Global Marine Drillships Ltd v Landmark Solicitors LLP & Ors

On 7 and 12 July 2011 I heard two applications for summary judgment, together with various other applications which I disposed of at the time. The applicant is the claimant Global Marine Drillships Limited (“Global Marine”). The first application is based on a solicitor’s undertaking (“the Undertaking”) given on 26 May 2010 by the third defendant, Ms Salina Jones, on behalf of herself personally and her firm, Landmark Solicitors LLP (“Landmark”), the second defendant, to Mr Simon McNally, a partner of Global Marine’s solicitors, Bridgehouse Partners LLP. The respondents to the first application are Ms Jones and Landmark. The second application is brought against the eighth defendant, Mr Frank Mullins (also known as Frank Crawford), and is based on his alleged active participation in the wrongful diversion by the first, second and third defendants of a substantial part of the sum of £7 million which was held by Landmark on the terms of the Undertaking.

Global Marine was represented at the hearing by Mr William Evans of counsel, instructed by Bridgehouse Partners LLP. Mr Evans has acted for Global Marine since these proceedings were started with an application for a freezing injunction against the first, fourth and fifth defendants on 28 June 2010. Mr Evans has also been responsible for the pleading of Global Marine’s case, most recently in draft re-amended particulars of claim for which permission to amend is now sought.

Landmark and Ms Jones were represented until the end of March 2011 by solicitors (Mills & Reeve LLP) and counsel (Mr Nigel Burroughs) instructed by their professional indemnity insurers. However, for reasons which were not disclosed to me in evidence (although Ms Jones touched on the subject in her oral submissions) the insurers appear to have repudiated (or purportedly repudiated) liability under the policy, and by an order of Master Moncaster dated 31 March 2011 Mills & Reeve came off the record. Since that date Landmark and Ms Jones have been without formal legal representation, and Ms Jones attended the hearing as a litigant in person on behalf of herself and Landmark (of which she is at present, as I understand it, the sole active member).

Mr Mullins was first brought into the action, together with the sixth and seventh defendants, by an order which I made on a without notice application, sitting in the applications court, on 26 November 2010. By that order I granted a freezing injunction over a Bentley car which Mr Mullins was alleged to have bought with £80,000 derived from the money held pursuant to the Undertaking, and I directed him to swear and serve by 7 December 2010 an affidavit giving details of his worldwide assets. Global Marine was for some time unable to effect service of the order on Mr Mullins, so the relief which I granted against him was continued (with fresh dates for compliance) at hearings on the first two return dates in December 2010 and January 2011. Mr Mullins was eventually served, however, and at a further hearing on 4 February 2011 before Vos J he appeared in person. The freezing injunction against him was then continued until trial or further order, and he was directed to swear and serve an affidavit of assets by 25 February, to include full details about the application of the sum of £80,000.

On 22 February 2011 Mr Mullins swore a very short affidavit, under the name Francis Patrick Crawford, in which he said he had never owned or sold a Bentley motor car, and that the £80,000 had been transferred by the first defendant, William La Bella, to a Mr Dennis Arriff in repayment of a gambling debt. He gave no details at all of his assets. He also filed an undated defence and acknowledgment of service, in which he claimed not to have been in the UK “when any transactions took place”, denied that he had ever owned a Bentley, and averred that there was “no foundation to this matter”. In the admission form contained in the response pack he disclosed that he lived in lodgings, and had a bank account overdrawn by £10,000.

Since then Mr Mullins has played no further part in the action, and although he was served with the application for summary judgment against him dated 5 May 2011 he has filed no evidence and did not appear at the hearing.

The background facts are briefly these. Global Marine is one of a family of associated companies. It was established as the vehicle for the proposed purchase of a partly built deep water oil drilling and processing vessel known as “MPF-01” or “the Dalian Developer”. The drillship was apparently going to be one of the largest vessels of its kind in the world, capable of drilling in water depths of up to 3,000 metres and with a storage capacity of up to 1 million barrels of oil. The original owner of the vessel had become insolvent, and was the subject of Chapter 11 insolvency proceedings in the USA. The vessel itself had been repossessed by the bank which had financed the project, DVB Group Merchant Bank (Asia) Ltd (“DVB”). The vessel was offered for sale through a special purpose vehicle controlled by DVB, and draft contracts were put in place for completion of its construction. For reasons connected with the Chapter 11 proceedings, the sale had to be concluded as a matter of some urgency.

