Haydon-Baillie & Ors v Bank Julius Baer & Co Ltd & Ors

Before I describe the detail of the claims made in these proceedings and my conclusions in relation to them, I will set out the relevant facts in greater detail. During the seven day hearing of these applications, the Defendants took me in detail through the facts as shown by the many documents. I have repeatedly reminded myself, both during the hearing and while I have been considering my judgment, that it is not my function to conduct a mini trial where the facts are in dispute. However, the facts which are recited below are either not in dispute or, where facts have been disputed, I am able to make findings which satisfy the tests identified above, that is, where there is no real substance in a contrary assertion of fact, or where that contrary assertion of fact is clearly contradicted by the documents.

The Defendants opened the facts to me in detail because the Claimants’ pleaded allegations make a large number of allegations of fact which, the Defendants submitted, were demonstrably not true. On Day 5 of the hearing, Professor Haydon-Baillie withdrew substantial parts of the Claimants’ pleaded case. I have considered whether in those circumstances, I could go straight to the remaining allegations which the Claimants make and deal only with the facts relating to those allegations. I have concluded that I should set out the facts in greater detail than that. First of all, the Claimants’ allegations involved serious attacks on the conduct of the Defendants and it should be made clear where there was no substance in such allegations. Secondly, if I confined myself to the remaining allegations made by the Claimants, it might turn out that I would deal with them in a way which would seem somewhat summary in the context of a seven day hearing and I would prefer that the parties could see that the facts discussed at the hearing had been considered in detail. Thirdly, if this judgment ever does have to be considered by another court, then it might conceivably be more helpful if the facts which I state below, and which cannot be seriously disputed, were set out.

I can take a description of the Property from a report prepared by Strutt & Parker in November 1998, which was in these terms:

“Listed Grade I as being of architectural and historic importance, Wentworth Woodhouse comprises two 18^th century houses constructed on the site of an original house built for Sir Thomas Wentworth in around 1630. The principal façade is described by Pevsner as “exceedingly ambitious – with a 600-ft (frontage) the longest front of any English country house”, and was designed by Henry Flitcroft. Internally the principal house includes some of the finest reception rooms in the country such as the Marble Room, Painted Drawing Room, Pillared Hall, Statuary Room, State Dining Room, Whistlejacket Room and Van Dyck Room. Many of the artefacts within the house are designed by some of the country’s greatest known specialists such as Robert Adam and John Gibson. The stables were designed in 1768 by John Carr on a scale to emulate the house and some of these have now been converted to provide classrooms, offices and workshops. In addition, there is a modern extension to the stables providing lecture rooms, indoor swimming pool and gymnasium etc. A residential block, situated to the north of the Property, was designed to provide accommodation for 120 students. The whole Property stands in about 83.5 acres of mature parkland.”

A November 1988 report, prepared by Smiths Gore, described Wentworth Woodhouse as “one of Britain’s principal private palaces”. The report also stated that the mansion and stable block were listed Grade I and that structures and ornaments within the garden were listed Grade II* and Grade II.

The documents include an article in Country Life published in around 1999 when the Property was on the market for sale by the Bank. The article contains the following statements:

“It is difficult to exaggerate the importance of Wentworth Woodhouse. In architectural terms it is one of the half dozen most important English 18^th - century houses. … The interiors are the finest of all the Georgian era and span the whole of the 18^th century, their design, decoration and furnishing being the work of three munificent patrons: both the 1^st and 2^nd Marquesses of Rockingham and the 4^th Earl Fitzwilliam, who commissioned a succession of architects, painters, sculptors and craftsmen to embellish the place. … The failure of Wentworth Woodhouse to become a “stately home” open to the public after the Second World War and thus to have secured its future, like Chatsworth or Woburn, is an architectural tragedy. Instead the house has been dogged by repeated misfortune: the premature death in a flying accident in 1948 of its then owner, the 8^th Earl Fitzwilliam, without male issue; piecemeal sales of contents; a split inheritance of chattels and the Property; and, not least, open cast coal mining of the park at the instigation of Emmanuel Shinwell, Minister of Fuel in Attlee’s Labour Government.”

In November 1988, the Property and, it seems, some further land in the vicinity was owned by Milton (Peterborough) Estates Company (“MPEC”). On 14^th November 1988, MPEC contracted to sell the Property to Professor Haydon-Baillie. Clause 2(a) of that agreement defined “the Property” to mean the mansion house known as Wentworth Woodhouse and the parkland and also “fixtures fittings and chattels on the said land or in or about the said house or buildings” and in particular the “fixtures fittings and chattels” specified in the Second Schedule to the agreement. Clause 2(b) defined “the Protected Fittings” as the fixtures and fittings specified in the Second Schedule marked with an asterisk. Clause 2(d) referred to the Vendor having neighbouring land in the vicinity. Clause 2(h) defined “the Fitzwilliam Charity Lands” as certain land vested in the Trustees of the Fitzwilliam Charities. Clause 2(i) defined “the Protected Land” as being the retained land of the Vendor and the Fitzwilliam Charity Lands. By clauses 3 and 4, the parties agreed on a sale of the Property to Professor Haydon-Baillie for the price of £2,000,000. By clause 6(4) it was agreed that the Protected Fittings and all (if any) “other fixtures fittings and chattels forming part of the Property” should pass without further assurance. Clause 8(1) referred to certain positive covenants to be entered into by Professor Haydon-Baillie. By clause 8(1)(b), Professor Haydon-Baillie was, in the conveyance, to enter into certain obligations as to the repair and condition of, amongst other things, the principal house as a major example of 18^th century English architecture. By clause 8(2), it was agreed that Professor Haydon-Baillie as Purchaser would covenant in the conveyance to observe the restrictions set out in the Seventh Schedule to the agreement. The Seventh Schedule to the agreement contained three paragraphs. Paragraph 1 was designed to prevent nuisance and annoyance to certain persons in relation to the Protected Land. Paragraph 2 restricted the use of the Property and prevented certain uses such as an hotel, leisure centre, sports centre, place of education, hospital or nursing home, for manufacturing or other industrial purposes or as a conference centre or offices. By paragraph 2(ii) of the Seventh Schedule, the covenant was expressed to prevent, amongst other things, the principal mansion house being used as a greater number of independent residential units than existed at the date of the conveyance. By paragraph 2(iii) of the Seventh Schedule, the covenant was expressed to prevent, amongst other things, the principal mansion house being used for any purpose which was inappropriate to its quality and character as a listed building of the grade applicable to it.

Paragraph 3 of the Seventh Schedule was expressed as a covenant by the Purchaser:

“Not at any time to sever or permit or suffer the severance of any of the Protected Fittings from the fabric of the said mansion house otherwise than temporarily for the purpose of protecting repairing cleaning or restoring the Protected Fittings or exhibiting them elsewhere in the United Kingdom for periods not exceeding six months.”

By clause 8(3) of the agreement, Professor Haydon-Baillie as Purchaser agreed to enter into a deed with the Trustees of the Fitzwilliam Charities to observe the restrictions set out in paragraphs 1 and 2 of the Seventh Schedule to the agreement. Clause 8(4) provided that the restrictions should enure for the benefit and protection of the Protected Land and provision was made as to the manner in which the benefit of the restrictions should pass to subsequent owners. Clause 8(5) provided that the restrictions should be expressed as intended to bind and run with the Property conveyed and every part of it into whosesoever hands the same might come. Clause 8(6) was an acknowledgment by the Purchaser that by reason of the imposition of the restrictions set out in paragraphs 1 and 2 of the Seventh Schedule to the agreement, the price agreed was materially less than it would have been if such restrictions had not been imposed, and the sub-clause went on to provide for what would happen in the event of a release variation or modification of those restrictions.

As indicated above, the Second Schedule to the agreement was a list of what had been described in the agreement as “fixtures fittings and chattels”. The list comprises an index and 28 pages. As contemplated by the agreement, some of the items in the list are marked with a handwritten asterisk. The items in the list include many paintings and statues. Many of the paintings are portraits. Some of the paintings appear to be on panels. For example, on pages 5 and 6 of the list there is reference to “a series of wall paintings to fit the room, comprising five major panels, six over doors and various pieces to in-fill”. Some of the items in the list refer to chandeliers, with some chandeliers having an asterisk and others not. Although the matter was not investigated in detail in argument before me, the clear impression one gets from reading the list is that the use of the asterisk is not meant to distinguish between what is a fixture in law and what is a chattel in law, but rather to identify (as the agreement explains) which items are Protected Fittings, so that the distinction appears to be based on the perception of the importance or quality of the item rather than its legal character. I note, however, that whereas the agreement refers to the Second Schedule describing “fixtures fittings and chattels”, the definition of “the Protected Fittings” refers to “fixtures and fittings” without using the word “chattels”. However, I doubt if the word “fittings” has a sufficiently precise general meaning so as to exclude things which are in law chattels.

On the same day as the agreement, 14^th November 1988, Professor Haydon-Baillie created a settlement called “the Succession Trust”. Under the settlement, Professor Haydon-Baillie was described as “the Settlor” and the Trustees were Professor Haydon-Baillie and a solicitor, a Mr Purton of Norton Rose. The Deed of Settlement recited that Professor Haydon-Baillie had transferred to the Trustees the sum of £60,000 to be held by them on the trusts of the settlement and that Professor Haydon-Baillie intended forthwith to enter into a deed of covenant to the intent that certain Property should become vested in the Trustees on the trusts of the settlement. By clause 1(2) of the Deed of Settlement, the Trustees were to stand possessed of the benefit of the covenant contained in the intended deed upon trust to enforce the same, and to hold the Property received by them in performance of the covenant upon the trusts declared by the Deed of Settlement. The Property which was to be the subject of the intended deed and, in that way, the subject of the settlement was described in Parts I, II and III of the First Schedule to the deed. Part I of the First Schedule referred to Wentworth Woodhouse and the surrounding 83.59 acres of land. Part II of the deed was the list of items situated at the Property. Part II of the First Schedule includes in the heading the words “the following chattels”. The items listed in Part II of the First Schedule to the deed, described there as “chattels”, appear to be the same as the items with an asterisk in the Second Schedule to the agreement of 14^th November 1988, although a strict comparison of the two lists was not carried out at the hearing before me. Clause 2 of the Deed of Settlement contains certain definitions, and one such definition stated that “the chattels” listed in Part II of the First Schedule to the deed were to be known as “the Settled Chattels”. Clause 3(1) of the deed stated that the Trustees should stand possessed of Wentworth Woodhouse and the Settled Chattels “when the legal title thereto shall have been vested in the names of the Trustees” upon the trusts declared by the deed.

Also on 14^th November 1988, as contemplated by the settlement of that date, Professor Haydon-Baillie entered into a deed of covenant with the Trustees. The second recital to the deed of covenant referred to the agreement of 14^th November 1988 and referred to the items marked with an asterisk in the Second Schedule to the agreement and stated that those items were thereinafter in the deed of covenant to be called “the Chattels”. By clause 1 of the deed of covenant, in consideration of the sum of £50,000 paid by the Trustees to Professor Haydon-Baillie, Professor Haydon-Baillie covenanted that he would transfer Wentworth Woodhouse and the Chattels to the Trustees to be held by them on the trusts of the Succession Trust. This transfer was either to be during Professor Haydon-Baillie’s lifetime or, if the transfer had not happened by his death, to be pursuant to a devise and bequest in his will.

On 1^st March 1989, MPEC conveyed Wentworth Woodhouse and the surrounding land to Professor Haydon-Baillie. The Property conveyed included “all fixtures fittings and chattels on the said land or in or about the said house or buildings”. Clause 1 of the conveyance defined “the Protected Fittings” as the fixtures and fittings specified in an annexed list of Protected Fittings and marked with an asterisk. There was attached to the conveyance a document called “List of the Protected Fittings”. This list is similar to the list in the Second Schedule to the agreement of 14^th November 1988. At the hearing before me, no-one carried out a detailed comparison of the two lists. I note, however, that the index to the list attached to the conveyance is different from the index to the list in the Second Schedule to the agreement of 14^th November 1988. I further note that in paragraph 1.12(c) of the Defence served in the First Action on behalf of Savills and Mr Sweeney, it was stated that the two lists were not identical and certain matters which were not asterisked in the list which was the Second Schedule to the agreement were asterisked in the list annexed to the conveyance. It is not necessary for present purposes to pursue that point any further.

By clause 3.01 of the conveyance of 1^st March 1989, Professor Haydon-Baillie covenanted in the terms set out in the Fifth Schedule to the conveyance. Clause 3.01 stated that the intention was that the burden of the covenant would run with the Property conveyed and clause 3.01 also provided for the circumstances in which the benefit of the covenant would pass. The covenants contained in the three paragraphs of the Fifth Schedule to the conveyance were essentially in the same terms as the covenants contained in the three paragraphs of the Seventh Schedule to the agreement of 14^th November 1988 and I need not repeat their terms. By clause 3.02 of the conveyance, reference was again made to the fact, originally stated in clause 8(6) of the agreement of 14^th November 1988, that the price was reduced by reason of the covenants in paragraphs 1 and 2 of the relevant schedule. By clause 4(b) of the conveyance, Professor Haydon-Baillie entered into a positive covenant as to repair and condition of, amongst other things, the principal mansion house.

Also on 1^st March 1989, Professor Haydon-Baillie entered into two deeds of covenant. These two deeds are in essentially the same terms, although the covenantees are different. I infer that these two deeds of covenant of 1^st March 1989 were the deeds in favour of the Trustees of the Fitzwilliam Charities which were contemplated by clause 8(3) of the agreement of 14^th November 1988. The deeds of 1^st March 1989 impose on Professor Haydon-Baillie the covenants to which I have earlier referred, set out in paragraphs 1 and 2 (but not 3) of the relevant schedules to the agreement and conveyance. The two deeds of 1^st March 1989 also make provision as to the benefit and burden of the covenants and restate in relation to the consideration paid for the conveyance the matters originally stated in clause 8(6) of the agreement of 14^th November 1988.

On 18^th April 1989, Professor Haydon-Baillie was registered as the proprietor of the freehold of Wentworth Woodhouse and the surrounding land. The title number was SYK270992. The first page of the register stated that the relevant map reference was SK3997. This second number was wrongly stated in some later documents as being the registered title number. The title was subject to a restriction in these terms:

“Except under an order of the registrar no disposition or dealing by the proprietor of the land is to be registered unless in accordance with the provisions of a deed of covenant dated 14^th November 1988 … ”.

This restriction plainly referred to the deed of covenant to transfer certain Property to the Trustees of the Succession Trust. The restrictive covenants contained in the conveyance of 1^st March 1989 and in the two deeds of covenant dated 1^st March 1989 were registered in the charges register.

In 1995, Professor Haydon-Baillie approached the Bank for a loan and on 2^nd October 1995 Professor Haydon-Baillie and the Bank agreed the terms of a Facility Letter. The Facility Letter stated that the facility would be made available in the form of one fixed term loan of £600,000 which was to be repaid in full together with any accrued interest, fees, costs etc. no later than the fifth anniversary of the date of the first drawing thereunder. The purpose of the facility was described as being to provide finance for the restoration of Art Works and the refurbishment of buildings on the Wentworth Woodhouse Estate. The Facility Letter provided for the payment of interest. Paragraph 5 of the Facility Letter required Professor Haydon-Baillie to give security in the form of a first legal mortgage over the freehold interest in Wentworth Woodhouse and also a life assurance policy. Paragraph 7 of the Facility Letter referred to certain events of default, which included non-payment of an amount payable under the Facility Letter, non-payment of any monies due from Professor Haydon-Baillie to the Bank, default in performance of any term or condition of the Facility Letter, and Professor Haydon-Baillie making a composition with his creditors or committing or suffering an act of bankruptcy or having any execution or distress levied against him or his effects. By clause 8(ii), Professor Haydon-Baillie was obliged to maintain insurance over the Property at Wentworth Woodhouse, but there was no express term dealing with the maintenance of the life insurance policy. The Bank argued that such an obligation was to be implied, but it is not necessary for me to deal with this submission. Paragraph 13 of the Facility Letter dealt with the address for service of notice on Professor Haydon-Baillie. It provided that notice could be addressed to Professor Haydon-Baillie at the address given in the Facility Letter, which was Cope House, Kensington Palace Gardens, London W8. Professor Haydon-Baillie countersigned the Facility Letter on 3^rd October 1995.

On 7^th November 1995, Professor Haydon-Baillie entered into a number of documents with other persons. In my judgment, the sequence which one should attribute to these documents, executed on the same day, so as to give them their intended effect, is as follows. First comes the revocation of the settlement of 14^th November 1988; second comes the charge in favour of the Bank; third comes the new settlement; fourth comes the deed of covenant in favour of the Trustees of the settlement; and last comes a deed of covenant in favour of MPEC.

The Deed of Settlement of 14^th November 1988 had contained express provision for the settlement to be revoked. By a deed of revocation, a notice signed by Professor Haydon-Baillie and a resolution made by the Trustees, all of which occurred on 7^th November 1995, the 1988 settlement was revoked and the Property and matters which were the subject of the settlement became vested beneficially in Professor Haydon-Baillie. As Professor Haydon-Baillie thereby held both the benefit and the burden of the deed of covenant of 14^th November 1988, that deed of covenant effectively was discharged. The purpose behind the revocation of the settlement appears to have been to clear the legal title to the Property of the equitable interest, if any, in the Property created by the settlement and to allow Professor Haydon-Baillie to charge the Property in favour of the Bank.

On 7^th November 1995, Professor Haydon-Baillie charged Wentworth Woodhouse and the land by way of legal mortgage to the Bank. The charge was to secure Professor Haydon-Baillie’s liabilities to the Bank. By clause 3.1 of the charge, the property charged was Wentworth Woodhouse, which was stated to be registered at HM Land Registry under title number SK3997. As earlier explained, this is the wrong number, but nothing turns on that. By clause 3.2, Professor Haydon-Baillie charged to the Bank the benefit of all covenants and rights relating to the property charged in clause 3.1. Clause 3.3 of the charge referred to fixtures and fittings, furniture and equipment, and implements and utensils of the mortgagor at the property, but this clause only applied if the mortgagor was a company, which, of course, Professor Haydon-Baillie was not.

