Simms v Conlon & Anor

Mr Paul Simms, the defendant in the action and the appellant in this court, is a former senior partner of Bower Cotton, solicitors. Bower Cotton was dissolved on 30 April 2000, and thereafter Mr Simms and Mr Michael Conlon (another former partner in Bower Cotton) continued in partnership together on the terms of a partnership agreement dated 1 May 2000 under the name “The Bower Cotton Partnership”. They were joined on 30 September 2000 by Mr Roger Harris.

On 2 February 2004, on the application of the Office of Supervision of Solicitors (“the OSS”), the Solicitors’ Disciplinary Tribunal (“the SDT”) pronounced Mr Simms guilty of conduct unbefitting a solicitor and ordered that he be struck off the roll of solicitors. By its findings, which were promulgated on 5 April 2004, the SDT expressed itself as satisfied beyond reasonable doubt that (among other things) from early 1997 onwards Mr Simms had been actively involved in making, promoting or facilitating transactions which (as he knew or, as an honest solicitor, would have known) were bogus in that they lacked an honest commercial purpose; and that in promoting such transactions Mr Simms had made deceitful representations to third parties – that is to say, that in relation to such transactions Mr Simms had acted dishonestly.

The hearing before the SDT lasted some fourteen days in November and December 2003. In the course of the hearing the SDT heard thirteen witnesses (including Mr Simms). The findings themselves – which extend to some 161 pages of typescript (single spaced) – range over a large number of transactions, and it is immediately apparent from a perusal of the findings that they are the product of an extremely detailed and conscientious investigation by the SDT of each of the transactions in question.

Mr Simms appealed against the SDT’s order to the Divisional Court on the ground (among others) that the SDT’s findings were wrong. By its order dated 17 March 2005 the Divisional Court (Latham LJ, Curtis J and Newman J) dismissed his appeal. At the conclusion of its lengthy and detailed judgment, the Divisional Court said this (paragraph 188):

“The most serious finding of the Tribunal was, of course, that the appellant was dishonest. We agree with the Tribunal that the pattern of behaviour by the appellant establishes that he was not merely foolish and credulous. He was prepared on occasion dishonestly to mislead in relation to the purpose of various transactions and indeed in failing to disclose his receipt of $50,000 in one instance. Accordingly we agree that his activities were, unfortunately, properly described as dishonest. That being the case, the order that the appellant be struck off the Roll is inevitable.”

In the present action, which was commenced on 12 February 2004 (that is to say, after the SDT had announced its decision but before it had promulgated its findings) Mr Conlon and Mr Harris allege that Mr Simms induced them to enter into partnership with him, and to enter into a further agreement with him dated 1 May 2002, by fraudulent misrepresentations concerning two particular organisations with whom he had had dealings whilst senior partner of Bower Cotton, namely Elite Engineering Corporation Limited (“Elite”) and The Charlton Corporation plc (“Charlton”); and that in the negotiations leading, respectively, to the partnership agreement with Mr Conlon in May 2000, to the admission of Mr Harris into the partnership in September 2000, and to the agreement dated 1 May 2002 Mr Simms had fraudulently refrained from disclosing matters which might affect his status as a solicitor (and hence his ability to practise as such), viz. the dishonest conduct of which the SDT had since found him guilty. The pleaded particulars of such matters (in paragraph 2.2(i) to (v) of the Amended Particulars of Claim) recite, in terms, the charges against Mr Simms which the SDT had found to be made out.

Paragraph 2.3 of the Amended Particulars of Claim pleads as follows:

“2.3

The First Claimant [Mr Conlon] will rely upon the findings of the [SDT] … and upon such further reasons as that Tribunal may produce hereafter.”

In paragraph 3.2 of the Amended Particulars of Claim Mr Harris adopts paragraph 2.3, mutatis mutandis.

Paragraph 8A of the Amended Particulars of Claim pleads that the positive representations in relation to Elite and Charlton were untrue to Mr Simms’ knowledge. The “Particulars of Falsity” pleaded under that paragraph recite the findings of the SDT in relation to those organisations, including its finding that both organisations were “instruments of fraud”.

Paragraph 8B pleads that Mr Simms had a positive duty to disclose the matters listed in paragraph 2.2, and that by entering into the agreements in question he “necessarily represented that he was entitled to practise as a solicitor of the Supreme Court and there were no matters which would affect that status”.

Paragraph 8C pleads that “… the representations both active and passive as pleaded” induced Mr Conlon to enter into partnership with Mr Simms and to enter into the further agreement dated 1 May 2002. Paragraph 8D pleads that by reason of “the passive representations pleaded at paragraph 2.2” Mr Harris was induced to enter into partnership with Mr Simms and to enter into the further agreement in May 2002.

Paragraph 8E pleads that by reason of Mr Simms’ misrepresentations and non-disclosure Mr Conlon and Mr Harris have suffered loss and damage in entering into partnership with Mr Simms and in entering into the further agreement in May 2002. Paragraph 8F states that particulars of loss and damage would be supplied thereafter by way of an expert’s report (none has as yet been served).

Paragraph 8G pleads that, further or alternatively, Mr Simms is liable in respect of the alleged misrepresentations and non-disclosure in negligence and under the Misrepresentation Act 1967.

Paragraph 9 pleads, in the further alternative, that Mr Simms is liable in contract for breach of the obligation of good faith which is implicit in each of the agreements in question.

The pleading goes on to plead other discrete issues, to which I need not refer.

As originally drawn, the Particulars of Claim claimed rescission of the partnership agreements of May 2000 and September 2000, but by amendment the claim for rescission was deleted and in its place was substituted a claim for a declaration that those agreements and the further agreement in May 2002:

“… were entered into as a result of fraud or negligent misrepresentations by the Defendant as pleaded above which entitles the Claimants to damages for fraudulent, negligent or statutory misrepresentation”.

No other relief is sought in relation to the allegations of misrepresentation and non-disclosure: in particular, there is no claim for damages based upon those allegations other than the reference to damages in the declaration itself.

By his Amended Defence and Counterclaim, Mr Simms denies all the allegations made against him by Mr Conlon and Mr Harris. In particular, he denies the facts alleged in subparagraphs (i) to (v) of paragraph 2.2 of the Amended Particulars of Claim (that is to say, the subparagraphs which recite the findings of the SDT relating to his conduct). He alleges that Mr Conlon and Mr Harris were kept fully informed of all relevant matters, including the existence and progress of the proceedings before the SDT and his denials of the OSS allegations. He asserts that the outcome of the SDT hearing could not be predicted. In paragraph 8A(iii) he contends that the SDT findings are inadmissible in evidence in this action. In any event, he denies that Mr Conlon and Mr Simms have suffered loss and damage as alleged or at all. In response to the claim (since abandoned) for rescission of the partnership agreements of May 2000 and September 2000, Mr Simms alleged that Mr Conlon and Mr Harris had in any event affirmed those agreements by entering into the further agreement of May 2002. (Mr Simms’ counterclaim relates to another aspect of the case, and is not material for present purposes.)

By their Amended Reply and Defence to Counterclaim Mr Conlon and Mr Harris accept that the outcome of the SDT hearing could not be predicted, but they allege (in paragraph 2.3) that:

“… the Defendant was aware that he had been involved in deceitful and fraudulent activity which rendered him unfit to practise as a solicitor”.

They deny that Mr Simms is entitled to rely on a plea of affirmation. They contend that they relied on Mr Simms’ false assurance that investigations being carried out by the OSS were untrue and without merit, and that the SDT findings are admissible in evidence as evidence of the facts found. Finally, they allege that Mr Simms reneged on assurances which he had given the Law Society and to his partners in April 1999 that thereafter Bower Cotton would not accept instructions in relation to investment schemes involving the use of its client account; and that he had falsely claimed that he was complying with those assurances. In support of these last allegations they rely on the findings of the SDT and of the Divisional Court. They do not put forward Mr Simms’ breach of his assurances as a separate head of claim; rather they put it forward as further evidence of Mr Simms’ dishonesty and of the fact that his alleged non-disclosure was fraudulent.

By interlocutory orders dated 10 February 2005 and 30 September 2005 it was ordered (in effect) that the trial of the issues as to misrepresentation and non-disclosure should take place separately from the trial of the other pleaded issues.

The trial of the issues as to misrepresentation and non-disclosure took place before Lawrence Collins J in November 2005. Mr Conlon and Mr Harris were represented (as they are in this court) by counsel, Mr Philip Engelman. Mr Simms represented himself (as he does in this court). Mr Simms had throughout maintained that the SDT findings were inadmissible as evidence of the facts found, but the judge made no ruling as to their admissibility until he delivered judgment.

The judge heard oral evidence from Mr Conlon, Mr Harris and Mr Simms. Mr Simms was cross-examined by Mr Engelman for close on a day and a half on selected aspects of the SDT findings (including, but by no means limited to, his dealings with Elite and Charlton).

In his judgment, which was handed down on 9 March 2006, the judge found that the two positive misrepresentations alleged by Mr Conlon and Mr Harris (relating to Elite and Charlton) had been made by Mr Simms, but that they had not induced either Mr Conlon or Mr Harris to enter into partnership with him. So the claim based on those representations failed. As to the claim based on passive representation/non-disclosure, the judge held, on authority, that in the context of negotiations for a partnership a party to those negotiations is under a duty to make disclosure of matters affecting or likely to affect his status as a partner, and that failure to make such disclosure gives rise in law to a claim for damages. As to the SDT findings, he held, on the authority of Hollington v. Hewthorn [1943] 1 KB 587 CA, that they were inadmissible as evidence (albeit prima facie evidence) of the facts found. However, he went on to find that in seeking to contest those findings in the present action Mr Simms was abusing the process of the court: that is to say, as I understand the judgment, that although the SDT findings were inadmissible in evidence as prima facie evidence of the facts found, nevertheless Mr Simms was in effect bound by those findings – or, to put it another way, estopped from denying those facts.

In case his finding of abuse of process should be wrong, the judge went on to make a number of further findings of fact. I shall have to return to these findings later in this judgment. For the moment it is enough to say that he found as a fact that from early 1997 onwards Mr Simms had acted dishonestly in his capacity as a solicitor in relation to transactions involving Elite and Charlton and in relation to various other transactions and entities.

By paragraph 1 of his order dated 9 March 2006 the judge ordered that:

“There be a declaration that the Defendant fraudulently failed to disclose his dishonesty to the First Claimant and falsely represented that he was honest thereby inducing the First Claimant to enter into the [May 2000] Partnership Agreement and the [September 2000] Partnership Agreement and that the Second Claimant was induced into the [September 2000] Partnership Agreement by the Defendant’s fraudulent failure to disclose his dishonesty and that the Claimants are entitled to damages to be assessed, such assessment to be stayed pending the Defendant’s appeal.”

By paragraph 4 of his order, the judge granted Mr Simms permission to appeal.

For a complete account of the facts, reference should be made to the judge’s judgment (neutral citation number: [2006] EWHC 401 (Ch)). The following summary refers only to those facts which are of central relevance to the appeal.

In September 1998, following a complaint by a Mr Malcolm Carr, the OSS undertook an inspection of the books of account of Bower Cotton. Mr James, of the Monitoring and Investigation Unit of the Law Society, was appointed to carry out the inspection.

In his report dated 25 February 1999 Mr James identified what he considered to be bank instrument transactions of the kind described in the “Yellow Card Warning” issued by the Law Society to the profession in October 1997 relating to bank instrument fraud. In the light of his report, the OSS decided to take no action save to warn the firm of the dangers of acting in transactions involving prime bank instruments. However, on 26 March 1999 the OSS wrote to Mr Simms raising a number of specific points concerning an investment scheme with which Mr Simms had been involved and expressing concern that there might have been a conflict of interest. Mr Simms replied on 22 April 1999, denying any conflict of interest. He ended his letter by saying:

“We have decided that the amount of time involved in acting for parties for schemes of the type described in the report is disproportionate to the reward and that we will not accept instructions in respect of schemes involving the use of our client account for the proposed investment monies.”

Nonetheless, the OSS inquiries continued.