The businessmen who controlled the Global Marine family of companies, headed as I understand it by Mr Andy Ruhan, were introduced to this opportunity through the agency, or at least with the assistance, of a Dubai-based company called London Marketing FZ LLC (“London Marketing”), the prime mover of which was a Mr Martin Gibbins (or Tobias-Gibbins). Mr Gibbins had negotiated a very substantial line of credit with JP Morgan Chase Bank N.A., Singapore (“JP Morgan”), for another client of his called Petra Energy Trading Pte Ltd (“Petra”) in connection with a projected investment in India which had fallen through. The idea was that this line of credit could now be made available to Global Marine in order to finance the purchase of the Dalian Developer.

It was arranged that the funds for the purchase would be provided by JP Morgan in two tranches, of $200 million and $150 million respectively, and secured on the partly built vessel. By way of additional security, JP Morgan also required the issue in its favour of standby letters of credit (“SBLCs”) in those amounts. This part of the transaction was arranged by a business associate of Mr Gibbins called William La Bella (the first defendant) through his BVI-registered company, Coolmead Investments Limited (“Coolmead”). Mr La Bella was a business man and property developer with various interests in the North of England, and it was through him that Ms Jones and Landmark became involved in the story. Mr La Bella had first met Ms Jones in 2008, and he soon began to introduce work to Landmark which she had founded in Leeds (with one other member) in February of that year. In time a personal friendship developed between Ms Jones and Mr La Bella, which according to her continues to this day. She says that she has trusted him throughout.

The arrangements for the procurement of the SBLCs were set out in a written agreement (“the SBLC procurement agreement”) entered into on 26 May 2010 between Coolmead (defined as “the Provider”), London Marketing (“the Arranger”) and Global Marine (“the Client”). The agreement was expressed to be governed and construed in accordance with English law. It recited some of the background to the transaction, and Global Marine’s intention to complete the construction of the vessel and then charter it as soon as possible to generate funds for further marine investments. Coolmead undertook to provide or procure the issue of the two SBLCs, by HSBC and Deutsche Bank respectively, for the purpose of securing a lending facility to be made available to Global Marine by JP Morgan. The prescribed time limit for the issue of the first SBLC (for $200 million) was seven working days from the date of the agreement. In consideration of the services provided by Coolmead and London Marketing, Global Marine agreed to pay a fee of $32 million for the first SBLC and $24 million for the second, such fees to be due and payable “upon the irrevocable issuance of the relevant SBLC” and confirmation of receipt thereof by JP Morgan (clause 3.2). Provision was also made (in clause 6.7) for Coolmead to appoint Mr Gibbins as a director of Global Marine while the SBLCs were in force.

Although no mention of it was made in the SBLC procurement agreement, it seems that there was an additional requirement for a policy of insurance to be taken out in respect of each SBLC. On the evidence before me, the precise nature of this insurance is surprisingly unclear. In his evidence on behalf of Global Marine, Mr McNally describes it as a policy which would cover the liability of Coolmead should the issuer of the SBLC be called upon to make any payment. This may well reflect what Mr McNally was told by Mr La Bella, but I doubt whether it can be correct. Apart from anything else, it is hard to understand why a call on the SBLC (presumably by JP Morgan, in circumstances where it was otherwise unable to obtain repayment from Global Marine or from the other security it held) should impose any liability on Coolmead. It seems likelier, on the basis of some documentation included in the exhibit to Ms Jones’ statement, that the purpose of the insurance was in fact to cover the risk of a default by the issuing bank (HSBC or Deutsche Bank) in honouring the SBLC when called upon to do so. If that is right, it seems reasonable to infer that the insurance may have been a further security requirement imposed by JP Morgan. In any event, it seems to have been understood that the premium for the first policy, which was apparently expected to be an amount approaching $10 million or £7 million, would have to be paid in advance of the issue of the first SBLC. It would also seem to follow that if, for any reason, the SBLC was never issued, the need for the insurance would fall away and one would expect the premium to be repayable.

In order to put Coolmead in funds to obtain the first policy, it was initially agreed that Global Marine would deposit with Landmark the full amount of the US$32 million fee that was to become payable to Coolmead upon issue of the first SBLC. In fact this did not happen, because Mr McNally discovered that the limit of Landmark’s own insurance cover was £7 million, and he was unwilling (wisely as it turned out) to advise Global Marine to deposit a sum in excess of that amount with Landmark. £7 million was accordingly the sum which Global Marine deposited with Landmark on 17 May 2010, at first against a simple undertaking given by Ms Jones to hold the money to Mr McNally’s strict order. The terms of a more detailed undertaking were then negotiated between them, and embodied in the Undertaking which (as I have already said) was signed by Ms Jones on 26 May 2010.

