommendation was that you should discontinue proceedings immediately”;

iii)            Mrs Harrison was told, again, that Mr Harrison had clearly shown that the £25,000 contained in the 726 account was in fact disclosed and that any claim based on material non-disclosure was hopeless. In summary, the letter noted:

“The ‘big picture’ points that would give you a chance of getting the judgment overturned have been knocked out. In any event even if you did win at trial – which we are virtually certain you will not – your husband has no money or substantial assets which you will be able to pursue on renewed ancillary relief proceedings. There is nothing to gain by continuing to prosecute this claim, and everything to lose both financially and emotionally.”

112.         Mr Ford repeated that there was an extremely good prospect the claim would be struck out and that she should immediately call a halt and draw a line under the proceedings; there was insufficient evidence to take the case forward and no prospect of obtaining further evidence to support it. The letter reminded Mrs Harrison that if she continued, she would face a very heavy indemnity costs order. In addition, there would also be an inquiry as to damages and she may be ordered to pay a sum pursuant to her cross-undertaking in the freezing injunction. The letter said:

“Our unequivocal advice to you is that you have come to the end of the road and that you must do the best deal you can now, before the strike out application is heard, and discontinue the proceedings. You asked us to play for more time so that you could consider your position and this we did. You must now follow our advice and discontinue the proceedings and make an offer to pay JH’s costs.

Manches have in their letter offered settlement terms which we very strongly recommend that you accept. You will have to pay your husband’s costs on the standard basis but you will not have to pay damages pursuant to your cross-undertaking on the freezing order. We believe that this is a good offer in the circumstances and it is quite possible that we can still strike a deal with Manches on costs under which you will pay less than your ex-husband would be likely to be awarded by the Court on an assessment. You will save the costs of instructing us to prepare for and represent you at a 1-day hearing in October which, we believe, you are almost bound to lose resulting in payment of vastly increased costs to your ex-husband no doubt on the indemnity basis and possibly a wasted costs order.”

113.         Mrs Harrison refused to accept or follow this advice. She sent Withers by email a large number of lengthy responses to Mr Harrison's evidence and the advice she received on 10 and 27 September 2007, in which she rejected or disputed the advice given. She did not however take issue with what it was said she had been advised in July 2007, either as to bringing the claim or the application for a freezing injunction. In her responses, Mrs Harrison described the Manches’ letter as “rambling nonsense” and “bluster and puff”. She sought to raise new allegations of fraud or perjury against Mr Harrison and/or allegations of false accounting and other claims against Mr Nunn and/or Dollar. In a letter of the 1 October 2007 for example, she rejected the advice as “entirely misplaced and fundamentally wrong”. She said her legal team’s view of the evidence was “overtly simplistic, narrow in focus and leaves aside vast swathes of common sense and other proof which supports my overall claims against fraud and deception as committed by [Mr Harrison] and aided by others.” She said the advice in relation to the 726 account was “entirely wrong…if this isn’t fraud I don’t know what is.” In her annotations on a further witness statement from Mr Harrison, she said the point made that the 726 account was an account of RBS, not of Interchange was “supreme nonsense. Did the money belong to RBS, No!”

114.         Both Withers and counsel took the view that none of Mrs Harrison’s further allegations could be substantiated or properly raised in the proceedings.

Advice given in October 2007

115.         Throughout October 2007 it was made plain to Mrs Harrison in numerous telephone consultations, as well as in writing that in the view of all her lawyers she had reached the end of the line, her case had collapsed, it was bound to fail and she should discontinue immediately. She was also repeatedly advised that contrary to her own view, none of the material she provided contained allegations that could be substantiated nor would they assist in defending the pending strike out application. It was also made plain that in view of their professional obligations, counsel did not consider the plea of fraud could be maintained, nor could the current or new allegations being made by her be advanced to a court on her behalf. Mrs Harrison flatly refused to accept this advice.

116.         Mr Ford sent an email to Mrs Harrison on 17 October 2007 setting out the advice she had received in her call with Mr Wass and in a telephone consultation that morning. In summary, he said:

i)                She had received advice that she was unable to adduce evidence to support the pleading and had no new evidence to support any proposed amendment;

ii)              She would need to obtain some evidence to support the allegation that Mr Harrison had misled the court in the ancillary relief proceedings;

iii)            It was not possible to defeat the pending strike out application, as there was ‘no real prospect of her succeeding in her claim;

iv)            The court would not be interested in suspicion or unsupported allegations of conspiracy; and

v)              Every care had been taken to explore her numerous and various allegations, but none of them stood up to scrutiny.

117.         His email also reminded Mrs Harrison that:

i)                Any issues that were before the ancillary relief proceedings court could not be re-argued;

ii)              Technical breaches or allegations of contempt of court, could not be relied on unless such contempt could be demonstrated as having a bearing on the Baron judgment; and

iii)            Inference and theories were not enough – it was necessary to demonstrate that Mr Harrison had lied to and misled the court.