By clause 4.1 of the charge, Professor Haydon-Baillie agreed to keep the property insured. The powers of the Bank were dealt with in clauses 6 and 7 of the charge. By clause 6.3, the Bank was given power to appoint a receiver. This power was not subject to any express precondition as to the circumstances in which the power might be exercised, and it thus appears that the power to appoint a receiver was exercisable at any time after the charge.

By clause 7.1.5, a receiver appointed by the Bank had power to sell the charged property. By clause 6.4, the Bank itself had all of the powers conferred on a receiver by clause 7, which could be exercised by the Bank without first appointing a receiver. This seems to mean that the Bank had the right to sell the charged property at any time. Clause 6.2 provided that s.103 of the Law of Property Act 1925 (which regulates the exercise of the power of sale conferred by s.101 of that Act) was not to apply. Clause 6.2 further provided that the Bank might exercise its power of sale and other powers under the 1925 Act or any other Act “or this deed” at any time after the date of the deed. These provisions mean that the Bank was able to sell the charged property at any time and there was no express precondition as to the exercise by the Bank of the power of sale.

Clause 7.3 dealt with the case where the mortgagor was not a company. In such a case a receiver had power to remove, store and/or dispose of any furniture or goods found in the property which the mortgagor refused or omitted to remove, and the receiver was to account to the mortgagor for the proceeds of any sale after deducting all expenses incurred. By clause 6.4, the power given to a receiver by clause 7.3 was also given to the Bank itself.

Clause 8 of the charge was headed “Protection of purchasers” and provided that a purchaser was not obliged or concerned to see or enquire whether the right of the Bank to exercise any of the powers conferred by the deed had arisen or become exercisable, nor was the purchaser concerned with notice to the contrary or with the propriety of the exercise or purported exercise of such powers.

The charge contains various provisions as to giving notice to the mortgagor. In particular, by clause 16.2, the Bank was entitled to give notice to the mortgagor at Cope House, Kensington Palace Gardens, London W8, unless the mortgagor had communicated another address to the Bank. By clause 16.3, communication by the Bank by post was deemed made on the day after posting by first class post with prepaid postage.

Having charged his freehold title to the Property in favour of the Bank, Professor Haydon-Baillie then executed the deed of settlement and a deed of covenant in favour of the Trustees of the settlement. The deed of settlement was between Professor Haydon-Baillie as the Settlor and between Professor Haydon-Baillie and Mr Purton as the Trustees. The deed of settlement recited Professor Haydon-Baillie’s ownership of Wentworth Woodhouse subject to the charge in favour of the Bank. The deed further recited Professor Haydon-Baillie’s intention to enter into a deed of covenant whereby not later than 28 days after the full discharge of the charge to the Bank, the property described in Parts I, II and III of Schedule I to the deed should become vested in the Trustees on the trusts of the settlement. By clause 1.1, it was agreed that the Trustees should enter into the deed of covenant with Professor Haydon-Baillie and by clause 1.2, the Trustees should stand possessed of the benefit of the covenant on the trusts declared. The deed defined “the Settled Chattels” by reference to “the chattels” listed in Part II of Schedule I to the deed. Part II of Schedule I contained a list of matters described as “the following chattels”. The list looks as if it is the same list as in the deed of settlement of 18^th November 1994, but the detail was not explored at the hearing before me. By clause 3.1 of the deed, it was provided that the Trustees should stand possessed of Wentworth Woodhouse and the Settled Chattels (when the legal title thereto should have been vested in the names of the Trustees) on the trusts declared in the deed.

Next, on 7^th November 1995, Professor Haydon-Baillie entered into a deed of covenant with the Trustees. Clause 1 of the deed of covenant is in these terms:

“In consideration of the sum of £50,000 now paid by the Trustees to the Settlor and receipt whereof the Settlor hereby acknowledges the Settlor hereby covenants for himself and his personal representatives with the Trustees that within 28 days of the full discharge of the Charge (whether before or after the death of Mr Haydon-Baillie) he (or his personal representatives as appropriate) will transfer Wentworth Woodhouse and the Chattels and the Share to the Trustees to be held by them on the trusts of the Succession Trust.”

There was no express obligation on Professor Haydon-Baillie to bring about a discharge of the charge in favour of the Bank so as to oblige him to transfer Wentworth Woodhouse and the Chattels within 28 days of that event occurring. Further, in my judgment, there was no implied obligation of that kind (whether an absolute obligation or a best endeavours or a reasonable endeavours obligation) on Professor Haydon-Baillie. Accordingly, the obligation on Professor Haydon-Baillie to transfer Wentworth Woodhouse and the Chattels to the Trustees depended upon the happening of a future event which neither Professor Haydon-Baillie nor the Trustees were under an obligation to bring about.

There was one further document entered into on 7^th November 1995. This was a deed of covenant by Professor Haydon-Baillie in favour of MPEC. This deed recited the deed of settlement and the charge in favour of the Bank, both made on 7^th November 1995. It further recited that Professor Haydon-Baillie was the beneficial owner of Wentworth Woodhouse. In consideration of a payment of £50 from MPEC to Professor Haydon-Baillie, Professor Haydon-Baillie covenanted with the company that he would create no further mortgages, charges or other encumbrances of a monetary nature on Wentworth Woodhouse, apart from the pre-existing charge in favour of the Bank. He further covenanted that he would use all reasonable endeavours to discharge the charge in favour of the Bank and that within 28 days of the discharge of the charge the Property at Wentworth Woodhouse would be transferred to the Trustees under the deed of settlement.

On 16^th February 1996, Professor Haydon-Baillie and the Bank agreed to increase the loan of £600,000 to £800,000 by way of an amendment to the Facility Letter of 2^nd October 1995.

By the beginning of 1998, Professor Haydon-Baillie was in serious financial difficulties. The interest of £19,408.22 which fell due to the Bank on 6^th February 1998 went unpaid. Between February and June 1998, the Bank wrote to Professor Haydon-Baillie on a number of occasions and there were telephone conversations with Professor Haydon-Baillie and his accountant and also a meeting between the Bank and Professor Haydon-Baillie. I refer to the facts as revealed by the Bank’s letters dated 10^th February 1998, 13^th March 1998, 25^th March 1998, 16^th April 1998, 1^st May 1998, 6^th May 1998 and 11^th May 1998. Further details are given in the witness statement of Mr Barratt on behalf of the Bank.

During this period, although the fact was initially not revealed to the Bank, Professor Haydon-Baillie appointed a nominee for the purpose of preparing a report on Professor Haydon-Baillie’s proposal to enter into an individual voluntary arrangement (“IVA”) and Professor Haydon-Baillie obtained an interim order under s.253 of the Insolvency Act 1986 on 30^th April 1998. By 6^th May 1998, the Bank had become aware that creditors of Professor Haydon-Baillie had obtained charging orders against Wentworth Woodhouse and on 6^th May 1998, the Bank wrote to Professor Haydon-Baillie stating that these charging orders were an event of default under paragraph 7(d) of the Facility Letter of 2^nd October 1995.

On 16^th June 1998, the Bank instructed Gouldens to advise the Bank in relation to Professor Haydon-Baillie’s default under the charge. On 17^th June 1998, the Bank sent to Professor Haydon-Baillie at Cope House a formal demand for the principal sum of £800,000 together with accrued interest due under the charge. The letter was sent by registered post, but was returned by the Post Office as not claimed by Professor Haydon-Baillie.

On 30^th June 1998, Gouldens carried out a bankruptcy search in relation to Professor Haydon-Baillie and became aware of the steps taken by Professor Haydon-Baillie to obtain an IVA and of the fact that an interim order had been made. Gouldens contacted the nominee under the proposed IVA and by 7^th July 1998 Gouldens were in possession of a considerable amount of further information as to the proposed IVA. On 7^th July 1998, the Bank was informed that Professor Haydon-Baillie had not paid an insurance premium due in August 1997 under the insurance policy relating to Wentworth Woodhouse. On 7^th July 1998, the Bank paid that insurance premium.

On 10^th July 1998, the Bank sent a further letter of demand for the sums due under the charge to Professor Haydon-Baillie at Cope House. This letter was sent both by registered post and by first class post.

On 15^th July 1998, the Bank applied to the Registrar in Bankruptcy at the High Court for leave pursuant to s.252 of the Insolvency Act 1986 to issue proceedings against Professor Haydon-Baillie notwithstanding the making of an earlier interim order. On 16^th July 1998, Mr Registrar Simmonds gave the Bank leave to serve this application notwithstanding that the return date was less than 14 days later, on 28^th July 1998. On 17^th July 1998, Gouldens on behalf of the Bank served this application, with a supporting affidavit, on Professor Haydon-Baillie by sending the same by recorded delivery to Cope House. Professor Haydon-Baillie did not respond to this application and on 28^th July 1988, Mr Registrar Simmonds gave the Bank leave, as asked.

On 12^th August 1998, the Bank brought proceedings against Professor Haydon-Baillie in the Rotherham County Court for possession of Wentworth Woodhouse. In paragraph 7 of the Particulars of Claim, where the Bank was requested to state the details it knew of the mortgagor’s financial and other circumstances, the Bank stated that it believed that the mortgagor was a company director lately self-employed, was married, resided at Cope House, but had shown an intention to move to Wentworth Woodhouse. In paragraph 8 of the Particulars of Claim, the Bank stated that there was no-one who should be given notice of the proceedings because of a registered interest in the Property. In paragraph 4 of the Particulars of Claim, the Bank gave its reasons for asking for possession of the Property, that interest had not been paid, that execution had been levied against the mortgagor in the form of charging orders dated 22^nd April 1988 being made in relation to Wentworth Woodhouse (said to be an act of default under clause 7(e) of the Facility Letter of 2^nd October 1995) and, further, that the mortgagor had failed to pay a premium on a life insurance policy which was said to be a default under clause 7(c) of the Facility Letter. The claim was supported by an affidavit made by a solicitor at Gouldens.

The mortgagor’s address for service of the proceedings for possession was given as Cope House and the proceedings were served by the court. On 2^nd October 1998, Gouldens on behalf of the Bank sent to Professor Haydon-Baillie at Cope House, by registered post, the affidavit in support of the claim. Professor Haydon-Baillie did not respond to the proceedings for possession and did not attend the hearing in the county court on 6^th October 1998, when the court made an order for possession on 20^th October 1998 and an order that the mortgagor pay the Bank £874,517.59.

On 23^rd October 1998, the Bank requested the county court to issue a warrant for possession pursuant to the order for possession and a notice of appointment with the bailiff was given for 13^th November 1998.

In the meantime, matters had been progressing in relation to the proposed IVA. The Bank was not identified as a creditor in the list of creditors drawn up by Professor Haydon-Baillie. In Professor Haydon-Baillie’s proposal for an IVA on 30^th April 1998, Professor Haydon-Baillie described his assets and referred specifically to Wentworth Woodhouse. He referred to the deed of covenant of 7^th November 1995 under which he was to transfer the property to the Trustees within 28 days of the discharge of the charge in favour of the Bank. He said:

“The solicitors have confirmed that I am not in a position to revoke the Wentworth Woodhouse Succession Trust and that I am not entitled to receive capital payments from the Trust.”

Professor Haydon-Baillie did not give notice of the proposed IVA to the Bank as a creditor who might be bound by the IVA and, as indicated earlier, the Bank simply found out about the proposal as a result of the bankruptcy search conducted by Gouldens on its behalf. At the hearing before me, everyone proceeded on the basis that the IVA was not intended to affect the debt owed by Professor Haydon-Baillie to the Bank nor the rights of the Bank under the charge nor the rights of anyone else in relation to Wentworth Woodhouse. Accordingly, I will proceed on the same basis.

On 28^th July 1998, there was a meeting of creditors to discuss the proposed IVA. Professor Haydon-Baillie attended this meeting. A representative of Gouldens attended as an observer on behalf of the Bank. At the meeting, a representative of Fitzwilliam (Wentworth) Estates asked Professor Haydon-Baillie about the probability of repossession proceedings against Wentworth Woodhouse. Professor Haydon-Baillie stated that negotiations were taking place between the relevant parties. He also stated that if the sale of Wentworth Woodhouse failed to fully discharge the charge in favour of the Bank, then the Bank would be added to the list of unsecured creditors.

I now refer to the facts relating to the Bank recovering possession of Wentworth Woodhouse. On 23^rd October 1998, Gouldens on behalf of the Bank sent to Professor Haydon-Baillie at Cope House by hand and by post a letter informing Professor Haydon-Baillie of the order made in the county court on 6^th October 1998 requiring Professor Haydon-Baillie to give up possession of the Property by 20^th October 1998. This letter obviously reached Professor Haydon-Baillie because it came to the attention of Alistair Meldrum & Co, Solicitors, of Enfield who were acting for him in relation to some matter or other. Professor Haydon-Baillie told me that Alistair Meldrum & Co were solicitors experienced in dealing with criminal matters and that they were acting for him in relation to an alleged criminal matter. He told me that they did not have experience in Property matters.

Alistair Meldrum & Co wrote to Gouldens on 5^th November 1998 and referred to the letter of 23^rd October 1998 and the order of 6^th October 1998. They stated:

“As far as this situation is concerned, Mr Haydon-Baillie had no knowledge of this, as he has been in the Churchill Priory for at least six weeks. Prior to that he was extremely unwell, and unable to deal with his own personal affairs. He is likely to be in the Churchill Priory for some considerable time. We therefore request on his behalf, that he be allowed to keep his possessions, which are presently in the Property known as Wentworth Woodhouse for a few more months. The reason for that is that he is not in a fit state to arrange for the collection of those possessions.”

Gouldens spoke to Alistair Meldrum & Co following the letter of 5^th November 1998. Alistair Meldrum & Co referred to the possibility that Professor Haydon-Baillie might apply to set aside the possession order of 6^th October 1998. On 9^th November 1998, Gouldens wrote to Alistair Meldrum & Co with a copy of the notice of the bailiff’s appointment for 13^th November 1998. Gouldens stated that the Bank had every sympathy with Professor Haydon-Baillie’s situation, but that the Bank would require Professor Haydon-Baillie’s furniture to be removed at some point, since it would clearly not form part of the sale when the Property was sold. Gouldens referred to the fact that Alistair Meldrum & Co had suggested that Professor Haydon-Baillie might be in a better position to deal with his personal affairs in around three months’ time. Gouldens proposed going back to the Bank with the suggestion that Professor Haydon-Baillie’s personal effects might remain at the Property so long as the Bank would not be responsible for them. As to the suggestion that Professor Haydon-Baillie might apply to set aside the order of 6^th October 1998, Gouldens stated that they knew of no grounds for the order to be set aside and did not regard this suggestion as helpful.

The Defendants’ chronology prepared for the hearing before me states that Alistair Meldrum & Co wrote to the court requesting a stay of proceedings, but I have not seen any document to that effect.

On 10^th November 1998, Gouldens wrote again to Alistair Meldrum & Co. They stated that, as they understood it, Professor Haydon-Baillie was unfortunately quite ill and unable to remove his furniture and personal effects from the Property. Gouldens stated that the Bank would need to give any purchaser of the Property vacant possession clear of furniture and personal effects, but it was expected that it would take some time to sell the Property and accordingly the Bank did not object to Professor Haydon-Baillie’s furniture and personal effects being left at the Property in the short term. However, the Bank would not be responsible for looking after those items.

On 13^th November 1998, the bailiff enforced the order for possession of Wentworth Woodhouse. A representative of Gouldens attended the bailiff’s appointment. Her attendance note stated that the Property was vacant apart from some remaining items of furniture and personal effects belonging to Professor Haydon-Baillie “which are currently being removed”. The note also stated that the complete removal of all remaining items “is expected to take at least another week”.

It is convenient at this point to deal with the attitude of the Bank to a redemption of the charge by Professor Haydon-Baillie. On 25^th January 1999, the Bank wrote to Gouldens stating that it had received a telephone call from Professor Haydon-Baillie on 22^nd January and Professor Haydon-Baillie wanted to know the amount of the debt outstanding.

On 26^th January 1999, Gouldens wrote to the Bank stating that there was no reason not to disclose the amount of the debt to Professor Haydon-Baillie and indeed the Bank had a positive obligation to do so.

The Bank obviously wrote to Professor Haydon-Baillie on 27^th January 1999 because on 24^th February 1999, Professor Haydon-Baillie wrote to the Bank referring to a letter of 27^th January as setting out the amount of the outstanding debt. Professor Haydon-Baillie stated that he would keep the Bank informed as to his own plans for repaying the loan in full, as he would not wish to miss the opportunity of settling the matter for his own sake and for the sake of the Bank. The letter refers to the Bank confirming something to Professor Haydon-Baillie on a number of occasions and I understand this to be a reference to the Bank confirming that it wished to see settlement of the debt.

On 1^st March 1999, Professor Haydon-Baillie wrote again to the Bank stating:

“I know that the bank and myself are both prepared to see a solution where the loan is repaid in full, at an appropriate date, and we need to ensure that such an opportunity is not missed.”

On 21^st April 1999, Professor Haydon-Baillie and Mr Barratt (his fellow trustee) met the Bank. The Bank’s note of the meeting initially refers to Professor Haydon-Baillie settling the outstandings. The note then discloses that the proposal was in fact for a Mr Ian Stewart (who turned out to be acting for Mundial Invest SA (“Mundial”)) to buy the Property from the Bank, selling as mortgagee. At the conclusion of the meeting, the Bank agreed to provide the figures for the outstandings and all interest and costs up to 30^th April 1999. Professor Haydon-Baillie and his fellow trustee agreed to arrange for their prospective purchaser to confirm its offer in writing to the Bank.