The undertaking was address to Mr McNally, on Landmark’s headed notepaper. It read as follows:

Although the Undertaking referred to the expected receipt of $32 million, it is common ground that it was intended to, and did, apply to the £7 million already held by Landmark, and that the whole of the £7 million was released to be used for the sole purpose of purchasing an insurance policy, in accordance with paragraph 2 of the Undertaking, once the SBLC procurement agreement had been entered into and notification thereof had been provided to Landmark by Mr McNally. He provided the necessary notification in an email to Ms Jones timed 4.52 pm on the same day:

By a further letter, also dated 26 May 2010, Mr McNally confirmed to Landmark that he was holding $22million in his client account for Global Marine, and that he was instructed to release that sum to Landmark on behalf of Coolmead upon receiving satisfactory written evidence of the issue of the first SBLC. He also said that if Landmark was able to obtain satisfactory professional indemnity insurance to the value of $32 million, and could provide satisfactory evidence thereof, his instructions were to transfer the $22million to Landmark’s client account to be held on the terms of the Undertaking.

Coolmead failed to arrange for the first SBLC within seven working days of 26 May 2010, or at all. Clause 18.1 of the SBLC procurement agreement provided that, if the first SBLC was not issued within the stipulated time, “this Agreement and all arrangements set out therein shall be automatically terminated”. Accordingly, the agreement terminated automatically on 7 June 2010. Mr La Bella nevertheless continued to act as if it were still in force, but the position was put beyond doubt on 15 June 2010 when Global Marine gave formal written notice to Coolmead terminating the agreement with immediate effect. On the same day Mr McNally wrote to Ms Jones, enclosing a copy of the termination notice and asking for immediate return of the £7 million (or its US dollar equivalent) pursuant to the Undertaking.

On 17 June 2010, Landmark returned £2 million to Bridgehouse Partners LLP, but Ms Jones was unable to return most of the balance of £5 million because, on 8 and 16 June respectively, she had transferred £3 million and £1.5 million to the fourth defendant, Charles Barber and Sons Limited (“Charles Barber”). Charles Barber was a company which operated a car dealership in Cheshire. Its managing director was the fifth defendant, Mr James Edward Barber.

Global Marine’s case is that the £4.5 million was paid to Charles Barber by Landmark without authority and in clear breach of the Undertaking. Most of the £4.5 million was then transferred by Charles Barber to various recipients, many of the payments apparently being made at the direction of Mr Mullins. In the course of the present proceedings Global Marine has succeeded in recovering some of the missing money, including a further payment from Landmark of £315,000 which was made on 10 December 2010; but a balance of approximately £3.495 million remains outstanding.

For completeness, I should mention that following the termination of the agreement with Coolmead, and in an apparent attempt to salvage its investment opportunity, Global Marine entered into a similar arrangement with a company called Asia Horizon of which Alan Wilcock, the seventh defendant, was a director. Asia Horizon had been working with Coolmead, and on 15 June 2010 Mr Wilcock apparently told Global Marine that, although Coolmead could not complete the transaction, Asia Horizon would be able to do so. The new agreement with Asia Horizon was entered into on 16 June, and required that company to produce the necessary SBLCs within three working days. As it turned out, Asia Horizon was no more able to honour its obligations that Coolmead had been, and this agreement too terminated by effluxion of time.

CPR rule 24.2 provides, so far as material, that:

I have recently summarised the principles which in my judgment the court should follow in dealing with an application for summary judgment: see Bleasdale and Cariss v Forster [2011] EWHC 416 (Ch) at paragraphs 22 to 24. That summary was given in the context of a claim for summary judgment by a defendant against a claimant, but the principles are essentially the same whether the application is made by a defendant or (as here) by a claimant. Subject to that difference, I see no reason to modify what I then said in the context of the present case, and for convenience I will quote the passage again:

Global Marine’s claim against Landmark and Ms Jones is squarely based on the Undertaking, and could hardly be simpler. None of the £7 million was used for the sole purpose for which Ms Jones was authorised to apply it, namely the purchase of an insurance policy for Coolmead. Accordingly the money was at all material times held by her and Landmark to Mr McNally’s order, and following Coolmead’s failure to procure the first SBLC by 7 June 2010 they were obliged to return the money to Mr McNally forthwith. This they failed to do, despite repeated requests. They are therefore in flagrant breach of their obligations in the Undertaking.