118.         Mrs Harrison’s hopes now appeared to rest on her receiving further evidence from Surrey police. She told Mr Wardell that if nothing was produced by Surrey Police, she would be “the first one to walk away from the case.” No further evidence was forthcoming, as Mrs Harrison was told by Mr Wass in an email of 22 October 2007. Mrs Harrison did not walk away from the case. Counsel now confirmed they could no longer continue to act for Mrs Harrison.

119.         As is clear from the email exchange between Withers and Mrs Harrison on 22 and 23 October 2007 Mrs Harrison was outraged and felt that she was being abandoned, even though she had been warned that counsel would have to withdraw if no new evidence was forthcoming. Mr Wass told Mrs Harrison he could not ignore the position either. He was, however, prepared to organise a second opinion from another barrister, if she needed confirmation that the advice she had received was correct.

120.         Further advice was then obtained from Mr Lawrence Cohen QC at short notice. Mr Wardell and Miss Scott prepared and sent to him a ‘Note to Leading Counsel’ which set out in some detail the factual background and circumstances that had led to their withdrawal.

121.         On 24 October 2007 Mr Cohen, attended by Mr Wass, provided an opinion at a telephone conference with Mrs Harrison. Mr Cohen made it clear that Mrs Harrison’s case was “hopeless”.

122.         Though Mrs Harrison had now been told by two silks that her case was hopeless, and repeatedly told that the best advice was to withdraw and limit the damages and costs she would inevitably otherwise incur, she refused to take that advice. On 25 October 2007 she terminated her retainer with Withers.

Events after the termination of the retainer

123.         Mrs Harrison now continued the claim in person. She opposed Mr Harrison's application for strike out/summary judgment at the hearing before HHJ Seymour QC which took place between 29 and 31 January 2008. On 31 January 2008 HHJ Seymour QC gave summary judgment in favour of Mr Harrison.

124.         Mrs Harrison applied to the Court of Appeal for permission to appeal against HHJ Seymour QC's decision. It was refused. On 30 October 2008 she made a renewed oral application in person which was refused by the Court of Appeal.

125.         On 23 December 2008, a consent order was made in the proceedings agreeing the amount of Mr Harrison’s costs at £205,000 plus interest at 8 per cent from 31 January 2008 until the date of payment.

The judgment of HH Judge Seymour QC

126.         At the outset of the trial, and again as part of his closing submissions, Mr Crawford invited me to read the judgment of HH Judge Seymour QC given on 31 January 2008. He accepted it did not bind me, that the parties were not the same and indeed the issues were not the same. But he submitted I needed to read it as part of the background or history, and the precursor to the order giving summary judgment on Mrs Harrison’s claim. Mr Knox objected to my doing so. He submitted that it was neither relevant nor probative. I agree.

127.         It does not follow because the judge at the summary judgment hearing was persuaded that Mrs Harrison’s case stood no realistic prospect of success (or even, if it be the case that he thought it should not have been advanced) that Withers was negligent in the advice it gave Mrs Harrison. It need hardly be said that a finding of negligence against the losing sides’ lawyers is not the inexorable consequence of a claim being summarily dismissed. Moreover there would be particular need for caution in this case because Mrs Harrison appeared in person at the hearing before HH Judge Seymour QC. It appears for example, that Butterfield J was shown the disclosed RBS accounts at the application for the freezing injunction whereas HH Judge Seymour QC was apparently told the opposite by counsel for Mr Harrison. It is to be doubted whether HH Judge Seymour QC had the benefit of the argument or disclosure I have had in this case: certainly it is most unlikely that he would have seen the privileged material passing between Mrs Harrison and her lawyers which I have seen.

128.         It is difficult to avoid the conclusion that I was being asked to read the judgment because HH Judge Seymour QC had obviously taken an adverse view of Mrs Harrison’s case, as pleaded, and I was being invited to do so as well – possibly for reasons he found persuasive. Whether that is right or not, I did read the judgment, as Mr Crawford invited me to do in his closing submissions, de bene esse but this did not alter my view as to its materiality except as part of the history. In the end, I have to draw my own conclusions about the issues which arise in this case from the evidence which I have read and heard.