Also on 21^st April 1999, the Bank contacted Gouldens (initially by telephone and later by fax) seeking advice on the proposal that Professor Haydon-Baillie had made to the Bank. This is described in Gouldens’ advice of 21^st April 1999 as a request from Professor Haydon-Baillie that the Bank “go with his suggested purchaser rather than any other”. Gouldens advised the Bank on 21^st April 1999 that the Bank appeared to have better offers and that the Bank had to obtain the best price reasonably obtainable for Professor Haydon-Baillie’s benefit. They asked: “Why should Mr H-B now wish you to go with a lower offer?” Gouldens advised that the overriding principle was that the Bank should act as a prudent bank and act in good faith as to realisation of the asset. If the purchaser introduced by Professor Haydon-Baillie outstripped any other offer, then that offer could be weighed against the others, but if the purchaser introduced by Professor Haydon-Baillie did not beat any other offer, then Gouldens could not conceive a bona fide motive for Professor Haydon-Baillie insisting upon a sale to this purchaser. Gouldens suggested that Professor Haydon-Baillie should commit to paper the terms of the offer being made for the Property and the reason why Professor Haydon-Baillie would favour this deal over any other higher price that was being offered. Gouldens said that whether the Bank owed a duty to creditors in these circumstances was unclear, but their concerns ran deeper than that.

On 22^nd April 1999, the Bank wrote to Professor Haydon-Baillie and his fellow trustee and confirmed that the amount of the outstanding debt plus interest and costs was in the sum of £1,130,000. The Bank invited Professor Haydon-Baillie to make a written offer with his proposal to settle the outstanding amount. The letter also asked for his written reasons as to the merits of his offer over and above other offers which the Bank believed were better in terms of both the headline figure and the perceived potential to complete. It is obvious that what was being discussed was not simply a redemption of the mortgage on payment of the outstandings but rather a sale by the Bank to a purchaser promoted by Professor Haydon-Baillie rather than another purchaser who might otherwise be selected by the Bank. In my judgment, the Bank’s letter of 22^nd April 1999 cannot realistically be read as a refusal by the Bank to accept a redemption of the mortgage.

On 23^rd April 1999, the Bank met Professor Haydon-Baillie again. Three matters were discussed. The first involved repayment of all outstandings. The Bank’s note of the meeting states that the Bank had no problem with this possibility. However, the note went on to record that Professor Haydon-Baillie had no money to pay off the Bank by reason of the IVA. The note records: “This avenue was closed”. That was a reference to the fact that the possibility of a redemption did not arise in view of Professor Haydon-Baillie’s financial circumstances. The meeting then considered two other possibilities; the first was a transfer of the debt to a third party and the second was a sale to Munidal at a “knock-down” price.

On 23^rd April 1999, the Bank sought advice from Gouldens as to the possibility of a transfer of the Property, subject to the mortgage, to a third party. Gouldens’ advice of 24^th April 1999 discusses an arrangement whereby Mr Stewart (of Mundial) became the legal owner of the Property and took an assignment of the debt, but their advice was that that would be viewed as a sale by the Bank for a price equivalent to the debt and therefore an obvious sale at an undervalue. Gouldens advised in these terms:

“I appreciate the need to help your client as much as you can but in these circumstances, I think you need the clearest and most unquestionable reasons for straying from the simple strategy of selling to the highest bidder in order to net H-B the best return.”

On 26^th April 1999, Professor Haydon-Baillie again discussed matters with the Bank. He said that he wanted the ability to “make an offer” after the date set for final offers on 30^th April 1999. It is clear from the Bank’s note of the discussion that Professor Haydon-Baillie’s proposal involved the possibility of a purchase of the Property by Mundial.

On 26^th April 1999, the Bank wrote to Gouldens proposing a form of words to be passed on to the selling agents to the effect that the Bank did not wish to get involved in any action that would jeopardise the bidding process and that all offers, including that by Ian Stewart acting through Professor Haydon-Baillie, should be received by noon on Friday 30^th April 1999. The Bank stated that in conjunction with its professional advisers it would accept the best offer (not necessarily the highest offer).

On 27^th April 1999, Howard Kennedy, solicitors for Mundial, requested a copy of the legal package prepared in connection with the marketing of the Property.

On 29^th April 1999, there was a further meeting or a telephone conversation between Professor Haydon-Baillie and the Bank at which a possible sale to Mundial was again discussed.

On 30^th April 1999, Howard Kennedy wrote to Gouldens with Mundial’s offer. The price offered by Mundial was the full amount properly due to the Bank under the loan, including interest and costs calculated to 30^th April 1999, plus the sum of £1. Howard Kennedy stated that Mundial knew of the figure given by the Bank to Professor Haydon-Baillie in the Bank’s letter of 22^nd April 1999, which was the amount of £1,130,000. Mundial’s offer was accompanied by a letter dated 30^th April 1999 from Professor Haydon-Baillie. He expressed his total and unconditional support for the proposal. He pointed out that the offer would repay the Bank in full. Also on 30^th April 1999, Professor Haydon-Baillie wrote direct to the Bank. He stated that he would provide the Bank with full indemnities and a complete waiver of his rights to take any action against the Bank in relation to a sale to Mundial in accordance with its offer. He confirmed his commitment to extend the indemnity and waiver to the Bank’s advisers, including Gouldens, Savills and Strutt & Parker, if required. In a further letter he stated that he was prepared to warrant that the unconditional offer from Mundial, together with full indemnities against any further liabilities to Professor Haydon-Baillie or the Succession Trust, was the best offer available and should be accepted, exchanged and completed at the earliest date possible. In a separate note in support of the proposal he expressed his views as to the acceptability of the offer.

It is clear from these events that Professor Haydon-Baillie never did try to redeem the charge and that the Bank never did refuse to allow a redemption of the charge. Professor Haydon-Baillie was not in a financial position to redeem the charge. If he had been in a financial position to redeem the charge, he would have been entitled to do so. There was no reason for the Bank not to permit a redemption. It would have been in the Bank’s interest to have the charge paid off in full, as compared with the considerable difficulty and time involved in selling the charged Property and sorting out the consequences, including the consequences as to the surplus proceeds of sale. The proposal which Professor Haydon-Baillie made to the Bank was for his associate to buy the charged Property from the Bank in the exercise of its power of sale as chargee. The Bank stated that it would have to consider such a proposal together with all other bids from prospective purchasers.

The Bank instructed the well-known firms of surveyors and estate agents, Savills and Strutt & Parker, to market the Property for sale. Professor Haydon-Baillie makes no criticism of the advice given by those agents nor the steps which they took to maximise interest in the market in the Property and the levels of bid which might be received. Accordingly, it is not necessary for me to summarise the facts as to the marketing process.

I will, however, refer to the way in which the marketing was brought to a close, which resulted in an exchange of contracts for the sale of the Property on 30^th April 1999. The matter is described in various places in the witness statements served on behalf of the Defendants. A detailed account is given in the witness statement of Mr Sweeney of Savills. He describes the marketing process and the extremely high level of interest generated from the marketing campaign. He also refers to an offer made by a Mr Paul Newbold in the sum of £1.5m. This offer was made on 30^th March 1999. At that point, the number of parties still interested was still substantial, and to give them additional time to review their position and improve the level and quality of their bid, the Bank was advised to seek best and final offers from interested parties. The Bank’s agents then wrote to twenty bidders requesting best and final offers.

The closing date for receipt of these final offers was 12 noon on Friday 30^th April 1999. The prospective bidders were told that their best offers were to be forwarded to Gouldens. The offers were to be unconditional, in sterling, and a full finance reference was to be provided. A legal package was prepared by Gouldens and was made available to the bidders at a cost of £25. The prospective bidders were told that if they intended to make a bid, they should instruct their solicitor to inspect the legal package and confirm that they were satisfied with its contents and that confirmation of satisfaction should be attached to the offer letter. The letter stated that the successful tenderer would be given five working days from the date of acceptance of the offer in which to exchange contracts and was told to provide confirmation that certain points which had been made by the Fitzwilliam Estate had been considered by the bidder. Each bidder was to give full details with its offer of the proposed use of the Property.

Mr Sweeney explains that with a property such as that in the present case, a seller is concerned that a bidder will use the legal due diligence period as an excuse for reviewing other factors such as raising finance or the results of the survey.

Of the twenty parties on the shortlist of prospective bidders, fourteen final bids were made. The meeting to decide which offer to accept took place at Gouldens’ offices and was attended by Gouldens, the Bank, Savills and Strutt & Parker. After the 12 noon deadline, the fourteen offers were reviewed. The three highest offers were Mr Paul Newbold at £2,100,054, Octagon at £2m but subject to condition and Mr White at £1,725,000.

Mr Newbold’s offer arrived in the form of a letter from Gordon Dadds, his solicitors, dated 30^th April 1999. The offer was for completion 28 days after exchange of contracts and involved the payment of a 10% deposit. Mr Sweeney of Savills first saw this letter at the meeting on 30^th April 1999 and had no prior knowledge of what the offer was or would be. The Bank and its advisers were impressed by Mr Newbold’s unconditional offer and his intention that the Property would be used as a family dwelling, which would not interfere with any of the restrictive covenants affecting the Property. A further advantage of the offer was considered to be that the Property was not being used as a security for a loan. Mr Sweeney stated that the offer from Mr Newbold was clearly the best offer and to minimise the risk of the bid failing between acceptance and exchange of contracts, the Bank gave instructions to accept the offer, but on the condition that contracts were exchanged that day. This was accepted by Mr Newbold and instructions were given to Gouldens to proceed to exchange of contracts.

Mr Sweeney left the meeting at Gouldens’ offices once the decision had been made but before exchange of contracts. Mark Rimell of Strutt & Parker stayed at the meeting until after exchange of contracts and Gouldens dealt with the rest of the sale process from exchange of contracts to completion.

Later in his witness statement, Mr Sweeney makes detailed comments on the timescale involved in the marketing process leading to exchange of contracts on 30^th April 1999. He also explains the reason for the decision to proceed to exchange of contracts on 30^th April 1999. The bidding process had required unconditional bids to be made, which bids were backed up by financial evidence. Paul Newbold complied with those conditions. The legal pack and the availability of Gouldens to answer enquiries enabled bidders to carry out due diligence so that an unconditional offer could be made. Mr Newbold’s bid confirmed that he was in funds. Although the letter to prospective bidders seeking best and final offers had indicated that the bidder would need to be in a position to exchange five working days after the acceptance of an offer, it was open to the parties to exchange contracts at any time within the five working days. Mr Sweeney states that it is quite common to exchange contracts as soon as possible, particularly with a stately home of the kind in question, as there was a risk that delaying the date for exchange can lead an offeror to reconsider his proposals and withdraw from the sale prior to exchange. For this reason, the Bank was keen to ensure exchange as soon as possible.

Mr Sweeney also helpfully comments upon the fact that Mr Newbold’s price was a precise figure of £2,100,054. Mr Sweeney explains that no-one at Savills had any advance knowledge of what Mr Newbold intended to bid. Mr Sweeney believes that no-one else acting for the Bank knew this. He states that there was nothing unusual about an offer being for a sum which is not a round number. Bidders engaged in the sealed bidding process often offer a sum which they hope will take them just above their competitors. In the present case, Mr Sweeney could understand a bidder ending up with a figure such as £2,100,054. A bidder might consider that he needed to pitch his bid at or around the £2m mark. He might tend towards £2.1m in order to beat those at or very close to £2m and he then might go to £2,100,050 in the hope of knocking out someone who has also pitched at £2.1m. Finally he might add a few extra pounds in case someone else’s thoughts mirrored his own. Mr Sweeney states that whatever the precise thought process of Mr Newbold, no-one with any knowledge or experience of competitive sealed bids would be remotely surprised at the figure chosen by Mr Newbold.

The process of marketing and selling the Property is also the subject of a witness statement from Mr Donnelly, the partner in Gouldens who was principally responsible for the relevant matters. Mr Donnelly points out that the Bank was very concerned to ensure that it followed the proper procedures in marketing and selling the Property so as to avoid any ground for complaint by Professor Haydon-Baillie or indeed anyone else interested in the Property or its proceeds of sale. Mr Donnelly gives some examples of this being the case. He also refers to the way in which the Bank acted in relation to an offer to purchase made by Mundial. The Bank has waived legal professional privilege in relation to documents in Gouldens’ file dealing with the period from Gouldens’ first involvement in June 1998 up to completion of the sale of the Property and beyond. Mr Donnelly has exhibited the entirety of Gouldens’ file containing both the privileged and the non-privileged material. It is possible to confirm from a study of these documents that the Bank did indeed act conscientiously and on advice in relation to how it conducted the marketing and sale of the Property.

On or about 17^th May 1999, Howard Kennedy wrote again to Gouldens. The letter is dated 30^th April 1999, but it is clear that the letter was sent after that date. The principal subject-matter of the letter was the fittings in the Property, but the letter contained an acceptance by Howard Kennedy that the Bank was entitled to sell the Property.

On 30^th April 1999, the Bank exchanged contracts for the sale of Wentworth Woodhouse. The contracting purchaser was St. Ledger Investments Limited. Clause 2 of the contract provided that the Bank as mortgagee, and in exercise of the power of sale contained in the charge of 7^th November 1995, agreed to sell, and the purchaser agreed to purchase, “the Property” at “the Price”. Clause 1.1 defined “the Property” to mean “the land and premises briefly described in the Schedule” to the agreement. The Schedule to the agreement described the Property as:

“all that the freehold land and premises situate at and known as Wentworth Woodhouse Yorkshire as registered at HM Land Registry with title absolute under title numbers SYK270992.”

Thus far, the provisions of the contract would appear to indicate that what was being sold was real property, namely, the land and buildings comprised in the registered title and, as part of the real property, fixtures attached to the land or buildings. However, it is relevant to refer to other provisions. Clause 1.1 of the agreement defined “the Price” as meaning:

“ … the sum of two million one hundred thousand and fifty four pounds (£2,100,054) which shall be apportioned between the land and premises and the Protected Fittings as defined by the conveyance dated 1 March 1989 … such apportionment to be determined by a valuation of the Protected Fittings by Phillips.”

Further, Clause 3.5 of the agreement stated:

“Save as herein expressly provided all fixtures and fittings are included in the sale.”

Finally, in relation to the agreement of 30^th April 1999, clause 4 provided that no title guarantee was given by the Bank in respect of “the Property”, that is, the subject matter of the sale.

If the Protected Fittings were in law fixtures, then they were part of the Property and were to be sold under clause 2 of the agreement. However, if the Protected Fittings were fixtures, it is not clear why the Price was to be apportioned between the land and premises on the one hand and the Protected Fittings on the other. It is, of course, commonplace for a price for the sale of a property to be apportioned between the price for the real property and the price for personal property (such as carpets and curtains, etc.). This was conventionally for stamp duty reasons, as stamp duty was payable on the price for the real property but not on the price for the personal property.

There appears therefore to have been some confusion of thought in the drafting of the agreement. However, it is difficult to avoid the conclusion that if part of the Price was for the Protected Fittings, the parties to the agreement were intending that the subject matter of the sale included the Protected Fittings. Further, it seems to have been their intention to include all of the Protected Fittings and not just such unspecified part of the Protected Fittings as might turn out to be fixtures.

That leaves the question of what is meant by clause 3.5 of the agreement. Clause 3.5 refers, first, to “fixtures”. That does not cause any difficulty. Clause 3.5 then refers to “fittings”. In my judgment, the word does not have a precise legal meaning. Should one approach the phrase “fixtures and fittings” as a composite phrase meaning, in fact, fixtures only, or should one take the word “fittings” as meaning things which are not fixtures and which are therefore in law chattels? I have already concluded that the subject matter of the sale included all of the Protected Fittings. Insofar as the Protected Fittings were chattels rather than fixtures, then that gives content to the reference to “fittings” in clause 3.5. Should one go further and hold that the reference in clause 3.5 to “fittings” extended to all chattels of whatever kind which might be upon the Property, or only to the subset of chattels which could qualify for the description “fittings” and, if the latter, should that subset be confined to fittings within the list of Protected Fittings?

In my judgment, it is untenable to say that the reference to “fittings” in clause 3.5 extended to all chattels of whatever kind which might be upon the Property. Further, I hold that the reference to “fittings” in clause 3.5 should be read consistently with the reference to Protected Fittings in the definition of the Price in clause 1.1, so that the reference to “fixtures and fittings” in clause 3.5 is not wider than the Protected Fittings. After all, the Price was to be apportioned between the land and premises on the one hand and the Protected Fittings on the other hand. It does not appear to have been contemplated that a part of the Price was for a third category of items, namely “fittings” which were not Protected Fittings.

On 4^th May 1999, the Bank wrote to Professor Haydon-Baillie stating that contracts had been exchanged on 30^th April 1999 and completion of the sale was due on 28^th May 1999.

I have already referred to the letter from Howard Kennedy, solicitors for Mundial, which bears the date 30^th April 1999 but appears to have been sent on or about 17^th May 1999. The letter accepted that the Bank was entitled to sell the Property, but took issue with the sale of the “Contents”. Howard Kennedy’s letter stated that they had taken counsel’s opinion. No copy of such an opinion was provided by Howard Kennedy at the time nor at any later time until Professor Haydon-Baillie produced at a late stage of the hearing an Opinion dated 16^th May 1999 prepared by Mr James Thom of counsel. Mr Thom advised that the charge extended to land and buildings, including fixtures, but not to items which retained their character as chattels. He stated that the real question was whether the Protected Fittings were fixtures or chattels. He stated that that question was one of fact and the answer could vary from item to item. He suggested a detailed inspection and description would be necessary before he could form a concluded view but he indicated he would offer his provisional views. Those views identified some items which he thought were probably fixtures and some others which were probably chattels.

There was then correspondence between Gouldens and Howard Kennedy, and Gordon Dadds were informed by Gouldens of the challenge that had been raised by Howard Kennedy. On 19^th May 1999, Gouldens sent instructions to Mr Grant Crawford, of counsel, to advise. Paragraphs 6 and 7 explain the Bank’s reasoning in declining an offer to purchase from Mundial and why the Bank followed “the simple path of trying to obtain the best price for the Property”. Gouldens explained that there were others apart from Professor Haydon-Baillie who may have had an interest in any surplus proceeds of sale. The instructions asked counsel to advise on the subject matter of the charge and the subject matter of the contract of 30^th April 1999. The instructions stated that they had been prepared hurriedly.

Mr Crawford appears to have advised on 19^th or 20^th May 1999. On 20^th May 1999, Gouldens stated that they had still not received counsel’s written opinion, which suggests that they had received advice orally by that time. Further, Gouldens drafted two letters which referred to advice from counsel. The documents do not include any note of Mr Crawford’s oral advice.