At about this time negotiations began for a merger of Bower Cotton with Birchams, and in October 1999 Birchams made a formal offer of merger.

On 9 November 1999 a letter was written which featured in the SDT findings and in the judge’s judgment. It was written on Bower Cotton headed notepaper by a company called Trinity Union Capital Ltd under the signature of a Mr Guinn, and was addressed to a company in Tulsa, Oklahoma, with a copy to Mr Simms. On its face it appears to refer to a proposed investment scheme involving the use of Bower Cotton’s client account. I shall return to this letter (which I shall call “the Trinity Union letter”) later in this judgment.

On 15 November 1999 Mr James was appointed by OSS to conduct a further inspection of Bower Cotton’s books of account. Discussion took place between the partners in Bower Cotton concerning disclosure of the fact of this inspection to Birchams.

At a meeting of the partners of Bower Cotton on 7 December 1999 it was agreed that Mr Simms and Mr Conlon would not accept Birchams’ offer but would continue in partnership together under the name “The Bower Cotton Partnership”. The remaining six partners in Bower Cotton wished to accept Birchams’ offer.

On 9 December 1999 two further letters were written which featured in the SDT findings and in the judge’s judgment. The first was a letter from a company called Scroda Ltd to Mr Simms saying that it would like to retain Bower Cotton to act for it in three apparently substantial transactions (one of which involved a company called Grosvenor & Partners Ltd). The second was a letter from Grosvenor & Partners Ltd to a Mr Twiss (with a copy to Mr Simms) which appears on its face to refer to an investment scheme involving, once again, the use of Bower Cotton’s client account. I shall return to these letters (which I shall call “the Scroda letters”) later in this judgment.

On 15 December 1999 the partners in Bower Cotton held a partners meeting at which they expressed concern at Mr Simms’ apparently continued involvement in investment schemes in which very large sums of money passed through Bower Cotton’s client account. Following the meeting, Mr Vincent (one of the partners) wrote to Mr Simms saying that Mr Simms’ explanations of his involvement with Trinity Union Ltd and Scroda Ltd “and indeed all these types of business” had not satisfied the partnership, and objecting to continued use of Bower Cotton’s client account for such purposes.

In a note to the partners dated 22 December 1999 Mr Paul Shaerf, Bower Cotton’s financial officer, expressed serious concerns about a particular investment scheme involving Scroda. His view was that, given the terms of the Law Society’s “Yellow Card Warning”, Bower Cotton was on notice that the scheme might be fraudulent. He continued:

“Further, if we continue to provide legal or banking services we may be guilty of a Class A offence under the Money Laundering Regulations. This is providing assistance to a money launderer to obtain, conceal, retain or invest funds knowing or suspecting that the funds are the proceeds of serious criminal conduct.

If we do not report our suspicion that this may be a money laundering exercise we also may be guilty of a Class C offence. No defence of legal privilege is available.”

On 23 December 1999 Mr Conlon wrote a note to Mr Simms about a cheque drawn on Bower Cotton’s client account on behalf of Elite which had had to be taken by hand to the bank the previous day so that Mr Simms should not be in breach of an undertaking he had given. Mr Conlon was concerned whether the payment should be reported to the appropriate authorities.

In an undated written response to Mr Conlon’s note, Mr Simms said that it was a complete distortion of the facts. In the course of it he said this in relation to Elite:

“We have held funds of [Elite] for over 18 months and they are people of repute dealing with substantial transactions.”

It was Mr Conlon’s evidence before the judge that on receipt of his (Mr Conlon’s) note Mr Simms had assured him that every transaction in which he had been involved was bona fide, and that Elite was a substantial entity and a potentially profitable client.

In 4 January 2000 the partners in Bower Cotton held another partners meeting. In anticipation of the meeting Mr Simms circulated a memorandum about Elite. In it he said:

“I know a good deal about Elite and its principals, but I have asked for bank references for our files which will be forthcoming during this week. They are regarded as first class customers of [a number of well-respected banks].”

The bank references which Mr Simms had promised were not available at the 4 January 2000 partners meeting, but at a further partners meeting on 12 January 2000 (at which all the partners except Mr Simms and Mr Conlon were present) it was agreed that the payment should be reported, but not until Mr Simms had returned to the office on the following Monday and had had an opportunity to comment.

On 24 March 2000 the partners in Bower Cotton entered into a Deed of Dissolution dissolving the partnership on 30 April 2000. The Deed of Dissolution provided that Mr Simms and Mr Conlon would enter into partnership together as from 1 May 2000 under the name “The Bower Cotton Partnership”, with a Mr Richardson as a salaried partner. In June 2000 negotiations started for the admission into The Bower Cotton Partnership of Mr Harris, a conveyancing specialist. As already noted, by an agreement dated 30 September 2000 he was admitted into the partnership on that date. Later, two other individuals joined the partnership as salaried partners.

On 1 November 2000 Mr Jackson, the corporate director at the City of London office of NatWest, the bankers to the firm, wrote to Mr Simms referring to the bank’s concerns about business which Mr Simms had introduced to the bank and about sums which had passed through the firm’s account with the bank. The letter continued:

“All this has led us to the conclusion that the working relationship between your firm and this Bank has been seriously damaged. You may not share that view, but I think you will agree that when one party to a commercial relationship is undeniably of that opinion then it is best that the relationship terminate. …. Regretfully, therefore, I must ask your firm to make alternative banking arrangements.”

Mr Simms wrote back on 15 November 2000 saying that the firm had conducted its banking for clients and on its own behalf impeccably over the years. In the course of the letter he said this:

“As a solicitor of over 30 years’ standing, a chairman of two publicly quoted companies and a director of many UK and overseas companies, I am pleased to say that I am held in high regard by my clients who know that I offer the excellent service and advice and would never let them down.”

A further report by the OSS dated 31 January 2002, which was circulated to all the partners in the firm, expressed concern that, despite Mr Simms’ assurance in his letter dated 22 April 1999, he was continuing to use the firm’s client account for fraudulent investment schemes.

On 19 February 2002 the Law Society intervened in Mr Simms’ practice on grounds of suspected dishonesty, based upon the latest OSS report. On 27 February 2002 the partners (that is to say Mr Conlon, Mr Harris, Mr Simms and the three salaried partners) applied to the court to set aside the intervention. Mr Simms’ practising certificate was suspended, but was reinstated on 19 March 2002 (albeit in conditions which Mr Simms considered made it impossible for him to resume his practice with the firm).

On 2 May 2002 Mr Conlon sent a memorandum to Mr Simms in which he referred to the Law Society’s belief that Mr Simms had been “involved in dishonest transactions to an extraordinary degree”.

On 7 May 2002 the Law Society served its evidence in opposition to the application to set aside the intervention. This evidence (which was not before Lawrence Collins J) constituted the Law Society’s case that Mr Simms had been guilty of dishonesty. Copies of the evidence were sent to Mr Conlon and Mr Harris, but Mr Conlon told Lawrence Collins J in evidence that he did not read it until about a year later.

On 15 May 2002 Mr Conlon, Mr Harris and Mr Simms signed an agreement dated 1 May 2002 designed to deal with the position pending Mr Simms’ return to practice. The agreement (which I will call “the 2002 Agreement”) contained provisions relating to the continuation of the firm’s overdraft by Barclays Bank plc (which had taken over from NatWest as the firm’s bankers) and the continuing provision of security for that overdraft by Mr Simms. In particular, it contained provisions obliging Mr Conlon and Mr Harris to reduce the security provided by Mr Simms. Clause 1.4 provided as follows:

“In the event that PFS [Mr Simms] shall not return as a full Equity Partner to the Partnership by 30 April 2003 he shall leave in place security to the Bank for the sum of £120,000 which security will be reduced by £2,000 per month over [sic] 60 monthly payments by the Partnership paying to the Bank the monthly capital instalments amounts due under the loan arrangements with the Bank and to the extent that the security of PFS is by April 2003 in excess of £120,000 MAC [Mr Conlon] and RH [Mr Harris] will put forward proposals for the release of the security provided by PFS in respect of the Partnership such release to be effective no later than 30 September 2003.”

On 2 September 2002 Russell-Cooke, the solicitors for the OSS in the SDT proceedings, wrote to the partners in the firm enclosing a copy of the “Rule 4 Statement” to be lodged with the SDT by the Law Society, summarising the Law Society’s case against Mr Simms.

On 17 September 2002 the OSS commenced disciplinary proceedings against Mr Simms before the SDT. By agreement, the application to set aside the intervention was stayed pending the conclusion of the disciplinary proceedings.

On 25 July 2003 Mr Simms commenced an action in the High Court, Chancery Division, seeking specific performance of the obligations of Mr Conlon and Mr Harris under clause 1.4 of the 2002 Agreement.

As noted earlier, the hearing before the SDT took place over fourteen days during November and December 2003.

On 13 January 2004 the trial of the specific performance action began before David Richards J. At the start of the trial counsel for Mr Conlon and Mr Harris asked for, and was granted, an adjournment of one day to investigate matters which had just come to her attention. At the resumed hearing, counsel (this time, Mr Engelman) argued that Mr Simms was not entitled to specific performance of the 2002 Agreement, or any other relief in respect of it, on grounds of misrepresentation and fraud or a lack of clean hands. The judge declined to allow such a defence to be raised for the first time at the trial of the action, pointing out that Mr Conlon and Mr Harris had been aware of the extent of Mr Simms’ alleged dishonest activities since at least September 2002, when they saw the Rule 4 Statement in the SDT proceedings. No adjournment was sought by Mr Engelman, and the trial proceeded.

On 2 February 2004 the SDT announced its decision and ordered Mr Simms to be struck off.

On 12 February 2004 Mr Conlon and Mr Harris commenced the present action.

In early February 2004, after the completion of the hearing of the specific performance action, Mr Engelman made written submission to David Richards J seeking a further oral hearing on the “clean hands” defence. The judge considered this submission on paper and rejected it, concluding that it was not appropriate to reopen the argument. On 22 March 2004 he delivered judgment in the Chancery action. He found that the obligation on Mr Conlon and Mr Harris in paragraph 1.4 of the 2002 Agreement to “put forward proposals” was an enforceable obligation, and that they had breached that obligation.

In paragraphs 38 and 39 of his judgment David Richards J referred to the application to reopen the argument, as follows:

“38.

After hearing counsel for the defendants, and Mr Simms, I concluded that it was not appropriate to reopen the argument. The first point to note is that the purpose of the defendants’ application for an adjournment in January was to put the decision and findings of the Tribunal before the court. They agreed with Mr Simms to withdraw that application and not to seek an adjournment. The application to reopen the argument so as to introduce the Tribunal’s decision is in substance, although not in form, to do the very thing which they agreed not to do. Their agreement not to seek an adjournment was an agreement to proceed to trial on the evidence which was then before the court and on the basis of the case then presented to the court. Secondly, introduction of the Tribunal’s decision does not conclude the case in the defendants’ favour. There is not a clear statement of their case based on fraud or clean hands. The connection between the dishonesty found by the Tribunal and the making of the Agreement would need to be defined and established, as would other issues such as reliance. It cannot be supposed that this could be done without a trial of the issues, at which Mr Simms would be entitled to cross examine the defendants on their evidence against him. In effect, all the steps would be needed which would have been taken if the defendants had raised a case along these lines in September last year.

39.