The Counterclaim

129.         The legal principles which apply to the claim are not controversial and may be summarised as follows. Mrs Harrison must establish that Withers failed to meet the standard of a reasonably competent commercial solicitor with the relevant expertise having regard to the standards normally adopted in his profession: see Midland Bank v Hett, Stubbs & Kemp [1979] Ch 384, especially at 402–3 per Oliver J, and e.g. Hurlingham Estates Ltd v Wilde & Partners [1997] 1 Lloyds Rep. 525. Withers is not liable for what may in the result turn out to have been errors of judgment, “unless the error was such as no reasonably well-informed and competent member of that profession could have made”: see Saif Ali v Sidney Mitchell & Co [1980] AC 198 at 220D per Lord Diplock. Withers’ conduct must be judged in the light of events as they appeared at the time, and not with the benefit of hindsight. As Megarry J said in Duchess of Argyll v Beuselinck [1972] 2 Lloyd's Reports 172 at 185:

“In this world there are few things that could not have been better done if done with hindsight. The advantages of hindsight include the benefit of having a sufficient indication of which of the many factors present are important and which are unimportant. But hindsight is no touchstone of negligence. The standard of care to be expected of a professional man must be based on events as they occur, in prospect and not in retrospect … On any footing, the duty of care is not a warranty of perfection.”

130.         Though a number of other matters were set out in Mrs Harrison’s pleaded case (as amended during the course of the trial) her claim that Withers was negligent centres on advice given to her on two matters. First, the 726 account. It is her case that it should have been apparent to a careful lawyer that the disclosed statements for the 726 account did not establish that Mr Harrison’s counsel’s statement in the ancillary relief proceedings was false: if the account was not an account of Interchange, its non-disclosure was not a breach of counsel’s assurance. Second, it is said that Withers was in breach of duty by 23 July 2007, following the Dollar disclosure, when it failed to advise her not to pursue the claim (which could then have been allowed to expire without service of the claim form, which would have become invalid on 26 July).

The case on negligence: the 726 account

131.         I do not consider Mr Wass was in error in failing to spot the 726 account was an RBS account or that even if he was his error was not an error which no reasonably competent solicitor with the relevant experience would have made even after a close scrutiny of the various statements. It seems to me that the criticisms now made by Mrs Harrison in relation to the RBS account are unrealistic and formed with the benefit of hindsight.

132.         Mr Crawford relies in particular on the description of the account holder in the 726 account, and the addresses given on that account’s statements, in particular when compared with those on other Interchange accounts disclosed at the same time. [5]

133.         I do not consider it would have been obvious merely from the name (“RBS Re Interchange Organization Ltd”) on the 726 account statements nor from the address on them (Argyll House, which was not Cavendish Square - the branch from which the documents emanated) even in comparison with the other disclosed statements, that the 726 account was an account of RBS rather than Interchange. As it happens, I agree with Miss Scott, who said that it is not obvious even looking at the matter now.

134.         Mr Wass considered the 726 account was an Interchange account, relying on the statements themselves, in the context of the other reasonably credible information available to him. This included Mrs Harrison’s very firm instructions, supported unequivocally by her professional adviser, Mr Coussens (himself an accountant) and verified in her witness statement of 16 January 2007, that the 726 account was an account belonging to Interchange (which was after all, the basis on which disclosure had been sought and obtained from RBS). The disclosure order made by Dobbs J required RBS to disclose bank statements for the 726 account and other accounts “in the name of Interchange”. The covering letter under which RBS disclosed the bank statements for the 726 account and other accounts described the disclosure as given “in relation to the Production Order for our customer, Interchange Organization”. Moreover, money came into the 726 account from an Interchange account (10132869) and went out to an Interchange account. Everything therefore pointed to the 726 account being an Interchange account.

135.         I am not surprised therefore that it was not obvious to Mr Wass, nor for that matter, subsequently to Miss Scott, or Butterfield J (to whom the accounts were shown) that the 726 account was not an account of Interchange, but an account of RBS in which Interchange had a beneficial interest. Thus I do not think there was any reason to suppose before the receipt of the letter from Manches of the 4 September 2007, that the 726 account was an internal RBS account in which Interchange had a beneficial interest.

136.         Mr Crawford submits that Withers was not entitled to rely on Mrs Harrison’s instructions or Mr Coussens’ report: they needed to satisfy themselves by looking at the primary evidence, in particular having regard to the high probability that would be needed to advance such serious accusations (or indeed the Bar Code of Conduct with regard to the pleading of fraud) and to Mrs Harrison’s position as a client emotionally involved in her case.

137.         A lawyer is not normally obliged to “second guess” his or her client’s factual instructions and is normally entitled to proceed on the basis that they are correct: Brown v Bennett [2002] 1 WLR 713, at [114] and Orchard v South Eastern Electricity Board [1987] QB 565. Whether it is appropriate for a lawyer to go further, must depend on the facts.

138.         Mrs Harrison is obviously an intelligent woman, as Mr Ford perceived at the time. She had been in business herself, and she had a great familiarity with the business of Interchange. (Baron J described Mrs Harrison as “clearly enterprising and innovative” in relation to certain ventures for which she had organised the necessary finance before her marriage). Throughout the material period, Mrs Harrison gave her lawyers extremely detailed instructions about her husband’s financial affairs, and the various company and financial matters which had to be considered, including on the accounts. Such matters were discussed also in great detail during the numerous consultations which took place.