The court has an inherent jurisdiction to enforce the terms of a solicitor’s undertaking, as part of its right and duty to supervise the conduct of solicitors: see, for example, Udall v Capri Lighting Limited [1988] 1 QB 907 (CA), where the nature of the jurisdiction, and the principles on which it should be exercised, were explained by Balcombe LJ at 916G to 918D. However, counsel for Global Marine did not seek to invoke this jurisdiction, although he relied indirectly on the principles of professional conduct which underpin it. He founded the claim instead on the law of trusts, and the proposition that the £7 million was held by Landmark and Ms Jones upon trust for Global Marine, subject to a power to apply it for the sole purpose authorised by the Undertaking. In other words, he submitted, the money was held on a Quistclose trust: see the well-known analysis of such trusts by Lord Millett in Twinsectra Limited v Yardley [2002] UKHL 12, [2002] 2 AC 164 at [68] and following, and the application by the House of Lords in that case of the Quistclose principle to a loan held by a solicitor in his client account subject to an undertaking given by him to the lender to use the money for a sole specified purpose. As Lord Hoffmann said at [13], the effect of the undertaking was to provide that the money in the client account should remain the lender’s money until such time at it was applied for the acquisition of property in accordance with the undertaking. The money was held in trust for the lender, but subject to a power to apply it in accordance with the undertaking.

I accept counsel’s submission that the Quistclose principle applies in the present case, and that it provides an appropriate cause of action upon which Global Marine can rely to secure due performance of the Undertaking. It is against this legal background, therefore, that the defences advanced by Ms Jones and Landmark fall to be considered.

Those defences are principally set out in a draft amended defence settled by their former counsel, Mr Burroughs, and verified by Ms Jones on 17 December 2010. An application to rely on this amended defence was made by Mills & Reeve before they came off the record, and was listed for hearing with the summary judgment applications. The application was not opposed by Global Marine, and I grant the necessary permission.

It is admitted in the amended defence (by reference to paragraph numbers of the un-amended particulars of claim) that no SBLC was ever issued for the benefit of Global Marine; that the SBLC procurement agreement was terminated on 15 June 2010; that no policy of insurance was ever issued; and that the conditions under which the full sum became repayable arose, because the agreement was terminated and no policy of insurance had been issued. It is also admitted that the payments of £3 million and £1.5 million were made to Charles Barber out of the £7 million subject to the Undertaking.

It is also alleged, however, that:

Global Marine was made aware on 8 June 2010 of a draft CHAPS transfer of £5 million which Ms Jones had prepared to an account in the name of Charles Barber, and raised no objection to it;

on 15 June Ms Jones informed Mr McNally in a telephone conversation that she had paid out £3 million in respect of the insurance premium, and he then urged her to make a further payment of £2 million for the insurance;

on the same day Ms Jones had a similar conversation with Stephen Scott, a director of Global Marine, and he also urged her to make a further payment of £2 million to Charles Barber’s account; and

on 16 June Ms Jones was informed by Mr La Bella that £2 million was not in fact needed, but a further payment of £1.5 million should be made to Charles Barber. He assured her that the payment was to be made on the express instructions of Global Marine, and Landmark then made the payment as he asked.

Finally, it is alleged that at a meeting on 17 June 2010 at Global Marine’s offices it was agreed that, if Mr La Bella arranged for £2 million to be returned from Landmark’s client account to Global Marine, Global Marine would not pursue either Mr La Bella or Landmark and Ms Jones for the balance of the £7 million. This meeting is said to have been attended by Mr La Bella, a colleague of his, Mr Ruhan, Mr Scott, Mr Michael Howarth (a consultant with an associated company of Global Marine) and Mr Gibbins.

I will consider these defences in due course, but first I will say something about the evidence of Ms Jones. She has made three witness statements in the course of the proceedings, of which her third, dated 23 November 2010 and filed in response to the present application, is by far the most substantial: it runs to 47 pages and 280 paragraphs, and was prepared at a time when she was legally represented. Her first statement was made on 2 July 2010, in the context of the initial application for a freezing injunction; and her second was made on 18 August 2010, in response to a committal application against her for alleged failure to comply with disclosure obligations in Newey J’s order of 5 July 2010. The committal application was subsequently compromised.

In her first statement Ms Jones acknowledged that the £7 million transferred to Landmark “was not strictly used in terms which mirror the [Undertaking]”. She also explained that on 30 June 2010 she had been arrested and questioned by the police, who had taken possession of her phone, computers and documents. She said that her lack of access to this material had been “a big hindrance”. She claimed that the nature of the transaction between Coolmead and Global Marine had changed as it progressed, and that the Undertaking had become “redundant” as a result. Her understanding was that all the money paid out of Landmark’s client account was intended to be used for obtaining insurance cover, and she had released the £4.5 million to Charles Barber on the basis of that understanding.