Thirdly, the findings of the Solicitors Disciplinary Tribunal are not admissible in these proceedings as evidence of the facts found by the Tribunal: Secretary of State for Trade and Industry v Bairstow [2003] 3 WLR 841, applying Hollington v F.Hewthorn & Co Ltd [1943] 2 All ER 35. Mr Engelman suggested that it would be an abuse of process for Mr Simms to seek to relitigate the issues decided by the Tribunal in this action. This can be an area of great difficulty, and to my mind it is far from certain that this argument would succeed in the present case. Relying on paragraph 38(d)(i) of the Vice-Chancellor’s judgment in Bairstow, Mr Engelman submitted that it would be manifestly unfair to expect the defendants in these proceedings to relitigate issues of fact decided by the Tribunal. He submitted that the decision in Bairstow could be distinguished on the basis that the second proceedings in that case were of a public law character. I do not think that the Bairstow case can be distinguished so easily. Rather than creating a special regime for proceedings of a public law character, it applied to directors disqualification proceedings a principle which was already well-established in private litigation. The other suggested ground of distinction was that the Solicitors Disciplinary Tribunal is required by statute to make its findings on the basis of proof beyond a reasonable doubt, rather than on a balance of probabilities. I do not consider that this is a basis for distinguishing the decision, and the principles underlying it. A number of the authorities in this area have concerned a challenge in civil proceedings to an earlier criminal conviction, and in a number of cases it has been held not to be an abuse of process, and indeed it was only by statute that a previous criminal conviction was made admissible as evidence of the underlying facts.”

By his order dated 22 March 2004 David Richards J awarded Mr Simms damages of some £49,000. He also ordered Mr Conlon and Mr Harris to pay Mr Simms £98,000 in monthly instalments of £2,000, but he stayed that part of his order pending determination of the claim in the present action. He dismissed the application to reopen the argument, and refused Mr Conlon and Mr Harris permission to appeal. Mr Simms applied to this court for permission to appeal, but permission was refused by Neuberger LJ on 1 July 2004.

In the meantime, on 5 April 2004 the SDT promulgated its findings. As mentioned earlier, the findings are extremely detailed. The first 78 paragraphs are introductory. They set out the OSS allegations, and deal with a number of preliminary points. There then follow 11 Chapters. Each of Chapters 1 to 10 deals with a separate transaction or set of transactions. Transactions involving Elite and its controller Mr Koffler (who gave oral evidence to the SDT) are dealt with in Chapter 2 (paragraphs 134 to 236). In paragraph 236 the SDT sets out its conclusions in relation to the Elite transactions, as follows:

“In the Elite transactions the Tribunal find that:

(a)

the transactions were bogus and lacked an honest commercial purpose;

(b)

Mr Simms knew or as a prudent and honest solicitor would have known they were bogus;

(c)

Mr Simms acted for Elite and Mr Koffler as well as Investors and Intermediaries and was in clear breach of conduct rules relating to conflicts of interest;

(d)

Mr Simms recommended and promoted Elite and the transactions they claimed to be able to effect and by reason of (a), (b) and (c) made misrepresentations which were deceitful.”

Chapter 11 of the SDT findings (paragraphs 537 to 544) contains the SDT’s concluding remarks. In paragraph 537 the SDT expresses itself as satisfied beyond any reasonable doubt that relevant evidence placed before it established that all the OSS allegations against Mr Simms save two were proved. Included among the allegations found to have been proved were the following:

On the basis of the findings of dishonesty made by the SDT the Law Society applied for the dismissal of the proceedings to set aside the Law Society’s intervention in Mr Simms’ practice. On 16 July 2004 Evans-Lombe J acceded to that application. There was an appeal to this Court but on 12^th July 2005 that appeal was dismissed.

In the meantime, on 17 March 2005 the Divisional Court dismissed Mr Simms’ appeal against the SDT’s order. In paragraph 2 of its judgment, the Divisional Court stated that as the appeal was by way of rehearing, the court had considered with care all the material which was before the SDT. However, in accordance with its usual practice the Divisional Court did not hear oral evidence. Moreover, it is common ground that had Mr Simms wished to adduce further evidence which had not been before the SDT he would have had to show (among other things) that such evidence could not with reasonable diligence have been placed before the SDT. In the event, Mr Simms did not seek to adduce further evidence before the Divisional Court.

Following a detailed review of the facts (including the transactions involving Elite and Mr Koffler), the Divisional Court concluded that the SDT’s findings on all contentious matters were fully justified. I have already quoted the Divisional Court’s own finding (in paragraph 188 of its judgment) that Mr Simms had been guilty of dishonesty (see paragraph 4 above).

As the judge acknowledges in paragraph 212 of his judgment, the question of the role which the SDT findings and the judgment of the Divisional Court were to play in the trial was not explored prior to trial, although Mr Engelman had suggested “rather faintly” that that should be decided as a preliminary issue. The judge continues:

“I decided that that would not be an appropriate course without looking at the findings and the decision in detail, and considering the case as a whole.”

The SDT findings and the Divisional Court judgment were, however, included in the documentary evidence before the judge, and it is evident from his judgment that he had studied them in detail.

As noted earlier, the judge heard oral evidence from Mr Conlon, Mr Harris and Mr Simms, each of whom was cross-examined at some length.

At an early stage in Mr Engelman’s cross-examination of Mr Simms, when Mr Engelman was putting to Mr Simms paragraph 369 of the SDT findings, where the SDT found that a document purporting to evidence a transaction in which a Dr Mannish was involved as “self-evidently bogus”, the judge intervened, saying this (transcript 4 November 2005, page 12 line 18):

“Mr Engelman, I am not going to interfere with the course of your cross-examination; I just want to see where we are going with this sort of material. I understand your point, of course, that the [SDT] findings may be evidence in themselves. If they are not, you have still got your Charlton and Elite allegations. But if you take a point like this, either you are right on whether the findings can be relied on or you are not. If you are right, then you do not need to cross-examine Mr Simms on paragraphs like 369. If you are wrong, we could only get into this if the document were here and Mr Simms had had notice of an allegation in relation to it and you were making an allegation. Or have I got the wrong end of the stick?” (Emphasis supplied)

Mr Engelman responded as follows:

“My submission will be … that there are two routes … through to the SDT’s findings. The first and most obvious is that I am entitled to cross-examine on credit because the issues before my Lord turn upon the credit of individuals. So I am entitled to put to the witness this is what the SDT found in relation, for example, to this transaction. This is why they found it and so on and so forth. … . The second route … is that the ruling in Hollington v. Hewthorn [[1943] KB 587] is subject to the later ruling of the House of Lords in Hunter v. Chief Constable of W. Midlands Police [[1982] AC 529, a case of abuse of process].”

Later in the course of the same discussion with the judge (ibid. page 15 line 2), Mr Engelman referred to “the principle that you cannot attack another court’s decision unless you come forth and show that there is new evidence …”. The judge responded:

“This is your basic point. But again in order to get home on that point, you do not have to do into great detail on things like paragraph 369 do you?”

Then, referring to the document which Mr Engelman was in the process of putting to Mr Simms, the judge said:

“But if, for example, he [Mr Simms] says: ‘No, it [the SDT finding] is wrong; there was no such document.’ Or ‘in any event, it was not bogus’, how can I possibly …. It is not before me.”

Nevertheless, the judge allowed Mr Engelman to continue his cross-examination of Mr Simms by selecting (Mr Engelman did not object to our use of the word “cherry-picking”) from the SDT findings. In the event, as noted earlier, the cross-examination of Mr Simms lasted about a day and a half. In the course of his oral submissions to us, Mr Simms described his cross-examination as cross-examination by ambush.

Later in Mr Simms’ cross-examination, when Mr Engelman was asking him further questions about his involvement with Dr Mannish, the judge intervened again to say this (ibid. p.32 line 3):

“This does show the difficulty of this type of questioning, Mr Engelman. If the whole file were in court it would be possible for this court to understand what Mr Simms was doing and what the context of all this was.” (Emphasis supplied)

However, despite that intervention Mr Engelman continued his cross-examination of Mr Simms undeterred.

It must be said straightaway that the judge’s judgment contains an impressive and comprehensive review of the factual background, coupled with a detailed analysis of the relevant authorities.

In the course of setting out the facts the judge (in paragraph 16 of his judgment) quoted the conclusions of the SDT as set out in paragraphs 537 to 544 of the SDT findings. In paragraph 17 he quoted paragraph 188 of the judgment of the Divisional Court (see paragraph 4 above). In paragraphs 89 to 89 he referred to the Trinity Union and Scroda letters.

In paragraph 104 he turned once again to the SDT findings, setting out the allegations against Mr Simms which the SDT had found proved. He continued (in paragraphs 105 and 106):

“105.

The SDT made, by reference to 10 groups of transactions, various findings of dishonesty, the promotion of transactions which were improbable in their likely returns and which were likely to be fraudulent, illegal or otherwise improper, substantial conflict of interest by either acting for or being in association with most if not all of the companies and individuals involved in these transactions, the recommendation of companies to innocent third parties who were of no substance such as Elite, the improper encouragement of innocent third parties in transactions which he knew or an honest solicitor would have known were bogus and the active making of misrepresentations as to the truth.

106.

So that the nature of the findings may be understood I shall set out fully the reasoning in relation to Elite and Hackar, two clients in respect of whom the investigation had its origin.”

In paragraphs 107 to 122 of his judgment he set out in detail the facts relating to Elite, as found by the SDT. In paragraph 123 he referred to the SDT’s findings in relation to Hackar.

The judge then turned to the judgment of the Divisional Court. In paragraphs 127 to 138 he summarised the Divisional Court’s consideration of transactions involving Elite and Hackar (a consideration based exclusively upon the documentary evidence which was before the SDT together with transcripts of the oral evidence before the SDT).

The judge then set out the pleaded issues. In paragraph 157 of his judgment he summarised the case put by Mr Conlon and Mr Harris in support of the allegation in the Amended Reply that Mr Simms had breached assurances given to the Law Society and to his partners in April 1999 (see paragraphs 18, 19 and 29 above), as follows:

“157.

The claimants say that the falsity of these assurances is proved by the findings of the SDT and the Divisional Court. Thus in relation to the Elite transactions which the SDT found were part of a fraudulent scheme, and in which Mr Simms participated, many of them took place after the April 1999 letter … Even if the claimants’ contention that the SDT/Divisional Court findings are admissible is wrong, the case is made out.”

The judge went on (in paragraphs 158 to 164 of his judgment) to rehearse in some detail the findings of the SDT and of the Divisional Court concerning various transactions on Bower Cotton’s bank account, including transactions involving Elite. The judge also referred in this connection to the Trinity Union letter (which did not feature in the SDT findings) and to the Scroda letters.

In paragraphs 165 to 186 of his judgment the judge addressed the pleaded allegations relating to Elite and Charlton, and reviewed the oral evidence he had heard relevant to those allegations.

In paragraph 170 of his judgment, the judge said this in relation to Elite:

“170.

Mr Simms’ assertion that Elite was to be considered substantial because of its alleged connection with Mr Koffler was not accepted by the SDT or the Divisional Court. No evidence of this assertion was produced by Mr Simms and his assertion should not be accepted unless corroborated by evidence because of his lack of credit.”

Turning to Charlton, the judge found (in paragraph 175), preferring the evidence of Mr Conlon to that of Mr Simms, that Mr Simms had made the alleged misrepresentation. In paragraph 176 the judge held that the misrepresentation was fraudulent, saying this:

“176.

The dishonesty lies in the fact that Mr Simms must have known that Charlton was a creature of Eastcastle [a Panamanian company, and the ultimate holding company of Charlton] and had no independent existence and was liable to have the plug pulled on it at any time.”

In paragraphs 193 to 257 of his judgment the judge set out his conclusions on the various issues before him.

He turned first to the alleged duty of disclosure, saying this (in paragraphs 193 to 204 of his judgment):

“193.

The most fundamental obligation which the law imposes on a partner is the duty to display complete good faith towards his co-partners in all partnership dealings and transactions: Lindley and Banks, Partnership, 18^th ed. 2002, para. 16-01.

194.

The relationship between partners is of a fiduciary nature (ibid. para. 16-03). “If fiduciary relation means anything I cannot conceive a stronger case of fiduciary relation than that which exists between partners”: Helmore v Smith (1886) 35 Ch D 436, 444.

195.

It follows that when co-partners are negotiating between each other in relation to partnership assets, each partner must put the others in possession of all material facts with reference to the partnership assets, and not to conceal what he alone knows: Maddeford v Austwick (1826) 1 Sim. 92; Law v Law [1905] 1 Ch 140, 157.

196.