139.         I think Mr Wass was, in all the circumstances, entitled to rely on Mrs Harrison’s instructions and the other evidence, including what he himself could see, in proceeding on the basis that the 726 account (and it followed, the money in it) had not been disclosed. I do not therefore consider Mr Wass was negligent in forming that view and advising Mrs Harrison accordingly.

140.         Moreover, even if Withers had known the 726 account was one of RBS in which Interchange had a beneficial interest, I do not think it would have made any difference to the way they, or Mrs Harrison, or indeed Butterfield J approached her claim. The money in the RBS account was an asset of Interchange which should have been disclosed in the ancillary relief proceedings (it later turned out of course, that it had been, albeit in a Treasury account, and it follows Mr Harrison and his advisers must have concluded it was an asset of Interchange he was required to disclose).

141.         There is no evidence before me of the terms on which the amount in the 726 account was held, but since Interchange had a beneficial interest in the account, Mr Harrison it is said by Mr Knox was technically in breach of his disclosure obligations in not obtaining and disclosing the bank statements (or at least, Mrs Harrison has not proved that he was not). But it seems to me, even if Mr Harrison was not obliged to disclose the bank statements for the 726 account, as I have said, he had to disclose the money in the account – and on the information before them, Withers had (non-negligently in my view) concluded he had not done so.

142.         Mr Crawford submits in answer to the asset point, that the material misrepresentation pleaded in the Particulars of Claim was a failure to disclose the bank statement – not that the account and the monies in the account had not been disclosed. It seems to me that this a wholly artificial view of the claim as Miss Scott said in her evidence. It was specifically pleaded that Mr Harrison concealed the 726 account which contained approximately £25,000 in 2002: and the purport of what was pleaded in paragraphs 2, 30(1) and 32 of the Particulars of Claim was the concealment of the underlying asset, not (merely) the account itself.

143.         It is also said by Mr Crawford that it would have been impossible properly to plead a case of material non-disclosure of the asset because Withers could not have known that the money in the account was not disclosed, but in my view it follows from the fact that there was reasonably credible material that the 726 account had not been disclosed, that the money in the account had not been disclosed either.

144.         It is suggested by Mr Crawford that on learning of the 726 account a reasonably careful solicitor would have looked at Interchange’s balance sheet to see whether the amount was included, and that the £25,000 in the unidentified Treasury Account in Interchange’s balance sheet, should have “raised doubts” as to whether the sum in the 726 account had in fact been disclosed. Further investigation he says would have revealed that on 26 March 2002, the date of the transfer of £25,000 by Interchange to the RBS account, its daily reconciliation statements showed a “Transfer to Treasury Account” of that sum. The latter documents were not put to Withers’ witnesses. But in any event, again, I think this is a view reached with the benefit of hindsight. At the time it was reasonable to conclude the 726 account was an account of Interchange which had not been disclosed, and (it followed) neither had the sum in it. The Treasury Account, as listed in the Interchange balance sheet, had no number or bank account details attached to it. As Mr Knox says, it was not just Mrs Harrison’s legal team who did not spot it. Mrs Harrison had plainly done an enormous amount of work on the documents she had access to, and, as Mr Knox says, was very familiar with the Interchange balance sheet, but she did not spot the possible connection either.

Was Withers negligent in advising Mrs Harrison that her case could go forward by 23 July 2007?

145.         The parties are agreed as to the relevant tests for setting aside judgments. The parties to ancillary relief proceedings are under a duty to make full and frank disclosure of all relevant circumstances and material non-disclosure is itself a ground for setting aside a judgment in such proceedings. The absence of full and frank disclosure must have been such as to have led to the court making an order that is substantially different from the order which would have been made if such disclosure had taken place: see Livesey v Jenkins [1985] 1 AC 424. The legal test for setting aside judgments on the grounds of fraud (which includes deliberate concealment) is that the new evidence will be material if it entirely changes the nature of the case: Kuwait Airways Corporation v Iraqi Airways Corpn [2003] EWHC 31 (Comm).

146.         Mr Crawford submits not only was there no fraudulent misrepresentation in this case, but even if there had been, in particular that as to the 726 account could not have affected the order of Baron J since she did not rely on it in reaching her conclusions. He submits it is inconceivable given the method of valuation of Interchange that, had Baron J known that there was an extra £25,000 in its balance sheet, she would have reached a different conclusion. Thus he says, Withers was negligent in advising Mrs Harrison on 23 July 2007 that her case against Mr Harrison was a pleadable one, even if they were not negligent in failing to spot the 726 account was an account in which Interchange had a beneficial interest, and that the £25,000 had already been disclosed.