Ms Jones’ third statement sets out her case in much greater detail, and also provides a good deal of background information about her personal and professional life, including her relationship with Mr La Bella. Her professional background included a period working in the legal division of Barclays Bank, followed by work for two law firms in Leeds between 1999 and 2007 while she qualified as a solicitor. During this time her main work was in residential and commercial conveyancing, although her time at Barclays had given her some experience of banking and litigation. She then worked for a property developer in Leeds before establishing Landmark in 2008. The venture was never a great success, and she had a series of difficulties with the members she recruited. In its first year of activity Landmark had a turnover of about £150,000.

I will not attempt to summarise Ms Jones’ evidence about the history of the relevant transactions, but will refer to her evidence when necessary in dealing with her defences. In broad terms, the picture which she paints is one where she was put under sustained and increasing pressure by Mr La Bella and his associates, including Mr Mullins, Mr Shackleston and Mr Wilcock, to release money to them or at their direction, for the ostensible purpose of paying the premium on insurance arranged through a broker in Spain called Jose Manuel Alvarez Grijuela (“Mr Grijuela”). For a considerable time Ms Jones succeeded in resisting their pressure, and for this purpose she relied on the terms of the Undertaking of which she was clearly well aware. Eventually, however, she succumbed, although she still believed that the £4.5 million which she sent to Charles Barber was in fact going to be used to pay for the insurance. Meanwhile, she had also been put under pressure by Global Marine and persons associated with Global Marine, including Mr Scott, Mr Gibbins, Mr Howarth and Mr McNally, to ensure that the insurance was obtained and paid for as soon as possible, so that the deal would not be lost. I emphasise that no challenge is made on this application to her good faith, and that after the police had interviewed her at length, and conducted an extensive enquiry into the matter, all allegations of fraud against her were withdrawn.

I now return to the pleaded defences of Ms Jones and Landmark.

The background to this abortive transfer, as described by Ms Jones, is as follows. On 2 June Mr La Bella and Mr Mullins told her that they had used some of Mr Mullins’ own money to pay for part of the premium, but they needed more to pay the full amount. Mr La Bella asked her to send the necessary amount to Charles Barber, assuring her that he (Mr La Bella) would have complete control over the money. He also told her that half of the shares in Charles Barber had been transferred to Coolmead, and he would obtain personal guarantees for her from Mr Wilcock and Mr Shackleston. Later the same day she received by email two letters from Mr Wilcock and Mr Shackleston which purported to indemnify her against any losses which might occur as a result of her acting upon the Undertaking.

On 3 June Global Marine, through Mr Scott, sought confirmation from Mr La Bella that HSBC was on track to issue the first SBLC that afternoon. Mr Scott emphasised the need for immediate reassurance on this point from Coolmead, before the start of the next working day in Singapore. Ms Jones was copied in to this email, and she gained the impression from it that Mr Scott thought the insurance premium had already been paid out of Landmark’s account. She telephoned him to say that this was not the case. She told him that she was being asked to send the money to a recipient other than the insurance company, but she could not do so because the conditions of the Undertaking had yet to be satisfied. She said she was trying to resolve the problem so that the deal could go ahead. She also told him that they had used £3 million of Mr Mullins’ own money, partly from the UK and partly from Spain, “to start the ball rolling with the insurance”. Mr Scott “did not seem particularly fazed by the fact that I had been asked to send it to a third party account”, and said he would leave it with her to sort out.

Ms Jones told Mr La Bella repeatedly that she needed more evidence to satisfy herself that the money was indeed going to be used for the purchase of insurance. On 3 June, presumably at Mr La Bella’s instigation, Mr Grijuela wrote to Landmark on the headed notepaper of Platinum Financial Services S.L., enclosing an earlier letter of 27 May addressed to “CSP Brokerage” in Cheshire (a trading style of Messrs Wilcock and Shackleston) which purportedly confirmed that arrangements had been made, subject to payment of a premium of $9,642,500, for the issue of “contract default insurance” in the sum of $200 million by a “top five UK insurance company”. In his letter of 3 June, Mr Grijuela said he understood that Landmark had now issued the premium “to our UK partners”, and upon receipt of the funds he fully expected that HSBC would be able to release the pre-advice for the first SBLC by close of business on Monday, 7 June.