It has been said that the duty of good faith exists not only as between persons who are actually in partnership together, but also as between persons who are negotiating their entry into partnership: Lindley and Banks, para. 16-06: Spencer Bower, Actionable Non-disclosure (2^nd ed Turner and Sutton, 1990), paras. 10.01 to 10.04; Chitty on Contracts, para. 6.157. It is true that the cases cited by Lindley and Banks and by Chitty do not bear out the proposition (the only one remotely near the point is Fawcett v Whitehouse (1829) 1 Russ & M 132, but that was not a case of a prospective partnership), and that Cartwright, Misrepresentation (2002), para. 11.10, on which Mr Simms relied, says that it is not clear whether the duty of disclosure arises during the negotiations for partnership.

197.

But there is authority, including very strong persuasive authority, for the existence of such a duty. In Andrewes v Garstin (1861) 10 C.B. (N.S.) 444 the plaintiff sued for breach of an agreement to enter into a partnership with the defendant, who pleaded that previously the plaintiff had carried on trade in partnership with another person, and that the defendant made the agreement on the faith and under the belief that the plaintiff had up to that time acted with honesty towards his previous partner. But after the making of the agreement the defendant discovered that the plaintiff had before the time of making the agreement acted with fraud and dishonesty towards his partner, and did not disclose it. It was held that the plea afforded no answer to the action. Erle CJ said that the arguments urged by the defendant would have been addressed with more plausibility if the plea had been a little more specific. There was no suggestion of fraud on the defendant and as to the rest it was much too vague and uncertain. Contrary to Mr Simms’ argument, there is no suggestion in this decision that there was no duty to disclose material matters.

198.

In Bell v Lever Brothers Ltd [1932] AC 161, at 227 (cited by Cartwright on this point, but not by Lindley and Banks), Lord Atkin assumed that an intending partner had a duty of disclosure. He said:

“Fraudulent concealment has been negatived by the jury; this claim is based upon the contention that Bell owed a duty to Levers to disclose his misconduct, and that in default of disclosure the contract was voidable. Ordinarily the failure to disclose a material fact which might influence the mind of a prudent contractor does not give the right to avoid the contract. The principle of caveat emptor applies outside contracts of sale. There are certain contracts expressed by the law to be contracts of the utmost good faith, where material facts must be disclosed; if not, the contract is voidable. Apart from special fiduciary relationships, contracts for partnership and contracts of insurance are the leading instances. In such cases the duty does not arise out of contract; the duty of a person proposing an insurance arises before a contract is made, so of an intending partner.”

199.

I am satisfied on principle and authority that prospective partners have a duty to disclose material matters.

200.

Mr Simms is right to say that the duty of disclosure depends upon the relative degree of knowledge as to the partnership affairs possessed by the parties, and there is a duty of disclosure on the partner who has “exclusive or superior knowledge of the affairs of the partnership” (Spencer Bower, para. 10.02). But this is only saying that there is no duty to disclose what is already known.

201.

There is, in variety of contexts, a tendency towards the view that mere non-disclosure does not give a right to damages. According to the view of Spencer Bower, Actionable Non-Disclosure, and its present editors, the right of any party complaining who elects to avoid a contract in the negotiation for which material facts have been withheld is to have the contract judicially annulled or treated as a nullity and that party is not entitled to recover damages: para. 14.02. So also, according to Lindley and Banks, para. 16-08, a breach of the duty of good faith will give rise to a claim for damages in an appropriate case, but such a claim may not be sustainable where the breach involves a mere non-disclosure, citing Uphoff v International Energy Trading, The Times, February 4, 1989 (C.A.), where it was held that even if shareholders owed each other a duty of good faith as parties to a joint venture, it was not arguable that there was a duty of disclosure in that case, but even if there had been, it would not sound in damages. Mere non-disclosure does not found an action for deceit: Clerk and Lindsell, Torts, 19^th ed. 2006, para. 18-08. Nor does it give rise to liability for damages under the Misrepresentation Act 1967: Chitty, Contracts (29^th ed. 2004), para. 6-072.

202.

But is clear that where there is a duty to disclose, and the failure to disclose is fraudulent, there will be an action in deceit and damages will be an available remedy. In such cases “the non-disclosure assumes the character of fraudulent concealment, or amounts to fraudulent misrepresentation, or is otherwise founded on, or characterized and accompanied by, fraud”: Spencer-Bower, para. 14.02.

203.

But it has been said that in practice the line between misrepresentation and non-disclosure is often imperceptible: Pan Atlantic Insurance Co. Ltd. v Pine Top Insurance Co. Ltd. [1995] 1 AC 501, 549, per Lord Mustill. The deliberate withholding of information which the person knows or believes to be material, if done dishonestly or recklessly, may amount to a fraudulent misrepresentation: HIH Casualty & General Insurance Ltd v Chase Manhattan Bank [2003] UKHL 6, [2003] 2 Lloyd’s Rep 61, at para. 21, per Lord Bingham. It cannot be easy to conceal material facts in the course of negotiating, without falsifying something which has been expressly or impliedly stated: ibid at para. 71, per Lord Hoffmann, who also said, at para. 72, citing Brownlie v Campbell (1880) 5 App Cas. 925, 950, that where there is a duty or an obligation to speak, and the person holds his tongue and does not speak, and does not say the thing he was bound to say, if that was done with the intention of inducing the other party to act upon the belief that the reason why he did not speak was because he had nothing to say, that was fraud also.

204.

The Amended Particulars of Claim also plead a contractual duty, namely the implied duty of good faith which is breached by such non-disclosure. Mr Engelman cited the decision in Trimble v Goldberg [1906] AC 494, at 500 (P.C.) for the proposition that a breach of contract arising as a result of breach of an implied term of good faith sounds in damages. But the Privy Council in that passage was speaking of breach of an express term not to purchase property for the partner’s own account. Nevertheless there is no reason to doubt that breach of an implied term would give rise to a right to damages. But it is clear from the context that what is pleaded in the present case is a breach of the implied obligations in the May 2000 and September 2000 Partnership Agreements. As regards Mr Conlon, there was an express contractual duty under the 1997 partnership agreement (clause 18.1.1) to act in good faith, but no breach of that agreement is pleaded or relied upon.”

The judge turned next to the issue as to the admissibility of the findings of SDT and of the Divisional Court as evidence of the facts found. He began his consideration of this issue by summarising the parties’ arguments, as follows (paragraphs 205 to 211):

“205.

Mr Simms argues that the findings in the SDT proceedings are inadmissible in principle. The defence put forward by Mr Conlon and Mr Harris in the first action included a claim that Mr Simms did not come to the court with clean hands because of the matters with which he was charged by the Law Society by way of disciplinary offences. The decision of David Richards J that the findings in the SDT were not admissible is res judicata in this action.

206.

Mr Simms says that since David Richards J’s judgment of March 22, 2004, Mr Conlon and Mr Harris have known that the findings of the SDT were not admissible and that if they wished to raise any specific allegations which were in any way founded on or connected with the SDT proceedings that they would need to make express allegations in this action so that the matter could be dealt with by way of defence, disclosure and witness statements on the details. It has been open to the claimants for over 18 months to plead specific allegations, require disclosure, call evidence and cross-examine on the relevant documents.

207.

Accordingly, he says, neither the decision nor any of its findings or conclusions will be admissible at any trial: Three Rivers DC v Bank of England (No.3) [2001] UKHL 16, [2003] 2 AC 1; Secretary of State for Trade and Industry v Bairstow [2004] Ch 1. Hunter v Chief Constable of the West Midlands Police [1982] AC 529 is of no relevance to the present action. There has been no initiation of any proceedings by Mr Simms. This action is not intended to and does not have as its purpose the mounting of a collateral attack on the SDT or Administrative Court decisions.

208.

Mr Simms argues that the cross-examination of him on the findings of the SDT has not proved anything other than Mr Simms has an explanation for the matters raised in cross-examination and does not accept the findings of the SDT. The cross-examination on the findings of the SDT (which were inadmissible), without any recourse to any documentation relevant to the issues upon which cross-examination occurred, does not prove anything.

209.

The claimants say that they are not precluded by the judgment of David Richards J from relying on the findings of the SDT and the Divisional Court.

210.

They argue that the order of a professional disciplinary committee is admissible as prima facie evidence of the fact that Mr Simms was struck from the Roll of Solicitors on the grounds of his dishonesty: Hill v Clifford [1907] 2 Ch 236. The court is entitled to reach its own view of the facts as found by the SDT/Divisional Court: Clifford v Timms [1908] AC 12. Although judicial findings made in a previous case are not admissible in later proceedings, the principle of abuse of process would prevent collateral attack on an earlier decision of a court of competent jurisdiction where re-litigation of the same issues would be manifestly unfair or would bring the administration of justice into disrepute: Secretary of State for Trade and Industry v Bairstow [2004] Ch 1. The principle of collateral attack is not applicable where the party seeking to make that attack is able by reference to new evidence to show why the earlier judgment should not stand: ibid at para. 30.

211.

Accordingly, the claimants contend that they do not have to get within the two categories identified in Bairstow, because of the failure by Mr Simms to identify any new evidence which would change the aspect of the case: Phosphate Sewage Co Ltd v Molleson (1879) 4 App. Cas. 801, 814. Even if that is not so, it would be either manifestly unfair or bring the administration of justice into disrepute to require such re-litigation where nothing is produced to show that the earlier decision was wrongly made.”

Having summarised the parties’ arguments, the judge said this (in paragraph 212):

“Before I come to my conclusions on this aspect, I should mention that the question of the role which the SDT findings and the Divisional Court decision were to play in this trial was not explored prior to trial, and it was rather faintly suggested by Mr Engelman on behalf of the claimants that I should decide it as a preliminary issue. I decided that that would not be an appropriate course without looking at the findings and the decision in detail, and considering the case as a whole. I was referred to many decisions on this aspect of the case, and I will deal with those which I consider most directly relevant. …”

The judge then turned to authority. He began (in paragraphs 213 to 218) by analysing in detail the decision of this court in Hill v. Clifford [1907] 2 Ch 236, demonstrating that a majority of the court (Cozens-Hardy MR and Buckley LJ) were of the view that an earlier decision of the GMC striking the defendant off the register of dentists was prima facie evidence of the truth of the charges against him. He went on to point out that the decision had rarely been cited or applied, and that it was not cited in Hollington v. Hewthorn.

After summarising the decision of this court in Hollington v. Hewthorn (paragraphs 221 and 222), the judge turned (in paragraphs 223 to 229) to the decision of the House of Lords in Hunter, noting in particular the observation of Lord Diplock (with whose speech the rest of their Lordships agreed) that Hollington v. Hewthorn was generally considered to have been wrongly decided. The judge then referred (in paragraphs 230 and 231) to similar observations in later authorities.

The judge referred next to the decision of this court in Secretary of State for Trade and Industry v. Bairstow [2004] Ch 1, saying this (in paragraphs 232 to 235):

“232.

But Hollington v Hewthorn was followed in Secretary of State for Trade and Industry v Bairstow [2004] Ch 1, where the former managing director of a company brought wrongful dismissal proceedings against the company. Following a trial which lasted almost a year (from October 1997 to September 1998), the judge dismissed the claims in two judgments given in July and December 1999, and found that the director had been guilty of grave misconduct and neglect in the performance of his duty. An appeal against the decision was dismissed. The Secretary of State for Trade and Industry subsequently applied under section 8 of the Company Directors Disqualification Act 1986 for a disqualification order and sought to rely on the findings made in the wrongful dismissal proceedings.

233.

Sir Andrew Morritt V-C, giving the judgment of the Court of Appeal, said that although Hollington v Hewthorn had been criticised by Lord Diplock in Hunter and by Lord Hoffmann in Arthur J S Hall & Co v Simons [2002] 1 AC 615, 702, it had been recognised as expressing the position at common law in several subsequent decisions: Savings and Investment Bank Ltd v Gasco Investments (Netherlands) BV [1984] 1 WLR 271; Hui Chi-ming v The Queen [1992] 1 AC 34 (P.C.); Land Securities plc v Westminster City Council [1993] 1 WLR 286; Symphony Group plc v Hodgson [1994] QB 179; Three Rivers District Council v Bank of England (No.3) [2003] 2 AC 1.