147.         As for the break-in, the allegation made was that Mr Harrison had falsely alleged that there had been a break-in at Interchange’s premises for the purpose of discrediting Miss Pincott’s valuation of Interchange based on its daily reconciliation sheets. Whether or not there was sufficient to plead (as opposed to prove) that there had been no break-in, Mr Crawford submits it was plain that the alleged fraudulent misrepresentation did not affect the judge’s decision. This is because Baron J rejected as “wholly fanciful” Miss Pincott’s second report which relied on the sheets, not because the information in the documents could not be relied upon, but because she regarded her methodology as flawed. For the purpose of arriving at a valuation for Interchange, the judge therefore placed no reliance at all on the figures from daily reconciliation statements, whether sought to be discredited by Mr Harrison or not. Mr Crawford submits none of the other “makeweight” allegations should have been advanced.

148.         He therefore submits the claim was never a pleadable one at all; and Mrs Harrison should have been clearly told so on the 23 July 2007: see County Personnel Ltd v Alan R. Pulver & Co. [1987] WLR 916 (CA). Mr Crawford says to tell her that her claim was pleadable was to encourage her to pursue her claim, which she was very keen to do because of her strong belief she had been defrauded. He submits, contrary to the evidence of Withers’ witnesses, Mrs Harrison was not advised on the 23 July 2007 that she should not proceed. He relies on what he submits is the clear difference between the first draft and the final version of the letter of advice of the 23 July 2007, and the absence of any note in the attendance notes made of the conference later that day to the effect that Mrs Harrison was told in terms, not to go ahead.

149.         Mr Knox submits Mr Crawford’s approach to the representation re the 726 account on its own, and the amount it contained, is simplistic and ignores the potential impact of the evidence relating to the fabricated break-in. Mrs Harrison’s case against Mr Harrison in the ancillary relief proceedings was that he was manipulating the figures and had misled the judge. Mr Knox says the right question to ask was whether or not Baron J would have reached the decision she did and made the order she did if she had known both that Mr Harrison had deliberately hidden assets from the court and had lied to the police and court about a break-in and tampering in order to discredit company documents that tended to show Interchange had real value.

150.         Mr Harrison’s expert based his analysis entirely on the management accounts which derived from Mr Harrison. Mr Knox submits there was a proper case to argue that had Baron J known that Mr Harrison and his witnesses had lied to the court about the break-in and tampering in order to discredit the authenticity of the reconciliation sheets Mrs Harrison had obtained, then the judge’s assessment of the credibility of the witnesses and the material (including the management accounts) produced by Mr Harrison would have been fundamentally different. She would not in those circumstances have found Mr Harrison’s presentation of his assets to be “fundamentally correct throughout”. If Baron J had also known that Mr Harrison had failed to disclose a bank account containing assets of Interchange then she may well have reached the conclusion that Mr Harrison was attempting to suppress evidence which tended to show that Interchange was a business that had value. There was a proper case to argue that Mrs Justice Baron would not have had “no hesitation” in preferring the evidence of Mr Harrison’s expert based on management accounts produced by Mr Harrison which purportedly showed a current loss making position; and would not have found that Mrs Harrison’s accountant’s evidence was “wholly contrived and speculative” .

151.         In my view, it is clear from the evidence, that the state of Mrs Harrison’s case as at the July 2007, following the RBS and Dollar disclosure, was the subject of the most anxious consideration on the part of all the lawyers. The conclusion reached by all of them, for the reasons explained by Mr Wardell and Miss Scott in their evidence was that there was indeed a proper case to argue even though there were grave reservations about its prospects of success.

152.         This was a conscientious conclusion reached after a careful and considered analysis of the evidence by four experienced lawyers who were acutely aware of their professional obligations in relation to advancing and maintaining a claim in fraud; and though the Withers lawyers had to exercise their own judgment it is material in my view, that all four lawyers, including a highly experienced silk with particular expertise in this field, and an experienced junior counsel were of the same view: see e.g Regent Leisuretime Ltd. V Skerret [2006] EWCA Civ 1184 [2007] P.N.L.R. 9. CA.

153.         I am not persuaded that their conscientious analysis and conclusion was wrong, or so wrong, as to be negligent in the light of events as they appeared at the time, rather than with the benefit of hindsight. It seems to me in the end, that the conclusion they reached was a matter of judgment as Mr Ford said in his evidence (and as Mr Wardell also said: “it was a judgment call”);[6] but whether it was or not, their conclusion was one which in my view it was open to a reasonably competent lawyer to reach.

154.         As Mr Ford and Mr Wardell both said in their evidence, it would have been much easier for them if they had been able to say at the time that Mrs Harrison’s case was hopeless: but though they were very pessimistic about Mrs Harrison’s prospects of success they just did not feel they could go that far. Mr Ford said: “I have to be careful not to give advice that suits me. Though I didn’t think her case would ultimately succeed, I couldn’t hand on heart, say it was hopeless.