On 21^st May 1999, Gouldens sent the letters they had drafted the previous day to Howard Kennedy. They stated that counsel had advised that the effect of the charge was to charge the Property, its fixtures and fittings and what they called the “protected items”. Howard Kennedy replied on the same day disputing that the charge extended to anything other than fixtures and so did not include any chattels.

On 25^th May 1999, the Bank wrote to Professor Haydon-Baillie urging him to inform the Bank of when he wished to enter the Property “to remove [his] personal effects”. Professor Haydon-Baillie was told it was essential that he inform the Bank of the items which he considered were his possessions.

Mr Crawford prepared a written Opinion dated 25^th May 1999. His conclusion at paragraph 13 was that Professor Haydon-Baillie had effectively charged the Protected Fittings in 1995, either because they were fixtures or because he was estopped from denying that they were. He concluded that the Bank had power to sell the Protected Fittings. He contrasted the Protected Fittings with other items. In paragraph 9, he stated that if the other items were chattels, the charge did not include chattels and in any case the Bank had not purported to sell the chattels he referred to. In paragraph 10, he referred to the Bank selling all the Protected Fittings.

Mr Crawford reached his conclusion by relying heavily on the way in which (he said) the Protected Fittings were described in some of the earlier documents such as the conveyance of 1^st March 1989 and the deed of covenant by Professor Haydon-Baillie on 7^th November 1995 to settle certain items of Property. There is force in the criticism that Mr Crawford misread some of the definitions in those documents and, further, did not refer to all of the ways in which the items were described in all of the documents executed around the relevant time. In paragraph 4 of his Opinion, he expressed the view that the parties to the conveyance of 1^st March 1989 intended to conclude the question as to what were fixtures and what were not. He correctly pointed out that evidence of the parties’ actual intentions is not admissible, but he then advised that the expression of view by the vendors under the conveyance of 1^st March 1989 should be given some weight. However, his next conclusion that the conveyance effectively settled the matter as between the vendor and Professor Haydon-Baillie is open to argument.

Having considered the relevant documents, Mr Crawford then dealt with the general law and referred to Leigh v. Taylor [1902] AC 157 and D’Eyncourt v. Gregory (1866) LR 3 Eq 382, and said that the Protected Fittings were “very probably fixtures in accordance with general law”. The difficulty with this reasoning is that Mr Crawford did not have very much factual material to go on to enable a conclusion of that kind to be reached. Mr Crawford then expressed the conclusions which I have referred to above.

The copy of the Opinion in the documents before me is dated 25^th May 1999. The documents also include a compliments slip from Mr Crawford’s chambers, which refers to the “revised version of Opinion”.

On 26^th May 1999, a firm of solicitors, Thomas Eggar Church Adams wrote to Gouldens in connection with certain of the Contents of the Property. The solicitors wrote on behalf of Professor Haydon-Baillie and Eric Barratt as trustees of the Succession Trust and also on behalf of Professor Haydon-Baillie personally. The solicitors referred to the earlier correspondence with Howard Kennedy and stated that Mundial had agreed to underwrite the costs incurred by Professor Haydon-Baillie and Mr Barratt. The solicitor stated that Professor Haydon-Baillie had been unwell for some time but had recently been able fully to comprehend issues relating to his personal affairs and to form a judgment as to a matter of business. The solicitors’ letter required an undertaking to delay completion of the sale of the Property until the dispute as to ownership of the Contents was resolved. It was suggested that the Property had been marketed on a false basis and the Property might require to be re-marketed. The solicitors asked whether the Bank was asserting a right to convey the house “and all its contents” to a purchaser. The documents include information as to the arrangements made on the 26^th May 1999 between Professor Haydon-Baillie and Mr Barratt on the one hand and Mundial on the other as to those parties sharing any sums received from the proposed litigation about the contents of the Property. It is not necessary to refer to the detail of those arrangements.

On 26^th May 1999 Gouldens sent two faxes in response to the letter from Thomas Eggar Church Adams. They enclosed a copy of the contract of 30^th April 1999 with the name of the purchaser removed. They stated that the Bank did not purport to sell any personal chattels but did purport to sell the Protected Fittings. They referred to the covenant against severance of the Protected Fittings from the fabric of the Property. They reacted to the suggestion that Professor Haydon-Baillie had been ill by referring to occasions when he appeared to be actively dealing with the matter. They sent to Thomas Eggar Church Adams a further copy of the letter of 25^th May 1999 when the Bank asked Professor Haydon-Baillie to remove his personal effects.

Thomas Eggar Church Adams replied to these faxes on the 27^th May 1999. In paragraph 6 of their letter they stated that if their contentions as to ownership of “the chattels” was correct then the sale to the purchaser would be voidable.

On the 27^th May 1999, Professor Haydon-Baillie and Eric Barratt applied ex-parte for an injunction restraining the Bank from disposing of the freehold land and from disposing of all chattels or items of personalty on the freehold land at Wentworth Woodhouse. No proceedings were issued on the 27^th May 1999 but the ex-parte application was made in proceedings that were stated to be intended to be issued.

The application was supported by a draft “Statement of Case” in the Chancery Division although the application was made in the Queens Bench Division. The “Statement of Case” was essentially a pleading like a Statement of Claim or Particulars of Claim. The claim was made by Professor Haydon-Baillie as legal owner of various “chattels” and by Professor Haydon-Baillie and Eric Barratt as trustees under the Succession Trust. The pleading asserted that the charge extended to land and real property including any fixtures but did not extend to chattels. Paragraph 4 of the Statement of Case referred to “the chattels listed in the Schedule hereto”. There was no list attached to the Statement of Case in the documents before me but it seems reasonably clear from the witness statement, to which I will refer, what items were referred to. The Statement of Case pleaded the possession proceedings in the County Court and made no challenge to the outcome of those proceedings. The Statement of Case also pleaded a letter from the Bank of 25^th May 1999 inviting Professor Haydon-Baillie to remove his personal effects. Finally, the Statement of Case asserted that the Bank had converted the “chattels” by purporting to deal with them in a manner inconsistent with the Claimants’ title.

The ex-parte application was supported by a witness statement of Professor Haydon-Baillie of 27^th May 1999. He exhibited a copy of the conveyance of 1^st March 1989 and drew attention to the Second Schedule to the conveyance which contained items marked with an asterisk which were designated as Protected Fittings. He also exhibited a second list of items at the Property. The documents before me include what I take to be these two exhibits in the form in which they were re-sent by Professor Haydon-Baillie to the bank by a fax of 27^th May 1999 to which I will later refer. The first list is indeed the Second Schedule to the conveyance of 1^st March 1999. The second list is headed “list of personal chattels” and is dated 26^th May 1999. This list extends to some twenty six items. The first page of the list includes items such as plans and drawings, books on the history of the house, aerial photographs, leases, estates documents and relics but also includes items such as five busts, pelmets, screens and a chart table. This first page of the list refers to items which Professor Haydon-Baillie has later called “the Historic Artefacts”. The second and third pages of the list refer to a whole variety of items. These pages refer to fridges, freezers, coolers, a rowing boat, personal photographs, personal magazines, china, kitchenware, cutlery, kitchen utensils, bedroom furniture, bicycles, photocopiers, bathroom items, garden furniture, prayer books and bibles and other items.

At paragraph 11 of this witness statement of 27^th May 1999, Professor Haydon-Baillie referred to the possession proceedings brought by the Bank. He stated in that regard:

“I had no Defence to the Possession Proceedings based on arrears of instalments and was in any event wholly unable to deal with my business affairs.”

He added at paragraph 16 that he was in financial difficulties and had no resources.

The ex-parte application came before Sullivan J in the Queens Bench Division in the afternoon of 27^th May 1999. The claimants were represented by Gillian Carrington of Counsel and Grant Crawford of Counsel appeared for the Bank. Miss Carrington had prepared a skeleton argument. She focused on the distinction between fixtures and chattels. It appears to have been accepted that fixtures had been properly charged to the Bank but it was submitted that the chattels had not. The difference between a fixture and a chattel was said to be “a question of fact which will vary from item to item”. Miss Carrington also addressed the question of the restrictive covenant not to sever the Protected Fittings from the fabric of the Property. It was suggested that this would not bind a purchaser.

Sullivan J held that it was not appropriate to grant the injunctive relief sought by the claimants. He stated that the relief sought i.e. to restrain completion of the sale of the Property was a “sledge hammer to crack a nut” as the sale of the Property was not in issue, the issue relating to the contents or chattels. He also referred to the fact that the application had been made at the very last moment. He also stated that there was no credible case that any chattels were in danger of being damaged, disbursed or sold. He concluded in these terms:

“…….. if Haydon-Baillie wants to pursue a claim for any chattels, he can join the purchaser in proceedings when the purchasers’ identity is revealed in due course (e.g. by search of the register once registration has taken place).”

Around midnight on the 27^th May 1999, Professor Haydon-Baillie sent to the Bank a fax comprising some thirty six pages. The first page was a letter by way of response to the Bank’s letter of 25^th May 1999 inviting Professor Haydon-Baillie to remove his personal effects. That letter had asked Professor Haydon-Baillie to advise the Bank the items he considered were his possessions. In response, on behalf of the trustees of the succession trust and himself he included two lists of items. The first list was the Second Schedule to the conveyance of 1^st March 1999 and therefore included the Protected Fittings marked with an asterisk and the other matters not marked with an asterisk. The second list was exhibit HB2 in the proceedings before Sullivan J namely the three page list of personal chattels running to twenty six items.

The contract of sale of 30^th April 1999 was completed on 4^th June 1999. The Bank was the transferor and the transferee was Macaw. The Property transferred was described as Wentworth Woodhouse, Yorkshire having title number SYK270992. The purchase price was stated to be £1,500,054.00. The price was stated in this way because the solicitors for the parties to the transfer had agreed that £600,000.00 should be apportioned to the Protected Fittings although there was disagreement as to whether this figure was far too low (the transferee’s position) or too high (the Bank’s position).

On 8^th June 1999, Gouldens wrote to Gordon Dadds referring to the fact that there were undoubtedly some items of the Property which were chattels which Professor Haydon-Baillie was invited by the Bank to collect before completion but he failed to do so. Gouldens suggested that further arrangements should be made with Professor Haydon-Baillie for him to come to collect his personal chattels (not being the Protected Fittings).

On 9^th June 1999, Gordon Dadds replied to Gouldens stating that Professor Haydon-Baillie had already been in contact with their clients in connection with the removal of his personal belongings but it was thought unlikely that the matter would be resolved amicably.

At a late stage in the hearing, Professor Haydon-Baillie produced a letter of advice from Edward Bannister QC addressed to Thomas Eggar Church Adams. This letter disclosed that Mr Bannister had been instructed on or about the 4^th June 1999 and had advised in consultation before writing his letter of advice of 10^th June 1999. The letter gives detailed advice on a number of topics such as the property the subject of the charge, which items were fixtures and which items were chattels, the relevance of the covenant not to sever the Protected Fittings, whether that covenant was a purely personal one binding Professor Haydon-Baillie, whether the action of Professor Haydon-Baillie in requiring the owner of the property to severe the Protected Fittings would be a breach of the covenant, whether the Bank had effectively sold the real property including fixtures, which of the Professor and the succession trustees could claim to recover items which were chattels and whether there had been a conversion of the items which were chattels.

Mr Bannister stated that the question whether the items were fixtures or chattels was one of mixed law and fact and he was awaiting further information before expressing an opinion but his very preliminary opinion was that the great bulk of the items in the list of Protected Fittings would have been caught by the Charge (i.e. they were fixtures). Mr Bannister stated that in so far as the Bank had purported to transfer title to uncharged chattels the Bank had converted the uncharged chattels. As regards a claim in conversion against the purchaser, the purchaser would have committed an actionable wrong if (a) it dealt with chattels inconsistently with the rights of the true owner or (b) refused, after an unconditional and specific demand, to deliver them up. Mr Bannister stated that he understood that it was not at present likely that any claim in conversion could be made against the purchaser. On the last page of his letter, Mr Bannister expressed an overall view pointing out difficulties in the way of the claim to recovery of items which were arguably chattels. He also suggested there was a conflict of interest between Professor Haydon-Baillie’s personal position and his position as trustee.

Professor Haydon-Baillie told me at the hearing that he had attended two consultations with Mr Bannister and that Mr Bannister had, at the consultations, expressed different views from those expressed in the letter.

On the last day of the hearing (11^th May 2007), Professor Haydon-Baillie told me that he had disclosed the last page of Mr Bannister’s letter as a result of confusion or a mistake of some kind and he requested the other parties to return to him their copies of the last page of the letter. The other parties declined to do so. Professor Haydon-Baillie stated that he would apply later for an order from the court requiring the other parties to return their copies of that page. I indicated to Professor Haydon-Baillie my view that he should apply straightaway for such an order although I did not see any basis for the application. Professor Haydon-Baillie repeated that he intended to apply for such an order in due course.

While I was considering my judgment in this matter, I received from Professor Haydon-Baillie a letter dated 15^th June 2007 which stated that he had been investigating how to obtain a transcript of the hearing, that obtaining such a transcript would take some time and that he would make an application when he had obtained it. It was not clear from the letter whether the intended application related just to the last page of Mr Bannister’s letter or to all of that letter and the Opinion from Mr Thom. By that stage I had reached the conclusion that the last page of Mr Bannister’s letter did not affect the outcome of these applications and I have decided not to defer the giving of judgment until Professor Haydon-Baillie makes some application or other in relation to these matters.

In the course of June 1999, the Bank and Gouldens gave consideration to the question as to who was the correct recipient of the surplus proceeds of sale after the Bank had been paid all sums due to it under the charge. On 21^st June 1999, Gouldens wrote to various persons who might be potential claimants to all or part of the surplus. They wrote to Thomas Eggar on behalf of Professor Haydon-Baillie in his personal capacity and also on behalf of the trustees of the Succession Trust. They wrote to the supervisor of Professor Haydon-Baillie’s IVA. They wrote to various persons who had judgment debts against Professor Haydon-Baillie and who had the benefit of a charging order protected by a caution against the title to Wentworth Woodhouse. They also wrote to MPEC which had also registered a caution against the Property.

On 21^st June 1999, the supervisor of the IVA stated he wished to make a claim in relation to the surplus. On 22^nd June 1999, Thomas Eggar wrote stating that Professor Haydon-Baillie in his personal capacity made no claim to the surplus. On 24^th June 1999, solicitors for MPEC also stated that no claim was made by their client.

On 15^th July 1999, the solicitors for MPEC provided to Gouldens a copy of a letter of advice dated 3^rd November 1998 which MPEC solicitors had received from David Unwin QC. He stated that if the Bank sold as mortgagee, any surplus proceeds of sale would belong to the trustees of the Succession Trust. He stated that the covenant binding Professor Haydon-Baillie to transfer Wentworth Woodhouse to the trustees of the Succession Trust created “an immediate equitable interest in the land”. He also stated that the equitable interest should now attach to the proceeds of sale. The fact that Professor Haydon-Baillie was no longer able to transfer the land did not affect the trustees’ rights over the proceeds of sale.

On 29^th October 1999, the Bank brought proceedings under CPR Part 8 seeking the decision of the court on the question as to who was entitled to receive the surplus proceeds of sale. The defendants to those proceedings were, first, Professor Haydon-Baillie and Mr Barratt as trustees of the Succession Trust; Professor Haydon-Baillie was not sued in his personal capacity in view of his earlier disclaimer of any personal interest in the proceeds of sale. The next defendant was the supervisor of the IVA. The remaining defendants were six persons who had the benefit of charging orders over Wentworth Woodhouse.

The claim form was supported by a witness statement from a solicitor at Gouldens. On 23^rd November 1999, a solicitor acting for the six persons with the benefit of a charging order signed a witness statement in support of their claim to a part of the surplus. On 31^st January 2000, Professor Haydon-Baillie as a trustee of the Succession Trust signed a witness statement putting forward the claim of the trustees to the entirety of the surplus. That witness statement was revised on the 4^th February 2000.

On the 9^th February 2000, the solicitors for the six persons with the benefit of charging orders wrote to Professor Haydon-Baillie and to Gouldens withdrawing their claim to the surplus. As the supervisor of the IVA had not acknowledged service of the proceedings, the way was now open for an order to be made disposing of the proceedings.

On 23^rd February 2000, Master Bowman made an order by consent reciting that the supervisor of the IVA had not acknowledged service and all other parties had agreed the terms of an order. The order provided that the surplus, less the Bank’s costs in connection with the various claims to the surplus, should be paid to the trustees of the Succession Trust.

In an introductory part of the Particulars of Claim in the First Action and the Second Action, the Claimants have pleaded:

“It must be emphasised that a clear understanding and full appreciation of these facts and circumstances are essential for the court to comprehend

…………

(3)

The Mental and Physical Health of Wensley Grosvenor Haydon-Baillie, including admission as an emergency to hospital on several occasions and covering all of the material dates.”

The topic of Professor Haydon-Baillie’s mental and physical health is set out in some 35 paragraphs between paragraphs 1.3.1 and 1.3.35 in the Particulars of Claim in both the First Action and the Second Action. Both those Particulars of Claim are supported by a statement of truth signed by Professor Haydon-Baillie.

I will not set out the full text of the pleading in this judgment but I will attempt to summarise the more important points. Professor Haydon-Baillie says he had become extremely unwell over many years since the late 1980s. The severity, extent and duration of his serious illness was not discovered until he had completed in-patient terms in hospital in January and February 1998 and from September to December 1998. He was thoroughly investigated by Doctor Brener, the Medical Director of the Churchill Priory Hospital, in which Professor Haydon-Baillie was an in-patient from September to December 1998. He refers to the medication that had been prescribed for him over a period from 1977 to 1998 which, he says, exacerbated and worsened any existing high stress conditions. He says that Doctor Brener had stated that this medication consisted of “chemical sledge hammers, massive depressants, fiercely additive and cumulative in the body”. These drugs are said to have propelled Professor Haydon-Baillie into a serious depressive illness and had rendered him incapable of making any decisions for a considerable period of time. His condition became worse and worse until he was found seriously ill at Wentworth Woodhouse and then in London in September 1998. He was admitted in that condition to the Churchill Priory Hospital and was told he would be sectioned under the Mental Health Act if he refused medication or tried to leave under any circumstances.