Increasingly fraught negotiations continued over the next few days, with Ms Jones caught in the middle between the demands of Global Marine for immediate resolution of the insurance issue, and the demands of Mr La Bella and his associates for release of the premium money to Charles Barber’s account. Ms Jones says that she asked Mr Grijuela why she could not send the money straight to him, to which he replied that he had already been partly paid by Mr Mullins and he wanted her to “pay the money to the UK account which he said was basically the equivalent of sending it to him”. She was told that Mr Mullins needed to be repaid out of the money, and the balance would then be sent to Mr Grijuela in Spain to obtain the insurance.

At 5.13 am on 7 June Mr La Bella sent an email to Ms Jones, asking her to forward £5 million “as agreed” to Charles Barber’s account. He confirmed that he was in control of the account, and that the funds would be used for the release of the SBLC. Ms Jones replied a few minutes later, saying she needed him to undertake that the money would be used “for the sole purpose of the insurance”. At 10.31 am, Mr La Bella purported to give that undertaking. Ms Jones realised that this was not equivalent to a solicitor’s undertaking, but she was comforted that she “at least had it in writing from a director of Coolmead that this was where the money would be applied”. She then completed a CHAPS form for the payment of £5 million out of Landmark’s client account to Charles Barber’s account, and sent copies of it by fax to Mr La Bella and Mr Mullins. In the evening she also emailed the form to Mr Mullins and Mr Wilcock, but it was by now too late for the transfer to be implemented that day. The next morning Ms Jones had a conversation with Mr Mullins, when he said that he had already paid £3 million of his own money towards the premium and the amount still needed was only £3 million not £5 million. Ms Jones then put this to Mr La Bella, who agreed that £3 million was the right figure if that was what Mr Mullins had said.

Ms Jones goes on to say:

If the evidence (partly hearsay and partly first hand) given by Ms Jones in paragraph 211 is correct, it follows that the draft £5 million CHAPS form was seen by Mr Scott, Mr Howarth and Mr Gibbins on 8 June, and Mr Howarth told her on the same day that he had seen it. However, this account is strongly denied by Mr Scott in his evidence in reply. He says the first time he saw the CHAPS form was on 17 June 2010, when it was faxed to the offices of Bridgehouse Capital Limited. He also says he was unaware that the insurance was going to be taken out through a broker in Spain, and he dismisses as “completely untrue” Ms Jones’ evidence about their earlier telephone conversation on 3 June. He says it is fanciful to allege he would not have been “fazed” by the fact that she was asked to send the money to a third party account.

I am plainly unable to resolve factual disputes of this nature on an application for summary judgment. Nor, it seems to me, can I safely dismiss Ms Jones’ evidence as inherently incredible. This was on any view a strange transaction, with very substantial sums of money apparently required for a policy of insurance of which nobody on the claimant’s side has been able to provide an intelligible description, and which involved the services of a shadowy Spanish broker. Moreover, the money supposedly needed for the policy was deposited not, as one might expect, with a substantial firm of solicitors experienced in dealing with such matters, but with a small two-member firm in Leeds introduced by Mr La Bella. In my view this is the kind of transaction which cries out for examination in the full forensic light of day, after full disclosure of documents and with oral evidence from the protagonists.

It is also worth noting, in this context, that although Mr Scott denies that he had ever met, or even knew of, Mr Grijuela in June 2010, he accepts that in August of that year he and Mr Grijuela together set up a special purpose vehicle called Coppercast UK Limited in an attempt to salvage the very same deal which underlies the claim. He says that they opened a bank account in Gibraltar for the purpose, on terms that the money would be returned if the transaction failed to complete. Perhaps unsurprisingly, the transaction did not complete and the money was returned to Global Marine. Mr Grijuela then resigned as a director of the company, and it is now in the process of being wound up. Far from providing reassurance, this evidence seems to me to add to the air of mystery surrounding the whole affair, and invites probing examination of the question whether Mr Scott and Mr Grijuela were in truth wholly unknown to each other at any earlier stage.

Ms Jones’ account of the events of this day relied on in the amended defence is as follows:

This account is again strenuously denied by Mr McNally and Mr Scott. Mr McNally points out that this was the day on which formal written notice of termination of the SBLC procurement agreement was served, and he refers to the emails which he sent to Ms Jones on that day, culminating in a request for the return of the funds as soon as possible in accordance with the Undertaking. Earlier in the day he had spoken to Ms Jones on her mobile phone, and in an email timed 2.52 pm he recorded his understanding of their conversation:

For his part, Mr Scott says that he never told Ms Jones to send out a further £2 million, and he “most certainly” did not know where “the first sum of money” had gone. It is at this point where he says that he had no business relationship with Mr Grijuela at this stage, had never met him, and did not know he even existed.