155.         Withers was not negligent therefore to have advised on 23 July 2007 that there was a pleadable claim to set aside the Baron judgment. There was a proper case to argue that Mrs Harrison could meet the test laid down by the authorities for setting aside judgments on the grounds of fraud or material non-disclosure. In any event, that conclusion, shared by Leading and Junior counsel, was not a conclusion which no reasonable lawyer, properly considering matters, could have reached.

156.         As for the allegations of fraudulent misrepresentation, apart from those relating to the 726 account, and the break-in, I do not consider the presence or absence of these points had any real bearing on the advice given to Mrs Harrison at any material time, nor any causative part to play in the loss she is alleged to have suffered. In other words, they are beside the point. Mrs Harrison was advised before the application for the freezing injunction application that these were not “stand alone” points which justified proceeding or applying for a freezing injunction. She was advised the non-disclosure of the 726 account was the main, if not the only reason why Withers and counsel felt it was possible to pursue her case; and after the receipt of Manches’ letter making clear that the money in the 726 account had been disclosed, she was advised to discontinue immediately. It was quite clear therefore that they were regarded as “make weights” (as Miss Scott described them in her evidence) in support of the main plank of the pleaded claim, and were included in the Particulars of Claim on that basis.

157.         Various criticisms were made of their inclusion in the pleadings, but there is no pleaded allegation of negligence against Withers for their inclusion in the Particulars of Claim and I agree with Mr Knox that it is too late to raise them now.

158.         For the sake of completeness I should add that various other allegations, particularly those pleaded in paragraph 21 (b), (c), (m) and (n) of the Amended Defence and Counterclaim were not put to Withers’ witnesses and I therefore need say no more about them.

Causation and reliance

159.         Mrs Harrison’s case is that she relied on the advice she was given, and that it caused her loss. Had she been advised that the case could not proceed, the retainer would have been terminated and she would have had no further liability for Withers’ fees, and would not have incurred any liability to pay Mr Harrison’s costs. If the position had been properly explained to her, it is said the only rational course would have been for her to give up. Her evidence is that this is what she would have done. But Mr Crawford says in addition, if she had decided to press on she would have faced such difficulties in all the circumstances, that the application for a freezing order would not have been pursued, and it is very unlikely that the claim would have been prosecuted by her without such an order, which had previously been regarded by her as essential. The claim form would have needed to be extended (it was due to expire on the 26 July 2007); she would have had to find other solicitors (who, it must be assumed, would not have acted negligently) and she would have been most unlikely to have obtained a freezing order in person.

160.         Whether or not the actual words, “you should not proceed” were used at the consultation of the 23 July 2007, it seems to me that Mrs Harrison, despite what she says now, was given the clearest advice of the dangers of proceeding and the grave concerns of her legal team that she was “throwing good money after bad”; and she was forcefully warned against proceeding with her claim or bringing an application for a freezing injunction given the substantial risks involved. The lawyers clearly thought it was against her best interests to proceed, and in my view Mrs Harrison knew full well that this was their view (at one point during the consultation she urged Mr Wardell to “listen with an open heart”). It seems to me that far from encouraging her, as it is now suggested they did, the lawyers tried very hard to persuade her not to proceed. Almost the last word to Mrs Harrison from Mr Wardell of that consultation was of his “severe reservations” about the matter going forward, a view he expressed throughout the consultation. Mrs Harrison’s instructions however were that she wanted to go as far as she could, and the case went ahead despite the advice she was given, not because it.

161.         In my view, the lawyers’ summary of the advice Mrs Harrison had earlier been given, recorded in the attendance note of Miss Scott of the consultation of 10 September 2007 (see paragraph 107 above) was accurate; it accords with the contemporaneous evidence, and that of Withers’ witnesses which I accept. Mrs Harrison did not then dispute it. Nor did she dispute that she had been advised that she ought not to pursue an application for a freezing injunction as was said in a later letter from Withers to her of the 27 September 2007. Mrs Harrison’s detailed response of 1 October 2007 took issue with many other points raised in the letter of 27 September 2007, but not that one.

162.         As Mr Knox says, the advice in July did not come out of the blue: Mr Wardell had previously advised Mrs Harrison in June of his “real concern” that she would find herself on the end of another losing judgment with costs consequences, was pessimistic about the prospects of success of the claim, and clearly warned Mrs Harrison against proceeding with her claim or bringing an application for a freezing injunction given the substantial risks involved.

163.         Mrs Harrison therefore incurred the costs she did (both her own and Mr Harrison’s for which she became liable) not because of any negligence on the part of Withers but because she refused to accept or follow the advice she was given against proceeding with her claim or bringing an application for a freezing injunction given the substantial risks involved.