234.

It was held that the decision was not limited to criminal proceedings. Accordingly the factual findings and conclusions in the employment proceedings were not admissible as evidence of the facts found in those proceedings. The cases established the following propositions. First, a collateral attack on an earlier decision of a court of competent jurisdiction might be but was not necessarily an abuse of the process. Second, if the earlier decision was that of a court exercising a civil jurisdiction then it was binding on the parties to that action, and their privies in any later civil proceedings. Third, if the parties to the later civil proceedings were not parties to or privies of those who were parties to the earlier proceedings then it would only be an abuse of the process of the court to challenge the factual findings and conclusions of the judge or jury in the earlier action if (i) it would be manifestly unfair to a party to the later proceedings that the same issues should be re-litigated or (ii) to permit such re-litigation would bring the administration of justice into disrepute.

235

On the facts it was held that it would not be manifestly unfair to either party for the Secretary of State to be required to prove his case. Nor would re-litigation bring the administration of justice into disrepute, because the allegations made by the Secretary of State were serious, and they had to be proved to the satisfaction of the court hearing the application for a disqualification order by legally admissible evidence.”

The judge then set out his conclusions as to the relevant principles of law, as follows (paragraphs 236 to 238):

“236.

My conclusions on this aspect of the case are these. First, I am in no sense precluded by the decision of David Richards J from deciding the question of the admissibility of the findings of the SDT and the Divisional Court. What he said was obiter and tentatively expressed, and is not res judicata as between the parties.

237.

Second, Hill v Clifford (having been affirmed on different grounds by the House of Lords) is not binding authority, and its value as persuasive authority is limited by the effect of Hollington v Hewthorn. The majority decision of the Court of Appeal in Hill v Clifford accords with common sense. I consider that it does support the view that the order of the SDT is evidence of the fact that Mr Simms was struck from the Roll of Solicitors on the grounds of dishonesty. But as regards the truth of the findings themselves, in relation to the potential admissibility of the decision of the Divisional Court in the present case it is difficult to reconcile Hill v Clifford with Hollington v Hewthorn, and it would be odd if the findings of the SDT had greater evidential value than the decision of the Divisional Court. Third, it is plain (if authority were needed for such an obvious point) from Clifford v Timms [1908] AC 12, the court is entitled to reach its own view of the facts as found by the SDT/Divisional Court, provided that the facts are properly proved in accordance with procedural fairness.

238.

Fourth, even where judicial findings made in a previous case were not admissible in later proceedings, and even where the earlier decision was not res judicata between the parties, the principle of abuse of process would prevent collateral attack (by a defendant as well as a claimant) on an earlier decision of a court of competent jurisdiction if re-litigation of the same issues would be manifestly unfair or would bring the administration of justice into disrepute: Hunter v Chief Constable of the West Midlands Police [1982] AC 529; Secretary of State for Trade and Industry v Bairstow [2004] Ch 1. Fifth, the principle preventing collateral attack is not applicable where the party seeking to make that attack is able by reference to new evidence to show new evidence which entirely changes the aspect of the case: Hunter v Chief Constable of the West Midlands Police [1982] AC 529, 545, and Secretary of State for Trade and Industry v Bairstow [2004] Ch. 1, 14, applying Phosphate Sewage Co Ltd v Molleson (1879) 4 App. Cas. 801, 814.”

Although the judge does not say so in terms, it is clear from the penultimate sentence of paragraph 237 of his judgment that his second conclusion was that Hollington v. Hewthorn remained good law despite the criticisms of it in later authorities; and that the findings of the SDT and of the Divisional Court were inadmissible in evidence in the instant case.

There can be no issue as to the correctness of the judge’s third conclusion. However, for reasons which will become apparent later in this judgment it is appropriate to stress the terms of the proviso, viz:

“provided that the facts are properly proved in accordance with procedural fairness”.

The judge’s fourth and fifth conclusions (abuse of process) follow the decision of this court in Bairstow, to which further reference will be made later in this judgment.

In the remainder of his judgment (paragraphs 239 to 257) the judge applied the law as he had found it to the facts of the instant case. It is, I think, necessary to quote this part of the judgment in full. It reads as follows:

“239.

In the present case I am satisfied that all three conditions are satisfied. First, it would be unfair to require Mr Conlon and Mr Harris to prove dishonesty in numerous transactions to which they were not parties and in relation to which the only contemporary evidence which they have is contained in the material annexed to the Law Society’s complaint. Second, and connected with the first point, it would bring the administration of justice into disrepute if, after a hearing before the SDT lasting several weeks, and a full appeal before the Divisional Court, Mr Simms could, in the absence of substantial fresh evidence, challenge those findings.

240.

Nor would it be unfair to Mr Simms. Mr Simms has known since these proceedings were commenced that the claimants were relying on the findings of the SDT and the Divisional Court and all he has done is to deny their admissibility. Mr Simms did not seek to put in any fresh material in relation to any of the allegations of the SDT/Divisional Court before the court in these proceedings, and he accepted in cross-examination that all the submissions and materials he wished to deploy before the SDT and the Divisional Court were deployed, save for evidence that was not called by him for reasons that were not fully explained, and he accepted that he had no new material that would satisfy the Ladd v Marshall test to put before the Divisional Court and that he had made no such application to the Divisional Court.

241.

If I were wrong in that conclusion I do not think it would have been right for me to go on to decide whether Mr Simms had been dishonest on the basis of the few examples from the Law Society complaint files which were put to him in cross-examination without prior warning. But I do consider that in any event I can take account of his answers to questions on those documents which were the subject of discussion and debate between the partners in 1999. His answers throw light both on his credibility in general, and on whether his non-disclosure was fraudulent. The documents relevant for these purposes are the documents relating to Elite, Trinity Union and Scroda.

242.

To the limited extent that this decision turns on oral evidence, I will indicate my impressions of the witnesses. Mr Conlon seemed to be an honest, if somewhat weak, man, who was plainly overpowered by the personality of Mr Simms. I consider that his evidence was honest and satisfactory, except that hindsight coloured some of his answers. Mr Harris was an entirely satisfactory witness, and I accept his evidence that he knew nothing of the potential problems with the Law Society when he joined the partnership, and would not have joined if he had known the true nature of Mr Simms’ practice.

243.

Mr Simms is a highly intelligent and articulate man, with a very powerful personality. In the course of the meeting on August 5, 1999 between Mr Vincent and Mr Brown, Mr Brown asked Mr Vincent “If [Mr Simms] always got his way” and Mr Vincent minuted “I told him the truth”. It is not difficult to guess what the answer was. Mr Simms was a dominant figure in the partnership, and the partners obviously did not stand up to him enough. In the end only Mr Conlon paid a price for it.

244.

The claims falls under two broad heads. The first is the Elite/Charlton representations, and the second is the non-disclosure. The reply pleads express assurances of honesty, and I could have given permission for them to be pleaded as separate claims. But if made out they would in any event go the honesty of the non-disclosure. I have set out above the correspondence and other documents in some detail, and I will not repeat their contents in this section.

245.

I am satisfied that Elite was not a substantial entity, and was an instrument of fraud. Mr Simms made the representation about Elite which Mr Conlon alleges, in substance that it was a substantial entity which would generate substantial fees. The occasion was when Mr Conlon expressed concern about a transfer from the firm’s client account for Elite and in the context of Mr Conlon’s conversation with Mr Foley, of the Bank of Ireland, about possible money laundering. The representation was confirmed or anticipated in Mr Simms’ note to the partners of about December 23, 1999, when he said “We have held funds of Elite Engineering Corporation Limited for over 18 months and they are people of repute dealing with substantial transactions … The client is an important source of new business for the future,” and he referred to Elite as a “valuable client” in his note to the partners a week or so later, when he said that they were regarded as first class customers of National Westminster Bank Plc, Barclays Bank, ABN Amro, Deutsche Bank, Merrill Lynch New York, and Goldman Sachs New York.

246.

The representation about Elite was untrue, and was made in December 1999 and repeated in December 1999 or early January 2000, which was before the partnership arrangements between Mr Simms and Mr Conlon were finalised, which was probably not before March 2000, when it became clear that there would be a new partnership rather than a continuation of Bower Cotton. As I have said, Mr Simms accepted in cross-examination that Elite was a £100 company registered in Gibraltar, that its accounts were not audited by a reputable firm of accountants, and that it did not have subsidiaries, and that he drafted letters on behalf of the two directors of Elite whom he had not met; and that no references were obtained from banks relating either to Elite or those standing behind Elite. The context of the Charlton representation was simply a discussion about potential fees in the arbitration which Mr Simms was conducting, and it probably took place in May 2000 after the partnership had commenced. Mr Simms probably gave Mr Conlon the impression that Charlton was substantial (which it was not), but I do not consider that there is any basis in the misrepresentation claim in relation to Charlton.

247.

But I accept Mr Simms’ case that in the statement made about Elite was not in the context of the future profitability of the firm, and that Mr Conlon was not, and could not have reasonably been, induced to enter into partnership by these representations. Mr Simms was the largest fee earner in the firm, and although Mr Conlon may have been worried by not continuing with those partners who did some of the work which Mr Simms introduced, I am satisfied on the evidence that he did not seek, nor was he given, any comfort in this respect by the representations about Elite.

248.

I am also satisfied that Mr Simms failed to make adequate disclosure to Mr Conlon, both as an existing and as a prospective partner, of material matters, namely his dishonesty. It is no answer that Mr Simms did not know that he would be found guilty, and be struck off, nor that Mr Conlon knew (in relation to a limited number of transactions) that the Law Society had concerns. Mr Simms knew, and Mr Conlon did not know, that Mr Simms was engaged in a large number of fraudulent schemes.

249.

I am also satisfied that the non-disclosure was not based on a bona fide belief in his innocence, but was fraudulent, and that because of that, Mr Simms gave numerous false assurances to his partners that the transactions in which he was involved were not fraudulent, and continued to do what he assured the Law Society the firm would not do. At the latest from the time when the Law Society first showed a interest in the transactions with which Mr Simms was involved, Mr Simms gave assurances to his partners (including Mr Conlon) that the clients and the transactions were bona fide. I accept Mr Conlon’s evidence Mr Simms represented that all transactions in which he was involved were bona fide and that he was honest.

250.

In response to the OSS report, in the letter of April 22, 1999 on behalf of the firm, Mr Simms said that the firm’s reputation for financial probity was undoubted, and it had never knowingly put any funds of clients at risk or misapplied them in any way. Since the introduction of the money laundering regulations, systems had been instituted to ensure that the firm was not used for money laundering activities. The firm was not involved in and did not permit any clients knowingly to be involved in any activity which was intended to cause money of any investor to be put into banking or other financial instruments which it believed did not exist or were fraudulent. Mr Simms ended the letter by saying:

“We have decided that the amount of time involved in acting for parties to schemes of the type described in the report is disproportionate to the reward and that we will not accept instructions in respect of the schemes involving the use of our client account for the proposed investment monies.”

251.

I accept Mr Conlon’s evidence that when he reported to Mr Simms in his note of December 23, 1999 on his conversation with Mr Foley of the Bank of Ireland, Mr Simms assured him that there was nothing untoward about the transactions he was involved in, particularly Elite.

252.

Mr Simms wrote a memorandum about Elite in anticipation of the partners’ meeting on January 4, 2000, when he said that he had checked that the Elite funds were “clean” when they were received 18 months before, that he knew a good deal about Elite and its principals, and that they were regarded as first class customers of National Westminster Bank Plc, Barclays Bank, ABN Amro, Deutsche Bank, Merrill Lynch New York, and Goldman Sachs New York.

253.