It seems highly probable that Mr McNally’s contemporary record of his telephone conversation with Ms Jones is substantially correct, and that he never told her to send out a further £2 million. If that is right, it casts doubt on the accuracy of Ms Jones’ recollection in paragraph 217 of her statement, and would no doubt provide fruitful material for cross-examination. However, I cannot necessarily assume that Mr McNally was being kept fully informed by his clients about their communications with Ms Jones, and it seems to me that the truth or otherwise of what Ms Jones says in paragraph 218 can only be ascertained at trial.

This was the day on which the second payment of £1.5 million was made to Charles Barber out of Landmark’s client account. According to Ms Jones, she was in Mr La Bella’s garden late that morning. He was on the telephone to Mr Ruhan, and she understood that Global Marine wanted an additional £2 million to be sent. Mr La Bella, however, said that £1.5 million would suffice, and reassured her that if that sum was sent they would be able to obtain the first pre-advice in time for the deal to proceed. She says that Mr Gibbins was in Spain and he was also pressurising her by telephone to send the money. She accordingly completed a CHAPS form for the second payment in that amount. Mr La Bella assured her that “they all knew where the money was going and for what purpose”, and that it was going on the specific instructions of Bridgehouse and/or Global Marine.

Ms Jones says that she also spoke to Mr McNally on the same day, who did not instruct her to stop the payment. However, the force of this point is blunted by her admission that she “probably” told him that the money had gone to an account controlled by Mr La Bella, and she did not inform him that the recipient was Charles Barber. Nevertheless, Ms Jones is confident that Mr Scott, Mr Howarth and Mr Gibbins all knew exactly where the money had gone, and she therefore assumed that she had Global Marine’s approval. As before, it seems to me that the correctness of this assertion can only be ascertained at trial.

For his part, Mr McNally was in communication with Ms Jones throughout the day, both by email and by phone. Ms Jones appears to have told him that there was only £2 million left in the client account, and that a further payment of £2 million had been made to the same account as the £3 million, “namely to the insurers”. Mr McNally pressed her repeatedly to honour the Undertaking, and faxed a letter to her giving formal notice that she was in breach of it. He followed this up with a further letter addressed to Landmark and Ms Jones, after his telephone conversations with her during the course of the day:

Ms Jones was not present herself at the meeting on 17 June referred to in paragraph 20A of the amended defence. All that she says about this meeting in her witness statement is the following:

Both Mr Howarth and Mr Scott deal in their evidence in reply with the meeting on 17 June. Mr Howarth says they were told by Mr La Bella that there was £2 million in Landmark’s account which could be returned immediately, and that a further £2 million was in an account under his control which he would immediately return to Landmark for onward transmission to Mr McNally. Mr La Bella said the remaining £3 million had been used to buy an insurance policy, the benefit of which he suggested could be assigned to Asia Horizon. Before the meeting Mr Howarth and his colleagues had been provided with a copy of the draft £5 million CHAPS transfer, which suggested that a transfer in that amount had already been made by Landmark to another account. Mr Howarth says they had no reason at that stage to disbelieve Mr La Bella, and although the account to which the money had apparently been transferred was not in his name, he led them to believe that it was under his control. In those circumstances, it was accepted by Global Marine that £4 million would be returned immediately (as to £2 million from Landmark, and as to £2 million from the account under Mr La Bella’s control via Landmark), but it was also accepted that the additional £3 million could not be returned immediately. An assignment of the benefit of the policy would therefore be acceptable, provided that the money would be returned if the transaction did not proceed and no SBLCs were issued. This account is substantially corroborated by Mr Scott, who says it was made quite clear to Mr La Bella that the £3 million would have to be returned unless he could arrange for Global Marine to obtain value for it:

I have already indicated that there are some important factual elements in the pleaded defence of Landmark and Ms Jones which the court cannot, and should not try to, resolve on a summary basis. In particular, although it seems to me most improbable that Mr McNally had any knowledge of the payments to Charles Barber before 17 June, I am not confident that the same can be said of Mr Howarth, Mr Scott or Mr Ruhan. In view of the clear evidence of Ms Jones (however vulnerable it may prove to be to cross-examination), taken with the absence of any attack on her good faith, the constant involvement throughout the transaction of middlemen like Mr Gibbins and Mr La Bella, and the strange features of the transaction to which I have already drawn attention, I am quite unable at this stage to find that there was a watertight division between what was known to Global Marine on the one hand, and what was known to Coolmead, Mr La Bella and his associates on the other hand.