164.         Even if however, Withers had advised Mrs Harrison on 23 July 2007 that the case could not be pursued and an application for a freezing injunction could not be made, I consider Mr Knox is right when he says it is perfectly obvious that Mrs Harrison would still have pursued the claim and sought to obtain a freezing injunction in person, even if she could not find a firm of solicitors to act on her behalf.

165.         What happened after Manches’ letter of 4 September 2007 and the eventual termination of the retainer is in my view highly instructive. Mrs Harrison is clearly resourceful and intelligent, and I have no doubt would have taken active steps to enable her to pursue her claim, come what may, even if she had been unsuccessful in obtaining a freezing injunction herself.

166.         That after all, is precisely what she did do for more than a year after the freezing injunction was discharged by consent on 17 September 2007 and after she terminated Withers’ retainer having been told repeatedly in September and October 2007 that her claim was hopeless and should be withdrawn. She continued to actively pursue her claim in person and issued in person two applications by notice (for third party disclosure and transfer to the Family Division) dated 25 January 2008 supported by a lengthy witness statement. She appeared in person before HHJ Seymour QC and at the hearing sought the reinstatement of the freezing injunction. She issued an appellant’s notice in person seeking permission to appeal HHJ Seymour QC’s order and then sought permission to appeal in person from the Court of Appeal at an oral hearing.

167.         Mr Knox submits, and in my view rightly, that in reality, Mrs Harrison was obsessed with the fraud she believed had been perpetrated on her by her former husband. She was convinced she had a compelling and unanswerable case that her husband had deliberately misled the court during the ancillary relief proceedings. She was unwilling to accept any advice to the contrary. She incurred the substantial legal costs she did (both her own and Mr Harrison’s) not because of any negligent advice she received but because she quite simply refused to accept or follow the advice she was given. Even when it was clear that the monies in the 726 account had in fact been disclosed and therefore her claim was hopeless Mrs Harrison flatly refused to accept this.

168.         In giving her account before me, I am bound to say that at various times in my view Mrs Harrison said what she thought would support the case she was now advancing, rather than giving an accurate account of her recollection of events. To take only one example of many, Mrs Harrison claimed in evidence that she only went to the Court of Appeal in person because she had no choice and wanted to recover her costs. It is plain from her Appeal document asking for permission to appeal (which was 13 pages long) presented by her in person, that this was simply not the case; that she remained convinced of her former husband’s ‘misconduct’, and that she continued to make extremely serious allegations against Mr Harrison not limited to the allegations relating to the Dollar ‘fraud’ and the 726 account, not because she had to, but because she believed them to be true.

169.         Mrs Harrison’s evidence on many points was simply contradicted by the contemporaneous documents, including the attendance notes of her meetings with her lawyers as I have already said, which she was forced to dispute in order to advance her counterclaim. No suggestion was ever made during the course of the trial on her behalf however as to how it could be the case that the Withers witnesses independently recorded substantially similar accounts of the consultations for example. Mr Crawford did not feel able to put to any Withers witnesses anything other than that their record was wrong on Mrs Harrison’s instructions. In contrast, I considered the Withers witnesses gave an accurate, careful and truthful account of material events. Insofar therefore as Mrs Harrison’s evidence contradicts that of the Withers witnesses, I do not accept it.

170.         As I have said, Mrs Harrison was advised repeatedly following receipt of Manches’ letter of 4 September 2007 that her claim was hopeless and should be withdrawn. She refused to accept or follow that advice but continued the claim incurring further liability for costs (both her own and Mr Harrison’s).

171.         On any view, therefore, even if I am wrong as to the conclusions I have reached on negligence, there is in my view, no basis whatever on which Withers can be held liable or responsible for the costs incurred by Mrs Harrison or Mr Harrison (for which she became liable) after the 10 September 2007 when she was advised to discontinue the proceedings immediately and make an offer to pay Mr Harrison’s costs. It would also follow that Withers would be entitled to the fees and disbursements incurred thereafter, the liability for which was incurred because Mrs Harrison failed or refused to accept or follow the advice she was given to discontinue the proceeding.

172.         For the sake of completeness I should also deal with the issue of contributory negligence which Mr Knox raises. In essence, it seems to me there is little distinction between his argument on causation, which I have accepted, and the points he makes on contributory negligence. On the footing that I am wrong in my finding that the advice given on 23 July 2007 was not negligent, if as I have also found, Mrs Harrison was the effective cause of her loss thereafter, in failing or refusing to accept the advice she was given to stop, then her conduct broke the chain of causation. Whether the issue is raised as one of causation or contributory negligence, the effect is the same; and I do not accept Mr Crawford’s argument that if Withers was negligent in the advice it gave on 23 July 2007, Mrs Harrison is entitled to recover all the losses she incurred thereafter. There is a limit to the hypothetical variables with which it is desirable to deal, but it is certainly my view, that even if Mrs Harrison was not the sole author of her own misfortune, as I have found she certainly was principally responsible for it.