I have set out in detail above (paras. 82 et seq.) the events following the discovery by the partners of the Trinity Union transaction, and Mr Simms’ evidence in cross-examination. The minutes of the partners meeting of December 15, 1999 record assurances by Mr Simms that he had not allowed Trinity Union to nominate the firm’s client account, or to use the firm’s address. In his note to the partners sent on about December 23, 1999 he assured them of the bona fides of Trinity Union. I am satisfied that these assurances were false. Mr Simms’ attempts to explain the Trinity Union transaction as a genuine commercial transaction and his involvement in it was incomprehensible and wholly unbelievable. It is relevant for at least three purposes: first, Mr Simms’ evidence in the witness box on this incident satisfied me that he is a liar. Second, it shows that he was involved in dishonest transactions. Third, it shows that he gave false assurances to his partners about his honesty.

254.

Even though it was written after Mr Conlon had gone into partnership with Mr Simms, Mr Simms’ letter to Mr Jackson of NatWest in November 2000 confirms the type of assurance which he consistently gave over the period, when he said: “My firm has conducted its banking for clients and on its own behalf impeccably over the years … [W]e would have no desire to act for anyone dubious.”

255.

I also accept that during the period after the assurance was given to the Law Society, Mr Simms caused the firm to be in breach of the assurance by allowing (a) a payment of $1 million on December 22, 1989 from Elite to International Banque Holdings: (b) a receipt on January 28, 2000, of $989,987 which was credited to Elite: (c) a transfer on March 6, 2000 from Elite to Power Resources and then to MBH in the sum of $750,000; (d) payments through the client account in the name of Ace Laboratories from April to June 2000, as part of schemes involving an advance fee in respect of prospective finance; (e) arranging for the firm’s client account to be used for Trinity Union transactions in November/December 1999. I do not accept Mr Simms’ explanation that these were insignificant transactions or designed to comply with the assurance by getting rid of funds.

256.

The letter from Trinity Union had all the characteristics about which the Law Society was concerned. It envisaged (a) a payment of $10 million to generate funds of $100 million; (b) a profit of 150 per cent. In addition, it was written on letterhead with Bower Cotton’s address. It was copied to Mr Simms. It named Mr Simms as the person through whom the contract would be made. It named Bower Cotton’s account as the account where the escrow funds would be kept. It said that a letter of intent should be returned to Trinity Union at the Bower Cotton address for the attention of Mr Simms.

257

Accordingly I am satisfied that Mr Simms fraudulently failed to disclose his dishonesty to Mr Conlon (and indeed falsely represented that he was honest) and thereby induced Mr Conlon to enter into the May and September 2000 partnership agreements, and Mr Conlon is entitled to damages to be assessed. There is nothing in the suggestion that Mr Conlon has waived his rights. Mr Harris was told nothing about the Law Society investigation by either Mr Simms or Mr Conlon. It is surprising that Mr Conlon said nothing (and he should have), but at that stage he did not know the nature of the Law Society’s interest or the scale of the transactions. But Mr Simms fraudulently failed to disclose his dishonesty, and is liable also to Mr Harris for the consequences of Mr Harris having entered into the September 2000 partnership agreement.”

I make the following observations on the above passage.

The “three conditions” to which the judge refers in paragraph 239 are (1) that “it would be unfair to require Mr Conlon and Mr Harris to prove dishonesty in numerous transactions to which they were not parties and in relation to which the only contemporary evidence which they have is contained in the material annexed to the Law Society’s complaint”; (2) that “it would bring the administration of justice into disrepute if, after a hearing before the SDT lasting several weeks, and a full appeal to the Divisional Court, Mr Simms could, in the absence of substantial fresh evidence, challenge those findings”; and (3) that it would not be unfair to Mr Simms, who had not sought to adduce any evidence additional to that which was before the SDT and the Divisional Court, for him to be prevented from requiring Mr Conlon and Mr Harris to relitigate the very issues which were before the SDT and the Divisional Court.

These conditions are what I may call the “the Bairstow conditions”, in that they derive from paragraph 38 of the judgment of Sir Andrew Morritt V-C in Bairstow, where he concluded that it is an abuse of the process of the court:

“… to challenge the factual findings and conclusions of the judge or jury in the earlier action if (i) it would be manifestly unfair to a party to the later proceedings that the same issues should be relitigated or (ii) to permit such relitigation would bring the administration of justice into disrepute”.

The judge held the third condition (unfairness to Mr Simms) to be satisfied on the basis that Mr Simms had known since the commencement of the present action that Mr Conlon and Mr Simms were relying on the findings of the SDT and the Divisional Court, and yet he had not sought to adduce any additional evidence.

I turn next to the first sentence of paragraph 241 of his judgment. The meaning of the conditional clause with which the judge begins that sentence (“If I were wrong in that conclusion …”) may not be entirely clear, but I take it to mean “If I am wrong in my conclusion that the Bairstow conditions are satisfied in this case …”: in other words, “If I am wrong in my conclusion as to abuse of process …”. On that hypothesis (a) the findings of the SDT and of the Divisional Court are inadmissible as evidence of the facts found (Hollington v. Hewthorn), and (b) those facts are in issue in the present action (no abuse of process on the part of Mr Simms). In the remainder of the sentence the judge makes it clear that in those circumstances he would not think it right to find Mr Simms dishonest “on the basis of the few examples from the Law Society complaint files which were put to him in cross-examination without prior warning” (emphasis added). This is entirely consistent with the anxieties expressed by the judge when he intervened in Mr Engelman’s cross-examination of Mr Simms (see paragraphs 69, 70, 72 and 74 above).

However, in the second sentence of paragraph 241 the judge considers that he can take into account Mr Simms answers under cross-examination relating to “those few examples” as relevant (a) to Mr Engelman’s attack on Mr Simms’ general credibility and (b) to the issue “whether his non-disclosure was fraudulent”.

Whilst I entirely accept that the judge was entitled to have regard to Mr Simms answers under cross-examination in assessing his general credibility, I am unable to divorce the issue as to whether Mr Simms’ non-disclosure was “fraudulent” (i.e. dishonest) from the prior issue as to whether Mr Simms was guilty of past dishonesty in the respects found by the SDT and by the Divisional Court. If he was indeed dishonest in those respects, then it must follow that he was also dishonest in not making full disclosure of his past dishonesty to Mr Conlon and Mr Harris; but the latter dishonesty seems to me to add little or nothing to the former dishonesty. Indeed, I find it difficult to conceive of a case where, given a duty of disclosure of past dishonesty, non-disclosure of such past dishonesty would not itself be dishonest. Whereas if Mr Simms was not dishonest in the respects found by the SDT and by the Divisional Court there was no relevant non-disclosure.

At the very least, it seems to me that the issue as to “whether [Mr Simms’] non-disclosure was fraudulent” is not a self-contained issue since it inevitably overlaps to a considerable extent with the issue as to whether Mr Simms was guilty of past dishonesty in the respects found by the SDT and by the Divisional Court. To put it another way, past dishonesty is the premise on which the case of non-disclosure is based.

Indeed, the close interrelation of the two issues is apparent from the findings which the judge makes when addressing the issue as to whether the non-disclosure was fraudulent as if it were a self-contained issue. The following are examples of this:

I return below to this aspect of the judgment.

By his grounds of appeal and his written skeleton argument, Mr Simms contends as follows:

In his helpful and courteous oral submissions Mr Simms elaborated on the above contentions. In particular, in advancing contention 7 he referred us to documents and to passages in the transcript of Mr Conlon’s evidence before the judge which suggest that Mr Conlon, contrary to his assertion that he did not read the Law Society’s evidence until May 2003, in fact read that evidence in early May 2002 and in any event before he entered into the 2002 agreement on 15 May 2002.

As to contention 1 above, Mr Engelman points out that on the issue of admissibility the judge reached the same conclusion as David Richards J: viz. that Hollington v. Hewthorn applies, and that the findings of the SDT and of the Divisional Court are inadmissible in evidence in the present action. As to abuse of process, Mr Engelman submits that in paragraph 236 of his judgment the judge was right to describe David Richards J’s observations (in paragraph 39 of David Richards J’s judgment) as obiter and tentatively expressed.

As to the contention (contention 2 above) that the judge was wrong to allow Mr Engelman to cross-examine Mr Simms by reference to selected aspects of the findings of the SDT and of the Divisional Court (i.e. “cherry-picking”: see paragraph 73 above), Mr Engelman submits that (as the judge held in paragraph 241 of his judgment) he was entitled so to cross-examine in attacking Mr Simms’ credit, and in the context of the issue as to whether the alleged non-disclosure was fraudulent.

As to contention 3 (abuse of process), he supports the judge’s analysis of the authorities, in particular Bairstow, and submits that the judge was right to find the Bairstow conditions satisfied in the instant case.

As to contention 4, he relies primarily on Hunter as authority for the proposition that a party in the position of Mr Simms will be guilty of abusing the process unless he adduces additional evidence which changes the complexion of the case (something which Mr Simms has not sought to do and cannot do).

As to contention 5, he submits that the judge’s conclusion was right both in principle and on authority.

As to contention 6, he again supports the judge’s reasoning and conclusion.

As to contention 7, he submits that the judge was right to conclude (in paragraph 248 of the judgment) that although Mr Conlon and Mr Harris were aware of the allegations made by the Law Society, and of Mr Simms’ denial of those allegations, they were, crucially, unaware of the fact that he “was engaged in a large number of fraudulent schemes”.

As to contention 8, he supports the judge’s analysis and conclusion.

As to contention 9, he accepts that the interlocutory orders made in February and September 2005 (see paragraph 20 above) did not split the trial of the issues of misrepresentation and non-disclosure as between liability and damages, but he referred us to passages in the cross-examination of Mr Harris where he gave evidence to the effect that the suspension of Mr Simms from practice placed him and Mr Conlon in a difficult financial position in that they were left having to fund the continuing overheads of the firm without any contribution from fees earned by Mr Simms. He submits that in the light of that evidence the judge was fully entitled to make an order for damages to be assessed. In any event, he relies on the pleaded claim of breach of the contractual obligation of good faith as entitling Mr Conlon and Mr Harris to an order for damages to be assessed without the need at this stage to prove damage.

As to contention 10, he submits that there are no grounds to justify the Court of Appeal in interfering with the judge’s findings of fact.

A number of issues can be disposed of relatively shortly. I turn to them first.

Given that both David Richards J and Lawrence Collins J concluded that Hollington v. Hewthorn is still good law, and that in consequence the findings of the SDT and of the Divisional Court were inadmissible in evidence, the only issue is whether David Richards J’s observations about abuse of process are res judicata as between the parties. In my judgment they plainly are not, for two reasons. In the first place, it is clear from paragraph 39 of his judgment that David Richards J was not expressing a final conclusion on the prospects of Mr Conlon and Mr Harris establishing that Mr Simms (the claimant in that action) was abusing the process. He went no further than saying: “… to my mind it is far from certain that this particular argument would succeed in the present case”. Secondly, and in any event, a final conclusion on abuse of process (had he been unwise enough to have expressed such a conclusion) would not have been a conclusion which was necessary for his decision to refuse Mr Engelman’s application to reopen the argument and hence would not have been res judicata as between the parties.

The reference to damages in the declaration claimed (see paragraph 15 above), coupled with the absence of any separate claim for damages in the prayer for relief, may well have led to a certain amount of confusion as to the precise nature of the relief which the judge was being asked to grant. On one reading, the declaration claimed merely raises a question of law, as opposed to raising the issue of liability.

At all events, the relief which the judge granted under paragraph 1 of his order (see paragraph 25 above) plainly includes, in addition to the declaration, an order for damages to be assessed. This is clear from the fact that paragraph 1 includes a stay of the assessment pending the present appeal.

In my judgment, despite the absence of the proposed expert report, there was, in the evidence of Mr Harris in cross-examination, enough evidence before the judge to justify his making the order he did, without the need for Mr Engelman to rely on the claim for breach of the implied contractual obligation of good faith.

This is relevant to the question whether Mr Conlon and Mr Simms were induced to enter into the three agreements in question by Mr Simms’ non-disclosure of his past dishonest activities (the claim based on the positive representations in relation to Elite and Charlton having failed).

In my judgment, the judge’s reasoning in paragraph 248 of his judgment (see paragraph 97 above) cannot be faulted. Even if, in truth, Mr Conlon had read the Law Society’s evidence in opposition to the parties’ application to set aside the intervention before entering into the 2002 agreement the position would in my judgment have been no different. Suspicion is not the same as knowledge.