In January and February 1998, these the being the first two occasions when Professor Haydon-Baillie was admitted to hospital for this condition, hospital records are said to show that there was a high chance that the doctors would use their powers to detain him under the Mental Health Act, so serious was his condition.

Professor Haydon-Baillie has referred to a report prepared by Doctor Brener, as an expert witness, on the state of Professor Haydon-Baillie’s health in 1997 and 1998 although that report is not in the documents before me. During his three month stay in hospital from 24^th September 1998 to 12^th December 1998, Professor Haydon-Baillie was taken off the previous drug regime, under heavy sedation and treatment, and treated for a severe depressive illness. He was discharged on 12^th December 1998 but continued as a day patient and on daily medication to commence a recuperation period expected to last at least two years, which was the expected period for the chemicals of the previous drug regime to leave his body and to allow him to readjust to normality.

The pleading then deals with the period 1999 to 2005 when Professor Haydon-Baillie was fighting “legal cases” as a litigant in person. He refers to one particular legal case where there was, he says, a trial of five weeks before David Steel J concerning a boat called the Brave Challenger. David Steel J gave judgment in December 2003 in favour of the Succession Trustees, who were represented by Professor Haydon-Baillie.

Professor Haydon-Baillie deals with the subject of his health in his witness statement of 30^th September 2006. On page 10 of that witness statement he states he has been under Doctor Brener’s care since September 1998. Between pages twelve and eighteen of that witness statement, he gives further information about his condition in the three periods, 1998 to 1999, 2000 to 2005 and 2005 to 2006. It is the first of those periods which is the period during which the Bank took possession of the Property and sold it as mortgagees. In relation to this first period, Professor Haydon-Baillie relies on a letter dated 9^th July 1999 written by Doctor Brener to the Chelsea Citizens Advice Bureau. The letter is set out in his witness statement and I was provided with a copy of the letter at the hearing. I will quote the first two paragraphs which state:

“I first met Mr Haydon-Baillie in September 1998 he was admitted into hospital with a major depressive illness that required intensive treatment, he was discharged on the 12^th December and was followed up in out patients and day care since then. He is continuing on medication I have to say here and now that Mr Haydon-Baillie’s illness was of the most severe nature possible, if he had not received treatment there was the risk that this man would have killed himself. His current medication are anti-depressants, Sertraline and Mirtazipine and he occasionally needs a little bit of Chlorpromazine, side effects of this are weight gain, sweatiness and occasionally sleep disturbance.

Turning to the point in your letter about the duration of the illness it is my belief that having talked to other doctors involved in Mr Haydon-Baillie’s care before I got to know him that he had been ill for at least a year prior to his admission. I am glad to say that he has responded well to treatment but is still not well enough to conduct his own affairs. I am able to confirm that the illness prevents him looking after himself fully and he is certainly not well enough to work and will not be able to work now I suspect for some months to come, possibly more than a year.”

The following pages of the witness statement deal with the position after 1999. In January 2004, Doctor Brener wrote that he had admitted Professor Haydon-Baillie to hospital on 9^th January 2004 as he was very concerned about his mental state and he was also worried about his physical well being. He said that Professor Haydon-Baillie was becoming increasingly agitated and anxious and if he had not agreed to come into hospital he would have looked at the Mental Health Act. At that time, he was not well enough to appear in court or conduct a trial as a litigant in person.

On 12^th June 2006, Doctor Brener reported again on Professor Haydon-Baillie’s condition. In his letter of advice he referred back to September 1998 and said at that point Professor Haydon-Baillie was potentially detainable under the Mental Health Act which indicated the severity of his illness. He stated that Professor Haydon-Baillie was admitted to hospital in January 2004 for a period of five weeks. He was unwell for the latter half of 2005 and the first part of 2006.

Professor Haydon-Baillie also produced at the hearing a six page note of a meeting he had with his IVA supervisor on 11^th March 2002. This note dealt with a number of matters but Professor Haydon-Baillie drew my attention in particular to the supervisor’s comments on Professor Haydon-Baillie’s physical and mental state: see paragraph 4(6) and paragraph 5 of the note. These refer to the supervisor being shocked when he first met Professor Haydon-Baillie: he “thought he should be in a straitjacket”. The supervisor added that Professor Haydon-Baillie: “ate the skin off his hands” and “he tore off strips of flesh and that it was horrible to watch”. The note also records his view that Professor Haydon-Baillie “was [seemingly in 1998] one million times worse than he is now- and that was [not] so good. He said it was hard to imagine how bad he was and that Mr W G Haydon-Baillie looked terrible and could not say too many words at one time.”

There was a hearing in these actions before Warren J on 20^th November 2006 when the Judge stated it would be helpful to have a report from Doctor Brener on a number of matters and in particular whether Professor Haydon-Baillie was incapable of managing his own affairs for the purposes of Part VII of the Mental Health Act 1983. At the beginning of the hearing before me, Professor Haydon-Baillie supplied a two page report (paragraphs 1-7) which is the report, or part of the report, from Doctor Brener. (A third page was provided on 19^th June 2007.) Paragraph 7 of that report stated that with rest and recuperation, Professor Haydon-Baillie would be able to resume his normal life and be able to conduct the present proceedings including an application hearing of four to ten days and a trial if necessary.

For the purposes of these applications to strike out these claims and/or to give summary judgment for the defendants, I will proceed on the basis that Professor Haydon-Baillie’s pleadings and statements as to his medical condition are true and reliable.

I will now consider the nature of the complaints made by Professor Haydon-Baillie in the First Action and the Second Action. The Particulars of Claim in the First Action run to some 54 pages and the Particulars of Claim in the Second Action run to some 62 pages. These pleadings are very far from being a model of a good pleading. They do not comply with CPR 16.4 (1) (a) in that they do not include a concise statement of the facts on which the Claimant relies. On the contrary, in so far as the pleadings refer to matters of fact, or alleged matters of fact, the matters are set out at length and contained more by way of commentary and threats as to exposure of the Defendants, than they contained statements of fact. Further, the pleadings show no sign of the pleader having any real comprehension of what cause of action he wishes to assert, what the ingredients of such a cause of action might be, what facts are relied upon to establish those ingredients and what are said to be the consequences of any breach of an obligation on a defendant owed to a claimant.

In these circumstances, it is extremely difficult to summarise what is being said by the Claimants in their pleadings. In his witness statement, Mr Donnelly of Gouldens made a valiant attempt to identify the nature of the allegations being made in the First Action. He suggested that the complaints could be grouped under the following eight headings:

Other Defendants adopted Mr Donnelly’s headings and submissions were made on behalf of the Defendants addressing the complaints under these headings.

The Defendants in the Second Action did not put forward any different list of categories in respect of the Second Action. In fact, the matters which were pleaded in the first 47 pages of the Particulars of Claim in the First Action were repeated in the Second Action. Following that repetition, section 3 of the Particulars of Claim in the Second Action purported to identify the relevant actions of the purchasers, their advisors and associates which were said to be material and in section 4 of the Particulars of Claim in the Second Action, the Claimants contended that title to the Property had not been transferred to the purchaser.

It is also right to comment upon the way in which the Claimants expressed themselves in the First Action and the Second Action and the nature of some of the allegations they made. For example, in paragraph 2.9.7 (in both the First Action and the Second Action), after referring to the steps taken in the possession proceedings, the Claimants allege:

“but Bank Julius Baer/Gouldens are hell bent on the opposite course, misleading the court and suppressing vital evidence to do so, and unnecessarily depriving W G Haydon-Baillie and The Succession Trust of their Property”.

In paragraph 2.15.16 in the Particulars of Claim in both actions, the Claimants stated:

“Claimants will seek by Disclosure and Special Disclosure by Order of Court all the records held by each of the thirteen Defendants and are deeply concerned that any one or all of these Defendants may have, or contemplated, destroying records and/or creating others to frustrate the attempts of the Claimants to determine the Truth in the Royal Courts of Justice.”

The First Action and the Second Action allege various heads of misconduct, criminality and manifold skulduggery on the part of the Defendants. The allegations against all Defendants are serious. The allegations against the professional Defendants impugn the integrity of those Defendants.

It was clear from the witness statements put in on behalf of the Defendants that the Bank had waived privilege in relation to documents held by Gouldens in respect of the matters which were challenged. Indeed, Mr Donnelly exhibited the whole of the Gouldens’ file to his witness statement. It also emerged at the hearing before me that the Bank had disclosed to Professor Haydon-Baillie all of the Bank’s files and that Professor Haydon-Baillie had inspected both the Bank’s files and Goulden’s files. Notwithstanding these inspections, the Claimants did not retract any of the serious allegations they had seen fit to make. On the first day of the hearing of these applications, the Claimants served Amended Claim Forms and Amended Particulars of claim and some of the more serious allegations in the Claim Form were removed or toned down but the essential content of the Particulars of Claim was not altered.

Professor Haydon-Baillie addressed me for three days, being the fourth, fifth and sixth days of the hearing. I invited him on a number of occasions to give some thought to identifying the precise cause of action he alleged against each Defendant, the facts relied upon as showing a breach of some obligation owed by a Defendant to a Claimant, and the consequences of the alleged breach. Notwithstanding the length of Professor Haydon-Baillie’s submissions he declined to act on that invitation. Indeed, Warren J on 1^st December 2006 had ordered the Claimants to serve a skeleton argument setting out their case not later than 21 days before the hearing of the applications. The Claimants ignored that order. During the hearing I asked more than once that Professor Haydon-Baillie should comply with that order and included as a reason for him doing so the clarity which a properly prepared skeleton argument would bring to the identification of the cause of action, the breach and the consequences being alleged. Again, notwithstanding this request, Professor Haydon-Baillie did not comply with it.

On day 5 of the hearing, in the face of some direct questions as to what exactly was meant by the various paragraphs in the pleadings, Professor Haydon-Baillie began to abandon very substantial parts of the Claimants’ case. He was content to strike out paragraph after paragraph on the grounds (he said) that they were unnecessary to the Claimants’ case.

The result of the Claimants’ abandonment of a large part of their pleadings produced the following result. In the First Action, the Claimants’ claims are reduced to the following:

In relation to the third, fourth and fifth claims, the Claimants’ claims can be divided into two parts. The first part is a proprietary claim to recover the items which are the subject of the claim. The second part is a claim to damages for conversion of the items which are the subject of the claim. In relation to the claims at (3), (4) and (5) in the last paragraph, the claim is against the Bank and against Gouldens either because Gouldens owed a duty of care to Professor Haydon-Baillie and to the Trustees or because Gouldens were also liable in conversion.

In relation to the Second Action, the Claimants’ surviving allegation as to the sale of the Property is the allegation in paragraph 4.1 of the Particulars of Claim in the Second Action. In summary, what is said is that the purchaser wanted to buy the real property and its contents and if, as the Claimants contend, the purchaser had never acquired title to the contents because those contents were chattels which were not charged to the Bank, then the result in the law is that there has not been an effective transfer of the real property to the purchaser. The Claimants also wish to claim against the Defendants in the Second Action in relation to the three classes of Contents referred to above. As before, doing the best I can to understand the Claimants’ claim, the Claimants wish to pursue a proprietary claim to recover the Contents and also a claim for damages for the tort of conversion.

I will deal with the claims in relation to the Contents later, and separately, in this judgment and I will first deal with all the other claims made by the Claimants in relation to the Property (apart from the Contents).

I will deal first with the complaints initially made (but abandoned on day 5 of the hearing) as regards the making of demands for repayment of the loan. I have set out in this judgment in detail the facts which emerge clearly from the documents. Professor Haydon-Baillie now accepts that the Claimants’ factual contentions in the First Action and the Second Action are simply wrong on the facts.

The Claimants allege that Professor Haydon-Baillie offered to redeem the charge and that the Bank refused to permit redemption but continued with its plans to sell the Property not withstanding the availability of the funds to redeem the loan in full. I have set out earlier in this judgment the facts which emerge clearly from the documents and I conclude that the Claimants’ allegation that there was a refusal to permit redemption of the charge is factually without any foundation.

In relation to the way in which the Bank sold the Property and in particular the way in which they accepted an offer from Mr Newbold to buy the Property, I have set out the facts in detail earlier in this judgment. In the end, Professor Haydon-Baillie accepted that there was no case in relation to the Claimants’ allegation. I conclude that the Claimants’ case is without any factual foundation.

In relation to the alleged failure to provide information regarding the sale, I have set out the relatively few facts relating to that matter. Professor Haydon-Baillie accepted that the Claimants had no claim in relation to that matter and I conclude that that is indeed the legal and factual position.

As regards the Claimants’ allegation as to the distribution of the surplus proceeds of sale, I have set out the facts relating to that matter. Professor Haydon-Baillie accepted that the Claimants’ claim was without foundation and I conclude that that is indeed the case.

I will next deal with the allegation made by the Claimants as to the form of the pleadings in the possession proceedings, brought by the Bank against Professor Haydon-Baillie. At first sight, these allegations go absolutely nowhere. The Claimants accepted before Sullivan J, at a time when they were represented by solicitors and counsel, that Professor Haydon-Baillie had no defence to the possession claim. Further, the Claimants have never applied to set aside the order for possession and do not even in the current proceedings make any such application. It was never clear whether the Claimants’ complaints about the possession proceedings were being relied upon to justify the court ordering title to the Property to be restored to Professor Haydon-Baillie or whether the claim was a claim to damages only.

Not withstanding these general comments, the detail of the complaints about the possession proceeding were considered at the hearing and I will express my conclusions on the points that were raised. When the possession proceedings were brought, they were governed by the County Court Rules 1981. County Court Rules 1981 Order 6 rule 5A(2) (d) states that where there is a claim to possession by a mortgagee of mortgaged property, which includes a dwelling house, and where the claim is brought because of failure to make periodic payments due under the mortgage, the particulars of claim shall “give such relevant information as is known by the plaintiff about the defendant’s circumstances…..”. Further, in such a claim to possession, rule 5A (3) requires the plaintiff to state in his particulars of claim whether there is any person on whom notice of the action is required to be served in accordance with section 8 (3) of the Matrimonial Homes Act 1983 and, if so, the plaintiff shall state the name and address of that person and shall file a copy of the particulars of claim for service on that person. Although the rule refers to the 1983 Act, at the relevant time in 1998, the appropriate Act was the Family Law Act 1996: see section 56. Section 56 refers to notices being registered under section 31 of the 1996 Act or section 2 (8) of the 1983 Act or section 2 (7) of the Matrimonial Homes Act 1967.

CCR 1981 Order 6 rule 5A (1) stated that the particulars of claim in a claim within that rule should be in a prescribed form. The relevant prescribed form was N120. Paragraph 7 of the form referred to the details which the plaintiff knew of the defendant’s financial and other circumstances. Paragraph 8 of the form referred to the position in respect of section 8 (3) of the Matrimonial Homes Act 1983.

There does not appear to be any authority as to what information a plaintiff was obliged to give as to the circumstances of the defendant. Indeed, there does not appear to be any authority as to the information which the plaintiff was obliged to give in a landlord and tenant case in accordance with CCR 1981 Order 6 rule 3 (3) (d).

Finally, on the relevant County Court Rules, Order 37 rule 5 stated that where there had been a failure to comply with any requirement of the rules, the failure should be treated as an irregularity and should not nullify the proceedings but the court might set aside the proceedings wholly or in part, or might exercise its powers under the rules to allow amendments and to give directions as it thought fit. It was further provided that no application to set aside any proceedings for irregularity should be granted unless made within a reasonable time and not where the party applying had taken a step in the proceedings after knowledge of the irregularity.

I have set out earlier in this judgment the contents of the Particulars of Claim in the possession action as regards the circumstances of Professor Haydon-Baillie and as regards the absence of any reference in the Particulars of Claim to the Trustees of the Succession Trust. It is very far from clear whether the description of Professor Haydon-Baillie’s circumstances failed to comply with CCR 1981 Order 6 rule 5A as Professor Haydon-Baillie would wish to allege. If the description of his circumstances did fail to comply with the rule then that would have been an irregularity only, governed by Order 37 rule 5. As I stated above, the Claimants do not make any application to set aside the order for possession for irregularity.

As regards the Claimants’ allegation to the effect that the Particulars of Claim were defective because they did not refer to the position of the Trustees of the Succession Trust, that submission involves a complete misunderstanding of the rule. The rule in question is directed to persons within section 8 (3) of the Matrimonial Homes Act 1983 and the Family Law Act 1996.

The Claimants repeatedly complain in their pleading, and Professor Haydon-Baillie repeatedly complained in the course of his oral submissions, about Professor Haydon-Baillie’s mental health at the time of the possession proceedings and the Bank’s and Gouldens’ failure to take that into account in any way. I have already referred to the evidence which there is as to Professor Haydon-Baillie’s mental health in 1998 and I have stated that I am prepared to assume on a summary judgment application that that evidence is reliable. Accordingly, I have considered what the rules of court provided in 1998 as to proceedings brought against a defendant who was in a bad state of mental health. The relevant rule was CCR 1981 Order 10. That is headed: “Persons Under Disability”. That phrase is defined in Order 1 rule 3 to mean a person who is a minor or a mental patient. “Mental patient” is defined in the same place to mean:

“A person who, by reason of mental disorder within the meaning of the Mental Health Act 1983 is incapable of managing and administering his property and affairs”.

Under Order 10 rule 1 (2) a person under disability may not defend any proceedings except by his guardian ad litem. Order 10 rule 4 provides for service on a person under disability. Order 10 rule 6 provides for the appointment of a guardian ad litem. By rule 6 (1) where the defendant under disability has no guardian ad litem acting for him then the plaintiff must, after the time for delivering an admission or the defence has expired and before taking any further step in the proceedings, apply to the court for an order that a person named in the application or some other proper person be appointed guardian ad litem to the defendant.