173.         I should also deal briefly with the claim to loss and damages, again on the footing that I am wrong in the conclusions I have reached on negligence.

174.         Mrs Harrison’s original claim in these proceedings was that Withers’ negligence caused her to suffer loss and damage comprising (i) the sum of £205,000 plus interest, paid or payable to Mr Harrison in respect of his costs; (ii) the costs (though they were not quantified) incurred by Mrs Harrison in respect of negotiations conducted on her behalf by Mishcon de Reya in negotiating the agreement with Mr Harrison with regard to his costs; (iii) costs of £163,976 already paid to Withers to the extent that they were incurred in consequence of Withers’ negligence – though this amount was not specified; (iv) the costs claimed by Withers in this action; and (v) the exposure to claims for damages to Mr Harrison pursuant to the cross-undertaking given by her in the application for the freezing injunction.

175.         However, by the end of this trial Mrs Harrison’s claim for loss and damage was put in this way. First, it is said by virtue of Withers’ negligence, she is entitled to be relieved of the liability to pay its fees charged for work done on or after 23 July 2007 – and for earlier work on the Particulars of Claim that should not have been undertaken (the parties are broadly in agreement as to those sums). In addition it is now accepted on Mrs Harrison’s behalf that her liability for Mr Harrison’s costs after 15 October 2007 was not caused by Withers’ negligence. Therefore, it is said Mrs Harrison is entitled to damages of the amount of Mr Harrison’s costs, but limited to the amount she would have had to pay if she had accepted his offer of settlement in the letter of 24 September 2007 on the 15 October 2007 (21 days after the date of the letter, by analogy with CPR r36.2 (2)(c)). I have already said that in my view, the relevant cut-off date is 10 September 2007. But whether it is that date, or not, a point arises as to how this court should quantify this part of Mrs Harrison’s claim to damages.

176.         The offer made in Mr Harrison’s letter of 24 September 2007 was that Mrs Harrison should pay his costs of the proceedings, including the freezing injunction, on a standard basis. Mr Harrison’s bill, as drawn, according to Mrs Harrison, amounted at the 15 October 2007 to £100,724.37.

177.         Mr Crawford submits, in the circumstances, it would have been unlikely that Mrs Harrison would have challenged the bill, or risked the costs of an assessment. Given the shortness of the period of the dispute (3 months) and having regard to the fact that whether costs are awarded on a standard or indemnity basis, they must be reasonably incurred (see Fourie v Le Roux [2007] UKHL 1, at 1229) a fair estimate of what Mrs Harrison would have had to pay, and therefore of her damages claim, on the footing that the cut-off date was the 15 October 2007 would be £100,000.

178.         It would have been wholly disproportionate in my view, in view of the amount at stake to send the matter for some form of assessment. Had I been required to do so, I would have invited the parties to agree the amount of Mr Harrison’s actual costs having regard to the relevant cut-off date of 10 September 2007. I would then have made a discount to reflect the probable discount for assessment on a standard basis and to take account of the fact that a small further discount could have been achieved as part of a negotiated settlement. Withers proposed a discount of 40 per cent (30 per cent to reflect assessment on a standard basis, and 10 per cent to reflect a settlement). Mr Crawford’s proposed discount was 0.7 per cent. Looking at the matter in the round, I would have made a discount of 25 per cent.

179.         In the result however, in the light of my conclusions, I reject Mrs Harrison’s case that Withers was negligent, and there will therefore be judgment for Withers on its claim, and Mrs Harrison’s counterclaim is dismissed.

 



[1] Mrs Harrison has since remarried, and is now Mrs Welch, but I shall refer to her in the name in which she has been sued.

[2] The claim is also pleaded in contract but there is no difference between the case in contract and in negligence.

[3] Case No FD00D15809

[4] [1985] FLR 789

[5] The account holder of each was identified as “Interchange Organization Ltd”, and the accounts were designated “Business High Interest Deposit A/c”, “Re: Wu Business Current Account”, “Re Credit Cards Business Current Account” and “Re Third Party Cheques Business Current Account”. The addressees were either Mr Harrison or “Mr Hussien Radwan” at “Interchange Organization Ltd”. The addresses to which the statements were to be sent varied, but they were all conventional postal addresses, and were either Mr Harrison’s private addresses, or Interchange’s offices.

[6] I note in Brown v Bennett at [113] Neuberger J described the decision a barrister instructed by a client to plead and maintain a claim of dishonesty has to face as a “judgment call, which will sometimes be of some nicety” depending on the circumstances.


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