In my judgment there can be no doubt that the principle of caveat emptor does not apply to the making of a partnership agreement, and that in negotiating such an agreement a party owes a duty to the other negotiating parties to disclose all material facts of which he has knowledge and of which the other negotiating parties may not be aware. This was made clear as long ago as 1932 in the passage from the judgment of Lord Atkin in Bell v. Lever Brothers Ltd [1932] AC 161 at 227 quoted by the judge in paragraph 198 of his judgment (see paragraph 87 above). In that passage, Lord Atkin said:

“Ordinarily the failure to disclose a material fact which might influence the mind of a prudent contractor does not give the right to avoid the contract. The principle of caveat emptor applies outside contracts of sale. There are certain contracts expressed by law to be contracts of the utmost good faith, where material facts must be disclosed; if not, the contract is voidable. Apart from special fiduciary relationships, contracts for partnership and contracts of insurance are the leading instances. In such cases the duty does not arise out of contract; the duty of a person proposing an insurance arises before a contract is made, so of an intending purchaser.” (Emphasis supplied)

Accordingly I respectfully agree with the judge’s conclusion (in paragraph 199 of his judgment) that prospective partners have a duty to disclose material matters.

Absent fraud, breach of the duty of disclosure will, at least as a general rule, give rise merely to a right of rescission (see, for example, per Lord Atkin in the passage quoted in the previous paragraph). The judge dealt with this in paragraph 201 of his judgment (see paragraph 87 above), and I respectfully agree with and adopt what he said.

However, the judge went on to say (in paragraph 202 of his judgment) that where the breach of the duty of disclosure is fraudulent, a party to whom the duty is owed who suffers loss by reason of the breach may recover damages for that loss in the tort of deceit. Once again, I respectfully agree with him. Non-disclosure where there is a duty to disclose is tantamount to an implied representation that there is nothing relevant to disclose.

As pointed out earlier, the oddity in the instant case is that the subject-matter of Mr Simms’ fraudulent concealment is the fact of his own dishonest conduct, but that does not affect the principle.

Addressing this issue in his judgment in Bairstow, Sir Andrew Morritt V-C referred to passages from the speeches of Lord Hope of Craighead and Lord Hutton in Three Rivers DC v. Bank of England (No 3) [2001] 2 All ER 513 in which their Lordships accepted the continued applicability of Hollington v. Hewthorn. After further reference to authority, Sir Andrew Morritt V-C said this (in paragraph 26 of his judgment):

“Even if [Hollington v. Hewthorn] could originally have been confined to cases in which the earlier decision was that of a court exercising a criminal jurisdiction, it has stood for over 60 years as establishing a much broader proposition.”

Sir Andrew Morritt V-C continued (in paragraph 27 of his judgment):

“Accordingly I would accept the submission of counsel for Mr Bairstow that the factual findings and conclusions of Nelson J in the earlier proceedings are not admissible as evidence of the facts so found in these proceedings.”

I respectfully agree with the conclusion of Sir Andrew Morritt V-C as to the continuing applicability of Hollington v. Hewthorn: a conclusion with which the other members of this court agreed and which is in any event binding on us.

It follows that I also respectfully agree with the judge’s conclusion (to be implied from the penultimate sentence of paragraph 237 of his judgment: see paragraph 93 above) that the findings of the SDT and of the Divisional Court are inadmissible in evidence in the present action.

That leaves two further issues to be considered:

The abuse of process alleged against Mr Simms in the instant case falls into the same general category as the abuse of process which was found to exist in Hunter and which was alleged (unsuccessfully) in Bairstow: that is to say, a collateral attack on a previous final decision by a competent court (in the instant case the decision of the Divisional Court, upholding the findings of the SDT).

Lord Diplock described the species of abuse of process which was found to exist in Hunter in the following terms (at ibid. p.541B-C):

“The abuse of process which the instant case exemplifies is the initiation of proceedings in a court of justice for the purpose of mounting a collateral attack upon a final decision against the intending plaintiff which has been made by another court of competent jurisdiction in previous proceedings in which the intending plaintiff had a full opportunity of contesting the decision in the court by which it was made.”

As I have already pointed out, we are bound by the decision of this court in Bairstow – a decision which, in so far as it relates to abuse of process, was in turn based upon the decision of the House of Lords in Hunter. Accordingly, the starting-point on this aspect of the case must be Sir Andrew Morritt V-C’s proposition (d) in paragraph 38 of his judgment in Bairstow. I quote that proposition again, in full:

“If the parties to the later civil proceedings were not parties to or privies of those who were parties to the earlier proceedings then it will only be an abuse of the process of the court to challenge the factual findings and conclusions of the judge or jury in the earlier action if (i) it would be manifestly unfair to a party to the later proceedings that the same issues should be relitigated or (ii) to permit such relitigation would bring the administration of justice into disrepute.”

Sir Andrew Morritt V-C’s formulation of that proposition plainly derives from Lord Diplock’s general description of abuse of the process of the court (see Hunter p.536C-D) as:

“… misuse of its procedure in a way which, although not inconsistent with the literal interpretation of its procedural rules, would nevertheless be manifestly unfair to a party to the litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people.”

However, as Lord Diplock also said in Hunter (at p.6536C), the circumstances in which abuse of process can arise are very varied – indeed, he described the facts of Hunter as unique. So in the nature of things there can be no catch-all formula for identifying an abuse of process, since each case will depend on its own facts.

In Hunter, for example, it was the plantiffs who were abusing the process of the court. Hence Lord Diplock’s reference to “the intending plaintiff” in the passage from his speech in Hunter quoted in paragraph 138 above. Lord Diplock had no difficulty in finding (at ibid. p.541F-G) that the plaintiffs’ “dominant purpose” in bringing the actions was not to recover damages, but that the actions had been brought:

“… in an endeavour to establish, long after the event when memories and witnesses other than [the claimants] themselves may be difficult to trace, that the confessions on the evidence of which they were convicted were induced by police violence, with a view to putting pressure on the Home Secretary to release them from the life sentences that they are otherwise likely to serve for many years to come”.

In Bairstow, on the other hand, the party said to be abusing the process of the court was the defendant in disqualification proceedings, but he had been the unsuccessful claimant in the previous action in which the relevant findings had been made.

It is also to be noted in this connection that in the Reichel litigation (Reichel v. Bishop of Oxford (1889) 14 App Cas 259 and Reichel v. Magrath (1889) 14 App Cas 665 – the two appeals being heard by the House of Lords on the same day), which was cited by Lord Diplock in Hunter (at p.542A-D) and by Sir Andrew Morritt V-C in Bairstow (at paragraph 28) as an example of a collateral attack on an earlier decision, the defendant in the second action had been the claimant in the first.

In the instant case, by contrast with the Reichel litigation, with Hunter and with Bairstow, Mr Simms is the defendant in the present action, and he was also the defendant before the SDT (albeit he was the appellant before the Divisional Court).

In such circumstances I consider that there is force in Mr Simms’ submission that in denying the allegations of dishonesty made against him in the present action he is doing no more than continuing to protest his innocence of the charges brought against him by the Law Society, albeit he is doing so in the face of the adverse findings of the SDT and the Divisional Court: to use his own words, he has initiated nothing. At the very least, as it seems to me, that is a factor which should be brought into account in considering whether the Bairstow conditions are satisfied, on the basis that in general the court should be slower in preventing a party from continuing to deny serious charges of which another court has previously found him guilty than in preventing such a party from initiating proceedings for the purpose of relitigating the question whether he is guilty of those charges.

It should also be borne mind, when determining whether a party (be he claimant or defendant) is abusing the process of the court by mounting a collateral attack on a previous court decision, that the practical effect of finding him guilty of such an abuse is to prevent him denying the allegations against him save in circumstances where he is in a position to adduce additional evidence which could not with reasonable diligence have been adduced in the earlier proceedings and which, if admitted, would have “changed the whole aspect of the case” (see Phosphate Sewage Co Ltd v. Molleson (1879) 4 App Cas 801, 814 per Earl Cairns LC and Hunter at p.545B-F per Lord Diplock). To that extent the party guilty of abuse of process will, as I see it, be placed in a worse position in regard to the adducing of evidence than he would have been in had the previous decision been admissible as prima facie evidence (for it would be no more than that) of the facts found.

With those introductory observations, I turn to the question whether the Bairstow conditions are satisfied in the instant case.

As to the first of those conditions (unfairness to Mr Conlon and Mr Harris if the issues as to Mr Simms’ dishonesty had to be relitigated), I consider that that condition is not satisfied in the instant case. As claimants in the action, Mr Conlon and Mr Harris have to establish, essentially, that had they known that Mr Simms had acted dishonestly in the course of his practice as a solicitor when they entered into the relevant agreements with him they would not have entered into those agreements; and that in consequence they have suffered financial loss. I can see no good reason why, in attempting to do so, they could not have pleaded and proved specific examples of Mr Simms’ dishonest conduct, rather than seeking to import the entirety of the SDT’s findings into their pleading as, in effect, determinative of the issue of dishonesty. Indeed, it may well be that a single example of Mr Simms’ dishonesty, if serious enough, would (if proved) be sufficient to support their claim. As it was, Mr Engelman was allowed to cross-examine Mr Simms on selected aspects of the comprehensive findings of the SDT in the absence of any pleading or other form of advance notice of the particular matters to be relied on; and the judge proceeded to make findings of fact on such matters adverse to Mr Simms.

By contrast, Mr Simms, as defendant in the action, is doing no more than denying the allegations of dishonesty. I find it hard to see that how, simply by so doing, he is “initiating” anything, in any relevant sense; or, for that matter, how he can be said to be thereby “changing the form of the proceedings” (see Reichel v. Magrath at p.668 per Lord Halsbury, quoted by Lord Diplock in Hunter at p.542C-D). Were the issues before the SDT and the issues in the present action identical, the position might be different, but they are not. The basic issue before the SDT was whether Mr Simms’ dishonest conduct, taken as a whole, justified his being struck off. The basic issue in the present action is whether Mr Conlon and Mr Harris were deceived by Mr Simms into entering into agreements with him.

In my judgment, however, the critical factor in the context of the first of the Bairstow conditions is that Mr Conlon and Mr Harris could, without (so far as I can see) any real difficulty, have selected particular matters from the SDT findings and pleaded and proved them: it was not necessary for them, in order to make good their claim, to seek to import the entirety of those findings. In my judgment the selectivity so skilfully employed by Mr Engelman in his cross-examination of Mr Simms could and should have been reflected in the Amended Particulars of Claim.

As to the second Bairstow condition (to permit such relitigation would bring the administration of justice into disrepute) I consider that that condition also is not satisfied in the instant case, for essentially the same reasons. In my judgment right-thinking people (to use Lord Diplock’s expression in Hunter) would consider it unfair to Mr Simms that, faced with a pleading which sought to import the SDT findings en bloc, he should be prevented from requiring Mr Conlon and Mr Harris to prove their case.

Accordingly, I respectfully disagree with the judge’s conclusion (in paragraphs 239 and 240 of his judgment) that in seeking to deny the findings of the SDT in the present action Mr Simms is abusing the process of the court. In my judgment a case of abuse of process is not made out.

I turn, then, to the findings of fact made by the judge in paragraphs 245 to 257 of his judgment.

As mentioned earlier, having reached his conclusion that Mr Simms was abusing the process of the court the judge went on to make findings of fact on the assumption that (contrary to that conclusion) no abuse of process had occurred. This part of his judgment is introduced by paragraph 241, which I have already quoted (see paragraph 97 above).

The difficulty I have with paragraph 241 is that, having concluded that “it would not have been right for [him] to go on to decide whether Mr Simms had been dishonest on the basis of the few examples from the Law Society complaint files which were put to him in cross-examination without prior warning” – a conclusion which reflected the concerns which the judge expressed in the course of the cross-examination – the judge, as I read his judgment, goes on to do precisely that. True, he expresses himself as doing so in the context of (1) Mr Engelman’s general attack on Mr Simms’ credit, and (2) an issue as to “whether [Mr Simms’] non-disclosure was fraudulent”. However, in my judgment neither context justifies the findings of dishonesty which he made.