The similar rules which appeared in the rules of the Supreme Court were considered by the Court of Appeal in Masterman-Lister v Brutton & Co [2003] 1 WLR 1511. That case involved a claim by a plaintiff said to be under a disability, rather than a defendant. The decision establishes that all adults are presumed to be competent to manage their property and affairs until the contrary is proved and the burden of proof rests on those asserting incapacity: see paragraph 17. The test as to capacity is issue-specific, that is to say, there is a requirement to consider the question of capacity in relation to the particular transaction (its nature and complexity) in respect of which the decisions as to capacity fall to be made: see paragraphs 27 and 62. The test as to capacity is whether the party to legal proceedings is capable of understanding, with the assistance of such proper explanation from legal advisors and experts in other disciplines as the case may require, the issues on which his consent or decision is likely to be necessary in the course of those proceedings: see paragraph 75.

In the present case, given the evidence put forward by Professor Haydon-Baillie as to his mental state in 1998, I am not able to say on a summary application whether Professor Haydon-Baillie had capacity in 1998 to defend the possession proceedings. However, it seems clear from the Masterman-Lister case and in particular the discussion in paragraphs 30 and 31 that the question as to the capacity of a defendant where an order has been made against the defendant only arises if the defendant applies to set aside the order. At paragraph 31 Kennedy LJ said:

“However, finality in litigation is also important, and the rules as to capacity are not designed to provide a vehicle for re-opening litigation which, having apparently been properly conducted (whatever the wisdom of the individual decisions in relation to it), has for long been understood to be at an end”

In these circumstances, if the Claimants had applied to set aside the order for possession in these proceedings brought in April 2005, it would have been far too late for the court to intervene and upset the order of 6^th October 1998. In any event, as I have stated more than once, it still is no part of the Claimants’ case to seek to set aside the order for possession.

The Claimants assert that the Bank owed Professor Haydon-Baillie a duty of care, and that the Bank owed the Trustees of the Succession Trust a duty of care and a duty in equity, and that Gouldens owed all the Claimants a duty of care. My conclusions for the reasons stated below are that the Bank did not owe a duty of care to Professor Haydon-Baillie; it owed to Professor Haydon-Baillie certain duties in equity but it did not break those duties. Further, the Bank did not owe a duty to the Trustees of the Succession Trust, whether a duty of care or a duty in equity. Further, Gouldens did not owe a duty of care to any of the Claimants.

The position as regards a mortgagee’s entitlement to take possession of mortgaged property is clear and long established. Indeed, the Claimants appear to accept that there was no defence to the claim of possession in 1998. The duties of a mortgagee owed to a mortgagor in relation to the exercise of a mortgagee’s power of sale are also clearly established. The position is summarised in Fisher & Lightwood’s Law of Mortgage 12^th edition at para 30.22, as follows:

“The power of sale is given to the mortgagee for his own benefit, to enable him the better to realise his debt. Accordingly, his own interests come before those of the mortgagor. The mortgagee is not a trustee of his own power of sale for the mortgagor and nor is he under a general duty of care to the mortgagor. He can, therefore, act in his own interests in deciding whether or not to exercise his power of sale. If the mortgagee does decide to exercise his power of sale, he can likewise act in his own interest in deciding when to exercise it, subject to his duty to obtain the best price reasonably obtainable. He is entitled to sell even though a sale (or the time, or the terms, of the sale) may be disadvantageous to the mortgagor. However, while the mortgagee may look to his own interest, he must nevertheless pay some regard to the interests of the mortgagor. Thus, the mortgagee, owes a general duty in equity to the mortgagor and to others with an interest in the equity of redemption (including subsequent incumbrancers) to act in good faith and to use his powers for proper purposes. Insofar as consistent with the mortgagor’s right to put his own interests first, the mortgagee must act fairly towards the mortgagor. Where their interests conflict, he is not entitled to act in a manner which unfairly prejudices or wilfully and recklessly sacrifices the interests of the mortgagor. Depending on the particular facts and circumstances of the case, he may also owe other duties in equity; the equitable obligations are flexible and will be adjusted to fit the requirements of the time.”

In the course of the hearing, there were cited the decisions in Downsview Nominees Limited v First City Corporation Limited [1993] AC 295, Raja v Austin Gray [2003] 1 EGLR 91 and Meretz Investments ND v ACP Limited [2007] 2 WLR 403. The last of these cases discussed at paras 296 – 299 the scope of the mortgagee’s obligation to act “fairly” which had been referred to in Palk v Mortgage Services Funding Plc [1993] Ch 330 at 337. It follows from these authorities that the Bank did not, as alleged by the Claimants, owe a duty of care as such to Professor Haydon-Baillie; the Bank owed a duty in equity as described in the Downsview case. Even if the Claimants had re pleaded their claim as an allegation of a breach of a duty in equity, there is simply no foundation on the facts for such an allegation of breach.

The Bank did not owe a duty of care or a duty in equity to the Trustees of the Succession Trust even assuming that those Trustees had an equitable interest in the mortgaged Property: see Parker-Tweedale v Dunbar Bank Plc [1991] Ch 12.

As regards the allegation that Gouldens, as solicitors for the Bank, owed a duty of care to any of the Claimants in relation to the litigation which the Bank had instructed Gouldens to undertake on the Bank’s behalf, such an allegation is a complete non-starter. In the course of the argument, I was reminded by the Defendants of the exceptional decisions, in this context, of Al-Kandari v J R Brown & Co [1988] QB 665 and Dean v Allin & Watts [2001] 2 Lloyds Reports 249. The general rule is that a solicitor acting on behalf of a client owes a duty of care only to his client. There would generally be a conflict of interest arising if the solicitor owed a duty of care to the client and to the client’s adversary in the litigation. The exceptional character of the two decisions I have referred to is clear from the way they were considered by Lord Bingham of Cornhill in Customs and Excise Commissioners v Barclays Bank Plc [2006] 3 WLR 1 at [21], [22]. In my judgment, there is simply no basis for asserting in the present case that Gouldens, as solicitors for the Bank, bringing a mortgagee’s possession action against a defaulting mortgagor, owed any duty of care to the mortgagor, as regards the conduct of the litigation.

In the course of the hearing, many other points were raised in relation to the Claimants’ complaints about the possession proceedings. It was argued that the matter was res judicata, that the present proceedings were a collateral attack and an abuse of process and it was also argued that any breach would have caused no loss to any of the Claimants. It is not necessary to deal with any further defences to these claims save to record that the matters argued appeared to me to have considerable force.

In these circumstances, the sole issue with which I need to deal relating to the Property as distinct from the Contents is the claim in paragraph 4.1 of the Second Action that title to the Property did not pass to Macaw who took a transfer or purported to take a transfer of the Property from the Bank. If, as I have held, the Claimants have no basis for challenging the exercise by the Bank of its power of sale of the Property, it is hard to see how it could be alleged that Property did not pass to Macaw who, on the face of it, took a transfer of the Property from the Bank. In this case, it is not necessary for Macaw as purchaser to rely upon the express term of the charge dealing with the protection of a purchaser from the Bank nor on section 104 (2) of the Law Property Act 1925.

The case which Professor Haydon-Baillie wishes to put in relation to the transfer of title is based on the following propositions. First, Macaw wanted to acquire both the Property and the Protected Fittings. Secondly, the Bank did not have a charge over the Protected Fittings (because they were chattels not fixtures) and so had no power of sale of the Protected Fittings and could not transfer title to the Protected Fittings to Macaw. Thirdly, because Macaw did not acquire title to the Protected Fittings, Macaw did not acquire title to anything.

For the time being, I will assume in Professor Haydon-Baillie’s favour that the first two of these propositions are correct. However, the third proposition simply does not follow. The true legal position is that the Bank had power to sell the Property and executed a valid transfer of the Property to Macaw with the result that title to the Property be vested in Macaw. If Macaw wanted to argue that the whole transaction should be set aside because the parties made a mistake as to the ability of the Bank to transfer title to the Protected Fittings, then that matter might have to be investigated. However, neither Macaw nor the Bank seek to set aside the whole transaction and Macaw and the Bank wish the transaction to take effect to the fullest extent possible. Accordingly, whatever the position in relation to the Protected Fittings (a matter to which I refer in more detail below), there is no basis for challenging the efficacy of a transfer of the Property from the Bank to Macaw.

I have now dealt with all of the Claimants’ claims and other assertions in relation to the Property, apart from the Contents.

The Contents of the Property can be divided into three groups. First there are the Protected Fittings, those items marked with an asterisk in the Second Schedule to the conveyance of 1^st March 1989. The second class consists of the other items in the Second Schedule to that conveyance; I will refer to these items as “the other items in the Second Schedule”. The third class consists of what Professor Haydon-Baillie calls “the Historic Artefacts”. It is convenient to consider these three classes of Contents separately.

The contract of sale dated 30^th April 1999 provided for the sale of all fixtures in the Property. Further, the contract for sale provided for the sale of the Protected Fittings in the Property. If the Protected Fittings were, in law, fixtures then they were part of the real property. Accordingly, those items were charged to the Bank, the Bank had a power of sale in respect of the Property including those items and the transfer of the Property to Macaw will have transferred the Property including those items. In the same way as the Claimants cannot challenge the transfer of the Property to Macaw, if the Protected Fittings were fixtures then the Claimants cannot challenge the transfer of the Protected Fittings either.

If the Protected Fittings, or some of them, were chattels then those chattels were not charged to the Bank. On that basis, the Bank did not have a power of sale of those chattels and the Bank did not have power to transfer title to those chattels to Macaw. Even if the Bank purported to transfer title to those chattels to Macaw, Macaw does not thereby acquire title; nemo dat quod non habet. Title would therefore have remained with the relevant Claimant and, prima facie, the relevant Claimant is entitled to recover its Property.

The issue therefore potentially arises whether all of the Protected Fittings were, in law, fixtures or whether all of the Protected Fittings, or some of them (and if so which) were chattels.

Whether the Protected Fittings became fixtures depends upon whether they were sufficiently annexed to the land to become part of the land. The question as to “sufficient annexation” depends upon the extent and also the purpose or object of the annexation. These matters were described by Blackburn J in Holland v Hodgson (1872) LR 7 CP 328 at 334 to 335, as follows:

“There is no doubt that the general maxim of the law is, that what is annexed to the land becomes part of the land; but it is very difficult, if not impossible, to say with precision what constitutes an annexation sufficient for this purpose. It is a question which must depend on the circumstances of each case, and mainly on two circumstances, as indicating the intention, viz., the degree of annexation and the object of the annexation. When the article in question is no further attached to the land, than by its own weight it is generally to be considered a mere chattel; see Wiltshear v Cottrell 1E& B674, and the cases there cited. But even in such a case, if the intention is apparent to make the articles part of the land, they do become part of the land: see D’Eyncourt v Gregory LR3 Eq 382…….Perhaps the true rule is, that articles not otherwise attached to the land other than by their own weight are not to be considered as part of the land, unless the circumstances are such as to shew they were intended to be part of the land, the onus of shewing that they were so intended lying on those who assert that they have ceased to be chattels, and that, on the contrary, an article which is affixed to the land even slightly is to be considered as part of the land, unless the circumstances are such as to shew that it was intended all along to continue a chattel, the onus lying on those who contend that it is a chattel.”

This statement by Blackburn J still represents the law: see Elitestone Limited v Morris [1997] 1 WLR 687.

There have been several cases over the years dealing with articles of ornament. The cases are conveniently summarised in Woodfall on Landlord and Tenant Volume 1 at para 13.135, in these terms:

“….articles of ornament are frequently held not to have become fixtures despite having been affixed to the property since many such articles cannot be enjoyed without some degree of affixation. So paintings, tapestries and antique panelling and fireplaces have all been held to remain chattels even though affixed by nails or screws. In each case the court came to the conclusion that the purpose of the annexation was the better enjoyment of the chattel as a chattel. By contrast, where the court comes to the conclusion that the objects were attached to the property for the purpose of its permanent beautification, the attached article will probably be held to be a fixture. So statues forming part of the architectural design of the building were held to be part of the property, even though they were resting on the ground only by their own weight. So also were ornamental wood carvings by Grinling Gibbons which were part of the original decorations of a mansion house, even though they had been moved within the house; and frescoes forming part of the permanent decoration of a cinema. In many cases the articles in question could equally well be chattels or fixtures, and in such cases the purpose of the annexation may be decisive. So where garden ornaments resting by their own weight could have been part of the permanent design of the garden or merely placed in the garden to be enjoyed as chattels, the fact that the owner of the land regarded them as features of the garden showed that they were fixtures.”

In the absence of other considerations, it would seem that one would apply these general principles to the detailed facts relating to the items in dispute. Such an enquiry would involve a detailed examination of the extent of annexation and the purpose of annexation in relation to each disputed item. It is agreed that the court cannot form a concluded view on that matter on these summary applications. Accordingly, in the absence of any other consideration, the question as to whether all of the Protected Fittings have become fixtures or whether some or all of them have remained chattels would have to go to trial.

As I stated earlier, when recounting the history of this matter, the Bank received advice from Counsel, Mr Crawford, that all of the Protected Fittings were fixtures. I referred above to Mr Crawford’s reasoning and for present purposes it suffices to say, that, in my judgment, there are substantial arguments which can be put forward to challenge that reasoning. As this is an application by the Defendants for a summary determination of the matter, in view of the fact that I am not persuaded that Mr Crawford’s reasoning concludes the matter in the Defendants’ favour and because, subject to any other consideration, the matter will have to go to trial, it is desirable that I do not discuss Mr Crawford’s reasons in greater detail and leave such questions to the court which has to determine the issue as to whether the Protected Fittings became fixtures or remained chattels.

Notwithstanding the above, it was submitted to me that the present claim in so far as it asserts ownership of the Protected Fittings on the basis that they were all chattels at the relevant time is an abuse of process and should be struck out for that reason. The burden of submissions on this issue was borne by Mr Fulton on behalf of the Bank.

I have already referred to the three earlier sets of proceedings which were the Bank’s claim to possession of the Property, the Claimants’ unsuccessful application for an interim injunction restraining a sale of the property and the proceedings as to the surplus proceeds of sale.

Before dealing with the legal principles as to abuse of process and the application of those principles to the facts of this case, I should deal briefly with a case that is not argued on behalf of the Bank. I enquired of Mr Fulton whether the Bank wished to argue that the surplus proceeds which were paid to the Trustees of the Succession Trust, with the consent of Professor Haydon-Baillie in his personal capacity, should be regarded as including a sum for the value of the Protected Fittings. If that were the right approach then, I enquired of Mr Fulton whether the Bank wished to argue that the Claimants have already received in full the value of the Protected Fittings and it was not open to them to bring a proprietary claim to recover the Protected Fittings. In response to my enquiry, Mr Fulton stated that the Bank did not intend to submit that the Claimants had, in effect, agreed to give up their claim to the Protected Fittings by taking the proceeds of sale nor did the Bank intend to argue that the Claimants’ entitlement to the Protected Fittings was in some way settled by the settlement of the proceedings relating to the surplus. The justification for this stance being taken by the Bank appears to be that the Bank had sold the Property and the Protected Fittings with no title guarantee and if it should transpire that the Protected Fittings were chattels, were not charged to the bank, were not effectively sold to the purchaser then the Claimants, or the relevant Claimant, would be entitled both to keep the surplus proceeds of sale and to pursue a proprietary claim in relation to the chattels. In view of Mr Fulton’s statement of the Bank’s position, I will not further consider that line of argument.

The relevant legal principles as to abuse of process are those contained in the speeches of Lord Bingham of Cornhill and Lord Millett in Johnson v Gore Wood & Co [2002] 2 AC1. At page 22, Lord Bingham stated:

“The rule of law depends upon the existence and availability of courts and tribunals to which citizens may resort for the determination of differences between them which they cannot otherwise resolve. Litigants are not without scrupulous examination of all the circumstances to be denied the right to bring a genuine subject for litigation before the court…This does not however mean that the court must hear in full and rule on the merits of any claim or defence which a party to litigation may choose to put forward.”

At page 31, after referring to Henderson v Henderson (1843) 3 Hare 100 Lord Bingham stated:

“The underlining policy interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary before abuse may be found, to identify any additional elements such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings will be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in the later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not. Thus while I would accept that lack of funds would not ordinarily excuse a failure to raise in earlier proceedings an issue which could and should have been raised then, I would not regard it as necessarily irrelevant, particularly if it appears that the lack of funds has been caused by the party against whom it is sought to claim. While the result may often be the same, it is in my view preferable to ask whether in all the circumstances a party’s conduct is an abuse than to ask whether the conduct is an abuse and then, if it is, to ask whether the abuse is excused or justified by special circumstances. Properly applied, and whatever the legitimacy of its descent, the rule has in my view a valuable part to play in protecting the interests of justice.”

At page 59, Lord Millett stated:

“It is one thing to refuse to allow a party to relitigate a question which has already been decided; it is quite another to deny him the opportunity of litigating for the first time a question which has not previously been adjudicated upon. This latter (though not the former) is prima facie a denial of the citizen’s right of access to the court conferred by the common law and guaranteed by Article 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms (1953). While, therefore, the doctrine of res judicata in all its branches may properly be regarded as a rule of substantive law, applicable in all save exceptional circumstances, the doctrine now under consideration can be no more than a procedural rule based on the need to protect the process of the court from abuse and the defendant from oppression.”

At page 60, Lord Millett referred to the situation where the defendants in one action were different from the defendants in a later action and where the claimant in the later action was not the same as the claimant in the first action.

Mr Fulton on behalf of the Bank addressed himself to the broad merits based judgment which is required in this context. He submitted that there were eleven factors which were relevant and that it was right to consider the accumulated effect of these factors. In identifying his eleven factors, Mr Fulton was not only dealing with the claim in relation to the Protected Fittings but also the earlier claims in relation to the possession proceedings and I have already dealt with those claims without finding it necessary to consider the topic of abuse of process in relation to them. Nonetheless, to do justice to Mr Fulton’s submissions, I will summarise what he had to say on the question of abuse of process generally.