Ms Jones was caught in the middle, and it seems that she eventually yielded to the sustained pressure put upon her by both sides in agreeing to the release of £4.5 million to Charles Barber, in the belief that it would somehow or other be used to pay for the promised insurance. But does any of this have any relevance to Global Marine’s claim to enforce the Undertaking? Mr Evans submitted, with considerable force, that it does not. He says that the Undertaking was a matter of professional obligation between the two solicitors involved, and there is no credible evidence that it was ever varied or released by Mr McNally, whatever the position may have been as between their respective clients. He also submits that it would anyway make no difference even if Global Marine did know of the payments to Charles Barber, because the terms of the Undertaking were clear and, if the money was not in fact used to purchase insurance, it was Landmark’s responsibility to recover it and repay Mr McNally on demand.

As to Mr Evans’ first point, he is of course right that the Undertaking was given to Mr McNally. But it was given to him as Global Marine’s solicitor, and for the benefit of Global Marine whose money was being deposited with Landmark. This is reflected in the fact that it is Global Marine which is the claimant in the present action, not Mr McNally. Thus it seems to me at least arguable that if Ms Jones was in fact authorised by Global Marine in some way to pay the money to Charles Barber, even though Charles Barber was obviously not an insurance company or broker, then the terms of the Undertaking must be taken to have been modified accordingly, and Mr McNally could no longer insist on repayment in accordance with the letter of the Undertaking.

In a similar way, I think it is at least arguable that, if Ms Jones was indeed authorised by Global Marine to pay £4.5 million to a Cheshire car dealer for the ostensible purpose of purchasing the insurance, the transaction assumes such a strange complexion, and so many obvious suspicions are raised, that the ability of the claimant to rely on the unvarnished terms of the Undertaking must be put in question, and the full facts of the matter need to be carefully scrutinised at trial. It would, in other words, be a classic example of the kind of case where there is an “other compelling reason” why it should go to trial, even if the court were not satisfied that the defendants had a real prospect of successfully defending the claim: compare the well-known observations of Megarry J on the similar wording of the old RSC order 14, although without the epithet “compelling”, in Miles v Bull [1969] 1 QB 258 at 265G-267C.

Nothing that I say is intended to detract from the general principle that a solicitor’s undertaking should, in the normal way, be summarily enforced in accordance with its terms. Many commercial and conveyancing transactions depend on the smooth operation of this well-recognised machinery for their efficient performance, and every solicitor knows the cardinal importance of honouring professional obligations freely undertaken. However, this is not in my judgment an ordinary case, and having reviewed the evidence I am left with the uncomfortable feeling that there may be a good deal more to it than meets the eye. It may also be of some relevance that the claimant has chosen, for whatever reason, not to invoke the inherent jurisdiction of the court to enforce the Undertaking, but has instead relied on a cause of action in trust law. The court is therefore being asked to exercise its equitable jurisdiction over trusts. In that context, it seems to me appropriate that summary judgment should be refused in circumstances where there may perhaps be reason to doubt the good faith of the claimant and the propriety of its conduct, even though there is at present no material to support a pleaded defence of illegality.

For these reasons, which I think are essentially the same as those which Ms Jones advanced in her oral submissions to me, I have come to the conclusion that the claim based on the Undertaking against Landmark and Ms Jones cannot safely be viewed in isolation, and must therefore go to trial.

I can deal with this claim very briefly. All the considerations which have persuaded me that the case against Landmark and Ms Jones should go to trial apply with equal, if not greater, force to the claim against Mr Mullins. If Global Marine is to succeed, it must in my view prove its claim against Mr Mullins at trial, and dispel the aura of suspicion which surrounds the case.

There is also a more technical reason why it would in my judgment be wrong to grant summary judgment against Mr Mullins. The case against him is pleaded in the draft re-amended particulars of claim together with the case against Mr Shackleston and Mr Wilcock. It is alleged that they knowingly interfered with Global Marine’s property, and facilitated, assisted in, arranged or procured breaches of trust by Mr La Bella, Landmark and Ms Jones. The claim thus appears to be one of dishonest assistance in a breach of trust. There is no plea of knowing receipt of trust money. But a claim for dishonest assistance requires the dishonesty alleged against each defendant to be distinctly averred with full particulars, so that the defendant knows he is being accused of dishonesty, and knows the case which he has to meet. In my judgment the pleading, as it stands, is deficient in both these crucial respects, and even though Mr Mullins has played no part in the action, he is entitled to have the case against him properly formulated. It would in my view be quite wrong to grant summary judgment against him on the basis of an unpleaded and unparticularised claim of dishonesty.

Accordingly, this application too must be dismissed.