As to the attack on Mr Simms’ credit, a finding that a witness is unreliable does not in itself justify a finding of fact which is directly contrary to his evidence in the absence of other evidence before the court sufficient to support the finding. So the fact that Mr Simms’ credit was successfully attacked cannot in itself justify the findings which the judge made.

As to the issue “whether his non-disclosure was fraudulent”, for reasons given earlier (see paragraphs 104 to 106 above) that is not a self-contained issue: it cannot be divorced from the prior issue as to whether Mr Simms’ earlier conduct was dishonest. Hence it was inevitable that in addressing the former issue the judge should also address the latter, and make the findings relevant to it.

So the question remains whether the judge was justified in making findings of dishonesty in relation to Mr Simms’ previous conduct.

As to that, the judge’s conclusion in the first sentence of paragraph 241 is, in my judgment, entirely correct. As he said himself in the course of Mr Engelman’s cross-examination of Mr Simms, the details of the various matters on which Mr Simms was being questioned were not before him. In my judgment, given that the SDT findings and the judgment of the Divisional Court were inadmissible as evidence of the facts found, there was not sufficient evidence before the judge to justify his findings of dishonesty in relation to Mr Simms’ past conduct.

Moreover, the course which the trial took was in my judgment procedurally unfair to Mr Simms. I accept his submission that, faced with the most serious allegations of dishonesty, he was subjected to cross-examination by ambush in that (as the judge acknowledges in the first sentence of paragraph 241) he was asked questions about specific aspects of the SDT findings without any prior warning as to the matters which were to be raised.

For those reasons, I conclude that the judge’s findings of dishonesty cannot stand.

I would allow the appeal.

Subject to hearing any further submissions as to the relief to be granted, I would be minded to set aside the judge’s order and to direct a retrial of the issues as to non-disclosure in accordance with this judgment.

I agree that the appeal should be allowed for the reasons given by Jonathan Parker L.J., but I wish to add a few words of my own on the question of abuse of process.

It has long been recognised that the court has an inherent jurisdiction to control its proceedings in order to prevent abuse. In doing so it may act on its own initiative, but it more commonly acts in response to an application by one of the parties to the proceedings who alleges that another party is seeking to invoke the process in a manner that amounts to an abuse. If the court is satisfied that that is the case, it will take appropriate steps prevent him from doing so. That may involve the striking out of the whole or part of the claim or the defence, as the case may be, or taking such other steps as may be necessary in the circumstances. However, since the consequences of any action to prevent abuse are likely to serious, it is desirable that any alleged abuse should be identified as soon as possible and the issue raised, where convenient, in the statements of case. If that had been done in the present case, it is likely that the true nature of the issue would have become clear much earlier than it did and could have been considered in advance of the trial.

As Jonathan Parker L.J. has observed, abuse of process may take many forms and I therefore agree that it would be unwise to attempt to formulate any all-embracing principle by which to identify it. It extends from a straightforward attempt to mount a collateral challenge to a previous decision of the kind considered in Hunter v Chief Constable of the West Midlands Police [1982] AC 529, to what has become known as the rule in Henderson v Henderson: see Johnson v Gore Wood & Co [2002] 2 A.C. 1. The passage in paragraph 38 of the judgment of Sir Andrew Morritt V.-C. in Secretary for Trade and Industry v Bairstow [2003] EWCA Civ 321; [2004] Ch. 1 on which the judge relied in the present case is no doubt an accurate and helpful summary of the principles to be derived from the earlier authorities concerning one particular form of potential abuse of process, namely challenging findings made in previous litigation, but even in that context was not, I think, intended to avoid the need to resort to those authorities in order to identify the kind of circumstances in which it will be manifestly unfair to relitigate issues that were decided on a previous occasion.

In my view it is necessary to be particularly cautious before holding that it would be an abuse of process for a party to challenge findings of fact made in previous proceedings between himself an a person who is not a party to the current litigation. Normally such findings are binding only between the immediate parties to the proceedings and their privies; indeed, in accordance with what has become known as the rule in Hollington v Hewthorn (Hollington v F. Hewthorn & Co Ltd [1943] 1 KB 587) the earlier decision is not admissible as evidence of the facts on which it is based. Whatever may be said about the decision in that case, it has never been suggested that findings of fact made in previous proceedings could be more than evidence of such facts in later proceedings involving different parties. It follows, therefore, that some additional factor must be present to justify preventing a party to the current proceedings from challenging findings of fact made in the earlier proceedings.

The passage in the judgment of the Vice-Chancellor in Secretary for Trade and Industry v Bairstow to which I referred earlier might be taken to suggest that the answer is supplied by applying a broad test of unfairness, but I question whether that is so. If the Law Society had not taken disciplinary proceedings against Mr. Simms in the present case, the claimants would have had to plead and prove their case against him in the ordinary way and it could not have been suggested that it would be unfair to require them to do so. One is therefore bound to ask what makes it unfair to require them to do so simply because another tribunal has made certain findings of fact in proceedings to which they were not parties.

In some of the cases dealing with abuse of process one can see that, although the earlier proceedings were between different parties, the parties to the current proceedings were both so closely involved in them that they should be required to accept the outcome for better or worse. In North West Water Ltd v Binnie & Partners [1990] 3 All ER 547 (one of the cases considered in Secretary for Trade and Industry v Bairstow) the defendants were consulting engineers engaged to design and supervise the construction of an underground tunnel link and valve house. As a result of an accident in which visitors to the project were killed and injured proceedings were brought against the water authority and the engineers. The court apportioned liability between the different defendants, but no contributions notices were served and formally, therefore, there were no proceedings between them capable of giving rise to an issue estoppel. Nonetheless, the court held that since the issues relating to the negligence of the engineers had been fully considered in proceedings to which both they and the water authority were defendants, it would be an abuse of process for the engineers in subsequent proceedings brought against them by the water authority to dispute the finding of negligence made against them in those former proceedings.

In Ashmore v British Coal Corporation [1990] 2 Q.B. 338 the claimant was one of a large number of female employees who complained to the industrial tribunal that she was paid less by the defendant than her male counterparts. Sample cases were selected for trial and the others stayed pending a decision. Although she had the opportunity to do so, the claimant did not seek to put her case forward as one of the test cases, so it was stayed. After the test cases had been decided in a manner adverse to the claimant she sought to have the stay lifted to enable her to continue her claim. This court held that, although the decision in the test cases was not binding upon her as a matter of law, it would be an abuse of process for her to relitigate the same issues since that would defeat the whole purpose of having test claims.

Hunter v Chief Constable of the West Midlands Police raised different quite considerations inasmuch as the claimants commenced civil proceedings for the very purpose of mounting a collateral attack on the decision reached in the course of their criminal trial. In those circumstances it is, perhaps, hardly surprising that the court regarded their action as an abuse of the process. The importance of maintaining the principle that it will normally be an abuse of process to make a collateral attack by civil proceedings on a decision reached in the course of a criminal trial has been re-emphasised in Arthur J. S. Hall & Co v Simons [2002] 1 A.C. 615. In this context the principles governing abuse of process rest largely on the need to preserve the integrity of the public administration of justice in the area of criminal law.

The Law Society is a professional body which exercises a disciplinary function in relation to its members. That function is undoubtedly important and many of its rules and procedures reflect those of the criminal courts, in particular in relation to the burden and standard of proof, but it does not form part of the public system for the administration of justice, despite the fact that an appeal lies to the Divisional Court. Mr. Conlon and Mr. Harris were not parties to the disciplinary proceedings against Mr. Simms; nor did they have any direct interest in them. It is difficult, therefore, to see why as against Mr. Conlon and Mr. Harris Mr. Simms should be bound by the tribunal’s findings and why it should be an abuse of process for him to relitigate the issues in this action. A perception of unfairness arises mainly from the fact that the issues in this action overlap to a significant degree with those in the disciplinary proceedings and that it would be expensive and time-consuming for Mr. Conlon and Mr. Harris to obtain the evidence needed to prove their case, but if that were sufficient to render it an abuse of process for Mr. Simms to put in issue the allegations against him the result would be that decisions reached in previous proceedings between different parties by tribunals of all kinds would effectively become binding on those parties for all purposes.

As Jonathan Parker L.J. has pointed out, this is not a case in which Mr. Simms invoked the process of the court in order to challenge the findings made by the Solicitors’ Disciplinary Tribunal. As the defendant to the proceedings he simply put in issue the claimants’ allegations and thereby required them to prove their case by any admissible evidence available to them. That there may be circumstances in which it is an abuse of the process for a party to seek to put in issue by his defence a matter determined against him in previous proceedings is demonstrated by cases such as Reichel v Magrath (1889) 14 App. Cas. 665 and North West Water Ltd v Binnie & Partners, but the facts of those cases were unusual and not at all comparable to those of the present case. In these circumstances I am unable to accept that it would be unfair to require Mr. Conlon and Mr. Harris to prove their case in the usual way or that to do so would bring the administration if justice into disrepute. It follows that I am unable to accept that the course taken by Mr. Simms was an abuse of process.

I have had the advantage of reading in draft the judgments of Jonathan Parker and Moore-Bick LJJ and I agree the appeal should be allowed for the reasons given by them.

I cannot refrain from commenting on one aspect of this case. In so far as the claim for damages for misrepresentation is concerned, the pleaded allegations in paragraph 1.4 of the claim relate to the Elite Corporation and the Charlton Corporation Plc. Among the pleaded particulars of falsity set out in paragraph 8A (iv) was the allegation that “both corporations were instruments of fraud as found by the Solicitors’ Disciplinary Tribunal”. The case on the duty of disclosure was that the relevant facts and matters which Mr Simms failed to disclose were those which were set out in the conclusions of by the Disciplinary Tribunal. The claimants’ case was that they were entitled to rely on the findings of that Tribunal. There is no allegation whatever anywhere as far as I can see raising an abuse of process and I agree with Moore-Bick L.J. that serious allegations of that kind should be fully pleaded.

What I find to be odd about the way the case developed is that if the claimants’ pleaded case had succeeded, the findings of the Tribunal would have been admitted in evidence but the consequence of that would have been that the evidential burden then shifted onto Mr Simms to rebut those findings. I accept, of course, that he chose not to put in any evidence in rebuttal and took his stand on the admissibility issue. But at least the opportunity was open to him. In fact Mr Simms won the admissibility argument because Hollington v Hewthorn was applied but he lost the abuse of process argument because Bairstow applied. Hollington v Hewthorn has its critics but is binding on us. Bairstow is the way to circumvent Hollington v Hewthorn and that, too, is binding on us. The result is this: once the abuse of process is established, then, as I understand it, he is effectively estopped from asserting his innocence. In other words he is now in a much worse position than he would have been if the claimants’ primary case against him had succeeded.

That seems to me to be a matter to be borne in mind when deciding where the balance of fairness lies. He was defending himself in the Solicitors Disciplinary Tribunal against the charges of dishonesty brought against him there. He exercised a right of appeal to the Divisional Court but it was still part of the same process of defending himself from the allegations made against him in the context in which they were made. He continues to assert his innocence. When deciding whether it is an abuse of the process for him to continue to demand that the case brought by others in a different context be proved, it seems to me that the essential question is whether it is more unfair on the claimants to require them to prove very serious charges of fraud (or to pick the one case of dishonesty which may be most easily and cheaply proved) than it is unfair on the defendant to prevent him altogether from defending himself in these new and unconnected proceedings. I am uncomfortable with the result might be that a man facing serious charges of fraud is not able to defend himself again, and I conclude that he suffers a greater unfairness than do the claimants. For this reason in addition to those expressed by my Lords, it would be wrong to hold that the maintenance of the defence is an abuse of process.

Partnership disputes are invariably tinged with bitterness and recrimination. It is a class of litigation so frequently fought to the death. If these parties had any sense at all, they would take time to lick their wounds and then invite the help of a mediator to bring this sorry litigation to an end.