His first point was that the Bank had already been the subject of three earlier proceedings. His second point was that the Claimants’ assertions in relation to the possession proceedings were a collateral attack on the outcome of those proceedings and that was an aggravating factor. His third point was that the surplus proceedings, when they were settled, appeared to achieve finality for the parties. The Bank was entitled to assume that all questions as to the Protected Fittings were now resolved. His fourth point was that the application for an interim injunction was the time when the claimant should have brought forward their whole case as regards title to chattels. His fifth point referred to the fact that the Claimants had the benefit of advice from Ms Carrington of Counsel and Mr Bannister QC. Ms Carrington’s pleading in relation to the alleged chattels was a comprehensible pleading which was to be compared with the largely incoherent pleadings generated by the Claimants in the First Action and the Second Action. Further, it was submitted, Mr Bannister’s letter of advice gave an insight into the strategy which was adopted by the Claimants. They brought the injunction proceedings, it was submitted, as a means of attempting to stop the sale of the Property. The Claimants’ solicitors had written at that time saying that the Property would have to be re marketed. Further, it was contended at this stage of the submissions, that although Mr Bannister’s advice pointed out the need to distinguish between the Protected Fittings which were chattels and those which were fixtures, the Claimants have never attempted to do that but had asserted in the widest terms that all of the Protected Fittings were chattels.

Mr Fulton’s sixth submission was that the claim now being made in relation to the Protected Fittings was not being pursued as an independent claim but was being brought together with a “raft of other claims”. The seventh submission was that the claim in relation to the Protected Fittings was made not just against the Bank but against a “raft of other defendants”. Mr Fulton stressed the very burdensome nature of these proceedings for the Bank so that even if the Bank succeeded on every point, the Bank would have been put to considerable expense in relation to irrecoverable legal costs and would have incurred significant management time. Mr Fulton’s eighth submission involved a criticism of the way in which the Claimants had conducted the proceedings thus far, leading to the conclusion that there is no reason to believe that the Claimants would run these proceedings properly in the future. Indeed, Mr Fulton referred to the nature of the allegations in the Third Action and the statements made by Professor Haydon-Baillie in the course of argument that he intended to initiate criminal proceedings against various defendants as demonstrating that the Claimants would not pursue any proper claim in an appropriate measured way.

Mr Fulton’s ninth submission related to the delay in commencing the First Action some six years less one day after the contract of sale of the 30th April 1999. Mr Fulton accepted that the Bank did not have a limitation defence. Mr Fulton’s tenth submission was that there was no proper explanation from the Claimants for the delay in bringing the First Action. Professor Haydon-Baillie’s ill health may have been a factor at some earlier point in time but was not an explanation for the entire period of delay. Further, the Trustees of the Succession Trust should have considered their own position irrespective of Professor Haydon-Baillie’s health. Mr Fulton’s eleventh and final submission was that it was appropriate in all the circumstances to strike out the claim as an abuse of process. He gave as part of his justification for this submission the point that the Defendants in the Second Action would not have been in a position themselves to apply to strike out a claim in relation to the Protected Fittings. I should say by way of comment that I was not clear why this would be so as a successor in title to the Bank would on the face of it be in the same position as the Bank in this respect.

Mr Fulton accepted that if the Claimants had brought properly pleaded proceedings asserting title to the Protected Fittings a month or so after the hearing before Sullivan J on 27^th May 1999, then a submission based on abuse of process could not be made.

Mr Denehan on behalf of the purchaser, Macaw, dealt with the way in which the Claimants had brought and conducted these proceedings as part of a general submission as to the attitude the court should take to these striking out applications. Whether these submissions can be described as going to “abuse of process” or something else, it is convenient for me to refer to Mr Denehan’s submissions at this point. He pointed out that although the Claimants were in person and although a court may be prepared to be more indulgent to a litigant in person as compared with a litigant represented by solicitors and counsel, there was no necessity for the Claimants to present their case in person. It was suggested, in particular in relation to the Succession Trust, that it ought to have funds to pay for proper legal representation in view of the fact that it received the surplus proceeds of sale in 2000. Mr Denehan was, rightly, highly critical of the way in which Professor Haydon-Baillie conducted the proceedings in court. He pointed out that Professor Haydon-Baillie had taken three days to make oral submissions which did not add anything to the written material. It was also submitted that the assertions made in writing by the Claimant were unparticularised, impenetrable, scurrilous and verged upon a stream of consciousness. Mr Denehan respectfully submitted to me that the court should not immerse itself in the mass of documents in this case to see if the court could discover something arguable in all that material. Mr Denehan referred to the fact that I had repeatedly asked Professor Haydon-Baillie to identify his causes of action, and the alleged breaches and the alleged consequences but Professor Haydon-Baillie had never responded constructively to those requests. It was submitted that the Claimants should not be given another chance to reformulate their case because such a chance would not be a second chance but a third chance. The second chance which the Claimants were given and persistently refused to take was the three days of oral submissions by Professor Haydon-Baillie. Mr Denehan cited the case of Wallis v Valentine [2002] EWCA Civ 1034. In that case, it appeared that the Claimant had an arguable claim to damages for defamation. Nonetheless, the judge struck out the claim and his decision was upheld by the Court of Appeal. It was submitted on behalf of the successful defendant in that case that the claimant was pursuing a vendetta against the defendant rather than pursuing a vindication of his reputation. The limited extent of the publication of the defamatory material was such that the claimant’s reputation would not have suffered any real harm and if damages were awarded they were likely to be extremely modest. A modest award was to be contrasted with the enormous costs likely to be incurred in contesting a fourteen day case and there was no prospect of recovery of any costs against the claimant who had no income and no assets. The Claimant’s object in bringing the proceedings was to stave off his bankruptcy. The judge substantially accepted these submissions. He referred to the fact that the damages would be very modest and perhaps nominal. The case was of no general importance. The issues were very complex and there would be considerable interlocutory work and a lengthy trial. That would be wholly disproportionate to the importance of the case. If the claimant lost, the claimant would be unable to pay the defendant’s costs. The proceedings would make substantial inroads into the court’s resources. The libel involved a technical publication unlikely to have resulted in any harm to the claimant’s reputation. The claim was brought for the dominant purpose of causing further harassment and expense to the defendants.

The Court of Appeal in Wallis v Valentine considered the authorities as to a claimant’s motive for bringing the claim. In view of all the circumstances and in particular the judge’s conclusion that the claim was wholly unmeritorious and pursued for vindictive purposes, the Court of Appeal agreed that the claim should be struck out.

I will now deal with Mr Fulton’s submissions point by point and then with the submissions made by Mr Denehan.

Mr Fulton’s first point related to the three former sets of proceedings. The First Action, being the Bank’s claim to possession does not seem to me to be of particular relevance to the intended claim to title to the Protected Fittings. As regards the second court proceeding, the application before Sullivan J, the learned Judge in giving judgment expressly referred to the possibility of a claim being pursued in respect of the title to the chattels. Further, Mr Fulton accepted that if such a claim had been brought promptly after May 1999, there would not have been an abuse of process. The third claim involved the settlement of the proceedings as to the entitlement to the surplus proceeds. However, as I have explained, Mr Fulton accepted that the settlement in those proceedings did not amount to an agreement that the claimants would take the surplus proceeds in respect of their entitlement to the Protected Fittings.

Mr Fulton’s second point that the arguments about the possession proceedings were a collateral attack on the outcome of those proceedings, does not relate to the matter now being considered.

Mr Fulton’s third point related to the apparent finality achieved in the proceedings about the surplus proceeds. However, in view of the concession that the settlement of those proceedings did not amount to an agreement or a settlement relating to the Protected Fittings, the Bank’s apparent views that the matter was now at an end were really more of a hope than a well justified conclusion. If the bank had wished to rule out the possibility of a further claim to title to the Protected Fittings then it would have been open to the Bank to have proposed a term of settlement to that effect.

Mr Fulton’s fourth point as to the proceedings before Sullivan J, in my judgment, counts against him as the learned Judge plainly contemplated that further proceedings relating to the title to the Protected Fittings might be brought.

Mr Fulton’s fifth point referred to a number of features of the advice given by Mr Bannister QC. I am prepared to accept that the motivation for the application for the interim injunction was to interfere with the sale of the Property rather than just the sale of the Protected Fittings. The Claimants are also open to criticism in that they have not sought to plead their case along the lines of the draft pleading prepared by Ms Carrington but have instead generated prolix and obscure pleadings in the First Action and the Second Action.

As to Mr Fulton’s sixth and seventh submissions as to the difficulty of dealing with a claim to title to the Protected Fittings in litigation involving many issues and many parties, that problem is capable of solution. It is open to the court to strike out the bulk of the present case but to leave a claim to title to the Protected Fittings against certain defendants only. It is open to the court to require the Claimants to put in a pleading which satisfies the court as to its form and content and, in default of which, the claims would be struck out. It is also open to the court to require a claimant if he wished to proceed against a particular defendant to pay all of that defendant’s costs incurred to date before the claimant can pick matters up again and continue against that defendant in relation to the Protected Fittings. It is also open to the court to order that such costs be assessed on an indemnity basis.

Mr Fulton’s eighth point was that there was no reason to think that the Claimants would conduct this litigation properly in the future if they were allowed to continue it. I will return to that matter when dealing with Mr Denehan’s submissions on a similar topic.

Mr Fulton’s ninth and tenth submissions related to the fact of delay and the absence of explanation for it. However, Mr Fulton accepted that the proceedings were issued within the relevant limitation period and the delay he relied upon was the delay in issuing the proceedings rather than in pursuing the proceedings following their issue. Mr Fulton’s last submission was a general one as to the appropriateness of the claims being struck out.

Turning to Mr Denehan’s submissions, I have a great deal of sympathy with those submissions but am not able to adopt the conclusion he urged upon me. The Claimants have generated pleadings in the First Action and the Second Action which are worse than useless. Professor Haydon-Baillie did not make proper use of three days of oral submissions which he insisted were essential to enable him to explain the Claimants’ case. Professor Haydon-Baillie was prepared to make a large number of factual assertions, supported by his statement of truth, when those assertions were without factual foundation. Professor Haydon-Baillie did not ever attempt to assist the court with a convenient summary of this case. This is further illustrated by his attitude in relation to his third witness statement of 30^th September 2006. That witness statement extends to some 231 pages. A large part of the witness statement was a commentary on documents in Gouldens’ files. As a running commentary on documents, the witness statement was extremely difficult to absorb. On the fifth day of these applications, Professor Haydon-Baillie abandoned large parts of the Claimants’ pleaded case. I asked Professor Haydon-Baillie to edit the 231 page witness statement so as to remove from it those parts of the commentary which ceased to be relevant in view of the abandonment of large parts of the claim. Professor Haydon-Baillie indicated that he would edit the witness statement but the edited form left some 99 percent of the statement unaffected. Professor Haydon-Baillie said that he was entitled to insist that the court read this witness statement notwithstanding the fact that large parts of the case had been abandoned and notwithstanding the fact that the statement continued to be difficult to absorb and understand.

Having fully considered these submissions of Mr Fulton and Mr Denehan, I am not prepared to hold that a properly pleaded claim brought by the right claimant against the right defendant in relation to title to the Protected Fittings would be an abuse of process of the court. Such a claim would have sufficient prospects of success to justify its being brought. Such a claim could involve objects of value which could not be described as small or minimal or nominal. Such a claim has not been litigated before save in the form of an interim application to Sullivan J who, in my judgment quite rightly, contemplated that a claim based on title to the Protected Fittings could properly be brought. I do not regard the delay in bringing these proceedings as sufficient to amount to an abuse of process of the court even taken together with the other factors urged upon me. I regard the way in which the Claimants have conducted this litigation as unhelpful and as burdensome both to the Defendants and to the court. It is difficult to know for certain what Professor Haydon-Baillie’s subjective motives are and, indeed, it is difficult to know what the other Trustee of the Succession Trust thinks about these proceedings. It is possible that Professor Haydon-Baillie wants these proceedings to be as burdensome on the Defendants as possible. It is also possible that there is some element of vindictiveness on his part. It is possible, indeed likely, that Professor Haydon-Baillie is not approaching this litigation in a realistic and proportionate way. It is also possible that Professor Haydon-Baillie has a much higher opinion of his own abilities as a litigant than is appropriate. It is obvious to me that a claim to title to the Protected Fittings would benefit enormously from some competent legal advice. Having said all that, in view of the fact that the Claimants, or one of them, have a properly arguable case of not insignificant value in relation to some or all of the Protected Fittings, I am not prepared to strike out the claim in its entirety.

I will, however, seek to identify who is the proper claimant and who is the proper defendant in proceedings relating to the title to the Protected Fittings. I will also require the proper claimant to submit a draft pleading which satisfies the court as to its form and contents as a pleading and failing that the First and Second Actions will be struck out (in so far as they would not be anyway struck out in respect of other issues and other defendants.)

I referred earlier in this judgment to CPR 3.4 (4). That rule deals with the case where a claimant’s statement of case has been struck out and the claimant has been ordered to pay costs to the defendant, the court may stay any subsequent claim arising out of substantially the same facts until the costs of the first claim have been paid.

After judgment is given in this case I will hear argument as to whether the Claimants should pay the costs incurred by the Defendant or some of those costs. I will also hear argument as to the basis of assessment of costs so ordered. If I order the Claimants to pay the costs of a particular Defendant and I permit the action to continue, when properly pleaded, against that Defendant in relation to a claim to title to the Protected Fittings, I will hear argument whether such a claim should only be allowed to continue when the relevant claimant has paid the costs so ordered to be paid to that defendant, failing which, the action is to be struck out.

Who is the proper claimant in relation to a proprietary claim to recover the Protected Fittings on the basis that they remain as chattels? My immediate reaction to this question is that the proper claimant should be the person who asserts title to the alleged chattels. In this case, Professor Haydon-Baillie asserts that he has been and remains the legal owner of the chattels. He therefore appears to be a proper claimant. Of course, on 7^th November 1995, Professor Haydon-Baillie covenanted with the Trustees of the Succession Trust that he would transfer the Protected Fittings to the Trustees of the Succession Trust within twenty eight days of the discharge of the charge of 7^th November 1995. In my judgment, assuming that a contract to transfer chattels is specifically enforceable where the chattels are unique, the covenant will not give rise to an equitable interest in the chattels until the contingency, the discharge of the charge, is satisfied: see Michaels v Harley House Limited [2000] Ch104 at 115B and 116C. However, when the Bank sold the Property pursuant to its power of sale and the full amount of the indebtedness was paid out of the proceeds of sale then, it seems to me, the point must have been reached when the charge was discharged. On the assumption that the alleged chattels were not charged to the Bank and therefore were not sold by the Bank they remain owned by Professor Haydon-Baillie who was then obliged to perform his covenant to transfer the alleged chattels to the Trustees of the Succession Trust. At that point, the Trustees would have acquired an equitable interest in the alleged chattels. For the purposes of the tort of conversion it is not sufficient for a claimant to assert that it has an equitable interest in the chattel which is alleged to have been converted: see MCC Proceeds Inc v Lehman Bros 1998 4 All ER 675, analysing the earlier decisions in Healey v Healey [1915] 1KB 938 and International Factors v Rodriguez [1979] QB 351. The equitable owner must show that at the date of the conversion, it had an immediate right to possession of the chattel and that that right to possession was interfered with by the defendant.

It cannot be right that both Professor Haydon-Baillie in his personal capacity and the Trustees of the Succession Trust claim recovery of the alleged chattels. One claimant or set of claimants ought to suffice. If Professor Haydon-Baillie with legal title to the chattels remains the claimant, then there is no need for the Trustees of the Succession Trust to be a claimant, and prima facie, they ought to be removed as claimants. As I understand it, the various Defendants say that the Trustees should indeed be removed as Claimants although I can see some circumstances in which it may be beneficial to the Defendants to have the Trustees remain as Claimants. For example, if the Trustees remain as Claimants, the presence of someone other than Professor Haydon-Baillie himself might conceivably lead to greater objectivity being brought to bear in respect of these proceedings (although that has not happened to date). In any event, the presence of an additional claimant may provide the Defendants with an additional person against whom to pursue an order for costs if such an order were to be made in the Defendants’ favour. Nonetheless, if the Defendants wish the Trustees to be removed as Claimants in the proprietary claim to recover the Protected Fittings, then that does seem to be appropriate.

I will next consider who should be the proper defendant to a claim by the relevant claimant to recover the Protected Fittings. Before expressing my conclusion on that point, it is necessary to recite a number of conveyancing steps which have occurred.

As stated above, on 30^th April 1999, the Bank contracted to sell the Protected Fittings to St. Ledger Investments Limited. On 4^th June 1999, the Bank completed that sale with the transfer of the Property being taken by Macaw. The formal transfer did not refer to the Protected Fittings as such but, it seems likely, that Macaw was given possession of the Property in which the Protected Fittings were placed. On the 4^th June 1999, Macaw charged its freehold title to the Property in favour of St. Ledger Investments Limited. The charge was expressed to relate to “the land comprised in [Title No. SYK 270992]”. The transfer of 4^th June 1999 would only have been an effective transfer of title to the Protected Fittings if they were fixtures and not chattels. The same comment applies to the charge dated 4^th June 1999.

The next events in relation to title and possession of the Property all seem to have happened on the 2^nd December 2005. On that date, Macaw transferred the title to the Property to Paul Newbold, Giles Newbold and Marcus Newbold. Again, the form of the transfer is not in the documents before the court but it is entirely possible that that which was purportedly transferred included the Protected Fittings. On the same day as, but presumably before, the transfer of the freehold, Macaw as freeholder underlet the Property for twenty years from 1^st December 2005 at a peppercorn rent. The Property which was demised was said to include “the fixtures, fittings and contents listed on the schedule hereto”. The schedule attached to that lease appears to be the full Second Schedule to the conveyance of 1^st March 1989. The schedule as attached to the lease does have asterisks against such items but, on the face of it, the asterisks are not significant for the purposes of the lease and the items which are demised extend to all of the items in the schedule to the lease. On this basis, the lease purported to be a demise of not only the Protected Fittings but also other items in the Second Schedule to the conveyance of 1^st March 1989.

On the 2^nd December 2005, SW1 Nominees Limited as the lessee of the Property, and the items in the schedule to the head lease, underlet certain rooms at the Property to Macaw. The underlease was for a term of twenty years less three days from the 1^st December 2005. The premises underlet included certain fixtures, fittings and contents listed in the schedule to the underlease and the schedule to the underlease referred to a number of items which included a few of the Protected Fittings as defined in the conveyance of 1^st March 1989 and a few other items from the Second Schedule to the conveyance of 1^st March 1989. On the 2^nd December 2005, Macaw as underlessee transferred the underlease to Paul Newbold, Giles Newbold and Marcus Newbold.

Reverting to the question as to the proper defendant to a proprietary claim to recover the Protected Fittings, this question should be answered by reference to the persons who assert that they own or have an interest in the Protected Fittings rather than the relevant claimant. As at April 2005, when the Second Action was brought, the freeholder was Macaw and it seems consistent with Macaw’s position in the litigation that it will wish to assert that when the action was brought against it it had title to the Protected Fittings on the basis that they were fixtures rather than chattels. Now that the freehold has been transferred to Paul, Giles and Marcus Newbold, it may be that those three individuals will assert that they have title to the Protected Fittings on the basis that they are fixtures and not chattels. The lease and the underlease were created after the Second Action was brought and I am not told in terms whether SW1 Nominees as lessee and Paul, Giles and Marcus Newbold as underlessee assert an interest in the Protected Fittings but it would be consistent with the terms of the lease and the underlease for them to do so. Accordingly, when judgment is handed down, I will seek to establish which of these persons are relevant defendants to a proprietary claim by the relevant claimant for recovery of the Protected Fittings. However, so far as such a proprietary claim is concerned, the Bank and St. Ledger Investments Limited would not appear to be necessary defendants.

I will now consider whether one of the Claimants has a claim in conversion against any defendant in respect of the Protected Fittings on the basis that, as alleged, the Protected Fittings were at all times chattels.

It is not appropriate for me to attempt a comprehensive statement of the relevant law of conversion. However, in order to understand what follows, it may be helpful to quote certain propositions from Clerk & Lindsell on Torts 19^th Edition, chapter 17. I am not giving a ruling that these propositions of law are correct but I am proceeding on the basis, in the Claimants’ favour, that they are correct for the purposes of this summary application.

Paragraph 17.02 of Clerk & Lindsell states that the essence of conversion lies in the unlawful appropriation of another’s chattels. It is a wide tort, covering the deliberate taking, receipt, purchase, sale, disposal or consumption of another’s property. Thus, it covers not merely an interference with the Claimant’s possessory interest in his chattels but also an injury to his right or title to them. It is not possible to categorise exhaustively all modes of conversion. The principal ways in which conversion may take place include:

As regards conversion by taking or receiving property, anyone who without authority receives or takes possession of another’s goods with the intention of asserting some right or dominion over them, or deals with them in a manner inconsistent with the right of the true owner is prima facie guilty of a conversion; provided there is an intention on the part of the person so dealing with them to negative the true owner or assert a right inconsistent therewith.

As regards conversion by the transfer of property, a person who without authority delivers another’s goods to a third party by way of sale or a gift, or otherwise in a manner adverse to the right of the person really entitled, is guilty of a conversion. The same applies to a constructive delivery. There must be a delivery of some kind: a mere contract by A to sell B’s goods to C is not a conversion unless it is in effect ipso facto to deprive B of his title to them under some exception to nemo dat quad non habet. In order to be liable under this head, the defendant must take some active part in the delivery of the goods.

As regards conversion by wrongful but effective sale, where there is a delivery by way of sale on the part of a non-owner, this is a conversion even if it is ineffective to pass title to the buyer. Where there is no delivery, a mere bargain and sale even with a purported transfer of title is not a conversion. There is an exception to the last proposition where the wrongful sale is effective despite the absence of delivery to transfer title.

The ordinary way of showing a conversion by unlawful retention of property is to prove that the defendant, having it in his possession, refused to surrender the property on demand. Indeed, such a demand is generally a precondition of the right of action for detention (see Barclays Mercantile Finance Limited v Sibec Developments Limited [1992] 1WLR 1253); the mere unpermitted possession of another’s chattel is not as such a conversion of it. The demand must be unconditional, specific and the refusal must also be unconditional.

Before the Torts (Interference with Goods) Act 1977, there was room for argument as to whether a mere denial of the claimant’s title could give rise to liability in conversion. It is now clear as a result of section 11 (3) of the 1977 Act that denial of title is not of itself conversion.

The owner of a chattel who has been deprived of his possession of it may well have a remedy against more than one person. For example, A may have wrongfully taken the chattel and B may afterwards have bought it, sold it or wrongfully detained it. A and B are not joint tortfeasors but there is an independent right of action against each.

Section 3 of the 1977 Act deals with the form of judgment where goods have been detained. By section 3 (2), the relief which may be granted is:

It is also relevant to refer to Kuwait Airways Corporation v Iraqi Airways Company (Nos. 4 and 5) [2002] 2 AC 883 both for a short statement as to the scope of the tort of conversion and for a further statement as to damages for conversion. At page 1084, Lord Nicholls said:

“Conversion of goods can occur in so many different circumstances that framing a precise definition of universal application is well nigh impossible. In general, the basic features of the tort are threefold. First, the defendant’s conduct was inconsistent with the rights of the owner (or other person entitled to possession). Second, the conduct was deliberate, not accidental. Third, the conduct was so extensive an encroachment on the rights of the owner as to exclude him from use and possession of the goods. The contrast is with lesser acts of interference. If these cause damage they may give rise to claims for trespass or in negligence, but they do not constitute conversion.”

The Kuwait Airways case considers a number of points dealing with damages for conversion. It is relevant to refer to one such point in the present case. At pages 1094 to 1095, Lord Nicholls referred to “user damages”, a term which he explained by referring to his own speech in Attorney General v Blake [2001] 1 AC 268 at 278-280. Lord Nicholls referred to the circumstances in which a defendant who has converted a chattel and who then returns the chattel to the claimant owner may nonetheless be liable to pay damages for the period during which he was unlawfully using the chattel.

Having regard to the transfers of title and the grant of various interests in the Property, it is at least possible that the relevant claimant has a claim for damages for conversion against various persons who have been involved with the Property since 1999. It is possible that a claim in conversion could be made against the Bank, against Macaw, against SW1 Nominees and against Paul, Giles and Marcus Newbold.

At the hearing of these applications, on several occasions I asked Professor Haydon-Baillie to identify the facts he wished to allege which he would say amounted to conversion on the part of a named defendant. All that he was prepared to do was to refer to the conveyancing steps which had been taken such as the transfers of the freehold and the grant of the lease and the under lease. He was not prepared to identify any other handing over of possession of the alleged chattel, whether by actual delivery or constructive delivery. The various Defendants invite me to take a severe view of the claim in these circumstances. They say that although the claims are pleaded at inordinate length, they do not specify what is required to establish the tort of conversion in accordance with the principles stated in Clerk & Lindsell. They rely on the fact that Professor Haydon-Baillie was either not able to, or not willing to, address the legal ingredients of the tort with a view to making the case that the tort of conversion had purportedly been committed by a specific defendant.

There is considerable force in the Defendants’ complaints as referred to above. In view of the fact that I am not prepared to strike out a proprietary claim to recover the Protected Fittings, in that I am prepared to give the relevant claimant an opportunity to present a properly pleaded claim in that respect, I regard it as a justified further step to permit the relevant claimant to add to the proprietary claim a claim for damages for conversion. However, in order for a pleading to satisfy the court that it is a proper pleading which can go to trial it must address the ingredients of the tort of conversion, it must identify the specific acts of specific defendants which are being relied upon as amounting to the tort and it must identify the basis on which any damages are claimed.

In reaching my conclusion as to a possible continuation of a claim to recover the Protected Fittings and a claim to damages for conversion, I bear in mind that the applications before the court are summary applications and in Bolton Pharmaceutical Co v Doncaster Pharmaceuticals Group Limited [2007] FSR 63, Mummery LJ at [18] suggested the court should hesitate before making a final decision without a trial when there were reasonable grounds for believing a fuller investigation into the facts of a case at a trial might affect the outcome of the case. In my judgment, there is a sufficient chance here that a properly pleaded claim for damages for conversion could result in the recovery of damages if it were to turn out that some or all of the Protected Fittings were chattels.

In relation to these items, the first question is as to whether any of the Claimants has a proprietary claim to recover the other items in the Second Schedule. The second question is whether any of the Claimants has a claim in damages for conversion in respect of any of the other items in the Second Schedule.

The first question raises an issue as to whether any Defendant asserts an entitlement to any of those items. I was told that all of the items in the Second Schedule were described in the sales information prepared by the Bank at the time of the proposed sale by the Bank. I have not myself found the relevant documents which show this. However, as explained above, the contract of sale made by the Bank did not include the other items in the Second Schedule. Before completion of the sale, when the Claimants asserted title to the Contents in the Property, Gouldens on behalf of the Bank made it clear that the Bank only asserted a right to sell the Protected Fittings and not anything else. Following completion of the purchase of the Property, there was correspondence from Gordon Dadds on behalf of Macaw which (whilst it is not wholly clear) might be read as accepting that the other items in the Second Schedule had not been transferred to Macaw (see the 3^rd paragraph on the 3^rd page of Gordon Dadds’ letter of 14^th July 1999). As against that, the lease to SW1 Nominees Limited and the sublease to Macaw proceed on the basis that the other items in the Second Schedule, or some of them, had passed on the sale to Macaw. In my judgment, this point can be clarified following the handing down of judgment. If no Defendant claims title to the other items in the Second Schedule, then there will not be a need for a proprietary claim in relation to those items. If any Defendant does claim title to any of the other items in the Second Schedule (presumably on the ground that it is a fixture), then in my judgment, a claim by Professor Haydon-Baillie (but not the other Claimants) should be allowed to go forward, subject to the same conditions which are applied to the proprietary claim in relation to the Protected Fittings.

As to the second question, I would be prepared (as in the case of the Protected Fittings) to allow a claim in conversion to be formulated against anyone with an interest in the Property from Macaw onwards (but not against the Bank, against whom there is plainly no case) where Professor Haydon-Baillie is able to put forward a properly pleaded case of conversion. As with the case of the Protected Fittings, such a pleading must be approved by the court as an appropriate pleading to go forward from this stage.

The two questions which arose in relation to the other items in the Second Schedule arise again here in relation to the Historic Artefacts.

As to the first question, it is clear that the Bank did not assert a right to the Historic Artefacts. However, the letter from Gordon Dadds of 14^th July 1999, on behalf of Macaw, does appear to claim items 1 – 7, but not 8, of the Historic Artefacts: see the 4^th and 5^th paragraphs on the 4^th page of that letter. The present position should be clarified following the handing down of this judgment: does any Defendant now claim any of the Historic Artefacts? If no Defendant claims any of the Historic Artefacts, then there will be no need for a proprietary claim in relation to them.

As to the second question in relation to the Historic Artefacts, I will adopt the same approach as indicated above in the case of the other items in the Second Schedule.

Having dealt with the main claims in relation to the Property and in relation to the Contents, I can now identify the position of the various Defendants.

As regards the Bank, there is no claim of any kind against the Bank in relation to the sale of the Property. As regards the Contents, the only possible claim against the Bank (subject to the relevant claimant filing a draft pleading which satisfies the court) is a possible claim to damages for conversion by purporting to sell the Protected Fittings to Macaw.

In relation to Gouldens, I have already held that Gouldens did not owe any duty of care to any of the Claimants in relation to the possession proceedings against Professor Haydon-Baillie. For essentially the same reasons, I conclude that Gouldens did not owe any duty of care in connection with the sale of the Property and the Protected Fittings by the Bank. Even though there remains a possibility of a claim against the Bank for damages for conversion, Gouldens are not liable as joint tortfeasors for any such conversion. Gouldens’ role was as solicitors to give legal advice to its client. The claims in conspiracy which were pleaded in the claim form were withdrawn by the Claimants. In any case, they were completely untenable. Gouldens were not a party to a common design with their client to commit a tort. If and in so far as it could be said that the giving of legal advice by a solicitor to a client in circumstances where the client ends up committing a tort, was a form of assistance to the client to commit a tort (and I am very doubtful about even that proposition), it is clearly established that knowing assistance to a tortfeasor does not make the assisting party itself liable as a joint tortfeasor: see Credit Lyonnais Bank v Export Credit Guarantee Department [1998] 1 Lloyds Reports 19 at 42 to 46 per Hobhouse LJ, following CBS Songs Limited v Amstrad Consumer Electronic Plc [1988] AC 1013 at 1055 to 1057 per Lord Templeman.

In relation to the Second Action, the First Defendant is Mr Clifford Newbold who, I understand, is a Director of one of the companies on the purchasers’ side of the transaction. There does not appear to be the beginning of a case against Mr Newbold personally. The Second Defendant was Mrs Dorothy Newbold and it is sufficient to say that there is not the beginning of a case against her either. The Third, Fourth and Fifth Defendants are Paul, Giles and Marcus Newbold. As a result of the transactions on 2^nd December 2005, these three have become the freehold owner of the Property and there is no case against them or their predecessor in title to set aside their ownership of the freehold. The same applies to their position as underlessees under the underlease of 2^nd December 2005. I have indicated the extent to which they might be relevant defendants to a claim in relation to the Contents and any claim to damages for conversion.

The Sixth Defendant is Macaw. I have indicated the extent to which it might be a relevant party to a claim for damages for conversion.

The Seventh and Eighth Defendants are St Ledger Investments Limited and an associated company St Ledger Properties Limited. In my judgment, there is no claim against these parties.

The Ninth Defendant is Gordon Dadds, solicitors, who acted for St Ledger Investments Limited as contracting purchaser and Macaw as transferee of the Property. There is no basis on which Gordon Dadds could be said to have owed any duty of care to any Claimant essentially for the reasons I have already discussed in relation to Gouldens. Similarly, in so far as there might be a claim in conversion in relation to the Contents, it is not arguable that Gordon Dadds are liable as a tortfeasor for such conversion.

The Tenth and Eleventh Defendants are Nexia Audit Limited and Smith & Williamson Limited. These two Defendants were auditors of and/or tax advisors to various companies which were sued as Defendants in the Second Action. However, these two Defendants were not involved in any way with the sale by the Bank to St Ledger Investments Limited as contracting purchaser and Macaw as transferee. There is absolutely nothing which either of the Tenth or Eleventh Defendants did which could conceivably give rise to any liability on their part for any of the matters referred to in these proceedings.

The Third Action was started on 17^th April 2007. The Claimants are Professor Haydon-Baillie and the Trustees of the Succession Trust. The claim form extends to some thirty three pages. Professor Haydon-Baillie emphasises that this document is merely a claim form and is not a particulars of claim. The court has power to strike out a claim form and does not have to wait until the Claimant serves particulars of claim.

As with the First Action and the Second Action, it is difficult to summarise the many and varied allegations in the Third Action. The Third Action pleads subsequent dealings with the Property after the sale in April to June 1999. I have already recounted the subsequent conveyancing steps in relation to the Property. In paragraphs 39 to 42 of the claim form, the Claimants allege that various Defendants have dissipated the assets of Macaw, sought to make the Defendants judgment free by distancing and compromising the assets which are the subject of the claim, have obstructed and interfered with and perverted the course of justice and have transferred assets at an undervalue. In so far as the claims relate to the Property (apart from the Contents), I have already determined that the Claimants have no arguable case in respect of the Property and Macaw as purchaser of the Property was free to deal with it and grant interests in the Property as it saw fit. In so far as the Claimants have a claim to own any of the Contents, then the Claimants have not lost their ownership by reason of the chattels being passed (if they were) from one Defendant to another. Even if the various dealings with the Property (and possibly the Contents) since 1999 were done with a view to creating difficulty for the Claimants in advancing their claim, that would not give the Claimants any independent course of action.

The Third Action continues by identifying a litany of alleged contraventions of Companies legislation and other statutes and is free with allegations of criminal offences and contempts of court. It has not been necessary at the hearing of these applications to investigate whether there is any factual basis for the allegations made because the Claimants were at all times unable to show the existence of any obligation owed by the Defendants to the Claimants, which was thereby broken by the Defendants.

The relief sought in the Third Action is, in summary, orders from the court to restore title to the Property to Professor Haydon-Baillie and/or the Trustees of the Succession Trust and to restore ownership of the Protected Fittings and the other items in the Second Schedule and the Historic Artefacts. As regards the Property (apart from the Contents), I have already determined that the Claimants have no claim in relation to the Property. As regards the Contents, I have specified the extent to which (subject to the Claimants putting in a properly pleaded claim in this respect) they should be entitled to pursue recovery of alleged chattels and damages for conversion.

In addition to the above more general remarks about the Third Action, the claim against the first Defendant, Clifford Newbold, should be struck out; there is no basis for the Claimants bringing proceedings against him. The position of Paul, Giles and Marcus Newbold and of Macaw I have already dealt with earlier in this judgment. There is no arguable claim against the two companies St Ledger Investments Limited and St Ledger Properties Limited. There is similarly no arguable claim in the Third Action, as there was none in the Second Action, against Nexia Smith & Williamson or Smith & Williamson. As regards SW1 Nominees Limited, I have indicated the extent to which there may be a claim against that Defendant. The eleventh to seventeenth Defendants in the Third Action are partners in the firm of Pemberton Greenish and the eighteenth Defendant is the firm of Pemberton Greenish itself. As with the solicitors, Gouldens and Gordon Dadds, whose position I have already considered, there is no basis for alleging that Pemberton Greenish owed any duty of care to any of the Claimants and there is equally no basis for alleging that Pemberton Greenish or its partners were in any way liable as joint tortfeasors for any tort of conversion that might have been committed by any other Defendant.

I have now dealt with the substantive points raised on these applications. It may be convenient to identify the points which have not thus far been addressed and which ought to be addressed when judgment is handed down.

On the handing down of judgment, I will deal with the following matters:

It may be that the list of matters left over as described in the last paragraph is not exhaustive and I will hear the parties on any other matters that properly arise.

It was agreed at the end of the hearing that I would hand down this judgment without it being necessary for any of the parties to be present and with a view to the parties and the court then fixing a date when the remaining matters would be dealt with. In view of the number of matters potentially arising, I direct that each party should state, succinctly, its position in relation to those matters (insofar as they affect that party) in a skeleton argument to be exchanged with the other parties and supplied to the court, not later than 48 hours before the next hearing date.